COVER SHEET

for
AUDITED FINANCIAL STATEMENTS

SEC Registration Number

0 0 0 0 0 6 0 5 6 6

COMPANY NAME

C E N T U R Y P R O P E R T I E S G R O U P I N C .

A N D S U B S I D I A R I E S

PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )

2 1 s t F l o o r , P a c i f i c S t a r B u i l d

i n g , S e n . G i l P u y a t c o r n e r M a k

a t i A v e n u e , M a k a t i C i t y

Form Type Department requiring the report Secondary License Type, If Applicable

A A F S S E C N / A

COMPANY INFORMATION
Company’s Email Address Company’s Telephone Number Mobile Number

N/A (02)793-5526 N/A

No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)

479 6/14 12/31

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation
Name of Contact Person Email Address Telephone Number/s Mobile Number

John Paul C. Flores jpcflores@century- (02) 793-8981 0917-3244071

properties.com

CONTACT PERSON’s ADDRESS

21st Floor, Pacific Star Building, Sen. Gil Puyat corner Makati Avenue, Makati City

NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the
Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.
2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission
and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies.

*SGVFSM000361*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT

The Stockholders and the Board of Directors

Century Properties Group Inc.
21st Floor, Pacific Star Building
Sen. Gil Puyat corner Makati Avenue
Makati City

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Century Properties Group Inc. and its
subsidiaries (the Group), which comprise the consolidated statements of financial position as at
December 31, 2019 and 2018, and the 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, 2019, and notes to the consolidated financial statements, including a
summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at December 31, 2019 and 2018, and its consolidated
financial performance and its consolidated cash flows for each of the three years in the period ended
December 31, 2019 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics)
together with the ethical requirements that are relevant to our audit of the consolidated financial
statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in that context.

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We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of
the risks of material misstatement of the consolidated financial statements. The results of our audit
procedures, including the procedures performed to address the matters below, provide the basis for our
audit opinion on the accompanying consolidated financial statements.

Real Estate Revenue Recognition

The Group’s revenue recognition process, policies and procedures is significant to our audit because this
involves application of significant judgment and estimation in the following areas: (1) assessment of the
probability that the entity will collect the consideration from the buyer; 2) determination of the transaction
price; (3) application of the output method as the measure of progress in determining real estate sales; (4)
determination of the actual costs incurred as cost of real estate sales; and (5) recognition of cost to obtain
a contract.

In evaluating whether collectability of the amount of consideration is probable, the Group considers the
significance of the buyer’s initial payments in relation to the total contract price (or buyer’s equity).
Collectability is assessed by considering factors such as past collection history, age of receivables and the
pricing of the property. Management also regularly evaluates the history of sales cancellations and back-
outs to determine if these would affect its current threshold of buyer’s equity before commencing revenue
recognition.

In determining the transaction price, the Group considers the selling price of the real estate property and
other fees and charges collected from the buyers that are not held on behalf of other parties.

In measuring the progress of its performance obligation over time, the Group uses the output method.
This method measures progress based on physical proportion of work done which requires technical
determination by the management specialist (third party project managers).

In determining the actual costs incurred to be recognized as cost of real estate sales, the Group estimates
costs incurred on materials, labor and overhead which have not yet been billed by the contractor.

The Group identifies sales commission after contract inception as cost of obtaining a contract. For
contracts that qualified for revenue recognition, the Group capitalized the total sales commission due to
the sales agent and recognizes the related liability. The Group uses percentage of completion (POC)
method in amortizing sales commission consistent with the Group’s revenue recognition policy.

The disclosures related to real estate revenue are included in Notes 2 and 3 to the consolidated financial
statements.

Audit Response
We obtained an understanding of the Group’s revenue recognition process.

For the buyer’s equity, we evaluated the management’s basis by comparing this to the historical analysis
of sales collections from buyers with accumulated payments above the collection threshold. We traced
the analysis to supporting documents such as the buyer’s collection report and official receipts.

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A member firm of Ernst & Young Global Limited
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For the determination of the transaction price, we obtained an understanding of the nature of other fees
charged to the buyers. For selected contracts, we agreed the amounts excluded from the transaction price
against the expected amounts required to be remitted to the government based on existing tax rules and
regulations (e.g., documentary stamp taxes, transfer taxes and real property taxes).

For the application of the output method, in determining real estate revenue, we obtained an
understanding of the Group’s processes for determining the POC, and performed tests of the relevant
controls. We obtained the certified POC reports prepared by the third-party project managers and
assessed their competence and objectivity by reference to their qualifications, experience and reporting
responsibilities. For selected projects, we conducted ocular inspections, made relevant inquiries and
obtained the supporting details of POC reports showing the completion of the major activities of the
project construction.

For the cost of real estate sales, we obtained an understanding of the Group’s cost accumulation process
and tested relevant controls. For selected projects, we traced the accumulated costs, including those costs
incurred but not yet billed, to supporting documents such as invoices, accomplishment reports from the
contractors, official receipts, among others.

For the recognition of cost to obtain a contract, we obtained an understanding of the sales commission
process. For selected contracts, we agreed the basis for calculating the sales commission capitalized and
portion recognized in profit or loss, particularly (a) the percentage of commission due against contracts
with sales agents, (b) the total commissionable amount (e.g., net contract price) against the related
contract to sell, and, (c) the POC against the POC used in recognizing the related revenue from real estate
sales.

Valuation of Investment Properties at Fair Value

The Group has investment properties which are accounted for using the fair value model and represent
24% of consolidated total assets as of December 31, 2019. Fair value gains relating to those properties
amounted to = P270.30 million in 2019. As disclosed in Note 10 of the consolidated financial statements,
determining the fair value of investment properties involves significant management judgment and
estimations. It is also based on appraisal reports prepared by an external appraiser. The valuation by the
external appraiser depends on certain assumptions such as market rent levels, expected vacancy, discount
rates and expected maintenance as well as sales and listings of comparable properties and adjustments to
sales price based on internal and external factors. Thus, we considered this as a key audit matter.

Audit Response
We evaluated the competence, capabilities and objectivity of the external appraiser. We involved our
internal specialist in the review of the methodology and assumptions used in the valuation of the
investment properties. We assessed the methodology adopted by referencing common valuation models
in accordance with its highest and best use, and evaluated key inputs used in the valuation, specifically
market rent levels, expected vacancy, discount rates, interest rates and expected maintenance. We also
reviewed the relevant information supporting the sales and listings of comparable properties and inquired
from the external appraiser the basis of adjustments made to the sales price. We also reviewed the
disclosures relating to investment properties.

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A member firm of Ernst & Young Global Limited
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Other Information

Management is responsible for the other information. The other information comprises the information
included in the SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report
for the year ended December 31, 2019, but does not include the consolidated financial statements and our
auditor’s report thereon. The SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and

Annual Report for the year ended December 31, 2019 are expected to be made available to us after the
date of this auditor’s report.

Our opinion on the consolidated financial statements does not cover the other information and we will not
express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the
other information identified above when it becomes available and, in doing so, consider whether the other
information is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audits, or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with PFRSs, 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.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with PSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of

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A member firm of Ernst & Young Global Limited
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not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

· Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

· Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.

· Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the audit. We remain solely
responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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A member firm of Ernst & Young Global Limited
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The engagement partner on the audit resulting in this independent auditor’s report is John T. Villa.

SYCIP GORRES VELAYO & CO.

John T. Villa
Partner
CPA Certificate No. 94065
SEC Accreditation No. 1729-A (Group A),
December 18, 2019, valid until December 17, 2021
Tax Identification No. 901-617-005
BIR Accreditation No. 08-001998-76-2019,
February 26, 2019, valid until February 25, 2021
PTR No. 8125318, January 7, 2020, Makati City

May 18, 2020

*SGVFSM000361*
A member firm of Ernst & Young Global Limited
CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31
2018
(As restated -
2019 see Note 2)
ASSETS
Current Assets
Cash and cash equivalents (Note 4) P4,005,009,231
= P1,950,389,193
=
Receivables (Notes 2 and 5) 10,967,149,055 8,874,334,324
Real estate inventories (Note 6) 15,558,004,362 17,257,481,436
Due from related parties (Note 16) 419,654,624 394,354,508
Advances to suppliers and contractors (Note 7) 2,006,510,283 2,236,124,707
Other current assets (Note 12) 1,409,171,684 1,284,425,939
Total Current Assets 34,365,499,239 31,997,110,107
Noncurrent Assets
Noncurrent portion of installment contracts receivable
(ICR; Notes 2 and 5) 1,137,658,202 1,894,555,056
Investment in bonds (Note 13) 463,750,000 –
Deposits for purchased land (Note 8) 1,079,443,219 1,189,477,058
Investments in and advances to joint ventures and associate (Note 9) 258,768,231 247,584,285
Investment properties (Note 10) 12,932,523,885 11,381,637,756
Property and equipment (Note 11) 1,648,122,313 1,273,790,837
Deferred tax assets - net (Note 27) 42,148,127 61,929,417
Other noncurrent assets (Note12) 1,513,772,396 1,320,598,313
Total Noncurrent Assets 19,076,186,373 17,369,572,722
TOTAL ASSETS =53,441,685,612
P =49,366,682,829
P

LIABILITIES AND EQUITY

Current Liabilities
Accounts and other payables (Note 14) P5,703,064,295
= P4,989,664,627
=
Contract liabilities (Notes 15) 1,784,093,580 2,294,326,736
Due to related parties (Note 16) 171,191,762 98,575,198
Short-term debt (Note 17) 1,452,692,919 2,206,610,954
Current portion of:
Long-term debt (Note 17) 5,462,166,897 5,389,150,881
Bonds payable (Note 18) 1,392,653,130 –
Liability from purchased land (Note 19) 67,200,000 67,200,000
Lease liabilities (Note 28) 21,642,553 –
Income tax payable 9,352,517 4,708,076
Other current liabilities (Note 28) 35,277,576 –
Total Current Liabilities 16,099,335,229 15,050,236,472
Noncurrent Liabilities
Noncurrent portion of:
Long-term debt (Note 17) 9,880,550,051 11,645,097,504
Bonds payable (Note 18) 3,060,379,036 1,505,894,698
Liability from purchased land (Note 19) 268,335,743 301,568,733
Lease liabilities (Note 28) 39,535,451 –
Pension liabilities (Note 26) 307,402,078 251,101,428
Deferred tax liabilities - net (Note 27) 2,708,263,227 2,524,519,956
Deposit for future stock subscription (Note 20) 42,480,000 –
Other noncurrent liabilities (Notes 28 and 32) 1,419,835,309 624,797,479
Total Noncurrent Liabilities 17,726,780,895 16,852,979,798
Total Liabilities 33,826,116,124 31,903,216,270

(Forward)

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December 31
2018
(As restated -
2019 see Note 2)
Equity (Note 20)
Capital stock - =
P0.53 par value
Authorized - 18,000,000,000 shares
Issued - 11,699,723,690 shares P6,200,853,553
= P6,200,853,553
=
Additional paid-in capital 2,639,742,141 2,639,742,141
Treasury shares - 100,123,000 shares (109,674,749) (109,674,749)
Other components of equity 99,393,242 99,231,014
Retained earnings 8,733,916,278 7,590,086,701
Remeasurement loss on defined benefit plan (81,174,033) (66,042,430)
Total Equity Attributable to Equity Holders
of the Parent Company 17,483,056,432 16,354,196,230
Non-controlling Interest (Note 20) 2,132,513,056 1,109,270,329
Total Equity 19,615,569,488 17,463,466,559
TOTAL LIABILITIES AND EQUITY =53,441,685,612
P =49,366,682,829
P

See accompanying Notes to Consolidated Financial Statements.

*SGVFSM000361*
CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31

2019 2018 2017
REVENUES
Revenue from contracts with customers:
Real estate sales (Note 30) =12,685,387,079
P =9,576,668,266
P =5,345,938,210
P
Property management fee and other services
(Notes 23 and 30) 412,151,431 395,460,217 352,971,958
Leasing revenue (Notes 10 and 28) 713,381,592 407,267,202 341,658,779
Interest income from real estate sales (Note 5) 504,096,166 322,482,606 665,202,951
14,315,016,268 10,701,878,291 6,705,771,898
COSTS
Cost of real estate sales (Note 6) 8,459,544,061 5,655,403,635 2,806,481,000
Cost of leasing (Note 10) 217,448,235 227,747,720 237,813,561
Cost of services (Note 22) 295,241,150 276,552,505 270,726,596
8,972,233,446 6,159,703,860 3,315,021,157
GROSS PROFIT 5,342,782,822 4,542,174,431 3,390,750,741
GENERAL, ADMINISTRATIVE AND
SELLING EXPENSES (Note 21) 3,235,818,061 3,254,526,410 2,964,062,656
OTHER INCOME (EXPENSES)
Interest income and others (Notes 12 and 24) 573,363,478 568,656,249 801,077,513
Gain from change in fair value of investment
properties (Note 10) 260,934,423 376,898,561 286,028,260
Foreign exchange gain (loss) (Note 17) 116,330,537 (145,192,729) (53,850,000)
Share in net earnings of joint ventures and
associate (Note 9) 11,183,946 12,430,580 –
Interest and other financing charges (Note 25) (936,688,211) (594,275,763) (403,480,265)
Gain (loss) from change in fair value of derivative
(Note 12) (76,055,987) 115,791,961 (35,614,007)
(50,931,814) 334,308,859 594,161,501
INCOME BEFORE INCOME TAX 2,056,032,947 1,621,956,880 1,020,849,586
PROVISION FOR INCOME TAX (Note 27) 577,562,748 503,770,261 370,924,446
NET INCOME 1,478,470,199 1,118,186,619 649,925,140
OTHER COMPREHENSIVE INCOME (OCI)
Items that will not be reclassified to profit or loss
in subsequent periods:
Remeasurement gain (loss) on defined benefit
plan - net of deferred tax (Note 26) (15,131,603) (31,462,443) 26,306,821
Net change in fair value of equity instruments at
fair value through OCI 162,228 77,333 (367,097)
TOTAL COMPREHENSIVE INCOME =1,463,500,824
P =1,086,801,509
P =675,864,864
P
Net income attributable to:
Equity holders of the Parent Company (Note 20) =1,281,748,829
P =985,915,365
P =630,312,075
P
Non-controlling interest (Note20) 196,721,370 132,271,254 19,613,065
=1,478,470,199
P =1,118,186,619
P =649,925,140
P
Total comprehensive income attributable to:
Equity holders of the Parent Company (Note 20) =1,266,779,454
P P954,530,255
= =656,251,799
P
Non-controlling interest (Note 20) 196,721,370 132,271,254 19,613,065
=1,463,500,824
P =1,086,801,509
P =675,864,864
P
Basic earnings per share (Note 20) =0.11
P =0.09
P =0.05
P

See accompanying Notes to Consolidated Financial Statements.

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CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

Total Equity Attributable to Equity Holders of the Parent Company

Additional Other Remeasurement
Capital Paid-in Treasury Components Retained Loss on Defined Non-controlling
Stock Capital Shares of Equity Earnings Benefit Plan Total Interest Total
At January 1, 2019 = 6,200,853,553
P = 2,639,742,141
P (P
= 109,674,749) = 99,231,014
P = 7,590,086,701
P (P
= 66,042,430) =
P16,354,196,230 = 1,109,270,329
P = 17,463,466,559
P
Net income – – – – 1,281,748,829 – 1,281,748,829 196,721,370 1,478,470,199
Other comprehensive income (loss) (Note 26) – – – 162,228 – (15,131,603) (14,969,375) – (14,969,375)
Total comprehensive income – – – 162,228 1,281,748,829 (15,131,603) 1,266,779,454 196,721,370 1,463,500,824
Cash dividends (Note 20) – – – – (137,919,252) – (137,919,252) – (137,919,252)
Investment from non-controlling interest
(Note 20) – – – – – – – 826,521,357 826,521,357
At December 31, 2019 = 6,200,853,553
P = 2,639,742,141
P (P
= 109,674,749) = 99,393,242
P = 8,733,916,278
P (P
= 81,174,033) P
= 17,483,056,432 = 2,132,513,056
P = 19,615,569,488
P

At January 1, 2018 = 6,200,853,553

P = 2,639,742,141
P (P
= 109,674,749) = 99,153,681
P = 6,804,171,335
P (P
= 34,579,987) P
= 15,599,665,974 P555,658,023
= = 16,155,323,997
P
Net income – – – – 985,915,365 – 985,915,365 132,271,254 1,118,186,619
Other comprehensive income (loss) (Note 26) – – – 77,333 – (31,462,443) (31,385,110) – (31,385,110)
Total comprehensive income – – – 77,333 985,915,365 (31,462,443) 954,530,255 132,271,254 1,086,801,509
Cash dividends (Note 20) – – – – (199,999,999) – (199,999,999) – (199,999,999)
Investment from non-controlling interest
(Note 20) – – – – – – – 421,341,052 421,341,052
At December 31, 2018 = 6,200,853,553
P = 2,639,742,141
P (P
= 109,674,749) = 99,231,014
P = 7,590,086,701
P (P
= 66,042,430) P
= 16,354,196,230 = 1,109,270,329
P = 17,463,466,559
P

At January 1, 2017 = 6,200,853,553

P = 2,639,742,141
P (P
= 109,674,749) = 58,869,696
P = 6,497,730,643
P (P
= 60,886,808) =
P15,226,634,476 = 119,785,810
P = 15,346,420,286
P
Net income – – – – 630,312,075 − 630,312,075 19,613,065 649,925,140
Other comprehensive income (loss) – – – (367,097) – 26,306,821 25,939,724 − 25,939,724
Total comprehensive income – – – (367,097) 630,312,075 26,306,821 656,251,799 19,613,065 675,864,864
Cash dividends (Note 20) – – – – (205,065,834) – (205,065,834) − (205,065,834)
Investment from non-controlling interest
(Note 20) – – – 40,651,082 – – 40,651,082 397,751,065 438,402,147
At December 31, 2017 = 6,200,853,553
P = 2,639,742,141
P (P
= 109,674,749) P99,153,681
= = 6,922,976,884
P (P
= 34,579,987) P
= 15,718,471,523 P537,149,940
= = 16,255,621,463
P

See accompanying Notes to Consolidated Financial Statements.

*SGVFSM000361*
CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31

2019 2018 2017

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax P
=2,056,032,947 =1,621,956,880
P =1,020,849,586
P
Adjustments for:
Interest and other financing charges (Note 25) 936,688,211 594,275,763 403,480,265
Loss (gain) from change in fair value of
derivative (Note 12) 76,055,987 (115,791,961) 35,614,007
Depreciation and amortization (Notes 11, 12 and 21) 57,545,711 37,854,976 33,242,675
Retirement expense (Note 26) 40,927,865 35,599,728 37,751,907
Loss on pre-termination of derivative (Notes 12 and 24) 39,735,974 – –
Interest income (Notes 5 and 24) (616,121,641) (385,108,364) (712,443,530)
Gain from change in fair value of investment
properties (Note 10) (260,934,423) (376,898,561) (286,028,260)
Foreign exchange loss (gain) (Note 17) (116,330,537) 145,192,729 53,859,864
Share in net earnings of joint ventures and
associate (Note 9) (11,183,946) (12,430,580) –
Gain on sale of investment property (Notes 10 and 24) (3,521,396) (12,941,360) –
Operating income before working capital changes 2,198,894,752 1,531,709,250 586,326,514
Decrease (increase) in:
Receivables (1,335,917,877) (785,380,593) 1,174,120,507
Real estate inventories 2,735,041,283 (1,578,749,310) (1,074,982,095)
Advances to suppliers and contractors 229,614,424 (272,146,577) 27,851,082
Other assets (423,368,311) (142,172,562) (128,884,592)
Increase (decrease) in:
Accounts and other payables 759,056,888 1,157,531,784 (221,552,495)
Contract liabilities (510,233,156) (464,274,871) –
Customers’ deposits – – 398,242,052
Liability from purchased land intended for development (33,232,990) (79,473,009) (72,802,321)
Other liabilities 418,119,692 – –
Net cash provided by (used in) operations 4,037,974,705 (632,955,888) 688,318,652
Interest received (Note 24) 616,121,641 385,108,364 712,443,530
Interest and other financing costs paid (1,944,181,954) (1,404,625,946) (1,071,993,645)
Income taxes paid (362,908,775) (319,165,692) (432,721,940)
Retirement benefits paid (Note 26) (5,796,722) (29,499,275) (1,748,518)
Net cash provided by (used in) operating activities 2,341,208,895 (2,001,138,437) (105,701,921)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from:
Refund of deposits for purchased land (Note 8) 181,595,212 – –
Sale of investment properties (Note 10) 156,600,215 179,598,017 –
Marginal deposits 31,658,800 15,016,031 28,337,697
Refund of rental deposits (Note 28) 7,177,123 1,008,513 –
Sale of property and equipment – 2,070,400 163,303
Payments for:
Additions to investment properties (Note 10) (1,250,844,012) (1,981,590,313) (1,236,009,408)
Additions to investment in bonds (Note 13) (463,750,000) – –
Additions to property and equipment (Note 11) (354,538,481) (232,121,247) (614,258,721)
Deposits for purchased land (Note 8) (237,561,373) (342,167,634) (423,539,188)
Intangible assets (2,105,735) (1,473,211) (1,684,030)
Marginal deposits – (31,658,800) (16,060,031)
Rental deposits – – (79,521,842)
Increase (decrease) in due from related parties (25,300,116) 96,891,440 41,832,372
Net cash used in investing activities (1,957,068,367) (2,294,426,804) (2,300,739,848)

(Forward)

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Years Ended December 31

2019 2018 2017

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from:
Short-term and long-term debt (Note 17) P
=12,464,293,414 =11,359,147,970
P =6,692,140,393
P
Issuance of bonds payable (Note 18) 3,000,000,000 – –
Additional investment from non-controlling interest
(Note 20) 826,521,357 421,341,052 438,402,147
Deposits for preferred shares (Note 32) 412,195,714 201,678,447 196,590,150
Deposits for future stock subscription (Note 20) 42,480,000 – –
Increase (decrease) in due to related parties 72,169,497 14,991,684 (277,834,458)
Payments for:
Short-term and long-term debt (Note 17) (14,807,436,336) (6,814,295,001) (5,183,131,809)
Deferred financing cost (Notes 17 and 18) (150,470,673) (137,268,569) (10,012,313)
Cash dividends (Note 20) (126,201,322) (199,999,999) (205,065,834)
Stock issuance cost (Note 12) (52,316,528) – –
Lease liabilities (Note 28) (10,755,613) – –
Bonds payable (Note 18) – – (1,187,360,000)
Net cash provided by financing activities 1,670,479,510 4,845,595,584 463,728,276

NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS 2,054,620,038 550,030,343 (1,942,713,493)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR (Note 4) 1,950,389,193 1,400,358,850 3,343,072,343

CASH AND CASH EQUIVALENTS AT END

OF YEAR (Note 4) P
=4,005,009,231 =1,950,389,193
P =1,400,358,850
P

See accompanying Notes to Consolidated Financial Statements.

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CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Information

Century Properties Group Inc. (the Parent Company or CPGI), a publicly-listed company, was
incorporated and registered with the Philippine Securities and Exchange Commission (SEC) on
May 6, 1975. The Parent Company is a 61.27%-owned subsidiary of Century Properties Inc. (the
Ultimate Parent or CPI) and the rest by the public. CPGI and its subsidiaries (collectively referred to
hereinafter as the Group) is primarily engaged in the development and construction of residential and
commercial real estate projects.

The registered office address of the Parent Company is 21st Floor, Pacific Star Building, Sen. Gil
Puyat corner Makati Avenue, Makati City.

Signing of Memorandum of Agreement with Global Development Corp. (GGDC)

On January 9, 2019, GGDC and the Parent Company signed a memorandum of agreement (MOA) to
create a Joint Venture (JV) that will develop 2.6 hectares of the 177-hectare Clark Global City into a
mix of residential and office buildings. GGDC is the owner and developer of Clark Global City. It is
a wholly owned subsidiary of Udenna Development (UDEVCO) Corp., the real estate and property
development arm of one of the fastest growing holding companies in the Philippines, Udenna
Corporation. The JV has not yet been incorporated as of the reporting date.

The MOA provides for mixed use development, i.e. residential and office buildings with support
retail establishments. This project will be the Parent Company's first development in Clark, a former
military base currently being transformed into the country’s next big metropolis and primed as the
answer to Metro Manila’s congestion. The Parent Company is banking on the phenomenal growth of
Central Luzon, which has the highest number of occupied housing units; and also Clark, which has
emerged as the second largest market for office after Metro Manila.

Situated within the Clark Freeport Zone, the development offers an ideal regulatory, economic and
operating environment. It is also poised to benefit from various public infrastructure projects such as
the expansion of the Clark International Airport, NLEX-SLEX Connector Road, Subic-Clark Cargo
Railway and PNR North Railway.

The accompanying consolidated financial statements as at December 31, 2019 and 2018 and for each
of the three years in the period ended December 31, 2019 were approved and authorized for issue by
the Board of Directors (BOD) on May 18, 2020.

2. Summary of Significant Accounting Policies

Basis of Preparation
The consolidated financial statements include the financial statements of the Parent Company and its
subsidiaries.

The accompanying consolidated financial statements have been prepared using the historical cost
basis, except for investment properties, derivative assets and financial assets measured at fair value
through other comprehensive income. The consolidated financial statements are presented in
Philippine Peso (P=), which is the functional currency of the Parent Company and of all the investee
companies. All amounts are rounded off to the nearest P =, except when otherwise indicated.

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Statement of Compliance
The consolidated financial statements of the Group have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS), which include the availment of the reliefs granted by the SEC
under the following memorandum circulars:
a. Memorandum Circular No. 4-2020 on Deferment of IFRIC Agenda Decision on Over Time
Transfer of Goods for Real Estate Industry
b. Memorandum Circular Nos. 14-2018 and 3-2019 for the following implementation issues of
PFRS 15 affecting the real estate industry:
· Exclusion of land in the determination of percentage of completion (POC) discussed in PIC
Q&A No. 2018-12-E
· Accounting for significant financing component discussed in PIC Q&A No. 2018-12-D
· Accounting to Common Usage Service Area (CUSA) Charges discussed in PIC Q&A No.
2018-12-H

Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company and
the following subsidiaries:
Percentage of Ownership
2019 2018 2017
Century Limitless Corporation (CLC) 100 100 100
Century Acqua Lifestyle Corporation (CALC) 100 100 100
Tanza Properties I, Inc. (TPI I) 60 60 60
Tanza Properties II, Inc. (TPI II) 60 60 60
Tanza Properties III, Inc. (TPI III) 60 60 60
Katipunan Prime Development Corporation (KPDC) 60 60 –
PHirst Park Homes Development Corporation (PPHDC) 100 100 –
Century Properties Management, Inc. (CPMI) 100 100 100
Siglo Suites, Inc. (SSI) 100 100 100
Siglo Commercial Management Corporation (SCMC) 100 100 100
Century Communities Corporation (CCC) 100 100 100
Century City Development Corporation (CCDC) 100 100 100
Century City Development Corporation II (CCDC II) 60 60 60
Centuria Medical Development Corporation (CMDC) 100 100 100
Knightsbridge Residences Development Corporation* 100 100 100
Milano Development Corporation (MDC) 100 100 100
Century City Development Corporation VII* 100 100 100
Century City Development Corporation VIII* 100 100 100
Century City Development Corporation X* 100 100 100
Century City Development Corporation XI* 100 100 100
Century City Development Corporation XII* 100 100 100
Century City Development Corporation XIV* 100 100 100
Century City Development Corporation XV* 100 100 100
Century City Development Corporation XVI* 100 100 100
Century City Development Corporation XVII* 100 100 100
Century City Development Corporation XVIII* 100 100 100
Century Destination Lifestyle Corporation (CDLC)** 100 100 100
PHirst Park Homes, Inc. (PPHI) 60 60 –
*non-operating CCDC subsidiaries
**formerly Century Properties Hotel and Leisure Inc. (CPHLI)

On August 31, 2018, PPHI was incorporated by the Parent Company and Mitsubishi Corporation
(MC) for 60% and 40% ownership interests, respectively (see Note 20). The primary purpose of
PPHI is to engage in real estate development.

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 -3-

On July 20, 2018, KPDC was incorporated by CLC, a wholly-owned subsidiary of the Parent
Company, and TCG Holdings, Inc. (THI) for 60% and 40% ownership interests, respectively. The
primary purpose of KPDC is to engage in real estate development. KPDC has not yet started
commercial operations.

On February 2, 2018, PPHDC, a wholly owned subsidiary of CLC, was incorporated. PPHDC was
organized primarily to engage in real estate development.

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

Generally, there is a presumption that a majority of voting rights result in control. To support this
presumption and 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
· 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 during
the year are included or excluded in the consolidated financial statements from the date the Group
gains control or until the date the Group ceases to control the subsidiary.

The financial statements of the subsidiaries are prepared for the same reporting period as the Parent
Company, using consistent accounting policies. All intra-group balances, transactions, unrealized
gains and losses resulting from intra-group transactions and dividends are eliminated in full.

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, the carrying amount
of any non-controlling interests (NCI) and the cumulative translation differences recorded in
equity.
· Recognizes the fair value of the consideration received, the fair value of any investment retained
and any surplus or deficit in profit or loss.
· Reclassifies the parent’s share of components previously recognized in other comprehensive
income to profit or loss or retained earnings, as appropriate.

Reclassifications
On September 27, 2019, the Philippine Interpretations Committee (PIC) issued a letter to the various
organizations in the real estate industry to clarify certain issues in relation to the PFRS 15
Implementation Issues and other accounting issues affecting real estate industry. The letter includes
the clarification on the conclusion of PIC Q&A 2018-12D Step 3 on the recording of contract asset
for the difference between the consideration received from the customer and the transferred goods or

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services to a customer. In the letter, the PIC would allow for the meantime, the recording of the
difference between the consideration received from the customer and the transferred goods or
services to a customer as either a contract asset or unbilled receivable. If presented as contract
asset, the disclosures required under PFRS 15 should be complied with. Otherwise, the disclosures
required under PFRS 9 should be followed.

As a result, the Group elected to record in 2019 the difference between the consideration received
from the customer and the transferred goods or services to a customer as installment contracts
receivable which differs from the 2018 presentation where the difference was recognized as a
contract asset.

December 31,
2018 December 31,
As previously 2018
reported Reclassification As adjusted
Current Assets
Receivables P2,047,127,253
= P6,827,207,071
= =8,874,334,324
P
Current portion of contract assets 6,827,207,071 (6,827,207,071) –
=8,874,334,324
P =–
P =8,874,334,324
P

Noncurrent Assets
Noncurrent portion of ICR =–
P P1,894,555,056
= =1,894,555,056
P
Noncurrent portion of contract assets 1,894,555,056 (1,894,555,056) –
=1,894,555,056
P =–
P =1,894,555,056
P

The reclassifications would have increased the current portion of receivables and decreased the
current portion of contract assets amounting to = P5,813.15 million and increased the noncurrent
portion of ICR and decreased the noncurrent portion of contract assets amounting to
=2,442.24 million, all as of January 1, 2018. These reclassifications however have no effect on total
P
current assets, total noncurrent assets, and total assets, or any liability and equity component of the
consolidated statements of financial position as of January 1, 2018. The reclassifications have no
impact also on the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year ended December 31, 2017.

Adoption of New and Amended Accounting Standards and Interpretations

The accounting policies adopted are consistent with those of the previous financial year, except that
the Group has adopted the following new accounting pronouncements starting January 1, 2019.
Unless otherwise indicated, adoption of these pronouncements did not have any significant impact on
the Group’s financial position or performance.

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

· Amendments to PFRS 9, Prepayment Features with Negative Compensation

Under PFRS 9, a debt instrument can be measured at amortized cost or at fair value through other
comprehensive income, provided that the contractual cash flows are ‘solely payments of principal
and interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is held
within the appropriate business model for that classification. The amendments to PFRS 9 clarify
that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes
the early termination of the contract and irrespective of which party pays or receives reasonable
compensation for the early termination of the contract.

These amendments had no impact on the consolidated financial statements of the Group.

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· PFRS 16, Leases

PFRS 16 supersedes PAS 17, Leases. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for most
leases under a single on-balance sheet model.

The Group has lease contracts for office spaces as a lessee. Before the adoption of PFRS 16, the
Group classified each of its leases at the inception date as either a finance lease or an operating
lease. A lease was classified as a finance lease if it transferred substantially all of the risks and
rewards incidental to ownership of the leased asset to the Group; otherwise it was classified as an
operating lease. In an operating lease, the leased property was not capitalized and the lease
payments were recognized as rent expense in the consolidated statements of comprehensive
income on a straight-line basis over the lease term. Any prepaid rent and accrued rent were
recognized under other current assets and accounts and other payables, respectively.

Upon adoption of PFRS 16, the Group applied a single recognition and measurement approach
for all leases, except for short-term leases and leases of low-value assets. The standard provides
specific transition requirements and practical expedients, which have been applied by the Group.

The Group has elected to apply the following practical expedients provided by the standard:
· The Group relied on its assessment of whether leases are onerous immediately before the date
of initial application.
· The Group did not apply the requirements of PFRS 16 to leases for which the lease term ends
within 12 months from the date of initial application.
· The Group accounted for the deferred tax at transition date by considering the asset and
liability as in-substance linked to each other. On this basis, the net asset or liability is
compared to its tax base and deferred tax is recognized on that net amount.

Lessor accounting under PFRS 16 is substantially unchanged from accounting under

PAS 17. Lessors will continue to classify all leases using the same classification principle as in
PAS 17 and distinguish between two types of leases: operating and finance leases.

The Group adopted PFRS 16 using the modified retrospective method of adoption with the date
of initial application of January 1, 2019. Under this method, PFRS 16 is applied retrospectively
with the cumulative effect of initially applying PFRS 16 recognized at the date of initial
application. The Group elected to use the transition practical expedient allowing the standard to
be applied only to contracts that were previously identified as leases applying PAS 17 at the date
of initial application. The Group did not recognize deferred tax on both the right-of-use asset and
lease liabilities on initial recognition.

The adoption of PFRS 16 resulted in recognition of right-of-use assets and lease liabilities both
amounting to =
P71.93 million as at January 1, 2019 (see Notes 11 and 28).

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Set out below, are the amounts by which each consolidated financial statement line item is
affected as at and for the year ended December 31, 2019 as a result of the adoption of PFRS 16.
The first column shows what the amounts would have been had PFRS 16 not been adopted and
the third column shows amounts prepared under PFRS 16:

Consolidated statement of financial position

As of December 31, 2019

Previous PFRS Increase (decrease) PFRS 16

ASSETS

Noncurrent Assets
Property and equipment =1,590,785,695
P =57,336,618
P =1,648,122,313
P

LIABILITIES AND EQUITY

Current liabilities
Current portion of lease liabilities – 21,642,553 21,642,553

Noncurrent liabilities
Noncurrent portion of lease liabilities – 39,535,451 39,535,451
Deferred tax liabilities - net 2,709,415,643 (1,152,416) 2,708,263,227

Equity
Retained earnings 8,736,605,248 (2,688,970) 8,733,916,278

Consolidated statement of comprehensive income

For the year ended December 31, 2019

Previous PFRS Increase (decrease) PFRS 16
General, administrative and selling
expenses =3,237,454,380
P (P
=1,636,319) =3,235,818,061
P
Interest and other financing charges (942,165,916) 5,477,705 (936,688,211)
Provision for income tax 578,715,164 (1,152,416) 577,562,748
Net income attributable to equity
holders of the Parent Company 1,284,437,799 (2,688,970) 1,281,748,829

Consolidated statement of cash flows

For the year ended December 31, 2019
Previous PFRS Increase (decrease) PFRS 16
Net cash provided by operating
activities =2,330,453,282
P =10,755,613
P =2,341,208,895
P
Net cash provided by financing
activities 1,681,235,123 (10,755,613) 1,670,479,510

· Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement

The amendments to PAS 19 address the accounting when a plan amendment, curtailment or
settlement occurs during a reporting period. The amendments specify that when a plan
amendment, curtailment or settlement occurs during the annual reporting period, an entity is
required to:
· Determine current service cost for the remainder of the period after the plan amendment,
curtailment or settlement, using the actuarial assumptions used to remeasure the net

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 -7-

defined benefit liability (asset) reflecting the benefits offered under the plan and the plan
assets after that event
· Determine net interest for the remainder of the period after the plan amendment,
curtailment or settlement using: the net defined benefit liability (asset) reflecting the
benefits offered under the plan and the plan assets after that event; and the discount rate
used to remeasure that net defined benefit liability (asset).

The amendments also clarify that an entity first determines any past service cost, or a gain or loss
on settlement, without considering the effect of the asset ceiling. This amount is recognized in
profit or loss. An entity then determines the effect of the asset ceiling after the plan amendment,
curtailment or settlement. Any change in that effect, excluding amounts included in the net
interest, is recognized in other comprehensive income.

The amendments had no impact on the consolidated financial statements of the Group as it did
not have any plan amendments, curtailments, or settlements during the year.

· Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures

The amendments clarify that an entity applies PFRS 9 to long-term interests in an associate or
joint venture to which the equity method is not applied but that, in substance, form part of the net
investment in the associate or joint venture (long-term interests). This clarification is relevant
because it implies that the expected credit loss model in PFRS 9 applies to such long-term
interests.

The amendments also clarified that, in applying PFRS 9, an entity does not take account of any
losses of the associate or joint venture, or any impairment losses on the net investment,
recognized as adjustments to the net investment in the associate or joint venture that arise from
applying PAS 28, Investments in Associates and Joint Ventures.

These amendments had no significant impact on the consolidated financial statements of the
Group.

· Philippine Interpretation IFRIC-23, Uncertainty over Income Tax Treatments

The interpretation addresses the accounting for income taxes when tax treatments involve
uncertainty that affects the application of PAS 12 and does not apply to taxes or levies outside the
scope of PAS 12, nor does it specifically include requirements relating to interest and penalties
associated with uncertain tax treatments. The interpretation specifically addresses the following:

· Whether an entity considers uncertain tax treatments separately or together with one or more
other uncertain tax treatments.
· The assumptions an entity makes about the examination of tax treatments by taxation
authorities
· How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates
· How an entity considers changes in facts and circumstances.

The Group applies significant judgement in identifying uncertainties over income tax treatments.
Upon adoption of the Interpretation, the Group considered whether it has any uncertain tax
position. The Group determined, based on its assessment, that it is probable that its tax
treatments will be accepted by the taxation authorities. The interpretation did not have a
significant impact on the consolidated financial statements of the Group.

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 -8-

· Annual Improvements to PFRSs 2015 - 2017 Cycle

· Amendments to PFRS 3, Business Combinations, and PFRS 11, Joint Arrangements,

Previously Held Interest in a Joint Operation

The amendments clarify that, when an entity obtains control of a business that is a joint
operation, it applies the requirements for a business combination achieved in stages,
including remeasuring previously held interests in the assets and liabilities of the joint
operation at fair value. In doing so, the acquirer remeasures its entire previously held interest
in the joint operation.

A party that participates in, but does not have joint control of, a joint operation might obtain
joint control of the joint operation in which the activity of the joint operation constitutes a
business as defined in PFRS 3. The amendments clarify that the previously held interests in
that joint operation are not remeasured.

An entity applies those amendments to business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period beginning on or after
January 1, 2019 and to transactions in which it obtains joint control on or after the beginning
of the first annual reporting period beginning on or after January 1, 2019, with early
application permitted.

These amendments had no impact on the consolidated financial statements of the Group.

· Amendments to PAS 12, Income Tax Consequences of Payments on Financial Instruments

Classified as Equity

The amendments clarify that the income tax consequences of dividends are linked more
directly to past transactions or events that generated distributable profits than to distributions
to owners. Therefore, an entity recognizes the income tax consequences of dividends in
profit or loss, other comprehensive income or equity according to where the entity originally
recognized those past transactions or events.

An entity applies those amendments for annual reporting periods beginning on or after
January 1, 2019, with early application is permitted.

These amendments had no impact on the consolidated financial statements of the Group
because dividends declared by the Group to domestic corporations do not give rise to tax
obligations under the current tax laws.

· Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligible for Capitalization

The amendments clarify that an entity treats as part of general borrowings any borrowing
originally made to develop a qualifying asset when substantially all of the activities necessary
to prepare that asset for its intended use or sale are complete.

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 -9-

An entity applies those amendments to borrowing costs incurred on or after the beginning of
the annual reporting period in which the entity first applies those amendments.
The amendments do not have a material effect on the Group’s consolidated financial
statements since the Group’s current practice is in line with these amendments.

· March 2019 IFRIC Agenda Decision on Over Time Transfer of Constructed Good (PAS 23,
Borrowing Costs)

In March 2019, the IFRS Interpretations Committee (the Committee) issued IFRIC Update
summarizing the decisions reached by the Committee in its public meetings. The March 2019
IFRIC Update includes the Committee’s Agenda Decision on the capitalization of borrowing cost
on over time transfer of constructed goods. The IFRIC Agenda Decision clarified whether
borrowing costs may be capitalized in relation to the construction of a residential multi-unit real
estate development (building) which are sold to customers prior to start of construction or
completion of the development.

Applying paragraph 8 of PAS 23, Borrowing Cost, an entity capitalizes borrowing costs that are
directly attributable to the acquisition, construction or production of a qualifying asset as part of
the cost of that asset. Paragraph 5 of PAS 23 defines a qualifying asset as ‘an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale’. Under the
March 2019 IFRIC Update, the Committee clarified that the related assets that might be
recognized in the real estate company’s financial statements (i.e., installment contract receivable,
contract asset, or inventory) will not qualify as a qualifying asset and the corresponding
borrowing cost may no longer be capitalized.

On February 11, 2020, the Philippine SEC issued Memorandum Circular No. 4, Series of 2020,
providing relief to the Real Estate Industry by deferring the mandatory implementation of the
above IFRIC Agenda Decision until December 31, 2020. Effective January 1, 2021, the Real
Estate Industry will adopt the IFRIC agenda decision and any subsequent amendments thereto
retrospectively or as the SEC will later prescribe. A real estate company may opt not to avail of
the deferral and instead comply in full with the requirements of the IFRIC agenda decision.
For real estate companies that avail of the deferral, the SEC requires disclosure in the Notes to the
Financial Statements of the accounting policies applied, a discussion of the deferral of the subject
implementation issues, and a qualitative discussion of the impact in the financial statements had
the IFRIC agenda decision been adopted.

The Group opted to avail of the relief as provided by the SEC. Had the Group adopted the IFRIC
agenda decision, borrowing costs capitalized to real estate inventories related to projects with pre-
selling activities would have been expensed out in the period incurred. This would result in
decrease in retained earnings as of January 1, 2017 and net income for 2018 and 2017.

This adjustment should have been applied retrospectively and would have resulted to restatement
of prior year financial statements. A restatement would have impacted interest expense, cost of
sales, provision for deferred income tax, real estate inventories, deferred tax liability and opening
balance of retained earnings.

Future Changes in Accounting Policies

Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the Group
does not expect that the future adoption of the said pronouncements will have a significant impact on
its consolidated financial statements. The Group intends to adopt the following pronouncements
when they become effective.

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Effective beginning on or after January 1, 2020

· Amendments to PFRS 3, Definition of a Business

The amendments to PFRS 3 clarify the minimum requirements to be a business, remove the
assessment of a market participant’s ability to replace missing elements, and narrow the
definition of outputs. The amendments also add guidance to assess whether an acquired process
is substantive and add illustrative examples. An optional fair value concentration test is
introduced which permits a simplified assessment of whether an acquired set of activities and
assets is not a business.

An entity applies those amendments prospectively for annual reporting periods beginning on or
after January 1, 2020, with earlier application permitted.

These amendments will apply on future business combinations of the Group.

· PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies, Changes in

Accounting Estimates and Errors, Definition of Material

The amendments refine the definition of material in PAS 1 and align the definitions used across
PFRSs and other pronouncements. They are intended to improve the understanding of the
existing requirements rather than to significantly impact an entity’s materiality judgements.

An entity applies those amendments prospectively for annual reporting periods beginning on or
after January 1, 2020, with earlier application permitted.

Effective beginning on or after January 1, 2021

· PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts covering

recognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replace
PFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types of
insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of
entities that issue them, as well as to certain guarantees and financial instruments with
discretionary participation features. A few scope exceptions will apply.

The new standard does not have any impact on the Group’s consolidated financial statements

Deferred effectivity

· Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of
control of a subsidiary that is sold or contributed to an associate or joint venture. The
amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint
venture involves a business as defined in PFRS 3. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however, is recognized only to the
extent of unrelated investors’ interests in the associate or joint venture.

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On January 13, 2016, the Financial Reporting Standards Council deferred the original effective
date of January 1, 2016 of the said amendments until the International Accounting Standards
Board (IASB) completes its broader review of the research project on equity accounting that may
result in the simplification of accounting for such transactions and of other aspects of accounting
for associates and joint ventures.

These amendments do not have any impact on the Group’s consolidated financial statements.

Current versus Noncurrent Classification

The Group presents assets and liabilities in the consolidated statement of financial position based on
current/noncurrent classification.

An asset is current when it is:

· Expected to be realized or intended to be sold or consumed in normal operating cycle;
· Held primarily for the purpose of trading;
· Expected to be realized within twelve months after the reporting period; or
· Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as noncurrent.

A liability is current when:

· It is expected to be settled in normal operating cycle;
· It is held primarily for the purpose of trading;
· It is due to be settled within twelve months after the reporting period; or
· There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.

The Group classifies all other liabilities as noncurrent.

Cash and Cash Equivalents

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

Financial Instruments
Initial recognition
The Group classifies financial assets, at initial recognition, as subsequently measured at amortized
cost, fair value through other comprehensive income (FVOCI), and fair value through profit or loss
(FVTPL).

The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. Except for trade
receivables that do not contain a significant financing component or for which the Group has applied
the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do
not contain a significant financing component or for which the Group has applied the practical
expedient are measured at the transaction price determined under PFRS 15.

For a financial asset to be classified and measured at amortized cost or fair value through OCI, it
needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an

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instrument level. The Group’s business model for managing financial assets refers to how it manages
its financial assets in order to generate cash flows. The business model determines whether cash
flows will result from collecting contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date,
i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement of financial assets

For purposes of subsequent measurement, financial assets are classified in four categories:
· Financial assets at amortized cost
· Financial assets at fair value through profit or loss
· Financial assets at fair value through OCI, where cumulative gains or losses previously
recognized are reclassified to profit or loss
· Financial assets designated at fair value through OCI, where cumulative gains or losses
previously recognized are not reclassified to profit or loss

Financial assets at amortized cost

The Group measures financial assets at amortized cost if both of the following conditions are met:
· The financial asset is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows
· The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding

Financial assets at amortized cost are initially recognized at fair value plus directly attributable
transaction costs and subsequently measured using the effective interest (EIR) method, less any
impairment in value. Gains and losses are recognized in profit or loss when the asset is derecognized,
modified or impaired. This accounting policy relates to the Group’s “Cash and cash equivalents”,
“Receivables” (excluding other receivables), marginal deposits and rental deposits under “Other
current assets”, “Due from related parties” and “Investment in bonds”.

Equity instruments. The Group may also make an irrevocable election to measure at FVOCI on
initial recognition investments in equity instruments that are neither held for trading nor contingent
consideration recognized in a business combination in accordance with PFRS 3. The classification is
determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. However, the Group
may transfer the cumulative gain or loss within equity. Dividends on such investments are
recognized in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the
investment. Equity instruments designated at fair value through OCI are not subject to impairment
assessment.

The Group elected to classify irrevocably its quoted equity investments under this category.

Financial assets at FVPL

Financial assets at fair value through profit or loss include financial assets held for trading, financial
assets designated upon initial recognition at fair value through profit or loss, or financial assets
mandatorily required to be measured at fair value. Financial assets are classified as held for trading if
they are acquired for the purpose of selling or repurchasing in the near term. Derivative, including
separated embedded derivative, are also classified as held for trading unless they are designated as
effective hedging instruments. Financial assets with cash flows that are not solely payments of
principal and interest are classified and measured at fair value through profit or loss, irrespective of

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the business model. Notwithstanding the criteria for debt instruments to be classified at amortized
cost or at fair value through OCI, as described above, debt instruments may be designated at fair
value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an
accounting mismatch.

Financial assets at fair value through profit or loss are carried in the statement of financial position at
fair value with net changes in fair value recognized in the statement of profit or loss.

This category includes derivative instruments which the Group had not irrevocably elected to classify
at fair value through OCI

Classification of financial liabilities

Financial liabilities are measured at amortized cost, except for the following:
· financial liabilities measured at fair value through profit or loss;
· financial liabilities that arise when a transfer of a financial asset does not qualify for
derecognition or when the Group retains continuing involvement;
· financial guarantee contracts;
· commitments to provide a loan at a below-market interest rate; and
· contingent consideration recognized by an acquirer in accordance with PFRS 3.

As of December 31, 2019 and 2018, the financial liabilities of the Group are of the nature of financial
liabilities at amortized cost (debt instrument). This accounting policy applies to the Group’s
“Accounts and other payables” (excluding customer’s advances and statutory liabilities), “Due to
related parties”, “Short-term debt”, Liability from purchased land”, Long-term debt” and “Bonds
Payable”.

Reclassifications of Financial Instruments

The Group reclassifies its financial assets when, and only when, there is a change in the business
model for managing the financial assets. Reclassifications shall be applied prospectively by the
Group and any previously recognized gains, losses or interest shall not be restated. The Group does
not reclassify its financial liabilities.

Impairment of Financial Assets

The Group recognizes an allowance for expected credit losses (ECLs) for all debt instruments not
held at fair value through profit or loss. ECLs are based on the difference between the contractual
cash flows due in accordance with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original effective interest rate. The expected cash
flows will include cash flows from the sale of collateral held or other credit enhancements that are
integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).

Financial assets are credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of those financial assets have occurred. For these credit exposures,
lifetime ECLs are also recognized and interest revenue is calculated by applying the credit-adjusted
EIR to the amortized cost of the financial asset.

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The Group applies a simplified approach in calculating ECLs for “ICRs”. Therefore, the Group does
not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at
each reporting date. For leasing receivables, the Group has established a provision matrix that is
based on its historical credit loss experience. For ICR, the Group uses a vintage analysis that is based
on its historical credit loss experience. Both are further adjusted for forward-looking factors specific
to the debtors and the economic environment.

For all debt financial assets other than ICRs, ECLs are recognized using the general approach wherein
the Group tracks changes in credit risk and recognizes a loss allowance based on either a 12-month or
lifetime ECLs at each reporting date.

At each reporting date, the Group assesses whether there has been a significant increase in credit risk
for financial assets since initial recognition by comparing the risk of default occurring over the
expected life between the reporting date and the date of initial recognition. The Group considers
reasonable and supportable information that is relevant and available without undue cost or effort for
this purpose. This includes quantitative and qualitative information and forward-looking analysis.

Exposures that have not deteriorated significantly since origination, or where the deterioration
remains within the Group’s investment grade criteria are considered to have a low credit risk. The
provision for credit losses for these financial assets is based on a 12-month ECL. The low credit risk
exemption has been applied on debt investments that meet the investment grade criteria of the Group
from the time of origination.

The Group’s “Cash and cash equivalents” and “Due from related parties” are graded to be low credit
risk investments based on the credit ratings of depository banks and related parties as published by
Bloomberg Terminal.

Derecognition of Financial Assets and Liabilities

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

· the rights to receive cash flows from the asset have expired;
· 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
· the Group has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all the risks and rewards of the
asset, nor transferred control of the asset, the Group continues to recognize the transferred asset to the
extent of its continuing involvement. In that case, the Group also recognizes an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.

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.

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

Write-off
The Group writes-off a financial asset, in whole or in part, when the asset is considered uncollectible,
it has exhausted all practical recovery efforts and has concluded that it has no reasonable expectations
of recovering the financial asset in its entirety or a portion thereof.

Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated
statements 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. The Group assesses that it has a currently enforceable right of offset if
the right is not contingent on a future event, and is legally enforceable in the normal course of
business, event of default, and event of insolvency or bankruptcy of the Group and all of the
counterparties.

Fair Value Measurement

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 is its highest and best use.

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

All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, 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 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 each reporting date.

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.

Advances to Suppliers and Contractors

The Group recognizes advances to suppliers at the time payment has been made to specific suppliers
and contractors for the construction of its real estate inventories. These are subsequently classified to
real estate inventories when incurred.

Real Estate 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 measured at the lower of cost and
net realizable value (NRV).

Cost includes:
· Land cost
· Land improvement cost
· Borrowing cost
· Planning and design costs, costs of site preparation, professional fees, property transfer taxes,
construction overheads and other related costs.

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

Real estate inventories also consist of land held for future development. The Group has plans to
construct and develop these parcels of land as a residential property for sale in the ordinary course of
business. The physical construction activities have not commenced as of December 31, 2019.

Deposits for Purchased Land

This represents deposits made to land owners for the purchase of certain parcels of land whose
ultimate use is currently undetermined. The Group normally makes deposits before a CTS or Deed of
Absolute Sale (DOAS) is executed between the Group and the land owner. These are recognized at
cost.

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. All other borrowing costs are expensed in the period they occur.
Borrowing costs consist of interest measure using the EIR method and other costs that an entity incurs
in connection with the borrowing of funds.

Where borrowings are associated with specific developments, the amount capitalized is the gross
interest incurred on those borrowings less any investment income arising on their temporary

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investment. Interest is capitalized from the commencement of the development work until the date of
practical completion. The capitalization of finance costs is suspended if there are prolonged periods
when development activity is interrupted. Interest is also capitalized on the purchase cost of a site of
property acquired specifically for redevelopment, but only where activities necessary to prepare the
asset for redevelopment are in progress.

Investments in and Advances to Joint Ventures and Associate

Investments in and advances to joint ventures and associate (investee companies) are accounted for
under the equity method of accounting. 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 the unanimous consent of the parties sharing control.

An associate is an entity over which the Group has significant influence. 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.

An investment is accounted for using the equity method from the day it becomes a joint venture or
associate. On acquisition of investment, the excess of the cost of investment over the investor’s share
in the net fair value of the investee’s identifiable assets, liabilities and contingent liabilities is
accounted for as goodwill and included in the carrying amount of the investment and not amortized.
Any excess of the investor’s share of the net fair value of the investee’s identifiable assets, liabilities
and contingent liabilities over the cost of the investment is excluded from the carrying amount of the
investment, and is instead included as income in the determination of the share in the earnings of the
investees.

Under the equity method, the investments in the investee companies are carried in the consolidated
statement of financial position at cost plus post-acquisition changes in the Group’s share in the net
assets of the investee companies, less any impairment in values. The consolidated statement of
comprehensive income reflects the share of the results of the operations of the investee companies, if
there’s any. The Group’s share of post-acquisition movements in the investee’s equity reserves is
recognized directly in equity. Profits and losses resulting from transactions between the Group and
the investee companies are eliminated to the extent of the interest in the investee companies and for
unrealized losses to the extent that there is no evidence of impairment of the asset transferred.
Dividends received are treated as a reduction of the carrying value of the investment.

Investment Properties
Initially, investment properties are measured at cost including certain transaction costs. Subsequent
to initial recognition, investment properties are stated at fair value, which reflects market conditions
at the reporting date. The fair value of investment properties is determined by independent real estate
valuation experts based on the “market approach” for its land properties which are based on recent
real estate transactions with similar characteristics and location to those of the Group’s investment
properties and the “income approach” for its income generating buildings which are based on the
buildings discounted future cash flows. Gains or losses arising from changes in the fair values of
investment properties are included in profit or loss in the period in which they arise.

Investment properties are derecognized when either they have been disposed of or when the
investment property is permanently withdrawn from use and no future economic benefit is expected
from its disposal. The difference between the net disposal proceeds and the carrying amount of the
asset is recognized in profit or loss in the period of derecognition.

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Transfers are made to or from investment property only when there is a change in use. For a transfer
from investment property to owner’s occupied property, the deemed cost for subsequent accounting is
the fair value at the date of change in use. If owner’s occupied property becomes an investment
property, the Group accounts for such property in accordance with the policy stated under property
and equipment up to the date of change in use.

For a transfer from investment property to inventories, the change in use is evidenced by
commencement of development with a view to sale. When the Group decides to dispose of an
investment property without development, it continues to treat the property as an investment property
until it is derecognized and does not treat it as inventory. Similarly, if an entity begins to redevelop
an existing investment property for continued future use as investment property, the property remains
an investment property and is not reclassified as owner-occupied property during the redevelopment.
For a transfer from investment property carried at fair value to inventories, the property's deemed cost
for subsequent accounting shall be its fair value at the date of change in use.

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 consists of its purchase price, including import duties,
taxes and any directly attributable costs of bringing the asset to its working condition and location for
its intended use. Expenditures incurred after the property and equipment have been put into
operation, such as repairs and maintenance, are normally charged against operations in the period in
which the costs are incurred. When significant parts of property and equipment are required to be
replaced in intervals, the Group recognizes such parts as individual assets with specific useful lives
and depreciation and amortization, respectively. Likewise, when a major inspection is performed, its
cost is recognized in the carrying amount of the equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation of property and equipment commences once the property and equipment are put into
operational use and is computed on a straight-line basis over the estimated useful lives (EUL) of the
property and equipment as follows:

Years
Office equipment 3-5
Computer equipment 3-5
Furniture and fixtures 3-5
Transportation equipment 5
Leasehold improvements 5 or lease term, whichever is shorter
Construction equipment 5
Right-of-use assets 3-6

The useful lives and depreciation method are reviewed at financial year end to ensure that the period
and method of depreciation 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 and the related accumulated depreciation and accumulated provision for impairment losses, if
any, are removed from the accounts and any resulting gain or loss is credited to or charged against
current operations.

Construction in progress, included in property and equipment, is stated at cost. Depreciation is

computed when the relevant asset is completed and becomes available for use in operations, at which
time, the asset is reclassified to its property and equipment category.

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Fully depreciated property and equipment are retained in the accounts until they are no longer in use
and no further depreciation and amortization is charged against current operations.
Effective January 1, 2019, it is the Group’s policy to classify right-of-use assets as part of property
and equipment. Prior to that date, all of the Group’s leases are accounted for as operating leases in
accordance with PAS 17, hence, not recorded on the consolidated statements of financial position.

Leases under PFRS 16

Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.

Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease
term, the recognized right-of-use assets are depreciated on a straight-line basis over the lease term.
Right-of-use assets are subject to impairment.

Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at
the lease commencement date if the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed
lease payments or a change in the assessment to purchase the underlying asset.

Short-term leases
The Group applies the short-term lease recognition exemption to its short-term leases of office spaces
(i.e., those leases that have a lease term of 12 months or less from the commencement date and do not
contain a purchase option). Lease payments on short-term leases are recognized as expense on a
straight-line basis over the lease term.

Leases under PAS 17

Leases in which the lessor retains substantially all the risks and benefits or ownership of the asset are
classified as operating leases. Payments made under an operating lease are shown as “Rent” under
the cost of services and general and administrative expenses account in the statement of
comprehensive income on a straight-line basis over the term of the lease.

Creditable Withholding Tax (CWT)

CWTs, which are included under “Other current assets” account in the consolidated statement of
financial position, are amounts withheld from income subject to expanded withholding taxes (EWT).
CWTs can be utilized as payment for income taxes provided that these are properly supported by
certificates of creditable tax withheld at source subject to the rules on Philippine income taxation.

Impairment of Nonfinancial Assets

The Group assesses as at reporting date whether there is an indication that its nonfinancial assets
(e.g., property and equipment and investments in joint ventures and associate) may be impaired. If

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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 calculated as
the higher of the 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 assessment of the time value of
money and the risks specific to the asset. Impairment losses are recognized in the expense categories
of profit or loss consistent with the function of the impaired asset.

Deposits for Preferred Shares Subscription

Deposits for preferred share subscription represent cash received by CALC, a subsidiary, that are
convertible to a fixed number of CALC’s stocks in the future. CALC’s preferred shares are
considered as compound financial instruments which contain both liability and equity components.
Since the preferred shares are non-redeemable and entitles the holder to a pro-rata share of assets
upon liquidation, including 28 free nights to stay at the hotel, this financial instrument is classified as
an equity instrument. However, the preferred shares establish a contractual right to a dividend [i.e.
the net room rental revenue (NRRR)], thus, it contains a financial liability with respect to the share in
the NRRR.

Prior to full payment and availability of the rooms, the Group accounts for the amounts received from
the buyers of preferred shares as “Deposits for preferred shares subscription” classified as a liability
under the “Other noncurrent liabilities” account, given that based on the terms of the contract, the
preferred shares shall be entitled to any of the rights and benefits as stated above upon full payment of
their shares and subject to the availability of the rooms. At present, the facility relating to the
generation of NRRR is under construction representing an obligation on the part of the Group to the
preferred shares subscribers.

Upon full payment and availability of the rooms and when the rights indicated above vest, the
amounts received from the preferred shareholders is allocated between the equity and liability
components. The deposits are fully refundable until such time that the asset is complete and readily
available for use.

Deposit for Future Stock Subscription

Deposits for future stock subscriptions refers to the amount received by the Group from its
stockholders with the purpose of applying the same as payment for future issuance of shares of stock.

Under existing SEC rules, DFFS can only be presented as equity if the following conditions are met:
1. Unissued authorized capital stock is insufficient to cover the DFFS;
2. The increase in authorized capital stock is approved by the BOD and stockholders;
3. Application of the increase in authorized capital stock has been filed with the SEC and related
filing fees have been paid as of the reporting date.

Deposits for future stock subscription is still classified as liability since its application of the increase
in authorized capital stock is not yet filed with SEC as of the reporting date. The deposits are fully
refundable until such time that the asset is complete and readily available for use.

Equity
Capital stock and additional paid-in capital
The Group records common stock at par value and additional paid-in capital in excess of the total
contributions received over the aggregate par value of the equity share. Incremental costs incurred

*SGVFSM000361*
 - 21 -

directly attributable to the issuance of new shares are shown in equity as a deduction from proceeds,
net of tax.

Retained earnings
Retained earnings represent accumulated earnings of the Group less dividends declared, if any and
transition adjustments from policy changes.

Treasury shares
Treasury shares are own equity instruments which are reacquired and are recognized at cost and
deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or
cancellation of the Parent Company’s own equity instruments. Any difference between the carrying
amount and the consideration, if reissued, is recognized in additional paid-in capital. Voting rights
related to treasury shares are nullified for the Parent Company and no dividends are allocated to them
respectively. When the shares are retired, the capital stock account is reduced by its par value and the
excess of cost over par value upon retirement is debited to additional paid-in capital when the shares
were issued and to retained earnings for the remaining balance.

Non-controlling interest
Non-controlling interest are recognized and measured at the proportionate share of the non-
controlling interest to the net assets of the Group.

Revenue and Cost Recognition under PFRS 15 (Effective January 1, 2018)

Revenue from Contract with Customers
The Group primarily derives its real estate revenue from the sale of vertical and horizontal real estate
projects. Revenue from contracts with customers is recognized when control of the goods or services
are transferred to the customer at an amount that reflects the consideration to which the Group
expects to be entitled in exchange for those goods or services. The Group has generally concluded
that it is the principal in its revenue arrangements, except for the provisioning of water, electricity in
its leasing units, wherein it is acting as agent.

The disclosures of significant accounting judgments, estimates and assumptions relating to revenue
from contracts with customers are provided in Note 3.

Real estate sales

The Group derives its real estate revenue from sale of lots, house and lot and condominium units.
Revenue from the sale of these real estate projects under pre-completion stage are recognized over
time during the construction period (or percentage of completion) since based on the terms and
conditions of its contract with the buyers, the Group’s performance does not create an asset with an
alternative use and the Group has an enforceable right to payment for performance completed to date.

In measuring the progress of its performance obligation over time, the Group uses the output method.
The Group recognizes revenue on the basis of direct measurements of the value to customers of the
goods or services transferred to date, relative to the remaining goods or services promised under the
contract. Progress is measured based on the physical proportion of the real estate project’s
completion. This is based on the monthly project accomplishment report prepared by the third party
project engineers which integrates the surveys of performance to date of the construction activities for
both sub-contracted and those that are fulfilled by the developer itself.

Property management fee and other services

Revenue from property management and other services is recognized over time as they are rendered
since the customer simultaneously receives and consumes the benefits provided by the Group’s

*SGVFSM000361*
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performance of its obligation. Property management fee and other services consist of revenue arising
from management contracts, auction services and technical services.

Cost of real estate sales

The Group recognizes costs relating to satisfied performance obligations as these are incurred taking
into consideration the contract fulfillment assets such as connection fees. These include costs of land,
land development costs, building costs, professional fees, depreciation, permits and licenses and
capitalized borrowing costs. These costs are allocated between the sold units being recognized as
cost of sales and the unsold units being recognized as part of real estate inventories.

Contract costs include all direct materials and labor costs and those indirect costs related to contract
performance. Expected losses on contracts are recognized immediately when it is probable that the
total contract costs will exceed total contract revenue. Changes in contract performance, contract
conditions and estimated profitability, including those arising from contract penalty provisions, and
final contract settlements which may result in revisions to estimated costs and gross margins are
recognized in the year in which the changes are determined.

Revenue and Cost Recognition under PAS 18

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Group and the amount of revenue can be reliably measured. The Group assesses its revenue
arrangements against specific criteria in order to determine if it is acting as principal or agent. The
Group has concluded that it is acting as principal in all of its revenue arrangements. The following
specific recognition criteria must also be met before revenue is recognized:

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 Philippine Interpretations Committee (PIC) Q&A No. 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 “Customers’ deposits”
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 “Customers’ deposits” account in the “Liabilities”
section of the consolidated statement of financial position.

*SGVFSM000361*
 - 23 -

Property management fee and other services

Revenue from property management and other services is recognized when the related services are
rendered. Property management fee and other services consist of revenue arising from management
contracts, auction services and technical services.

Cost of real estate sales

Cost of real estate sales is recognized consistent with the revenue recognition method applied.
Cost of residential house and lots and condominium units sold before the completion of the
development is determined on the basis of the acquisition cost of the land plus its full development
costs, which include estimated costs for future development works, as determined by the Group’s
third party engineers.

Leasing revenue
The Group leases its commercial real estate properties to others through operating leases. Rental
income on leased properties is recognized on a straight-line basis over the lease term, or based on a
certain percentage of the gross revenue of the tenants, as provided under the terms of the lease
contract. Contingent rents are recognized as revenue in the period in which they are earned.

Income from forfeited collections

Income from forfeited collections recorded under “Interest and other income” is recognized at a point
in time when the deposits from potential buyers are deemed nonrefundable due to prescription of the
period for entering into a contracted sale. Such income is also recognized, subject to the provisions
of Republic Act 6552, Realty Installment Buyer Act, upon prescription of the period for the payment
of required amortizations from defaulting buyers.

Interest income
Interest income is recognized as it accrues, taking into account the effective yield on the asset.

Other income
Other customer related fees such as penalties and surcharges are recognized as they accrue, taking
into account the provisions of the related contract.

Cost of leasing
Cost of leasing pertains to direct costs of leasing the Group’s commercial properties. These costs are
expensed as incurred.

Cost of services
Cost of services pertains to direct costs of property management fee and other services. These costs
are expensed as incurred.

General and administrative expenses

General and administrative expenses constitute costs of administering the business and are expensed
as incurred.

Contract Balances under PFRS 15 (Effective January 1, 2018)

Installment contract receivables (ICRs)
ICRs pertain to any excess of progress of work over the right to an amount of consideration that is
unconditional (i.e., only the passage of time is required before payment of the consideration is due).

Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group
has received consideration (or an amount of consideration is due) from the customer. If a customer

*SGVFSM000361*
 - 24 -

pays consideration before the Group transfers goods or services to the customer, a contract liability is
recognized when the payment is made or the payment is due (whichever is earlier). Contract
liabilities are recognized as revenue when the Group performs under the contract. The contract
liabilities also include payments received by the Group from the customers for which revenue
recognition has not yet commenced.

Costs to Obtain Contract under PFRS 15 (Effective January 1, 2018)

The incremental costs of obtaining a contract with a customer are recognized as an asset if the Group
expects to recover them. The Group has determined that commissions paid to brokers and marketing
agents on the sale of pre-completed real estate units are deferred when recovery is reasonably
expected and are recorded as “Prepaid commissions” in the consolidated statements of financial
position. These are charged to expense in the period in which the related revenue is recognized as
earned. Commission expense is included in the “General and administrative expenses” account in the
consolidated statement of comprehensive income.

Costs incurred prior to obtaining contract with customer are expensed as incurred.

Pension Cost
Pension cost is computed using the projected unit credit method. This method reflects services
rendered by employees up to the date of valuation and incorporates assumptions concerning
employees’ projected salaries. Actuarial valuations are conducted with sufficient regularity, with an
option to accelerate when significant changes to underlying assumptions occur.

Pension cost includes a) current service cost, interest cost, past service cost and b) gains and losses,
and curtailment and non - routine settlement.

The liability recognized by the Group in respect of the funded defined benefit pension plan is the
present value of the defined benefit obligation at the reporting date. The defined benefit obligation is
calculated by independent actuaries using the projected unit credit method. The present value of the
defined benefit obligation is determined by discounting the estimated future cash outflows using risk-
free interest rates of 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.

Remeasurements, comprising of actuarial gains or losses, the effect of the asset ceiling, excluding net
interest cost and the return on plan assets (excluding net interest), are recognized immediately in the
consolidated statement of financial position with a corresponding debit or credit to other
comprehensive income (OCI) in the period in which they occur. Remeasurements are not reclassified
to profit or loss in subsequent periods.

Income Taxes
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 have been enacted or substantively enacted as of the reporting date.

Deferred tax
Deferred tax is provided using the balance sheet liability method on temporary differences, with
certain exceptions, at the reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.

*SGVFSM000361*
 - 25 -

Deferred tax liabilities are recognized for all taxable temporary differences, including asset
revaluations. Deferred tax assets are recognized for all deductible temporary differences, carry
forward benefit of unused tax credits from the excess of minimum corporate income tax (MCIT) over
regular corporate income tax (RCIT), and unused net operating loss carryover (NOLCO), to the
extent that it is probable that sufficient taxable income will be available against which the deductible
temporary differences and the carry forward of unused tax credits from MCIT and unused NOLCO
can be utilized. Deferred tax, however, is not recognized on temporary differences that arise from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting income nor taxable income.

Deferred tax liabilities are not provided on non-taxable temporary differences associated with
investments in domestic subsidiaries and associate.

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 profit
will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax 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.

Value-added Tax (VAT)

Revenues, expenses, and assets are recognized net of the amount of VAT, if applicable.

When VAT from sales of goods and/or services (output VAT) exceeds VAT passed on from
purchases of goods or services (input VAT), the excess is recognized as payable and is included as
part of the “Accounts and other payables” account in the consolidated statement of financial position.
When VAT passed on from purchases of goods or services (input VAT) exceeds VAT from sales of
goods and/or services (output VAT), the excess is recognized as an asset and is included as part of the
“Other current assets” and “Other noncurrent assets” accounts in the consolidated statement of
financial position to the extent of the recoverable amount.

Foreign Currency Transactions

Transactions denominated in foreign currencies are initially recorded using the exchange rates
prevailing at transaction dates. Foreign currency-denominated monetary assets and liabilities are
retranslated using the closing exchange rates at reporting date. Exchange gains or losses arising from
foreign currency transactions are credited to or charged against current operations.

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 the Group’s business
segments is presented in Note 31 to the consolidated financial statements.

Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income attributable to common
stockholders by the weighted average number of common shares issued and outstanding during the

*SGVFSM000361*
 - 26 -

year and adjusted to give retroactive effect to any stock dividends declared during the period. Diluted
EPS is computed by dividing net income attributable to common equity holders by the weighted
average number of common shares issued and outstanding during the year plus the weighted average
number of common shares that would be issued on conversion of all the dilutive potential common
shares. The calculation of diluted EPS does not assume conversion, exercise or other issue of
potential common shares that would have an antidilutive effect on earnings per share.

As of December 31, 2019, 2018 and 2017, the Group has no potentially dilutive common shares.

Events After the Reporting Date

Post year-end events up to the date of auditor’s report 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 consolidated
financial statements when material.

3. Significant Accounting Judgments and Estimates

The preparation of the consolidated financial statements in compliance with PFRS requires the Group
to make judgments and estimates that affect the amounts reported in the consolidated financial
statements and accompanying notes. The judgments, estimates and assumptions used in the
accompanying consolidated financial statements are based upon management’s evaluation of relevant
facts and circumstances as of the date of the consolidated financial statements. Future events may
occur which will cause the judgments and assumptions used in arriving at the estimates to change.
The effects of any change in judgments and estimates are reflected in the consolidated financial
statements as they become reasonably determinable.

Judgments and estimates are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances.

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.

Existence of a contract
The Group’s primary document for a contract with a customer is a signed CTS. It has determined,
however, that in cases wherein CTS are not signed by both parties, the combination of its other signed
documentation such as reservation agreement, official receipts, buyers’ computation sheets and
invoices, would contain all the criteria to qualify as contract with the customer under PFRS 15.

Revenue recognition method and measure of progress

The Group concluded that revenue for real estate sales is to be recognized over time because: (a) the
Group’s performance does not create an asset with an alternative use and; (b) the Group has an
enforceable right for performance completed to date. The promised property is specifically identified
in the contract and the contractual restriction on the Group’s ability to direct the promised property
for another use is substantive. This is because the property promised to the customer is not
interchangeable with other properties without breaching the contract and without incurring significant
costs that otherwise would not have been incurred in relation to that contract. In addition, under the
current legal framework, the customer is contractually obliged to make payments to the developer up
to the performance completed to date. In addition, the Group requires a certain percentage of buyer's

*SGVFSM000361*
 - 27 -

payments of total selling price (buyer's equity), to be collected as one of the criteria in order to initiate
revenue recognition. Reaching this level of collection is an indication of buyer’s continuing
commitment and the probability that economic benefits will flow to the Group. The Group considers
that the initial and continuing investments by the buyer of about 5% would demonstrate the buyer’s
commitment to pay.

The Group has determined that output method used in measuring the progress of the performance
obligation faithfully depicts the Group’s performance in transferring control of real estate
development to the customers.

Incorporation of forward-looking information

The Group incorporates forward-looking information into both its assessment of whether the credit
risk of an instrument has increased significantly since its initial recognition and its measurement of
ECL.

To do this, the Group has considered a range of relevant forward-looking macro-economic

assumptions for the determination of unbiased general industry adjustments and any related specific
industry adjustments that support the calculation of ECLs. Based on the Group’s evaluation and
assessment and after taking into consideration external actual and forecast information, the Group
considers a representative range of possible forecast scenarios. This process involves gathering two
or more economic scenarios and considering the relative probabilities of each outcome. External
information includes economic data and forecasts published by governmental bodies, monetary
authorities and selected private-sector and academic institutions.

The Group has identified and documented key drivers of credit risk and credit losses of each portfolio
of financial instruments and, using an analysis of historical data, has estimated relationships between
macro-economic variables and credit risk and credit losses.

Predicted relationship between the key indicators and default and loss rates on various portfolios of
financial assets have been developed based on analyzing historical data over the past 5 years. The
methodologies and assumptions including any forecasts of future economic conditions are reviewed
regularly.

The Group has not identified any uncertain event that it has assessed to be relevant to the risk of
default occurring but where it is not able to estimate the impact on ECL due to lack of reasonable and
supportable information.

Definition of default and credit-impaired financial assets

The Group defines a financial instrument as in default, which is fully aligned with the definition of
credit-impaired, when it meets one or more of the following criteria:
· Quantitative criteria
The borrower is more than 90 days past due on its contractual payments, i.e. principal and/or
interest, which is consistent with the regulatory definition of default.
· Qualitative criteria
The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant
financial difficulty. These are instances where:
· The borrower is experiencing financial difficulty or is insolvent
· The borrower is in breach of financial covenant(s)
· An active market for that financial assets has disappeared because of financial difficulties
· Concessions have been granted by the Group, for economic or contractual reasons relating to
the borrower’s financial difficulty

*SGVFSM000361*
 - 28 -

· It is becoming probable that the borrower will enter Bankruptcy or other financial
reorganization
· Financial assets are purchased or originated at a deep discount that reflects the incurred credit
losses.

The criteria above have been applied to all financial instruments held by the Group and are consistent
with the definition of default used for internal credit risk management purposes. The default
definition has been applied consistently to model the Probability of Default (PD), Loss Given Default
(LGD) and Exposure at Default (EAD) throughout the Group’s expected loss calculation.

An instrument is considered to be no longer in default (i.e. to have cured) when it no longer meets
any of the default criteria for a consecutive period of six months as it has exhibited a satisfactory
track record. This period of six months has been determined based on an analysis which considers
the likelihood of a financial instrument returning to default status after cure using different possible
cure definitions.

Determining the incremental borrowing rate and lease term of contracts with renewal options
The Group uses its incremental borrowing rate (IBR) to measure lease liabilities because the interest
rate implicit in the lease is not readily determinable. The IBR is the rate of interest that the Group
would have to pay to borrow over a similar term, and with a similar security, the funds necessary to
obtain an asset of a similar value to the right-of-use assets in a similar economic environment. The
IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no
observable rates are available (such as for subsidiaries that do not enter into financing transactions) or
when they need to be adjusted to reflect the terms and conditions of the lease (for example, when
leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable
inputs (such as market interest rates) when available and is required to make certain entity-specific
estimates (such as the subsidiary’s stand-alone credit rating).

The Group determines the lease term as the non-cancellable term of the lease, together with any
periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any
periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the right at its option, to lease the assets for additional terms. The Group applies
judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it
considers all relevant factors that create an economic incentive for it to exercise the renewal. After
the commencement date, the Group reassesses the lease term if there is a significant event or change
in circumstances that is within its control and affects its ability to exercise the option to renew such as
a change in business strategy.

Receivable financing
The Group has entered into various receivable financing transactions with local banks to assign its
ICRs. The Group has determined that it has retained substantially all the risks and rewards of
ownership of these assets. Thus, the Group still retains the assigned ICRS in the financial statements
and records the proceeds from these sales as long-term debt.

Classification of deposit for preferred shares subscription

The Group determined that CALC’s preferred shares under the “Other noncurrent liabilities” account
are compound financial instruments, which contain both liability and equity components. However,
prior to full payment and availability of the rooms through the completion of the project, the Group
has determined that amounts received from the buyers of preferred shares are classified as “Deposits
for preferred shares subscription” under the “Other noncurrent liabilities” account since the
shareholders rights to the 28 free nights to stay at the hotel and contractual right to dividends will
inure to the shareholder only upon full payment and availability of the rooms.

*SGVFSM000361*
 - 29 -

Management’s Use of Estimates and Assumptions

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

Revenue recognition on real estate projects

The Group’s revenue recognition 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 and
construction contracts is recognized based on POC are measured principally on the basis of the
estimated completion of a physical proportion of the contract work. Apart from involving significant
estimates in determining the quantity of imports such as materials, labor and equipment needed, the
assessment process for the POC is complex and requires technical determination by management’s
specialists (third party project engineers).

Collectability of the sales price

In determining whether the sales price is collectible, the Group considers that the initial and
continuing investments by the buyer of 5% would demonstrate the buyer’s commitment to pay.
Based on the historical trend of cancellations of customer contracts, the management believes that 5%
continues to be reasonable. The revenue arising from these sales contracts amounted to
=12,685.39 million, =
P P9,576.67 million and =P5,345.94 million in 2019, 2018 and 2017, respectively
(see Note 30).

Fair value of investment properties

The Group carries its investment properties at fair value, with changes in fair value being recognized
in profit or loss except for investment properties under construction. The Group determined that the
fair value of its investment properties under construction cannot yet be reliably measurable, as such
these investment properties are measure at cost. Once the construction is complete or the fair value is
reliably measurable, whichever comes first, the Group will measure the investment property at fair
value.

For its investment properties that are complete and whose fair value are reliably measurable, the
Group engages annually independent valuation specialists to determine its fair value. The appraisers
used market approach for its land, which is based on comparable market data and income approach
for its buildings, which are based on future cash flows available for such properties. Gain from
change in fair value of investment properties amounted to =P260.93 million, =P376.90 million and
=
P286.03 million in 2019, 2018 and 2017, respectively. The carrying value of the investment
properties amounted to = P12,932.52 million and =P11,381.64 million as of December 31, 2019 and
2018, respectively (see Note 10).

Evaluation of impairment of financial assets

The Group uses a provision matrix to calculate ECLs for trade receivables other than ICRs. The
provision rates are based on days past due for groupings of various customer segments that have
similar loss patterns.

The provision matrix is initially based on the Group’s historical observed default rates. The Group
will calibrate the matrix to adjust the historical credit loss experience with forward-looking
information such as inflation and GDP growth rates. At every reporting date, the historical observed
default rates are updated and changes in the forward-looking estimates are analyzed.

The Group uses vintage analysis approach to calculate ECLs for ICRs. The vintage analysis accounts
for expected losses by calculating the cumulative loss rates of a given loan pool. It derives the
probability of default from the historical data of a homogenous portfolio that share the same

*SGVFSM000361*
 - 30 -

origination period. The information on the number of defaults during fixed time intervals of the
accounts is utilized to create the PD model. It allows the evaluation of the loan activity from its
origination period until the end of the contract period.

The Group defines a financial instrument as in default when a customer is more than 90 days past due
on its contractual obligations. However, in certain cases, the Group may also consider a financial
asset to be in default when internal or external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full. An instrument is considered to be no longer in
default (i.e. to have cured) when it no longer meets any of the default criteria.

The assessment of the correlation between historical observed default rates, forecast economic
conditions (inflation and interest rates) and ECLs is a significant estimate. The amount of ECLs is
sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical
credit loss experience and forecast of economic conditions may also not be representative of
customer’s actual default in the future.

There have been no significant changes in estimation techniques or significant assumptions made
during the reporting period.

As of December 31, 2019 and 2018, the allowance for impairment losses on financial assets of the
Group amounted to = P10.99 million (see Note 5). As of December 31, 2019 and 2018, the carrying
values of these assets are as follows:

2019 2018
Cash and cash equivalents (Note 4) P
=4,005,009,231 = P1,950,389,193
Receivables* (Note 5) 11,720,584,861 10,367,979,186
Due from related parties (Note 16) 419,654,624 394,354,508
Rental deposits (Note 12) 152,396,921 162,818,009
Marginal deposits (Note 12) – 31,658,800
*Excluding other receivables that are non-financial in nature amounting to =
P348.22 million and =
P400.91 million as of
December 31, 2019 and 2018.

Estimating NRV of real estate inventories

The Group reviews the NRV of real estate inventories and compares it with the cost since assets
should not be carried in excess of amounts expected to be realized from sale. Real estate inventories
are written down below cost when the estimated NRV is found to be lower than the cost.

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 having taken suitable external advice
and in light of recent market transactions. NRV in respect of inventory under construction is assessed
with reference to market prices at the reporting date for similar completed property, less estimated
costs to complete construction less an estimate of the time value of money to the date of completion.
The estimates used took into consideration fluctuations of price or cost directly relating to events
occurring after the end of the period to the extent that such events confirm conditions existing at the
end of the period.

The carrying values of real estate inventories amounted to =

P15,558.00 million and P
=17,257.48 million
as of December 31, 2019 and 2018, respectively (see Note 6).

*SGVFSM000361*
 - 31 -

Impairment of nonfinancial assets

The Group assesses impairment on its nonfinancial assets (e.g. property and equipment and
investment in joint ventures and associate) and considers the following important indicators:
· Significant changes in asset usage;
· Significant decline in assets’ market value;
· Obsolescence or physical damage of an asset;
· Significant underperformance relative to expected historical or projected future operating results;
· Significant changes in the manner of usage of the acquired assets or the strategy for the Group’s
overall business; and
· Significant negative industry or economic trends.

If such indications are present and where the carrying amount of the asset exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount. The
recoverable amount is the asset’s fair value less cost to sell or value in use whichever is higher. The
fair value less cost to sell is the amount obtainable from the sale of an asset in an arm’s length
transaction while value in use is the present value of estimated future cash flows expected to be
generated from the continued use of the asset. The Group is required to make estimates and
assumptions that can materially affect the carrying amount of the asset being assessed.

The carrying values of the nonfinancial assets follow:

2019 2018
Advances to suppliers and contractors (Note 7) P
=2,006,510,283 =P2,236,124,707
Property and equipment (Note 11) 1,648,122,313 1,273,790,837
Other current assets (Note 12)* 1,409,171,684 1,252,767,139
Other noncurrent assets (Note 12)** 1,361,375,475 1,041,988,343
Deposits for purchased land (Note 8) 1,079,443,219 1,189,477,058
Other receivables that are non-financial in nature 384,222,396 400,910,194
Investments in and advances to joint ventures and
associate (Note 9) 258,768,231 247,584,285
*Excluding marginal deposits amounting to P=31.66 million as of December 31, 2018.
**Excluding rental deposits amounting to P
=152.40 million and P=162.82 million as of December 31, 2019 and 2018, respectively and
derivative asset amounting to P
=115.80 million as of December 31, 2018..

No impairment was recognized for the Group’s nonfinancial assets as of December 31, 2019 and
2018.

Recognition of deferred tax assets

The Group reviews the carrying amounts of deferred tax assets at each reporting date and reduces the
amounts 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. Significant judgment is required to
determine the amount of deferred tax assets that can be recognized based upon the likely timing and
level of future taxable income together with future planning strategies. The Group assessed its
projected performance in determining the sufficiency of the future taxable income. The carrying
values of these assets amounted to = P108.19 million and = P217.30 million as of December 31, 2019 and
2018, respectively. As of December 31, 2019 and 2018, the Group has unrecognized deferred tax
assets amounting to = P132.04 million and = P11.11 million, respectively (see Note 27).

Estimating pension liabilities

The determination of the Group’s pension liabilities and cost of retirement benefits is dependent on
the selection of certain assumptions used by actuaries in calculating such amounts. Those
assumptions are described in the consolidated financial statements and include among others,

*SGVFSM000361*
 - 32 -

discount rates and salary increase rates. While the Group believes that the assumptions are
reasonable and appropriate, significant differences in the actual experience or significant changes in
the assumptions may materially affect the pension liabilities. The Group’s remeasurement loss on
defined benefit plan amounted to =P81.17 million and = P66.04 million as of December 31, 2019 and
2018, respectively. The Group’s pension liabilities net of its plan assets amounted to =P307.40 million
and P=251.10 million as of December 31, 2019 and 2018, respectively (see Note 26).

4. Cash and Cash Equivalents

This account consists of:
2019 2018 2017
Cash on hand and in banks =
P1,765,436,278 =1,084,410,768
P =1,298,625,891
P
Cash equivalents 2,239,572,953 865,978,425 101,732,959
P
=4,005,009,231 =1,950,389,193
P =1,400,358,850
P

Cash in banks earns 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 months depending on the immediate cash requirements of the Group and earn interest at the
prevailing short-term rates ranging from 0.5 % to 6.5%and 0.3% to 5.2% in 2019 and 2018,
respectively. Interest income on cash and cash equivalents amounted to =P99.29 million,
=62.63 million and =
P P47.24 million in 2019, 2018 and 2017, respectively (see Note 24).

5. Receivables
This account consists of:
2018
(As restated -
2019 see Note 2)
Trade receivables
ICR =10,477,877,484
P =9,267,752,039
P
Leasing receivable 192,163,903 148,960,355
Management fees 174,895,185 145,799,956
Receivable from employees and agents 411,632,225 377,764,318
Advances to condominium corporations 162,244,369 196,528,227
Advances to customers 68,203,079 53,055,951
Other receivables 628,780,299 590,017,821
12,115,796,544 10,779,878,667
Allowance for estimated credit losses (10,989,287) (10,989,287)
12,104,807,257 10,768,889,380
Noncurrent portion of ICR 1,137,658,202 1,894,555,056
=
P10,967,149,055 =8,874,334,324
P

ICR pertain to receivables from the sale of real estate properties. These are collectible in monthly
installments over a period of one (1) to five (5) years, bear no interest and with lump sum collection
upon project turnover. Titles to real estate properties are not transferred to the buyer until full
payment has been made.

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Details of ICRs are as follows:

2019 2018
Gross ICR =21,611,151,889
P =25,073,039,882
P
Unamortized discount arising from noninterest-bearing
ICR (3,371,786,927) (3,349,772,920)
18,239,364,962 21,723,266,962
Percentage of completion adjustment (7,761,487,478) (12,455,514,923)
Carrying value of ICR 10,477,877,484 9,267,752,039
Non-current portion of ICR (1,137,658,202) (1,894,555,056)
Current portion of ICR =9,340,219,282
P =
P7,373,196,983
Unamortized discounts
These ICRs were recorded initially at fair value which is derived using the discounted cash flow
model using discount rates ranging from 5.21% to 6.44%and 4.29% to 7.03% in 2019 and 2018,
respectively.

Movements in the unamortized discount on ICRs follow:

2019 2018
Balance at the beginning of the year P
=3,349,772,920 =P3,410,940,189
Additions 526,110,173 261,315,337
Accretion for the year (504,096,166) (322,482,606)
Balance at the end of the year P
=3,371,786,927 P=3,349,772,920

Interest income from accretion of unamortized discount on ICRs amounted to =

P504.10 million,
P322.48 million and =
= P665.20 million in 2019, 2018 and 2017, respectively.

Leasing receivables pertain to receivables arising from leasing revenue. These receivables are billed
to tenants and are expected to be collected within one (1) year.

Management fees are revenues arising from property management contracts. These are collectible on
a 15- to 30-day basis depending on the terms of the management service agreement.

Receivable from employees and agents pertain salary and other loans granted to the employees and
are recoverable through salary deductions. These are noninterest-bearing and are due and
demandable.

Advances to condominium corporations pertain to expenses paid by the Group in behalf of the
condominium corporations for various expenses incurred for the projects already turned over. These
receivables are due and demandable and bear no interest.

Advances to customers pertain to expenses paid by the Group in behalf of the customers for the taxes
and other costs incurred in securing the title in the name of the customers. These receivables are
billed separately to the respective buyers and are expected to be collected within one (1) year.

Other receivables include advances to a third party amounting =

P384.22 million and = P400.91 million
as of December 31, 2019 and 2018 for a purchase of a parcel of land to be held for future
development.

Receivable financing
The Group entered into various agreements with a local bank whereby the Group assigned its ICRs
and contract assets with recourse at average interest rates of 5.75% to 9.12% and 5.50% to 7.50% in

*SGVFSM000361*
 - 34 -

2019 and 2018, respectively. The assignment agreements provide that the Group will substitute
defaulted CTS with other CTS of equivalent value.

The Group retains the assigned receivables in the consolidated financial statements since the Group
retains the risks and rewards related to these receivables. The Group records the proceeds from these
sales as long-term debt. The gross amount of ICRs used as collateral amounted to = P6,722.17 million
and P=6,638.84 million as of December 31, 2019 and 2018, respectively (see Note 17).

6. Real Estate Inventories

This account consists of:

2019 2018
Condominium units =
P12,952,038,940 =
P15,253,715,791
Residential house and lots 1,374,400,543 1,152,789,848
Land held for future developments 1,231,564,879 850,975,797
P
=15,558,004,362 P
=17,257,481,436

The roll forward of this account follows:

2019 2018
Balance at beginning of the year P
=17,257,481,436 =P15,691,115,486
Construction costs incurred 5,301,173,696 5,960,617,000
Purchase of raw land 423,329,082 1,273,535,945
Borrowing costs capitalized (Notes 17 and 18) 935,352,352 764,748,055
Transfer from deposits for purchased land (Note 8) 166,000,000 522,260,382
Transfers to investment properties (Note 10) (256,913,745) (1,299,391,797)
Transfers from investment properties (Note 10) 191,125,602 –
Cost of real estate sales (8,459,544,061) (5,655,403,635)
Balance at the end of the year P
=15,558,004,362 P=17,257,481,436

General and specific borrowings were used to finance the Group’s ongoing real estate projects. The
related borrowing costs were capitalized as part of real estate inventories. The capitalization rate used
in 2019 and 2018 are 4.84% and 6.11%, respectively, for general borrowing costs.

Real estate inventories recognized as “Cost of real estate sales” amounted to =

P8,459.54 million,
P5,655.40 million and =
= P2,806.48 million in 2019, 2018 and 2017, respectively.

In 2019 and 2018, the Group purchased land in Batangas intended for development into affordable
housing amounting to =P423.33 million and =
P736.19 million, respectively. In 2018, the Group
purchased land in Quezon City intended for future development amounting to = P537.35 million.

In 2019, land situated in Laguna and Batangas amounting to =

P208.74 million started its development
as residential house and lots.

The carrying values of inventories mortgaged for trust receipts payables and bank loans amounted to
=7,533.24 million and =
P P6,672.32 million as of December 31, 2019 and 2018, respectively
(see Note 17).

*SGVFSM000361*
 - 35 -

7. Advances to Suppliers and Contractors

Advances to suppliers and contractors amounting to =P2,006.51 million and P =2,236.12 million as of
December 31, 2019 and 2018, respectively, are capitalized as part of inventories when the materials
have been delivered or services have been rendered by the suppliers and contractors, respectively.
These advances are intended for the construction of the Group’s real estate inventories.

8. Deposits for Purchased Land

This account consists of deposits made to property owners for the acquisition of parcels of land in
which the use is currently undetermined. Deposits for purchased land amounted to = P1,079.44 million
and P
=1,189.48 million as of December 31, 2019 and 2018, respectively.

In 2019, a deposit for purchased land amounting to =

P181.60 million was cancelled and refunded to
the Group.

In 2019, the Group made additional deposits to property owners for the acquisitions of parcels of land
located in Quezon City amounting to =
P237.56 million.

In 2019, the Group finalized its deed of absolute sales (DOAS) for the land acquired in Novaliches
with contract price and deposit amounting to =P166.00 million. On the same year the Group decided
to develop the land for future development and sale, hence the deposit was reclassified to real estate
inventories.

In 2018, the Group made additional payment for the acquisition of land located in Novaliches
amounting to =P342.17 million.

In 2018, the Group finalized its DOAS for the land acquired in Quezon City amounting to
=1,059.61 million. On the same year the Group decided to hold the land for future development and
P
sale, hence, the initial deposit for the land amounting to =
P522.26 million was reclassified to real estate
inventories and the difference between the contract price and the deposit amounting = P537.35 million
was recorded as additional real estate inventories (see Note 6).

Additional deposits made by the Group for purchased land located in Quezon City amounted to
=423.54 million in 2017.
P

9. Investment in and Advances to Joint Ventures and Associate

The Group’s investments in joint ventures and associate are shown below:

2019 2018
Joint ventures:
A2Global, Inc. (A2 Global) P
=3,055,000 =3,055,000
P
One Pacstar Realty Corporation (One Pacstar) 197,882,711 189,703,620
Two Pacstar Realty Corporation (Two Pacstar) 49,830,620 46,825,765
Associate:
Asian Breast Center (ABC) 7,999,900 7,999,900
P
=258,768,231 =247,584,285
P

*SGVFSM000361*
 - 36 -

Investment in A2Global
In 2013, the Parent Company entered into an agreement with Asian Carmakers Corp. and other
individuals which aim to create an entity with the primary purpose to develop, own and manage
properties of all kinds and nature and to develop them into economic and tourism zones, golf course,
theme parks and all other forms of leisure estates.

On February 26, 2013, the Parent Company acquired 122,200 shares in A2Global with acquisition
price of P
=3.06 million, for a 48.88% ownership. A2Global has six (6) directors, three (3) from the
Parent Company and three from Asian Carmakers Corp.

A2 Global’s principal place of business is 5th Floor, Pacific Star Building, Gil Puyat Avenue corner
Makati Avenue, Makati City.

According to its by-laws, most of the major business decisions of A2Global shall require the majority
decision of its BOD. Because the BOD is equally represented, the arrangement is considered a joint
venture and is measured using the equity method.

As of December 31, 2019, A2Global is still in its pre-operating stage.

Investments in One Pacstar Realty Corporation and Two Pacstar Realty Corporation
On October 22, 2014, CLC entered into an agreement with La Costa Development Corporation, Inc.
(La Costa) to take out the loan of La Costa with Union Bank of the Philippines in its name and for its
sole account. For and in consideration of the loan take out, La Costa transferred, ceded, and
conveyed 196,250 shares of One Pacstar and 42,250 shares of Two Pacstar.
Provisions in the agreement grant CLC to vote using the owned shares in the meetings of the
stockholders of One Pacstar and Two Pacstar. The Group currently owns 50% of the total voting
shares with the remaining 50% owned by La Costa for both One Pacstar and Two Pacstar. This is
tantamount to the two companies having joint control. The primary purpose of One Pacstar and Two
Pacstar is to acquire, own, lease, and manage lands and all other kinds of real estate properties.

One Pacstar and Two Pacstar’s principal place of business is 5th Floor, Pacific Star Building, High
Rise Tower, Gil Puyat cor. Makati Avenue, Makati City.

Following are the significant financial information of the joint ventures as of December 31, 2019 and
2018 and for the years then ended (in millions):

2019 2018
Total assets 813 P753
=
Total current liabilities 300 280
Total revenue 59 46
Total expenses 37 22

In 2019 and 2018, the Group recognized share in net earnings of the joint ventures amounting to
=11.18 million and =
P P12.43 million, respectively.

Investment in Asian Breast Center, Inc. (ABC)

On January 7, 2016, the Group acquired 79,999 shares in ABC with an acquisition price of
=8.00 million, for a 16.00% ownership. ABC has five (5) directors, one from the Group and four
P
from ABC. Because the Group only has significant influence, this arrangement is considered as an
investment in associate and is measured using the equity method.

*SGVFSM000361*
 - 37 -

The primary purpose of ABC is to provide comprehensive ambulatory care for women afflicted with
any form of breast disease, including prevention, early detection, early diagnosis, and treatment.
ABC’s principal place of business is 8th Floor, Centuria Medical Makati, Kalayaan Avenue, Makati
City. As of December, 31 2019 and 2018, ABC is still in its pre-operating stage.

The Group has not incurred any contingent liabilities as at December 31, 2019 and 2018 in relation to
its interest in the joint ventures and associate, nor do the joint ventures and associate themselves have
any contingent liabilities for which the Group is contingently liable. The Group has not entered into
any capital commitments in relation to its interest in the joint ventures and associate and did not
receive any dividends from the joint ventures and associate.

10. Investment Properties

The Group’s investment properties are classified as follows:

2019 2018
Land P
=2,718,303,174 P=2,390,099,800
Building 6,305,892,789 6,460,452,416
Construction-in-progress 3,908,327,922 2,531,085,540
P
=12,932,523,885 =
P11,381,637,756

Movements in this account are as follows:

2019 2018
Cost:
Balance at the beginning of the year P
=8,291,938,498 =P4,945,149,725
Construction costs incurred 1,250,844,013 1,981,590,313
Borrowing cost capitalized (Notes 17 and 18) 126,398,369 130,853,284
Sale of property (100,387,357) (65,046,621)
Transfer to real estate inventories (Note 6) (191,125,602) –
Transfer from real estate inventories (Note 6) 256,913,745 1,299,391,797
Balance at the end of the year 9,634,581,666 8,291,938,498
Change in fair value:
Balance at the beginning of the year 3,089,699,258 2,814,410,733
Sale of property (52,691,462) (101,610,036)
Gain from change in fair value of investment
property 260,934,423 376,898,561
Balance at the end of the year 3,297,942,219 3,089,699,258
P
=12,932,523,885 P
=11,381,637,756

Construction-in-progress pertains to properties being constructed that are intended to be leased out.
As of December 31, 2019, the Group have investment properties under construction located in
Century City and Bonifacio Global City. The Group has contractual obligations to develop these
properties amounting to =
P624.83 million and = P1,871.22 million as of December 31, 2019 and 2018,
respectively.

In 2019 and 2018, the Group sold portion of its Papermoon and Gramercy property at a gain
amounting to =
P3.52 million and =
P12.94 million, respectively (see Note 24).

*SGVFSM000361*
 - 38 -

The Group recorded gain on fair value of investment properties amounting to =

P260.93 million,
=376.90 million and =
P P286.03 million in 2019, 2018 and 2017, respectively.

Investment properties are stated at fair value, which has been determined based on valuations
performed by Cuervo Appraisers, Inc., an accredited independent valuer, as of December 31, 2019
and 2018. Cuervo Appraisers, Inc. is an industry specialist in valuing these types of investment
properties.

Toward the end of 2018, the construction for Asian Century Center, located in Bonifacio Global City
was completed.

The carrying values of investment properties mortgaged for trust receipts payables and bank loans
amounted to =
P1,606.06 million as of December 31, 2019 (see Note 17).

The fair value of the investment properties was estimated by using the Sales Comparison Approach
(SCA) and the Income Capitalization Approach (ICA). SCA is an approach to value that considers
the sales of similar or substitute properties and related market data and establishes a value estimate by
processes involving comparison. ICA is a method in which the appraiser derives an indicated of
value for income producing property by converting anticipated future benefits into current property
value. For the Group’s leasing properties, the Group adopted the Discounted Cash Flow Analysis
which considers the future cash flows from lease contracts.

The fair value of the investment properties classified as buildings and land in the consolidated
financial statements is categorized within level 3 of the fair value hierarchy.

The key assumptions used to determine the fair value of the investment properties and sensitivity
analyses are as follows:

Valuation Range
Property technique Significant unobservable inputs 2019 2018
Buildings DCF Discount rates for similar lease contracts, Discount rate - 8 % to Discount rate - 10 %
market rent levels, expected vacancy and 10%
expected maintenance. Market rent levels - Market rent levels -
= 400 to P
P = 1,500/sqm per =400 to =
P P1,500/sqm per
month month
Expected vacancy - Expected vacancy -
3% to 15%; 5% to 15%;
Expected maintenance - Expected maintenance -
6% to 60%% of gross 8% to 64%% of gross
revenue revenue
Land SCA Selling price for the land adjusted for External Factors: -10% External factors: -10% to -
external factors and internal factors 15%
Internal Factors: -5%
External factors pertain to negative to -8% Internal factors: -3%
externalities outside the property limits to -15%
that influence the value namely: social,
economic, environmental and
governmental.

Internal factors include adjustments due

to location, use, size and time elements

For DCF, the higher the market rent levels, the higher the fair value. Also, the lower the expected
vacancy, maintenance and discount rate the higher the fair value.

For SCA, the higher the price per sqm, the higher the fair value. Also, the higher the external and
internal factors adjustments, the higher the fair value.

*SGVFSM000361*
 - 39 -

In 2019, 2018 and 2017, the Group recognized leasing revenue from the use of the said real properties
amounting to = P713.38 million, =
P407.27 million and =
P341.66 million, respectively, and incurred direct
cost of leasing amounting to =P217.45 million, P
=227.75 million and =
P237.81 million, respectively, in
relation to these investment properties.

*SGVFSM000361*
 - 40 -

11. Property and Equipment

The composition and movements of this account are as follows:

2019
Office Computer Furniture Transportation Leasehold Construction Construction - Right-of-use
Equipment Equipment and Fixtures Equipment Improvements Equipment in -Progress Assets Total
Cost
At January 1 P
=52,831,269 P
=43,085,203 P
=36,222,147 P
=76,194,662 P
=68,854,219 P
=251,492,426 P=1,193,692,369 P
=– P
=1,722,372,295
Adoption of PFRS 16 (Note 2) – – – – – – – 71,933,617 71,933,617
At January 1, as restated 52,831,269 43,085,203 36,222,147 76,194,662 68,854,219 251,492,426 1,193,692,369 71,933,617 1,794,305,912
Additions 11,056,987 8,671,679 2,428,492 4,368,054 1,295,727 – 326,717,542 – 354,538,481
Disposals – (21,128) (394,398) (971,429) – – – – (1,386,955)
At December 31 63,888,256 51,735,754 38,256,241 79,591,287 70,149,946 251,492,426 1,520,409,911 71,933,617 2,147,457,438
Accumulated Depreciation
At January 1 30,128,127 22,339,348 29,337,427 60,799,242 54,488,845 251,488,469 – – 448,581,458
Depreciation 11,444,741 8,480,196 4,694,512 6,595,561 6,325,224 3,389 – 14,596,999 52,140,622
Disposals – (21,128) (394,398) (971,429) – – – – (1,386,955)
At December 31 41,572,868 30,798,416 33,637,541 66,423,374 60,814,069 251,491,858 – 14,596,999 499,335,125
Net Book Values at December 31 P
=22,315,388 P
=20,937,338 P
=4,618,700 P
=13,167,913 P
=9,335,877 P
=568 P=1,520,409,911 P
=57,336,618 P
=1,648,122,313

2018
Office Computer Furniture Transportation Leasehold Construction Construction -
Equipment Equipment and Fixtures Equipment Improvements Equipment in -Progress Total
Cost
At January 1 P31,189,703
= =36,257,126
P =32,116,135
P =80,777,507
P =60,038,731
P =251,492,426
P P994,051,133
= =1,485,922,761
P
Additions 21,712,472 6,864,819 4,106,012 – 8,815,488 – 199,641,236 241,140,027
Disposals (70,906) (36,742) – (4,582,845) – – – (4,690,493)
At December 31 52,831,269 43,085,203 36,222,147 76,194,662 68,854,219 251,492,426 1,193,692,369 1,722,372,295
Accumulated Depreciation
At January 1 17,763,664 17,655,425 25,397,308 58,109,586 46,951,668 251,485,080 – 417,362,731
Depreciation 12,430,269 4,683,923 3,940,119 5,243,943 7,537,177 3,389 – 33,838,820
Disposals (65,806) – – (2,554,287) – – – (2,620,093)
At December 31 30,128,127 22,339,348 29,337,427 60,799,242 54,488,845 251,488,469 – 448,581,458
Net Book Values at December 31 =22,703,142
P =20,745,855
P =6,884,720
P =15,395,420
P =14,365,374
P =3,957
P =1,193,692,369
P =1,273,790,837
P

*SGVFSM000361*
 - 41 -

Construction-in-progress pertains to the construction cost incurred by the Group for the construction
of Novotel Suites Manila at Acqua 6 Tower of Acqua Private Residences. The Group has contractual
obligations to develop its construction in progress amounting to =
P90.45 million and =P417.17 million
as of December 31, 2019 and 2018, respectively.

Borrowing cost capitalized in 2018 related to the construction in progress amounted to =

P9.02 million
(see Notes 17 and 18).

The depreciation and amortization of property and equipment in 2019, 2018 and 2017 are recognized
as follows:

2019 2018 2017

Real estate inventories P
=– =–
P =2,196,026
P
General, administrative and
selling expenses
(see Note 21) 52,140,622 33,838,820 28,876,693
P
=52,140,622 =33,838,820
P =31,072,719
P

12. Other Assets

This account consists of:
2019 2018
Current:
Prepaid commissions P
=793,835,366 =366,119,945
P
Input taxes 204,820,589 389,052,295
Creditable withholding taxes 356,043,741 434,390,510
Marginal deposits – 31,658,800
Prepaid expenses 5,173,186 6,553,509
Others 49,298,802 56,650,880
P
=1,409,171,684 =1,284,425,939
P

Noncurrent:
Prepaid commissions P
=535,038,383 =581,012,743
P
Advances to land owners 350,000,000 350,000,000
Input taxes 304,690,593 –
Rental deposits (Note 28) 152,396,921 162,818,009
Creditable withholding taxes 67,761,682 –
Intangible assets 34,674,105 37,973,459
Deferred financing costs 3,116,451 3,116,451
Derivative asset – 115,791,961
Others 66,094,261 69,885,690
P
=1,513,772,396 =1,320,598,313
P

Prepaid commissions pertain to capitalized commission expenses payable to its agents on the sale of
its real estate projects related to contracts that have qualified for revenue recognition. These will be
recognized as commission expense under “General, administrative and selling expenses” in the period
in which the related real estate sales are recognized. This also includes prepayments to Century
Integrated Sales, Inc. (CISI) for future services of CISI in relation to managing the Group’s sales
activities which amounted to P =314.96 million and P =168.85 million as of December 31, 2019 and
2018, respectively (see Note 16).

*SGVFSM000361*
 - 42 -

Input taxes are fully realizable and will be applied against output VAT.

Creditable withholding taxes are attributable to taxes withheld by third parties arising from real estate
sale, property management fees and leasing revenues.

In 2019, the Group revisited its forecasted tax payable position as well as its output tax liability
position and accordingly, reclassified a total of =
P67.76 million in creditable withholding taxes and
=304.69 million in input taxes to noncurrent asset.
P

Advances to land owners represent the minimum share of the lot property owners in relation to the
profit sharing agreement of CDLC with land owners. In accordance with the profit sharing
agreement, CDLC advanced this share in significant installments throughout the term of the project.
The advances shall be deducted from the proceeds of the sales and collection of the land owners’
units.

Rental deposits mostly pertain to security deposits held and applied in relation to the Group’s lease
contracts for its administrative and sales offices. The deposits are noninterest-bearing and are
recoverable through application of rentals at the end of the lease term (see Note 28).

Intangible assets include software costs and trademarks. Software cost includes application software
and intellectual property licenses owned by the Group. Trademarks are licenses acquired separately
by the Group. These licenses arising from the Group’s marketing activities have been granted for a
minimum of 10 years by the relevant government agency with the option to renew at the end of the
period at little or no cost to the Group. Previous licenses acquired have been renewed and enabled
the Group to determine that these assets have an indefinite useful life. The related amortization is
charged to expense as “Depreciation and amortization” in the “General, administrative and selling
expenses” account amounting to = P5.41 million, P
=4.01 million and P
=4.36 million in 2019, 2018 and
2017, respectively (see Note 21).

Derivative asset pertains to the cross currency and interest rate swap agreement entered by the Group
in 2018 with Standard Chartered Bank (SCB) to hedge their foreign currency and interest rate risk
related to the bank loan with the same bank. The Group will pay the principal in a fixed amount of P =
and interest at a fixed rate of 7.5% based on the notional amount in =P and will receive interest at a
floating rate [USD ($) LIBOR plus 3%] based on the equivalent notional amount in $ until March
2020. The gain or (loss) from change in the fair value of derivative amounted to (P =76.06 million),
=115.79 million, and (P
P =35.61 million) in 2019, 2018, and 2017, respectively. In 2019, the Group pre-
terminated its loan with SCB hence the derecognition of the derivative asset and recognition of a loss
on pre-termination amounting to = P39.74 million (see Notes 17 and 24).

Others under “Other current assets” pertain mostly to deposits made by preferred shares subscribers
kept in an escrow account with an escrow agent in compliance with the preferred shares subscription
agreement.

As of December 31, 2019, others under “Other noncurrent assets” include stock issuance costs
amounting to =
P52.32 million for the listing of its preferred shares on January 10, 2020 (see Note 35).
This was subsequently reclassified as a reduction in equity on the date the preferred shares were
issued. As of December 31, 2018, others under “Other noncurrent assets” include land held for future
disposal amounting to =
P41.76 million which was donated to a third party in 2019.

*SGVFSM000361*
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13. Investment in Bonds

On July 10, 2019, the Group purchased Philippine Peso-denominated, fixed rate bonds amounting to
=463.75 million. The bonds have a maturity of eighteen (18) months from issue date and interest rate
P
of 5.70% per annum. The bonds are rated “AAA” by Philippine Rating Services Corporation.
Investment in bonds is classified and measured as financial assets at amortized cost since the bonds
are held to collect contractual cash flows representing solely payments of principal and interest.

In 2019, interest income from investment in bonds amounted to =

P12.74 million (see Note 24).

14. Accounts and Other Payables

This account consists of:

2019 2018
Accounts payable P
=3,631,221,875 =3,090,029,245
P
Accrued expenses
Commissions 177,382,771 73,868,248
Taxes 294,057,904 98,419,973
Interest 92,422,496 149,797,646
Salaries 55,986,056 52,457,371
Others 50,995,073 47,326,155
Customers’ advances 871,388,151 1,049,494,994
Retention payable 443,016,187 353,291,867
Dividends payable 11,717,930 –
Other payables 74,875,852 74,979,128
P
=5,703,064,295 =4,989,664,627
P

Accounts payable are attributable to the construction costs incurred by the Group. These are
noninterest-bearing and with terms of 15 to 90 days.

Customers’ advances pertain to funding from buyers of real estate for future application against
transfer and registration fees and other taxes to be incurred upon transfer of properties to the buyer.

Retention payable are noninterest-bearing and are normally settled on a 30-day term upon completion
of the relevant contracts.
Others under “Accrued expenses” consist mainly of utilities, marketing costs, professional fees,
communication, transportation and travel, security, insurance, taxes and representation.

15. Contract Liabilities

Contract liabilities consist of collections from real estate customers which have not qualified for
revenue recognition and excess of collections over the recognized receivables based on percentage of
completion. As of December 31, 2019 and 2018, carrying values of contract liabilities amounted to
=1,784.09 million and =
P P2,294.33 million, respectively.

The amount of revenue recognized from amounts included in contract liabilities at the beginning of
the year amounted to =
P2,376.28 million and =
P1,852.40 million in 2019 and 2018, respectively.

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16. Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the
other party or exercise significant influence over the other party in making financial and operating
decisions. Parties are also considered to be related if they are subject to common control or common
significant influence which include affiliates.

Terms and Conditions of Transactions with Related Parties

The Group in their regular conduct of business has entered into transactions with related parties
principally consisting of advances and reimbursement of expenses, development, management,
marketing, leasing and administrative service agreements and purchases which are made at normal
market prices.

The Group has material related party transactions policies containing the approval requirements and
limits on amounts and extent of related party transactions in compliance with the requirements under
the Revised SRC Rule 68 and SEC Memorandum Circular 10, series of 2019.

The Group has an approval requirement such that material related party transactions shall be reviewed
by the Related Party Transactions Committee (the Committee) and endorsed to the BOD for approval.
Material related party transactions are those transactions that meet the threshold value as approved by
the Committee amounting to = P50.0 million and other requirements as may be recommended by the
Committee.

The related party transactions are shown under the following accounts in the consolidated financial
statements:

Due from Related Parties

Amount of
2019 2018 transaction Terms and Conditions

Ultimate Parent =
P156,878,875 =161,480,105
P (P
=4,601,230) Noninterest bearing, due
and demandable,
Stockholders 188,509,842 160,320,970 28,188,872 unsecured, no
impairment
Other affiliates 74,265,907 72,553,433 1,712,474
P
=419,654,624 =394,354,508
P =25,300,116
P

Due to Related Parties

Amount of
2019 2018 transaction Terms and Conditions

Ultimate Parent =
P115,225,874 =37,070,486
P =78,155,388
P
Noninterest bearing, due
and demandable,
Stockholders 19,175,305 19,175,305 – unsecured
Other affiliates 36,790,583 42,329,407 (5,538,824)
P
=171,191,762 P98,575,198
= =72,616,564
P

*SGVFSM000361*
 - 45 -

The related party transactions that are eliminated during consolidation follows:

Due from Related Parties

Amount of
2019 2018 transaction Terms and Conditions
Parent Company
CPGI P
=6,119,677,982 =4,511,359,590
P =1,608,318,392
P
Noninterest bearing, due
Subsidiaries: and demandable,
CLC 866,355,877 916,566,843 (50,210,966) unsecured, no
PPHI 7,249,564 71,115,139 (63,865,575) impairment
CCDC 4,874,625,300 2,948,156,733 1,926,468,567
CCC 10,959,478 10,066,633 892,845
P
=11,878,868,201 =8,457,264,938
P =3,421,603,263
P

Due to Related Parties

Amount of
2019 2018 transaction Terms and Conditions
Parent Company
CPGI P
=36,775,774 =110,346,831
P (P
=73,571,057)

Subsidiaries: Noninterest bearing, due

CLC 6,682,277,191 4,043,038,548 2,639,238,643 and demandable,
PPHI 13,683,920 566,730,710 (553,046,790) unsecured
CCDC 2,766,219,356 1,579,963,008 1,186,256,348
CCC 2,099,441,132 1,864,642,246 234,798,886
CPMI 26,882,989 41,997,084 (15,114,095)
CPHLI 253,587,839 250,546,511 3,041,328
P
=11,878,868,201 =8,457,264,938
P =3,421,603,263
P

Significant transactions of the Group with related parties are described below:

Due from related parties pertains to advances provided by the Group to the stockholders and other
affiliates.

Due to related parties pertains to advances made by the Group for its capital expenditures. These are
generally noninterest bearing and are due and demandable.

Management agreement
In 2018, the Group contracted CISI to manage all of its sales and marketing activities. CISI is a
wholly-owned subsidiary of CPI. Prepayments to CISI for initial marketing services recognized
under “Other current assets” account as of December 31, 2019 and 2018 amounted to P =314.96 million
and P
=168.85 million , respectively (see Note 12).

Transfer of pension liabilities

In 2018, the Omnibus Marketing, Logistics and Support Services Agreement entered into in 2013 by
the Group and an entity under common control ceased; hence, personnel services are no longer being
outsourced from the Group. Subsequently in 2019 and 2018, the employees and related pension
liabilities were transferred from the Group to the affiliate (see Note 16).

*SGVFSM000361*
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Key management compensation

The key management personnel of the Group include all directors, executive, and senior management.
The details of compensation and benefits of key management personnel in 2019, 2018 and 2016
follow:

2019 2018 2017

Short-term employee benefits P
=172,530,681 =166,550,735
P =147,277,908
P
Post-employment benefits
(see Note 26) 8,635,745 6,022,060 5,325,203
P
=181,166,426 =172,572,795
P =152,603,111
P

17. Short-term and Long-term Debts

Short-term Debt
The roll-forward of the Group’s short-term debt is as follows:

2019 2018
Trust receipts Bank loans Total Trust receipts Bank loans Total
Beginning balance = 805,610,954 =
P P1,401,000,000 P= 2,206,610,954 =656,894,637
P =759,000,000 =
P P1,415,894,637
Availments 1,711,073,696 1,457,500,000 3,168,573,696 1,552,819,739 1,501,000,000 3,053,819,739
Repayments (1,958,991,731) (1,963,500,000) (3,922,491,731) (1,404,103,422) (859,000,000) (2,263,103,422)
Ending balance = 557,692,919
P P895,000,000 P
= = 1,452,692,919 =805,610,954
P =1,401,000,000 P
P =2,206,610,954

Trust receipts
Trust receipts (TRs) are facilities obtained from various banks to finance purchases of construction
materials the Group’s projects. Under these facilities, the banks pay the Group’s suppliers then
require the Group to execute trust receipts over the goods purchased. The TRs have interest rates
ranging from 5.75% to 9.00% and 4.87% to 8.75% in 2019 and 2018, respectively. These are paid
monthly or quarterly in arrears with full payment of principal balance at maturity of one year and
with an option to prepay.

Bank loans
Bank loans pertain to the various short-term promissory note (PN) obtained by the Group.

In 2018 the Group renewed a short-term PN with China Bank Corporation (CBC) amounting to
=747.00 million with interest rate of 5.63%. The loan facility has a term of twelve (12) months,
P
interest of which is to be paid quarterly and principal repayment to be made at maturity date.

On July 25, 2019, the Group availed a peso-dominated short-term PN facility with CBC amounting
up to =P1,000.00 million to be issued in multiple tranches. The facility has a term a term of twelve
(12) months with interest payable quarterly. In 2019, the Group availed = P890.00 million of the total
facility, with interest rate of 5.91%.

In 2019 and 2018, repayments related to short-term PNs with CBC amounted to =
P747.00 million and
=754.00 million, respectively.
P

On November 22, 2018, the Group availed a short-term PN with Banco De Oro (BDO) amounting to
=249.00 million. The loan facility has a term of six (6) months with principal repayment schedule of
P
25% on the third (3rd) month and every month thereafter, with interest rate of 6.75% which are
payable monthly.

*SGVFSM000361*
 - 47 -

In 2019, the Group availed an additional short-term PN from the same loan facility with BDO
amounting to =P562.50 million subject to the same terms and interest.

In 2019, the Group fully paid its short-term PNs with BDO amounting to =
P811.50 million.

In 2018, the Group availed a short-term PN with Maybank Philippines, Inc (MPI) amounting to
=500.00 million. The loan facility has a term of 45 days and 31 days with interest rate of 2.88%,
P
interest of which is to be paid with the principal at maturity date, respectively.

In 2019 and 2018, repayments related to short-term PNs with MPI amounted to =
P400.00 million and
=100.00 million, respectively.
P

In 2018, the Group obtained a short-term PN amounting to = P5.00 million from Bank of the Philippine
Islands (BPI) for additional working capital requirements. The PN has a term of one (1) year with a
fixed interest rate of 6.50% per annum (p.a.) and principal repayment of which is to be made at
maturity date.

In 2019, the Group renewed the short-term PN amounting to =

P5.00 million from BPI for the same
terms and interest rates.

In 2019 and 2018, repayments related to short-term PNs with BPI amounted to =
P5.00 million each.

Long-term Debt
As of December 31, 2019 and 2018, this account consists of:

2019 2018
Long-term debt:
Bank loans =
P8,414,050,455 P9,139,599,216
=
Payable under CTS financing 6,914,652,948 7,875,795,684
Car loan financing 14,013,545 18,853,485
15,342,716,948 17,034,248,385
Less current portion 5,462,166,897 5,389,150,881
Noncurrent portion =9,880,550,051
P =11,645,097,504
P

The roll-forward of the Group’s long-term debt is as follows:

2019
Car Loan
Bank Loans CTS Financing Financing Total
Principal:
Balances at beginning of year P
= 9,264,955,585 P
= 7,875,795,684 P
= 18,853,485 P= 17,159,604,754
Addition 6,627,518,487 2,666,232,117 1,969,114 9,295,719,718
Payments (7,250,760,698) (3,627,374,853) (6,809,054) (10,884,944,605)
Effect of foreign currency translation (116,330,537) − − (116,330,537)
Balances at end of year 8,525,382,837 6,914,652,948 14,013,545 15,454,049,330
Deferred financing costs:
Balances at beginning of year 125,356,369 − − 125,356,369
Addition 76,458,240 − − 76,458,240
Amortization (90,482,227) − − (90,482,227)
Balances at end of year 111,332,382 − − 111,332,382
Carrying values P
= 8,414,050,455 P
= 6,914,652,948 P
= 14,013,545 P
= 15,342,716,948

*SGVFSM000361*
 - 48 -

2018
Car Loan
Bank Loans CTS Financing Financing Total
Principal:
Balances at beginning of year =5,689,119,217
P =7,541,936,091
P =29,220,065 P
P =13,260,275,373
Addition 5,177,756,856 3,882,681,284 635,166 9,061,073,306
Payments (1,747,113,217) (3,548,821,691) (11,001,746) (5,306,936,654)
Effect of foreign currency translation 145,192,729 − − 145,192,729
Balances at end of year 9,264,955,585 7,875,795,684 18,853,485 17,159,604,754
Deferred financing costs:
Balances at beginning of year 77,429,948 − − 77,429,948
Addition 137,268,569 − − 137,268,569
Amortization (89,342,148) − − (89,342,148)
Balances at end of year 125,356,369 − − 125,356,369
Carrying values =9,139,599,216
P =7,875,795,684
P =18,853,485
P P
=17,034,248,385

Bank loans
On January 3, 2018, the Group entered into an Omnibus Agreement with SCB for a senior secured
dollar term loan facility up to USD 40.00 million or = P1,990.00 million to finance the planned
construction and development of its properties and to refinance its unpaid debts. Under this
agreement the utilization of the loan shall be subject to the dollar term loan facility agreement. The
loan facility bears interest rate equal to the screen rate or the reference bank rate plus 3.00% margin
payable quarterly. Principal repayment will be in installments on each repayment date until its final
maturity on 2020.

Concurrent with the loan agreement, the Group entered into a cross currency and interest rate swap
agreement with SCB to hedge their foreign currency and interest rate risk related to the bank loan
(see Note 12).

In 2018, the Group obtained additional loan from SCB amounting to =

P563.35 million, with interest
ranging from 6.46% to 7.08% per annum and will be payable in two (2) years. The proceeds of the
loan will be used to fund ongoing development of its projects.

In 2019, the Group pre-terminated its loans from SCB for a total payment of =
P2,933.33 million. In
2018, principal repayments pertaining to the bank loans from SCB amounted to = P107.27 million.

In 2018, the Group availed additional loan from DBP amounting to = P639.87 million, with interest
ranging from 7.00% to 9.21% per annum. The principal amount which have maturities ranging from
two (2) to four (4) years will be used to fund ongoing development of its projects and for additional
working capital.

In 2019, the Group obtained additional loans from DBP amounting to =P581.00 million with an
interest rate ranging from 7.00% to 9.21% per annum and are payable quarterly

In 2019 and 2018, repayments related to loans with DBP amounted to =

P157.02 million and
=585.03 million, respectively.
P

In 2018, the Group, entered into an Omnibus Loan and Security Agreement (OSLA) with Amalgated
Investment Bancorporation (AIB), for a two-year term-loan with a principal amount of up to
=500.00 million. On the same year, the Group made a drawdown amounting to =
P P351.10 million with
interest of 7% per annum.

In 2019, the Group availed the remaining undrawn balance of its OSLA with AIB amounting to
=148.90 million with interest of 8.50% per annum and availed another bank loan with AIB amounting
P
to =
P100.00 million with interest of 7.97% per annum.

*SGVFSM000361*
 - 49 -

In 2019, the Group obtained a five-year term loan from United Coconut Planters Bank (UCPB)
amounting to =P1,000.00 million, which is payable quarterly with interest of 8.42% per annum.

In 2018, the Group availed a five-year term loan agreement amounting to =P125.00 million with BDO
to finance land development and house construction of its project. The loan bears interest of 5.78%
per annum and payable on a quarterly basis.

On September 17, 2019, the Group renewed a portion of its five-year term loan from BDO amounting
to =
P3,500.00 million, which is payable semi-annually with interest of 6.31% per annum.

On October 28, 2019, the Group renewed a portion of its five-year term loan from BDO amounting to
=700.00 million with a fixed interest of 6.07% fixed for 92 days with an option to reprice over 30-180
P
days as agreed by the parties.
In 2019 and 2018, principal repayments related to loans with BDO amounted to = P3,271.71 million
and P
=799.81 million, respectively.

In 2019 and 2018 the Group availed = P597.62 million and = P1,008.44 million, respectively, from the
=2,200.00 three-year loan facility with BPI with interest ranging from 7.03% to 10.24%. The
P
proceeds will be used for the construction of the Group’s investment property. Principal repayment
will be in installments on each repayment date until its final maturity date.

On June 29, 2018, the Group obtained a three-year loan from China Bank Savings (CBS) amounting
to =
P500.00 million with interest of 6% per annum. The proceeds will be used to finance the
construction of the Group’s real estate projects.

In 2019 and 2018, principal repayments related to loans with CBS amounted to P
=100.00 million and
=255.00 million, respectively.
P

In 2019, the Group made principal repayments to its existing loans with Phoenix Property Investors
amounting to =P788.70 million.

CTS financing
CTS financing pertains to loan facilities which were used in the construction of the Group’s real
estate development projects. The related PNs have terms ranging from twelve (12) to forty-eight (48)
months and are secured by the buyer’s post-dated checks, the corresponding CTS, and parcels of land
held by the Parent Company. The Group retained the assigned ICRs and recorded the proceeds from
these assignments as “Long-term debt”. These CTS loans bear fixed interest rates ranging from
5.88% to 9.75% and 5.75% to 9.12% in 2019 and 2018, respectively.

Security and Debt Covenants

Certain bilateral, trust receipts, payables under CTS financing and bank loans have mortgaged real
estate inventories and assigned ICRs and contract assets wherein such assets can no longer be allowed
to be separately used as collateral for another credit facility, grant loans to directors, officers and
partners, and act as guarantor or surety in favor of banks. As of December 31, 2019 and 2018, the
carrying values of these assets mortgaged for trust receipts, payables under CTS financing and bank
loans are as follows:

2019 2018
Real estate inventories (Note 6) P
=7,533,240,582 =6,672,323,498
P
ICR (Note 5) 6,722,174,747 6,638,842,433
Investment properties (Note 11) 1,606,057,348 –

*SGVFSM000361*
 - 50 -

Certain bilateral loans have covenants including maintenance of a debt-to-equity ratio of not more
than 2.33x and 3.00x, and a debt service coverage ratio of at least 1.5x. The bank loans have a
covenant, specific to the projects they are availed for, of having loan to security value of no more than
50.00% to 55%. Security value includes, among other things, valuation appraisal by independent
appraisers and takes into account the sold and unsold sales and market value of the properties. The
loan agreements require submission of the valuation of each mortgage properties on an annual basis
or upon request of the facility agent.

The bank loans contain negative covenant that the Group’s payment of dividend is subject to meeting
certain financial ratios.

As of December 31, 2019 and 2018, the Group has complied with the provisions of its loan
covenants.

Borrowing Costs Capitalized

Borrowing cost capitalized amounted to =
P946.29 million, =P806.81 million and =
P766.78 million in
2019, 2018 and 2017, respectively (see Notes 6, 10 and 11).

Interest Expense and Other Finance Charges

Interest and other financing charges for the short-term and long-term debts in 2019, 2018 and 2017
totaled to =
P915.54 million, P
=585.68 million and = P393.94 million, respectively (see Note 25).

18. Bonds Payable

This account consists of the following:

2019 2018
Principal:
Five-and-half year bond P
=1,393,530,000 =1,393,530,000
P
Three-year-bond 3,000,000,000 –
Seven-year bond 119,110,000 119,110,000
4,512,640,000 1,512,640,000
Deferred financing cost:
Balances at beginning of year 6,745,302 11,673,091
Addition 74,012,433 –
Amortization (21,149,901) (4,927,789)
Balances at end of year 59,607,834 6,745,302
Carrying value 4,453,032,166 1,505,894,698
Less: current portion 1,392,653,130 –
Noncurrent portion P
=3,060,379,036 =1,505,894,698
P

On April 15, 2019, CPGI listed at the Philippine Dealing & Exchange Corp. (PDEx) its three-year
bonds, with interest rates of 7.8203% p.a. The =
P3.00 billion proceeds of the bonds will be used to
partially finance development costs for the Group’s affordable housing and townhome projects. The
bonds are rated “AA” by Credit Rating and Investor Services Philippines Inc. (CRISP).

The bonds listed at the Philippine Dealing & Exchange Corp. (PDEx) on September 2, 2014 bear
interest rates of 6% p.a. for the three-year bonds, 6.6878% p.a. for the five-and-a-half year bonds, and
6.9758 % p.a. for the seven-year bonds. The bonds are rated “AA+” with a Stable outlook by Credit
Rating and Investor Services Philippines Inc. (CRISP).

*SGVFSM000361*
 - 51 -

Borrowing Costs Capitalized

Borrowing cost capitalized amounted to =
P115.46 million, =P97.81 million and =
P158.79 million in
2019, 2018 and 2017, respectively (see Notes 6, 10 and 11).

Interest Expense and Other Finance Charges

Interest and other financing charges from bonds payable in 2019, 2018 and 2017 amounted to
=21.15 million, P
P =8.6 million and =P9.54 million, respectively (see Note 25).

19. Liability from Purchased Land

This account pertains to the outstanding payable of the Group for the cost of land purchases
recognized under “Real estate inventories” as follows:

2019 2018
Current P
=67,200,000 P67,200,000
=
Noncurrent 268,335,743 301,568,733

20. Equity

Earnings per share

Basic earnings per share amounts attributable to equity holders of the Parent Company in 2019, 2018
and 2017 are as follows:

2019 2018 2017

Net income attributable to the
owners of the Parent Company P
=1,281,748,829 =985,915,365
P =630,312,075
P
Weighted average number of shares 11,599,600,690 11,599,600,690 11,599,600,690
Basic earnings per share P
=0.11 =0.09
P =0.05
P

Earnings per share are calculated using the consolidated net income attributable to the equity holders
of Parent Company divided by the weighted average number of shares. The Group has no potentially
dilutive ordinary shares as of December 31, 2019, 2018 and 2017.

Deposit for future stock subscription

In 2019, the Group received deposits amounting to = P42.48 million from stockholders with the
purpose of applying the same as payment for future issuance of shares of stock. These were classified
as a liability since its application for the increase in authorized capital stock has not been filed yet
with SEC as of December 31, 2019.

On January 10, 2020, the Group listed in the Philippines Stock Exchange (PSE) a public offering of
20,000,000 preferred shares with an oversubscription of 10,000,000 preferred shares of at offer price
of ₱100.00. The Preferred shares are being offered for subscription solely in the Philippines through
China Bank Capital Corporation (Note 35).

Common shares
The Group’s authorized capital stock and issued and subscribed shares amounted to 18.00 million
shares and 11.70 million shares, respectively as of December 31, 2019 and 2018. There are no
movements in the Group’s authorized, issued and subscribed shares in 2019, 2018 and 2017.

*SGVFSM000361*
 - 52 -

The following summarizes the Group’s record of registration of securities under the Revised
Securities Regulation Code:

On February 09, 2000, the Parent Company was listed with the Philippine Stock Exchange with a
total of 3,554.72 million common shares, issued, paid and outstanding. The offering of the shares
was at =P1.00 per share.

On November 11, 2014, the Philippine Stock Exchange, Inc. approved the application of the Group to
list additional 730.32 million common shares, with a par value of =
P0.53 per share, to cover the
Group’s 20.62% stock dividend declaration to stockholders of record as of
October 27, 2014 which was paid on November 14, 2014.

On August 30, 2019, the Group’s BOD authorized and approved the amendment of the stockholders’
resolution dated September 29, 2017, specifically: (a) change in the par value of the proposed
reclassified 3.00 billion Preferred Shares from P
=1.00 to =
P0.53 per share and (b) no increase in the
authorized capital stock of the Parent Company, together with the consequent amendment of article
nine of the amended articles of incorporation of the Parent Company. The amendment was approved
by the SEC in January 2020.

As of December 31, 2019 and 2018, the Parent Company had 498 stockholders with at least one
board lot at the PSE, for a total of 11,599,600,690 (P
=0.53 par value) issued and outstanding common
shares.

Treasury shares
On January 7, 2013, the BOD of the Parent Company approved a share buyback program for those
shareholders who opt to divest of their shareholdings in the Parent Company. A total of
=800.00 million worth of shares were up for buyback for a time period of up to 24 months. In 2014
P
and 2013, a total of 85.68 million shares and 14.44 million shares were reacquired at a total cost of
=87.15 million and =
P P22.52 million, respectively.

As of December 31, 2019 and 2018, treasury shares amounted to =

P109.67 million consisting of
100.12 million shares.

Retained earnings
Retained earnings include the accumulated equity in undistributed net earnings of consolidated
subsidiaries amounting to =
P8,055.51 million and P
=6,840.16 million as of December 31, 2019 and
2018, respectively. These amounts are not available for dividend declaration until these are declared
by the subsidiaries.

Cash dividend declaration

On June 25, 2019. the BOD approved the declaration of P =0.02 per share cash dividends amounting to
=137.92 million for distribution to the stockholders of the Parent Company of record as of
P
July 11, 2019. As of December 31, 2019, = P126.20 million of the dividend declaration has been paid.

On June 8, 2018, the BOD of the Parent Company approved the declaration of = P0.02 per share cash
dividends amounting to =P200.00 million for distribution to the stockholders of the Parent Company of
record as of June 26, 2018 which was paid on July 6, 2018.

On May 22, 2017, the BOD of the Parent Company approved the declaration of = P0.02 per share cash
dividends amounting to =P205.07 million for distribution to the stockholders of the Parent Company of
record as of June 2, 2017 which was paid on June 19, 2017.

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Other components of equity

Other components of equity mainly pertain to the equity reserve recognized between the
consideration paid by Mitsubishi Corporation (MC) and the carrying value of the net assets of TPI I,
TPI II, TPI III and CCDC II given up amounting to =P104.49 million as of December 31, 2019 and
2018. This also includes the remeasurement loss on equity instruments at FVOCI amounting to
=5.10 million and =
P P5.26 million as of December 31, 2019 ad 2018, respectively.

Non-controlling interest
In, 2019, PPHI issued additional 480.00 million common shares with a par value of = P1.00 and
0.12 million preferred shares with 1,000.00 par value to Mitsubishi Corporation (MC), which resulted
into an aggregate increase in the non-controlling interest amounting to =
P600.00 million.

In 2019, MC paid an additional P =226.52 million for its subscription to CCDC II, which resulted to an
increase in the non-controlling interest for the same amount.

In 2018, additional investments made to KPDC and PPHI resulted to an aggregate increase in non-
controlling interests amounting to =
P209.00 million.

In 2018, MC made additional cash payments for its subscription to CCDC II in the amount of
=212.34 million, which resulted to an increase in the non-controlling interest for the same amount.
P

In 2017, additional investments made to TPI I, TPI II and TPI III resulted to an aggregate increase in
non-controlling interests amounting toP
=121.67 million.

In 2017, MC made additional cash payments for its subscription to CCDC II in the amount of
=276.08 million, which resulted to an increase in the non-controlling interest for the same amount.
P

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The financial information of subsidiaries that have material non-controlling interests is provided below.

Summarized statements of financial position (in millions):

TPI I TPI II TPI III CCDC II PPHI

2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Current assets = 813.00
P =996.62
P P
=736.52 =387.19
P P
=271.39 =197.55
P P
=561.25 =442.19
P = 2,571.22
P =1,099.06
P
Noncurrent assets 5.54 9.57 8.64 11.09 6.60 6.57 4,467.67 2,819.85 31.20 2.32
Current liabilities (200.35) (242.10) (362.57) (291.90) (233.34) (190.80) (579.52) (87.78) (578.79) (619.15)
Noncurrent liabilities (51.15) (216.98) − − − − (2,137.81) (1,175.54) (5.85) −
Total equity P
=567.04 =547.11
P P
=382.59 =106.38
P =
P44.65 =13.32
P P
=2,311.59 P =1,998.72 P
=2,017.78 =482.23
P

Attributable to:
Equity holders of the Parent
Company P340.22
= P328.27
= P229.55
= P63.83
= P
=26.79 P7.99
= P
=1,386.95 =1,352.67
P = 1,210.67
P P289.34
=
Non-controlling interest 226.82 218.84 153.04 42.55 17.86 5.33 924.64 646.05 807.11 192.89
Total equity P
=567.04 =547.11
P = 382.59
P =106.38
P P
=44.65 =13.32
P P
=2,311.59 =1,998.72
P = 2,017.78
P =482.23
P

Summarized statements of comprehensive income (in millions):

TPI I TPI II TPI III CCDC II PPHI

2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Revenue =
P285.19 =870.64
P = 555.59
P =327.11
P = 57.13
P =−
P = 131.96
P =−
P = 844.06
P =133.84
P
Cost of real estate sales and
services (205.02) (438.80) (178.73) (44.06) (17.73) − − − (409.42) (47.88)
General and
administrative expenses (55.27) (154.33) (108.44) (50.97) (8.44) (19.28) (75.22) (1.04) (402.03) (108.02)
Operating income (loss) 24.90 277.51 268.42 232.08 30.96 (19.28) 56.74 (1.04) 32.61 (22.06)
Other income 1.28 (15.94) 11.21 0.12 0.56 0.01 130.01 65.34 18.93 (7.80)
Provision for income tax (6.24) 4.45 (3.43) 0.02 (0.18) − (55.75) (20.21) (14.31) (0.42)
Total comprehensive income =
P19.94 =266.02
P = 276.20
P =232.22
P = 31.34
P (P
=19.27) = 131.00
P =44.09
P = 37.23
P (P
=30.28)

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TPI I TPI II TPI III CCDC II PPHI

2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Total comprehensive income
attributable to:
Equity holders of the
Parent Company P
=11.96 P159.61
= P
=165.72 =139.33
P P18.80
= (P
=11.56) P
=78.60 P26.45
= P
=22.34 (P
=18.17)
Non-controlling interests 7.98 106.41 110.48 92.89 12.54 (7.71) 52.40 17.64 14.89 (12.11)
P
=19.94 =266.02
P P
=276.20 =232.22
P P
=31.34 (P
=19.27) P
=131.00 =44.09
P P
=37.23 (P
=30.28)

Summarized cash flows information (in millions):

TPI I TPI II TPI III CCDC II PPHI

2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Operating =
P236.13 =210.55
P P
=80.95 (P
=102.32) (P
=17.96) (P
=53.33) P
=758 =207.56
P (P
= 44.99) (P
=552.19)
Investing − (124.76) − (15.68) (0.07) (5.89) (1,358) (858.28) (32.35) −
Financing (221.05) (34.40) 44.78 123.74 125.71 59.22 600 771.20 1,004.65 1,016.10

*SGVFSM000361*
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Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong and
healthy consolidated statement of financial position to support its current business operations and
drive its expansion and growth in the future.

The Group undertakes to establish the appropriate capital structure for each business line, to allow it
sufficient financial flexibility, while providing it sufficient cushion to absorb cyclical industry risks.

The Group considers debt as a stable source of funding. The Group attempts to continually lengthen
the maturity profile of its debt portfolio and makes it a goal to spread out its debt maturities by not
having a significant percentage of its total debt maturing in a single year.

The Group manages its capital structure and makes adjustments to it, in the light of changes in
economic conditions. It monitors capital using leverage ratios on both a gross debt and net debt basis.
The Group is subject to externally imposed capital requirements from its bank loans which it has
complied with as of December 31, 2019 and 2018 (see Note 17).

Equity, which the Group considers as capital, pertains to the equity attributable to equity holders of
the Parent Company excluding other components of equity and remeasurement loss on defined
benefit plan, amounting to a total of =
P17,445.73 million and P=16,321.01 million as of
December 31, 2019 and 2018, respectively.

No changes were made in the objectives, policies or processes for managing capital in 2019 and 2018.

21. General, Administrative and Selling Expenses

This account consists of:

2019 2018 2017

Commission P
=1,073,736,547 =834,317,060
P =300,250,118
P
Salaries, wages and employee
benefits (Note 22) 734,098,003 629,488,457 583,582,166
Marketing and promotions 603,383,309 1,121,772,561 1,418,266,804
Taxes and licenses 202,501,561 193,656,209 104,602,623
Professional fees 116,454,983 87,860,082 169,035,347
Representation expenses 93,552,363 66,050,772 69,158,880
Repairs and maintenance 62,074,477 13,757,548 19,717,458
Depreciation and amortization
(Notes 11 and 12) 57,545,711 37,854,976 33,242,675
Outside services 43,335,986 29,165,709 27,244,096
Rent 22,412,548 65,994,163 32,026,544
Supplies 21,110,823 10,194,937 6,877,223
Utilities 18,367,414 20,732,147 22,156,056
Transportation and travel 17,056,463 16,104,758 13,906,269
Communication 15,702,014 20,122,275 17,792,877
Miscellaneous 154,485,859 107,454,756 146,203,520
P
=3,235,818,061 =3,254,526,410
P =2,964,062,656
P

Miscellaneous pertains mainly to research development, sponsorships, recruitment fess, software

maintenance and insurance.

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22. Personnel Cost

This account consists of salaries, wages and employee benefits as follows:

2019 2018 2017

General, administrative and
selling expenses (Note 21) P
=731,772,223 =629,488,457
P P583,582,166
=
Cost of services 295,241,150 276,552,505 270,726,596
P
=1,027,013,373 =906,040,962
P =854,308,762
P

The breakdown of salaries, wages and employee benefits is as follows:

2019 2018 2017

Salaries and wages = 712,558,986
P =639,423,507
P =602,914,358
P
Retirement expense (Note 26) 40,927,863 35,599,728 37,751,907
Other employee benefits 273,526,524 231,017,727 213,642,497
P
=1,027,013,373 =906,040,962
P =854,308,762
P

23. Property Management Fee and Other Services

Property management fee pertains mostly to facilities management and consultancy fees of
condominium corporations, corporate facilities and prior projects of the Group, which have been
turned over to the respective buyers.

Other services pertain to technical services such as plan evaluation, consultation and project
management.

Total property management fee and other services recognized amounted to =

P412.15 million,
P395.46 million and =
= P352.97 million in 2019, 2018 and 2017.

24. Interest and Others

This account consists of:

2019 2018 2017

Income from forfeited collections P
=335,707,714 =
P363,850,996 =519,409,631
P
Interest income from cash and
cash equivalents (Note 4) 99,287,587 62,625,758 47,240,579
Interest income from investment
in bonds (Note 13) 12,737,888 – –
Gain on sale of investment
property (Note 10) 3,521,396 12,941,360 –
Foreign exchange gains – 10,677,268 16,545,181
Loss on pre-termination of
derivative (Note 12) (39,735,974) – –
Other income 161,844,867 118,560,867 217,882,122
P
=573,363,478 =568,656,249
P =801,077,513
P

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 - 58 -

Income from forfeited collections pertains to forfeited collections from reservation fees whose
allowable period of completion has prescribed and terminated sales contracts.

Other income mainly consists of the penalties and other surcharges billed against defaulted
installments from sales contracts. Real estate buyers are normally charged a penalty of 3.00% of the
monthly installment for every month in arrears from the time the specific installment becomes due
and payable.

25. Interest and Other Financing Charges

Details of this account follow (see Notes 17 and 18):

2019 2018 2017

Interest expense =
P747,608,418 =
P414,117,993 =287,329,113
P
Other financing charges 189,079,793 180,157,770 116,151,152
P
=936,688,211 =
P594,275,763 =403,480,265
P

Other financing charges mostly include charges from interbank transfers other banking service fees
and amortization of deferred transaction costs.

26. Pension Costs

The Group has a funded, noncontributory, defined benefit pension plan covering substantially all of
its regular employees. The benefits are based on the projected retirement benefit of 22.5 days pay per
year of service in accordance with Republic Act 7641. The benefits are based on current salaries and
years of service and compensation on the last year of employment. An independent actuary conducts
an actuarial valuation of the retirement benefit obligation using the projected unit credit method.

The components of retirement expense included under “Salaries, wages and employee benefits” under
general, administrative and selling expenses follow (see Note 22):

2019 2018 2017

Current service cost =
P21,593,153 =22,013,276
P =23,861,076
P
Net interest cost on benefit
obligation 19,334,710 13,586,452 13,890,831
Retirement expense P
=40,927,863 =35,599,728
P =37,751,907
P

Changes in the fair value of the plan assets (FVPA) and the present value of the retirement obligation
(PVRO) are as follows as of December 31, 2019 and 2018:

2019 2018
FVPA:
Balance at January 1 =
P5,938,951 =6,025,477
P
Interest income 457,299 347,670
Remeasurement gain (loss) from changes in
financial assumptions 337,436 (434,196)
Balance at December 31 6,733,686 5,938,951

(Forward)

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2019 2018
PVRO:
Balance at January 1 P
=257,040,379 =241,492,588
P
Current service cost 21,593,153 22,013,276
Interest cost 19,792,009 13,934,122
Benefits paid (5,796,722) (29,499,275)
Transfer to an affiliate (see Note 16) (447,067) (35,412,483)
Actuarial loss (gain) from changes in:
Financial assumptions 76,042,712 (32,665,100)
Experience and demographic assumptions (54,088,700) 77,177,251
Balance at December 31 314,135,764 257,040,379
Net liability arising from retirement obligation P
=307,402,078 =251,101,428
P

The plan assets as of December 31, 2019 and 2018 pertain solely to bank deposits. The Group does
not expect to contribute to its retirement fund in 2020.

The sensitivity analysis below has been determined based on reasonably possible changes of each
significant assumptions on the defined benefit obligation as of the end of the reporting period,
assuming if all other assumptions were held constant.
December 31, 2019
Increase (decrease) Effect on DBO
Discount rate 1.0% (P
=32,075,086)
Discount rate (1.0%) 38,542,932
Rate of salary increase 1.0% 38,109,923
Rate of salary increase (1.0%) (22,655,620)
December 31, 2018
Increase (decrease) Effect on DBO
Discount rate 1.0% (P
=18,977,120)
Discount rate (1.0%) 22,725,414
Rate of salary increase 1.0% 23,124,960
Rate of salary increase (1.0%) (19,592,383)

The assumptions used to determine pension benefits for the Group in 2019 and 2018 are as follows:

2019 2018
Discount rate 5.50% 7.70%
Salary increase rate 4.00 to 6.00% 4.00 to 6.00%

Shown below is the maturity analysis of the undiscounted benefit payments:

Year ending Amount

December 31, 2019 =
P70,719,769
December 31, 2020 3,730,651
December 31, 2021 2,995,909
December 31, 2022 8,347,536
December 31, 2023 11,983,207
December 31, 2024 through December 31, 2028 106,527,981

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 - 60 -

27. Income Taxes

The provision for income tax consists of:

2019 2018 2017

Current:
RCIT/MCIT = 345,148,121
P =308,117,860
P =418,360,859
P
Final 22,405,095 12,525,152 9,448,116
367,553,216 320,643,012 427,808,975
Deferred 210,009,532 183,127,249 (56,884,529)
= 577,562,748
P =503,770,261
P =370,924,446
P

Current tax
Provision for current tax pertains to final tax and RCIT/MCIT.

Income tax includes RCIT paid at the rate of 30%, MCIT paid at the rate of 2% and final taxes paid at
the rate of 20%, which is a final withholding tax on gross interest income from debt instruments and
other deposit substitutes.

The components of the Group’s deferred tax assets and deferred tax liabilities are as follows:

2019 2018
Recognized in the consolidated statements of
comprehensive income:
Deferred tax assets on:
NOLCO P
=8,891,813 =60,405,244
P
Accrued retirement costs 57,431,752 47,026,529
MCIT 2,626,632 19,767,531
Difference in accounting of PFRS 16 1,152,416 –
Provisions for impairment losses 3,296,786 3,296,786
Unrealized foreign exchange loss – 58,502,781
73,399,399 188,998,871
Deferred tax liabilities on:
Effect of difference in accounting and tax
base on real estate sales (see Note 2) (1,305,730,303) (1,371,105,361)
Fair value gains on investment properties (989,382,666) (926,909,778)
Prepaid commissions (304,173,303) (227,933,259)
Effect of difference in accounting and tax
base on investment properties (112,770,175) (69,218,745)
Unamortized deferred financing costs (52,217,000) (41,309,965)
Gain from change in fair value of
derivative – (34,737,588)
Others (10,029,923) (8,678,614)
(2,700,903,971) (2,490,894,439)
Recognized directly in equity:
Deferred tax asset on re-measurement loss on
retirement obligation 34,788,871 28,270,750
(P
=2,666,115,100) (P
=2,462,590,539)

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The above deferred tax assets and liabilities are presented in the consolidated statements of financial
position as follows:

2019 2018
Deferred tax assets - net P
=42,148,127 P61,929,417
=
Deferred tax liabilities - net 2,708,263,227 2,524,519,956

As of December 31, 2019, carryover NOLCO that can be claimed as deduction from future taxable
income are as follows:

Year Incurred Amount Used/Expired Balance Expiry Year

2016 P26,073,074
= (P
=26,073,074) =−
P 2019
2017 169,080,670 − 169,080,670 2020
2018 43,234,045 − 43,234,045 2021
2019 238,937,496 − 238,937,496 2022
=477,325,285
P (P
=135,851,282) =451,252,211
P

As of December 31, 2019, MCIT that can be used as deductions against income tax liabilities are as
follows:
Year Incurred Amount Used/Expired Balance Expiry Year
2016 =14,418,987
P (P
=14,418,987) =−
P 2019
2017 5,314,166 − 5,314,166 2020
2018 34,378 − 34,378 2021
2019 2,840,330 − 2,840,330 2022
=22,607,861
P (P
=14,418,987) =8,188,874
P

Unrecognized deferred tax assets

The Group has NOLCO and MCIT that are available for offset against future taxable income or tax
payable for which deferred tax assets have not been recognized. Unrecognized NOLCO and MCIT
amounted to =P126.48 million and =P5.56 million, respectively as of December 31, 2019.
Unrecognized NOLCO amounted to = P11.11 million as of December 31, 2018.

Statutory reconciliation
The reconciliation of the provision for income tax computed at statutory income tax rate to the
provision for income tax shown in profit or loss follows:

2019 2018 2017

Provision for income tax computed
at statutory rate =616,809,884
P =486,587,064
P =306,254,876
P
Adjustments for:
Nondeductible interest and other
expenses 161,178,419 131,473,516 55,338,346
Expired NOLCO 7,821,922 79,394,320 36,051,779
Change in unrecognized deferred
tax assets 120,934,999 56,736,634 31,928,467
Final tax 22,405,095 12,525,152 9,448,116
Expired MCIT 14,418,987 2,367,377 25,810,875
Income under income tax holiday (268,591,541) (202,780,529) (12,649,385)
Non-taxable interest and other
income (97,415,017) (62,533,273) (81,258,628)
=577,562,748
P =503,770,261
P =370,924,446
P

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28. Lease Contracts

Group as lessee
The Group has lease contracts for various office spaces with lease terms of two (2) to three (3) years.
Rental due is based on prevailing market conditions. As of December 31, 2019 and 2018, the Group has
rental deposits pertaining to these lease contracts amounting to =
P152.40 million and =
P162.82 million,
respectively (see Note 12). The Group refunded rental deposits amounting to = P7.18 million and
=1.01 million in 2019 and 2018, respectively.
P

The rollforward of this account is as follows:

December 31, 2019

Effect of adoption of PFRS 16 (Note 2 and 11) =71,933,617
P
Accretion for the year (Note 25) 5,477,704
Payments (16,233,317)
Balance at the end of the year 61,178,004
Less: current portion 21,642,553
Noncurrent portion =39,535,451
P

The lease liabilities as at January 1, 2019 can be reconciled to the operating lease commitments as of
December 31, 2018 as follows:

Operating lease commitments as disclosed in the consolidated

financial statements as at December 31, 2018 P243,545,412
=
Commitments relating to short-term leases (155,220,948)
Operating leases subject to discounting as at
December 31, 2018 88,324,464
Weighted average incremental borrowing rate as
at January 1, 2019 8.03 - 8.18%
Lease liabilities as at January 1, 2019 (Notes 2 and 11) =71,933,617
P

Shown below is the maturity analysis of the future undiscounted lease payments as of
December 31, 2019 and 2018 (effective prior to January 1, 2019):

2019 2018
Within one year P
=55,107,312 P85,222,740
=
After one year but not more than three years 147,983,833 158,322,672
P
=203,091,145 =243,545,412
P

Group as lessor
The Group is a lessor of its commercial units in its retail mall, hospital, office and commercial spaces.
The leases have terms ranging from one (1) year to (10) years, with renewal options. Monthly rent
payment is computed using a fixed rate per square meter and variable rent based on percentage of
sales of the tenants for the year. Leasing revenue recognized amounted to = P713.38 million,
=407.27 million and =
P P341.66 million in 2019, 2018 and 2017, respectively.

In 2019, the Group received security deposits and advance rentals amounting to = P35.28 million and
=382.84 million classified as “Other current liabilities” and “Other noncurrent liabilities”,
P
respectively for its lease contracts from its project, Century Diamond Tower, which is forecasted to
finish construction and start full commercial operation in 2020.

*SGVFSM000361*
 - 63 -

Future minimum rentals receivable under operating leases are as follows:

2019 2018
Within one year P
=585,442,933 P52,795,330
=
After one year but not more than three years 2,902,733,169 137,337,923
P
=3,488,176,102 =190,133,253
P

29. Financial Instruments

Fair Value Information

The table below presents the carrying amounts and fair values of the Group’s financial assets and
financial liabilities:
December 31, 2019 December 31, 2018
Carrying Value Fair value Carrying Value Fair Value
Financial assets
ICR P
=10,477,877,484 P
=11,568,452,788 =9,267,752,039
P =9,375,204,221
P
Rental deposits 152,396,921 153,476,981 162,818,009 164,738,382
Investment in bonds 463,750,000 471,542,330 – –
P
=11,094,024,405 P
=12,193,472,099 =9,430,570,048
P =9,539,942,603
P

Financial liabilities
Long-term debt P
=15,342,716,948 P
=15,986,421,333 =17,034,248,385
P =17,252,185,192
P
Bonds payable 4,453,032,166 4,541,582,403 1,505,894,698 1,518,928,301
Liability from purchased
land 335,535,743 349,217,856 368,768,733 370,231,832
Security deposits 382,842,116 403,727,199 – –
P
=20,514,126,973 P
=21,280,948,791 =18,908,911,816
P =19,141,345,325
P

Fair Value of Financial Instruments

The methods and assumptions used by the Group in estimating the fair values of the financial
instruments are as follows:

Financial assets
Cash and cash equivalents, receivables (excluding ICRs), due from related parties, marginal deposit
accounts and other payables, due to related parties and short-term debt
Carrying amounts approximate fair values due to the short-term maturities of these instruments.

ICRs
Fair value is based on undiscounted value of future cash flows using the prevailing interest rates for
similar types of receivables as of the reporting date using the remaining terms of maturity. Discount
rates ranging from 8.12% to 9.23% were used in calculating the fair value as of December 31, 2019
and 2018.

Rental deposits and investment in bonds

The fair values of rental deposits and investment in bonds are based on the discounted value of future
cash flows using the applicable market interest rates. Discount rates ranging from 4.29% to 5.07%
and 1.91% to 5.00% were used in calculating the fair value of the Group’s rental deposits as
of December 31, 2019 and 2018, respectively. The discount rate used for the investment in bonds is
3.82% as of December 31, 2019.

Derivative asset
The Group’s derivative asset in 2018 is carried at fair value. The fair value of cross currency swap
transaction is determined using valuation techniques with inputs and assumptions that are based on

*SGVFSM000361*
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market observable data and conditions and reflect appropriate risk adjustments that market
participants would make for credit and liquidity risks existing at the end each of reporting period.
The fair values of cross currency swap transactions are determined based on changes in the term
structure of interest rates of each currency and the spot rate.

Long-term debt, bonds payable, liability from purchased land and, security deposits and
The fair values are estimated using the discounted cash flow method 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 for long-term debt ranged from 4.97% to
5.04% and 2.39% to 6.34% as of December 31, 2019 and 2018, respectively. The discount rates used
for the bonds payable ranged from 4.95% to 5.00% and 2.79% to 4.52% as of December 31, 2019
2018, respectively. The discount rates used for the liability from purchased land ranged from 4.97%
to 5.18% and 2.87% to 3.15% as of December 31, 2019 and 2018, respectively. The discount rates
used for refundable deposits ranged from 4.97% to 5.04% as of December 31, 2019. The discount
rates used for the lease liabilities ranged from 4.38% to 5.12% as of December 31, 2019.

In 2019 and 2018, the Group did not have transfers between Level 1 and 2 fair value measurements
and no transfers into and out of Level 3 fair value measurements.

Financial Risk Management Policies and Objectives

The Group has various financial assets and liabilities such as cash and cash equivalents, receivables,
due to and from related parties, and accounts payable and other liabilities, which arise directly from
its operations. The Group has bonds payable, short-term and long-term debt availed for financing
purposes.

Exposure to credit, interest rate and liquidity risks arise 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 BOD reviews and approves the policies for managing each of these risks and they are
summarized below:

Credit Risk
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the
Company by failing to discharge an obligation.

The Group trades only with recognized, creditworthy third parties. The Group’s receivables are
monitored on an ongoing basis to manage exposure to bad debts and to ensure timely execution of
necessary intervention efforts. Real estate buyers are subject to standard credit check procedures,
which are calibrated based on payment scheme offered. The Group assessed that its customers
portfolio is homogeneous. The Group’s respective credit management units conduct a comprehensive
credit investigation and evaluation of each buyer to establish creditworthiness.

In addition, the credit risk for ICRs is mitigated as the Group has the right to cancel the sales contract
without need for any court action and take possession of the subject house in case of refusal by the
buyer to pay on time the due installment contracts receivable. This risk is further mitigated because
the corresponding title to the subdivision units sold under this arrangement is transferred to the buyers
only upon full payment of the contract price.

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With respect to credit risk arising from the other financial assets of the Group, exposure to credit risk
arises from default of the counterparty, with a maximum exposure equal to the carrying amount of
these instruments. The Group transacts only with institutions or banks which have demonstrated
financial soundness for the past 5 years.

The Group’s maximum exposure to credit risk as of December 31, 2019 and 2018 is equal to the
carrying values of its financial assets with an aggregate amount of =
P6,280.72 and = P3,754.77 million,
which excludes cash on hand amounting to = P2.80 million and =
P0.47 million, respectively, and ICRs
with carrying values of =P10,477.89 million and = P9,267.75 million, respectively, and fair value of
collateral amounting to =P13,871.70 million and P =12,617.52 million, respectively.

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

Cash and cash equivalents, marginal deposits, rental deposits and derivative asset - these are
considered as high grade financial assets as these are entered into with reputable counterparties.

Receivables - these are considered as high grade since there are no default in payments.

Due from related parties - these are considered as standard grade as these are settled on time or are
slightly delayed due to unresolved concerns.

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’s objective is to maintain a balance between continuity of funding and flexibility through
the use of bank loans and advances from related parties. The Group considers its available funds and
its liquidity in managing its long-term financial requirements. It matches its projected cash flows to
the projected amortization of long-term borrowings. For its short-term funding, the Group’s policy is
to ensure that there are sufficient operating inflows to match repayments of short-term debt.

The following table shows the maturity profile of the Group’s financial assets used for liquidity
purposes and liabilities based on contractual undiscounted payments:

December 31, 2019

Within 1 Year 1 - 5 years Total
Financial assets
Cash and cash equivalents P
=4,005,009,231 P
=– P
=4,005,009,231
Receivables* 10,582,926,659 1,137,658,202 11,720,584,861
Due from related parties 419,654,624 – 419,654,624
Rental Deposits – 152,396,921 152,396,921
Investment in bonds 463,750,000 – 463,750,000
P
=15,471,340,514 P
=1,290,055,123 P
=16,761,395,637
* Excluding other receivables amounting to =
P348.22 million as of December 31, 2019.

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December 31, 2019

Within 1 Year 1 - 5 years Total
Financial liabilities
Accounts and other payables** P
=4,537,618,240 P
=– P
=4,537,618,240
Due to related parties 171,191,762 – 171,191,762
Short-term debt 1,452,692,919 – 1,452,692,919
Liability from purchased land 67,200,000 268,335,743 335,535,743
Long-term debt:
Principal 5,462,166,897 9,991,882,433 15,454,049,330
Interest 38,643,173 72,689,208 111,332,381
Bonds payable:
Principal 1,392,653,130 3,119,986,870 4,512,640,000
Interest 6,210,246 40,965,921 47,176,167
Lease liabilities 21,642,553 50,448,594 72,091,147
Security deposits – 382,842,116 382,842,116
P
=13,150,018,920 P
=13,927,150,885 P
=27,077,169,805
**Excluding customers’ advances and statutory liabilities amounting to =
P871.39 million and =
P 294.06 million, respectively, as of
December 31, 2019.
December 31, 2018
Within 1 Year 1 - 5 years Total
Financial assets
Cash and cash equivalents =1,950,389,193
P =–
P P1,950,389,193
=
Receivables* 1,894,555,056 8,473,424,130 10,367,979,186
Due from related parties 394,354,508 – 394,354,508
Marginal deposits 31,658,800 – 31,658,800
Derivative asset – 115,791,961 115,791,961
Rental deposits – 162,818,009 162,818,009
=4,270,957,557
P =8,752,034,100
P =13,022,991,657
P
Financial liabilities
Accounts and other payables** =3,841,749,660
P =–
P =3,841,749,660
P
Due to related parties 98,575,198 – 98,575,198
Short-term debt 2,206,610,954 – 2,206,610,954
Liability from purchased land 67,200,000 301,568,733 368,768,733
Long-term debt:
Principal 5,389,150,881 11,770,453,873 17,159,604,754
Interest 39,369,461 85,986,908 125,356,369
Bonds payable:
Principal – 1,512,640,000 1,512,640,000
Interest 6,745,302 13,490,604 6,745,302
=11,649,401,456
P =13,684,140,118
P =25,320,050,970
P
* Excluding other receivables amounting to =
P400.91 million as of December 31, 2018.
**Excluding customers’ advances and statutory liabilities amounting to =
P1,049.49 million and =
P 98.42 million, respectively,
as of December 31, 2018.

Foreign currency risk

Financial assets and credit facilities of the Group, as well as major contracts entered into for the
purchase of raw materials, are mainly denominated in Philippine Peso.

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The following table shows the Group’s consolidated foreign currency-denominated monetary assets
and liability and their peso equivalents as of December 31, 2019 and December 31, 2018:

December 31, 2019 December 31, 2018

Original Peso Original Peso
Currency Equivalent Currency Equivalent
Assets
Cash and cash equivalents
US Dollar $559,980 =28,223,031
P $1,170,033 =61,520,317
P
Euro €7,160 396,286 €7,193 433,813
Loans payable
US Dollar – – $55,000,000 (2,891,900,000)
Net foreign currency denominated
instruments =28,619,317
P (P
=2,829,945,870)
The spot exchange rates used were; =
P 50.4 to US$1 and =
P55.34 to €1 in 2019 =
P52.58 to US$1 and =
P 60.31 to €1 in 2018.

The following table demonstrates the sensitivity to reasonably possible changes in foreign currency
rates, with all variables held constant, of the Group’s income before tax and equity.
2018 2018
Increase Increase
(decrease) in (decrease) in
foreign Effect on profit foreign Effect on profit
exchange rates before tax exchange rates before tax
Dollar 5% (P
= 1,411,151) 5% (P
= 141,518,984)
(5%) 1,411,151 (5%) 141,518,984

Euro 5% 19,814 5% 21,691

(5%) (19,814) (5%) (21,691)

Interest rate risk

Interest rate risk is the risk that changes in the market interest rates will reduce the Group’s current or
future earnings and/or economic value. The Group’s interest rate risk management policy centers on
reducing the 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
rates or rates subject to repricing as it can cause a change in the amount of interest payments.

The following table sets out the carrying amount, by maturity, of the Group’s long-term debt that are
exposed to interest rate risk.

Interest terms
(p.a.) Rate fixing period <1 year 1 to 5 years
2019 6.2-10.3 % Monthly; Annually P89,678,076
= P10,134,117,726
=
2018 6.5-8% Monthly; Annually 5,389,150,881 11,645,097,504

The interest rate risk exposure arising from the Omnibus Agreement with SCB with carrying amount
of P
=2,057.80 million as of December 31, 2018 is hedged by a cross currency and interest rate swap
agreement entered with the same bank.

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The following table demonstrates the sensitivity to reasonably possible changes in interest rates, with
all variables held constant, of the Group’s income before tax and equity (through the impact on
floating rate borrowings).

2019 2018
Increase (decrease) Effect on profit Increase (decrease) Effect on profit
in interest rates before tax in interest rates before tax
Basis points 0.33% (P
=19,729,570) 0.33% (P
=26,821,680)
(0.33%) 19,729,570 (0.33%) 26,821,680

There is no other impact on the Group’s total comprehensive income other than those already
affecting the net income.

30. Performance Obligations

Information about the Group’s performance obligations are summarized below:

Real estate sales

The Group entered into contracts to sell with one identified performance obligation, which is the sale
of the real estate unit together with the services to transfer the title to the buyer upon full payment of
contract price. The amount of consideration indicated in the contract to sell is fixed and has no
variable consideration. The sale of real estate unit may cover the contract for either the (i) serviced
lot; (ii) service lot and house, and (ii) condominium unit and the Group concluded that there is one
performance obligation in each of these contracts. The Group recognizes revenue from the sale of
these real estate projects under pre-completed contract over time during the course of the
construction.

Payment commences upon signing of the contract to sell and the consideration is payable in cash or
under various financing schemes entered with the customer. The financing scheme would include
payment of 10%-30% of the contract price spread over a certain period (e.g., three months to four
years) at a fixed monthly payment with the remaining balance payable (a) in full at the end of the
period either through cash or external financing; or (b) through in-house financing which ranges from
two (2) to five (5) years with fixed monthly payment. The amount due for collection under the
amortization schedule for each of the customer does not necessarily coincide with the progress of
construction, which results to either a contract asset or contract liability.

The transaction price allocated to the remaining performance obligations (unsatisfied or partially
satisfied) as at December 31, 2019 and 2018 are as follows:

2019 2018
Within one year P
=2,624,812,013 =3,474,143,694
P
More than one year 10,112,663,995 7,312,045,153
P
=12,737,476,008 =10,786,188,847
P

The remaining performance obligations expected to be recognized within one year and in more than
one year relate to the continuous development of the Group’s real estate projects. The Group’s
condominium units are completed within three years and five years, respectively, from start of
construction while serviced lots and serviced lots and house are expected to be completed within two
to three years from start of development.

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All of the Group’s real estate sales from residential development are revenue from contracts with
customers recognized over time. The Group’s disaggregation of each sources of real estate sales are
presented below:

Project Location 2019 2018

Century City Makati City =3,894,435,955
P =1,338,683,860
P
The Residences at
Commonwealth Quezon City 2,465,763,621 2,061,766,134
Azure Urban Resort
Residences Paranaque City 1,528,571,196 1,416,055,991
Acqua Private Residences Mandaluyong City 1,182,514,118 1,856,393,357
The Resort Residences at
Azure North Pampanga City 1,534,977,998 1,718,593,263
Tanza Properties Cavite 897,915,882 1,036,620,987
PHirst Park Homes Cavite 844,062,390 133,842,483
Batulao Landscapes Batangas 323,057,116 –
Canyon Ranch Cavite 14,088,803 14,712,191
=12,685,387,079
P =9,576,668,266
P

Property management fee and other services

The Group’s disaggregation of each source of property management fee and other services are as
follows:

Location 2019 2018

Within metro manila =380,775,404
P =365,635,328
P
Outside metro manila 31,376,027 29,824,889
=412,151,431
P =395,460,217
P

31. Segment Information

Business segment information is reported on the basis that is used internally for evaluating segment
performance and deciding how to allocate resources among operating segments. Accordingly, the
segment information is reported based on the nature of service the Group is providing.
The segments where the Group operate follow:

· Real estate development - sale of high-end, upper middle-income and affordable residential lots
and units and lease of residential developments under partnership agreements;
· Leasing - lease of the Group’s retail mall;
· Property management - facilities management of the residential and corporate developments of
the Group and other third party projects, including provision of technical and related consultancy
services.
Segment performance is evaluated based on operating profit or loss and is measured consistently with
operating profit or loss in the consolidated financial statements.

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The financial information about the operations of these operating segments is summarized below:
For the Year Ended December 31, 2019
Real Estate Property Adjustments and
Development Management Leasing Elimination Consolidated
Revenue =
P13,551,163,364 =
P412,151,431 =
P713,381,593 (P
= 361,680,120) =
P14,315,016,268
Costs and expenses
Cost of real estate sales and services 8,638,664,807 295,241,150 217,448,235 (179,120,746) 8,972,233,446
General, administrative and selling
expenses 2,933,170,351 99,664,088 202,983,622 – 3,235,818,061
Operating income 1,979,328,206 17,246,193 292,949,736 (182,559,374) 2,106,964,761
Other income (expenses)
Interest and other income 1,040,347,760 1,543,625 23,497,911 (103,576,912) 961,812,384
Interest and other financing charges (1,073,115,571) (372,012) (42,833,527) 103,576,912 (1,012,744,198)
Income before income tax 1,946,560,395 18,417,806 273,614,120 (182,559,374) 2,056,032,947
Provision for income tax 501,139,550 4,330,376 79,518,996 (7,426,174) 577,562,748
Net income = 1,445,420,845
P =
P14,087,430 =
P194,095,124 (P
=175,133,200) = 1,478,470,199
P

As of December 31, 2019

Segment assets = 65,431,347,121
P = 328,496,231
P = 8,384,169,137 (P
P =20,744,475,004) = 53,399,537,485
P
Deferred tax assets 25,013,993 17,134,134 – – 42,148,127
Total Assets = 65,456,361,114
P = 345,630,365
P = 8,384,169,137 (P
P =20,744,475,004) = 53,441,685,612
P

Segment liabilities = 37,863,283,879

P = 260,753,562
P = 6,411,286,302
P (P
=13,417,470,846) = 31,117,852,897
P
Deferred tax liabilities 2,168,872,268 – 546,817,133 (7,426,174) 2,708,263,227
Total Liabilities = 40,032,156,147
P = 260,753,562
P = 6,958,103,435
P (P
=13,424,897,020) = 33,826,116,124
P

For the Year Ended December 31, 2018

Real Estate Property Adjustments and
Development Management Leasing Elimination Consolidated
Revenue =10,001,951,426
P =390,551,113
P =407,267,202
P (P
=97,891,450) =10,701,878,291
P
Costs and expenses
Cost of real estate sales and services 5,726,713,078 279,364,283 227,918,806 (74,292,307) 6,159,703,860
General, administrative and selling
expenses 2,903,943,006 97,440,044 253,143,360 – 3,254,526,410
Operating income (loss) 1,371,295,342 13,746,786 (73,794,964) (23,599,143) 1,287,648,021
Other income (expenses)
Interest and other income 776,743,967 6,652,692 395,963,836 (105,583,144) 1,073,777,351
Interest and other financing charges (840,872,163) (282,068) (3,897,405) 105,583,144 (739,468,492)
Income before income tax 1,307,167,146 20,117,410 318,271,467 (23,599,143) 1,621,956,880
Provision for income tax 337,928,617 7,709,092 163,857,083 (5,724,531) 503,770,261
Net income =969,238,529
P =12,408,318
P =154,414,384
P (P
=17,874,612) =1,118,186,619
P

As of December 31, 2018

Segment assets =
P53,523,802,781 =
P305,335,227 =
P11,888,813,090 (P
=16,413,197,686) =49,304,753,412
P
Deferred tax assets 41,983,795 19,945,622 – – 61,929,417
Total Assets =53,565,786,576
P =325,280,849
P =11,888,813,090 (P
P =16,413,197,686) =49,366,682,829
P

Segment liabilities =35,047,770,114

P =
P250,733,529 =
P4,229,631,053 (P
=10,149,438,382) =29,378,696,314
P
Deferred tax liabilities 1,603,334,709 – 926,909,778 (5,724,531) 2,524,519,956
Total Liabilities =
P36,651,104,823 =
P250,733,529 =
P5,156,540,831 (P
=10,155,162,913) =
P31,903,216,270

For the Year Ended December 31, 2017

Real Estate Property Adjustments and
Development Management Leasing Elimination Consolidated
Revenue =6,239,457,125
P =352,971,958
P =341,658,779
P (P
=228,315,964) =6,705,771,898
P
Costs and expenses
Cost of real estate sales and services 2,990,508,625 270,726,596 237,813,561 (184,027,625) 3,315,021,157
General, administrative and selling
expenses 2,830,461,704 91,875,141 41,725,811 – 2,964,062,656
Operating income (loss) 418,486,796 (9,629,779) 62,119,407 (44,288,339) 426,688,085
Other income (expenses)
Interest and other income 1,253,205,200 12,763,672 295,164,108 (474,027,207) 1,087,105,773
Interest and other financing charges (665,732,425) (286,799) (952,255) 174,027,207 (492,944,272)
Income before income tax 1,005,959,571 2,847,094 356,341,124 (344,298,203) 1,020,849,586
Provision for income tax 363,585,555 884,085 10,003,018 (3,548,212) 370,924,446
Net income =642,374,016
P =1,963,009
P =346,338,106
P (P
=340,740,127) =649,925,140
P

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32. Significant Contracts

Deposits for Preferred Shares Subscription

The Group’s deposit for preferred shares subscription pertains to deposits received by the Group from
buyers of its preferred shares. On June 17, 2015, the Group’s preferred shares divided into Class A,
Class B, Class C and Class D have been registered with SEC for public offering.
As of December 31, 2019, there had been subscriptions of 6,206 Preferred A shares at a total amount
of P
=1,041.71 million, 494 Preferred B shares at a total amount of P
=116.81 million, 704 Preferred C
shares at a total amount of P
=155.61 million and 325 Preferred D shares at a total amount of
=71.73 million. Outstanding subscription receivable on preferred shares as of December 31, 2019
P
amounted to = P349.86 million. As of December 31, 2018, outstanding subscription receivables
amounted to = P660.62 million. As of December 31, 2019 and 2018, fully paid subscriptions amounted
to =
P805.89 million and =P130.63 million, respectively. In 2019, 2018 and 2017, the Group received
additional deposits amounting to =
P412.20 million, P=201.68 million and =
P196.59 million, respectively.

Total deposits for preferred shares subscriptions received presented under financial statement caption
“Other noncurrent liabilities” amounted to = P1,035.99 million and = P623.79 million as of
December 31, 2019 and 2018, respectively. Prior to full payment and availability of the rooms, the
Group has determined that amounts received from the buyers of preferred shares are classified as
liability since the shareholders’ rights to the 28 free nights to stay at the hotel and contractual right to
dividends will inure to the shareholders only upon full payment and availability of the rooms. The
Group has an obligation to complete the facility expected to be completed in 2020.

The preferred shares have the following features, rights, privileges and obligations which can be
availed by the preferred shareholders upon full payment:

a. All classes of the preferred shares are non-voting.

b. Preferred shareholders are entitled to use and occupy, for twenty-eight (28) nights per year (the
“Annual Usage Entitlement”), the rooms to be owned by the Group in the planned Acqua 6
Tower of the Acqua Private Residences (upon its completion and only when such rooms are
ready for occupancy), with the room class based on the class of preferred shares owned. Annual
Usage Entitlements are non-cumulative.

The corresponding room class of each class of shares are as follows:

Class of Preferred Shares Corresponding Room Class

Preferred A shares Studio Room
Preferred B shares One Bedroom Deluxe Room
Preferred C shares One Bedroom Superior Room
Preferred D shares One Bedroom Premier Room
c. The preferred shareholders shall be entitled to a share in Net Room Rental Revenue at the rate of
40% for all of the 152 rooms to be owned by the Group. The share of a preferred shareholder in
the Net Room Rental Revenue shall be payable annually. The share of a preferred shareholder in
the Net Room Rental Revenue shall be calculated based on the attributable square meters
(“SQM”) corresponding to the class of preferred shares held by such preferred shareholder for
every 13 preferred shares held.

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d. Net Room Rental Revenue means total revenue from rentals of all rooms less total room cost of
sales. The corresponding attributable SQM of each class of shares are as follows:

Class of Preferred Shares Corresponding Attributable SQM

Preferred A shares 8.00
Preferred B shares 11.75
Preferred C shares 19.00
Preferred D shares 21.75

e. The preferred shareholders shall no longer participate in any dividend declaration of the Group.

f. The preferred shareholders shall regularly and diligently pay the fees, contributions, charges and
other dues, including but not limited to the Annual Management Fee, Annual Operating Budget,
Furniture, Fittings and Equipment Reserve, pertaining to the maintenance and use of the rooms to
be owned by the Group.

33. Contingencies

The Group is contingently liable for lawsuits or claims filed by third parties (substantially civil cases
that are either pending decision by the courts or are under negotiation, the outcomes of which are not
presently determinable). In the opinion of management and its legal counsels, the eventual liability
under these lawsuits or claims, if any, will not have a material or adverse effect on the Group's
financial position and results of operations. The information usually required by PAS 37, Provisions,
Contingent Liabilities and Contingent Assets, is not disclosed on the grounds that it can be expected
to prejudice the outcome of these lawsuits, claims or assessments. No provisions were made in 2019,
2018 and 2017 with respect to the foregoing matters.

34. Notes to Consolidated Statements of Cash Flows

Below are the noncash transactions not included in the adjustments for income before tax in the
consolidated statement of cash flows for the years ended December 31, 2019, 2018 and 2017:
a. Transfer from deposit for purchased land to real estate inventories amounting to =
P166.00 million,
=522.26 million and =
P P105.72 million in 2019, 2018 and 2017, respectively (see Notes 6 and 7).
b. Transfer from real estate inventories to investment property amounting to =
P256.91 million,
=1,299.39 million and =
P P141.23 million 2019, 2018 and 2017, respectively (see Notes 6 and 10).
c. Transfer from investment property to real estate inventories amounting to =
P191.13 million in
2019 (see Notes 6 and 10).
d. Net change in fair value of equity instruments at FVOCI recognized in other components of
equity amounting to =P.02 million, P
=.01 million and (P
=.37 million), respectively.
e. Amortization of deferred financing costs amounting to =
P90.48 million, P
=89.34 million and
=48.73 million in 2019, 2018 and 2017, respectively (see Notes 17 and 28).
P

f. Additions to right-of-use assets and increase in lease liabilities for the transition to PFRS 16
amounting =P71.93 million in 2019.

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Changes in liabilities arising from financing activities

2019
Effect of foreign Advance rentals
Beginning of the Adoption of currency Amortization Dividend and security
year Cash flows PFRS 16 translation of discount declaration deposits Other movements End of the year
Short-term and long-term debts = 19,240,859,339
P (P
= 2,419,601,162) =–
P (P
= 116,330,537) = 90,482,227
P =–
P =
P =–
P P16,795,409,867
=
Bonds payable 1,505,894,698 2,925,987,567 – – 21,149,901 – – – 4,453,032,166
Non-controlling interest 1,109,270,329 826,521,357 – – – – – 196,721,370 2,132,513,056
Other noncurrent liabilities 624,797,479 412,195,714 – – – – 418,119,692 – 1,455,112,885
Deposits for preferred shares – 42,480,000 – – – – – – 42,480,000
Due to related parties 98,575,198 72,169,497 – – – – – 447,067 171,191,762
Dividends payable – (126,201,322) – – – 137,919,252 – – 11,717,930
Other noncurrent assets (1,320,598,313) (52,316,528) – – – – – (140,857,555) (1,513,772,396)
Lease liabilities – (10,755,613) 71,933,617 – – – – – 61,178,004
= 21,258,798,730
P = 1,670,479,510
P = 71,933,617
P (P
= 116,330,537) = 111,632,128
P = 137,919,252
P = 418,119,692
P = 56,310,882
P = 23,608,863,275
P

2018
Beginning of Effect of foreign Amortization of
the year Cash flows currency translation discount Dividend declaration Other movements End of the year
Short-term and long-term debts =14,598,740,062
P =4,407,584,400
P =145,192,729
P =89,342,148
P =–
P =–
P =19,240,859,339
P
Non-controlling interest 537,149,940 421,341,052 – – – 150,779,337 1,109,270,329
Other noncurrent liabilities 423,119,032 201,678,447 – – – – 624,797,479
Bonds payable 1,500,966,910 – – 4,927,788 – – 1,505,894,698
Dividends payable – (199,999,999) – – 199,999,999 – –
Due to related parties 48,171,031 14,991,684 – – – 35,412,483 98,575,198
=17,108,146,975
P =4,845,595,584
P =145,192,729
P =94,269,936
P =199,999,999
P =35,412,483
P =21,470,126,714
P

2017
Movement in deferred
Beginning of Effect of foreign financing
the year Cash flows currency translation cost Dividend declaration Other movements End of the year
Short-term and long-term debts =12,997,163,020
P =1,498,996,271
P =53,850,000
P =48,730,771
P =–
P =–
P =14,598,740,062
P
Other noncurrent liabilities 226,528,882 196,590,150 – – – – 423,119,032
Non-controlling interest 119,785,810 438,402,147 – – – (21,038,017) 537,149,940
Bonds payable 2,678,787,473 (1,187,360,000) – 9,539,437 – – 1,500,966,910
Dividends payable – (205,065,834) – – 205,065,834 – –
Due to related parties 326,005,489 (277,834,458) – – – – 48,171,031
=16,348,270,674
P =463,728,276
P =53,850,000
P =58,270,208
P =205,065,834
P (P
= 21,038,017) =17,108,146,975
P

*SGVFSM000361*
 - 74 -

35. Events After the Reporting Date

Issuance of preferred shares

On January 10, 2020, the Group listed at the main board of the PSE its maiden follow-on offering of
preferred shares under the trading symbol "CPGP". The Group offered 20 million preferred shares at
=100.00 each with an oversubscription option of up to 10 million preferred shares on
P
December 16, 2019 to January 3, 2020, after the SEC issued an order rendering the Registration
Statement that was filed on October 19, 2019 effective and a corresponding permit to offer the
securities for sale. The initial dividend rate was set at 6.72% per annum. The dividends on the
preferred shares shall be paid quarterly, every January 10, April 10, July 10, and October 10 of each
year.

COVID-19 outbreak
In a move to contain the COVID-19 outbreak, on March 16, 2020 the office of the Philippine
President issued Presidential Proclamation No. 929, declaring a State of Calamity throughout the
Philippines for a period of six (6) months and imposed an enhanced community quarantine
throughout the island of Luzon until April 12, 2020 which was subsequently extended until
April 30, 2020 and May 15, 2020. On May 12, 2020 this was further extended into a modified
enhanced community quarantine, wherein certain implementing rules have been relaxed. These
measures have caused disruptions to businesses and economic activities, and its impact on businesses
continue to evolve.

The following are potential business risks as well as the mitigating measures that the Group has
undertaken to immediately implement should the risks ensue.

Potential Business Risks Mitigating Measures

1. Work disruption during the · Activation of the Group’s business continuity plans based
community quarantine in Luzon on its risk assessments
enforced by the · Increased capabilities for alternative work arrangements
government. for the Group's employees and workers to continue
servicing its customers.

2. Supply-chain challenges for its · Recent assessments found that ports will remain open amidst
business operations. the current community quarantine scenario and the Bureau of
Customs has a team in place to accept shipments.
· Contingencies are in place in the event of enhanced
scenarios, including alternative ports and suppliers that can
temporarily augment our business requirements.

3. Sales and collections performance · Activated full shift to online marketing activities as part of its
may be affected by the community contingency plans.
quarantine enforced by the · Established frequent and open communication with clients to
government. help address concerns.
· Measures are in place for clients who may encounter
difficulties in their purchase journey.
· Options are discussed thoroughly with customers to avoid
any untoward cancellations.

*SGVFSM000361*
 - 75 -

Potential Business Risks Mitigating Measures

4. Delays in project completions in a · Delays of a few months are assumed into the Group’s current
scenario of enhanced quarantine. construction timelines.
· Buyers and bank partners are regularly updated on the
completion progress; adjustments are made on payment
timelines as the case may be.

5. All properties are located in the · Prudent financial and operational controls and policies
Philippines, exposing it to risks · Risk management initiatives
associated with the Philippines. · Constant monitoring of key economic and market indicators

6. Exposure to geographic portfolio · Landbank outside Metro Manila including Cavite,

concentration risks as substantial Pampanga, Batangas and Palawan
portion of the Group’s properties are
located in Metro Manila.

7. Significant portion of the Group’s · Clients located in 50 different countries; not exposed to a
revenue are derived from OFWs, single jurisdiction
balikbayans and other overseas · Company is expanding its product portfolio to cater to a
buyers, exposing the Group to risks wider customer base to include horizontal affordable housing
relating to the performance of
economies where they are located

The Group considers the events surrounding the outbreak as non-adjusting subsequent events, which do
not impact its financial position and performance as of and for the year ended December 31, 2019.
However, the outbreak could have a material impact on its 2020 financial results and even periods
thereafter. Considering the evolving nature of this outbreak, the Group cannot determine at this time the
impact to its financial position, performance and cash flows. The Group will continue to monitor the
situation.

*SGVFSM000361*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT

ON SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors

Century Properties Group Inc.
21st Floor, Pacific Star Building
Sen. Gil Puyat corner Makati Avenue
Makati City

We have audited in accordance with Philippine Standards on Auditing, the consolidated financial
statements of Century Properties Group Inc. and Subsidiaries (the Group) as at December 31, 2019 and
2018, and for each of the three years in the period ended December 31, 2019, and have issued our report
thereon dated May 18, 2020. Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in the Index to the Consolidated
Financial Statements and Supplementary Schedules are the responsibility of the Group’s management.
These schedules are presented for the purpose of complying with the Revised Securities Regulation Code
Rule 68, and are not part of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly state, in all material respects, the financial information required to be set forth
therein in relation to the basic consolidated financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

John T. Villa
Partner
CPA Certificate No. 94065
SEC Accreditation No. 1729-A (Group A),
December 18, 2019, valid until December 17, 2021
Tax Identification No. 901-617-005
BIR Accreditation No. 08-001998-76-2019,
February 26, 2019, valid until February 25, 2021
PTR No. 8125318, January 7, 2020, Makati City

May 18, 2020

*SGVFSM000361*
A member firm of Ernst & Young Global Limited
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT ON

COMPONENTS OF FINANCIAL SOUNDNESS INDICATORS

The Stockholders and the Board of Directors

Century Properties Group Inc.
21st Floor, Pacific Star Building
Sen. Gil Puyat corner Makati Avenue
Makati City

We have audited in accordance with Philippine Standards on Auditing, the consolidated financial
statements of Century Properties Group, Inc. and Subsidiaries (the Group) as at December 31, 2019 and
2018 and for each of the three years in the period ended December 31, 2019, and have issued our report
thereon dated May 18, 2020. Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The Supplementary Schedule on Financial Soundness
Indicators, including their definitions, formulas, calculation, and their appropriateness or usefulness to the
intended users, are the responsibility of the Group’s management. These financial soundness indicators
are not measures of operating performance defined by Philippine Financial Reporting Standards (PFRS)
and may not be comparable to similarly titled measures presented by other companies. This schedule is
presented for the purpose of complying with the Revised Securities Regulation Code Rule 68 issued by
the Securities and Exchange Commission, and is not a required part of the basic consolidated financial
statements prepared in accordance with PFRS. The components of these financial soundness indicators
have been traced to the Group’s consolidated financial statements as at December 31, 2019 and 2018 and
for each of the three years in the period ended December 31, 2019 and no material exceptions were noted.

SYCIP GORRES VELAYO & CO.

John T. Villa
Partner
CPA Certificate No. 94065
SEC Accreditation No. 1729-A (Group A),
December 18, 2019, valid until December 17, 2021
Tax Identification No. 901-617-005
BIR Accreditation No. 08-001998-76-2019,
February 26, 2019, valid until February 25, 2021
PTR No. 8125318, January 7, 2020, Makati City

May 18, 2020

*SGVFSM000361*
A member firm of Ernst & Young Global Limited
INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY
SCHEDULES

Schedule Contents

A Financial Assets

B Amounts Receivable from Directors, Officers, Employees, Related

Parties, and Principal Stockholders (Other than Related parties)

C Amounts Receivable from Related Parties which are Eliminated

during the Consolidation of Financial Statements

D Intangible Assets - Other Assets

E Long-Term Debt

F Indebtedness to Related Parties

G Guarantees of Securities of Other Issuers

H Capital Stock

I Schedule of Retained Earnings Available for Dividend Declaration

J Financial Ratios

K Map Showing the Relationships Between and Among the Companies in the
Group, its Ultimate Parent Company and Co-subsidiaries

L Schedule of Bonds Proceeds

 SCHEDULE A

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF FINANCIAL ASSETS
DECEMBER 31, 2019

Number of shares or Income received

principal amount of Amount shown in or
bonds and notes the balance sheet accrued
Cash and cash equivalents =–
P P
=4,005,009,231 = 99,287,587
P
Receivables
Trade receivables:
ICR – 10,477,877,484 504,096,166
Leasing receivables – 192,163,903 –
Management fee – 174,895,185 –
Receivables from
employees and agents 411,632,225 –
Advances to condominium
corporations 162,244,369 –
Advances to customers – 68,203,079 –
Other receivables* – 244,557,903 –
Due from related parties – 419,654,624 –
Investment in Bonds – 463,750,000 –
Rental deposit – 152,396,921 –
=–
P P
=16,772,384,924 =603,383,753
P
* Excluding other receivables amounting to =
P384.22 million as of December 31, 2019.
 SCHEDULE B

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES, AND
PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES)
DECEMBER 31, 2019

Name and Balance at Balance at

Designation of beginning of Amounts Not the end of
debtor period Additions collected Current Current the period
Officers, Directors
and Employees =18,762,777
P =10,657,388
P (P
=13,371,003) =16,049,162
P =-
P =16,049,162
P
 SCHEDULE C

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
RELATED PARTIES WHICH ARE ELIMINATED DURING THE
CONSOLIDATION OF FINANCIAL STATEMENTS
DECEMBER 31, 2019

Receivable Payable Current

Balance Balance Portion
CPGI =6,119,677,992
P (P
=36,775,774) =6,082,902,218
P
CLC 866,355,877 (6,682,277,191) (5,815,921,314)
PPHI 7,249,564 (13,683,920) (6,434,356)
CCDC 4,874,625,300 (2,766,219,356) 2,108,405,944
CCC – (2,099,441,132) (2,099,441,132)
CPMI 10,959,478 (26,882,989) (15,923,511)
CPHLI – (253,587,849) (253,587,849)
Total Eliminated
Receivables/Payables P
=11,878,868,211 (P
=11,878,868,211) P
=–
 SCHEDULE D

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF INTANGIBLE ASSETS - OTHER ASSETS
DECEMBER 31, 2019
Other
Charged changes
Beginning Charged to cost to other additions Ending
Description Balance Additions at cost and expenses accounts (deductions) Balance
Trademark =3,024,289
P =–
P =–
P =–
P =–
P =3,024,289
P
Software
Cost 34,949,170 2,105,735 (5,405,089) – – 31,649,816
P37,973,459
= P2,105,735
= (P
=5,405,089) P–
= P–
= P34,674,105
=
 SCHEDULE E

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF LONG-TERM DEBT
AND BONDS PAYABLE
DECEMBER 31, 2019

Long-term Debt and Bonds Payable

Amount shown
Amount shown under under caption
caption "Current “Noncurrent
Title of Issue and type of Amount authorized Liabilities” in related Liabilities” in
obligation by indenture balance sheet related balance sheet
Term Loan =8,414,050,455
P =2,454,907,249
P =5,959,143,206
P
Payable under CTS financing 6,914,652,948 3,002,015,540 3,912,637,408
Chattel Mortgage 14,013,545 5,244,108 8,769,437
Bonds payable 4,453,032,166 1,392,653,130 3,060,379,036
P
=19,795,749,114 P
=6,854,820,027 P
=12,940,929,087
 SCHEDULE F

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF INDEBTEDNESS TO RELATED PARTIES
(LONG-TERM LOANS FROM RELATED COMPANIES)
DECEMBER 31, 2019

Indebtedness to related parties (Long-term loans from Related Companies)

Name of related party Balance at beginning of period Balance at end of period

N/A
 SCHEDULE G

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF GUARANTEES OF SECURITIES OF
OTHER ISSUERS
DECEMBER 31, 2019

Guarantees of Securities of Other Issuers

Name of issuing entity of Title of issue of Amount owned
securities guaranteed by each class of Total amount by person for
the company for which securities guaranteed and which statement Nature of
this statement is filed guaranteed outstanding is file guarantee

N/A
 SCHEDULE H

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF CAPITAL STOCK
DECEMBER 31, 2019

Capital Stock
Number of Number of
shares issued shares reserved
and outstanding for options
Number of as shown under warrants, Number of Directors,
shares related balance conversion and shares held by officers and
Title of Issue authorized sheet caption other rights related parties employees Others
Capital Stock 18,000,000,000 11,599,600,690 – – 9 –
*All nine (9) directors have one (1) nominal common shares issued
 SCHEDULE K

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

MAP SHOWING THE RELATIONSHIPS BETWEEN AND AMONG THE
COMPANIES IN THE GROUP, ITS ULTIMATE PARENT COMPANY AND CO-
SUBSIDIARIES
DECEMBER 31, 2019

Century Properties Group Inc. (CPGI) – incorporated in May 6, 1975, CPGI is the listed Company of
CPI with property development corporations as subsidiaries.

CPGI Subsidiaries
Century City Development Corporation (CCDC) – incorporated in 2006, is focused on developing
mixed-use communities that contain residences, office and retail properties. CCDC is currently
developing Century City, a 3.4 hectare mixed-use development along Kalayaan Avenue, Makati City.
CCDC has fourteen local subsidiaries.

Milano Development Corporation (MDC) & Centuria Medical Development Corporation (CMDC)
– is a wholly owned subsidiary of CCDC. Affiliated company under CCDC includes CCDC II.

Century Communities Corporation – incorporated in 1994, is focused on horizontal house and lot
developments. From the conceptualization to the sellout of a project, CCC provides experienced
specialists who develop and execute the right strategy to successfully market a project. CCC is currently
developing Canyon Ranch, a 25-hec house and lot development located in Carmona, Cavite. 100% owned
by CPGI.

Century Limitless Corporation (CLC) – incorporated in 2008, is Century’s newest brand category that
focuses on developing high-quality, affordable residential projects. Projects under CLC caters to first-
time home buyers, start-up families and investors seeking safe, secure and convenient homes. It has one
internal branch office in Singapore namely CLC Singapore. CLC is 100%owned by CPGI.
 -2-

Century Acqua Lifestyle Corporation - incorporated on November 6, 2014, a wholly owned subsidiary
of CLC, was organized primarily to acquire by purchase, own, hold, manage, administer, lease or operate
condominium units of the planned Acqua 6 Tower of Acqua Private Residences for the benefit of its
shareholders.

PHirst Park Homes Inc. - PHirst Park Homes Inc. was incorporated on August 31, 2018 and is the first-
home division and brand of CPGI. Its projects are located within the fringes of Metro Manila and its target
market are first homebuyers. Its current projects are located at Bo. San Lucas in Lipa City and San Pablo,
Laguna, which involve a multi-phase horizontal residential property and offer both Townhouse units &
Single Attached units. PHirst Park Homes is a joint venture project between Century Properties Group Inc.
and Mitsubishi Corporation with a 60-40% shareholding, respectively.

Century Properties Management Inc. (CPMI) – incorporated in 1989, is one of the largest property
management companies in the Philippines, as measured by total gross floor area under management.
100% owned by CPGI after acquisition of the shares of Mr. Romig.

Century Destinations and Lifestyle Corporation (formerly “Century Properties Hotel and Leisure
Inc.”) - CDLC, incorporated in March 27, 2014, is a newly formed wholly-owned subsidiary of CPGI.
CDLC shall operate, conduct and engage in hotel business and related business ventures.

A2Global Inc. - A2Global Inc., incorporated in 2013, is a newly formed company wherein CPGI has a
49% shareholdings stake. A2Global shall act as a sub-lessee for the project initiatives of Asian Carmakers
Corporation (ACC) and Century Properties Group Inc. in the development and construction commercial
office in Fort Bonifacio.
 SCHEDULE I

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

RECONCILIATION OF RETAINED EARNINGS AVAILABLE FOR
DIVIDEND DECLARATION
DECEMBER 31, 2019

Unappropriated Retained Earnings, as adjusted to

P
=1,338,291,238
available for dividend distribution, beginning

Add: Net income (loss) actually earned/realized during the period

Net income (loss) during the period closed to Retained Earnings (224,107,736)
Less: Non-actual/unrealized income net of tax
Equity in net income of associate/joint venture −
Unrealized foreign exchange gain - net (except those attributable
to Cash and Cash Equivalents) −
Unrealized actuarial gain
Fair value adjustment (M2M gains) −
Fair value adjustment of Investment Property resulting to gain −
Adjustment due to deviation from PFRS/GAAP-gain −
Other unrealized gains or adjustments to the retained earnings as
a result of certain transactions accounted for under the PFRS −
Sub-total −

Add: Non-actual/Unrealized Losses

−
Depreciation on revaluation increment (after tax)
−
Adjustment due to deviation from PFRS/GAAP – loss
−
Loss on fair value adjustment of investment property (after tax)
−
(224,107,736)
Net Income Actual/Realized

Add (Less):
Dividend declarations during the period (137,919,252)
Appropriations of Retained Earnings during the period −
Reversals of appropriations −
Effects of prior period adjustments −
Treasury shares (109,674,749)
(247,594,001)
TOTAL RETAINED EARNINGS, END
AVAILABLE FOR DIVIDEND P
=866,589,501
 SCHEDULE J
CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES
SCHEDULE OF FINANCIAL RATIOS
DECEMBER 31, 2019

Financial ratios Dec-19 Dec-18

Current/Liquidity Ratios
Current Assets 34,365,499,239 31,997,110,107
Current Liabilities 16,099,335,229 15,050,236,472
Current Ratios 2.1 2.1
Current Assets 34,365,499,239 31,997,110,107
Inventory 15,558,004,362 17,257,481,436
Quick Assets 18,807,494,878 14,739,628,671
Current Liabilities 16,099,335,229 15,050,236,472
Quick Ratios 1.2 1.0
Liabilities and Debt Ratios
Short-term debt 1,452,692,919 2,206,610,954
Long-term debt - Current 5,462,166,897 5,389,150,881
Long-term debt - Non-current 9,880,550,051 11,645,097,504
Bonds payable 4,453,032,166 1,505,894,698
Debt 21,248,442,033 20,746,754,037
Equity 19,615,569,488 17,463,466,559
Debt-to-Equity 1.1 1.2
Debt 21,248,442,033 20,746,754,037
Cash and Cash Equivalents 4,005,009,231 1,950,389,193
Net Debt 17,243,432,802 18,796,364,844
Equity 19,615,569,488 17,463,466,559
Net Debt-to-Equity 0.9 1.1
Debt 21,248,442,033 20,746,754,037
EBITDA 2,861,187,076 2,073,929,849
Debt-to-EBITDA 7.42 10.00
Income before Income Tax 2,056,032,947 1,621,956,880
Interest expense 747,608,418 414,117,993
Depreciation and amortization 57,545,711 37,854,976
EBITDA 2,861,187,076 2,073,929,849
Asset to Equity Ratios
Total Assets 53,441,685,612 49,366,682,829
Total Equity 19,615,569,488 17,463,466,559
Asset to Equity Ratio 2.7 2.8
Liabilities to Equity Ratios
Total Liabilities 33,826,116,124 31,903,216,270
Total Equity 19,615,569,488 17,463,466,559
Liabilities to Equity Ratio 1.7 1.8
Financial ratios Dec-19 Dec-18
Profitability ratios
Revenue 14,315,016,268 10,701,878,291
Gross Profit 5,342,782,822 4,542,174,431
 -2-

Gross Profit Ratio 37% 42%

Net Income Attributable to Equity

holders of the Parent Company 1,281,748,829 985,915,365
Revenue 14,315,016,268 10,701,878,291
Net Income Margin 9.0% 9.2%

Total Net Income after tax (Annualized) 1,478,470,199 1,118,186,619

Total Asset CY 53,441,685,612 49,366,682,829
Total Asset PY 49,366,682,829 42,555,650,621
Average total asset 51,404,184,221 45,961,166,725
Return on Asset 2.9% 2.4%

Total Net Income after tax (Annualized) 1,478,470,199 1,118,186,619

Total Equity CY 19,615,569,488 17,463,466,559
Total Equity PY 17,463,466,559 16,255,621,463
Average total equity 18,539,518,024 16,859,544,011
Return on Equity 8.0% 6.6%

Net Income 1,478,470,199 1,118,186,619

Revenue 14,315,016,268 10,701,878,291
Net Income Margin 10.3% 10.4%

.
 SCHEDULE L

CENTURY PROPERTIES GROUP INC. AND SUBSIDIARIES

SCHEDULE OF BOND PROCEEDS
DECEMBER 31, 2019

P
=3.0 BILLION FIX RATE BONDS DUE 2022

ESTIMATED
(In Pesos) PER PROSPECTUS ACTUAL
Issue Amount 3,000,000,000 3,000,000,000
Less: Upfront Fees
SEC registration and legal research fee 1,073,125 1,325,725
Documentary Stamp Tax 22,500,000 22,500,000
Underwriting fees 22,500,000 22,500,000
Estimated Professional and Agency Fees 10,065,100 32,152,583
Listing fees 50,000 50,000
Marketing/Printing/Photocopying Costs and OPEs 50,000 70,562
Total Expenses 56,238,225 78,598,869
Net Proceeds 2,943,761,775 2,921,401,131

Balance of proceeds as of December 31, 2019 =

P2.41 Billion

Century Properties Group, Inc. raised from the Bonds gross proceeds of = P3.0 billion. After issue-related
expenses, actual net proceeds amounted to approximately = P2.25 billion. =
P681.83 million of the net
proceeds were used to partially finance affordable projects.