EEI Corporation Annual Report 2021

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Building our Dreams Together EEI on Kindling Hope and Igniting Possibilities

2021 Annual Report

2021 In Review

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Message to the Shareholders

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Financial Highlights

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Projects Completed

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Projects Obtained

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Ongoing Projects

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Our People

54

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Corporate Information

62

Philippine Economic Performance

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Audited Financial Statements

66

Domestic Subsidiaries Report

26

Al Rushaid Construction Co., Ltd. (ARCC) Report

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Sustainability Report

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Digital Innovation Saudi Arabia Economic Performance

2021 In Review

EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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Building our Dreams Together

EEI on Kindling Hope and Igniting Possibilities 2021 was a breakthrough year for us at EEI. Although it followed the heels of the first year of the pandemic, the past 12 months have pushed our Group to adapt, transform, and navigate unpredictable circumstances. It also paved the way for us to embrace another role in the community-- that of a changemaker.

As the waves of the outbreak hit, we took it upon ourselves to continue building, creating, and moving forward with the plans we had set.

We utilized the time to lay the groundwork so that when the economy, our country, and the world gradually open up, they will have the infrastructure, utilities, services, manpower, equipment, and capacity to retrace their steps and recover.

Our direction for 2021 was clear to all members of the EEI Team: it was to move forward by building capacity and increasing resources and assets. This strategy would enable us to create and sustain more employment opportunities, expand our operations, and pursue life-enabling projects.

We understood the value of action during a time when most industries and citizens were severely affected by the health crisis and community restrictions.

So, despite the challenges, we completed 27

projects in 2021, three of which were just awarded in the same year.

The Skyway Stage 3-Section 2A, Oro Cemento, South East Metro Manila Expressway Sections 1A & 1B, and the NLEX-Meycauayan and Bigaa Bridge Strengthening Project were among our list of completed projects 2021.

The EEI Team worked on 39 ongoing projects in the same period. These projects vary in scope and scale from public infrastructure, construction of condominiums, residential complexes, foundation work, repairs and rehabilitation jobs, and property development. We also won 31 new projects in 2021.

Although we still have plenty of groundwork to cover, we are optimistic that our inroads will enable more businesses to restart. The work we have done can facilitate more manageable and smoother transportation of goods, provide secure homes, and empower numerous commuters, business leaders, and industries to move forward.

This annual report narrates EEI’s journey in 2021.

It is a journal of our successes, milestones, and the hurdles we had and continue to overcome. It also documents our vision and hope for the future – that despite the uncertainty of the times, EEI, its stakeholders, and the immediate community can finally realize the dreams that were temporarily put on hold by the pandemic.

EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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Message to the Shareholders

ROBERTO JOSE L. CASTILLO President & Chief Executive Officer

HELEN Y. DEE Chairperson

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2021 was a year of recovery, excellence, and celebration for EEI. We were able to achieve a revenue of ₱16.1 billion, up from ₱13.9 billion in 2020. Our Net income also grew to ₱479 million, from over ₱2 billion losses registered in the previous year. We achieved these numbers despite the country still being in the middle of the COVID-19 pandemic in 2021.

We value our employees and make sure that their well-being always comes first, especially during these times. With the threat of the COVID-19 virus threatening the health and safety of our people, we strictly adhered to the safety protocols imposed by the Philippine government. We also helped our employees get their first and second doses of the COVID-19 vaccine when they became available in the third quarter of the year. As of December 2021, a total of 14,632 employees or 95.6% had been vaccinated.

EEI continues to be the contractor of choice of many property developers and companies in the Philippines. Our quadruple-A rating from the Philippine Contractors Accreditation Board (PCAB) allows us to build large-scale infrastructure works, high-rise buildings, and complex industrial facilities.

Our experience and expertise, coupled with the trust of our customers, has opened the doors for more prospects and undertakings.

During the year, we completed a total of 27 projects.

The most notable of these are the Metro Manila

Skyway Stage 3 Section 2A, Section 1A and 1B, and various contracting works for the Metro Manila Subway Project. We are also working on 70 other building, infrastructure, and electromechanical projects here in the Philippines, as well as industrial projects in Saudi Arabia. From these ongoing projects, 31 were awarded in 2021. As such, our backlog, which represents the unworked portion of our existing contracts, peaked at ₱60.25 billion in October 2021, and stood at ₱54 billion by the end of the year.

To pave the way for more growth and expansion for EEI, we listed preferred shares in December 2021.

Investors gave us their trust and confidence and we were able to raise ₱6 billion from this issuance. The proceeds will be used to finance EEI’s current and future mega-infrastructure projects, manage EEI’s liabilities, fund capital expenditures, and invest in new businesses and emerging technologies. EEI continues to explore other business opportunities, both within and outside of the construction sector.

Moreover, we have also been working on expanding our existing subsidiaries.

As EEI celebrates 90 fruitful years in the construction industry, we would like to thank our shareholders, clients, and business partners for continuing to be with us through our highs and lows.

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Financial Highlights 2021 began with a slow and rocky start.

Although restrictions were gradually eased to General Community Quarantine (GCQ) in the first quarter, it swung back to a more restrictive Enhanced Community Quarantine (ECQ) in March and April due to a spike in COVID-19 cases nationwide.

Despite the community restrictions, essential industries such as construction activities were allowed to remain operational using reduced staff.

Net Income (in million pesos)

This exemption enabled the Group to move forward with its projects and gradually regain its footing. From decreased revenues in Q1 to modest gains from Q2 to Q4, EEI remained persistent in its task of rebuilding and recovering for its businesses, stakeholders, and the community.

Here are the highlights of our financial performance and backlog of projects standing in 2021.

Revenues (in million pesos)

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Earnings per Share (in pesos)

Assets, Liabilities, and Equity (in billion pesos)

Book Value per Share (in pesos)

Equity in Net Earnings of Associates and Joint Ventures (in million pesos)

Backlog of Projects

Financial Ratios

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EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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EEI on helping and empowering its employees personally and at work.

“

Hope. Even when you are overwhelmed by the uncertainty brought about by the pandemic.

The unwavering determination of our leadership to bring that message of hope was overpowering. To know that you still have a job, a way to connect with your co-workers, that sense of community wherein you have someone you can depend on at the most trying times.

“

Marlo Dominic Delizo, 46 HRM - Organization and Learning Development

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2021 Project

Highlights

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Projects Completed in 2021 The working conditions in 2021 were an improvement compared to 2020. Construction work and other essential industries were allowed to operate with half of their workforce for most of the year, while strictly abiding by health protocols to prevent COVID-19 infections.

The reduction and restraints in personnel made projects more challenging to execute. Yet, EEI saw the new working conditions as an opportunity to level up process efficiency and foster greater collaboration within the group.

These are the projects we completed in 2021.

Buildings •

House of Investments Inc. Mapua Makati Building

Infrastructure • • • • • • • •

Construction Works for the Improvement of Eight (8) Critical Link Slabs of the Candaba Viaduct Construction Works for the Improvement of Twelve (12) Critical Link Slabs of the Candaba Viaduct The Metro Manila Skyway Stage 3, Section 2A, Piers 27 to 37 The South East Metro Manila Expressway (SEMME) Section 1A and 1B NLEX-Meycauayan and Bigaa Bridge Strengthening Project (also awarded in 2021) Metro Manila Subway Project – Construction and Completion of Tunnel Boring Machine Staging Metro Manila Subway Project – North Avenue Station Pre-construction Works Metro Manila Subway Project – North Avenue Site Preparation Works

Electromechanical • • • • • • •

JFE Fukuyama Fabrication Works San Miguel Brewery, Inc.’s Bacolod Brewery Expansion Package 2 Natura Aeropack Corporation – Fabrication and Delivery of Reactors SFEX Widening Project (Sta. Clara) Oro Cemento SMNCI Line 3 Expansion Project Siemens Electrification Installation Works for UPPC PM3 Project

ARCC • • • • • • • • • • •

TASNEE – Manpower Supply for Furnace #3 Decoking (Cutting/Welding) Saudi Aramco – Replacement of Pressure Vessel at South Gawar RPO 27 – Execution of Remaining Scope for HDO Handling Facility at Ras Tanura Refinery Khurais Plant Restoration Works (direct Saudi Aramco) Khurais Restoration Project – Procurement and General Construction Works for Snamprogetti S.A. Ltd. Sadara Chemical Co. – MFC Furnace Radiant Coil Repair/ Coil Services Supply and Installation of Equipment Shade at Silasil Farm Piping Pre-fabrication for BERRI Project Replacement of Gas Compression at Abqaiq Plant Replacement of AC Equipment at Ras Tanura Refinery Acciona Agua S.A. – Sea Water Reverse Osmosis (SWRO) at Al Shuqaiq 3 Project (Mechanical & SDS Piping Erection Package)

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Metro Manila Skyway Stage 3 - Balintawak Flyover

Sadara Chemical Co.

Siemens Electrification Installation Works EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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San Miguel North Cement Inc. Line 3 Expansion Project

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Analog B3 South Project

Projects Obtained in 2021 One of our goals in 2021 was to forge ahead and seize profitable opportunities that could strengthen the Group’s and our stakeholders’ capacities and boost our resources and assets as well. This approach enabled us to generate more employment opportunities and establish life-empowering projects that support economic growth.

We leveraged our digitalized systems, operational innovations, highly-skilled workforce, and outstanding track record to win 31 new productive and rewarding projects using this strategy.

Buildings • • • •

Cebu Landmasters’ The Masters Tower Project SMDC’s Ice Tower Sands Residences The Yuchengco Centre Phase 1-Demolition & Excavation

Infrastructure • • • • • •

NLEX – Meycauayan and Bigaa Bridge Strengthening Project MCRP CPN-04 Subcon Package - RC Works Underground and Viaduct Structures MCRP CPN-04 Structural BR 107 Steel Through Girder Metro Manila Subway Project CP-101 Construction of Light Repair Shop (Civil, Structural, Architectural Package) Metro Manila Subway Project - Temporary Yard Development & Piling Work for Depot Metro Manila Subway Project - North Avenue Station Site Preparation Works Electromechanical

• • • • • •

Supply, Fabrication, and Delivery of Structural Steel Box Girder for NLEX-SLEX Connector Road Section 1 Analog B3 South Project D&L - Fabrication of 2 Units Reactors and 2 Units Drop T Freyfil Corp. - Mindanao Bridge Integrated Synergy Const. - Site Preparation Work (Zones 3 & 4) at Atimonan Powerplant Project Project Lucy 2.0 Supply of Pre-fabricated Pipe Spooling

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• • • • • • • • • • • • • •

SSEM - Manpower Supply for Reverse Osmosis & Sewage Treatment Plant for Saudi Aramco MAADEN – Construction of Dust Suppression Pond-3 (DSP-3) in Residue Storage Area (Civil Works) DAELIM - Manpower Supply for Maaden Ammonia III Project TR - Manpower Supply for Ras Tanura Refinery Clean Fuels Project Saudi Aramco - Riyadh Refinery Restoration Manpower Supply for Wastewater Disposal System Refurbishment SMR ARPIC - Supply and Installation of Equipment Shade at Silasil Farm Manpower & Equipment Supply (Safaniyah - SMR#185) Heater Mechanical Repair EBS-II T/A 2021 (Petrokemya North) YANPET Shutdown Works for Line 6 & 7 (SABIC Man Supply) Remaining Work Activities for Upgrade of Onshore Flare Systems at Safaniyah Shuaiba Desalination Plant Technology and Expired Assets Replacement Project Furnace Maintenance Services for Saudi Kayan Plant Furnace 7 Furnace Maintenance Services for Yansab Olefins Plant Furnace 8 SAUDI APOC PDH / UTOS Project

The Masters Tower Project

•

The Yuchengco Centre Phase 1-Demolition & Excavation

ARCC

Site Preparation Works Atimonan

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MRT 7 Project

Ongoing Projects in 2021

•

We understand the importance of continuing projects even during times of uncertainty. EEI immediately rolled out digitalized systems, streamlined operations, devised efficient employee rotations and schedules, and implemented highlyadvanced health and safety protocols to ensure that our operations remained “business as usual.”

We had 39 ongoing projects in 2021. These are the projects under development.

•

Buildings • • •

Federal Land’s Four Seasons Riviera – Podium and Tower 3 Federal Land’s Seasons Residences 4-Towers (formerly known as Sunshine Fort) Federal Land’s Big Apple – Park Avenue

• • • • • •

• • •

Federal Land’s Grand Hyatt Manila Gold Residences 2 - Superstructure Federal Land’s IMET BPO Towers 2, 3, and 4 Federal Land’s Grand Midori Ortigas SMDC’s Air Residences in Makati City SMDC’s Glam Residences in Quezon City SMDC’s Light Residences Phases 1 and 2 in Mandaluyong Torre Lorenzo Development Corporation’s 3 Torre Lorenzo in Malate, Manila Torre Lorenzo Development Corporation’s Torre Lorenzo Malate in Malate, Manila Torre Lorenzo Development Corporation’s Torre Lorenzo Loyola in Quezon City Cyberzone Properties’ Cebu Cyberzone Towers 3 and 4 Filinvest Land’s Clark Mimosa Lifestyle Mall in Angeles, Pampanga

Infrastructure • •

Metro Manila Subway Project – Phase 1 Metro Manila Subway Project – Demolition Works for North Avenue Station, Quirino Highway Tandang Sora and Depot Building Compound

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Torre Lorenzo Malate

Metro Manila Skyway Stage 2, Sucat Alabang Viaduct

•

•

•

• •

• • • •

Malolos Clark Railway Project CPN 04 (JV Portion with ACCIONA) Malolos-Clark Railway Project (MCPR) CP N-05 (Site Clearing and Earthworks Package #1) Design and construction of the MRT 7 Civil Works Package for Universal LRT Corporation Erection and Construction of the relocation works for the affected transmission and construction of the MMSS3 Project Sections 3 and 4 (NGCP Skyway) The Metro Manila Skyway Stage 3 Sections 3 and 4 The Metro Manila Skyway Stage 3, Sections 4 – C3-A. Bonifacio Interchange The Metro Manila Skyway Stage 3, Section 5 – Balintawak Flyover The Metro Manila Skyway Stage 2, Sucat Alabang Viaduct Improvement

Electromechanical •

•

• •

ARCC • • • • • • • •

Petron Corporation’s Petron Bataan Refinery RSFFB PHASE-3 OSBL-3 Electrical Connection and Installation of Spare LPG Pump for Tank Truck Loading Project (BPP19-0027) SMNCI Line A Expansion Project

Southern Star Project – SSP Industrial CP-01 General Construction Works Compostela Steel Asia Inc. Foundation Works Temporary Works for the Atimonan Power Plant Project

• •

Fire Protection for Sulfur Storage Facilities for Saudi Aramco Debottleneck Onshore Plant for ENPPI Remaining Works FGRS & NGP at Safaniyah for Saudi Aramco Saudi Aramco - Abqaiq Plant Restoration Dewatering System & Oily Water Sump Pits Project for Saudi Aramco Acciona Agua S.A. - Sea Water Reverse Osmosis (SWRO) at Al Shuqaiq 3 Project (Civil Work Package) Refinery Lagoon FWS Pipes Replacement Project Hawiyah Unayzah Gas Reservoir Storage Project (Structural, Mechanical, Piping, Insulation & Painting Works “Package 2”) Installation of New Seal Leg at DR Module C at Hadeed Plant NEOM Primary Healthcare Facility for ARPIC

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Digital Innovation The Key to an Agile EEI

While EEI’s various construction projects and business units had carefully resumed full scale operations in 2021, the Corporation’s efforts to relentlessly pursue improvement in various areas also continued. This was especially evident in EEI’s new approach in developing its most important asset: its employees, where training and development transitioned into the digital age. The past year saw the grand launch of EEI’s EUREKA! Learning Management System.

With our continuing commitment to offer all our employees opportunities for personal and professional development, the EUREKA! Learning Management System is EEI’s new central hub for our programs and initiatives for Talent Development and Skills Training. This jointinitiative between the Learning & Development and Information Technology group is envisioned to be the talent development platform for ensuring that EEI’s employees are ready to fulfill their collective mission of being Builders of a Better Future. EUREKA! hosts the wide array of self-paced and on-demand training modules around EEI’s core competencies, as well as modules focused

on one’s functional, technical and leadership competencies.

The past year also ushered in the full-scale deployment of EEI One Service, which is the organization’s new internal request management system that will enable its various internal support functions to automate and improve their overall handling and management of various internal requests from new software installations and controlled documents, to IT service desk support. This new technology enables internal support functions to further scale, optimize, and enhance their service delivery for various routine transactions and departmental support requests.

EEI also continued to progress in its multi-year program to improve its overall project delivery processes with some key milestones in 2021.

In the area of project controls, the previous year marked the completion of the system integration between EEI’s technology solution for project planning and scheduling, Primavera P6, and EEI’s Enterprise Resource Planning (ERP) solution, Oracle Fusion. The integration between project

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and cost data will enable project teams to make better decisions related to managing the schedule and cost performance of their respective projects.

This joint initiative between EEI’s Planning, Cost Control and Finance group will help EEI deliver improved project outcomes for both the corporation and our customers.

Our digital construction journey continued to evolve with the further adoption of Reality Capture solutions by EEI’s Project Planning Department and Survey Department in its preconstruction planning and progress monitoring.

Reality Capture solutions enable project teams to generate 3D models and data related to existing site conditions from drone-captured videos and laser scanners. This type of data enables our teams to reduce the time and effort to survey the

conditions of potential and ongoing jobsites for logistics planning and work progress assessment.

Finally, EEI’s Field Operations Teams also made important strides in implementing new tools, materials and construction methodologies that delivered productivity improvements in our construction activities. Led by our Buildings Group Innovation unit, enhancements in the choice of formworks material and the ramped up deployment of new mechanized tools have delivered numerous project benefits around cost and quality. The successful capital raising effort of the corporation at the end of 2021 will help fuel more necessary investments in modern construction equipment and technology that will ultimately help EEI improve its construction services and benefit its clients.

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Saudi Arabia Economic Performance 2021 The Kingdom of Saudi Arabia’s (KSA) oildependent economy suffered greatly as the COVID-19 pandemic affected the global demand for petroleum products.

The Organization of the Petroleum Exporting Countries (OPEC) announced extended production cuts and as a result, declining oil prices pulled the country into a recession, with its GDP contracting by 4.1% in 2020 from the 0.3% growth in 2019.

Despite these setbacks, Saudi Arabia’s economy is on the road to recovery with the improving global conditions, ongoing national vaccination programs, and higher oil prices.

This economy was expected to grow by 2.4%

in 2021. Astoundingly, Saudi Arabia’s Gross Domestic Product (GDP) rose by 6.7 percent in the fourth quarter of 2021, while growth across the whole year increased by 3.2 percent.

Saudi Arabia’s Public Investment Fund (PIF) launched its five-year strategy (20212025), which, in line with its Vision 2030, will enable the development of new industries that will drive Saudi Arabia’s economic transformation. It aims to rampup the country’s economy by contributing to non-oil GDP growth and investing opportunities across diversified sectors, including renewable energy and construction.

Pandemic Era

Road to Recovery

GDP Contracted in 2020

Expected Economic Growth

4.1% 2.4% 3.2% 0.3% from

GDP growth in 2021

from improving global conditions

growth in 2019

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Philippine Economic Performance 2021 The Philippine Economy fell into a recession in 2020 amid the prolonged effects of the COVID-19 pandemic and the damages caused by the strong typhoons Rolly, Quinta, and Ulysses. The real gross domestic product (GDP) declined by 9.6 percent from the growth of 5.9 percent in 2019. The construction sector likewise shrank by 25.7% during the year in review.

A gradual recovery was expected in the succeeding quarters of 2021 as consumer and business confidence is boosted by the gradual reopening of the economy brought by the arrival of COVID-19 vaccines. Infrastructure spending will be at the forefront of the country’s growth with the increased focus on the sector’s budget. The International

Pandemic Era + Natural Disasters

9.6% 5.9% GDP decline in 2020 from

growth in 2019

Monetary Fund (IMF) forecasted a 6.9% GDP growth rate for the Philippines in 2021.

Downside risks to the economy’s growth remain as a larger second wave of the pandemic may once again re-impose stricter health measures and threaten to disrupt trade and supply chain movements. Proper coordination and implementation of the Government’s initiatives to tackle the pandemic will be the key towards the economy’s full recovery.

The Philippine Gross Domestic Product (GDP) posted a growth of 7.7 percent in the fourth quarter of 2021, resulting in 5.6 percent fullyear growth in 2021.

Road to Recovery

25.7% 6.9% scale of shrinking of the construction sector

expected GDP Growth from improving global conditions

5.6%

GDP Growth in 2021 EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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EEI on supporting and leading its employees in overcoming challenges and roadblocks.

“

EEI is a supportive contractor. Issues and resolution options were discussed, negotiated, and put to action because of the open communication policy of the contractor. EEI is also closely monitoring and communicating with our construction management team to resolve any issue onsite.

“

Engr. Antonino Aligaen

Head of Technical Project Execution Group, Federal Land, Inc.

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2021 Towards

Sustainability

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Domestic Subsidiaries Report JP Systems Asia Inc. 2021 Operations Report 2021 proved to be a complete turnaround year for JP Systems Asia, Inc. (JPSAI). Notwithstanding the slow resurgence of the Philippine market, due to a series of COVID-19 waves, JPSAI produced ₱88.75 million revenues in 2021, that resulted to a net income of ₱13.01 million for its 2021 operations.

This was an overwhelming 200% increase from the previous year’s annual revenues of ₱29.60 million. This was a 180-degree pivot from its ₱-12.84 million loss in year 2020. The banner year’s revenues were driven by JPSAI’s core business, Scaffolding Rental, Formworks Shoring Rental and Asset Management Services which includes inventory management, refurbishment & repair of all EEI Scaffolding inventory.

With the resumption of the pandemic-suspended projects, JPSAI was able to support its valuable clients by providing its Iq Ringlock Scaffolding System in Power Plant Maintenance works in Bataan & Quezon, various Infrastructure and Industrial projects like Sucat-Alabang Viaduct, SEME, Southern Star, Analog and San Miguel Brewery Expansion projects. While JPSAI’s Formworks & Falsework Shoring Systems were supplied to EEI’s Infrastructure project, MRT7 and High-rise Building projects such as Glam Residences & Grand Midori. The refurbished conventional scaffolding materials, which was the subject of ownership transfer, were re-deployed to 22 EEI projects last year.

2022 Outlook JPSAI will continue to provide solutions to its clients, banking on its specialty & competency in Scaffolding & Formworks Shoring Systems.

It will keep up with the transfer of all EEIowned scaffolding materials and show its value in refurbishment and control in inventory management. JPSAI plans to expand its presence by forming a Scaffolding & Formworks Hub which can serve the uncovered clientele outside EEI.

Biotech JP Adapting and thriving—the seemingly endless changes brought by COVID-19 brought with it challenges that threatened to cripple industries and halt progress. Despite this, BiotechJP Corp (BTJP) was able to power through these wearisome times and achieve its goals, kicking off 2021 with the start of the full operation of the Tarlac Plant last April 2021. Led by BiotechJP President, Kiyosada Egawa, the company began its journey to achieve its vision of becoming the leading manufacturer of functional rice products made using innovation and biotechnology geared towards healthier lives.

Utilizing rice as a functional food is still a relative new concept in the Philippine Market. Recognizing this as a strength, BTJP partnered with medical specialists, nutritionists and dieticians to provide customized meals for individuals with kidney problems and health enthusiasts alike—an effort that will build up the potential of our unique products. We have also secured partnerships

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with resellers whose passions lie in providing healthy options for people on strict diets or those participating in weight management programs.

Our team has been putting up antenna shops in various hospitals to promote and educate consumers, especially the families of patients with kidney ailments. This year, our sales team is also collaborating with dialysis centers to probe and qualify potential partners to sell our products through the Healthy Food Business Program.

Aside from giving Healthy Juans and Juanas a healthy alternative, the resiliency of our rice products also makes them the best choice in emergency situations—with rice products with a shelf life lasting up to months and can be eaten on the go.

With Food Safety and Quality of the utmost importance, BTJP made a decisive move to acquire a Food Safety Certification. Securing any system certification is no easy task and with only six months of preparation, the team pushed through various hurdles and worked hard to make the seemingly impossible, possible. On November 2021, BTJP became certified in FSSC 22000 ver. 5.1 after five days of rigorous auditing by DQS Philippines. Of course, securing an FSSC-certification is only the start—BTJP is aiming to be certified in Halal and GMO, among others.

of efficiency—the factory is designed to operate with minimal manpower. Factory operation is mostly made up of semi-automated processes such as using machines for raw rice segregation, washing, packing and sterilization which enables production to run smoothly even with minimal manning.

One of the missions of BTJP is to improve the lives of Filipino farmers through the introduction of a sustainability program for both farmers and the environment. This initiative is headed by BTJP President Egawa, in partnership with Tarlac Cooperatives. Together they started planting Japanese rice, Koshihikari variety, known to be the best rice in Japan. This was planted in Gerona, Tarlac. This program hopes to pave the way for Tarlac to be the Japanese rice capital of the Philippines.

Despite the restrictions brought on by the COVID-19 pandemic, BTJP was able to outperform its 2020 Sales by ₱4M .

For 2022, the company is gearing to launch more innovative products such as the tray variants and Echigo grain which are planned to be distributed to LGUs, NGOs, medical centers and the international market. Taking a boost from new sales and marketing initiatives, we are looking to increase company sales to a new high.

At its core— Japanese technology and culture EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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Equipment Engineers, Inc. In spite of the pandemic, Equipment Engineers, Inc. (EE) still registered ₱258.4 million revenue and ₱41 million in contribution, a 17% and 5% increase respectively compared to 2020’s output of ₱219.3 million revenue and ₱38.8 million contribution. 2021 revenues are comprised of ₱164.7 million stock sales, ₱79.4 million contracts and P14.3 million from services.

2022 from Non-EEI Accounts (₱34.4 million from 2021 backlogs while ₱357.6 million from new revenue targets in 2022) • New Property Developers to nominate EE’s products • Acquire additional Specifying Architects • Develop New Clients from New Sectors/ Industries 3. EE will soon change its name to “EEI Business Solutions, Inc.” to reflect the company’s vision and trajectory.

EEI Construction & Marine, Inc.

The main revenue drivers in the Trading subsidiary are still CETCO-Voltex and FFS-UPP Pipes, and recently acquired products like Autoclaved Aerated Concrete (AAC) Blocks, Sika and BASF waterproofing. These products were mainly utilized in various EEI high-rise building projects like Cebu-Cyberzone, Big Apple, Seasons, HICC & Torre Loyola as well as Megaworld, Rockwell and SMDC for external projects. For infrastructure projects, EE supplied CETCO’s Voltex-Waterproofing products at EEI’s MRT7 project. EE also resumed its suspended orders from the downstream Petroleum industry by supplying Franklin Fueling System products for Shell, Petron, Total Phils. , and other independent players and its contractors.

EEI Construction and Marine, Inc. (ECMI) delivered strong results in 2021 although it entered the year with a low backlog during the pandemic.

The company generated a gross revenue of ₱335 million which turned to a ₱125.3 million gross production contribution and a net income of ₱75.18 million, surpassing its initial estimates.

For 2022, EE carries a total backlog of ₱343 million with an estimated ₱196.4 million producible within the year . Below are areas of focus to attain our targets and objectives.

1. For EEI group: Revenue of ₱254 million with ₱39 million contribution (₱162 million from 2021 backlogs, ₱92 million from new revenue targets in 2022) • Aside from EE’s major products, we intend to increase our product offering with the likes of floor hardeners, coatings, paints, non-explosive demolition agents, asphalting, fire protection, auxiliary system and other equipment.

2. For External group: Revenue of ₱392 million in

Majority of projects came from Pilipinas Shell for the fabrication of single wall/double wall underground tanks and depot construction projects. Our principal, EEI Corp., also contributed projects such as the fabrication of Elevated and At-Grade fences intended for the MRT7

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project. Regular clients like Chevron, Petron, Fil Oil and Philippine Coastal also added to the list with various depot upgrade works. While MG8/ Ginebra San Miguel’s non-petroleum alcohol tank projects, contributed earnings during the last quarter of 2021. At the same time Jetti, Total, Petron and Royale Cord Storage also awarded ECMI with various underground tank fabrication and reconditioning jobs.

Over-all, EEI Power’s consolidated net income in 2021 reached ₱212.25 million, which is 2.5% higher than the ₱207 million in 2020.

Though ECMI’s backlog still has not recovered, the company expects its regular clients to pursue their projects that have been on hold for the past two years. ECMI is also looking for other non-oil offshore work business opportunities particularly those in shipbuilding and pier construction.

Another prospect that is likely to proceed this year is modular framing which will enable the company to construct a six-story building using cold-formed pre-engineered steel. ECMI is also investing on automations to improve the quality of cutting and welding works.

EEI ENERGY SOLUTIONS CORPORATION

EEI Power Group EEI POWER CORPORATION In spite of the continuing challenges brought about by the COVID-19 pandemic that resulted in the notable slump in economic activities in 2021, EEI Power Corporation managed to bounce back from its dismal performance in 2020. Revenues from its power solutions business, or from the sale of electrical equipment, services and electromechanical contracting works reached ₱269.27 million, which is 72% higher than the previous year’s ₱156 million.

The dividend earnings from its investments in PetroGreen Energy Corporation amounting to ₱16.77 million further boosted its financial position. This resulted to a net income of ₱18.24 million, from a ₱30 million loss in 2020.

Meanwhile, EEI Power’s share in the net earnings of Petro Solar Corporation and Petro Wind Energy, Inc. tallied at ₱194.01 million in 2021, which is 18% lower than the previous year’s ₱237 million.

The year 2021 was likewise heralded by the robust performance of EEI Energy Solutions Corporation, the wholly-owned subsidiary of EEI Power engaged in the retail electricity supply (RES) business. EEI Energy, which started commercial operations only in February 2021, was able to achieve a net income of ₱4.16 million, earning the distinction of being among, if not the first, start-up company in the EEI group to have attained a positive bottom line during its maiden year of operation.

EEI Energy was able to successfully close six (6) Retail Supply Contracts with an aggregate portfolio of 12.003MW. Energy delivery commenced for the following contestable customers in 2021: Grobest Feeds Philippines; Limcoma MultiPurpose Cooperative; Wesselton Inc.; Genstar Manufacturing Inc.; Liwayway Marketing Corporation; and, Cathay Steel Pacific Corporation (CAPASCO). Gains from energy trading efforts in the Wholesale Electricity Spot Market (WESM) significantly complemented EEI Energy’s revenues from retail contracts.

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Prospects and Outlook Consistent with the company’s strategic direction, EEI Power will continue to be active in the deployment and utilization of sustainable and renewable energy sources. Along this line, EEI Power will pursue the expansion of its power generation portfolio that will include hydropower, modest-sized solar, energy storage systems, and other new and emerging technologies. Likewise, EEI Power aims to increase its presence in the solar rooftop business with its unique offering of an end-to-end value proposition to commercial and industrial customers, as well as to interested homeowners in the residential sector.

As a solutions provider, EEI Power continuously expand its menu of electrical products and service offerings to best address the needs of its clients. This includes innovative products, as well as new service approaches, that the company is developing in-house. Additionally, EEI Power will continue to provide turn-key solutions being an accredited electro-mechanical contractor of the Philippine Contractors Accreditation Board.

Meanwhile, EEI Energy Solutions Corporation gears up for new levels of milestones as the threshold for contestability is expected to go down in the coming years. At the same time, EEI Energy will likewise partake in the provision of clean renewable energy supply to qualified customers, having been granted a Green Energy Option Program (GEOP) operating permit by the Department of Energy. In the highly competitive retail electricity market, EEI Energy sets itself apart from the other industry players as it thrives in positioning itself as one of the most innovative RES companies by delivering competitive rates along with quality value-added services to its customers.

GAIC Group GAIC Group posted a consolidated net income of ₱28.91 million in 2021, 61% higher than 2020 net income of ₱17.91 million.

GAIC registered a net loss of ₱8.43 million in 2021 from a net loss of ₱11.81 million registered in

2020 due to the effects of pandemic specifically the closure of borders of major markets and strict immigration and health protocols imposed by labor importing countries.

GAIC’s ₱1.21 million or 5% of its total revenues were generated mainly from its traditional accounts in Saudi Arabia, Libya, Malaysia, Equatorial Guinea and Ascencion Island. While new accounts in Japan and Guam contributed P0.33 million or 1% of total revenues.

Revenues from the EEI in-house account’s overseas projects increased substantially by 215% from ₱7.10 million in 2020 (1,623 men) to ₱15.24 million in 2021 (2,479 men).

Operating expenses of GAIC decreased by 10% in 2021 versus 2020 due to implementation of cost management program.

GAIC looks forward to a profitable 2022 as many overseas markets have opened their doors for foreign workers. Thus, GAIC anticipates increased activities in its traditional accounts in the Middle East, Japan, Equatorial Guinea and Papua New Guinea and new accounts in Germany, New Zealand, Guam and USA. Demand for nurses, caregivers and other healthcare workers in the Middle East, U.S.A, Germany and Japan are expected to be high in 2022. These will bring in more revenues to GAIC. For stronger and wider coverage, GAIC will acquire more Marketing Agents / Consultants particularly in Middle East, Asia and Europe, tie-up with more Foreign Recruitment / Placement Agencies, maximize referrals from satisfied customers and join the marketing missions organized by PASEI and JEPPCA. 31

GAMSI’s net income increased by 27% from ₱29.48 million in 2020 to ₱37.34 million in 2021.

YGC remains as the major customer of GAMSI. Newly acquired janitorial, office and building maintenance service contracts in 2021 such as The Ritz Tower Condominium, IntoGreat Solutions Philippines Inc., Manila Memorial Park Cemetery, Inc. and RCBC KYC contributed ₱0.70 million in total revenue with 45 men.

One-time cleaning (OTC) and disinfection services generated ₱4.69 million in total revenue.

GAMSI’s prospects for 2022 remain bright and continue to show great potential for growth.

GAMSI will continue to expand its major services to YGC towards the region of Luzon, Visayas and Mindanao.

GAMSI will direct its marketing efforts to labor intensive markets such as factory, agricultural, manufacturing sectors, industrial parks, PEZA, Clark, Subic areas, etc. To achieve this, GAMSI has to develop a team for accounts management/ digital marketing / telemarketing to expand market exposure.

Corporation (ERC) was ₱16.22 million, a 61% decline from previous year’s ₱41.6 million. The revenue highlights are as follows: One (1) Additional work for housing units in Suburbia East in Marikina City was booked for a total of Php .84 million, generating a contribution of ₱.25 million.

Nineteen (19) socialized housing units in Royal Parks @ Grosvenor Place were with HDMF/ PAG-IBIG takeout, total proceeds amounting to Php11.1 million, contribution of ₱5 million.

One (1) parcel of land in Puting Lupa, Calamba, Laguna was sold for ₱2.0 million, generating contribution of ₱1.4 million.

Rent income of ₱10.2 million on the 10 hectare industrial land in Bgy. Tanauan, Tanza, Cavite being rented out to EEI Corporation.

Commissions and other services amounting to ₱2.2 million generated from the management fee of EEI Corporation’s asset & supply of manpower to JPSAI.

It will aggressively market OTC and disinfection services for residential / commercial and exterior glass & wall cleaning for buildings and projects completed by EEI. GAMSI will expand its OTC and disinfection services to Cebu, Cagayan de Oro and Davao. These services are expected to contribute ₱2.60 million in revenue for 2022.

GAIC Group looks forward to another profitable year in 2022.

EEI Realty The Philippines’ real estate industry is striving to overcome the impact of lockdowns and restrictions brought about by COVID-19. The Philippine’s real estate sector is set to balance in solving the vacancies in the metro and the demand for affordable housing in outskirts development in order to sustain recovery.

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Learn JP LearnJP is a joint venture between EEI Corporation and LeoPalace21, an international Japanese corporation that engages in the construction and leasing of residential, office, and service spaces.

Incorporated in 2018, LearnJP is now at the forefront of Japanese language, skills, and cultural training in the Philippines.

LearnJP Corp offers a holistic, comprehensive, and updated range of academic courses, training, translation and interpretation services. Using the globally recognized Benese learning management system, the academy has been offering live and online language classes. Moreover, it extends its services to practical training and individual developmental coaching. An accredited entity of TESDA, LearnJP offers TESDA language courses along with other customized curricula to fit market demand and requirement.

The company also gained interest income of ₱3.1 million from bank deposits; and in-house financing of some Suburbia East buyers.

Net income after tax amounted to ₱2.3 million, 61% lower compared to ₱5.9 million of previous year.

The implementation of the Tanza Master Plan, covering almost 54 hectares of vacant land in Cavite is deferred for further evaluation due to changing economic landscape. The Master Plan when implemented aims to integrate current and future uses of the property such as residential and commercial areas expanding into interior parcels.

The strategy is to reevaluate project launches and realistic market demand and to revisit pricing structures.

In its effort to share latest job market status in Japan, LearnJP also offers online orientations to the public. It has been in partnership with various agencies in fulfilling the academic eligibility requirements for Filipino workers bound for Japan. LearnJP is also commissioned by various Japanese companies in the Philippines to teach basic Japanese to their employees.

The first site of the academy is at Calle Industria at the heart of Quezon City. The next milestone of the academy is the completion of its second site in San Pedro, Laguna which will become the core of its “Kaigo” (caregiving) training.

LearnJP is currenty working on creating synergies with the Department of Education and various NCR universities and public high schools for the promotion of various Japan-based opportunities.

In the next coming months, ERC will resume talks with Ayala Greenfield, Inc. (AGI) on the amended Memorandum of Agreement dated April 19,1999, whereby ERC will contribute parcels of land totaling 111,906 square meters situated in Barangay Puting Lupa, Calamba, Laguna, to the joint venture project with AGI. EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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eCarga EEI Carga Digital Logistics Corporation (eCarga), a new subsidiary under EEI Corporation, conducted its soft launch last October 2021. eCarga is a digital logistics solutions provider that currently offers mobile applications and web platforms that connects shippers to truck owners for their full truckload delivery requirement. These give shippers an affordable and easy way to source and book trucks with a wide range of available truck types that will suit each need. The platform also provides an opportunity to traditional truck operators by having access to spot bookings as well as contract engagements.

eCarga’s platform includes eCarga Shippers Mobile App and Drivers Mobile Application for contract engagements. As of today, eCarga’s mobile application is already functional and caters to spot and on-demand service that is downloadable via the Google Playstore. At the same time, the fleet management platform and drivers’ mobile application were rolled out to provide complete its truck booking capabilities, online. eCarga started partnering with clients from different industries such as manufacturing and construction companies. They did several activities with customers in preparation for the onboarding such as driver and helpers training and client truck inspection and accreditation.

To further increase its presence and its market share in the logistics industry, eCarga is focusing on co-advertising its brand with its parent company as well as partnering with various companies to be known in the business. eCarga has also joined several convention events such as PhilConstruct and BuildCon to gather clients and prepare for possible expansion of its current Luzon-wide truck delivery services to handling project logistics and inter-island delivery services to Visayas and Mindanao. To support its growth plan, eCarga is investing in further app and platform development and strengthening its capabilities in order to provide high-quality digital logistics services. eCarga is excited and looking forward to achieving its goals in the years to come.

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EEI on providing solutions through digital innovations.

“

The flexibility that EEI demonstrated with a multiphase handover of the latest ADI Building project allowed us to have a usable manufacturing floor with the early turnover of Level 1 at the time we needed it. This was a key enabler in meeting our manufacturing targets and in re-starting a key project in a timely manner. Their use of the advanced digital collaboration tools for virtual site tours and virtual meetings enabled close coordination between the EEI and ADI Teams. EEI’s strong top level management support was instrumental in their ability to respond to the challenges of the COVID situation. We would like to express our heartfelt gratitude to EEI for being a reliable construction partner.

“

Ponch Santos

Sr. Director Equipment/Process Development Engineering, Analog Devices Gen. Trias

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Al Rushaid Construction Co., Ltd. (ARCC) Report On the third year of pandemic, Al Rushaid Construction Co., Ltd. (ARCC) continued to beat the odds and bagged in SAR 974 million in revenue in 2021, 12% higher compared to SAR 867 million in 2020. While a slowdown in some greenfield projects was felt in the market, the Company was able to swing its resources to generate larger contribution through seconding of manpower to other main contractors. ARCC reported SAR 131 million net income, 23% higher than forecast of SAR 107 million. Workable backlog for 2022 is SAR 787 million (out of total backlog of SAR 1.8 billion).

The company anticipates a workable order of SAR 406 million setting the forecast at SAR 1.193 billion revenue for the following year.

During the year, ARCC closed SAR 1.3 billion worth of contracts, the biggest chunk of which is the Propane Dehydrogenation Plant and Utilities & Offsites (PDH & UTOS) Project with Samsung Engineering at SAR 800M. The project is located in Jubail 2 Industrial City, 20 km from ARCC Jubail Base Camp & Fabrication Shop. ARCC also signed the first contract with Rawafid Industrial Company and Advance Water Technology Consortium (RAC) for the Shuaibah-5 Desalination Plant Civil Works at SAR 230 million. ARCC anticipates to carry out the Electromechanical Works of the plant, also, in 2022.

ARCC set footprint in NEOM, building the first healthcare facility in the famous city of the future.

The NEOM Advance Health Center is a Build & Operate Contract by Al Rushaid Petroleum Investment Company (ARPIC) through its affiliate companies Burj Al Shifah Medical Complex and Al Rushaid International SOS. The Health Center is the first hospital project built by ARCC in Saudi Arabia, paving the way for opportunities to take

on more challenging projects in this sector.

As the Saudi Vision 2030 of the Crown Prince Mohammed Bin Salman is aggressively launching new developments and opening the business to international investors, ARCC is gearing towards this rising phenomenon. The company is set to invest in the re-fleeting of heavy equipment and in bringing in more talents from the Philippines and other countries such as India, Nepal and Bangladesh. It also has opened a new business unit for the Tanks Maintenance Services utilizing magnetic waterjet blasting technology and conventional spray painting. Fusion-bonded Epoxy (FBE) Coating facility is also in the pipeline planned to put up in 2022.

In this year 2021, ARCC continues to impress clients particularly Saudi Aramco, SABIC and Sadara with high quality output and early completion in shutdown works. The company received multiple citations and recognition awards for the Riyadh Refinery Plant jobs, the SABIC affiliates furnaces shutdown works, and the Sadara HPU Maintenance Divison for multiple shutdown/maintenance works. ARCC is the preferred Contractor in the kingdom for emergency and shutdown works due to its expertise and commitment to schedule.

With the world rapidly shifting to online business transactions, ARCC obtained the Cybersecurity Compliance Certificate for the General Requirement Classification, Type: CCC

by Saudi Aramco-accredited Third Party Audit Firm, BakerTilly. This certification assures ARCC’s clients that electronic data transfers are protected against malicious attacks designed to access, alter, delete, destroy or extort an organization’s or users’ system and sensitive information.

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NEOM Primary Healthcare Facility

Debottlenecking Onshore Plant At Safaniyah Shuaiba Desalination Plant Technology and Expired Assets Replacement Project

South Ghawar Pressure Vessels Replacement

Hawiyah Unayzah Gas Reservoir Storage Project

Sea Water Reverse Osmosis Plant at Al Shuqaiq

Fire Protection for Sulfur & Storage Facilities

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Sustainability Report This report represents EEI Corporation and its subsidiaries in 2021. In this report, we provide an assessment of the progress of our 2021 Sustainability Objectives and updates on our growing sustainability program. Due to the complex nature of how the COVID-19 pandemic impacted our efforts in social responsibility, we include a section on EEI’s response to the pandemic. This report has been prepared using the initial template issued by the SEC and utilizes the Sustainable Development Goals (SDGs) prescribed by the United Nations (UN) as guidance for indicators related to climate risk and overall impact and to inform sustainability ingenuities.

impact through business opportunities it creates with its numerous subcontractors and suppliers that also employ several other unskilled and skilled employees and other professionals.

In 2021, EEI generated ₱17,160,928,235 in direct economic value, of which 96% flowed back to the economy through our key stakeholders. Only about 4% was retained and reinvested by the Company.

Participation in the economy The Corporation’s economic impacts are directly attributable to its business activities.

The construction sector is the backbone of the economic growth of any country. It heavily influences every other sector’s role at all levels of the economy. EEI’s positive effect on the economy in the areas where it operates is seen by how economic value directly flows from the Company to its various stakeholders such as, the government, suppliers, employees, local communities, and investors.

The business of EEI is manpower extensive.

Manpower extensive because the Company employs not only numerous unskilled and skilled employees such as foremen, electricians, plumbers, masons, welders, and licensed machine operators, but also numerous other related professions such as architects, interior designers, engineers, financial planners, accountants, lawyers, IT professionals, and other office or clerical personnel.

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Environmental Commitment

the Corporation. Approximately five-sixths of the Corporation’s energy consumption is attributable to vehicles and generator sets. The remaining one-sixth of the energy consumption is mainly attributed to heavy equipment operations.

ENERGY EEI considers the lifecycle of its products and resources by designing out waste. The Company is committed to its role in the environment by making use of materials and technologies that extend the lifespan and potential reuse value of the things it produces and uses while minimizing unintended waste. The Company is working closely with key industry bodies, regulatory authorities, and supply chain partners to develop best-in-class traceability capability in the construction industry – giving our clients fulfillment, plus certifiers, and regulators confidence that the materials and procedures of the Company used match the specification and design from both an excellence and sustainability perspective.

Our electricity consumption increased by 9.13% compared to the year 2020, when EEI experienced the longest and strictest lockdowns. In 2021, work on project sites resumed, as the government lowered community quarantine to levels that allowed for resumption of operations.

As part of the Company’s mandate to maximize the use of clean and renewable energy, EEI Power expanded its services by offering the installation of solar rooftop systems to qualified business enterprises such as commercial and industrial facilities. It is also now providing the same services to residential customers. The 197.6 kWp rooftop Solar Panels installed at the Company’s Home Base were able to generate a total of 175,613 kWh as of December 2021, which is equivalent to 154.54 Metric Tons of CO2 emission prevented.

This is equivalent to approximately ₱1,400,000.00 in total savings for the reportable period.

The construction industry is an energy-intensive and fuel-intensive industry. The use of such resources impacts heavily on the operations of

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WATER The total water consumption for 2021 amounted to 452,876.89 cu.m, relatively lower by 4,669.95 cu.m from the Corporation’s 2020 consumption.

Project sites’ activities involving usage of water like Hydro testing and cleaning of reactor tanks decreased in numbers (from 16 reactor tanks tested and cleaned from the previous reportable period down to 10 reactor tanks for this year) before delivery to other project sites.

Recognizing the increase in the consumption of energy and fuel, the new normal mitigated our cost and improved efficiency. The Corporation has instituted several process changes and had undertaken renewed efforts to adopt new technology and business processes to reduce its reliance on energy and fuel.

The Corporation is continuously modernizing its equipment and types of machinery into a more fuel-efficient variant. The use of other energy-conserving devices, solar panels, and fuel additives that improve efficiency, among others, are some of the ongoing efforts undertaken by the Corporation to address the use of energy and fuel.

The Corporation has also taken energy-saving efforts in conjunction with strict safety practices.

To ensure the safety of equipment usage, it regularly conducts inspection, servicing, repairs, and overhauls of all equipment to ensure that they are safe to use and at its most efficient.

AIR

For the previous reportable period, the majority of the project sites housed or accommodated the employees/workers onsite in barracks following government-mandated guidelines for construction, contributing to increase in water consumption.

The Corporation has a department with competent personnel dedicated to monitoring and managing the environmental impact of work.

Inspection following DENR guidelines covering ECC commitments (PD 1586), and compliance with all environmental protection laws such as but not limited to Clean Air Act (RA 8749), Clean Water Act (RA 9275), Hazardous Waste Act (RA 6969), Solid Waste Management (RA 9003), are strictly complied by the operations teams.

For 2021, some project sites started to implement the “uwian” scheme/stay-out policy for their employees/workers. This resulted in controlled usage or lowered consumption of water in project sites. Nevertheless, project sites continue to implement water conservation programs.

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Our Asset Our most powerful partnership is the one we have with our people.

• • • • • •

We value dedicated and excellent employees.

We respect diversity.

We protect privacy rights.

We endeavor to attract top industry talent.

We create a fully engaged workforce, and We create growth opportunities to retain the talent we have developed.

EEI Corporation supports the advancement of employees’ skills, career growth and treats training as an important investment in making a clear path for employees. EEI’s Learning and Development Department (L&D) was able to adopt alternative modalities of training and keeping employees motivated in attending online training. There was an increase in the total hours provided for inhouse training from 67% from 2020 to 98% for the reportable period. The L&D is fully equipped with the necessary technology and internet access.

Despite the challenges of COVID-19, it is noted that the crisis has simply accelerated the planned transition towards the digitalization of the Company’s training and development program.

Learning and Development EEI believes that the ongoing development of our employees is critical to its success. Through continuous training and development programs, EEI provides opportunities for personal and career enhancement and advancement while assuring that its personnel are knowledgeable of our policies and procedures and possess the right training and skillset. The Company encourages every employee to actively participate in their own career development and growth.

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INCLUSIVE DIVERSITY EEI believes that by appreciating individual differences, we improve our performance and improve the lives of our employees and communities. This mindset allows us to be inclusive of all the diversity we have today and our differences enhance creativity and innovation.

With the increased demand and access to resources and information, more women are now joining the construction industry and possess relevant competencies. This is reflected in the increase in the number of female employees from 1,022 female workers in 2020 to 4,042 female workers for the reportable period for EEI Corporation and its subsidiaries.

The Corporation’s hiring policy adheres to the equal opportunities requirement set by law and does not discriminate against any applicant as long as he or she is fit for the job. The Corporation encourages more women to join the Company and empower women’s participation through the following: 1. Training and development are given equal opportunity for all.

2. Selection and Recruitment of the Corporation prohibit discrimination concerning terms and conditions of employment.

3. Implementation of Laws protecting women such as the Anti-Violence Against Women and Children Act, 105-Day Expanded Maternity Leave Law, and Magna Carta of Women.

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EMPLOYEE’S SAFETY Occupational accidents and diseases cause human suffering and loss. Their economic cost is high, with some 17,000 workers, the Corporation is continuously promoting the culture of safety and health that brings OSH services to those that need them the most.

The Corporation employs a fully staffed and competent Safety Department that ensures the safe working practices are employed in all of its projects. Moreover, safety violations are closely monitored and met with appropriate disciplinary actions to contain this risk.

Aside from the policy and procedure on Workplace Conditions, labor standards, and Human Rights, employees are given appropriate OSH Training.

EMPLOYEE’s HEALTH – Response to the Pandemic During the pandemic, “we learned that we are adaptable, resilient, and can react with expedience. EEI ensured that essential business meant that most of our operations were able to continue through the pandemic, keeping our team safe and informed during a time of profound economic stress. Our SHES, rapid implementation of safety controls, training, and distribution of personal protection equipment allowed work to continue safely.

Implementing Safety Practices Our safety focus is also evident in our response to the COVID-19 pandemic around the country. We implemented the following: • work from home flexibility • cleaning protocols across all locations • regular communication on COVID-19 tracking • physical distancing procedures •protocols to address actual and suspected COVID-19 cases • vaccination of our employees

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Looking into Climate Risk and Opportunities Almost no industry was spared by the effects of COVID-19, as it ravaged and destroyed businesses all over the world. Not even the construction industry was able to escape its claws. However, the construction industry is poised to be the one with the highest level of adaptability to any crisis.

Construction provides a great deal of opportunity and reasonable and consistent wages to workers who otherwise have weaker opportunities in the job market. There is a potential demand in public or quasi-public infrastructure from infrastructure, commercial, industrial, institutional, residential, energy and other utilities sectors.

Governance The Board Risk Oversight Committee (BROC) oversees the implementation of the Company’s enterprise-wide risk management (ERM) program.

It meets regularly to discuss the Company’s major risks and opportunities including those related to the climate.

The Company also has a Risk Management Council (Council) with members coming from its Management team and the President and CEO as its Chairman. The Council is responsible for implementing the ERM program and providing timely, relevant, and comprehensive risk information to the Board through the BROC. The Risk Management Department provides technical expertise and assistance to the Council and risk owners for the implementation, monitoring, and reporting of the ERM activities.

Demand for contractors that can do green construction has seen an uptick. Advances in technology, especially in the field of artificial intelligence, are helping (construction) companies do more with less, reducing business’ toll on the environment. For instance, it is now possible to design structures with a higher strength but with fewer materials.

The Company is noticing the current increasing trend in the strength of typhoons and the intensity of droughts that hit our country, which can be reasonably associated with climate change. The Company suffers varying degrees of damage and incurs delays from these natural phenomena. But more importantly, the possibility of injuries and sometimes death that comes with this inclement weather are more pressing concerns. Also, standards adopted by world governments to curb pollution put more pressure on businesses to improve their impact on the environment which costs money. The Company also acknowledges that addressing climate change is a profitable business, as its investments in renewable energy proves. Moreover, plants and factories that want to have more environmentally friendly systems require installation of new or additional equipment, which is an additional opportunity for the Company.

Climate-related risks: Climate change (e.g. heavier monsoon rains, stronger typhoons, flooding and flash flooding, storm surges along coastal areas, hotter days and more severe drought) play a part in affecting the businesses of the Company in the form of delays, damages to property, injury and even death. This includes threats due to pollution.

As the world’s awareness of humanity’s responsibility to protect our world increases, so too will the demand for green technologies – which the Corporation is willing to invest in, given the right parameters. EEI currently earmarked funds to purchase construction equipment that uses more efficient and cleaner energy to replace older models that utilize combustion engines.

The Corporation is also looking into innovations in construction materials as an alternative to traditional steel and concrete, the production of which creates significant greenhouses gases. At the same time, the Company has launched initiatives to improve its efficiency through programs such as the War on Waste and improving work methodologies. Lastly, the Company is looking to increase its investment in renewable energy whenever the opportunity presents itself.

Climate-related opportunities: With the global push for renewable, sustainable and clean energy, opportunities for the Company are increasing.

The Company’s strategies can tolerate a considerable number of the possible effects coming from climate-related risks without

Strategy

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the need for major adjustments because such strategies were designed with these contingent effects already considered. However, the possibility of any risk producing an unexpected significant impact on the business cannot be ruled out; but the Corporation has business continuity and disaster management plans and insurance policies in place to handle these situations.

Risk Management Identification of climate-related risks and opportunities is done primarily through brainstorming sessions with knowledgeable members of the organization, which may also include from time-to-time consultants to fill in any knowledge gaps. This is supported by literature review and research to find additional relevant information.

Much like how it manages other risks, the Company employs four (4) general approaches to manage climate-related risks: accept, mitigate, transfer, or avoid. Such risks that can be evaded without compromising our targets, are avoided.

Those that have contributing factors where the Corporation has significant ability to influence are mitigated, while those that can be economically

transferred to entities more capable of handling them are transferred. Finally, those that the Corporation cannot avoid, mitigate or transfer without compromising its targets are accepted.

Whenever the Company does its regular risk identification, assessment, and treatment processes, climate-related risks are always part of the checklist that all risk owners go through to find climate-related risks in their area of responsibility.

Strategies that the Corporation come up with to manage climate-related risks always require multi-departmental and even total organization involvement. Lastly, our ERM program aims to manage the Company’s total risk profile instead of individual risks since managing risks in groups is usually more effective and economical.

Metrics and Targets All our risks and opportunities are measured using generally two metrics: impact and probability of occurrence. This is also the case for climaterelated risks.

All our risks are managed so that their probabilityweighted impact will not exceed the risk tolerance when it occurs.

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Engaged Service Contribution to UN SDGs Societal Value/ Contribution to UN SDGs

Management Approach

Health and Well-Being

•

• • • • • •

Reduced Environmental Impact

•

• • • • •

Allocate funds to ensure the health and safety of its workers.

Maintain or improve sanitation and hygiene facilities in strict compliance with DOLE, COVID-19 INTER-AGENCY TASK FORCE, and Local Government standards in preventing and/or minimizing the entry of infectious diseases in the workplace.

Provide or maintain onsite ambulances, medical life-saving devices and instruments, and health informatics that help promote the health and well-being of employees.

Strengthen the prevention of substance abuse, including narcotic drug abuse and harmful use of alcohol.

Alignment of Human Resource policies with the principle of human rights.

Establish a relationship with government entities like TESDA and other higher education institutions to improve the education of the employees.

Provide employees with continuous opportunities to improve employee skills for their current and future employment.

Create training programs that will give the community access to the work in the corporation which has an indirect impact on jobs creation.

Continuously improving energy efficiency, utilization of clean and renewable energy, reduction of emissions, and resilience in the Corporation’s operations, supply chains, and the communities in which the Corporation operates.

The Corporation maintains full compliance and implementation of environmental laws for the conservation and sustainable use of oceans and their resources.

Ensure monitoring of the following: • Total water discharge data by destination across the operation • CO2 savings of each project.

Waste management and how the corporation reduces waste and at the same time generate value therefrom.

For future projects, the Corporation is committed to implementing responsible sourcing practices beyond compliance - applying environmental and social safeguards Measure, manage and mitigate impacts on ecosystems and natural resources, this will be included in the WOW reporting.

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Uplift Livelihood

• •

Review policies on Vendor Survey and Qualification to identify possible use of child labor and forced labor throughout supply chain, and implement remediation when abuses are discovered.

Continuous firm implementation of the policy against unfair hiring and recruitment practices, particularly of vulnerable groups such as migrant workers.

The Company is committed to: • • • • • • • • •

Pay equal remuneration, including benefits, for work of equal value regardless of gender.

Zero-tolerance policy towards all forms of discrimination and violence at work.

Equal opportunity for promotion, training, and participation in policy and decision-making processes.

The Corporation will continue to develop skill programs and activities that will help improve its employees regardless of their age, gender, religious beliefs, disability, national origin, or ethnicity.

Support for Nation Building Invest in new and resilient infrastructure, equipment and machinery or retrofit existing infrastructure, equipment and machinery to make it more sustainable.

Establish standards and regulations that ensure projects and initiatives are sustainably managed.

The Corporation will provide solutions to improve energy efficiency in its buildings and recommend to clients the structures it will build.

Collaborate with cities and governments to find solutions to future mobility needs that minimize environmental impact.

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Feature EEI’s impressive showing during its Preferred Shares Listing One of the most noteworthy milestones for the year was the preferred shares listing we issued in December 2021.

To propel EEI towards its vision of becoming a builder of dreams, the Group rejoined the local equity capital market on December 23, 2021, after a 14-year hiatus. Our return was warmly received as the organization successfully raised ₱6 billion with its preferred shares offering reflecting the maximum oversubscription from its original ₱4 billion base offer.

EEI’s listing of series A and Series B preferred shares had an overwhelming reception at the Philippine Stock Exchange (PSE) as both institutional and retail investors were keen on being exposed to the infrastructure development sector.

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The Group’s Series A preferred shares (EEIPA) have an initial dividend rate of 5.7641% per annum, while its Series B (EEIPB) shares will reap an initial dividend rate of 6.9394% per annum. The preferred shares were issued at ₱100 apiece. EEI initially released 40 million preferred shares and then utilized its oversubscription option of 20 million preferred shares due to the high demand.

EEI’s fruitful fundraising exercise is a testament to the public’s trust in its solvency, performance, and potential.

The proceeds from the issuance will finance ongoing and future projects and capital expenditures, particularly new equipment needed in operations. A portion of the resources will repay short- and long-term loans and fund general and working capital requirements.

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EEI on supporting its working community during the COVID-19 pandemic.

“

Nagpapasalamat po ako at ipinagmamalaki ang EEI Corporation dahil hindi po kami pinabayaan sa oras ng aming pangangailangan. Masaya po ako at hindi nagsisisi na nakapasok sa kumpanyang EEI at dalangin ko po sa Poong Maykapal na dumami pa po ang mga project ninyo at tularan ng ibang kumpanya na may malasakit sa mga manggagawa.

“

Melchor Balbin,22 Mason

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2021 Our People

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Board of Directors Renato C. Valencia Independent Director

Juan Kevin G. Belmonte Director

Lorenzo V. Tan Director

Medel T. Nera Director

Wilfrido E. Sanchez Director

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Roberto F. de Ocampo Independent Director

Gregorio T. Yu

Independent Director

Roberto Jose L. Castillo Director

Helen Y. Dee Chairperson

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Key Officers

ROBERTO JOSE L. CASTILLO

PRESIDENT & CHIEF EXECUTIVE OFFICER

ANGELITO D. BERMUDO EXECUTIVE VICE PRESIDENT

FERDINAND M. DEL PRADO SENIOR VICE PRESIDENT - SALES AND MARKETING

NORMAN K. MACAPAGAL EXECUTIVE VICE PRESIDENT & GENERAL MANAGER / PRESIDENT EEI LIMITED

MERCADO T. MAGNO

SENIOR VICE PRESIDENT FINANCE TECHNICAL SUPPORT

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MANFRED RICHTER

GLENN F. VILLASENOR

JULIAN PIERS B. SMITH

JOSE T. TAN JR

CRIS NOEL E. TORRES

EARL JASON R. VISTRO

SENIOR VICE PRESIDENTINFRASTRUCTURE OPERATIONS

SENIOR VICE PRESIDENT COMMERCIAL AND CONTRACTS

SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER / MANAGING DIRECTOR SUB

SENIOR VICE PRESIDENT BUSINESS TRANSFORMATION

SENIOR VICE PRESIDENT - INTERNAL AUDIT

SENIOR VICE PRESIDENT - SUPPLY CHAIN MANAGEMENT AND LOGISTICS

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Other Officers ALLAN G. AGOR

ASSISTANT VICE PRESIDENT - OPERATIONS MANAGER (KSA)

MA. FATIMA B. ALUA

ASSISTANT VICE PRESIDENT - QUALITY CONTROL

MARIA CRISTINA R. AMBAT

ASSISTANT VICE PRESIDENT - QUALITY ASSURANCE

FERDINAND D. APOLONIO

ASSISTANT VICE PRESIDENT - INFRASTRUCTURE

MICHAEL D. ARGUELLES

ASSISTANT VICE PRESIDENT - SAFETY, HEALTH, ENVIRONMENT & SECURITY

STEPHEN F. BATERINA

ASSISTANT VICE PRESIDENT - PROJECT PLANNING

LEONARDO BRUGE

ASSISTANT VICE PRESIDENT INTERNATIONAL MARKETING

ERNESTO E. CRISTI JR.

ASSISTANT VICE PRESIDENT - QUALITY CONTROL

LUIS H. DADO

ASSISTANT VICE PRESIDENT - LABOR & EMPLOYEE RELATIONS AND FIELD ADMINISTRATION

JUSTINO B. DE GUZMAN

ASSISTANT VICE PRESIDENT - INFRASTRUCTURE

RAUL GILBERTO J. DELA CRUZ ASSISTANT VICE PRESIDENT FABRICATION OPERATION

CHRISTOPHER F. ESGUERRA

ASSISTANT VICE PRESIDENT - SALES & MARKETING

LOUIE I. GALICIA

ASSISTANT VICE PRESIDENT - ORGANIZATION & LEARNING DEVELOPMENT / STAFFING, TALENT ACQUISITION & RECRUITMENT SERVICES / TECHNICAL, CRAFTS & SERVICES

VICENTE A. GAYYA

ASSISTANT VICE PRESIDENT & PROJECT DIRECTOR

CHARLIE P. GREGORIO

ASSISTANT VICE PRESIDENT - LOGISTICS SUPPORT

GEORGE RYAN T. HIPOLITO

ASSISTANT VICE PRESIDENT - LEGAL & CORPORATE SERVICES/COMPLIANCE OFFICER/ASST. CORPORATE SECRETARY/INVESTOR RELATION OFFICER/DATA PROTECTION OFFICER (DPO)

ROMAN M. LAPUZ

ASSISTANT VICE PRESIDENT - PROJECT CONTROL

REYNALDO S. MANRIQUE

ASSISTANT VICE PRESIDENT -HUMAN RESOURCES

ROSELYN M. MASA

ASSISTANT VICE PRESIDENT - PROJECT CONTROL

MEDVIL T. MEDIAVILLO ASSISTANT VICE PRESIDENT SUBCON PROCUREMENT

MAGNEO M. PARAM

ASSISTANT VICE PRESIDENT - ENGINEERING

VAL JOSEPH A. RECIO

ASSISTANT VICE PRESIDENT - HRM TOTAL REWARDS AND ANALYTICS

JESUS TEODORO C. REYES

ASSISTANT VICE PRESIDENT - CORPORATE DEVELOPMENT

JOSE RENE E. SALARDA

AVP - MARKETING / ENGINEERING (KSA)

CHRISTOPHER A. SANTOS

GENERAL MANAGER - LEARNJP & GAMSI EXPRESS

EDWIN R. STA. MARIA

ASSISTANT VICE PRESIDENT - INFRASTRUCTURE

CRISANTO B. BRUTAS

VICE PRESIDENT - BUILDINGS

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STEPHEN BULL

ANDRES P. TUMBOKON III

ROMUALDO D. CANLAS

MARIETTA R. VELASCO

DIRECTOR - PROJECT

VICE PRESIDENT - BUILDINGS

VICE PRESIDENT - ENGINEERING

EDWIN ALBERTO P. CONSTANTINO VICE PRESIDENT & CPO SUPPLY CHAIN MANAGEMENT

VICE PRESIDENT - LEGAL SERVICES, LITIGATION, CONTRACTS, CORPORATE SECRETARY FOR SUBSIDIARIES

PAUL C. VISAYA

VICE PRESIDENT - BUILDINGS

OCTAVIO S. DELA CRUZ

VICE PRESIDENT - ORACLE CLOUD ADMIN. AND MANAGEMENT

DANTE G. DESEMBRANA

VICE PRESIDENT - INFRASTRUCTURE

REYNALDO J. DIZON

VICE PRESIDENT - HUMAN RESOURCES MANAGEMENT

ANNA SHEILA P. FIGUERA

DIRECTOR - COMMERCIAL AND CONTRACTS

GLENN C. MACALINO

CESAR A. BAUZA

CUSTOMER RELATIONS HEAD

GARIZALDY F. CRUZ PRESIDENT - JPSAI

EFREN C. JUNGOY JR.

ASSISTANT VICE PRESIDENT, VISMIN OPERATIONS HEAD - EEI POWER CORPORATION

ENRIQUE D. MERCURIO

ASSISTANT VICE PRESIDENT - SERVICE

JOSEPHINE CECILLE B. NG

MANAGER - COMMERCIAL

RAYMUNDO H. MARRAS JR.

VICE PRESIDENT - FINANCE CONTROLLER

LAURO FELICISIMO C. MATIAS

VICE PRESIDENT - INFORMATION TECHNOLOGY

JOSE LUCIO R. MENDOZA

VICE PRESIDENT - LIGHT INDUSTRIES

MANUEL A. PAYAWAL DIRECTOR - PROJECT

VICTOR G. PEREZ

ASSISTANT VICE PRESIDENT - HUMAN RESOURCES

SEAN E. PESTAŇO

COMMERCIAL HEAD - ECARGA

JEROME M. REYES

VICE PRESIDENT - ECMI

SALVADOR M. SALIRE JR.

ASSISTANT VICE PRESIDENT - EEI POWER CORPORATION GENERAL MANAGER - EEI ENERGY SOLUTIONS CORP.

LUISITO M. MEDINA-CUE JR.

VICE PRESIDENT - TREASURY

HIPOLITO P. PUNZALAN JR. VICE PRESIDENT - ELECTROMECH

KENNETH B. SAMSON

VICE PRESIDENT - SALES AND MARKETING

SIMON ELMER D. SAN MIGUEL

GENERAL MANAGER - BIOTECHJP

RICARDO C. REYES PRESIDENT - GAIC

REBECCA R. TONGSON

VICE PRESIDENT AND CONTROLLER - EEI REALTY

VICE PRESIDENT-ELECTROMECHANICAL / GENERAL MANAGER - AL RUSHAID CONSTRUCTION COMPANY LIMITED EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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Corporate Information Corporate Office

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. No.: (+632) 8-334-2677 (EEI-CORP) Fax No.: (+632) 8-635-0861 Email: eeicenter@eei.com.ph Website: https://www.eei.com.ph Mailing Address P.O. Box 287 ACPO, Cubao, Quezon City, Philippines

Steel Fabrication Division

Barangay Sta. Maria, CBW-21 Bauan, Batangas, 4201 Philippines Tel. Nos.: (+6343) 727-1601 to 02 E-mail: rgjdelacruz@eei.com.ph

OVERSEAS JOINT VENTURE Al Rushaid Construction Co., Ltd.

3rd Floor Tower A, Petroleum Center Building 3927, Prince Sultan Road Al Jawharah District Unit No.333 Al Khobar 34431-9618, Saudi Arabia Tel. No.: (00966) 3 801-0000 Fax No.: (00966) 3 801-0177 Website: www.arccksa.com

ARCC Sales & Marketing Department

Tel. Nos.: (00966) 3 801-0000 ext. 1200 & 1319 Emails: fgparaisojr@arccksa.com mktghq@arccksa.com clpabillon@arccksa.com

SUBSIDIARIES Equipment Engineers, Inc.

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. Nos.: (+632) 8-334-2677 loc 3057 and 3064 Fax No.: (+632) 8-635-0861 E-mail: eetrading@eei.com.ph

EEI Power Corporation

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. Nos.: (+632) 8-635-0843 to 49 loc 3074 VisMin Office: 2F, Door 3&4 Sto. Nino Building Km 7 McArthur Highway, Bangkal, Barangay Talomo Proper, Talomo District Davao City 8000 Tel. No.: (+632) 8-297-4776 E-mail: power@eei.com.ph

EEI Energy Solutions Corp.

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. No.: (+632) 8-634-2677 loc 3150 or 3152 E-mail: eeienergysolutions@eei.com.ph

EEI Realty Corporation

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. Nos.: (+632) 8-334-2677, (02) 8-880-1956 loc 1956, 3111, 3113 Fax No.: (+632) 8-880-1945, (+632) 8-635-0851, (+632) 8-635-0861 E-mail: eeirealty@eei.com.ph

EEI Construction and Marine, Inc.

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines (+632) 8 880 1936 Fax No.: (+632) 8-636-5352 Email: eeimc@eei.com.ph

ECMI Fabrication Shop

Lot 5A Maguyam Road, Brgy. Maguyam, Silang, Cavite Tel. Nos.: (+6346) 482-0748, (+6346) 482-0722 E-mail: eeimc@eei.com.ph

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Gulf Asia International Corporation

GAIC Manpower Services, Inc. Ground Floor Topy Building, 3 Economia Street, Bagumbayan, Quezon City 1110, Philippines Tel Nos.: (+632) 8-634-7551 , (+632) 8-534-5831 (+632) 8-633-7910 Fax Nos.: (+632) 8-635-4770 , (+632) 8-638-4946 Email: jqalivarvar@eei.com.ph aomcardenas@eei.com.ph rcreyes@eei.com.ph

GAIC Cagayan De Oro Office

Tan’s Apartment Door #5 Captain Vicente St., Cagayan de Oro, Philippines Tel. no.: (+63) 928-665-8226 Email: rlgomos@eei.com.ph

GAIC/GAMSI Cebu Office

ShinBayanihan

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. No.: (+632) 8-334-2677 E-mails: cabauza@eei.com.ph jmresmade@eei.com.ph

Cagayan De Oro Satellite Office

3rd floor Marel Bldg., Pabayo Hayes St., Cagayan De Oro City Tel. Nos.: (088) 855 0894 (+639) 26 568 7146 (+639) 26 568 7163 (+639) 35 294 9709 E-mail: sblumactod@eei.com.ph

Davao Office

G/F JL & Sons Building No. 92 Landon Junquera Street, Cebu City, Philippines Tel. No.: (+6332) 253-4190 E-mail: jjgcabreros@eei.com.ph rcreyes@eei.com.ph

Room 208 Goldwin Building E. Quirino Ave., Davao City, Philippines Tel. Nos.: (+6382) 224-1332 (+639) 30-880-5635 (+639) 26-111-4921 Emails: rsvillafuerte@eei.com.ph llma@eei.com.ph

JP Systems Asia, Incorporated

Stock Transfer Agent

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. No.: (+632) 8-635-0974 Email: gfcruz@eei.com.ph / gfcruz@jpsai.net

BiotechJP

Rizal Commercial Banking Corporation

Auditors

Sycip Gorres Velayo & Co. Certified Public Accountants

Central Technopark, Brgy. Lourdes, Tarlac City, Tarlac Tel. No.: (+632) 8-334-2677 loc 3302 E-mail: info@biotechjp.com.ph

LearnJP Corp.

3rd Floor, Topy Building, 3 Economia Street, Bagumbayan, Quezon City Tel. Nos.: (+632) 8880 1864 , (+632) 8334 2677 loc 3320 0931-780-7722 / 0966-154-0424 E-mail: learnjpcorp@eei.com.ph

eCarga

12 Manggahan Street, Bagumbayan, Quezon City 1110, Philippines Tel. Nos.: (+632) 8-334-2677 loc 3260 0907-358-7754 Website: www.ecarga.com.ph E-mail: ecarga@eei.com.ph EEI 2021 Annual Report | Building Our Dreams Together: EEI on Kindling Hope and Igniting Possibilities

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EEI on sustaining support with its collaborators in the times of crises.

“

We’ve been collaborating with EEI for 20 Years.

EEI awarded and trusted us with additional projects that helped sustain and grow our company despite the ongoing pandemic.

“

Roy Abrigo

President and Chairman Pacific Airconditioning and General Services, Inc.

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2021 Audited Financial Statements

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

Tel: (632) 8891 0307 Fax: (632) 8819 0872 ey.com/ph

INDEPENDENT AUDITOR’S REPORT The Board of Directors and the Stockholders EEI Corporation No. 12 Manggahan Street Bagumbayan, Quezon City

Opinion We have audited the consolidated financial statements of EEI Corporation and its subsidiaries (the Group), which comprise the consolidated statements of financial position as at December 31, 2021 and 2020, and the consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the three years in the period ended December 31, 2021 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, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for each of the three years in the period ended December 31, 2021 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.

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.

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Recognition of revenue from construction contracts The Group’s revenue from construction projects on electro-mechanical works, industrial, buildings and infrastructure accounts more than 90% of the total revenue of the Group. Under PFRS 15, Revenue from Contracts with Customers, the Group assessed that there is only one performance obligation for each construction agreement that it has entered and that revenue arising from such agreements qualify for recognition over time. The Group also recognized as part of its construction revenue, the effects of variable considerations arising from various change orders and claims, to the extent that they reflect the amounts the Group expects to be entitled to and to be received from the customers, provided that it is highly probable that a significant reversal of the revenue recognized in connection with these variable considerations will not occur in the future. The Group elected to use the input method to measure the progress of the fulfilment of its performance obligation, which is based on the actual costs incurred to date relative to the total estimated cost to complete the construction projects.

Aside from the significance of the amount involved, we consider this as a key audit matter because this process involves significant judgment and estimates, particularly with respect to the estimation of the variable considerations arising from the change orders and claims and calculation of estimated cost to complete construction projects, which requires the technical expertise of the Group’s engineers.

The Group’s disclosures about construction revenue are included in Notes 4 and 20 to the consolidated financial statements.

Audit response We inspected sample contracts and supplemental agreements and reviewed management’s assessment on the identification of performance obligation within the contract and the timing of revenue recognition.

For construction revenue which includes significant effects of the variable considerations, we obtained an understanding and tested the relevant controls over the management’s process to estimate the amount of consideration expected to be received from the customers. For change orders and claims of sampled contracts, we compared the amounts recognized as revenue to the change orders and claims approved by the customers and other relevant documentary evidences supporting the management’s estimate of revenue recognized.

For the measurement of progress of the construction projects, we obtained an understanding of the Group’s processes to accumulate actual costs incurred and to estimate the expected cost to complete and tested the relevant controls. We also tested actual costs incurred by examining sample invoices and other supporting third-party correspondences. We also considered the competence, capabilities and objectivity of the Group’s cost engineers by referring to their qualifications, experience and reporting responsibilities.

We examined the approved total estimated completion costs, any revisions thereto, and the cost variance analysis with supporting details. We discussed the status of the projects under construction with the Group’s engineers. We also inspected the related project documentation and inquired about the significant deviations from the targeted completion.

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Accounting for investment in Al-Rushaid Construction Company Ltd. The Group owns 49% equity interest in Al-Rushaid Construction Company Ltd. (ARCC), associate accounted for under the equity method. As of December 31, 2021, ARCC recognized deferred tax asset on net operating loss carryover of ₱289.10 million. We consider the accounting for the investment in ARCC as a key audit matter because the Group’s share in ARCC’s net earnings and the carrying value of the investment represents 138% of the Group’s consolidated net income and 5% of the Group’s total assets, respectively. The Group’s share in ARCC’s net earnings is significantly affected by ARCC’s revenue recognition from its construction contracts. In addition, management’s assessment process on the recognition of deferred tax asset is based on assumptions, which are affected by expected future market or economic conditions.

The Group’s disclosures about the investment in ARCC are included in Note 11 to the consolidated financial statements.

Audit response We sent instructions to statutory auditors of ARCC to perform an audit on the relevant financial information of ARCC for the purpose of the Group’s consolidated financial statements. These audit instructions cover their scope of work, risk assessment procedures, audit strategy and reporting responsibilities. We discussed with ARCC’s statutory auditors about their key audit areas, planning and execution of audit procedures, significant areas of estimation and judgment. We reviewed their working papers, focusing on the procedures performed on ARCC’s revenue recognition, and obtained relevant conclusion statements related to their audit procedures. Furthermore, we evaluated management’s assumptions on the recognition of deferred tax assets and inquired with the Group’s management the basis of the financial forecast. We also compared management’s forecast against historical performance of ARCC. We also obtained the financial information of ARCC for the year ended December 31, 2021 and recomputed the Group’s share in net earnings for the year ended December 31, 2021.

Valuation of unquoted equity investments carried at fair value through other comprehensive income The Group has unquoted equity investments classified as equity investments at fair value through other comprehensive income (FVOCI) amounting to ₱1.2 billion. The valuation of these investments is significant to our audit because it is inherently subjective as it involves the use of valuation inputs that are not market observable. Management also applied judgment in selecting the valuation technique and the assumptions to be used.

The Group’s disclosures about its unquoted equity investments are included in Notes 12 and 33 to the consolidated financial statements.

Audit response We evaluated the competence, capabilities and qualifications of the external valuers by considering their qualifications, experience and reporting responsibilities. For the unquoted equity investment valued using market approach, we inquired from the external appraiser the basis of the adjustments made to the sales price. For the unquoted equity investment valued using earnings-based approach, we involved our internal EEI 2021 Annual Report | Audited Financial Statements

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specialist in the review of the methodology and assumptions used. The key assumptions used are the revenue growth rate and discount rate. We evaluated the revenue growth rate by reference to historical information and relevant market data. We tested the parameters used in the determination of the discount rate against market data. We compared the fair value of the investment against a range of values determined using earnings-based approach. We also reviewed the Group’s disclosures about those assumptions to which the outcome of the valuation is most sensitive; specifically, those that have the most significant effect on the determination of the fair value of the unquoted equity investments.

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, 2021, 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, 2021 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.

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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 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

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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.

The engagement partner on the audit resulting in this independent auditor’s report is Wenda Lynn M. Loyola.

SYCIP GORRES VELAYO & CO.

Wenda Lynn M. Loyola

Partner CPA Certificate No. 109952 Tax Identification No. 242-019-387 BOA/PRC Reg. No. 0001, August 25, 2021, valid until April 15, 2024 SEC Partner Accreditation No. 109952-SEC (Group A) Valid to cover audit of 2021 to 2025 financial statements of SEC covered institutions SEC Firm Accreditation No. 0001-SEC (Group A) Valid to cover audit of 2021 to 2025 financial statements of SEC covered institutions BIR Accreditation No. 08-001998-117-2022, January 20, 2022, valid until January 19, 2025 PTR No. 8854316, January 3, 2022, Makati City April 5, 2022

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EEI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31

2021

2020

₱7,124,222,377 2,366,869,061 8,741,253,049 1,195,316,227 154,351,686 882,935,158 20,464,947,558

₱1,332,363,040 3,614,063,617 7,605,270,420 1,415,137,210 65,613,972 1,905,385,711 15,937,833,970

3,259,612,915

2,890,075,272

1,272,977,284 14,496,211 3,308,019,139 594,107,160 1,112,394,601 1,079,458,807 1,109,058,887 11,750,125,004 ₱32,215,072,562

1,031,570,234 14,562,211 3,718,888,905 695,475,235 1,471,146,110 978,481,350 154,506,816 10,954,706,133 ₱26,892,540,103

₱5,460,072,585 3,250,000,000 3,526,205,077 52,319,204 421,090,961 16,301,158 2,121,399 12,728,110,384

₱6,742,428,383 5,015,000,000 2,302,998,099 99,582,705 190,194,001 23,444,320 ‒ 14,373,647,508

4,737,011,698 37,278,295 127,911,493 435,269,552 565,849,622 242,947,497 6,146,268,157 18,874,378,541

3,245,029,226 373,757,488 90,388,276 469,982,718 1,658,679,655 273,600,624 6,111,437,987 20,485,085,495

1,066,401,386 6,402,046,998 (3,720,790) 922,058,654 4,950,157,787 13,336,944,035 3,749,986 13,340,694,021 ₱32,215,072,562

1,036,401,386 477,037,443 (3,720,790) 422,725,295 4,460,457,934 6,392,901,268 14,553,340 6,407,454,608 ₱26,892,540,103

ASSETS Current Assets Cash and cash equivalents (Note 6) Receivables - net (Note 7) Contract assets - net (Note 8 Inventories (Note 9) Due from related parties (Note 26) Other current assets (Note 10)

Total Current Assets Noncurrent Assets Investments in associates and joint ventures (Note 11) Equity investments at fair value through other comprehensive income (FVOCI) (Note 12) Investment properties (Note 15) Property and equipment (Note 13) Right-of-use asset (Note 14) Deferred tax assets - net (Note 25) Contract assets - net of current portion (Note 8) Other noncurrent assets (Note 16)

Total Noncurrent Assets

LIABILITIES AND EQUITY Current Liabilities Accounts payable and other current liabilities (Note 18) Bank loans (Note 17) Current portion of long-term debt (Note 19) Current portion of lease liability (Note 14) Current portion of contract liability (Note 8) Income tax payable Due to related parties (Note 26)

Total Current Liabilities Noncurrent Liabilities Long-term debt - net of current portion (Note 19) Retirement liabilities (Note 27) Deferred tax liabilities (Note 25) Lease liability - net of current portion (Note 14) Contract liability - net of current portion (Note 8) Other noncurrent liabilities (Note 18)

Total Noncurrent Liabilities Total Liabilities Equity Capital stock (Note 29) Additional paid-in capital Treasury stock (Note 32) Other comprehensive income - net (Notes 12 and 27) Retained earnings (Note 30) Non-controlling interests Total Equity

See accompanying Notes to Consolidated Financial Statements.

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EEI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME For the Years Ended December 31

2021

2020

2019

₱16,149,705,243

₱13,881,319,022

₱23,581,877,243

14,394,288,323

16,093,666,815

20,600,291,523

1,755,416,920

(2,212,347,793)

2,981,585,720

925,173,364

980,867,002

346,252,663

1,520,567,340

1,696,611,510

1,446,651,519

Interest expense (Notes 14, 17 and 19) Foreign exchange losses (gains) – net

469,481,846 (7,068,699) 462,413,147

466,242,665 46,583,668 512,826,333

564,165,927 35,357,259 599,523,186

INTEREST INCOME (Note 23)

7,721,523

16,955,390

27,618,043

78,328,105

66,405,380

189,253,743

783,659,425

(3,357,557,864)

1,498,535,464

63,824,530 240,938,396 304,762,926

44,351,618 (1,329,742,992) (1,285,391,374)

320,421,488 22,785,513 343,207,001

₱478,896,499

(₱2,072,166,490)

₱1,155,328,463

₱489,699,853 (10,803,354) ₱478,896,499

(₱2,046,059,914) (26,106,576) (₱2,072,166,490)

₱1,156,330,474 (1,002,011) ₱1,155,328,463

₱0.4662

(₱1.9744)

₱1.1158

REVENUE FROM CONTRACTS WITH CUSTOMERS (Note 20) COSTS OF SALES AND SERVICES* (Note 21) GROSS PROFIT (LOSS) EQUITY IN NET EARNINGS OF ASSOCIATES AND JOINT VENTURES (Note 11)

SELLING AND ADMINISTRATIVE EXPENSES (Note 22) FINANCE COSTS AND OTHER EXPENSES - NET

OTHER INCOME - Net (Note 24) INCOME (LOSS) BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX (Note 25) Current Deferred NET INCOME (LOSS) Net income (loss) attributable to: Equity holders of the Parent Company Non-controlling interests

Earnings (Loss) Per Share – Basic and Diluted (Note 32)

* For the year ended December 31, 2020, costs of sales and services includes ₱1.03 billion cost that the Group incurred during enhanced community quarantine where all construction activities, both private and government projects, in entire island of Luzon were temporarily suspended. These costs pertain to salaries and wages of its construction workers at project site during the period of suspension of construction activities.

See accompanying Notes to Consolidated Financial Statements.

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EEI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31 NET INCOME (LOSS)

2021

2020

2019

₱478,896,499

(₱2,072,166,490)

₱1,155,328,463

233,107,050 (35,105,272)

(17,501,993) (14,258,282)

110,253,055 (8,684,333)

372,851,041

(82,143,152)

(226,705,511)

(153,543,497) 417,309,322

30,571,827 (83,331,600)

51,468,919 (73,667,870)

82,024,037 499,333,359

(41,824,037) (125,155,637)

(11,415,464) (85,083,334)

₱978,229,858

(₱2,197,322,127)

₱1,070,245,129

₱989,033,212 (10,803,354) ₱978,229,858

(₱2,171,093,551) (26,228,576) (2,197,322,127)

₱1,071,328,177 (1,083,048) ₱1,070,245,129

OTHER COMPREHENSIVE INCOME (LOSS)

Items not to be reclassified to profit or loss in subsequent periods: Fair value change on equity investments at FVOCI (Note 12) Share in OCI of an associate (Note 11) Remeasurement gains (losses) on retirement liabilities (Note 27) Income tax effect relating to items that will not be reclassified to profit or loss (Note 25) Item to be reclassified to profit or loss in subsequent periods: Cumulative translation adjustments

TOTAL COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) attributable to: Equity holders of the Parent Company Non-controlling interests

See accompanying Notes to Consolidated Financial Statements.

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EEI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to Equity Hold Other Comprehensive Incom

Capital Stock Additional (Note 29) Paid-In Capital Balances at January 1, 2019 Change in non-controlling interests Net income Other comprehensive income (loss) Total comprehensive income (loss) Cash dividend declared (Note 30) Balances at December 31, 2019 Reversal of appropriation of retained earnings (Note 29) Net loss Other comprehensive loss Total comprehensive loss Balances at December 31, 2020 Issuance Net income (loss) Other comprehensive income Total comprehensive income Balances at December 31, 2021

₱1,036,401,386

₱477,037,443

‒ ‒ ‒ ‒ ‒ 1,036,401,386

‒ ‒ ‒ ‒ ‒ 477,037,443

‒ ‒ ‒ ‒ ‒ ‒ ‒ ‒ 1,036,401,386 477,037,443 30,000,000 5,925,009,555 ‒ ‒ ‒ ‒ ‒ ‒ ₱1,066,401,386 ₱6,402,046,998

See accompanying Notes to Consolidated Financial Statements.

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Remeasurement Gains (Losses) on Retirement Treasury Liability Stock (Note 27) (₱3,720,790) (₱143,221,282)

Net Unrealized Cumulative Gain on Available Translation for Sale Financial Adjustments Assets ₱333,099,018

₱−

‒ ‒ (167,297,154) (167,297,154) ‒ (310,518,436)

‒ ‒ (11,415,464) (11,415,464) ‒ 321,683,554

‒ ‒ ‒ ‒ ‒ ‒

‒ ‒ ‒ ‒ ‒ (71,650,488) ‒ (71,650,488) (3,720,790) (382,168,924) ‒ ‒ ‒ ‒ ‒ 217,007,502 ‒ 217,007,502 (₱3,720,790) (₱165,161,422)

‒ ‒ (41,824,037) (41,824,037) 279,859,517 ‒ ‒ 83,558,335 83,558,335 ₱363,417,852

‒ ‒ ‒ ‒ ‒ ‒ ‒ ‒ ‒ ₱‒

‒ ‒ ‒ ‒ ‒ (3,720,790)

FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

ders of the Parent Company me - Net of Deferred Tax Effect

Fair Value Reserve of Equity Investments at FVOCI (Note 12)

Retained Earnings (Note 30) Subtotal Unappropriated

Non-controlling

Appropriated

Subtotal

Interests

Total

₱442,883,493

₱632,761,229

₱1,557,443,671

₱4,000,000,000

₱7,699,922,939

₱12,021,153

₱7,711,944,092

‒ ‒ 93,710,321 93,710,321 ‒ 536,593,814

‒ ‒ (85,002,297) (85,002,297) ‒ 547,758,932

‒ 1,156,330,474 ‒ 1,156,330,474 (207,256,297) 2,506,517,848

‒ ‒ ‒ ‒ ‒ 4,000,000,000

‒ 1,156,330,474 (85,002,297) 1,071,328,177 (207,256,297) 8,563,994,819

29,843,811 (1,002,011) (81,037) (1,083,048) ‒ 40,781,916

29,843,811 1,155,328,463 (85,083,334) 1,070,245,129 (207,256,297) 8,604,776,735

‒ ‒ (11,559,112) (11,559,112) 525,034,702 ‒ ‒ 198,767,522 198,767,522 ₱723,802,224

‒ ‒ (125,033,637) (125,033,637) 422,725,295 ‒ ‒ 499,333,359 499,333,359 ₱ 922,058,654

4,000,000,000 (2,046,059,914) ‒ (2,046,059,914) 4,460,457,934 ‒ 489,699,853 ‒ 489,699,853 ₱4,950,157,787

(4,000,000,000) ‒ ‒ (2,046,059,914) ‒ (125,033,637) ‒ (2,171,093,551) ‒ 6,392,901,268 ‒ 5,955,009,555 ‒ 489,699,853 ‒ 499,333,359 ‒ 989,033,212 ₱‒ ₱13,336,944,034

‒ ‒ (26,106,576) (2,072,166,490) (122,000) (125,155,637) (26,228,576) (2,197,322,127) 14,553,340 6,407,454,608 ‒ 5,955,009,555 (10,803,354) 478,896,499 ‒ 499,333,359 (10,803,354) 978,229,858 ₱3,749,986 ₱13,340,694,021

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EEI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31

2021

2020

2019

Income (loss) before income tax Adjustments for: Depreciation and amortization (Notes 13, 14, 15, 21 and 22) Interest expense (Notes 14, 17 and 19) Movements in retirement assets and liabilities Gain on sale of investment properties (Notes 15 and 24) Gain on sale of property and equipment (Note 24) Unrealized foreign exchange loss (gain) - net Interest income (Note 23) Dividend income (Note 24) Equity in net earnings of associates and joint ventures (Note 11)

₱783,659,425

(₱3,357,557,864)

₱1,498,535,464

598,297,606 469,481,846 38,164,681

766,098,997 466,242,665 (8,256,584)

808,786,418 564,165,927 (1,770,037)

(14,750)

(204,500)

(111,500)

(4,248,583) (7,068,699) (7,721,523) (50,987,679)

(7,316,671) 46,583,668 (16,955,390) (37,058,954)

(97,426,071) 35,357,259 (27,618,043) (53,417,279)

(925,173,364)

(980,867,002)

(346,252,663)

Operating income (loss) before working capital changes Decrease (increase) in: Receivables Contract assets Due from related parties Inventories Other current assets Other noncurrent assets Increase (decrease) in: Accounts payable and other current liabilities Contract liabilities Due to related parties

894,388,960

(3,129,291,635)

2,380,249,475

1,247,048,658 (1,236,960,086) (88,737,714) 219,820,983 98,072,698 (30,174,216)

631,056,198 1,393,590,033 17,098,368 328,621,215 (394,723,607) 102,198,678

(680,463,624) (3,860,423,624) 102,842,332 (42,888,998) (270,951,613) 351,744,203

(1,345,890,036) (861,933,073) 2,121,399

156,507,623 (875,200,911) (126,417,175)

1,313,741,720 2,724,074,567 (23,126,682)

Cash flows generated from (used in) operations Interest received Interest paid Income taxes paid

(1,102,242,427) 7,867,421 (413,103,643) (70,967,692)

(1,896,561,213) 17,724,385 (472,138,293) (63,490,599)

1,994,797,756 25,502,415 (566,913,324) (462,277,377)

Net cash flows provided by (used in) operating activities

(1,578,446,341)

(2,414,465,720)

991,109,470

99,116,617 ‒ 80,750

568,685,883 9,900,000 873,500

159,351,53 ‒ 562,000

(170,057,061) ‒ ‒ (8,300,000) 454,139,216 207,891,679

(489,514,591) (450,000) ‒ ‒ 575,959,275 112,058,954

(323,538,084) (169,126,188) ‒ (18,877,857) ‒ 116,417,279

582,871,201

777,513,021

(235,211,319)

CASH FLOWS FROM OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposals of: Property and equipment (Note 24) Equity investment at FVOCI (Note 12) Investment properties (Note 24) Acquisitions of: Property and equipment (Note 13) Investment in associates (Note 11) Investment properties (Note 15) Equity investment at FVOCI (Note 12) Proceeds from return of investment (Note 11) Dividends received (Notes 11, 12 and 24)

Net cash flows provided by (used in) investing activities

(Forward)

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Years Ended December 31

2021

2020

2019

₱10,000,000,000 5,955,009,555 5,457,684,245

₱11,602,000,000 ‒ 4,082,880,748

₱14,075,000,000 ‒ 992,499,997

(11,765,000,000) (2,765,991,887) (92,847,405) ‒ ‒

(12,492,000,000) (1,260,133,045) (105,787,665) (5,999,995) ‒

(14,410,000,000) (865,952,374) (247,603,606) (207,256,297) 29,843,811

6,788,854,508

1,820,960,043

(633,468,469)

(1,420,031)

(7,850,763)

(2,896,485)

NET INCREASE IN CASH AND CASH EQUIVALENTS

5,791,859,337

176,156,581

119,533,197

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

1,332,363,040

1,156,206,459

1,036,673,262

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 6)

₱7,124,222,377

₱1,332,363,040

₱1,156,206,459

CASH FLOWS FROM FINANCING ACTIVITIES

Availment of: Bank loans (Note 17) Issuance of preferred shares (Note 29) Long-term debt – net of transaction costs (Note 19) Payments of: Bank loans (Note 17) Long-term debt (Note 19) Principal portion of lease liabilities (Note 14) Cash dividends Changes in non-controlling interests Net cash flows provided by (used in) financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

See accompanying Notes to Consolidated Financial Statements.

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EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Corporate Information and Authorization for Issuance of Consolidated Financial Statements EEI Corporation (the Parent Company) is a stock corporation incorporated on April 17, 1931 under the laws of the Philippines. On July 15, 1980, the Parent Company’s corporate life was extended for another fifty years starting April 17, 1981. The Parent Company is engaged in general contracting and construction equipment rental. Its registered office address and principal place of business is No. 12 Manggahan Street, Bagumbayan, Quezon City.

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

It is a subsidiary of House of Investments, Inc., which is also incorporated in the Philippines. The ultimate parent company of EEI Corporation is Pan Malayan Management and Investment Corporation (PMMIC).

The consolidated financial statements were approved and authorized for issue by the Board of Directors (BOD) on April 5, 2022

2. Basis of Preparation and Statement of Compliance Basis of Preparation

The consolidated financial statements have been prepared on a historical cost basis, except for equity investments at FVOCI which have been measured at fair value. The accompanying consolidated financial statements are presented in Philippine Peso (₱), which is also the Parent Company’s functional currency. Except as indicated, all amounts are rounded off to the nearest Peso.

Statement of Compliance

The consolidated financial statements have been prepared in compliance with Philippine Financial Reporting Standards (PFRSs).

Basis of Consolidation

The consolidated financial statements include the Parent Company and the following `companies (collectively the Group) that it controls:

(Forward)

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* On May 14, 2021, EEI Carga Digital Logistics Corporation was incorporated as a wholly owned subsidiary of EE. EEI Carga’s primary purpose is to own and operate a digital logistics platform that enables shippers to deliver their products through various transportation options available in the platform. EEI Carga’s financial year end is December 31.

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: a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); b) exposure, or rights, to variable returns from its involvement with the investee; and c) 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: a) the contractual arrangement with the other vote holders of the investee b) rights arising from other contractual arrangements c) the Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statements of income and consolidated statements of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases.

The consolidated financial statements are prepared with the same financial reporting period as the Parent Company using the consistent accounting policies. All significant intercompany balances and transactions, intercompany profits and expenses and gains and losses are eliminated during consolidation.

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EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: • derecognizes the assets (including goodwill) and liabilities of the subsidiary.

• derecognizes the carrying amount of any non-controlling interests.

• recognizes the fair value of the consideration received.

• recognizes the fair value of any investment retained.

• reclassifies to profit or loss, or transfer directly to retained earnings if required by other PFRSs, the amounts recognized in other comprehensive income in relation to the subsidiary; and • recognizes any resulting difference as a gain or loss in profit or loss attributable to the Parent Company.

Non-controlling interests (NCI) represent the portion of equity not attributable to the Parent Company.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Parent Company and to the non-controlling interests, even if this results in the noncontrolling interests having a deficit balance. Non-controlling interests are presented separately in the consolidated statements of comprehensive income and within the equity section of the consolidated statements of financial position and consolidated statements of changes in equity, separately from the equity attributable to equity holders of the Parent Company.

3. Changes in Accounting Policies 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, 2021. Adoption of these pronouncements did not have any significant impact on the Group’s financial statements unless otherwise indicated.

The Group did not early adopt any other standard, interpretation or amendment that has been issued but is not yet effective. The adoption of these pronouncements does not have a significant impact on the Group’s consolidated financial statements unless otherwise indicated.

■ Amendment to PFRS 16, COVID-19-related Rent Concessions beyond June 30, 2021.

The amendment provides relief to lessees from applying the PFRS 16 requirement on lease modifications to rent concessions arising as a direct consequence of the COVID-19 pandemic. A lessee may elect not to assess whether a rent concession from a lessor is a lease modification if it meets all of the following criteria: • • • •

The rent concession is a direct consequence of COVID-19; The change in lease payments results in a revised lease consideration that is substantially the same as, or less than, the lease consideration immediately preceding the change; Any reduction in lease payments affects only payments originally due on or before June 30, 2022; and There is no substantive change to other terms and conditions of the lease.

A lessee that applies this practical expedient will account for any change in lease payments resulting from the COVID-19 related rent concession in the same way it would account for a change that is not a lease modification, i.e., as a variable lease payment.

The amendment is effective for annual reporting periods beginning on or after April 1, 2021. Early adoption is permitted.

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The adoption of the amendments has no impact to the Group’s consolidated financial statements since the Group has no lease concessions.

■ Amendments to PFRS 9, PFRS 7, PFRS 4 and PFRS 16, Interest Rate Benchmark Reform – Phase 2 The amendments provide the following temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR): o Practical expedient for changes in the basis for determining the contractual cash flows as a result of IBOR reform o Relief from discontinuing hedging relationships o Relief from the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component The Group shall also disclose information about: o The about the nature and extent of risks to which the entity is exposed arising from financial instruments subject to IBOR reform, and how the entity manages those risks; and o Their progress in completing the transition to alternative benchmark rates, and how the entity is managing that transition The amendments are effective for annual reporting periods beginning on or after January 1, 2021 and apply retrospectively, however, the Group is not required to restate prior periods. The adoption of the amendment did not impact the Group’s financial statement as of December 31, 2021.

Standards Issued But Not Yet Effective

Pronouncements issued but not yet effective are listed below. The Group intends to adopt the following pronouncements when they become effective. The adoption of these pronouncements is not expected to have a significant impact on the Group’s consolidated financial statements unless otherwise indicated.

Effective beginning on or after January 1, 2022

■ Amendments to PFRS 3, Reference to the Conceptual Framework The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements. The amendments added an exception to the recognition principle of PFRS 3, Business Combinations to avoid the issue of potential ‘day 2’gains or losses arising for liabilities and contingent liabilities that would be within the scope of PAS 37, Provisions, Contingent Liabilities and Contingent Assets or Philippine-IFRIC 21, Levies, if incurred separately.

At the same time, the amendments add a new paragraph to PFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.

The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply prospectively. The Group is still assessing the impact of the amends to the consolidated financial statements.

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EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ■ Amendments to PAS 16 , Plant and Equipment: Proceeds before Intended Use The amendments prohibit entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment.

The amendments are not expected to have a material impact on the Group.

■ Amendments to PAS 37, Onerous Contracts – Costs of Fulfilling a Contract The amendments specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.

The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments.

The amendments are not expected to have a material impact on the Group.

■ Annual Improvements to PFRSs 2018-2020 Cycle •

Amendments to PFRS 1, First-time Adoption of Philippines Financial Reporting Standards, Subsidiary as a first-time adopter The amendment permits a subsidiary that elects to apply paragraph D16(a) of PFRS 1 to measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to PFRS. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of PFRS 1.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption permitted. The amendments are not expected to have a material impact on the Group.

■ Amendments to PFRS 9, Financial Instruments, Fees in the ’10 per cent’ test for derecognition of financial liabilities The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s

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behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendments are not expected to have a material impact on the Group. The Group is still assessing the impact of the amends to the consolidated financial statements.

■ Amendments to PAS 41, Agriculture, Taxation in fair value measurements The amendment removes the requirement in paragraph 22 of PAS 41 that entities exclude cash flows for taxation when measuring the fair value of assets within the scope of PAS 41.

An entity applies the amendment prospectively to fair value measurements on or after the beginning of the first annual reporting period beginning on or after January 1, 2022 with earlier adoption permitted. The amendments are not expected to have a material impact on the Group.

Effective beginning on or after January 1, 2023

■ Amendments to PAS 12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction The amendments narrow the scope of the initial recognition exception under PAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences.

The amendments also clarify that where payments that settle a liability are deductible for tax purposes, it is a matter of judgement (having considered the applicable tax law) whether such deductions are attributable for tax purposes to the liability recognized in the financial statements (and interest expense) or to the related asset component (and interest expense).

An entity applies the amendments to transactions that occur on or after the beginning of the earliest comparative period presented for annual reporting periods on or after January 1, 2023.

The Group is still assessing the impact of the amendments to the consolidated financial statements.

■ Amendments to PAS 8, Definition of Accounting Estimates The amendments introduce a new definition of accounting estimates and clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, the amendments clarify that the effects on an accounting estimate of a change in an input or a change in a measurement technique are changes in accounting estimates if they do not result from the correction of prior period errors.

An entity applies the amendments to changes in accounting policies and changes in accounting estimates that occur on or after January 1, 2023 with earlier adoption permitted. The amendments are not expected to have a material impact on the Group.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ■

Amendments to PAS 1 and PFRS Practice Statement 2, Disclosure of Accounting Policies The amendments provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by: o Replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies, and o Adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures The amendments to the Practice Statement provide non-mandatory guidance. Meanwhile, the amendments to PAS 1 are effective for annual periods beginning on or after January 1, 2023. Early application is permitted as long as this fact is disclosed. The Group is still assessing the impact of the amends to the consolidated financial statements.

Effective beginning on or after January 1, 2024

■ Amendments to PAS 1, Classification of Liabilities as Current or Non-current The amendments clarify paragraphs 69 to 76 of PAS 1, Presentation of Financial Statements, to specify the requirements for classifying liabilities as current or non-current. The amendments clarify: o What is meant by a right to defer settlement o That a right to defer must exist at the end of the reporting period o That classification is unaffected by the likelihood that an entity will exercise its deferral right o That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be applied retrospectively. The Group is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.

Effective beginning on or after January 1, 2025

■ 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 overall objective of PFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are largely based on grandfathering previous local accounting policies, PFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of PFRS 17 is the general model, supplemented by: • •

A specific adaptation for contracts with direct participation features (the variable fee approach) A simplified approach (the premium allocation approach) mainly for short-duration contracts

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PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, with comparative figures required. Early application is permitted. The amendments are not expected to have a material impact on the Group.

Deferred Effectivity

■ Amendments to PFRS 10 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, Business Combinations. 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.

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.

4. Significant Accounting Policies Leases - Group as a lessee, Effective starting January 1, 2019 The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for shortterm leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Right-of-use assets The Group recognizes right-of-use assets at the commencement date of the lease. 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 ease incentives received.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: EUL Land Building

10-66 years 2-10 years

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Right-of-use assets are subject to impairment. Refer to the accounting policies in section impairment of non-financial assets.

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. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.

Lease liabilities that are expected to be settled for no more than 12 months after reporting period are classified as current liabilities presented as current portion of lease liabilities. Otherwise, these are classified as noncurrent liabilities.

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 insubstance fixed lease payments or a change in the assessment to purchase the underlying asset.

Short-term leases and leases of low-value assets The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (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). It also applies the leases of low-value assets recognition exemption to leases of property and equipment that are considered of low value.

Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.

Group as a lessor Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Revenue Recognition 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, because it typically controls the goods or services before transferring them to the customer.

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Revenue from construction contracts The Group assessed that there is only one performance obligation for each construction agreement that it has entered and that revenue arising from such agreements qualify for recognition over time because the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced by applying par. 35(b) of PFRS 15. Control of an asset refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The customer, having the ability to specify the design (or any changes thereof) of the asset, controls the asset as it is being constructed. Furthermore, the Group builds the asset on the customer’s land (or property controlled by the customer), hence, the customer generally controls any work in progress arising from the Group’s performance. The Group also recognized as part of its construction revenue, the effects of variable considerations arising from various change orders and claims, to the extent that they reflect the amounts the Group expects to be entitled to and to be received from the customers, provided that it is highly probable that a significant reversal of the revenue recognized in connection with these variable considerations will not occur in the future. For unpriced change orders and claims, the Group uses the “most likely amount” method to predict the amounts the Group expects to be entitled to and to be received from the customers. The Group updates its estimate of the transaction price at the end of each reporting period to reflect any changes in circumstances that would result to changes in amount of variable consideration.

The Group elected to use the input method to measure the progress of the fulfilment of its performance obligation, which is based on the actual costs incurred to date relative to the total estimated cost to complete the construction projects because there is a direct relationship between the Group’s effort (i.e., costs incurred) and the transfer of service to the customer. The Group excludes the effect of any costs incurred that do not contribute to the Group’s performance in transferring control of goods or services to the customer (such as unexpected amounts of wasted materials, labor or other resources) and adjusts the input method for any costs incurred that are not proportionate to the Group’s progress in satisfying the performance obligation (such as uninstalled materials).

Revenue from real estate sales Revenue from real estate sales pertains to sale of completed real estate properties. Revenue from real estate sales is recognized at point in time when the control over the real estate property is transferred to the customer which is when the transaction price of the real estate property is fully paid and the real estate property is turned over to the customer.

Revenue from power generation The Group’s power supply agreement with its customer requires the Group to deliver certain units of electricity (in kWh) to the customer per month. As delivery of electricity constitutes a series of distinct good or services that are substantially the same and have the same pattern of transfer to the customer (i.e., the good or service would be recognized over time using the same measure of progress), this was treated by the Group as a single performance obligation. Because electricity is simultaneously provided and consumed, the Group’s performance obligation to deliver electricity qualifies for revenue recognition over time by applying par. 35(a) of PFRS 15. The Group recognizes revenue from power generation by applying the “right to invoice” practical expedient since the Group’s right to payment is for an amount that corresponds directly with the value to the customer of the Group’s performance to date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue from manpower services Under the Group’s service agreements with its customers, the Group is required to provide manpower services (including but not limited to janitorial, messengerial and other allied services).

As provision of these services constitutes a series of distinct good or services that are substantially the same and have the same pattern of transfer to the customer (i.e., the good or service would be recognized over time using the same measure of progress), this was treated by the Group as a single performance obligation. Because the services are simultaneously provided and consumed by the customer, the Group’s performance obligation to render such services qualifies for revenue recognition over time by applying par. 35(a) of PFRS 15. The Group recognizes revenue from manpower supply services by applying the “right to invoice” practical expedient since the Group’s right to payment is for an amount that corresponds directly with the value to the customer of the Group’s performance to date.

Revenue from sale of merchandise Revenue from sale of merchandise is recognized at a point in time when control of the asset is transferred to the customer, generally on delivery and acceptance of the inventory item.

Onerous contracts If the Group has a contract that is onerous, the present obligation under the contract is recognized and measured as a provision. However, before a separate provision for an onerous contract is established, the Group recognizes any impairment loss that has occurred on assets dedicated to that contract.

An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).

Dividend Income Dividend income is recognized when the shareholders’ right to receive the payment is established.

Contract balances arising from revenue with customer contracts Receivables A receivable represents the Group’s 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 assets A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional.

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 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.

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The Group presents each contract with customer in the consolidated statement of financial position either as a contract asset or a contract liability.

Expenses Expenses are recognized in the consolidated statement of income when decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.

Cost of sales and services Cost of sales is recognized as an expense when the related goods are sold. Cost of services include all direct materials and labor costs and those indirect costs related to contract performance which are recognized as incurred.

Cost of real estate sales is recognized consistent with the method of applied revenue recognition.

The cost of inventory recognized in the statement of income is determined with reference to the specific costs incurred on the sold property, allocated based on the relative size of sold property over the real estate corresponding project.

Selling and administrative expenses Selling expenses are costs incurred to sell goods and services. Administrative expenses constitute costs of administering the business. Selling and administrative expenses are expensed as incurred.

Current versus Non-current Classification The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset as 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 and cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period

All other assets are classified as non-current.

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 12 months after the reporting period

The Group classifies all other liabilities as non-current. Deferred tax assets and deferred tax liabilities are classified as non-current assets and liabilities.

Cash and Cash Equivalents Cash includes cash on hand and in bank and cash equivalents. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three (3) months or less and that are subject to an insignificant risk of change in value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 by the Group.

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

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

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

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

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

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

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

Financial Instruments The Group recognizes a financial asset or a financial liability in the consolidated statement of financial position when it becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized on the settlement date. The Group follows the settlement date accounting where an asset to be received and liability to be paid are recognized on the settlement date and derecognition of an asset that is sold and the recognition of a receivable from the buyer are recognized on the settlement date.

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Financial Instruments - Initial Recognition and Subsequent Measurement Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

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. With the exception of trade receivables that do not contain a significant financing component, 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 are measured at the transaction price determined under PFRS 15.

In order 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 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 the time frame established by regulation or convention in the marketplace are recognized on the settlement date.

Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • • • •

Financial assets at amortized cost (debt instruments) Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) Financial assets at fair value through profit or loss

Financial assets at amortized cost (debt instruments) 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; and 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 subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Group’s financial assets at amortized cost includes cash and cash equivalents, deposits, receivables, and due from related parties.

Financial assets designated at fair value through OCI (equity instruments) Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under PAS 32, Financial Instruments: Presentation, and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in the consolidated statement of income when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

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

The Group does not have any debt financial assets at fair value through OCI and financial assets at fair value through profit or loss as of December 31, 2021 and 2020.

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).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The loss allowance was adjusted for forward-looking factors specific to the debtors and the economic environment.

For other debt financial assets, the ECL is based on the 12-month ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. The Group generally considers a financial asset in default when contractual payments are 90 days past due. For a financial asset that arises from long-term construction contracts, the Group considers the asset to be in default if contractual payments are not settled within 30 days from the completion of the construction project. 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 before taking into account any credit enhancements held by EEI 2021 Annual Report | Audited Financial Statements

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the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial Liabilities The accounting for the Group’s financial liabilities remains the same as it was under PAS 39. The Group initially measures a financial liability at its fair value plus, in the case of a financial liability not at fair value through profit or loss, transaction costs. The Group has no financial liabilities at FVPL. Subsequent to initial recognition, the Group’s financial liabilities are carried at amortized cost. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the consolidated statement of income. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.

This category generally applies to the Group’ accounts payable and other current liabilities, bank loans, long-term debt, lease liabilities and due to related parties.

Derecognition of Financial Instruments 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: (a) the rights to receive cash flows from the asset have expired; or (b) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; and either (i) has transferred substantially all the risks and rewards of the asset, or (ii) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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

Financial liabilities A financial liability is derecognized when the obligation under the 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 liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of income.

Offsetting of Financial Instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statements of financial position if there is a currently enforceable legal right to set off the recognized amounts and there is 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Inventories Inventories are stated at the lower of cost and net realizable value (NRV). Cost includes purchase price and other costs directly attributable to its acquisition such as non-refundable taxes, handling and transportation cost. The cost of real estate inventories includes (a) land cost; (b) freehold and leasehold rights for land; (c) amounts paid to contractors for construction; (d) planning and design cost, cost of site preparation, professional fees, property taxes, construction overheads and other related costs that are directly attributable in bringing the real estate inventories to its intended condition.

Cost of inventories is generally determined using the moving-average method, except for land inventory of EEI Realty which is accounted for using the specific identification method.

NRV is the estimated selling price in the ordinary course of the business less the estimated costs of completion and the estimated costs necessary to make the sale.

Materials issued but still uninstalled to construction projects are not considered as part of computation for percentage of completion of projects.

Prepaid Expenses These are recorded as asset before they are utilized and apportioned over the period covered by the payment and charged to the appropriate account in the consolidated statement of income when incurred.

Advances to Suppliers and Subcontractors Advances to suppliers and subcontractors represent advance payment for the purchase of various construction materials and down payment to subcontractors for the contract work to be performed.

Other Current Assets Other current assets pertain to other resources controlled by the Group as a result of past events and from which future economic benefits are expected to flow to the Group within the financial reporting period.

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 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 in the consolidated statement of financial position up to the extent of the recoverable amount.

Investments in Associates and Joint Ventures An associate is an entity in which the Group has significant influence. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

Investments in associates and joint venture are accounted for using the equity method of accounting.

Under this method, the investment amount is increased or decreased to recognize the Group’s share in the profit or loss of the investee after the date of acquisition. Dividends received from the investee reduces the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the Group’s proportionate interest in the investee arising from changes in the investee’s other comprehensive income.

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Gains and losses resulting from ‘upstream’ and ‘downstream’ transactions between the Group and its associate or joint venture are recognized in the consolidated financial statements only to the extent of unrelated investors’ interests in the associate or joint venture.

The reporting dates and the accounting policies of the associates and joint venture conform to those used by the Group for like transactions and events in similar circumstances.

Property and Equipment Property and equipment, except for land, is stated at cost, less accumulated depreciation, amortization and impairment in value, if any. Land is carried at cost less 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 assets have been put into operation, such as repairs and maintenance, are normally charged to operations in the year in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of property and equipment.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property and equipment of the Group are as follows: Number of Years Buildings and improvements Machinery, tools and construction equipment Furniture, fixtures and office equipment Transportation and service equipment

10 - 20 2 - 20 3-5 5

Amortization of leasehold improvements is computed over the estimated useful life of the improvement of 20 years or term of the lease, whichever is shorter.

The estimated useful lives and depreciation and amortization method are reviewed periodically to ensure that the periods and method of depreciation and amortization are consistent with the expected pattern of economic benefits from items of property and equipment.

Construction in progress represents property and equipment under construction and is stated at cost.

This includes cost of construction and other direct costs. Construction in progress are reclassified to the appropriate class of property and equipment when construction of the asset is completed.

Property and equipment are written-off when either these are disposed of or when these are permanently withdrawn from use and there is no more future economic benefits expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of income in the year the asset is derecognized.

Investment Properties Investment properties include land that is carried at cost less any impairment in value, if any.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the carrying amount of the investment property transferred at the date of change in use. If owner-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.

Software Costs Software costs are stated at cost less accumulated amortization and any impairment in value. Costs related to software purchased by the Group for use in the operations are amortized on a straight-line basis over a period of three (3) years.

Impairment of Non-financial Assets For property and equipment, right-of-use assets, software costs, investments in associates and joint venture and investment properties, the Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost to sell, recent market transactions are taken into account, if available. If no such transaction can be identified, an appropriate valuation model is used.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years.

Such reversal is recognized in the consolidated statement of income.

Foreign Currency-denominated Transactions and Translation Transactions denominated in foreign currencies are recorded using the applicable exchange rate at the date of the transaction. Outstanding monetary assets and monetary liabilities denominated in foreign currencies are retranslated using the applicable rate of exchange at the end of reporting period. Foreign exchange gains or losses are recognized in the Group’s consolidated statement of income.

Nonmonetary items that are measured in terms of historical cost in foreign currency are translated using the exchange rates as at the dates of initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currency of EEI Limited and Subsidiaries, the Group’s foreign subsidiaries, is United States Dollar. As at reporting date, the assets and liabilities of foreign subsidiaries are translated into the presentation currency of the Group (the Philippine Peso) at the closing rate as at the reporting date, and the consolidated statements of income accounts are translated at monthly weighted average exchange rate.

The exchange differences arising on the translation of foreign subsidiaries are taken directly to a separate component of equity under “Cumulative translation adjustments” account.

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Upon disposal of a foreign subsidiary, the deferred cumulative amount recognized in other comprehensive income relating to that particular foreign operation is recognized in the consolidated statement of income.

Retirement Benefits

The net defined benefit liability or asset is the aggregate of the present value of the defined benefit obligation at the end of the financial reporting period reduced by the fair value of plan assets (if any), adjusted for any effect of limiting a net defined pension asset to the asset ceiling. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

The cost of providing benefits under the defined pension plans is actuarially determined using the projected unit credit method.

Retirement expenses comprise the following: a) Service cost b) Net interest on the net defined benefit liability or asset c) Remeasurements of net defined benefit liability or asset Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognized as expense in profit or loss. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated periodically by independent qualified actuaries.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on government bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognized as expense or income in profit or loss.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately in other comprehensive income in the period in which they arise. Remeasurements are not reclassified to profit or loss in subsequent periods.

Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the expected period until the settlement of the related obligations).

If the fair value of the plan assets is higher than the present value of the defined benefit obligation, the measurement of the resulting defined benefit asset is limited to the present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

Plan assets are not available to the creditors of the Group, nor can they be paid directly to the Group.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Tax Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and the tax laws used to compute the amount are those that are enacted or substantially enacted at reporting date.

Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the financial reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except: • •

When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint venture, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except: •

•

When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss In respect of deductible temporary differences associated with investments in associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized

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 profit will be available to allow all or part of the deferred tax asset to be used. Unrecognized deferred tax assets are re-assessed at each financial reporting date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

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

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred taxes relate to the same entity and the same taxation authority.

Current tax and deferred tax shall be recognized outside profit or loss if the tax relates to items that are recognized outside profit or loss.

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

For contract with customer identified by the Group to be onerous (i.e., the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.), the Group records a provision for the loss it expects to make on such contract.

Contingencies Contingent liabilities are not recognized in the consolidated financial statements but disclosed in the notes to consolidated financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the group financial statements but disclosed in the notes to group financial statements when an inflow of economic benefits is probable.

Stock Option Plan No benefit expense is recognized relative to stock options granted. When the shares related to the stock options plan are subscribed, these are treated as capital stock issuances. The stock option plan is exempt from PFRS 2, Share-based Payment.

Basic and Diluted Earnings per Share Basic earnings per share is computed by dividing net income for the year attributable to equity holders of the Parent Company by the weighted average number of common shares outstanding during the year, after giving retroactive effect for any stock dividends, stock splits or reverse stock splits.

Diluted earnings per share is computed by adjusting the net income for the year attributable to equity holders of the Parent Company and the weighted average number of common shares outstanding during the year after giving retroactive effect for any stock dividends, stock splits or reverse stock splits and adjusted for the effects of all dilutive potential common shares.

Capital Stock The Group records common stocks at par value and additional paid-in capital in excess of the total contributions received over the aggregate par values of the equity shares. Incremental costs incurred directly attributable to the issuance of new shares are shown in equity as a deduction from proceeds, net of tax.

Treasury Stock When the Group purchases its own shares of capital stock (treasury shares), the consideration paid, including any attributable incremental costs, is deducted from equity until the shares are cancelled or reissued of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related tax effects is included in equity.

Retained Earnings Retained earnings represent the cumulative balance of periodic net income or loss, prior period adjustments, effect of changes in accounting policy and other capital adjustments. Retained earnings are restricted for dividend declaration to the extent of the cost of treasury shares.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Appropriated retained earnings are set aside for specific purpose as approved by the Board of Directors.

Events After the Financial Reporting Date Any 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 when material, in notes the consolidated financial statements.

5. Significant Accounting Judgments and Estimates The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The effects of any changes in estimates will be 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.

The following presents a summary of these significant accounting judgments and estimates:

Judgments Determination of lease term of contracts with renewal and termination options – Group as a lessee The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. 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 or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customization to the leased asset).

The Group included the renewal period as part of the lease term for leases of land and office spaces with shorter non-cancellable period (i.e., three to ten years). The Group typically exercises its option to renew for these leases because there will be a significant negative effect on production if a replacement asset is not readily available. The renewal periods for leases of land and office spaces with longer non-cancellable periods are not included as part of the lease term as these are not reasonably certain to be exercised (Note 14).

Recognition of revenue from construction contracts Under PFRS 15, the Group assessed that there is only one performance obligation for each construction agreement that it has entered and that revenue arising from such agreements qualify for recognition over time. The Group elected to use the input method to measure the progress of the fulfilment of its performance obligation, which is based on the actual costs incurred to date relative to the total estimated cost to complete the construction projects. The Group believes that this method faithfully depicts the Group’s performance towards satisfaction of its performance obligation because there is a direct relationship between the Group’s effort (i.e., costs incurred) and the transfer of service to the customer (Note 20).

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Provisions and contingencies The Group is involved in various claims in the ordinary course of business. Management and its legal counsels believe that the Group has substantial legal and factual bases for its position. The Group’s management believes that the outcome of these claims will not have a material adverse effect on the Group’s financial position or operating results. It is possible, however, that future results of operations could be materially affected by changes in estimates or in the effectiveness of the strategies relating to these claims (Note 18).

Assessment of joint control Judgment is required to determine when the Group has joint control over an arrangement, which requires an assessment of the relevant activities and when the decisions in relation to those activities require unanimous consent. The Group assesses their rights and obligations arising from the arrangement and specifically considers: • • •

the structure of the joint arrangement - whether it is structured through a separate vehicle when the arrangement is structured through a separate vehicle, the Group also considers the rights and obligations arising from: the legal form of the separate vehicle the terms of the contractual arrangement other facts and circumstances, considered on a case by case basis.

Refer to Note 11 for details of the Group’s investment in joint venture.

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 described below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Estimating variable considerations arising from change orders and claims The Group frequently agrees to change orders that modify the scope of its work previously agreed with customers and regularly submits claims to customers when unanticipated additional costs are incurred because of delays or changes in scope caused by the customers. PFRS 15 requires the Group to recognize, as part of its revenue from construction contracts, the estimated amounts the Group expects to be entitled to and to be received from customers due to these change orders and claims (otherwise known as variable considerations), provided that it is highly probable that a significant reversal of the revenue recognized in connection with these variable considerations will not occur in the future. For these unpriced change orders and claims, the Group uses the “most likely amount” method to predict the amount to which it will be entitled and expected to be received from the customers. The Group also updates its estimate of the transaction price to reflect any changes in circumstances that would result to changes in amount of variable considerations and corresponding increase or decrease in the contract assets.

The aggregate carrying values of receivables and contract assets arising from construction contracts amounted to ₱12.2 billion as of December 31, 2021 and 2020, respectively (Notes 7 and 8).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair value measurement of unquoted equity investments at FVOCI The Group uses valuation techniques such as discounted cash flow approach and adjusted net asset method to estimate the fair value of investment in PetroGreen Energy Corporation (PGEC) and Hermosa Ecozone Development Corporation (HEDC), respectively. These valuation techniques require significant unobservable inputs to calculate the fair value of the Group’s unquoted equity investments at FVOCI. These inputs include forecast cash flows assumptions, discount rates, appraised value of real properties, among others. Changes in assumptions relating to these factors could affect the reported fair value of these unquoted equity financial instruments. For the investment in PGEC, the effects of COVID-19 were reflected in the discount rate used in the discounted cash flow and were not accounted for separately. For the investment in HEDC, the valuation made by the appraisers was based on sales comparison approach. The effects of COVID-19 were reflected in the selling price of comparable listings of real estate properties and were not accounted for separately.

The fair value of unquoted equity investments amounted to ₱1.2 billion and ₱1.0 billion as of December 31, 2021 and 2020, respectively (Note 12).

Provision for expected credit losses of trade receivables and contract assets The Group uses the simplified approach in calculating the ECL of its trade receivables and contract assets wherein the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The model is based on the Group’s historical observed default rates and adjusted to include forward looking information. At every reporting date, the historical observed default rates are updated and changes in the forwardlooking estimates are analyzed.

The assessment of the correlation between historical observed default rates, forecast economic conditions 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.

As of December 31, 2021 and 2020, the aggregate carrying values of receivables and contract assets amounting to ₱12.2 billion, respectively, are disclosed in Notes 7 and 8 to the consolidated financial statements.

Impairment of nonfinancial assets The Group performs annual impairment review of nonfinancial assets (e.g. property and equipment, right-of-use assets, investment properties and investment in associates and joint venture) when certain impairment indicators are present. Determining the fair value of assets, which requires the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets, requires the Group to make estimates and assumptions that can materially affect the financial statements. Future events could cause the Group to conclude that the assets are impaired. Any resulting impairment loss could have a material adverse impact on the Group’s financial position and performance.

The aggregate carrying values of investments in associates and joint ventures, property and equipment, investment properties, noncurrent portion of land and development and other noncurrent assets (excluding time deposits) amounted to ₱7.2 billion and ₱7.3 billion as of December 31, 2021 and 2020, respectively (Notes 11, 13, 14 and 15).

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Estimation of retirement obligations The determination of the obligation and retirement cost are dependent on certain assumptions used by actuaries in calculating such amounts. Those assumptions include, among others, 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 retirement obligations.

Retirement liabilities amounted to ₱37.3 million and ₱373.8 million as of December 31, 2021 and 2020, respectively (Note 27).

Realizability of deferred tax assets The Group reviews the carrying amounts of deferred taxes of each entity in the Group at each reporting date and reduces deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized.

Deferred tax assets recognized by the Group are disclosed in Note 25 to the consolidated financial statements.

Classification of creditable withholding tax The Group classify its creditable withholding tax (CWT) as current when it is expected to be realized (e.g., will be used as tax credit against income taxes due) for at least twelve months after the reporting period. The portion of CWT that is expected to be realized after twelve months after the reporting period is classified as noncurrent. In 2021, the Group classified CWT as non-current as management assessed that it will not be used as tax credits within the next twelve months.

CWT recognized by the Group are disclosed in Notes 10 and 16 to the consolidated financial statements.

Estimation of impact of coronavirus pandemic The impact of coronavirus pandemic to the Group’s business operations relates to any potential interruptions or disruptions. The Group ensure that the impact of COVID-19 pandemic is appropriately reflected in its consolidated financial statements, and currently assessed the impact on its assets, liabilities and revenue recognition as follows: • • • •

Collectability of accounts with customers continues to be closely monitored. A material change in the provision for impairment of trade receivables has not been identified.

There were no onerous contracts or additional provisions that have been recognized resulting from the direct impact of coronavirus pandemic.

Additional costs incurred by the Group due to COVID-19 pandemic that do not represent satisfaction of performance obligation are excluded in the measurement of progress on the Group’s construction contracts.

The Group has also considered the increased uncertainty in determining key assumptions within the assessment of future taxable income of the Group upon which recognition of deferred tax assets is assessed, including forecast of revenue and expenses, among others.

The Group continues to monitor the risks and the ongoing impacts of COVID-19 pandemic on its business.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Cash and Cash Equivalents This account consists of: Cash on hand Cash in banks Cash equivalents

2021

2020

₱9,642,680 2,281,602,470 4,832,977,227 ₱7,124,222,377

₱6,661,848 1,322,276,023 3,425,169 ₱1,332,363,040

Cash in banks earns interest at the respective bank deposit rates. Cash equivalents are made for varying periods of up to three (3) months depending on the immediate cash requirements of the Group and earn annual interest at the respective short-term investment rates.

Allowance for expected credit losses on cash in banks and cash equivalents amounted to ₱6,985 and ₱4,855 as of December 31, 2021 and 2020, respectively.

Interest income from cash in banks and cash equivalents amounted to ₱5.4 million, ₱6.3 million and ₱4.2 million in 2021, 2020 and 2019, respectively (Note 23).

7. Receivables This account consists of: Trade receivable Non-interest bearing Billed receivables Unbilled receivables Interest-bearing Receivable from EEI RFI (Note 26) Receivable from sale of investment properties Other receivables Less: Allowance for expected credit losses

2021

2020

₱2,312,725,740 60,082,926 16,061,796 − 17,285,545 48,080,909 2,454,236,916 87,367,855 ₱2,366,869,061

₱3,402,093,122 159,121,436 20,479,281 38,000,000 21,280,648 55,376,762 3,696,351,249 82,287,632 ₱3,614,063,617

Movements in the allowance for expected credit losses for the year ended December 31 follow: 2021 Non-interest-bearing trade receivables

Balances at beginning of year Provision (Note 22) Recovery (Note 22) Balances at end of year

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₱44,578,717 31,662,957 − ₱76,241,674

Interest-bearing trade receivables

₱200,000 − − ₱200,000

Other receivables

₱37,508,915 − (26,582,734) ₱10,926,181

Total

₱82,287,632 31,662,957 (26,582,734) ₱87,367,855

2020 Non-interest-bearing trade receivables

Balances at beginning of year Provision (Note 22) Balances at end of year

₱33,078,046 11,500,671 ₱44,578,717

Interest-bearing trade receivables

Other receivables

₱11,572,962 25,935,953 ₱37,508,915

₱200,000 ‒ ₱200,000

Total

₱44,851,008 37,436,624 ₱82,287,632

Trade receivables mainly pertain to amounts arising from construction contracts and are generally on a 30-day credit term.

Receivable from sale of investment properties On December 11, 2017, the Parent Company sold a parcel of land located in Batangas for ₱466.7 million. Both parties agreed the selling price will be settled in eight (8) semi-annual installments and shall bear annual interest rate of 2%.

Receivable from EEI RFI The Parent Company sold a parcel of land classified as investment property to EEI RFI, a trustee of the Parent Company’s employee retirement fund in previous years. Both parties agreed the selling price will be repaid in installments and shall bear annual interest rate of 5%. In 2016, the Parent Company and EEI RFI agreed to extend the term of the payment of receivables based on scheduled payments until April 30, 2021 (Note 26). Interest income from receivables from EEI RFI amounted to ₱0.4 million, ₱3.2 million and ₱5.7 million in 2021, 2020 and 2019, respectively (Note 23).

Interest-bearing trade receivables In 2017, certain trade receivables were reclassified as interest-bearing trade receivables after the Parent Company and the customers agreed to extend the credit terms. These receivables bear interest of 5% per annum and will be repaid in five (5) years’ time. Interest income from trade receivables amounted to ₱1.9 million, ₱2.3 million and ₱10.6 million in 2021, 2020 and 2019, respectively (Note 23).

Details of receivables from sales of investment properties, receivable from EEI RFI and interestbearing trade receivables follow: 2020 2021 Receivable from sale of investment properties Current portion Receivable from EEI RFI Current portion Noncurrent portion (Note 16) Interest-bearing trade receivables Current portion Noncurrent portion (Note 16)

₱17,285,545

₱21,280,648

− −

38,000,000 ‒

16,061,796 −

20,479,281 2,768,265

8. Contract Assets and Liabilities Contract Assets The Group presents contract receivable and retentions withheld by customer as contract assets as the Group’s right for consideration is conditioned on the lapse of the defect and liability period and the receipt of customer certification that there are no defects on the constructed asset. These are reclassified as receivables upon the lapse of the defect and liability period and final customer acceptance.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Group’s contract assets amounted to ₱9.8 billion and ₱8.6 billion as of December 31, 2021 and 2020, respectively. The increase in this account is due to the improvement on the level of production of the Group after COVID-19 restrictions have been lifted and operating activities have resumed.

Details of the Group’s contract assets as of December 31, 2021 and 2020 are shown below: 2021 Current

Contract asset Less: Allowance for expected credit losses

Non-Current

₱8,788,954,323 47,701,274 ₱8,741,253,049

₱1,088,902,619 9,443,812 ₱1,079,458,807

Total

₱9,877,856,941 57,145,086 ₱9,820,711,855

2020 Current

Contract asset Less: Allowance for expected credit losses

Non-Current

₱7,642,055,723 36,785,303 ₱7,605,270,420

₱993,635,397 15,154,047 ₱978,481,350

Total

₱8,635,691,120 51,939,350 ₱8,583,751,770

Movement in the allowance for expected credit losses for the years ended December 31, 2021 and 2020 follows: 2021 Current

Balances as at January 1 Provision (Note 22) Reversals Balances as at December 31

Non-Current

₱36,785,303 10,915,971 − ₱47,701,274

₱15,154,047 − (5,710,235) ₱9,443,812

Total

₱51,939,350 10,915,971 (5,710,235) ₱57,145,086

2020 Current

Balances as at January 1 Provision (Note 22) Balances as at December 31

Non-Current

₱9,072,771 27,712,532 ₱36,785,303

₱226,907 14,927,140 ₱15,154,047

Total

₱9,299,678 42,639,672 ₱51,939,350

Contract Liabilities Contract liabilities mainly consist of down payments received in relation to construction contracts that will be recognized as revenue in the future as the Group satisfies its performance obligations. The group’s contract liabilities amounted to ₱1.0 billion and ₱1.8 billion as of December 31, 2021 and 2020, respectively, after offsetting with contract asset.

Total contract liabilities Less current portion

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2021

2020

₱986,940,583 421,090,961 ₱565,849,622

₱1,848,873,656 190,194,001 ₱1,658,679,655

9. Inventories This account consists of: Construction materials Real estate: Land and land development Subdivision lots and condominium units for sale Raw land Merchandise Spare parts and supplies Less: Allowance for inventory obsolescence Spare parts and supplies Merchandise

2021

2020

₱828,563,511

₱1,042,419,432

151,320,246 39,546,586 45,073,466 94,026,848 77,248,841 1,235,779,498

151,725,741 36,460,877 42,584,391 115,955,903 72,729,483 1,461,875,827

21,874,203 18,589,068 40,463,271 ₱1,195,316,227

21,874,203 24,864,414 46,738,617 ₱1,415,137,210

Spare parts and supplies Spare parts and supplies with cost of ₱21.9 million were fully provided with allowance for inventory obsolescence as of December 31, 2021 and 2020. The Group recognized loss on inventory obsolescence of ₱6.9 million in 2020 (nil in 2020) (Note 22). In 2020, inventory amounting to ₱0.2 million was written-off against allowance for inventory obsolescence as the Group assessed that inventories will not be able to be of use in the future (nil in 2021).

Real estate A summary of the movement in real estate inventories is set out below:

Balances at beginning of year Construction/development costs incurred Cost of real estate sales (Note 21) Balances at end of year

2021

2020

₱230,771,009 12,683,981 (7,514,692) ₱235,940,298

₱239,537,439 13,698,820 (22,465,250) ₱230,771,009

Merchandise inventories Merchandise inventory with cost of ₱18.6 million and ₱24.9 million were fully provided with allowance for inventory as of December 31, 2021 and 2020, respectively. In 2020, the Group recognized loss on inventory obsolescence of ₱6.3 million (nil in 2021). In 2021, the Group recognized reversal of allowance for inventory obsolescence of ₱6.3 million (nil in 2020).

Spare parts and supplies This pertains to inventory items used in the repair and maintenance of the Group’s property and equipment.

EEI 2021 Annual Report | Audited Financial Statements

*SGVFS163860* 109

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Other Current Assets This account consists of: Advances to suppliers and subcontractors Miscellaneous deposits Bid deposit Creditable withholding taxes (CWTs) Prepaid expenses Advances to officers and employees Others Less: Allowance for impairment

2021

2020

₱581,912,690 128,667,271 59,822,400 − 55,052,743 50,822,589 23,116,133 899,393,826 16,458,668 ₱882,935,158

₱955,316,362 117,721,508 − 685,611,138 56,432,254 58,475,819 48,287,298 1,921,844,379 16,458,668 ₱1,905,385,711

CWTs pertain to unutilized creditable withholding tax which will be used as tax credit against income taxes due. This will be used as tax credit against income taxes due. The Group determines that taxes withheld can be recovered in future periods. In 2021, the Group classified CWT as non-current as management assessed that it will not be used as tax credits within the next twelve months (Note 16).This is accounted for as noncash operating activity in the 2021 interim consolidated statement of cash flows.

Miscellaneous deposits mainly represent the Group’s refundable rental, utilities and guarantee deposits on various machinery and equipment items.

Movements in allowance for impairment for the years ended December 31 are shown below: 2021 Miscellaneous deposits

Balances as at January 1 Provisions for ECL (Note 22) Balances as at December 31

₱3,335,193 ₱3,335,193

Advances to officers Advances to suppliers and employees and subcontractors

₱29,516 ₱29,516

₱13,093,959 ₱13,093,959

Total

₱16,458,668 ‒ ₱16,458,668

2020 Miscellaneous deposits

Balances as at January 1 Provisions for ECL (Note 22) Balances as at December 31

EEI 2021 Annual Report | Audited Financial Statements

110

₱3,335,193 ₱3,335,193

Advances to officers Advances to suppliers and employees and subcontractors

₱29,516 ₱29,516

₱1,545,329 11,548,630 ₱13,093,959

Total

₱4,910,038 11,548,630 ₱16,458,668

11. Investments in Associates and Joint Ventures The investments relate to the following investee companies: Percentage of ownership Place of incorporation

Nature of Business

2021

2020

Kingdom of Saudi Arabia

Construction

49

49

Philippines Renewable Energy

44

44

Philippines Renewable Energy

20

20

Shinbayanihan Heavy Equipment Corporation (SHEC)

Philippines

Equipment rental

40

40

BEO Distribution and Marketing Corporation (BEO DMC)

Philippines

30

30

Shimizu-Fujita-Takenaka-EEI Joint Venture (SFTE)

Distribution and Marketing

Philippines

Construction

5

Acciona-EEI Joint Venture (AE)

Philippines

Construction

30

Associates Al-Rushaid Construction Company Limited (ARCC) PetroSolar Corporation (PSOC) Joint ventures PetroWind Energy, Inc. (PWEI)

EEI 2021 Annual Report | Audited Financial Statements

5 30

*SGVFS163860* 111

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Details of the Group’s material investments in associates and joint ventures follow: 2021 Acquisition cost: Balances as at January 1 Return of investment Balances as at December 31 Accumulated equity in net earnings (losses): Balances as at January 1 Equity in net earnings (losses) Dividends Balances as at December 31 Accumulated share in other comprehensive income(loss) Balances as at January 1 Additions Balances as at December 31 Equity in cumulative translation adjustments

ARCC

PSOC

PWEI

₱1,050,087,261

₱690,553,362

₱257,020,000

268,810,851 659,889,360 ‒ 928,700,211

393,898,925 191,700,922 (156,904,000) 428,695,847

165,438,344 49,396,031 ‒ 214,834,375

(21,943,225) (35,105,272) (57,048,497) 153,681,683 ₱1,621,281,442

(181,079) ‒ (181,079) ‒ ₱1,119,068,130

107,379 ‒ 107,379 ‒ ₱471,961,754

(454,139,216) 595,948,045

‒ 690,553,362

‒ 257,020,000

2020 Acquisition cost: Balances as at January 1 Additions (Note 16) Return of investment Balances as at December 31 Accumulated equity in net earnings (losses): Balances as at January 1 Equity in net earnings (losses) Dividends Balances as at December 31 Accumulated share in other comprehensive income(loss) Balances as at January 1 Additions Balances as at December 31 Equity in cumulative translation adjustments

EEI 2021 Annual Report | Audited Financial Statements

112

ARCC

PSOC

₱1,626,046,536

₱690,553,362

₱25

‒ (575,959,275) 1,050,087,261

‒ ‒ 690,553,362

(472,029,632) 740,840,483 ‒ 268,810,851

266,935,700 181,963,225 (55,000,000) 393,898,925

13 5 (20 16

(7,758,643) (14,184,582) (21,943,225) 63,168,916 ₱1,360,123,803

− (181,079) (181,079) − ₱1,084,271,208

₱42

25

2021 SHEC

BEO DMC

SFTE

AE

Total

₱20,800,000

₱450,000

₱‒

₱‒

₱2,018,910,623

(2,048,155) 591,837 ‒ (1,456,318)

(285,799) (58,370) ‒ (344,169)

4,198,492 2,854,599 ‒ 7,053,091

‒ 20,798,985 ‒ 20,798,985

830,012,658 925,173,364 (156,904,000) 1,598,282,022

‒ ‒ ‒ ‒ ₱19,343,682

‒ ‒ ‒ ‒ ₱105,831

‒ ‒ ‒ ‒ ₱7,053,091

‒ ‒ ‒ ‒ ₱20,798,985

(22,016,925) (35,105,272) (57,122,197) 153,681,683 ₱3,259,612,915

‒ 450,000

‒ 20,800,000

‒ ‒

‒ ‒

(454,139,216) 1,564,771,407

2020 PWEI

SHEC

BEO DMC

SFTE

Total

57,020,000 ‒ ‒ 57,020,000

₱20,800,000

‒ ‒ 20,800,000

₱‒

450,000 ‒ 450,000

₱‒

₱2,594,419,898

30,032,138 55,406,206 0,000,000) 65,438,344

(792,550) (1,255,605) ‒ (2,048,155)

‒ (285,799) ‒ (285,799)

‒ 4,198,492 ‒ 4,198,492

(75,854,344) 980,867,002 (75,000,000) 830,012,658

− 107,379 107,379 − 22,565,723

− − − − ₱18,751,845

‒ ‒ ‒ ‒ ₱164,201

‒ ‒ ‒ ‒ ₱4,198,492

(7,758,643) (14,258,282) (22,016,925) 63,168,916 ₱2,890,075,272

‒ ‒ ‒

EEI 2021 Annual Report | Audited Financial Statements

450,000 (575,959,275) 2,018,910,623

*SGVFS163860* 113

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ARCC In 2017, the stockholders of ARCC extended advances amounting to ₱1,620.8 million (SAR121.75 million) to ARCC to refinance the associate’s maturing bank loan and other funding requirements. The amount of the extended loan is proportionate to the ownership interests of the stockholders. Subsequently, the stockholders agreed to treat the ₱1,591.5 million (SAR121.75 million) loan as non-refundable shareholders’ funding in the statement of equity of ARCC. Consequently, the ₱794.2 million (SAR59.66 million) advances extended by the Group to ARCC was reclassified as additional investment in ARCC. EEI Limited made additional investment of ₱294.9 million in ARCC in 2016.

In 2021 and 2020, ARCC repaid investment amounting to ₱454.1 million and ₱576.0 million, respectively.

The transactions did not result to a change in the 49% ownership of EEI Limited over ARCC.

PSOC In 2015, the EPC purchased 3.7 million shares from PSOC amounting to ₱366.43 million which resulted to 44% ownership on the latter. PSOC was incorporated on June 17, 2015 primarily to carry out the general business of generating, transmitting, and/or distributing power derived from renewable energy resources. It has a 50-megawatt solar farm in Tarlac City.

In 2018, EPC made additional investment of ₱175.80 million in PSOC. In 2019, EPC made an additional investment of ₱148.3 million in PSOC. This transaction did not result to a change in the 44% ownership of EPC over PSOC.

PWEI In 2013, EPC acquired 20% stake in PWEI for ₱118.75 million. PWEI was incorporated on March 6, 2013, primarily to carry on the general business of generating, transmitting and/or distributing power derived from renewable energy sources such as, but not limited to wind, biomass, hydro, solar, geothermal, ocean, wave and such other renewable sources of power, and from conventional sources such as coal, fossil fuel, natural gas, nuclear, and other viable or hybrid sources of power corporation, public electric utilities, electric cooperative and markets. PWEI has a wind energy project in Nabas, Aklan and has started construction activities on April 29, 2013.

On November 21, 2013, PetroGreen Energy Corporation (PGEC), CapAsia ASEAN Wind Holdings Cooperative, U.A. (CapAsia) and EEI Power Corporation (EPC) entered into a Shareholders’ Agreement (SA). The SA will govern their relationship as the shareholders of PWEI as well as containing their respective rights and obligations in relation to PWEI. Further, the SA contains provisions regarding voting requirements for relevant activities that require unanimous consent of all the parties. PGEC, CapAsia and EPC agree that their equity ownership ratio in PWEI is at 40%, 40% and 20%, respectively.

Although the Share Purchase Agreement (SPA) and the SA were executed on November 21, 2013, these did not result to PGEC’s loss of control over PWEI in 2013. The loss of control did not happen until the Closing Date. On February 14, 2014, the Closing Date, the payment has been received from sale of the shares as executed in the Deed of Assignment covering the transfer of shares from PGEC to CapAsia and all the conditions precedent have been satisfactory completed. Hence, the transaction made PWEI a joint venture among PGEC, CapAsia and EPC by virtue of the SA signed among the three parties governing the manner of managing PWEI. PGEC lost control over PWEI while CapAsia was given full voting and economic rights as a 40% shareholder.

EEI 2021 Annual Report | Audited Financial Statements

114

SHEC In 2019, the Group acquired 40% stake in Shinbayanihan Heavy Equipment Corporation (SHEC) and was accounted as joint venture. SHEC was incorporated on July 26, 2019 primarily to engage in the business of managing the operation of used and new construction equipment rental and used and new construction equipment wholesale business in the Philippines and import and export of used and new construction equipment without engaging in retail trading.

BEO DMC In 2020, the Group acquired 30% stake in BEO Distribution and Marketing Corporation (BEO DMC) and was accounted as joint venture. BEO DMC was incorporated on September 20, 2019 primarily to engage in the business of distributing and marketing goods, products and items of commerce without engaging in retail activity.

SFTE On September 12, 2020, the Parent Company entered into a joint venture agreement with Shimizu Corporation, Fujita Corporation, Takenaka Civil Engineering & Construction Co. Ltd. (SFTE) to contract with the Department of Transportation (DOTr) of the Republic of the Philippines for the Metro Manila Subway Project (MMSP)-Phase 1, Contract Package 101. In the joint venture, the Parent Company acquired a proportionate share of 5% with regard to the assets, liabilities, costs, profits and losses arising out of the execution of the Works as identified in the contract with DOTr. The joint venture agreement also requires anonymous vote of all joint venture partners on the relevant activities of the joint venture.

AE On October 13, 2020, the Parent Company entered into a joint venture agreement with Acciona Construction Philippines, Inc. to undertake the construction of the Malolos-Clark Railway Project-Package No. CP N-04. The Group’s participating interest in the joint venture is 30%. The Group has no initial capital investment on the joint venture as it is an unincorporated joint venture.

The Parent Company also entered into joint venture agreements with certain contractors for the purpose of establishing unincorporated joint ventures, the object of which are to submit bids for certain projects, and if such bids are successful, execute the project and jointly deliver the works in accordance with the project documents. As of December 31, 2021, these projects are yet to be awarded. The Group has no initial capital investment on the joint ventures as these are unincorporated. The Group accounts for these joint ventures under equity method of accounting.

EEI 2021 Annual Report | Audited Financial Statements

*SGVFS163860* 115

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Below are the summarized financial information relating to the Group’s associates and joint venture: 2021 Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Total liabilities Preferred stock Net assets of the investee

ARCC

PSOC

₱7,695,391,086

₱612,446,167

1,558,311,252

₱ 9,253,702,338 ₱4,537,166,477

3,551,998,724

₱4,164,444,891 ₱268,487,074

1,407,798,224 ₱5,944,964,701 ₱‒ ₱3,308,737,637

1,352,621,158 ₱1,621,108,232 ₱‒ ₱2,543,336,659

ARCC

PSOC

₱5,216,440,382

₱726,992,003 3,568,033,723 ₱4,295,025,726 ₱268,387,574 1,562,385,407 ₱1,830,772,981 ₱‒ ₱2,464,252,745

₱601

3,628

₱4,230 ₱321

1,549 1,870

₱2,359

2020 Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Total liabilities Preferred stock Net assets of the investee

EEI 2021 Annual Report | Audited Financial Statements

116

1,669,960,034 ₱6,886,400,416 ₱2,912,334,569 1,198,302,984 ₱4,110,637,553 ₱‒ ₱2,775,762,863

₱74 3,50 ₱4,24 ₱34 1,78 ₱2,12

₱2,11

2021 PWEI

SHEC

BEO DMC

SFTE

AE

1,542,457 8,733,636 0,276,093 1,315,833 9,151,490 0,467,323 ₱‒ 9,808,770

₱43,897,089

₱1,541,219

₱16,837,812,295

₱2,765,091,514

₱67,627,640 ₱2,628,435

₱1,541,219 ₱1,188,449

₱16,837,812,295 ₱16,696,750,475

₱3,538,891,521 ₱3,469,561,571

23,730,551

‒ ₱2,628,435 ₱16,640,000 ₱48,359,205

‒

‒ ₱1,188,449 ₱‒ ₱352,770

‒

‒ ₱16,696,750,475 ₱‒ ₱141,061,820

773,800,007

‒ ₱3,469,561,571 ₱‒ ₱69,329,950

2020 PWEI

SHEC

BEO DMC

SFTE

AE

40,415,875 02,153,340 42,569,215 42,183,100 87,557,500 29,740,600 ₱‒ 12,828,615

₱42,381,760

₱1,537,710

₱15,480,975,062

₱2,250,009,096

25,546,946 ₱67,928,706 ₱4,409,093 ‒ ₱4,409,093 ₱16,640,000 ₱46,879,613

‒ 1,537,710 ₱990,374 ‒ ₱990,374 ‒ ₱547,336

‒ 15,480,975,062 ₱15,397,005,225 ‒ ₱15,397,005,225 ‒ ₱83,969,837

EEI 2021 Annual Report | Audited Financial Statements

‒ 2,250,009,096 ₱2,286,879,636 ‒ ₱2,286,879,636 ‒ (₱36,870,540)

*SGVFS163860* 117

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Below are the summary of statements of comprehensive income (loss) of the Group’s associates and joint venture: 2021 Revenue Cost Gross margin Selling and administrative, and other expenses Pre-tax income (loss) Income tax expense (benefit) Net income (loss)

ARCC

PSOC

₱12,867,243,426

₱886,190,108

₱762

381,580,758 1,646,038,739 299,325,759 ₱1,346,712,980

159,831,655 475,187,534 39,503,620 ₱435,683,914

164 246

ARCC

PSOC

₱11,093,477,338

₱879,290,407

₱80

308,441,666 1,815,216,324 303,296,971 ₱1,511,919,353

163,858,036 447,120,476 33,567,692 ₱413,552,784

18 27

10,839,623,929 2,027,619,497

251,170,919 635,019,189

350 411

₱246

2020 Revenue Cost Gross margin Selling and administrative, and other expenses Pre-tax income (loss) Income tax expense (benefit) Net income (loss)

EEI 2021 Annual Report | Audited Financial Statements

118

8,969,819,348 2,123,657,990

268,311,895 610,978,512

35 45

₱27

2021 PWEI

SHEC

BEO DMC

SFTE

AE

2,297,941 0,970,211 1,327,730

₱5,074,008

₱1,349

₱57,091,980

₱1,663,629,388

4,347,574 6,980,156 ‒ 6,980,156

1,629,887 1,479,593 ‒ ₱1,479,593

1,964,528 3,109,480

‒ 1,349

195,917 (194,568) ‒ (₱194,568)

57,091,980

840,548,927 823,080,461

‒ 57,091,980 ‒ ₱57,091,980

753,750,511 69,329,950 ‒ ₱69,329,950

2020 PWEI

SHEC

BEO DMC

SFTE

AE

07,759,507 50,255,483 57,504,024

₱1,234,376

₱1,854

₱83,969,837

₱199,670,205

80,851,537 76,652,487 (378,543) 77,031,030

4,171,274 (3,139,013) ‒ (₱3,139,013)

954,516 (952,662) ‒ (₱952,662)

‒ 83,969,837 ‒ ₱83,969,837

284,279,845 (132,348,741) ‒ (₱132,348,741)

202,115 1,032,261

‒ 1,854

‒ 83,969,837

EEI 2021 Annual Report | Audited Financial Statements

47,739,101 151,931,104

*SGVFS163860* 119

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The table below shows the Group’s share in net earnings (loss) of its associates and joint ventures: ARCC

PWEI

SHEC

BEO DMC

SFTE

Net income (loss) ₱1,346,712,980 ₱435,683,914 ₱ 246,980,156

₱1,479,593

(₱194,568)

₱57,091,980

Proportionate ownership in the associates and joint venture Equity in net earnings (losses)

49%

PSOC

44%

20%

40%

30%

5%

₱659,889,360 ₱191,700,922

₱49,396,031

₱591,837

(₱58,370)

₱ 2,854,599

December 2021 AE

Total

₱69,329,950 ₱ 2,157,084,005

-

30%

₱ 20,798,985 ₱ 925,173,364

December 2020

ARCC

PSOC

PWEI

SHEC

BEO DMC

SFTE

Total

Net income (loss)

₱ 1,511,919,353

₱413,552,784

₱ 277,031,030

₱(3,139,013)

(₱ 952,662)

₱83,969,837

₱ 2,282,381,329

Proportionate ownership in the associates and joint venture

49%

44%

20%

40%

30%

5%

-

Equity in net earnings (losses)

₱740,840,483

₱181,963,225

₱55,406,206

(₱1,255,605)

(₱ 285,799)

₱4,198,492

₱ 980,867,002

The Group’s share in the net income of ARCC is subject to 20% income tax rate in Saudi Arabia.

Other relevant financial information of PWEI are as follows: Cash and cash equivalents Current financial liabilities * Noncurrent financial liabilities * Depreciation and amortization Interest income Interest expense

*Excluding trade and other payables and provisions

2021

2020

₱210,926,150 290,734,202 1,512,560,580 194,393,893 2,391,881 139,993,428

₱146,374,970 235,934,771 1,787,557,500 199,496,579 6,792,292 161,083,658

2021

2020

₱34,253,747 5,435,145 1,813,800 43,322

₱36,954,405 3,756,956 1,457,940 44,801

2021

2020

₱1,502,203 870,183 1,349

₱1,501,854 672,106 1,854

Other relevant financial information of SHEC are as follows: Cash and cash equivalents Current financial liabilities * Depreciation and amortization Interest income

*Excluding trade and other payables and provisions

Other relevant financial information of BEO are as follows: Cash and cash equivalents Current financial liabilities * Interest income

*Excluding trade and other payables and provisions

EEI 2021 Annual Report | Audited Financial Statements

120

Other relevant financial information of SFTE are as follows: Cash and cash equivalents Interest income

2021

2020

₱9,800,712,506 57,091,980

₱13,907,484,052 83,969,837

Other relevant financial information of AE are as follows: Cash and cash equivalents Current financial liabilities * Interest income Depreciation and amortization

*Excluding trade and other payables and provisions

2021

2020

₱268,799,174 421,140,200 1,948 216,823,727

₱1,626,763,861 605,001,690 ‒ 508,081

EEI 2021 Annual Report | Audited Financial Statements

*SGVFS163860* 121

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The reconciliation of the net assets of the investees to the carrying amounts of the investments recognized in the consolidated financial statements follows: 2021 Net assets of the investee Proportionate ownership in theassociate Carrying value of investment

ARCC

PSOC

₱3,308,737,637

₱2,543,336,659

49%

₱2,359

44%

₱1,621,281,442

₱1,119,068,130

₱471

2020 Net assets of the investee Proportionate ownership in theassociate Carrying value of investment

EEI 2021 Annual Report | Audited Financial Statements

122

ARCC

PSOC

₱2,775,762,863

₱2,464,252,745

49%

₱1,360,123,803

44%

₱1,084,271,208

2021 PWEI

SHEC

BEO

SFTE

AE

9,808,770

₱48,359,205

₱352,770

₱141,061,820

₱69,329,950

20% 1,961,754

₱19,343,682

40%

30%

₱105,831

5%

₱7,053,091

30%

₱20,798,985

2020 PWEI

SHEC

BEO

SFTE

₱2,112,828,615

₱46,879,613

₱547,336

₱83,969,837

20%

₱422,565,723

40%

₱18,751,845

30%

₱164,201

EEI 2021 Annual Report | Audited Financial Statements

5%

₱4,198,492

*SGVFS163860* 123

EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. Equity Investments at FVOCI This account consists of: Quoted equity investments Unquoted equity investments

2021

2020

₱27,687,694 1,245,289,590 ₱1,272,977,284

₱23,510,829 1,008,059,405 ₱1,031,570,234

The rollforward analyses of equity investments at FVOCI for the years ended December 31 follow: At January 1 Additions Disposals Fair value changes At December 31

2021

2020

₱1,031,570,234 8,300,000 − 233,107,050 ₱1,272,977,284

₱1,055,688,160 − (6,615,933) (17,501,993) ₱1,031,570,234

In 2021, the Group invested additional ₱8.3 million in PGEC, an unquoted equity investment. This transaction did not result to a change in the Group’s 10% equity interest in PGEC. The unquoted equity investments consist of shares of the following companies:

PetroGreen Energy Corporation Hermosa Ecozone Development Corporation YGC Corporate Services, Inc. Brightnote Assets Corporation Others At December 31

2021

2020

₱835,276,405 404,381,880 3,305,447 1,656,327 669,531 ₱1,245,289,590

₱560,676,478 440,750,024 3,305,447 2,657,925 669,531 ₱1,008,059,405

The Group elected to present the fair value changes of all its equity investments in other comprehensive income because it does not intend to hold these investments for trading.

PGEC The fair value of the Group’s investment in PGEC is determined by an independent third-party professional services firm using the discounted cash flow model. The valuation requires certain assumptions to be made, such as forecast cash flows, the discount rate, among others.

HEDC The fair value of the Group’s investment in HEDC is determined using the adjusted net asset approach wherein the assets of HEDC consisting mainly of parcels of land are adjusted from cost to their fair value.

The valuation was performed by an independent SEC-accredited appraiser as of December 31, 2021.

Dividends earned from equity investments at FVOCI amounting to ₱51.0 million, ₱37.1 million, and ₱53.4 million in 2021, 2020 and 2019, respectively (see Note 24).

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Presented below are the movements in fair value of equity investments at FVOCI (net of tax effect) for the years ended December 31: At January 1 Disposal Fair value changes At December 31

2021

2020

₱525,034,702 − 198,767,522 ₱723,802,224

₱536,593,814 3,284,067 (14,843,179) ₱525,034,702

13. Property and Equipment The rollforward analyses of this account follow: 2021 Land, Buildings and Improvements

Cost

At beginning of year Additions Retirements/disposals (see Note 24) Reclassifications At end of year

Accumulated depreciation and amortization At beginning of year Depreciation and amortization Retirements/disposals (see Note 24) At end of year Net book value

Machinery, Tools and Construction EquipmenT

₱1,261,587,670 ₱5,440,461,635

Transportation and Service Equipment

Furniture, Fixtures, and Office Equipment

₱1,059,135,087

₱466,558,150

(266,643,597) 3,684,792 5,256,688,886

(56,392,022) ‒ 1,015,730,081

264,140,154

3,274,743,896

36,323,129 ‒ 300,463,283 ₱1,018,878,709

14,951,532

79,186,056

‒ 42,802,790 1,319,341,992

12,987,016

Construction In Progress

35,639,893

Total

₱50,616,279 ₱8,278,358,821 27,292,564

170,057,061

(3,125,597) ‒ 499,072,446

‒ (46,487,582) 31,421,261

(326,161,216) ‒ 8,122,254,666

646,762,949

373,822,917

‒

4,559,469,916

309,071,449

91,297,386

49,366,829

‒

486,058,793

(177,030,572) 3,406,784,773 ₱1,849,904,113

(51,825,974) 686,234,361 ₱329,495,720

(2,436,636) 420,753,110 ₱ 78,319,336

‒ ‒ ₱31,421,261

(231,293,182) 4,814,235,527 ₱3,308,019,139

2020 Land, Buildings and Improvements

Cost

At beginning of year Additions Retirements/disposals (see Note 24) Reclassifications At end of year

Accumulated depreciation and amortization At beginning of year Depreciation and amortization Retirements/disposals (see Note 24) At end of year Net book value

Machinery, Tools and Construction EquipmenT

Transportation and Service Equipment

Furniture, Fixtures, and Office Equipment

Construction In Progress

Total

₱1,112,362,394

₱6,247,253,593

₱1,044,773,924

₱409,825,302

₱37,162,723

₱8,851,377,936

(11,908,587) ‒ 1,261,587,670

(1,019,418,566) 7,290,759 5,440,461,635

(14,488,725) ‒ 1,059,135,087

(16,717,828) ‒ 466,558,150

‒ (7,290,759) 50,616,279

(1,062,533,706) ‒ 8,278,358,821

227,341,628

3,349,096,334

540,170,054

311,444,944

‒

4,428,052,960

38,452,824

404,270,963

114,850,111

75,007,550

‒

632,581,448

(1,654,298) 264,140,154 ₱ 997,447,516

(478,623,401) 3,274,743,896 ₱ 2,165,717,739

(8,257,216) 646,762,949 ₱412,372,138

(12,629,577) 373,822,917 ₱ 92,735,233

‒ ‒ ₱50,616,279

(501,164,492) 4,559,469,916 ₱3,718,888,905

161,133,863

205,335,849

28,849,888

73,450,676

20,744,315

489,514,591

Machinery, tools and construction equipment are directly used in various construction projects of the Group.

As of December 31, 2021 and 2020, construction in progress mainly pertains to installation of the Parent Company’s air quality improvement project at its head office.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The distribution of the depreciation and amortization expense of the Group’s property and equipment follows: Cost of sales and services (Note 21) Selling and administrative expenses (Note 22)

2021

2020

2019

₱370,528,908 115,529,885 ₱486,058,793

₱483,808,837 148,772,611 ₱632,581,448

₱588,264,706 128,247,438 ₱716,512,144

As at December 31, 2021 and 2020, no property and equipment items were pledged as security.

14. Leases Group as a lessee The Group has lease contracts for various items of land, office spaces, and other equipment used in its operations. Leases of land and office spaces generally have lease terms between 10 and 66 years, while other equipment generally have lease terms between 1 and 3 years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. There are several lease contracts that include extension and termination options and variable lease payments, which are further discussed below.

The Group also has certain leases with lease terms of 12 months or less and leases of office equipment with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. a. Starting January 2007, the Parent Company and EEI-RFI entered into a lease agreement for the lease of land and improvements. The lease terms are for one year and renewable every year with 5% increase effective January 1, 2014. b. The Parent Company entered into a sublease agreement for lease of 2,459.22 square meters land in Clark City, Pampanga. Lease term is until 2085. c. The Group leases a staff house which it occupies for its operations for a period of two years, both parties has the option to renew as per agreement. d. The Group leases a lot and offices which it occupies for its operations for its projects with option to renew as per agreement. In October 2011, the Group entered into a lease contract covering the period of October 16, 2011 to October 15, 2014. The contract has a rate of ₱450 per square meter for the first two years and ₱460 per square meter for the third year. e. In May 2016, the Group entered into a lease agreement for a period of five (5) years commencing on July 7, 2016 and expiring on July 6, 2021. The lease is subject to escalation of 10% starting the second year of lease. This was renewed for a period of five (5) years covering July 7, 2021 to July 6, 2026. f. In April 2016, the Group renewed the lease for a period of three (3) years commencing from April 16, 2014 to April 15, 2019. The lease contract has a rate of ₱630 per square meter for the first year and subject to 5% yearly increase thereafter. g. In February 2020, the Parent Company and GAMSI entered into a lease agreement for the lease of office space located at 12 Manggahan St. Bagumbayan, Quezon City. The lease shall start from January 1, 2020. This was renewed for a period year covering January 1, 2021 to December 31, 2021. The lease terms are for one year and renewable every year.

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h. In June 2020, the Group entered into a lease of parcel of land for a period of fourteen (14) months commencing on July 1, 2020 and expiring on August 31, 2021.

The carrying amount of right-of-use assets and the movement during the period are as follows: Balances at beginning of the year Additions during the year Amortization of right-of-use assets Balances at end of the year

2021

2020

₱695,475,235 10,870,738 (112,238,813) ₱594,107,160

₱809,683,974 19,308,810 (133,517,549) ₱695,475,235

The distribution of the amortization of the Group’s right-of-use assets follow: Cost of sales (Note 21) Cost of services (Note 21) Selling and administrative expenses (Note 22)

2021

2020

₱1,073,588 53,825,306 57,339,919 ₱112,238,813

₱1,325,134 71,729,696 60,462,719 ₱133,517,549

The carrying amount of lease liability and the movement during the period are as follows: Balances at beginning of the year Additions during the year Interest expense Payments Balances at end of the year Less: current portion Noncurrent portion

2021

2020

₱569,565,423 10,870,738 40,867,111 (133,714,516) 487,588,756 52,319,204 ₱435,269,552

₱654,337,141 21,015,947 50,991,135 (156,778,800) 569,565,423 99,582,705 ₱469,982,718

The following are the amounts recognized in consolidated statement of income: Amortization of right-of-use assets Interest expense on lease liabilities Expenses relating to short-term leases (included in cost of services) Expenses relating to leases of low-value assets (included in general and administrative expenses)

2021

2020

2019

₱112,238,813 40,867,111

₱133,517,549 50,991,135

₱92,256,774 50,446,983

598,074,448

500,768,669

526,373,629

8,440,238 ₱759,620,610

13,144,311 ₱698,421,664

6,433,856 ₱675,511,242

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Shown below is the maturity analysis of the undiscounted lease payments for years ended December 31 as follow:

1 year more than 1 years to 2 years more than 2 years to 3 years more than 3 years to 4 years more than 5 years Total

2021

2020

₱85,417,970 87,168,196 90,569,092 95,097,547 341,048,238 ₱699,301,043

₱140,457,971 94,176,309 90,954,837 90,020,765 447,660,658 ₱863,270,540

15. Investment Properties The rollforward analyses of this account follow: 2021

Total

Land

Cost Balances at beginning of year Disposals Net book value at end of year

₱14,562,211 (66,000) ₱14,496,211

₱14,562,211 (66,000) ₱14,496,211

2020

Total

Land

Cost Balances at beginning of year Disposals Net book value at end of year

₱15,231,211 (669,000) ₱14,562,211

₱15,231,211 (669,000) ₱14,562,211

Land classified as investment properties include parcels of land located in Benguet, Cavite, Nueva Ecija, Bulacan and memorial lots in Las Piñas with carrying values of ₱6.6 million, ₱0.5 million, ₱0.2 million, ₱7.0 million and ₱ 0.2 million, respectively, as of December 31, 2021. Carrying values of parcels of land located in Benguet, Cavite, Nueva Ecija, Bulacan and memorial lots in Las Piñas were ₱6.6 million, ₱0.5 million, ₱0.2 million, ₱7.0 million and ₱0.2 million, respectively, as of December 31, 2020.

As of December 31, 2021, the fair value of the land in Benguet amounted to ₱20.8 million, which was determined based on valuation performed by an independent SEC accredited appraiser whose report was dated December 31, 2021. The fair value of the land was determined using the market approach which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets and adjusted to reflect differences on size, and shape (Level 3 – Significant unobservable inputs).

As of December 31, 2021, the fair value of the land in Cavite amounted to ₱2.5 million, which was determined using the market approach (Level 3 – Significant unobservable inputs).

Rental income derived from the investment properties amounted to ₱0.3 million, ₱1.2 million, and ₱0.3 million in 2021, 2020 and 2019, respectively (Note 24). Total direct operating expenses incurred in relation to these investment properties amounted to nil in 2021, ₱0.1 million in 2020 and ₱0.4 million in 2019.

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In 2021 and 2020, the Group sold parcels of land located in Las Pinas City for ₱0.07 million and ₱0.9 million, respectively. The Group recognized a gain of ₱0.01 million and ₱0.2 million, respectively in related to the sale.

16. Other Noncurrent Assets This account consist of: Deferred input VAT Interest-bearing trade receivables – net of current portion (Note 7) Receivable from DANECO Creditable withholding taxes (Note 10) Others Allowance for expected credit loss

2021

2020

₱122,863,374

₱150,221,650

– 54,570,275 924,336,073 8,926,920 1,110,696,642 (1,637,755) ₱1,109,058,887

2,768,265 – – 8,922,921 161,912,836 (7,406,020) ₱154,506,816

Receivable from DANECO pertains to portion of receivables for collection beyond 1 year.

Movement in allowance for expected credit loss on interest-bearing trade receivables for the year ended December 31: Balances at beginning of year Recoveries Balances at end of year

2021

2020

₱7,406,020 (5,768,265) ₱1,637,755

₱9,695,689 (2,289,669) ₱7,406,020

Deferred input VAT pertains to unamortized input VAT on the purchase of capital goods exceeding ₱1.0 million.

Deposit for Future Subscription of Shares of Stock In November 2018, the Parent Company deposited ₱81.0 million with BiotechJP Corp. in exchange for 60% ownership in the latter. BiotechJP Corp. is in the business of manufacturing food and therapeutic food. Management is in the position that Parent Company has not obtained control over BiotechJP in 2018 because the Parent Company can only exercise its right as a stockholder owning 60% equity interest in BiotechJP upon receipt of the shares of capital stock of the investee.

In August 2019 (acquisition date), the Parent Company reclassified the deposit to investment in subsidiary upon receipt of stock certificate of BiotechJP. The Parent Company accounted for the investment as investment in subsidiary with its 60% interest. At date of acquisition, the Group recognized net assets acquired at fair value of ₱35.5 million. Non-controlling interest in BiotechJP was also recognized at the proportionate share of its interest in the BiotechJP’s identifiable net assets. The net assets recognized were based on provisional assessment of their fair value while the Parent Company sought an independent valuation of net assets of BiotechJP. Also, the Parent Company attributes the excess of the acquisition cost over the fair value of the net assets acquired amounting to ₱45.47 million to goodwill and was recorded at net recoverable amount as at December 31, 2019. In August 2020, the valuation of the net assets of BiotechJP was completed. There were no changes in the fair values of net assets of BiotechJP based on EEI 2021 Annual Report | Audited Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS final valuation except for the identified other intangible assets amounting to ₱14.2 million which management assessed as not recoverable and thus, recorded at nil.

In 2019, BiotechJP deposited ₱0.5 million with BEO Distribution and Marketing Corporation (BEO DMC) in exchange for 30% ownership in the latter. BEO DMC is in the business of distributing and marketing of goods. The deposit was recorded as “Deposit for Future Stock Subscription” pending receipt of the shares of capital stock of the investee.

In 2020, BiotechJP reclassified the deposit to investment in joint venture upon receipt of stock certificate of BEO DMC (Note 11).

17. Bank Loans The Group availed of several unsecured short-term bank loans with a number of local banks. These loans will mature within one year with annual interest rates ranging from 2.50% - 5.00% and 3.50% - 5.50% in 2021 and 2020, respectively.

Movements in this account during the years ended December 31 follow: Balances at the beginning of year Availment Payments Balances at the end of year

2021

2020

₱5,015,000,000 10,000,000,000 (11,765,000,000) ₱3,250,000,000

₱5,905,000,000 11,602,000,000 (12,492,000,000) ₱5,015,000,000

Interest expense incurred on these loans amounted to ₱193.3 million, ₱347.1 million and ₱448.9 million in 2021, 2020 and 2019, respectively.

18. Accounts Payable and Other Current Liabilities This account consists of: Accounts payable Deferred output taxes Retention payable Accrued expenses Withholding taxes and other statutory liabilities Advances from joint venture partners Others

2021

2020

₱4,280,614,961 320,604,220 420,465,848 232,613,718 53,459,82 32,381,854 119,932,159 ₱5,460,072,585

₱5,568,041,571 426,530,095 396,597,272 166,062,058 44,055,723 32,381,854 108,759,810 ₱6,742,428,383

Accrued expenses consist of:

Accrued salaries and wages Accrued interest Other accrued expenses

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2021

2020

₱23,702,410 42,185,746 166,725,562 ₱232,613,718

₱26,136,473 9,304,635 130,620,950 ₱166,062,058

Accounts payable are non-interest bearing ang generally settled on 30 to 90 days terms.

Deferred output taxes pertain to sale of services on credit. Once collected, the amount will be transferred to output VAT payable.

Retention payable are amounts that the Group deducts from its subcontractors’ billings and are usually paid within 12 months.

Other accrued expenses mainly consist of provisions, accrual for professional fees, outside services, utilities and other expenses that are expected to be settled within one year. Provisions were provided for claims by third parties in the ordinary course of business. As allowed by PAS 37, Provisions, Contingent Liabilities and Contingent Assets, only a general description is provided as the disclosure of additional details beyond the present disclosures may prejudice the Group’s position and negotiation strategies with respect to these matters.

Other noncurrent liabilities Other noncurrent liabilities pertain to noncurrent portion of retention payables that are expected to be settled beyond one year from the end of reporting period. As of December 31, 2021, and 2020, other noncurrent liabilities amounted to ₱242.9 million and ₱273.6 million, respectively.

19. Long-term Debt This account consists of: Fixed-rate corporate promissory notes Fixed-rate term loan Less current portion

2021

2020

₱8,078,421,328 184,795,447 8,263,216,775 3,526,205,077 ₱4,737,011,698

₱5,204,857,924 343,169,401 5,548,027,325 2,302,998,099 ₱3,245,029,226

Fixed-rate corporate promissory notes In 2014, the Parent Company received ₱500.0 million proceeds from the issuance of unsecured fixedrate corporate promissory notes to a local bank that bear annual interest of 5.2%. Subsequently, the bank reduced the interest rate to 4.8% effective May 26, 2015 until maturity. The promissory notes mature within seven (7) years from the date of issuance. The loan was fully paid in 2021.

On June 15, 2015, the Parent Company received ₱1,000 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 4.8%.

The promissory note matures within seven (7) years from the date of issuance.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On May 23, 2018, the Parent Company received ₱2,000 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 4.8%. The promissory note matures within five (5) years from the date of issuance.

On November 11, 2019, the Parent Company received ₱909 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 3.9%. The promissory note matures within three (3) years from the date of issuance.

On October 15, 2020, the Parent Company received ₱3,000 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 3.5%. The promissory note matures within three (3) years from the date of issuance.

On November 23, 2020, the Parent Company received ₱1,000 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 3.3%. The promissory note matures within three (3) years from the date of issuance.

On March 22, 2021, the Parent Company received ₱1,500 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 4.5%. The promissory note matures within three (3) years from the date of issuance.

On October 7, 2021, the Parent Company received ₱2,500 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 4.8%. The promissory note matures within three (3) years from the date of issuance.

On December 3, 2021, the Parent Company received ₱1,500 million proceeds from the issuance of an unsecured fixed-rate corporate promissory note to a local bank that bears annual interest of 3.4%.

The promissory note matures within three (3) years from the date of issuance.

The proceeds from the promissory notes were used for general corporate requirements.

Interest expense incurred on these corporate notes amounted to ₱229.0 million, ₱58.5 million and ₱52.6 million in 2021, 2020 and 2019, respectively.

Fixed-rate term loan On August 28, 2015, EEI Power availed an unsecured ₱500.0 million long-term loan from a local bank that bears an annual interest of 4.8%. The loan is payable in equal quarterly installments and will mature on August 27, 2022. The loan was fully paid in 2021.

On August 12, 2016, BiotechJP obtained an unsecured five-year long-term loan from Biotech Japan Corporation that bears an annual interest rate of 0.05%. The loan is payable at maturity date, including accrued interest.

On October 1, 2018, the BiotechJP obtained an unsecured 4.5 year long-term loan from Biotech Japan Corporation that bears an annual interest rate of 0.30%. The loan is payable in five equal annual installments and will mature on March 31, 2021.

In 2019, BiotechJP availed an unsecured ₱47.60 million long-term loan from Biotech Japan Corporation that bears an annual interest of 0.30%. The loan is payable in equal semi-annual installments and will mature on September 13, 2030.

On April 24, 2020, BiotechJP availed an unsecured ₱21.8 million long-term loan from a foreign bank that bears an annual interest of 0.80%. The loan is payable in 18 equal semi-annual installments and will mature on September 13, 2030.

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On September 25, 2020, BiotechJP availed an unsecured ₱92.3 million long-term loan from Biotech Japan Corporation that bears an annual interest of 3.0%. The loan is payable in equal semi-annual installments and will mature on March 31, 2030.

Interest expense incurred on these corporate notes amounted to ₱6.3 million, ₱9.6 million and ₱12.3 million in 2021, 2020 and 2019, respectively.

Movements in the account follow: December 31, 2020

December 31, 2021 Promissory Note

Balance at beginning of period Proceeds Payments Less: Transaction costs Balance at beginning of period Additions Amortization Balance at end of period Balance at end of period Less current portion

Term Loan

Total

Promissory Note

Term Loan

Total

5,257,724,097 5,500,000,000 (2,632,617,933) 8,125,106,164

318,063,237 – (133,373,954) 184,689,283

5,575,787,334 5,500,000,000 (2,765,991,887) 8,309,795,447

2,446,428,571 4,000,000,000 (1,188,704,474) 5,257,724,097

275,357,148 114,134,660 (71,428,571) 318,063,237

2,721,785,719 4,114,134,660 (1,260,133,045) 5,575,787,334

27,760,009 42,315,755 (23,497,092) 46,578,672 8,078,527,492 3,500,000,000 ₱4,578,527,492

– – – – 184,689,283 26,205,077 ₱158,484,206

27,760,009 42,315,755 (23,497,092) 46,578,672 8,263,216,775 3,526,205,077 ₱4,737,011,698

‒ 31,253,912 (3,493,903) 27,760,009 5,229,964,088 2,186,295,526 ₱3,043,668,562

‒ ‒ ‒ ‒ 318,063,237 116,702,573 ₱ 201,360,664

‒ 31,253,912 (3,493,903) 27,760,009 5,548,027,325 2,302,998,099 ₱3,245,029,226

The aforementioned loans require the Group to maintain certain financial ratios such as debt to equity ratio and current ratio calculated based on stipulation with the lender banks. As of December 31, 2021 and 2020, the Group was in compliance with the loan covenants.

20. Revenue from Contracts with Customers Set out below is the disaggregation of the Group’s revenue from contracts with customers for the years ended December 31: Construction contracts Manpower services Merchandise sales Real estate sales Power generation Others

Construction contracts Building Infrastructure Electro-mechanical Industrial

2021

2020

2019

₱14,942,556,591 568,014,461 385,868,524 14,029,663 – 239,236,004 ₱16,149,705,243

₱12,940,916,871 595,986,180 187,975,881 32,735,487 13,991,023 109,713,580 ₱13,881,319,022

₱21,866,830,755 669,811,598 476,827,282 87,899,956 348,840,955 131,666,697 ₱23,581,877,243

2021

2020

2019

₱6,825,132,430 5,048,584,055 642,042,623 2,426,797,483 ₱14,942,556,591

₱3,988,256,546 6,378,382,769 1,990,184,632 584,092,924 ₱12,940,916,871

₱6,986,569,037 11,344,227,918 2,685,576,381 850,457,419 ₱21,866,830,755

The Group recognized revenue amounting to ₱12.4 billion and ₱12.2 billion in 2021 and 2020, respectively, from performance obligations partially satisfied in the previous periods.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Performance obligations Information about the Group’s performance obligations are summarized below: The transaction price allocated to the remaining performance obligations of the Group (unsatisfied or partially unsatisfied) in connection with the construction contracts that have an original expected duration of more than one year (otherwise known as backlogs) as at December 31 are as follows:

Within one year More than one year

2021

2020

2019

₱12,448,951,193 18,517,252,543 ₱30,966,203,736

₱12,653,212,583 30,942,788,536 ₱43,596,001,119

₱8,803,236,672 47,698,616,553 ₱56,501,853,225

2021

2020

2019

₱340,531,890 14,053,756,433 ₱14,394,288,323

₱191,262,219 15,902,404,596 ₱16,093,666,815

₱341,053,970 20,259,237,553 ₱20,600,291,523

2021

2020

2019

₱318,257,368 9,506,042 1,073,588 4,180,200 7,514,692 ₱340,531,890

₱159,529,808 5,957,078 1,325,134 1,984,949 22,465,250 ₱191,262,219

₱264,797,031 7,547,944 4,377,443 3,417,073 60,914,479 ₱341,053,970

2021

2020

2019

₱7,202,941,000 3,079,255,910 3,338,692,265 424,354,214 8,513,044 ₱14,053,756,433

₱7,312,953,617 3,182,242,114 4,837,320,506 555,538,533 14,349,826 ₱15,902,404,596

₱6,911,619,992 5,444,529,737 7,247,784,141 622,243,621 33,060,062 ₱20,259,237,553

21. Costs of Sales and Services This account consists of:ended December 31: Cost of sales Cost of services

Cost of Sales Merchandise sales Inventories Personnel expenses Amortization (Note 14) Others Real estate sales (Note 9)

Cost of Services Personnel expenses Equipment costs and others Materials Depreciation and amortization (Notes 13 and 14) Others

In a move to contain the COVID-19 outbreak, the Philippine Government has placed the entire island of Luzon to enhanced community quarantine until May 15, 2020. Effective May 16, 2020, some provinces in Luzon were placed under general community quarantine while National Capital Region (NCR) was placed under modified enhanced community quarantine. During the period of enhanced community quarantine, all construction activities whether related to private and government projects were suspended. During the

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period of suspension of construction activities, the Group continued to incur costs of ₱1.03 billion which includes continued payment of salaries and wages of its construction workers at project site. These costs were presented as part of “Personnel Expenses” under “Cost of Sales and Services” in 2020 consolidated statement of income.

22. Selling and Administrative Expenses This account consists of:ended December 31:

Personnel expenses Depreciation and amortization (Notes 13, 14 and 15) Repairs and maintenance Taxes and licenses Travel and transportation Outside services Professional fees Utilities Donations Training Insurance Rent (Note 14) Supplies Management fee Provision (recovery) of allowance for expected credit loss - net (Notes 6, 7, 8, 10 and 16) Advertising Food, meals and others Entertainment, amusement and recreation Research and development Provision for inventory obsolescence (Note 9) Others

2021

2020

2019

₱778,325,391

₱765,341,411

₱667,226,964

172,869,804 74,672,541 72,286,059 57,462,797 51,768,749 46,853,311 39,227,172 22,511,546 18,650,105 12,493,854 8,440,238 6,611,467 6,190,452

209,235,330 52,396,105 166,994,059 52,156,489 40,065,087 56,188,239 41,231,261 7,568,695 15,969,836 12,835,753 13,144,311 3,740,593 3,342,857 89,338,264

182,165,354 54,066,443 99,465,774 68,283,525 39,885,434 59,680,821 36,191,236 9,360,647 27,660,685 8,282,769 6,433,856 10,705,819 3,705,358 (5,916,646)

8,588,733 7,378,967 2,641,137 461,887 13,220,101 134,772,395 ₱1,696,611,510

5,729,338 27,330,266 5,846,993 1,317,376 21,809,716 117,419,791 ₱1,446,651,519

4,519,824 3,914,675 3,035,011 1,659,638 386,160 ‒ 138,688,546 ₱1,520,567,340

Others pertain to the various administrative expenses that the Group incurs in support of its day-to-day operations including technical support, painting expenses, and other charges.

The distribution of the depreciation and amortization expense follows:

Property and equipment (Note 13) Right-of-use asset (Note 14) Investment properties (Note 15}

2021

2020

2019

₱115,529,885 57,339,919 ‒ ₱172,869,804

₱148,772,611 60,462,719 ‒ ₱209,235,330

₱128,247,438 53,900,416 17,500 ₱182,165,354

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The distribution of the provision (recovery) of allowance for expected credit loss - net follows: Cash and cash equivalents (Note 6) Receivables (Note 7) Contract assets (Note 8) Other current assets (Note 10) Other noncurrent assets (Note 16)

2021

2020

2019

₱2,130 5,080,223 5,205,736 ‒ (5,768,265) ₱4,519,824

₱3,007 37,436,624 42,639,672 11,548,630 (2,289,669) ₱89,338,264

(₱50) (1,665,750) (5,582,898) 1,332,052 ‒ (₱5,916,646)

2021

2020

2019

₱5,455,892 1,923,369 342,262 ‒ ₱7,721,523

₱6,276,562 2,288,438 3,237,599 5,152,791 ₱16,955,390

₱4,234,199 10,647,486 5,677,703 7,058,655 ₱27,618,043

2021

2020

2019

₱50,987,679

₱37,058,954

₱53,417,279

4,248,583 14,750 774,123 1,053,123 815,329 20,434,518 ₱78,328,105

7,316,671 204,500 1,786,719 1,152,085 249,490 18,636,961 ₱66,405,380

97,426,071 111,500 5,075,313 2,115,916 4,804,879 26,302,785 ₱189,253,743

23. Interest Income This account consists of: Cash in banks and cash equivalents (Note 6) Interest-bearing trade receivables (Note 7) Receivable from EEI-RFI (Notes 26) Receivable from related parties (Note 26)

24. Other Income - Net This account consists of: Dividend income (Note 12) Gains on disposal of: Property and equipment Investment properties (Note 15) Gain on sale of scrap Rent income (Note 15) Tax refund/discount Others

In 2021 and 2020, the Group sold parcels of land located in Las Pinas City for ₱0.08 million and ₱0.9 million, respectively. The Group recognized a gain of ₱0.01 million and ₱0.2 million, respectively in related to the sale in 2021 and 2020, respectively.

In 2021 and 2020, the Group also sold various property and equipment for total proceeds of ₱99.1 million and ₱568.7 million, respectively. The Group recognized a gain of ₱4.2 million and ₱7.3 million in relation the sale in 2021 and 2020, respectively In 2019, the Group sold various investment properties for total proceeds of ₱0.6 million. The group recognized a gain of ₱0.1 million in relation the sale.

In December 2019, the Group sold a parcel of land located in Laguna for ₱160.0 million. The Group recognized a gain of ₱97.39 million in relation to the sale.

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25. Income Taxes The components of the Group’s deferred tax assets and liabilities follow:

Deferred tax assets (liabilities) recognized in profit or loss: NOLCO Allowance for expected credit losses Unamortized past service cost Unrealized foreign exchange losses (gains) Allowance for inventory obsolescence Capitalized borrowing cost Net retirement liabilities Excess of right-of-use assets over lease liability – net Deferred transaction costs Excess MCIT Others Deferred tax assets recognized in other comprehensive income: Remeasurement loss on defined benefit plans Deferred tax assets – net

Reconciliation of net deferred tax assets follows: Balance at beginning of year Tax income (expense) recognized in:

Other comprehensive income

Profit and loss Balance at end of year

2021

2020

₱1,059,762,672 40,654,087 22,296,264 (385,847) 5,461,493 (81,351) (26,134,003) (26,629,601) (11,644,668) 17,811,754 (5,302,692) 1,075,808,108

₱1,306,298,099 38,980,029 32,159,269 10,581,814 6,562,260 (97,621) (38,671,768) (33,486,819) (8,328,003) 2,056,209 693,035 1,316,746,504

36,586,493 ₱1,112,394,601

154,399,606 ₱1,471,146,110

2021

2020

₱1,471,146,110

₱116,760,173

(117,813,113) (240,938,396) ₱1,112,394,601

24,642,945 1,329,742,992 ₱1,471,146,110

The Group did not recognize deferred tax assets on the following future deductible differences as management assessed that it is not probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized.

NOLCO Allowance for inventory obsolescence MCIT Allowance for expected credit losse

2021

2020

₱89,022,926 4,654,325 2,354,618 –

₱35,846,562 7,459,325 5,893,111 3,061,690

On September 30, 2020, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 25-2020 implementing Section 4 (bbbb) of “Bayanihan to Recover As One Act” which states that the NOLCO incurred for taxable years 2020 and 2021 can be carried over and claimed as a deduction from gross income for the next five (5) consecutive taxable years immediately following the year of such loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2021, the Group has NOLCO and excess MCIT to which deferred tax assets that can be claimed as deductions against future taxable income and tax payable, respectively, as follows: NOLCO Incurred In 2019

Available until 2022

Amount ₱193,545

Tax Effect ₱48,386

Incurred In 2019 2020 2021

Availment period 2020-2022 2021-2023 2022-2024

Excess MCIT ₱2,229,271 2,056,209 16,394,112 ₱20,679,592

Impact of CREATE – 514,052 – ₱514,052

MCIT Balance ₱2,229,271 1,542,157 16,394,944 ₱20,166,372

As of December 31, 2021 and 2020, the Group has incurred NOLCO in taxable year 2021 and 2020, respectively, which can be claimed as deduction from the regular taxable income for the next five (5) consecutive taxable years pursuant to the Bayanihan to Recover As One Act, as follows: Incurred In 2020 2021

Availment period 2021-2025 2022-2026

Amount ₱4,322,493,523 291,946,184 ₱4,614,439,707

Applied ₱19,490,860 – ₱19,490,860

Expired – – –

Balance ₱4,303,002,663 291,946,184 ₱4,594,948,847

The Group did not recognize any deferred tax asset in relation to unexpired share options as this has negative intrinsic value.

The Group recognized deferred tax liability of ₱127.9 million and ₱90.4 million pertaining to the accumulated fair value gain on equity investments at FVOCI as of December 31, 2021 and 2020, respectively.

The reconciliation between the statutory and effective income tax rates follows:

Statutory income tax rate Add (deduct) reconciling items: Equity in net earnings (losses) of associates and joint ventures Income subjected to final taxes at lower rates Impact of CREATE Others Effective income tax rate

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2021

2020

2019

25.0%

30.0%

30.0%

(8.5) (0.2) 28.0 (5.4) 38.9%

1.68 0.12 – 6.50 (38.3%)

(3.1) (2.2) – (1.8) 22.9%

Republic Act No. 11534 otherwise known as the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE President Rodrigo Duterte signed into law on March 26, 2021 the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to attract more investments and maintain fiscal prudence and stability in the Philippines. Republic Act (RA) 11534 or the CREATE Act introduces reforms to the corporate income tax and incentives systems. It takes effect 15 days after its complete publication in the Official Gazette or in a newspaper of general circulation or April 11, 2021.

The following are the key changes to the Philippine tax law pursuant to the CREATE Act which have an impact on the Group •

Effective July 1, 2020, regular corporate income tax (RCIT) rate is reduced from 30% to 25% for domestic and resident foreign corporations. For domestic corporations with net taxable income not exceeding Php5 million and with total assets not exceeding Php100 million (excluding land on which the business entity’s office, plant and equipment are situated) during the taxable year, the RCIT rate is reduced to 20%.

•

Minimum corporate income tax (MCIT) rate reduced from 2% to 1% of gross income effective July 1, 2020 to June 30, 2023.

•

Imposition of improperly accumulated earnings tax (IAET) is repealed.

As clarified by the Philippine Financial Reporting Standards Council in its Philippine Interpretations Committee Q&A No. 2020-07, the CREATE Act was not considered substantively enacted as of December 31, 2020 even though some of the provisions have retroactive effect to July 1, 2020. The passage of the CREATE Act into law on March 26, 2021 is considered as a non-adjusting subsequent event. Accordingly, current and deferred taxes as of and for the year ended December 31, 2020 continued to be computed and measured using the applicable income tax rates as of December 31, 2020 (i.e., 30% RCIT / 2% MCIT) for financial reporting purposes. Current and deferred taxes as of and for the year ended December 31, 2021 were computed and measured using the new tax rates in 2021.

The effect of CREATE Act in 2020 of a lower provision for current income tax for the year ended December 31, 2020 and lower income tax payable as of December 31, 2020, which was reflected in the Group’s 2020 annual income tax return was only recognized for financial reporting purposes in the 2021 consolidated financial statements. Also, the effect in 2020 of a lower deferred tax assets and liabilities as of December 31, 2020 and provision for deferred tax for the year then ended of ₱ 245.2 million were recognized for financial reporting purposes only in the 2021 consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 26. Related Party Transactions 2021

(In Thousands of Philippine Peso)

Parent company

Rendering of janitorial services Purchase of management services

Associate

Rendering of services Extension of advances Availment of advances

Entities under the common control

Bank deposits

Conditions

₱16,167

₱ 9,709 Non-interest bearing

(4,286)

(2,400) Non-interest bearing

Unsecured, no impairment Unsecured

‒ ‒ ‒

30,070 Non-interest bearing 66,345 Non-interest bearing (1,151) Non-interest bearing

Unsecured Unsecured Unsecured

Interest bearing; 0.20% -0.25% per annum

Unsecured, no impairment

63,149 Non-interest bearing

Unsecured

4,820

Revenue from construction services Revenue from service contract Extension of advances

Other related parties

Terms

Transaction Amount / Volume

Related party

44,842

Outstanding Receivable/ (Payable)

1,922,895

13,966

6,042

− Non-interest bearing

Rendering of janitorial services Sale of supplies

350,970 10

46,012 ‒

− −

− Unsecured, no impairment − −

Lease of property

(74,464)

- Non-interest bearing

Unsecured

Rendering of construction services

144

Interest bearing, 5% per annum

Unsecured

Sale of property

342

Extension of advances Extension of advances

Interest bearing, 5% per annum (971) Non-interest bearing 2,217 Non-interest bearing

Unsecured

Outstanding Terms Receivable/ (Payable) 8,165 Non-interest bearing ₱7,163

Conditions

‒ ‒

‒

2020

(In Thousands of Philippine Peso)

Transaction Amount / Volume

Related party Parent company

Rendering of janitorial services

Associate

Rendering of services

Entities under the common control

Other related parties

Unsecured Unsecured

‒

33,357

Bank deposits

3,946

1,193,073

Revenue from construction services Extension of advances

9,534 ‒

Rendering of janitorial services

225,921

Lease of property

(70,918)

Non-interest bearing

Unsecured, no impairment Unsecured

Interest bearing; 0.20% -0.25% per annum

Unsecured, no impairment

99,791 Non-interest bearing 24,092 Non-interest bearing −

Unsecured Unsecured, no impairment −

− Non-interest bearing

Unsecured

6,995

Sale of property

3,238

38,000

Interest income

5,153

‒

Interest bearing, 5% per annum

Unsecured

a. In 2019, EPC was contracted by RCBC Realty Corporation, for the Supply of Labor, Tools and Materials and Installation of the Additional Low Voltage Switchgear and Busway System for Phase 2 Electrical System Upgrade which commence in April 2019 with contract price amounted to ₱260.39 million. The outstanding trade receivables amounted to nil as of December 31, 2021 and 2020.

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b. In 2018, the Parent Company was contracted by Malayan Education Systems, Inc. for the General Construction Works, Excavation, Structural, Civil, Architectural, MEPF Works and Attendance of Mapua Makati Building with contract price amounted to ₱891.0 million. The project is 100% and 98.9% completed as of December 31, 2021 and 2020, respectively. The outstanding receivables amounted to ₱63.1 million and ₱93.4 million, including retention receivables of ₱56.4 million and ₱90.81 million as of December 31, 2021 and December 31, 2020, respectively. c. In 2017, the Parent Company was contracted by Malayan Colleges Mindanao for the general construction works of Mapua School in Davao City with contract price amounted to ₱1,158.5 million. The project was completed on July 31, 2018. The outstanding receivables amounted to nil and ₱6.4 million as of December 31, 2021 and 2020, respectively. d. In 2013, the Parent Company was contracted by PWEI for the construction of 18 units WTG foundations, roadways and temporary landing pad intended for the 36MW Nabas Wind Power Project (NWPP) in Nabas, Aklan for ₱1,100.0 million. The project was completed on April 30, 2015. The outstanding receivables amounted to nil as of December 31, 2021 and 2020. e. In 2006, the Parent Company sold parcels of land to EEI-RFI, a trustee of the Parent Company employees retirement fund (the Fund). The Fund is managed by RCBC Trust and Investment Division. The parcels of land sold are located in Manggahan, Quezon City and Bauan, Batangas.

The receivables bear interest of 5% per annum in 2021, 2020, and 2019.

Starting January 2007, the Parent Company and EEI-RFI entered into operating lease agreements for the said land and improvements. The lease terms are for one year and renewable every year with 5% increase effective January 1, 2014.

In 2013, the receivable from the EEI-RFI amounting to ₱390.0 million was restructured and reclassified to other noncurrent assets with fixed 5% interest rate per annum. In 2016, the Parent Company and the Fund agreed to extend the term of the payment until April 30, 2021.

Outstanding receivables amounted to nil million and ₱38.0 million as of December 31, 2021 and 2020 respectively (Notes 7 and 16). Interest income earned from receivable from EEI-RFI amounted to ₱0.3 million, ₱3.2 million and ₱5.7 million for the years ended December 31, 2021, 2020 and 2019, respectively (Note 23). f. The Group’s retirement plan assets include investments in equity securities of the following entities:

Rizal Commercial Banking Corporation House of Investments, Inc. EEI Corporation

2021

2020

₱20,051,560 120,700 40,619 ₱20,212,879

₱19,398,256 160,800 55,794 ₱19,614,850

Loss arising from investments in the shares of stocks of the aforementioned companies amounted to ₱3.7 million and ₱3.9 million in 2021 and 2020, respectively. Meanwhile, gain arising from investments in the shares of stocks of the aforementioned companies amounted to ₱0.01 million in 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS g. The remuneration of members of key management personnel are as follows:

Short-term benefits Post-employment benefits

2021

2020

2019

₱ 291,710,419 36,290,371 ₱328,000,790

₱281,897,880 26,237,470 ₱308,135,350

₱166,655,077 50,213,444 ₱216,868,521

Outstanding balances at year-end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. These mainly consist of advances and reimbursement of expenses. The Group has not recognized any impairment on amounts due from related parties for the years ended December 31, 2021 and 2020.

This assessment is undertaken each financial year through a review of the financial position of the related party and the market in which the related party operates.

Identification, review and approval of related party transactions Material related party transactions (MRPT) refers to any related party transactions, either individually, or in aggregate over a twelve (12)–month period with the same related party, amounting to ten percent (10%) or higher of the Group’s total consolidated assets based on its latest audited financial statements.

All material related party transactions shall be reviewed by the Group’s Corporate Governance Committee and approved by the BOD with at least 2/3 votes of BOD, with at least a majority vote of the independent directors. In case that the vote of a majority of the independent directors is not secured, the material related party transactions may be ratified by the vote of the stockholders representing at least 2/3 of the outstanding capital stock.

27. Retirement Benefits The Group has a funded, noncontributory plan covering substantially all of its employees. The retirement funds are being administered and managed through EEI Corporation and Subsidiaries Retirement fund, with Rizal Commercial Banking Corporation (RCBC) as Trustee. The Group, however, reserves the right to discontinue, suspend or change the rates and amounts of its contributions at any time on account of business necessity or adverse economic conditions. The latest actuarial valuation report for the retirement plan was issued on January 17, 2022.

Under the existing regulatory framework, Republic Act 7641 requires a provision for retirement pay to qualified private sectors employee in the absence of any retirement plan in the entity, provided however that the employee retirement benefits under any collective bargaining and other agreements shall not be less than those provided under law. The Law does not require minimum funding of plan.

The following table summarizes the components of retirement expense recognized in the Group’s consolidated statements of income and the amounts recognized in the Group’s consolidated statements of financial position for the plan:

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The components of retirement expense follow: Current service cost Net interest cost Retirement expense

2021

2020

₱149,055,885 14,042,645 ₱163,098,530

₱123,213,155 15,053,328 ₱138,266,483

2021

2020

₱1,521,590,657 149,055,885 57,167,322 (80,627,815)

₱1,297,712,780 123,213,155 65,315,061 (59,765,626)

(94,817,886) (306,625,084) ₱1,245,743,079

‒ 95,115,287 ₱1,521,590,657

The components of retirement expense follow: Balance at beginning of year Current service cost Interest cost Benefits paid Remeasurement (gains)/losses arising from: Experience adjustments Changes in financial assumptions Balance at end of year

Movements in the fair value of the plan assets follow: Balance at beginning of year Interest income included in net interest cost Remeasurement (gain) loss Contributions Benefits paid Balance at end of year

2021

2020

₱1,147,833,169 43,124,677 (28,591,929) 126,726,682 (80,627,815) ₱1,208,464,784

₱997,855,858 50,261,733 12,972,135 146,509,069 (59,765,626) ₱1,147,833,169

The Group does not expect to contribute to the Fund in 2022.

The retirement assets and liabilities recognized in the consolidated statements of financial position as of December 31 follow: Present value of defined benefit obligations Fair value of plan assets

2021

2020

₱1,245,743,079 (1,208,464,784) ₱37,278,295

₱1,521,590,657 (1,147,833,169) ₱373,757,488

Movements in the net retirement liabilities follow: At January 1 Retirement expense Remeasurement (gain) loss Contributions At December 31

2021

2020

₱373,757,488 163,098,530 (372,851,041) (126,726,682) ₱37,278,295

₱299,856,922 138,266,483 82,143,152 (146,509,069) ₱373,757,488

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The major categories and fair value of the plan assets are as follows: Investments in: Government securities Equity securities Debt and other securities Cash and cash equivalents Interest and other receivables Accrued trust fees and other payables

2021

2020

₱728,964,491 216,572,706 10,219,821 250,926,751 10,994,179 (9,213,164) ₱1,208,464,784

₱570,922,981 219,055,038 65,680,970 281,734,955 12,688,258 (2,249,033) ₱1,147,833,169

The plan assets are being held by the RCBC Trust and Investment Division. The investing decisions of the plan assets are made by the authorized officers of the Parent Company.

The plan assets consist of the following: • • • • •

Investment in government securities - includes investment in Philippine Retail Treasury Bonds (RTBs) and Fixed Rate Treasury Notes (FXTNs).

Investment in equity securities - includes investment in common and preferred shares traded in the Philippine Stock Exchange.

Investment in debt and other securities - includes investment in long-term debt notes and retail bonds.

Cash and cash equivalents - include savings and time deposit.

Interest and other receivables - pertain to interest and dividends receivable on the investments in the fund.

The management performs an Asset-Liability Matching Study (ALM) annually. The overall investment policy and strategy of the Group’s defined benefit plan is guided by the objective of achieving an investment return which, together with contributions, ensures that there will be sufficient assets to pay retirement benefits as they fall due while also mitigating the various risk of the plans.

Principal actuarial assumptions used to determine defined benefit obligations follow: Discount rate Beginning of year End of year Salary increases Beginning of year End of year

2021

2020

2019

3.69%-3.78% 4.93%-4.99%

5.02%-5.02% 3.69%-3.78%

7.33%-7.37% 5.02%-5.02%

6.50% 5.60%

6.61% 6.50%

6.50% 6.61%

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the defined benefit obligation as at the reporting period, assuming all other assumption were held constant: 2021 Increase (decrease)

Discount rates Salary increase rates

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+0.5% -0.5% +1.0% -1.0%

Effect on defined benefit obligation (in millions)

(₱4.26) 4.72 9.59 (7.97)

2020 Increase (decrease)

+0.5% -0.5% +1.0% -1.0%

Effect on defined benefit obligation (in millions)

(₱6.98) 7.82 15.37 (12.73)

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

Less than one year More than one to five years More than five to ten years More than 10 to 15 years More than 15 to 20 years More than 20 years

2021

2020

₱210,753,240 328,543,661 580,237,044 788,651,959 886,081,765 6,127,208,490

₱205,843,704 282,471,492 656,798,471 936,046,217 939,199,550 8,733,366,011

The average duration of the defined benefit obligation ranges from 18-23 and 19-23 years as of December 31, 2021 and 2020, respectively.

28. Stock Option Plan The Parent Company’s stock option plan, as amended (Amended Plan), had set aside 35 million common shares for stock options available to regular employees, officers and directors of the Parent Company and its subsidiaries.

Under the Amended Plan, the option or subscription price must be equal to the book value of the Parent Company’s common stock but not less than 80% of the average market price quoted in PSE for five trading days immediately preceding the grant, but in no case less than the par value. The option or subscription price should be paid over a period of five years in 120 equal semi-monthly installments.

Shares acquired under the Amended Plan are subject to a holding period of one year.

A summary of the plan availments is shown below.

Number of Shares Shares allocated under the Original Stock Option Plan Shares allocated under the Amended Stock Option Plan Total shares allocated Shares subscribed under the Original Stock Option Plan Shares subscribed under the Amended Stock Option Plan Total shares subscribed Shares allocated at end of year

19,262,500 15,737,500 35,000,000 19,365,815 10,886,188 30,252,003 4,747,997

The Parent Company opted to avail the exemption in PFRS 1, First-time Adoption of Philippine Financial Reporting Standards, from applying PFRS 2 upon adoption on January 1, 2005 as it allows non-adoption of PFRS 2 for equity instruments that were granted on or before November 7, 2002.

Since 2000, there were no shares under the stock option plan that were granted, forfeited, exercised and expired.

No benefit expense is recognized relative to the shares issued under the stock option plan. When options are exercised, these are treated as capital stock issuances.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 29. Capital Stock The Group’s capital stock as at December 31 is consist of the following: 2021

2020

Series B

Common

₱0.5

₱1 2,000,000,000

45,000,000

1,036,401,386

Preferred

Par value Authorized Issued and outstanding

Common

Series A

₱1 2,000,000,000

₱0.5

1,036,401,386

15,000,000

240,000,000

Common shares The Group’s common shares were registered with the Securities and Exchange Commission (SEC) on August 28, 1997. The total number of shares registered with SEC at that time was 2 billion with original issue price amounting to ₱1.0 per share. As of December 31, 2021 and 2020, the Group had 3,120 and 3,119 shareholders on record, respectively.

Preferred shares On July 15, 2021, the BOD of the Parent Company approved the following: a)Offer of up to four billion pesos of preferred shares of EEI, with over-subscription option of up to two billion pesos preferred shares, at an offer price of up to Php100 per share. b)Amendment in 2nd paragraph of Article 7 of the Articles of Incorporation to reflect that all stockholders shall have no pre-emptive rights with respect to any shares of any other class or series of the present capital or on future or subsequent increases in capital. c)Amendment in 4th paragraph of Article 7 of the Articles of Incorporation changing the characteristic of preferred shares of the Company from non-cumulative to cumulative. d)Amendment in Article 6 of the Articles of Incorporation increasing the number of board of directors to eleven (11).

The above were approved by the shareholders through written assent on August 26, 2021.

On December 23, 2021, the Group issued and listed in PSE the non-convertible preferred shares generating net proceeds of ₱5.96 billion.

Cumulative dividends in arrears on preferred shares as at December 31, 2021 amounted to ₱6.55 million.

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The movement in capital stock and additional paid-in capital account as at December 31 follows: 2021

Capital stock

Additional paid-in capital

Preferred Balance as at January 1

Common

Series A

₱1,036,401,386

₱‒

‒ ‒

7,500,000 ‒

Issuance Share issuance cost Balance as at December 31

₱1,036,401,386 ₱7,500,000

Preferred

Series B

Subtotal

Common

Series A

Series B

Subtotal

₱‒ ₱1,036,401,386

₱477,037,443

₱‒

₱‒

₱477,037,443

22,500,000 ‒

30,000,000 ‒

‒ 1,492,500,000 4,477,500,000 5,970,000,000 (33,742,834) (44,990,445) ‒ (11,247,611)

₱22,500,000 ₱1,066,401,386

₱477,037,443 ₱1,481,252,389 ₱4,443,757,166 ₱ 6,402,046,998

2020 Balance as at January 1 and December 31

Common Stock

Additional paid-in capital

₱1,036,401,386

₱477,037,443

Capital Management The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximize shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders or issue new shares. No changes were made in the objectives, policies or processes for the years ended December 31, 2021 and 2020.

The Group considers total equity as its capital The Group monitors capital using a debt-to-equity ratio, which is total liabilities divided by total equity attributable to equity holders of Parent Company. The Group’s policy is to maintain a debt-to-equity ratio lower than 4:1 as at December 31, 2021 and 2020. .

2020 2021 Current liabilities Noncurrent liabilities Total liabilities (a) Equity attributable to the equity holders of Parent Company (b) Debt to Equity Ratio (a/b)

₱12,728,110,384 6,146,268,157 18,874,378,541 13,336,944,035 1.42:1

₱14,373,647,508 6,111,437,987 20,485,085,495 6,392,901,268 3.20:1

30. Retained Earnings On July 7, 2019, the Board of Directors of the Parent Company approved the declaration of cash dividends of ₱ 0.20 per share or a total of ₱207.26 million. The dividends were paid on July 22, 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On March 13, 2020, the Board of Directors of the Parent Company approved the declaration of cash dividends amounting of ₱0.40 per share or for a total of ₱414.51 million. On April 23, 2020, to ensure the Parent Company’s liquidity which will enable it to deal with the difficulties of the anticipated recession due to COVID-19 pandemic and also ultimately protect the best interest of the stockholders and the Parent Company’s employees, the Board of Directors cancelled the declaration of the said cash dividend.

Under the Tax Code of the Philippines, publicly listed companies are allowed to accumulate retained earnings in excess of capital stock and are exempt from improperly accumulated earnings tax.

The accumulated earnings of subsidiaries, associates and joint venture which are included in the Group’s retained earnings amounted to ₱2.9 billion and ₱1.4 billion as of December 31, 2021 and 2020, respectively, are not available for dividend declaration. Retained earnings are further restricted for payment of dividends to the extent of cost of treasury shares and deferred tax assets amounting to ₱1,149.7 million and ₱1,357.6 million as of December 31, 2021 and 2020, respectively.

On June 22, 2018, the BOD of the Parent Company approved the appropriation of retained earnings of ₱4.0 billion for purchase of property and equipment as business expansion and manpower training program for the next three to five years. On December 4, 2020, the BOD of the Parent Company approved the reversal of the said appropriation to make funds available for the Parent Company’s ongoing projects, particularly in infrastructure.

Retained earnings available for dividend declaration amounted to ₱0.6 billion and ₱0.9 billion as of December 31, 2021 and 2020, respectively.

The Group takes into consideration the financing requirements of its construction projects when deciding the amount to be declared as dividends.

31. Segment Information For management purposes, the Group is organized into business units based on geographical location, which comprises of two main groupings as follows: 1.Domestic - all transactions and contracts entered in the Philippines 2.Foreign - all transactions and contracts entered outside the Philippines • EEI Limited - incorporated in British Virgin Islands • Clear Jewel Investments, Ltd. - incorporated in British Virgin Islands • Nimaridge Investments, Limited - incorporated in British Virgin Islands • EEI Corporation (Guam) - incorporated in the United States of America • Al Rushaid Construction Company Limited - incorporated in the Kingdom of Saudi Arabia Management monitors construction revenue and segment net income for the purpose of making decision about resources allocation.

Segment reporting is consistent in all periods presented as there are no changes in the structure of the Group’s internal organization that will cause the composition of its reportable segment to change.

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2021

(In Thousands of Philippine Peso)

Domestic

Foreign

Combined

Elimination

Consolidated

Current assets Noncurrent assets Total Assets

₱21,012,276 12,697,973 ₱33,710,249

₱7,829,630 3,179,593 ₱11,009,223

₱28,841,906 15,877,566 ₱44,719,472

(₱8,376,958) (4,127,441) (12,504,399)

₱20,464,948 11,750,125 ₱32,215,073

Liabilities Current liabilities Noncurrent liabilities Total Liabilities

₱13,471,662 6,251,128 ₱19,722,790

₱4,552,028 1,407,798 ₱5,959,826

₱18,023,690 7,658,926 ₱25,682,616

(₱5,295,580) (1,512,658) (₱6,808,238)

₱12,728,110 6,146,268 ₱18,874,378

₱16,380,153 (14,596,707) (1,590,838) (444,455) 7,069

₱12,867,243 (10,839,624) (311,699) (63,892) ‒

₱29,247,396 (25,436,331) (1,902,537) (508,347) 7,069

(₱13,097,691) 11,042,043 381,970 38,865 ‒

₱16,149,705 (14,394,288) (1,520,567) (469,482) 7,069

265,284 129,365 149,871 (291,121) (₱141,250)

‒ 75,328 1,727,356 (389,323) ₱1,338,033

265,284 204,693 1,877,227 (680,444) ₱1,196,783

659,889 (118,643) (1,093,567) 375,681 (₱717,886)

925,173 86,050 783,660 (304,763) ₱478,897

₱598,298 170,057 25,481

₱‒ ‒ 1

₱598,298 170,057 25,482

₱‒ ‒ (17,760)

₱598,298 170,057 7,722

1,636,834

1,622,779

3,259,613

‒

3,259,613

Assets

Revenue Direct cost Selling and administrative expense Interest expense Foreign exchange gain Share in equity in net earnings (losses) of associates and joint ventures Interest and other income – net Income before tax Provision for income tax Net income (loss) Other disclosures: Depreciation and amortization Capital expenditure Interest income Investments in associates and joint ventures

2020

(In Thousands of Philippine Peso)

Domestic

Foreign

Combined

Elimination

Consolidated

Current assets Noncurrent assets Total Assets

₱15,361,433 14,606,181 ₱29,967,614

₱5,215,041 1,238,386 ₱6,453,427

₱20,576,474 15,844,567 ₱36,421,041

(₱4,638,640) (4,889,861) (₱9,528,501)

₱15,937,834 10,954,706 ₱26,892,540

Liabilities Current liabilities Noncurrent liabilities Total Liabilities

₱14,332,584 6,129,312 ₱20,461,896

₱2,912,335 1,198,303 ₱4,110,638

₱17,244,919 7,327,615 ₱24,572,534

(₱2,871,271) (1,216,177) (₱4,087,448)

₱14,373,648 6,111,438 ₱20,485,086

₱14,416,682 (16,574,587) (1,750,003) (482,745) (46,584)

₱11,093,477 (8,969,819) (252,016) (74,663) ‒

₱25,510,159 (25,544,406) (2,002,019) (557,408) (46,584)

(₱11,628,840) 9,450,739 305,407 91,165 ‒

₱13,881,319 (16,093,667) (1,696,612) (466,243) (46,584)

966,226 136,627 (3,334,384) 1,093,397 (₱2,240,987)

14,641 34,730 1,846,350 (201,256) ₱1,645,094

980,867 171,357 (1,488,034) 892,141 (₱595,893)

‒ (87,994) (1,869,523) 393,250 (₱1,476,273)

980,867 83,363 (3,357,557) 1,285,391 (2,072,166)

Assets

Revenue Direct cost Selling and administrative expense Interest expense Foreign exchange gain Share in equity in net earnings (losses) of associates and joint ventures Interest and other income – net Income before tax Provision for income tax Net income (loss) (Forward)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2020

(In Thousands of Philippine Peso)

Domestic

Foreign

Combined

Elimination

Consolidated

₱766,099 489,515 28,392

₱‒ ‒ ‒

₱766,099 489,515 28,392

₱‒ ‒ (11,437)

₱766,099 489,515 16,955

1,529,787

1,360,288

2,890,075

‒

2,890,075

Domestic

Foreign

Combined

Elimination

Consolidated

Current assets Noncurrent assets Total Assets

₱18,220,222 8,534,084 ₱26,754,306

₱4,651,738 2,687,834 ₱7,339,572

₱22,871,960 11,221,918 ₱34,093,878

(₱4,649,238) (1,397,850) (₱6,047,088)

₱18,222,722 9,824,068 ₱28,046,790

Liabilities Current liabilities Noncurrent liabilities Total Liabilities

₱14,090,327 4,418,563 ₱18,508,890

₱3,747,677 1,239,330 ₱4,987,007

₱17,838,004 5,657,893 ₱23,495,897

(₱2,814,554) (1,239,330) ₱(4,053,884)

₱15,023,450 4,418,563 ₱19,442,013

₱23,902,509 (20,939,081) (1,445,944) (572,113) (35,357)

₱8,725,885 (7,777,657) (300,235) (139,651) ‒

₱32,628,394 (28,716,738) (1,746,179) (711,764) (35,357)

(₱9,046,517) 8,116,446 299,527 147,598 ‒

₱23,581,877 (20,600,292) (1,446,652) (564,166) (35,357)

139,760 296,341 1,346,115 (347,483) ₱998,632

213,087 26,129 747,558 (108,718) 638,840

352,847 322,470 2,093,673 (456,201) ₱1,637,472

(6,594) (105,598) (595,138) 112,994 (₱482,144)

346,253 216,872 1,498,535 (343,207) ₱1,155,328

₱776,099 489,515 33,247

₱‒ ‒ 3

₱776,099 489,515 33,250

₱‒ ‒ (5,634)

₱776,099 489,515 27,616

1,364,098

1,290,434

2,654,532

‒

2,654,532

Other disclosures: Depreciation and amortization Capital expenditure Interest income Investments in associates and joint ventures

2019

(In Thousands of Philippine Peso)

Assets

Revenue Direct cost Selling and administrative expense Interest expense Foreign exchange gain Share in equity in net earnings (losses) of associates and joint ventures Interest and other income – net Income before tax Provision for income tax Net income (loss) Other disclosures: Depreciation and amortization Capital expenditure Interest income Investments in associates and joint ventures

Notes to operating segments: a. Intersegment revenue, cost and expenses, assets and liabilities are eliminated on consolidation.

These are accounted for under PFRSs. b. Other income consists of: Interest income Other income

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2021

2020

2019

₱7,721,523 78,328,105 ₱86,049,628

₱16,955,390 66,405,380 ₱83,360,770

₱27,618,043 189,253,743 ₱216,871,786

c. The foreign segment above includes the equity in net earnings (losses) from ARCC. d. In 2021, each of the two customers from the domestic segment contributed revenue that exceeded 10% of the Group’s revenue. Following are the revenue contributed by each of these customers: ₱4,485 million and ₱3,821 million.

In 2020, each of the two customers from the domestic segment contributed revenue that exceeded 10% of the Group’s revenue. Following are the revenue contributed by each of these customers: ₱2,668 million and ₱2,384 million.

In 2019, each of the two customers from the domestic segment contributed revenue that exceeded 10% of the Group’s revenue. Following are the revenue contributed by each of these customers: ₱4,557 million and ₱3,144 million.

32. Earnings per Share The following table presents information necessary to calculate earnings per share: Net income (loss) attributable to equity holders of the Parent Company Dividends on preferred shares Net income (loss) attributable to common equity holders of the Parent Company Weighted average number of common shares Earnings (loss) per share - basic/diluted

2021

2020

2019

₱489,699,853 (6,554,540)

(₱2,046,059,914) ‒

₱1,156,330,474 ‒

483,145,313 1,036,281,485 ₱0.4662

2,046,059,914 1,036,281,485 (₱1.9744)

1,156,330,474 1,036,281,485 ₱1.1158

The exercise price of unexercised stock options is still higher than the average market price during the year making the options anti-dilutive, hence, no diluted earnings per share is calculated.

The weighted average number of common shares is computed as follows: 2021

2020

2019

1,036,401,386 119,901 1,036,281,485

1,036,401,386 119,901 1,036,281,485

1,036,401,386 119,901 1,036,281,485

Number of common shares issued and outstanding Less treasury shares

33. Changes in Liabilities Arising from Financing Activities Changes in the Group’s liabilities arising from financing activities follows:

Bank loans (Note 17) Long-term debt (Note 19) Lease liabilities (Note 14)

2020

January 1, 2021

Net cash flows

Non-cash movement

December 31, 2021

₱5,015,000,000 5,548,027,325 569,565,423 ₱11,132,592,7487

(₱1,765,000,000) 2,691,692,358 (97,249,655) ₱871,758,458

₱− 23,497,092 15,272,988 (₱3,545,675)

₱3,250,000,000 8,263,216,775 487,588,756 ₱12,000,805,531

2020 Bank loans (Note 17) Long-term debt (Note 19) Lease liabilities (Note 14)

January 1, 2021

Net cash flows

Non-cash movement

December 31, 2021

₱5,905,000,000 2,721,785,719 654,337,141 ₱9,281,122,860

(₱890,000,000) 2,822,747,703 (105,787,665) ₱1,826,960,038

₱‒ 3,493,903 21,015,947 ₱24,509,850

₱5,015,000,000 5,548,027,325 569,565,423 ₱11,132,592,748

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 34. Financial Instruments Fair Value Information Cash and cash equivalents, receivables, deposits, advances to officers and employees, bank loans, accounts payable and other current liabilities and due to related parties The carrying amounts of these instruments approximate fair values due to their short-term maturities and demand feature.

Receivable from EEI RFI The fair values of the receivable amounting to nil and ₱38.0 million as of December 31, 2021 and 2020, respectively, were estimated as the present value of all future cash flows discounted using the applicable rates for similar types of loans (Level 2 - significant observable inputs). Discount rates used in 2020 was 1.41% (nil in 2020).

Interest-bearing trade receivables The fair value of interest-bearing trade receivables amounting to ₱16.1 million and ₱23.2 million as of December 31, 2021 and 2020, respectively, was estimated as the present value of all future cash flows discounted using the applicable rates for similar types of loans (Level 2 - significant observable inputs). Discount rate used in 2021 and 2020 was 1.66% and 1.41%, respectively.

Receivable from sale of investment properties The fair value of the receivable from sale of investment property amounting to ₱17.3 million and ₱21.3 million as of December 31, 2021 and 2020, respectively, was estimated as the present value of all future cash flows discounted using the applicable rates for similar types of loans (Level 2 - significant observable inputs). Discount rate used in 2021 and 2020 was 1.66% and 1.41%, respectively.

Quoted equity investments Fair values of investments in equity shares listed with Philippine Stock Exchange amounting to ₱8.7 million and ₱6.6 million as of December 31, 2021 and 2020, respectively, were determined by reference to the quoted price in the stock exchange at the end of the reporting period (Level 1 - quoted prices in active market).

Fair values of investments in club/golf shares amounting to ₱19.0 million and ₱16.9 million as of December 31, 2021 and 2020, respectively, were determined by reference to the price of the most recent transaction at the end of the reporting period (Level 2 - significant observable inputs).

Unquoted equity investments at FVOCI PGEC The fair value of the Group’s investment in PGEC is determined by an independent third party professional services firm using the discounted cash flow model. PGEC is a holding company and has investments in the following subsidiaries, namely, Maibarara Geothermal, Inc. and PetroSolar Corporation and PetroWind Energy, a joint venture, Inc. as of December 31, 2021. All investees are engaged in the business of generating power through renewable sources of energy.

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The significant unobservable inputs (Level 3) used in the fair value measurement of PGEC are as follows: • • •

Discount rate: 6.31% - 9.35% (1% decrease in the discount rates could increase the fair value of the Group’s investment in PGEC by ₱164.9 million.)

Zero growth rate was used as assumption since the operating life of subsidiaries is limited to 25- year projection Electricity prices used in calculating revenue: • • •

Maibarara Geothermal, Inc.: Electricity price based on electricity supply agreement with a customer PetroSolar Corporation: Feed-in tariff rate of ₱9.82 per kWH PetroWind Energy, Inc: Feed-in tariff rates of ₱8.59 per kWH

HEDC The fair value of the Group’s investment in HEDC is determined using the adjusted net asset approach wherein the assets of HEDC consisting mainly of parcels of land are adjusted from cost to their fair value. The valuation was performed by an independent SEC-accredited appraiser as of December 31, 2021.

The significant unobservable inputs (Level 3) used in the fair value measurement of PGEC are as follows: The fair values of the land were determined using the market approach which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets and adjusted to reflect differences on size (20%), location (20%) and facilities and utilities (15%). Significant favorable (unfavorable) adjustments to the aforementioned factors based on the professional judgment of the independent appraisers would increase (decrease) the fair value of land. Depending on the status of the development, the value of the land per sqm ranges from ₱490 to ₱5,900.

A 5% increase (decrease) in the appraised value of the land per sqm could increase (decrease) the Group’s investment by ₱14.6 million.

Long-term debt The fair values of the interest-bearing long-term loans amounting to ₱8.52 billion and ₱5.41 billion as of December 31, 2021 and 2020, respectively, were estimated as the present value of all future cash flows discounted using the applicable rates for similar types of loans (Level 2 - significant observable inputs). Discount rates used in 2021 and 2020 were 3.25% and 3.31%, respectively.

Long-term retention payable The fair values of the retention payable (Note 18) amounting to ₱242.9 million and ₱273.6 million as of December 31, 2021 and 2020, respectively were estimated as the present value of all future cash flows discounted using the applicable rates for similar types of loans (Level 2 - significant observable inputs). Discount rates used in 2021 and 2020 were 1.66% and 1.41%, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 35. Financial Risk Management Objectives and Policies The main purpose of the Group’s financial instruments is to raise finances for the Group’s operations.

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and foreign currency risk. The policies for managing these risks are summarized as follows:

Credit Risk

The exposure to credit risk on its receivables relates primarily to the inability of project owners to fully settle the unpaid balance of receivables and other claims owed to the Group. Credit risk is managed in accordance with the Group’s credit risk policy which requires the evaluation of the creditworthiness of the project owners by engaging the service of an accredited third-party credit analyst. The credit risk for receivables from construction projects is mitigated by the fact that the Group can resort to carry out its contractor’s lien over the project with varying degrees of effectiveness depending on the jurisprudence applicable on or country location of the project.

The Group’s gross maximum exposure to credit risk is equal to the carrying amounts of its financial assets as of December 31, 2021 and 2020.

The Group generally considers a financial asset in default when contractual payments are 90 days past due.

For a financial asset that arises from long-term construction contracts, the Group considers the asset to be in default if contractual payments are not settled within 90 days from the completion of the construction project. The Group’s normal credit terms for construction projects is within 90 days based on its historical experience. 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. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

In 2021, the Group has no significant concentration of credit risk from any customer. In 2020, the Group has a significant concentration of credit risk from one customer which comprises 33% of the total financial assets.

Its gross maximum exposure to credit risk is equivalent to the carrying value of its financial assets as presented in the consolidated statements of financial position.

Credit risk is managed since the titles of the properties sold by the Group from its real estate operations are retained until receivables are fully collected and the fair values of these properties held as collateral are sufficient to cover the carrying values of the receivables.

The information about the credit exposure on the Group’s receivables and contract assets using provision matrix and the credit quality of other financial assets is as follows: 2021 Neither Past Due nor Impaired

Trade receivables Receivable from sale of investment properties Other receivables Due from related parties Interest-bearing trade receivables Miscellaneous deposits

High Grade

Standard Grade

Past Due and Impaired Financial Assets

Total

₱979,444,582

₱1,257,039,484

₱76,241,674

₱2,312,725,740

17,285,545 570,300 154,351,686

‒ 36,584,428 ‒

‒ 10,926,181 ‒

17,285,545 48,080,909 154,351,686

15,861,796 125,332,078 ₱1,292,845,987

‒ ‒ ₱1,293,623,912

200,000 3,335,193 ₱90,703,048

16,061,796 128,667,271 ₱2,677,172,947

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2020 Neither Past Due nor Impaired

Trade receivables Receivable from sale of investment properties Other receivable Due from related parties Interest-bearing trade receivable Miscellaneous deposits Receivable from EEI Retirement Fund, Inc.

High Grade

Standard Grade

Past Due and Impaired Financial Assets

Total

₱1,281,255,134

₱2,085,509,013

₱35,328,975

₱3,402,093,122

21,280,648 3,380,742 65,613,972 20,279,281 15,579

‒ 14,487,104 ‒

‒ 37,508,915 ‒

21,280,648 55,376,761 65,613,972

‒ 114,370,736 ‒ ₱2,214,366,853

200,000 3,335,193 ‒ ₱76,373,083

20,479,281 117,721,508 38,000,000 ₱3,720,565,292

38,000,000 ₱1,430,025,356

Neither past due nor impaired trade receivables and other receivables are classified into ‘High Grade’ and ‘Standard Grade’. The Group sets financial assets as ‘high grade’ based on the Group’s positive collection experience. The counterparties have a very remote likelihood of default and have consistently exhibited good paying habits. On the other hand, ‘standard grade’ are those which have credit history of default in payments.

Impairment is performed at each reporting date using a provision matrix to measure expected credit losses.

The provision rates are based on days past due for groupings of customer segments with similar loss patterns (i.e., type of customers). The calculation reflects the probability-weighted outcome and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

The Company has the following financial assets that are subject to the expected credit loss model under PFRS 9: • Cash and cash equivalents; • Trade receivables; • Contract assets • Advances to officers and employees A summary of Group exposure to credit risk under general and simplified approach as of December 31, 2021 and 2020, are as follow: 2021 General Approach

Amortized cost Cash and cash equivalents Receivables Receivable from DANECO Contract assets Due from related parties Bid deposit Miscellaneous deposit Advances to officers and employees Total gross carrying amounts Less allowance

Stage 1

Stage 2

Stage 3

Simplified Approach

₱7,114,579,697 65,366,454 54,570,275 − 154,351,686 59,822,400 128,667,271 50,822,589 7,628,180,372 (14,297,875) ₱7,613,882,497

₱− − − − − − − − − − ₱−

₱− − − − − − − − − − ₱−

₱− 2,388,870,462 − 9,877,856,941 − − − − 12,266,727,403 (128,381,024) ₱12,138,346,379

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2020

General Approach

Amortized cost Cash and cash equivalents Receivables Contract assets Advances to officers and employees Total gross carrying amounts Less allowance

Stage 1

Stage 2

Stage 3

Simplified Approach

₱1,325,701,192 114,657,410 − 58,475,819 1,498,834,421 (37,541,438) ₱1,461,292,983

₱− − − − − − ₱−

₱− − − − − − ₱−

₱− 3,581,693,839 8,635,691,120 − 12,217,384,959 (96,718,067) ₱12,120,666,892

Liquidity Risk Liquidity risk is the risk that the Group will be unable to meet its payment obligations as they fall due. The Group seeks to manage its liquidity risk to be able to meet its operating cash flow requirements, finance capital expenditures and service maturing debts. To cover its short-term and long-term funding requirements, the Group intends to use internally generated funds and available short-term and long-term credit facilities.

Credit lines are obtained from BOD-designated banks at amounts based on financial forecasts approved by BOD. The maturity groupings are based on the remaining period from the end of the reporting period to the contractual maturity date.

The tables below summarize the maturity profile of the Group’s financial assets.

2021 Financial Liabilities Accounts payable and other current liabilities* Bank loans Peso loan Interest Long-term debt Peso loan Interest Lease liabilities Due to related parties Financial Assets Cash and cash equivalents Receivables Trade receivables Other receivables Due from related parties Liquidity gap (position)

On demand

< 1 year

1 to < 2 years

> 2 years

Total

₱667,461,995

₱4,136,361,794

₱54,255,653

₱227,929,098

₱5,086,008,540

‒ ‒

3,250,000,000 199,260,791

‒ ‒

‒ ‒

3,250,000,000 199,260,791

‒ ‒ ‒ 2,121,398 669,583,393

3,526,205,077 173,927,038 85,417,970 ‒ 11,371,172,670

3,298,237,801 66,866,814 87,168,196 ‒ 3,506,528,464

1,438,773,897 19,607,590 526,714,877 ‒ 2,213,025,462

8,263,216,775 260,401,442 699,301,043 2,121,398 17,760,309,989

₱7,124,222,377

₱‒

₱‒

₱‒

₱7,124,222,377

1,110,405,129 33,370,480 154,358,455 8,422,356,441 (₱7,752,773,048)

1,111,868,846 ‒ ‒ 1,111,868,846 ₱10,259,303,824

56,959,685 ‒ ‒ 56,959,685 ₱3,449,568,779

33,492,080 14,710,426 ‒ 48,202,506 ₱2,164,822,956

2,312,725,740 48,080,906 154,358,455 9,639,387,479 ₱8,120,922,510

*Excludes statutory liabilities

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2020 Financial Liabilities Accounts payable and other current liabilities* Bank loans Peso loan Interest Long-term debt Peso loan Interest Lease liabilities Due to related parties Financial Assets Cash and cash equivalents Receivables Trade receivables Other receivables Due from related parties Liquidity gap (position)

On demand

< 1 year

1 to < 2 years

> 2 years

Total

₱1,249,822,685

₱4,313,741,859

₱184,227,979

₱524,050,042

₱6,271,842,565

‒ ‒

5,015,000,000 272,089,020

‒ ‒

‒ ‒

5,015,000,000 272,089,020

‒ ‒ ‒ ‒ 1,249,822,685

2,302,998,099 69,480,133 140,457,971 ‒ 12,113,767,082

1,796,899,021 62,184,387 94,176,309 ‒ 2,137,487,696

1,448,130,205 11,480,485 628,636,260 ‒ 2,612,296,992

5,548,027,325 143,145,005 863,270,540 ‒ 18,113,374,455

₱1,332,363,040

₱‒

₱‒

₱‒

₱1,332,363,040

1,583,616,770 51,845,982 65,613,972 3,033,439,764 (₱1,783,617,079)

1,560,158,100 3,530,780 ‒ 1,563,688,880 ₱10,550,078,202

241,210,955 ‒ ‒ 241,210,955 ₱1,896,276,741

17,107,297 ‒ ‒ 17,107,297 ₱2,595,189,695

3,402,093,122 55,376,762 65,613,972 4,855,446,896 ₱13,257,927,559

*Excludes statutory liabilities

As of December 31, 2021 and 2020, the Group has available undrawn committed borrowing facilities with local banks totaling to ₱21.2 billion and ₱15.9 billion, respectively.

Foreign currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s currency risk arise mainly from cash and receivables which are denominated in a currency other than the Group’s functional currency or will be denominated in such a currency.

The following tables demonstrate the sensitivity to a reasonably possible change in the US dollar (USD), Singapore dollar (SGD), Euro (EUR), Japan yen (YEN) and UK Pound (GBP) currency rates, with all variables held constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities):

USD SGD EUR YEN GBP

USD SGD EUR YEN GBP

Percentage increase/decrease in foreign currency

December 31, 2021 Effect on profit before tax (in PHP)

Percentage increase/ decrease in foreign currency

December 31, 2020 Effect on profit before tax (in PHP)

+4.4% +2.7% +1.0% +1.3% +0.6%

₱12,772,442 17,886 4,373 83,553 ‒

+ 3.0% + 1.5% + 0.5% + 3.7% + 4.1%

₱6,261,228 9,403 1,154 60,623 ‒

Percentage increase/decrease in foreign currency

Effect on profit before tax (in PHP)

Percentage increase/ decrease in foreign currency

Effect on profit before tax (in PHP)

-4.4% -2.7% -1.0% -1.3% -0.6%

(₱12,772,442) (17,886) (4,373) (83,553) ‒

- 3.0% - 1.5% - 0.5% - 3.7% - 4.1%

(₱6,261,228) (9,403) (1,154) (60,623) ‒

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EEI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The foreign currency denominated financial assets and financial liabilities in original currencies and equivalents to the functional and presentation currency are as follows:

Financial assets Cash and cash equivalents Receivables Financial liabilities Accounts payable and other current liabilities

2021

USD1

SGD2

EUR3

YEN4

GBP5

Equivalents in PHP

$5,657,415 388,067 6,045,482

$17,680 ‒ 17,680

€7,722 ‒ 7,722

¥12,657,997 1,439,193 14,097,190

£− ‒ ‒

₱293,943,666 20,338,812 314,282,478

294,720 $5,750,762

‒ $17,680

‒ €7,722

‒ ¥14,097,190

‒ £‒

14,964,113 ₱299,318,364

1 Exchange rate used - ₱50.99 to $1 2 Exchange rate used - ₱37.55 to S$1 3 Exchange rate used - ₱57.51 to €1 4 Exchange rate used - ₱0.44 to ¥1 5 Exchange rate used - ₱68.53 to £1

Financial assets Cash and cash equivalents Receivables Financial liabilities Accounts payable and other current liabilities

2020 USD1

SGD2

EUR3

YEN4

GBP5

Equivalents in PHP

$3,106,230 1,191,113 4,297,343

$17,680 ‒ 17,680

€3,797 ‒ 5,817

¥2,101,739 ‒ 2,103,759

£− ‒ ‒

₱151,045,217 57,881,225 208,926,442

‒ $4,297,343

‒ $17,680

‒ €5,817

‒ ¥2,103,759

‒ £‒

‒ ₱208,926,442

1 Exchange rate used - ₱48.02 to $1 2 Exchange rate used - ₱36.12 to S$1 3 Exchange rate used - ₱58.69 to €1 4 Exchange rate used - ₱0.46 to ¥1 5 Exchange rate used - ₱64.62 to £1

36. Other Matters a. Since 2017, ARCC has submitted various claims to Snamprogetti, the main contractor of the RP2 Naphtha and Aromatics Package Project, to recover losses due to the delays, disruptions and work variations relating to the said project. In January 2019, Snamprogetti paid ARCC SAR180.0 million to settle the aforementioned claims. b. In 2019, EPC extended a one-year term loan to PSOC amounting to ₱123.20 million and purchased additional shares amounting to ₱25.13 million. c. In 2019, EPC made an additional investment in PGEC amounting to ₱3.2 million. d. In February 2022, the BOD of the Parent Company approved the infusion of ₱41.7 million additional capital to BiotechJP Corp. e. The COVID-19 pandemic has continuously impacted the Group’s operation and financial performance in 2021.

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On April 28, 2021, the Philippine Government extended the MECQ until May 14, 2021. On May 13, 2021, the Office of the President announced that Metro Manila and 4 adjacent provinces will shift to general community quarantine (GCQ) with heightened restrictions until May 31, 2021 and then eventually extended until June 15, 2021. On June 29, 2021, the President of the Philippines approved the recommendation of the Inter-Agency Task Force on emerging Infectious Diseases (IATF) to extend the general community quarantine in “NCR Plus” until July 15, 2021 and subsequently extended until July 31, 2021. NCR stayed under GCQ until August 5, 2021. Beginning August 6, 2021, the classification of the NCR was escalated to Enhanced Community Quarantine until August 20, 2021. The IATF decided to ease the strict lockdown in NCR beginning August 21, lowering the status in both areas to a modified enhanced community quarantine (MECQ) until September 7, 2021. The risk level classification of NCR as MECQ was maintained until September 15, 2021.

IATF imposed new classification framework which focuses on the imposition of granular lockdown measures. Community quarantines were reduced to either ECQ or GCQ with the latter having an Alert Level System (Alert level 1 to 4) with each Alert Level limiting restrictions to identified risk activities. The pilot area for this policy shall be the NCR which started from September 16, 2021 until September 30, 2021 wherein NCR was placed under the GCQ Alert Level 4 which was subsequently extended until October 15, 2021. IATF placed NCR under Alert Level 3 starting October 16, 2021 until November 4, 2021. IATF placed NCR under Alert Level 2 starting November 5, 2021 until January 2, 2022. Furthermore, Alert Level classification of NCR was escalated to Alert Level 3 starting January 3, 2022 until January 15, 2022 and subsequently extended until January 31, 2022.

Subsequently, NCR was placed to Alert Level 2 starting February 1, 2022 until February 28, 2022.

On February 27, 2022, IATF placed NCR under Alert level 1 starting March 1, 2022. These measures have caused disruptions to the businesses and economic activities, and its impact on businesses continue to evolve.

At the end of 2021, EEI Corporation’s unworked portion of existing contracts stood at ₱54.0 billion, including ARCC’s backlog of ₱23.99 billion. The Company considers this backlog of projects as healthy and sustainable. EEI expects an overall strong performance in its domestic operations driven by the current buildings, infrastructure, electromechanical, and industrial projects in its pipeline as production continues to pick-up. Despite the delays in operations caused by the COVID-19 pandemic, the backlog was preserved and will be realized as construction works resume.

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

Tel: (632) 8891 0307 Fax: (632) 8819 0872 ey.com/ph

INDEPENDENT AUDITOR’S REPORT ON SUPPLEMENTARY SCHEDULES The Board of Directors and the Stockholders EEI Corporation No. 12 Manggahan Street Bagumbayan, Quezon City We have audited in accordance with Philippine Standards on Auditing (PSAs) the consolidated financial statements of EEI Corporation and its subsidiaries (the Group) as at December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021, included in this Form 17-A and have issued our report thereon dated April 5, 2022. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the Index to 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 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 information required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Wenda Lynn M. Loyola

Partner CPA Certificate No. 109952 Tax Identification No. 242-019-387 BOA/PRC Reg. No. 0001, August 25, 2021, valid until April 15, 2024 SEC Partner Accreditation No. 109952-SEC (Group A) Valid to cover audit of 2021 to 2025 financial statements of SEC covered institutions SEC Firm Accreditation No. 0001-SEC (Group A) Valid to cover audit of 2021 to 2025 financial statements of SEC covered institutions BIR Accreditation No. 08-001998-117-2022, January 20, 2022, valid until January 19, 2025 PTR No. 8854316, January 3, 2022, Makati City April 5, 2022

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

Tel: (632) 8891 0307 Fax: (632) 8819 0872 ey.com/ph

INDEPENDENT AUDITOR’S REPORT ON COMPONENTS OF FINANCIAL SOUNDNESS INDICATORS The Board of Directors and the Stockholders EEI Corporation No. 12 Manggahan Street Bagumbayan, Quezon City We have audited in accordance with Philippine Standards on Auditing, the consolidated financial statements of EEI Corporation and its subsidiaries (the Group) as at December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2020, and have issued our report thereon dated April 5, 2022. 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, 2021 and 2020 and for each of the three years in the period ended December 31, 2021 and no material exceptions were noted.

SYCIP GORRES VELAYO & CO.

Wenda Lynn M. Loyola

Partner CPA Certificate No. 109952 Tax Identification No. 242-019-387 BOA/PRC Reg. No. 0001, August 25, 2021, valid until April 15, 2024 SEC Partner Accreditation No. 109952-SEC (Group A) Valid to cover audit of 2021 to 2025 financial statements of SEC covered institutions SEC Firm Accreditation No. 0001-SEC (Group A) Valid to cover audit of 2021 to 2025 financial statements of SEC covered institutions BIR Accreditation No. 08-001998-117-2022, January 20, 2022, valid until January 19, 2025 PTR No. 8854316, January 3, 2022, Makati City April 5, 2022

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EEI CORPORATION AND SUBSIDIARIES

EEI CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION AND DISCLOSURES REQUIRED ON REVISED SRC RULE NO. 68 DECEMBER 31, 2021 Philippine Securities and Exchange Commission (SEC) issued the Revised Securities Regulation Code Rule No. 68 (Revised SRC Rule No. 68) which consolidates the two separate rules and labeled in the amendment as “Part I” and “Part II”, respectively. It also prescribed the additional information and schedule requirements for issuers of securities to the public.

Below are the additional information and schedules required by Revised SRC Rule No. 68, that are relevant to the Group. This information is presented for purposes of filing with the SEC and is not required part of the basic financial statements.

Schedule A. Financial Assets The following is the detailed schedule of equity in investments at FVOCI as at December 31, 2021.

Amount Shown in the Number of Shares Statement of Financial Position

Movement Valuation

Name of Issuing Entities Quoted:

Sta. Elena Golf Club Inc. Philippine Long Distance Telephone Co. Manila Southwood Golf & Country Club Valle Verde Country Club The Orchard Golf and Country Club Canyon Woods Royale Tagaytay Country Club

2 37,942 2 2 1 1 1

₱13,000,000 8,727,360 3,000,000 700,000 700,000 70,000 60,000

₱2,000,000 2,176,864 (200,000) 200,000 -

Related Parties: The Orchard Golf Sherwoods Hills Golf Club Fairways & Blue Water Resort Golf Club Filipino Forest Hill golf share Royale NorthWoods Eagle Ridge Golf & Country Club PLDT

1 1 1 1 1 1 1 925

500,000 250,000 250,000 180,000 180,000 121,856 60,000 10,333

-

Unquoted: Hermosa Ecozone Development Corp (HEDC) Brightnote Assets Corporation YGC Corporate Services, Inc. YGC Corporate Services, Inc. Tower Club (Philam Properties Corp.)

Architectural Center Club, Inc. (ACCI) Philippine Contractors Association Philippine Exporters Trading Corp.

Pilipino Telephone Company

1,000,000 11,000,000 12,000 1,389 1 1 10,000 5,000 150

404,381,881 1,656,327 2,509,932 795,515 500,000 32,000 10,000 5,000 675

(36,368,143) (1,001,598) -

Related Party:

Petro Green Energy Corporation Total

258,144,888 270,212,312

835,276,405 ₱1,272,977,284

266,299,927 ₱233,107,050

Income earned and accrued from the financial assets amounted to ₱51.0 million in 2021.

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Schedule B. Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) Below is the schedule of advances to employees of the Group with balances above ₱1,000,000 as at December 31, 2021: Name and designation Manalad, Janine Ann Bernadette Capistrano*

Balance at beginning of year -

Additions 2,514,163 2,514,163

Collections/ Liquidations -

Balance at end of year 2,514,163 2,514,163

*Salary deduction

The amounts of advances to employees as shown above are classified under current assets. There were no amounts written off during the year.

Schedule C. Amounts Receivable from Related Parties which are Eliminated during the Consolidation of Financial Statements The following is the schedule of receivables from related parties, which are eliminated in the consolidated financial statements as at December 31, 2021: Name and Designation of Debtor EEI Realty Corp EEI Power Corp.

Gulf Asia International Corp.

GAIC Manpower Services Inc. Philrock Construction & Services, Inc. Philmark, Inc. Equipment Engineers, Inc. EEI Construction & Marine, Inc. Learn JP JPSAI Biotech EEI Energy EEI Carga EEI Limited

Balance at beginning of year

Additions

Amounts Collected

Balance at end of year

₱847,241 45,511,910 29,627 105,071 41,864,355 33,704,595 16,232,679 936,243 37,051 27,303,132 81,671 315,301,023 ₱481,954,598

₱2,895,366 6,132,134 2,666,018 7,309,405 14,000,940 6,773,364 416,214 32,916,040 14,909,879 46,361 193,579 10,446,828 ₱98,706,128

(₱3,526,289) (51,215,093) (2,695,645) (7,414,476) (14,580,851) (7,708,629) (73,599) (1,638,887) (19,693) (325,747,851) (₱414,621,013)

₱216,318 428,951 41,864,355 33,704,595 15,652,768 978 379,666 58,580,285 14,971,857 46,361 193,579 ₱166,039,713

The amounts of receivables from related parties as shown above are classified under current assets.

There were no amounts written off during the year.

The following is the schedule of payable to related parties, which are eliminated in the consolidated financial statements as at December 31, 2021:

Name and Designation of Creditor EEI Construction & Marine, Inc. Equipment Engineers, Inc. EEI Subic Corporation Gulf Asia International Corp.

GAIC Manpower Services Inc. Bagumbayan Equipment Industrial Products, Inc.

Balance at beginning of year

Additions

Amounts Collected

Balance at end of year

₱162,552,323 78,397,813 89,079,662 2,515,375 1,643,054

₱65,916,126 199,302,793 15,444,232 21,849,867 -

(₱170,430,248) (267,714,380) (15,444,232) (14,159,495) -

₱58,038,201 9,986,226 89,079,662 10,205,747 1,643,054

(Forward)

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Name and Designation of Creditor JP Asia EEI Realty Corp.

EEI Limited EEI Power Corp

Balance at beginning of year

Additions

Amounts Collected

Balance at end of year

16,529,644 4,845,640 321,998 ₱355,885,509

51,756,865 52,859,791 60,174,776 141,065,194 ₱608,369,644

(66,636,132) (15,165,358) (3,018,135) (45,792,944) (₱598,360,924)

1,650,377 42,540,073 57,156,641 95,594,248 ₱365,894,229

The amount of payables to related parties as shown above are classified under current liabilities. There were no amounts written off during the year.

Schedule D. Long-term Debt Below is the schedule of long-term debt of the Group: Type of Obligation Parent Company Floating-rate corporate promissory notes with effective interest of 3.5000% per annum for three (3) years.

Floating-rate corporate promissory notes with effective interest of 3.5000% per annum for three (3) years.

Floating-rate corporate promissory notes with effective interest of 4.5000% per annum for three (3) years.

Floating-rate corporate promissory notes with effective interest of 3.25000% per annum for three (3) years.

Floating-rate corporate promissory notes with effective interest of 3.42000% per annum for three (3) years.

Floating-rate corporate promissory notes with effective interest of 3.42000% per annum for three (3) years.

BiotechJP

Amount

Current

₱2,000,000,000

₱1,000,000,000

2,500,000,000

833,333,334

1,666,666,666

333,333,333

333,333,333

-

620,087,995

300,191,063

319,896,932

1,125,000,000

500,000,000

625,000,000

1,500,000,000

500,000,000

1,000,000,000

Yen-denominated five (5) year term loan, with interest of 0.05% per annum.

17,652,000

17,652,000

-

No Collateral

Yen-denominated four and half (4.5) year term loan, with interest of 0.98% per annum

6,619,500

6,619,500

-

No Collateral

Yen-denominated four and half (5) year term loan, with interest of 0.30% per annum

7,824,347

6,059,147

1,765,200

No Collateral

USD-denominated, APR 2020 – NOV 2029, with interest of floating rate plus margin (0.075%)

20,309,600

2,538,700

17,770,900

No Collateral

Yen-denominated ten (10) year term loan, with 0.30% per annum.

44,130,000

8,826,000

35,304,000

No Collateral

Yen-denominated ten (10) year term loan, with 2.975% per annum.

88,260,000

17,652,000

70,608,000

No Collateral

₱8,263,216,775

₱3,526,205,077

₱4,737,011,698

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Noncurrent

Collateral

₱1,000,000,000 Clean/No Collateral

Schedule E. Indebtedness to Related Parties (Long Term Loans from Related Companies) As at December 31, 2021, the Group has no long-term loans from its associates and entities under common control.

Schedule F. Guarantees of Securities of Other Issuers The Group did not guarantee any guarantees of securities of other issuing entities by the Group as at December 31, 2021.

Schedule G. Capital Stock

Title of issue Common Shares Preferred Shares

Number of shares issued and Number of shares outstanding as shown reserved for options, Number of under related balance warrants, conversion shares authorized sheet caption and other rights 2,000,000,000 1,036,281,485 35,000,000 240,000,000 60,000,000 –

Number of shares held by related parties 573,463,646 –

Directors, Officers and Employees 3,319,385 –

Others 459,498,454 –

EEI CORPORATION AND SUBSIDIARIES

RECONCILIATION OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION As of December 31, 2021 Unappropriated retained earnings, January 1, 2021, as adjusted Add: Net income actually earned/realized during the period Add: Net income during the period closed to Retained Earnings Equity share in net loss of joint venture - net of tax Non-actual 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) Less: Net loss during the period closed to Retained Earnings Equity share in net earnings of joint venture - net of tax Non-actual/ unrealized income net of tax Unrealized foreign exchange gain - net Unrealized actuarial gain - net Fair value adjustment Adjustment due to deviation from PFRS/GAAP gain Other unrealized gain or adjustments to the retained earnings as a result of certain transactions accounted under the PFRS Movement in deferred tax asset Net loss actually earned during the period Add (Less): Dividend declarations during the period Appropriations of retained earnings during the year Reversals of appropriations Effects of prior period adjustments Unappropriated retained earnings available for dividend distribution, December 31, 2021

₱855,567,516

‒ ‒ ‒ ‒ (435,095,634) (24,245,421) ‒ (1,397,069) ‒ ‒ ‒ ‒ 246,580,790 (214,157,334) ₱641,410,182

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EEI CORPORATION AND SUBSIDIARIES

MAP OF RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP Group Structure Below is a map showing the relationship between and among the Group and its ultimate parent company, subsidiaries, and associates as at December 31, 2021:

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EEI CORPORATION AND SUBSIDIARIES

SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS As At December 31, 2021 and 2020 and for the years then ended Financial Soundness Indicator Below are the financial ratios that are relevant to the Group as at December 31, 2021 and 2020 and for the years then ended.

Ratios

Formula

2021

2020

Current ratio

Current assets Current liabilities

1.61:1

1.11:1

Solvency ratio

Net income plus depreciation Total liabilities

0.06:1

(0.06):1

Debt - equity ratio

Total liabilities Total equity

1.42:1

3.20:1

Asset-to-equity ratio

Total assets Total equity

2.42:1

4.21:1

Interest rate coverage ratio

EBIT* Interest expense

2.67:1

(6.24):1

Return on assets

Net income Average total assets

2%

(8%)

Return on equity

Net income Average total equity

5%

(28%)

*Earnings before interest and taxes (EBIT)

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EEI CORPORATION AND SUBSIDIARIES

SCHEDULE FOR LISTED COMPANIES WITH A RECENT OFFERING OF SECURITIES TO THE PUBLIC FOR THE YEAR ENDED DECEMBER 31, 2021 The information below is in connection with the preferred shares issued by EEI Corporation and listed at the PSE on December 23, 2021.

1.Gross and net proceeds as discussed in the final prospectus Gross proceeds Net proceeds

Base Offer

Oversubscription

₱4,000,000,000 ₱3,959,077,720

₱6,000,000,000 ₱5,948,461,920

2. Actual gross and net proceeds Gross proceeds Net proceeds

₱6,000,000,000 ₱5,945,800,028

3. Each expenditure item where the proceeds were used Offer-Related Expenses Sole Issue Manager, Joint Lead Underwriters and Bookrunners Receiving Agent Stock Transfer Agent Legal and audit fees Additional - Listing and other expense Use of net proceeds Principal debt repayment Total

₱31,969,574 550,000 380,000 11,086,253 10,214,145

54,199,972 700,000,000 ₱754,199,972

4. Balance of the proceeds as of end of reporting period: ₱5,245,800,028

EEI 2021 Annual Report | Audited Financial Statements

*SGVFS163860* 169

EEI CORPORATION AND SUBSIDIARIES

EEI CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES SEC FORM 17-A CONSOLIDATED FINANCIAL STATEMENTS Statement of Management’s Responsibility for Consolidated Financial Statements Report of Independent Auditor’s Report Consolidated Statements of Financial Position as at December 31, 2021 and 2020 Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 Notes to Consolidated Financial Statements SUPPLEMENTARY SCHEDULES Report of Independent Auditor’s on Supplementary Schedules Schedules Required under Revised SRC Rule No. 68 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.Long-term Debt E.Indebtedness to Related Parties F.Guarantees of Securities of Other Issuers G.Capital Stock Additional Components I.Schedule of Reconciliation of Retained Earnings Available for Dividend Declaration II.Map of the relationships of the Companies within the Group III.Schedule of Financial Soundness Indicators IV.Schedule for Listed Companies with a Recent Offering of Securities to the Public

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