2016 SRC Definitive 20-IS (1)

SEAFRONT RESOURCES CORPORATION 7e Floor, JMT Bullding, ADB Avenue Ortigas Center, Paslg City

637-2917 Telephone Number

31 December2015 Fiscal Year Ended

Notice of Regular Annual Stockholder' Meeting

SEC Form 20lS

Information Statement Pursuant to Section 20 of the Securities Regulation Code Fom Type

4 NOTICE OF REGULAR ANNUAL STOCKHOLDERS, MEETING TO OUR STOCKHOLDERS:

NOTICE tS HEREBY GLV_EN_tla] lleJegutar annuat meeting of the stockholders of SEAFRoNT REsouRcES coRpouTroN"*irr G' n"ia'"t no6o,s czi-szii'vrii, Level 5, Podium 4, RCBC ptaza, Ayala Gor. S"n.

Cif J]FrV"t Avenues, Makaii City May 1s, 2016 at l:bo-p.m. rn" oio"ior or.i-ness at saro ,i"tiniiwirl6i

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Certification of Service of Notice; Determination of euorum/Call to Order: Approval of the Minutes of the last Stockholders, +vleeting h€ld on 26 May 2015; Approval of Management Report and the 2015 Audited Financial Statements: Confirmation and Ratification of all acts, contrac{s and investments enterldinto by Management andlor Board o, Directors Ta.de 3nd ouflng rne penod 26 May 2015 to 19 May 2016; (9) mem.bers of the l':1!1:.:1,Y" Foard of Directors (inctudins moependent Directors) for the year 20162012; Appointment of Ext6rnal Auditorsl Other Matters: and Adjournmeni

Prease be advised that the record date of stockholders entited to vote at said meeting sha[ be 10 March 2016. Registration for the meeting snarr commence at 1:00 p.m. on Thursday, May 19, 2016 at thJabove venue.

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Atty. Samuel V. Torres Corporate Secretary

SEAFRONT RESOURCES CORPORATION

2

Information Required by Items of SEC Form 20-IS A. GENERAL INFORMATION Item 1 - Date, time and place of meeting of security holders The Regular Annual Meeting of Stockholders of Seafront Resources Corporation will be held at the Rooms 527-528 YIAS, Level 5, Podium 4, RCBC Plaza, Ayala Cor. Gil J. Puyat Avenues, Makati City, on Thursday, May 19, 2016, at 1:30 p.m.

Mailing Address – 7th Floor, JMT Building, ADB Avenue, Ortigas Center, Pasig City, Philippines.

Approximate date of which the Information Statement is to be first sent or given to security holders: 15 April 2016

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY Item 2 - Dissenters’ Right of Appraisal There are no corporate matters or actions that will entitle dissenting stockholders to exercise their right of appraisal as provided in the Title X of the Corporation Code.

Although the following actions are not among the matters to be taken up during the 2016 Annual Stockholders’ Meeting, the stockholders are herein apprised of their appraisal rights pursuant to Title X of the Philippine Corporation Code. A stockholder shall have the right to dissent and demand payment of fair value of the share in case he voted against the following proposed corporate actions: (a) in case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those outstanding shares of any class, or extending or shortening the term of corporate existence; (b) in case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets; and (c) in case of merger or consolidation.

The appraisal right may be exercised by the dissenting stockholder by making a written demand for payment of the fair value of his shares on the company within thirty (30) days after the date on which the vote was taken and within ten (10) days after demanding payment on his shares, he shall submit the certificate of stocks representing his shares to the company for notation thereon that such shares are dissenting shares. If the proposed corporate action is implemented and if there is agreement as to the fair value of the shares, the company shall pay the fair value of the shares to such stockholder upon surrender and transfer of the certificate of stocks.

The fair value of the share shall be determined as to the day prior to the date on which the vote was taken, excluding any appreciation or depreciation in anticipation of such corporate actions. Provided, that no payment shall be made to any dissenting stockholder, unless the company has unrestricted retained earnings in its books to cover such payment. If within a period of sixty (60) days from the date of the corporate action was approved, the withdrawing stockholder of the company cannot agree on the fair value of the shares, it shall be determined an appraised by three (3) disinterested persons, one of whom shall be named by the dissenting stockholder, another by the company and third by the two previously chose. The findings of the majority of the appraisers will be final and the award shall be paid by the company within thirty (30) days after the award is made. Upon payment of the agreed or awarded price, the stockholder shall forthwith transfer his share to the company. From the time of demand for payment of the fair value of the stockholder shares, all rights accruing to such shares, including voting and dividend rights shall be suspended.

Item 3 - Interest of Certain Persons in Matters to be Acted Upon No director, nominee for election as director, associate of the nominee or executive officer of the Company at any time since the beginning of the last fiscal year had any substantial interest, direct or indirect, by security holdings or otherwise, in any of the matters to be acted upon in the meeting, other than election to office.

No director has informed the Corporation in writing that he intends to oppose any action to be taken by the registrant at the meeting.

3

B. CONTROL AND COMPENSATION INFORMATION Item 4 - Voting Securities and Principal Holders Thereof a)

Number of Shares Outstanding as of 15 March 2016: 163,000,000 Number of Votes Entitled One (1) vote per share Foreign Equity Ownership as of 15 March 2016: The Company Foreign equity ownership, as follows: No. of Shares 162,274,134 common 725,866 common 163,000,000 common

Shares held by Filipino Shares held by foreign nationals Total

% Ownership 99.55% 0.45% 100%

b)

All stockholders as of March 10, 2016 are entitled to notice and to vote at the Annual Stockholders Meeting.

c)

Manner of Voting Section 5.0 of Article II of the By-Laws of the Corporation provides that stockholder may vote at all meetings the number of shares registered in their respective names either in person or by proxy executed in writing. No proxy shall be recognized unless presented to the Secretary for inspection and registration at least ten (10) calendar days before the date of said meeting.

In the same vein, Section 24 of the Corporation Code of the Philippines provides that each stockholder may vote in any of the following manner: he/she may vote such number of shares for as many persons as there are Directors to be elected; he/she may cumulate said share and give one candidate as many votes as the number of Directors to be elected multiplied by his/her shares; 3) he/she may distribute them on the same principle among as many candidates as he/she may see fit. In any of these instances, the total number of votes cast by the stockholders should not exceed the number of shares owned by him/her as shown in the books of the Corporation multiplied by the total number of Directors to be elected.

1) 2)

d)

Security Ownership of Certain Record and Beneficial Owners and Management (1) Security Ownership of Certain Record and Beneficial Owners The following table sets forth information with respect to a record or beneficial owner directly or indirectly owning more than 5% of the Company’s Capital Stock as of March 15, 2016.

Title of Class

Common

Common

Common

Common

Common

NOTE: 1.

2.

3.

4.

Name, Address of Record Owner PCD Nominee Corp.

MSE Building, Ayala Ave., Makati City PMMIC 10th Floor, GPL Building, Buendia Ave., Makati City Alsons Cons. Res., Inc. 2286 Pasong Tamo Ext. Makati City CBC T/A-SCA#0010 CBC Building, Trust Dept. Paseo de Roxas, Makati City CBC T/A-SCA#0011 CBC Building, Trust Dept. P. de Roxas, Makati City

Relationship with Issuer

Name of Beneficial Owner

No. of shares held Citizenship

Percentage of Ownership

Stockholder

Various clients (Note 1)

Filipino

64,463,857 *

39.55%

Stockholder

Pan Malayan Management and Investment Corporation (Note 2)

Filipino

30,469,858

18.69%

Stockholder

Stockholder

Alsons Consolidated Resources, Inc.(Note 3)

Filipino

China Banking Corp.

(Note 4)

Filipino

14,178,625

8.70%

Filipino

10,204,120

6.26%

-do-

15,544,911

9.54%

Stockholder

None of the holders of the Company’s common shares registered under the name of PCD Nominee owns more than 5% of the company’s common shares.

The corporate acts of PMMIC are carried out by its Board of Directors and Management Amb. Alfonso T. Yuchengco is the Chairman of PMMIC. The Corporate acts of Alsons Cons. Res., Inc. are carried out by its Board of Directors. Mr. Tomas I. Alcantara is the current president of the Company.

CBC T/A-SSC#0010 and T/A-SSC#0011 are Trust Accounts with China Banking Corporation as Trustee. The Corporate acts of CBC are carried out by its Board of Directors and Management. Mr. Ricardo R. Chua is the current CBC President and CEO. * PCD total shares include Filipino and Non-Filipino.

4 (2)

Security Ownership of Management as of March 15, 2016

The following are the number of shares owned of record by the Directors, the Chief Executive Officer and each of the key officers of the Company and the percentage of shareholdings of each:

Title of Class Common Common Common Common Common Common Common Common

Name of Beneficial Owner Name and Position Helen Y. Dee Chairman and Director Milagros V. Reyes President and Director Perry Y. Uy Director/Treasurer Albert S. Yuchengco Director Yvonne S. Yuchengco Director Nicasio I. Alcantara Independent Director Reynaldo B. Vea Director Medel T. Nera Director

Amount and Nature of Beneficial Ownership 1,917,084 “Direct”* 165,000 “Indirect”

Citizenships

Percent of Class

Filipino

1.2800%

1 “Direct”

Filipino

-

1 “Direct”

Filipino

-

325 “Direct”

Filipino

-

1 “Direct” 425 “Direct” 2,834 “Indirect”

Filipino

-

Filipino

-

1 “Direct”

Filipino

-

1 “Direct”

Filipino

-

1 “Direct”

Filipino

-

-

Filipino

-

2,085,674 shares

Filipino

1.2800%

Ernestine Carmen Jo D. Villareal-Fernando

Common Common Common Total

Independent Director Samuel V. Torres Corporate Secretary Arlan P. Profeta Asst. Corporate Secretary

*3,070 shares of Ms. Helen Y. Dee not included in the Top 20 list.

As of March 15, 2016, the Company’s directors and executive officers owned an aggregate of 2,085,674 shares equivalent to 1.28% of the Company’s outstanding shares. None of the members of the Company’s directors and management owns more than 2% or more of the outstanding capital stock of the Company.

Voting Trust Holders of 5% or more-The Company is not aware of any voting trust or similar arrangement among persons holding more than 5% of a class of shares.

Changes in Control - There had been no change in the control of the Company since the beginning of the last fiscal year. The Company has no existing voting trust or change in control agreements.

Item 5 - Directors and Executive Officers:

Helen Y. Dee Milagros V. Reyes Perry Y. Uy Albert S. Yuchengco Yvonne S. Yuchengco Nicasio I. Alcantara Reynaldo B. Vea Medel T. Nera Ernestine Carmen Jo D. Villareal-Fernando

71 74 70 60 62 73 64 60 54

Chairman of the Board Director/President Director/Treasurer Director Director Independent Director Director Director Independent Director

Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino

Director since 2002 and 2011 as Chairman of the Board to present 1999 to present 2007 to present 1996 to present 2000 to present 1995 to present 2010 to present 2011 to present 2012 to present

74 70 51 42

President Treasurer Corporate Secretary Asst. Corporate Secretary

Filipino Filipino Filipino Filipino

1999 to present 2007 to present 2006 to present 2008 to present

Executive Officers: Milagros V. Reyes Perry Y. Uy Atty. Samuel V. Torres Atty. Arlan P. Profeta

The members of the Board are elected at the Annual Stockholders’ Meeting to hold office until the next Annual Stockholders’Meeting and until their respective successors have been appointed or elected and qualified.

5 Below is the list of the members of the Board, Nominees, and the corporate officers, and their business experience during the past five (5) years: Ms. Helen Y. Dee, 71, Filipino, is presently the Chairman of House of Investments, Inc., Rizal Commercial Banking Corporation, RCBC Excom Forex Brokers Corporation, Landev Corporation, Mapua Information Technology, Inc., Hi-Eisai Pharmaceuticals, Inc., Pan Malayan Realty Corporation, RCBC Savings Ba nk, Merchants Bank, La Funeraria Paz-Sucat, Malayan Insurance Company, National Reinsurance Corp of the Philippines, Xamdu Motors, Inc., PetroEnergy Resources Corporation, Manila Memorial Park Cemetery, Inc., Petrowind Energy, Inc. and Malayan High School of Science, Inc. She is the Chairman/President of Hydee Management & Resources, Inc.; Financial Brokers Insurance Agency, Inc., RCBC Leasing and Finance Corporation and Mijo Holdings, Inc.; She is also Chairman and CEO of Tameena Resources, Inc. She is the President of Moira Management, Inc., YGC Corporate Services, Inc. and GPL Holdings, Inc. She is the Vice Chairman of Pan Malayan Management and Investment Corporation and West Spring Development Corporation and Vice President of A.T. Yuchengco, Inc. She is also a Member, Board of Trustees of Mapua Institute of Technology, Inc. a leading engineering school in the Philippines, Malayan Colleges Laguna, Inc and Philippine Business for Education, Inc. She also sits in the Board of the following companies, Phil. Long Distance Telephone Company; South Western Cement Corp., Great Life Financial Assurance Corp., MICO Equities, Honda Cars Philippines, Inc., Isuzu Philippines, Inc., EEI Corporation, A.Y. Holdings, Inc. Pan Malayan Express, Honda Cars Kalookan, Sun Life Grepa Financial, Inc., Philippine Integrated Advertising Agency, Inc., iPeople, Inc., Y Realty, Inc., Luis Miguel Foods.

Ms. Milagros V. Reyes, 74, Filipino, is presently the Chairman/President of PetroGreen Energy Corporation, Chairman of Maibarara Geothermal, Inc. She is also the President of PetroEnergy Resources Corporation, PetroWind Energy, Inc and PetroSolar Corporation. She is also a Director of Ipeople, Inc., Director/Treasurer of Hermosa Ecozone & Development Corporation. She was formerly a Director/Consultant of PNOC-EC and a Senior Vice President of Basic Petroleum and Minerals, Inc. Mr. Perry Y. Uy, 70, Filipino, is presently the President of Manila Memorial Park. He is a Director of La Funeraria Paz, Sucat. He is also an Ex-Com member of Manila Memorial Park and La Funeraria Paz, Sucat. He is formerly a member of the Board of Directors of various companies such as: RCBC Realty Corp., EEI Corporation, I People, Inc., Landev Corp., Hi-Esai, First Malayan Leasing, Subic Power Corporation, Malayan Colleges Laguna, Inc., Honda Cars, Inc. in Quezon City/Kalookan and Isuzu Manila.

Mr. Albert S. Yuchengco, 60, Filipino, is presently the President and Chief Executive Officer of Grepaland, Inc. He is a member of the Board of Directors of various companies such as: Y Realty Corporation, Mona Lisa Development Corporation, Enrique T. Yuchengco, Inc., Principal Marketing Co., Inc., Shayamala Corporation, Pan Malayan Express, Inc., YGC Corporate Services, Inc. Ms. Yvonne S. Yuchengco, 62, Filipino, is the President/Director of Malayan Insurance Company, Inc., Mico Equities, Inc., Philippine Integrated Advertising Agency, Inc., Alto Pacific Corporation, RCBC Land, Inc. She also holds the position of Chairperson of First Nationwide Assurance Corporation, The Malayan Plaza Cond. Owners Association, Inc., RCBC Capital Corporation and XYZ Assets Corporation. Chairperson/President of Royal Commons, Inc., Y Tower II Office Cond Corp., Yuchengco Tower Office Condominium Corp. Director/Treasurer and CFO of Pan Malayan Mgm’t. & Inv’t. Corp., Director and Treasurer PetroEnergy Resources Corporation; Honda Cars Kalookan, Mona Lisa Development Corporation, Asst. Treasurer, Enrique T. Yuchengco, Inc.; Member, Board of Trustees AY Foundation, Inc, Mapua Institute of Technology, Inc., Phil-Asia Assistance Foundation, Inc., Yuchengco Museum, Inc. She is a member of Advisory Committee of Rizal Banking Corporation. She also sits in the board of several companies such as: House of Investment, Inc., HYDee Management and Resource Corp., iPeople, inc., La Funeraria Paz, Inc.-Sucat, Luisita Industrial Park Corp., Malayan College Laguna, Inc., Malayan Colleges, Inc., Malayan High School of Science, Inc., Malayan Insurance (H.K.), Malayan International Insurance Corp., Manila Memorial Park, Inc., National Reinsurance Corporation of the Pilippines, Pan Malayan Express, Inc., Pan Malayan Realty Corporation, Asia-Pac Reinsurance Co., Ltd., AY Holdings, Inc., DS Realty, Inc., Pan Pacific Computer Center, Inc.,Shayamala Corporation and YGC Corporate Services, Inc. Mr. Nicasio I. Alcantara, 73, Filipino, He is presently the Chairman of Conal Corporation and Vice-Chairman of Aviana Development Corporation. He is a member of the Board of Directors of various companies such as: Aces Technical Services, Inc., Acil Corporation, Alcor Transport Corporation, Alsing Power Holdings, Inc., Alsons Aquaculture Corporation, Alsons/AWS Information System, Inc. Alsons Corporation, Alsons Development & Investments Corp., Alsons Insurance Brokers Corp., Alsons Land Corporation, Alsons Power Holdings Corporation, Alsons Properties Corporation, Alsons Security Co., Inc., Aquasur Resources Corporation, BDO Private Banks, Inc., Buayan Cattle, Inc. Conal Holdings Corporation, Finfish Hatcheries, Inc., Indophil Resources NL, The Philodrill Corporation, San Ramon Power, Inc., Sarangani Agricultural Co., Inc., Sarangani Energy Corporation, Seawood Holdings Incorporated, Sunfoods Agri. Ventures, Inc., Site Group International, Ltd. Southern Philippines Power Corporation and Western Mindanao Power Corporation.

6

Dr. Reynaldo B. Vea, 64, Filipino, is the President and CEO of Mapua Institute of Technology since January 2000; President of Malayan High School of Science, Malayan Colleges Laguna, Inc. He is also President of iPeople, Inc. He is the Chairman of Philippine Science High School Foundation, Inc. He is also a member of the Board of Trustees of AY Foundation, Inc. and Yuchengco Center of De La Salle University and Member of the Board of Directors of House of Investments, Inc., Maibarara Geothermal, Inc., Petrogreen Energy Corporation and PetroWind Energy, Inc. He is also a Director of Philippine-American Educational Foundation (Fulbright Commission), Philippine Association of Colleges and Universities (PACU), and the Fil-Swedish Maritime Foundation, Inc., He is the Chairman of the Engineering Sciences and Technology Division of the National Academy of Science and Technology and of the Science and Technology Committee of the UNESCO National Commission of the Philippines.

Mr. Medel T. Nera, 60, Filipino, is the President and CEO of House of Investments, Inc. and President of RCBC Realty Corporation. He serves as Director of House of Investments and its significant subsidiaries and associates. He also serves as Director of Rizal Commercial Banking Corporation and National Reinsurance Corporation of the Philippines. He was former senior partner of Sycip, Gorres, Velayo and Co., CPAs where he served as Financial Service Practice Head. He also serves as Director and Treasurer of CRIBS Foundation, Inc. Atty. Ernestine Carmen Jo Villareal-Fernando, 54, Filipino, is the Director of various corporation such as: Country Bankers Insurance Corporation, Country Bankers Life Insurance Corporation, Director and Treasurer of Jose E. Desiderio, Inc., Guesst Evaluator of Center for Asian Culinary Studies and Café Ysabel Group, Managing Director of Fernando Villareal Books, Legal Counsel, Committee on Art Auction, Ateneo Alumni Association, Senior Partner, Platon Martinez Flores San Pedro Leano Fernando Panagsagan Bantilan Law Office.

Atty. Samuel V. Torres, 51, Filipino, is the Gen. Counsel/Corporate Secretary of AY Foundation, Alto Pacific Company, Inc. (Formerly: The Pacific Fund, Inc.), Bankers Assurance Corp., FBIA Insurance Agency, Inc., Bluehounds Security & Invt. Agency, Enrique T. Yuchengco, Inc., First Nationwide Assurance Corp., GPL Holdings, Inc. GPL Cebu Tower Office Cond. Corp., GPL Holdings, Inc., Grepaland, Inc., Grepa Reality Holding Corporation, Hexagon Integrated Financial & Insurance Agency, Hi-Eisai Pharmaceutical, Inc., Honda Cars Kalookan, Inc, House of Investments, Inc., Hexagon Integrated Fin. Ins. Agency, Inc., Hexagon Lounge, Inc., iPeople, Inc., Investment Managers, Inc., Landev Corporation, La Funeraria Paz-Sucat, Inc., Malayan High School of Science, Inc., Malayan Insurance Co., Inc., Mico Equities, Inc., Malayan Colleges, Inc., Malayan Colleges Laguna, Inc., Malayan Securities Corporation, Mapua Information Technology Center, Inc., MJ888 Corporation, Mona Lisa Development Corporation, Pan Malayan Management & Investment Corporation, Pan Malayan Realty Corporation, Pan Malayan Express, Inc., Pan Pacific Computer Center, Inc., People eServe Corporation, PetroEnergy Resources Corporation, Philippine Integrated Advertising Agency, Inc., Royal Commons, Inc., RCBC Forex Corporation, RCBC Realty Corporation, RCBC Land, RCBC Securities, Inc., RCBC Bankard Services Corporation, RCBC Securities, Inc., RP Land Development Corporation, Seafront Resources Corporation, Sun Life Grepa Financial, Inc., Yuchengco Museum, YGC Corporate Services, Inc., Y Realty Corporation, Y Tower II Office Condominium Corp., Yuchengco Tower Office Condominium Corp. and Xamdu Motors, Inc. Atty. Arlan P. Profeta, 42, Filipino, is presently the Corporate Secretary of Maibarara Geothermal, Inc., PetroGreen Energy Corporation, PetroWind Energy, Inc. and PetroSolar Corporation. He is also the Asst. Corporate Secretary and AVP for Legal and Admin of PetroEnergy Resources Corporation and formerly Tax Manager of Punongbayan and Araullo.

Nominees for Election as Members of the Board of Directors: 1.

2.

3.

4.

5.

Ms. Helen Y. Dee Mr. Medel T. Nera Ms. Milagros V. Reyes Mr. Perry Y. Uy Mr. Albert S. Yuchengco

6.

7.

8.

9.

Mr. Nicasio I. Alcantara – Independent Director Atty. Ernestine Carmen Jo D. Villareal-Fernando – Independent Director Dr. Reynaldo B. Vea Ms. Yvonne S. Yuchengco

The above-mentioned nominees for the proposed election during the May 19, 2016 Stockholders’ Meeting are all incumbent members. The nomination committee passed upon their qualifications and found no disqualifications, as provided for in the By-Laws and in accordance with SRC Rule 38.

Atty. Arturo B. Maulion, a stockholder of record, formally nominated Mr. Nicasio I. Alcantara and Atty. Ernestine Carmen Jo D. Villareal-Fernando as Independent Directors. Atty. Maulion has no relations with the Nominees. (Please see attached Annex “A” for the Certification of Independent Directors).

7 The Nomination Committee adheres to the criteria and guidelines governing the conduct of the nominations as set forth in the procedures under SRC Rule 38 on the Nomination and Election of Independent Directors, By-Laws, and the Company’s Manual of Corporate Governance. The Company’s Nomination Committee is composed of three directors, namely; Mrs. Helen Y. Dee, Chairperson; Mr. Medel T. Nera and Nicasio I. Alcantara.

The Company has adopted the SRC Rule 38 (Requirements on Nomination and Election of Independent Directors) and compliance therewith has been made. Only nominees whose names appear on the Final List of Candidates shall be eligible for election as Independent Director. No further nominations shall be entertained or allowed on the floor during the actual annual stockholders’ meeting.

As defined under the said Rule, an Independent Director is a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his independent judgment in carrying out his responsibilities as a director. (Please see Annex “A” for the Certification of Independent Director).

The members of the Board of Directors and Independent Director are elected at the general meeting of stockholders, who shall hold office for the term of one (1) year or until their successors shall have been elected and qualified.

The Management Committee members and other Officers of the Company, unless removed by the Board of Directors, shall serve as such until their successors are elected or appointed.

Significant Employees Other than the aforementioned Directors and Executive Officers identified in the item on Directors and Executive Officers in this Information Statement, there are no other employees of the Company who may have significant influence in the Company’s major and/or strategic planning and decision-making.

The Corporation values its human resources. It expects each employee to do his share in achieving the Corporation’s set goals.

Family Relationship Mr. Albert S. Yuchengco, Ms. Yvonne S. Yuchengco and Ms. Helen Y. Dee are siblings. There are no other family relationships known to the Company.

Involvement in Certain Legal Proceedings For the past five (5) years, none of the Directors or Executive Officers was involved nor has any such officer or director has been involved in any legal cases under the Insolvency Law or the Philippine Revised Penal Code either as defendant or accused, nor has any such officer or director been the subject of any court order, judgment or decree barring, suspending or otherwise limiting him from engaging in the practice of any type of business including those connected with securities trading, investments, insurance or banking activities.

Certain Relationships and Related Transactions There were no related transactions or proposed transactions during the last two (2) years to which the registrant was or is to be a party.

Disagreements with the Company No director has resigned or declined to stand for re-election for the Board of Directors since the date of the annual meeting of security holders due to any disagreement with the Corporation relative to the Corporation’s operations, policies and practices.

8 Item 6 - Compensation of Directors and Executive Officers Name and Principal Position All Directors as a group*

Year 2015 2016 2017**

Salary -0-0-0-

Bonuses -0-0-0-

Others 95,000.00 70,000.00 70,000.00

Total 95,000.00 70,000.00 70,000.00

*all executive officers of the company do not receive any compensation. **projected per diem during BOD meetings.

There is no employment contract between the registrant and the Chairman and all others Executive Officers. Each member of the Board of Directors receives a per diem of P5,000.00 per meeting attended.

There are no other arrangements pursuant to which any director of the company was compensated, or is to be compensated, directly or indirectly.

Item 7 - Independent Public Accountant The external auditor of the Corporation is the auditing firm SyCip Gorres Velayo & Co. (SGV). The same accounting firm has been endorsed by the Audit Committee to the Board. The Board, in turn, approved the endorsement and will nominate the reappointment of the said auditing firm for the stockholders’ approval at the scheduled annual stockholders’ meeting. The said auditing firm has accepted the Company’s invitation to stand for re-election this year.

Audit services of SGV for the calendar year ended December 31, 2015 are the examination of the financial statements of the Company, review of income tax returns and other services related to filing of reports made with the Securities and Exchange Commission and Bureau of Internal Revenue.

The representatives of SGV have always been present at the shareholders’ meeting held during prior years and shall likewise be present during this year’s stockholders’ meeting to respond to appropriate questions or make statements with reference to matters for which their services were engaged.

Pursuant to SRC Rule 68 Paragraph 3 (b) (1V) (Re: Rotation of External Auditors), the Company has not engaged Mr. Michael C. Sabado, partner of SGV & Co., for more than five (5) years. Mr. Michael C. Sabado was engaged by the Company in 2014 and 2015 for examination of the Company’s financial statements. The engagement of the partner is subject to the approval by the shareholders of the appointment of SGV & Co. as the external auditor for Calendar year 2016-2017.

The Company is compliant with the Rotation requirement of its external auditor’s certifying partner as required under SRC Rule 68 (3)(b) (1V). A two year cooling off period shall be observed in the re-engagement of same signing partner or individual auditor.

AUDIT AND AUDIT-RELATED FEES External audit fees inclusive of VAT and out of pocket expenses amounted to P323,400.00 for December 31, 2015 and P308,000.00 as of December 31, 2014. Said fees are for the audit and review of registrant’s annual financial statements and other services rendered in connection with filing of said financial statements with the government institution such as SEC and BIR. There were no fees paid or accrued for the last two years relative to tax accounting, compliance, advice, planning and any other form of tax services.

The Audit Committee approved the above fees based on the services rendered and the amount paid from the previous year’s audit.

It is the policy of the company that all audit findings are presented to its Audit Committee which reviews and make recommendations to the Board on actions to be taken thereon. The Board of Directors of the Company passes upon and approves the Audit Committee’s recommendations. The members of the Audit Committee are as follows: Nicasio I. Alcantara Medel T. Nera Reynaldo B. Vea

-

Chairman (Independent Director) Member Member

9 Item 8 - Compensation Plan No action is to be taken with respect to any plan pursuant to which cash or non-cash compensation may be paid or distributed.

C. ISSUANCE AND EXCHANGE OF SECURITIES Item 9 - Authorization or Issuance of Securities Otherwise than for Exchange There is no matter or corporate action to be taken up in the meeting with respect to issuance of securities.

Item 10 - Modification or Exchange of Securities No Modification of Outstanding Securities Item 11 - Financial and Other Information The Audited Financial Statements of the Company is Attached as Annex “A”. The Management’s Discussion & Analysis is incorporated in the attached Management Report.

Item 12 - Mergers, Consolidation, Acquisition and Similar Matters Not Applicable.

Item 13 - Acquisition or Disposition of Property Not Applicable.

Item 14 - Restatement of Accounts None.

D. OTHER MATTERS Item 15 - Action with Respect to Reports a)

Approval of the Minutes of the 2015 Annual Shareholders Meeting; The Minutes of 2015 Annual Shareholders Meeting reflects the following:

b)

1.

Approval of Management Report and the 2014 Audited Financial Statements contained in the 2014 Information Statement.

2.

Confirmation and Ratification of all acts, contracts and investments made and entered into by Management and/or the Board of Directors during the period of 15 May 2014 to 26 May 2015.

3.

Election of Nine (9) members of the Board of Directors for the year 2015-2016.

4.

Appointment of External Auditors.

Approval of Management Report and the 2015 Audited Financial Statements;

10 c)

Confirmation and Ratification of all acts, contracts and investments made and entered into by Management and/or the Board of Directors during the period of 26 May 2015 to 19 May 2016; 1.

Constitution of various Committees and Appointment of Chairman and Members: (Organizational Meeting held 26 May 2015).

Such as: Nomination Committee Chairperson Helen Y. Dee Members Medel T. Nera Nicasio I. Alcantara - Independent Director Compensation and Remuneration Committee Chairperson Perry Y. Uy Members Helen Y. Dee Ernestine Carmen Jo D. Villareal-Fernando-Independent Director Audit Committee Chairperson Members

-

Nicasio I. Alcantara - Independent Director Reynaldo B. Vea Medel T. Nera

Risk Management Committee Chairperson Nicasio I. Alcantara – Independent Director Members Yvonne S. Yuchengco Perry Y. Uy Corporate Information Officer/ Compliance Officer

- Atty. Samuel V. Torres

Asst. Corporate Information Officer/ Asst. Compliance Officer - Atty. Arlan P. Profeta

2. Approval of 2015 Audited Financial Statements (Audit Committee Meeting February 19, 2016) 3. There are no acts and resolutions of Management and the Board of Directors for the preceding years which need the approval of the stockholders. Ratification of acts and resolutions of Management of the Board of Directors as referred to in the Notice of the Annual Meeting refers only to acts and resolutions done in the ordinary course of business and operation of the Company. Ratification is being sought in the interest of transparency and as a matter of customary practice or procedure undertaken at every Annual Meeting of Stockholders of the Company. d)

Election of Nine (9) members of the Board of Directors (including Independent Directors) for the year 2016-2017.

Item 16 - Matters Not Required to be Submitted a)

Proof of the required notice of the meeting

b)

Proof of the presence of a quorum

Item 17 - Amendment of Charter, By-Laws or Other Document None.

Item 18 - Other Proposed Action None.

11 Item 19 - Voting Procedures a)

the vote required for approval or election

Section 4 of Article II of the By-Laws of the Corporation provides that unless otherwise prescribed by the Corporation Law, a quorum at any meeting of the stockholders shall consist of a majority of the subscribed capital stock of the Company represented in person or by proxy, and a majority of such quorum shall decide any question that may come before the meeting, save and except in those several matters in which the laws of the Philippines require the affirmative vote of a greater proportion.

With regard to the election of the members of the Board of Directors, the nominees receiving the highest number of vote shall be declared elected pursuant to Section 24 of the Corporation Code of the Philippines. Likewise, for the election of External Auditors, the nominee receiving the highest number of votes will be declared the Corporation’s External Auditors. b) the method by which votes will be counted Except in cases where voting by ballot is applicable, voting and counting shall be viva voce. If by ballot, counting shall be supervised by the external auditors and transfer agents. If by viva voce, counting shall also be supervised by the external auditors and transfer agents.

13 MANAGEMENT REPORT TO STOCKHOLDERS PART I - BUSINESS AND GENERAL INFORMATION Description of Business Item 1 - Business Development Seafront Resources Corporation (the Company) was registered with the Securities and Exchange Commission (SEC) on April 16, 1970 as an oil exploration and production company. On October 18, 1996, the Company amended its Articles of Incorporation which provides for the revision of its primary purpose from engaging in the business of oil exploration and production into a holding company and to include oil exploration and production business as one of its secondary purposes.

The Company implemented a quasi-reorganization plan whereby (a) its authorized capital stock was decreased from P800 Million divided into 800 Million shares, to P388 Million divided into 388 Million shares, both at par value of P1; and (b) its issued and subscribed capital stock were decreased from P575 Million to P163 Million applied proportionately for all stockholders. The reduction surplus resulting from the quasi-reorganization was used to offset the Company’s deficit as of December 31, 1997. The quasi-reorganization plan was approved by the SEC on October 5, 1998.

The registered office address of the Company is 7th Floor, JMT Building, ADB Avenue, Ortigas Center, Pasig City.

Accounting and administrative functions are undertaken by PetroEnergy Resources Corporation (PERC).

The Company’s shares of stock are listed and are currently traded at the Philippine Stock Exchange.

Business of Issuer A. Investments in Financial Assets at Fair Value through Profit and Loss (FVPL) The Company maintains a portfolio of investments in stocks traded in the Philippine Stock Exchange and investment in Government Securities. These financial assets at FVPL are carried at fair value as follows:

Listed seListed securities: Equity securities

2015

2014

P =40,650,199

P =47,627,704

B. Investment in Available for Sale Securities (AFS) AFS financial assets consist of shares of stock held for long-term investment purposes and non-listed equity security. Listed equity securities are carried at fair value, while the non-listed equity security is carried at cost. The carrying values of these investments are as follows:

Listed equity securities: PERC Benguet Corporation Non-listed equity security: Hermosa Ecozone Development Corporation (HEDC) Investment in Government Securities

2015

2014

P =13,748,657 4,597,274 18,345,931

P =15,918,146 7,046,366 22,964,512

87,700,476 6,048,352 P =112,094,759

80,585,726 P =103,550,238

Investment in HEDC On January 31, 1997, the Company entered into a Project Shareholders’ Agreement with five other companies led by Investment and Capital Corporation of the Philippines and Penta Capital Investment Corporation to develop 500 to 600 hectares of raw land in Hermosa, Bataan into a new township consisting of industrial estates, residential communities, a golf and country club and a commercial center.

14 The project site is accessible from Roman Highway through a connecting road which has just been completed. Onsite development has commenced and possible locators have been invited.

The Subic Clark-Tarlac Expressway (SCTEX) was completed and public access started in May 2008. A spur road of the expressway will be one of the ingress-egress to HEDC. As of December 31, 2013, titles under the name of the original owners (a total of 229 hectares) were already transferred to HEDC. On May 31, 2015 HEDC declared cash dividends to its stockholders of record as of December 31, 2014 in the amount of P =68,874,000.

Company’s share amounted P =7,800,000 which was received on June 02, 2015.

On June 06, 2015, the Company paid the amount of P =7,114,500 for its share in HEDC’s Cash Call on Subscription in the amount of =49,457,311.

P As of December 31, 2015 and 2014, the Company has outstanding subscriptions payable to HEDC which amounted to P =12.4 million and P =19.5 million, respectively. The subscriptions payable are due on demand. Investment in HEDC is presented in the statement of financial position at cost, net of subscriptions payable. a)

Operations Update

In 2011, Park management started collection of administration dues; with the start of construction activities on IWS building, the water system was put in operation and monthly billing and collection of locator’s water consumption started.

The Park’s water system continued its operation since 2011 upon the start of construction of SPWS building. Currently it caters to the ongoing construction of SPWS new building located at Block 5 Lot 1 and Bioteque Medical Phil., Inc. factory. NWRB personnel conducted a site visit to monitor compliance with the permit conditions. Quarterly reports of water consumption are submitted to NWRB office which is one of the bases in computation of Annual supervision charges.

On the Water System, Application for the renewal of the Certificate of Public Convenience (CPC) was filed last November 25, 2014 at the National Water Resources Board (NWRB). HEDC is awaiting for the schedule of formal hearings and inspection.

As of February 16, 2014, hearing was conducted and no opposition was received from the barangay or any other party.

On September 16, 2014, HEDC obtained its License to Sell and Certification of Registration for the 52.46 hectares in Phase II from HLURB. Processing of registration and issuance of individual lot titles is on - going at Registry of Deeds, Bataan. Issuance will take 68 months due to on-going computerization.

As of September 30, 2015, Phase II: With License to Sell (LTS). Registration and Titling were already completed. Total Area with LTS is 52.46 has; Total Saleable Area is 37.77 has; Total No. of lots is 43.

Phase IIA: With License to Sell Total Area with LTS is 66.18 has; Total Saleable Area is 55.02 has; Total No. of Lots is 49.

Environmental Management Services – Park Management is now in the process of securing a Discharge Permit (DP) with the DENREMB for the operation on Sewage Treatment Facility.

Power Substation – Park Management and PENELCO agreed to amend the existing power supply agreement which increases the area of the lot for the power substation to 1,000 sqm.

On August 14, 2015, the Company and YH Energy, Inc. signed a Lease Agreement for 25 years at a lease rate of P10,000,000 per annum subject to escalation of 10% every 5 years for total of 25 hectares. YH energy will use the property for its Solar project.

Updates on Land Development Developments on a prospective client’s interest to acquire land within HEDC’s leisure estate area has compelled HEDC management to expedite the full conversion of the remaining 108 hectares of the corporation from its present use to that of a mixed

15 residential/commercial/leisure land use as originally envisioned in the Approved Master Plan of the property. As of December 31, 2009, the full conversion of the remaining 108 hectares of land was already finished.

Land development works related to the lease contract on the lot of Bioteque Medical Philippines, Inc. and IWS Realty, Inc. were completed in December 2013 amounting to P8.2 million and P29.3 million respectively. Development works consisting of the construction of the roads and underground drainage, water, and sewer utilities within the Phase I area were substantially completed by December 2013 and included North Road-2 at a cost of P15.7 million; North Road-3 at P7.05 million; and East Road-5 at P9.3 million.

Land development works for the year 2013 includes the construction of the Bridge across Tama River that would connect the Phase I and Phase II areas started during the year at a cost of P45.7 million with scheduled completion in May 2014. The site grading of 10 hectares in the Phase II area was likewise started during the year at a cost of P43.8 million with scheduled completion in the first quarter of 2014.

Other development works that were also implemented during 2013 are as follows:  Construction of slope protection works along Tama River, with cost amounting to P20.3 million and was 42% completed as of December 2013; 

Relocation to the NIA irrigation at a cost of P 11.8 million;



Construction of a retaining wall and CHB fence at a cost of P8.7 million;



Construction of the Wastewater Lift Station and Sewage Treatment Facility (which shall be part of the future Centralized Wastewater Treatment Plant) at contract costs of P8.4 million and P9.78 million, respectively;



and installation of electrical poles, power lines, and 21 units of additional streetlights at an aggregate cost of P1.0 million and which complete the road lighting of the Phase I area and construction of 4-units Flag poles amounting to P140 thousand.

Land development projects stated above which started in late 2013 spilled over and were all completed in 2014.

The site grading of 14 has in Phase 2 started in August 2014 and expected to be completed by April 2015.

Additional Project Development as of June 2015.

1.

2.

3.

Stage 1 of the Construction of Roadways ad Underground Utilities (Drainage, Sewer, and Water Lines) at Phase 2 of HEIP Centralized Wastewater Treatment Plant (CWTP)  Purchasing of CWTP equipment from Hydrex is in process.  Importation handling and delivery services has been awarded to Asiafreight  Detailed Engineering Design is ongoing with DCCD Perimeter Fence and Retaining Wall (Phase II, Adjacent to T-lot) For EXCOM approval to be awarded to Cybereage Construction amounting to P12.15MM.

As of December 31, 2015, the following projects are still ongoing    

Stage 1 of the Construction of Roadways and Underground Utilities (Drainage, Sewer, and Water Lines) at Phase 2 of HEIP Perimeter Fence and Retaining Wall (Phase II, adjacent to T-lot) Centralized Waste Water Treatment Plant (CWTP) – Equipment consisting of pumps and accessories was delivered at site on January 25, 2016.

Stage 3 of site grading works and Stage 2 of roads construction is now up for bidding.

16 b)

Marketing/Sales Update

In July 2008, HEDC completed the sale of 11.091 hectares to European Nickel Research and Technology Corporation (Asian Nickel).

Asian Nickel is a London listed company and intends to build Nickel Ore Research Center. They have propriety technology of heap leaching process that will enhance recovery of nickel ore. Total sales price amounted to P77.4 million.

In May 2011, HEDC completed the sale of 68,000 square meters to IWS Realty for a consideration of P102 million. Alongside this sale, was a sale of 22,000 square meters to Biglift Properties and Development Corporation at a price of P33 million worth of construction services.

The 22,000 square meter sale to Biglift was consummated on October 2013, upon completion of the construction services.

In July 2013, HEDC leased of 34,288 square meters to Bioteque Medical Phil. Inc. for a consideration of P77 million.

In October 2013 HEDC completed the sale of 73,638 square meters to IWS Realty Inc. at a price of P143 million.

At the end of December 2014, HEDC was able to complete a sale to Orient GoldCrest Realty, Inc a total of 3.3has amounting to Php93.1M. As of the end of July 2015, a total of 9 prospective locators expressed interest in buying lots from HEDC property, of which 4 are under serious negotiation with the Company.

HEDC signed an Option Agreement for purchase of 1.14 hectares and 1.2 hectares on April 13, 2015 and November 02, 2015, respectively.

As of December 31, 2015, HEDC’s unearned revenue amounting to P20.80 million from Biglift Properties Development and Corporation has already been recognized as revenue. c)

Update on Access to Spur Road

In 2010, HEDC re-submitted its request for Access to the Spur Road with the following justifications: 1.

Hermosa Ecozone Industrial Park is a proclaimed Economic Zone by the President.

2.

Industrial locators, suppliers, residents of the leisure estate will use the toll facility, thus, will contribute to its revenues.

3.

SCTEX was built to develop the Subic-Clark corridor into a manufacturing and logistics hub to minimize Subic Port and Clark International Airport.

4.

The National Government is encouraging investments along this growth corridor and HEDC heeded the call way ahead of other investors even before other SCTEX was built.

The Toll Regulatory Board is inclined to approve HEDC’s request for reconsideration based on Philippine Bases Conversion and Development Authority (BCDA) technical study. Once approved, the next steps to be made by HEDC is to get an approval from BCDA as owner of the facility and Manila North Tollways Corporation (MNTC) as operator of the toll facility.

In 2013, HEDC undertook several meetings with the Toll Regulatory Board (TRB) and Bases Conversion and Development Authority (BCDA) to discuss the company’s design options for the proposed connection to the Dinalupihan Spur Road of the Subic-Clark-Tarlac (STEX) expressway. The TRB required the construction of a “Trumpet” interchange for the connection and agreed that this be constructed by HEDC in stages. HEDC is optimistic to get the approval of both agency to invite investor and eventually bring progress in the area.

In January 2014, The Board of Directors of HEDC approved the engagement of a consultant to design the plans for a road construction form the SCTEX Dinalupihan spur road to the Hermosa Leisure Estate. As of December 2014, the design was already submitted to BCDA who is currently reviewing said design.

17 d)

Community Relation Activities

Medical and Dental mission was conducted on November 13, 2013 at HEIP project office in partnership with BataanMedical Association and Bataan Dental Association. Total number of beneficiaries – 166 On December 11, 2014, Comrel activity was conducted at Bgy Pandatung. Hermosa, Bataan with a theme “Toy for Kids in Need Project”. Beneficiaries – 30 students of the Day Care Center. Donations came from HEIP management and staff and Bioteque Medical Philippines.

On September 30,2015, the Company donated 66 reading glasses to 66 Senior Citizens from the 3 Barangays, (Palihan,Pandatung, Bacong). School supplies were also provided for the said barangays.

On November 3, 2015, HEDC distributed school supplies for the daycare centers of the 3 barangays with the participation of two locators.

Transaction with and/or dependence on related parties Not applicable Percentage of sale or revenue and net income contributed by foreign sales Revenues which are mainly from interest income, dividend and rental income are denominated in Pesos. There are no revenues from foreign sales.

Total number of employees The Company has no employees; PERC provides administrative, accounting and legal services to the Company. The Company does not anticipate any special undertaking that would warrant hiring some people for regular employment.

Competition The Company itself has no competitor because it is a holding company. Its major investment, HEDC has competitors such as Clark Development Corporation, Subic Gateway Park and other nearby industrial zones.

Patent, trade, copyright, licenses and etc.

The Company has no existing patents, trademarks, copyrights, licenses, franchises, concessions or royalty agreements.

Research and development activities No amount of money was spent for development activities for the last three fiscal years.The Company does not intend to acquire additional properties in the next twelve (12) months. However, the Company can sustain its need for operating expenses in the ordinary course of business.

Products The Company has its investments in stocks (as discussed in the “Business of the Issuer”) as its principal product. Total revenue as of December 31, 2015 amounted to P8.838 million, bulk of which was derived from dividend income and interest income from the Company’s investments. Other than discussed, the Company has no principal product which contributes 10% or more to sales or revenues. No government approval is needed for its principal product.

Risk Factors Political, Economic and Legal Risks in the Philippines The Philippines has, from time to time, experienced military instability, mass demonstrations, and similar occurrences, which have led to political instability. The country has also experienced periods of slow growth, high inflation and significant depreciation of the Peso. The regional economic crisis which started in 1997 negatively affected the Philippine economy resulting in the decline of the Peso, higher interest rate, increased unemployment, greater volatility and lower value of the stock market, lower credit rating of the country and the reduction of the country’s foreign currency reserves. There has also been growing concerns about the unrestrained judicial intervention in major infrastructure project of the government.

There is no assurance that the political environment in the Philippines will be stable and that current or future governments will adopt economic policies conducive to sustained economic growth.

18 The general political situation in and the state of the economy of the Philippines may influence the growth and profitability of the Company. Any future political or economic instability in these countries may have a negative effect on the financial results of the Company.

Equity Partnership Risk The Company entered into a Project Shareholder’s Agreement with five other companies led by Investment and Capital Corporation of the Philippines and Penta Capital Investment Corporation to develop 500-600 hectares of raw land in Hermosa, Bataan. Into a township consisting of industrial estates, residential communities, a golf and country club and a commercial center. This situation may involve special risks associated with the possibility that the equity partner (i) may have economic or business interests or goals that are inconsistent with those of the Company; (ii) take actions contrary to the interests of the Company; (iii) be unable or unwilling to fulfill its obligations under the Project Shareholder’s Agreement; or (iv) experience financial difficulties. These conflicts may adversely affect the Company’s operations. To date, the Company has not experienced any significant problems with respect to its equity partners.

Financial Risk Management Objectives and Policies The Company’s financial instruments comprise cash and cash equivalents, financial assets at FVPL, AFS financial assets, account payable, accrued expenses and subscriptions payable. The main purpose of these financial instruments is to fund its own operations and capital expenditures. Inherent in using these financial instruments are the following risks on liquidity, market and credit. The BOD reviews and approves policies for managing these risks. Also, the Audit Committee of the BOD meets regularly and exercises oversight role in managing these risks.

Financial Risks The main financial risks arising from the Company’s financial instruments are liquidity risk, market risk and credit risk. a. Liquidity Risk Liquidity risk is the risk that the Company is unable to meet its financial obligation when due. The Company has substantial investments in shares of stock which are not listed in the Philippine Stock Exchange and may not be readily convertible to liquid assets necessary to meet any potential additional liquidity requirements of the Company. Investments in unquoted equity securities included in AFS investments amounted to P =87.70 million as of December 31, 2015 and 2014.

The Company monitors its cash position and overall liquidity position in assessing its exposure to liquidity risk. The Company maintains a level of cash and cash equivalents deemed sufficient to finance operations and to mitigate the effects of fluctuation in cash flows.

The Company’s accounts payable and accrued expenses are all settled on a monthly basis. Subscriptions payable to HEDC are payable on demand and are non-interest bearing. The Company’s liquidity risk exposure on subscription payable to HEDC is the risk the Company will have to secure loan from banks or lending institutions when the subscription payable is called for payment since most of the Company’s investments in shares of stocks may not be readily convertible to cash. (Please refer to the 2015 Audited Financial Statement, Note 14 for the maturity profile of the Company’s Financial Assets and Liabilities) b. Market Risk Market risk is the risk of loss on future earnings, on fair values or on future cash flows that may result from changes in market prices.

The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchanges rates, commodity prices, equity prices and other market changes. The Company’s market risk emanates from its holdings in debt and equity securities.

Equity Price Risk The Company closely monitors the prices of its debt and equity securities as well as macroeconomic and entity-specific factors which could directly or indirectly affect the prices of these instruments. In case of an expected decline in its portfolio of equity securities, the Company readily disposes or trades the securities for replacement with more viable and less risky investments.

Such investment securities are subject to price risk due to changes in market values of instruments arising either from factors specific to individual instruments or their issuers, or factors affecting all instruments traded in the market. (Please refer to the 2015 Audited Financial Statement, Note 14 for the analysis performed for reasonably possible movements in the PSE index with all variables held constant, showing the impact on income before tax).

19 Foreign Exchange Risk Exposure to currency risk arises from the Company’s investments in debt securities which are denominated in US dollar. The Company closely monitors the daily movements in the exchange rate and makes regular assessments of future foreign exchange movements, based also, in part, on its analysis of other macroeconomic indicators. The Company then manages the balance of its USD-denominated deposits based on this assessment. The Company has very minimal investments that are denominated in USD. There is no other impact on the Company’s equity other than those already affecting net income.

Interest Rate Risk The Company’s exposure to market risk for changes in fixed interest rates relates primarily to the Company’s money market placements and debt securities.

There is no other impact on the Company’s equity other than those already affecting net income. c. Credit Risk There are no significant concentrations of credit risk within the Company. (Please refer to the 2015 Audited Financial Statement, Note 13 for the comparative summary of maximum credit risk exposures on financial instruments) The Company determines the credit quality by class for loan-related statements of financial position lines based on the following: Cash in bank and short-term investments - based on the nature of the counterparties and reputation of the financial institution. These accounts are rated as high-grade.

Receivables - based on the payment behavior of the counterparty. High grade pertains to interest receivable from short-term investments and standard grade pertains to other receivables.

Financial assets at FVPL and AFS financial assets - based on the nature of the counterparty and the reputation of the financial institution. The Company also makes use of institutions with high creditworthiness. These accounts are rated as high-grade.

Past due and impaired receivables relate to long outstanding receivables from a consortium operator, which are fully provided with allowance.

With respect to credit risk arising from the other financial assets of the Company, which comprise of financial assets at FVPL, cash in bank, short-term investments and AFS financial assets, the Company’s exposure to credit risk relates to default of the counter party.

The Company has a well-defined credit policy and established credit procedures. In addition, receivable balances are being monitored on a regular basis to ensure timely execution of necessary intervention efforts.

Capital Management The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholders' value.

The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares.

The Company monitors capital using a debt-to-equity ratio, which is total debt divided by total equity. The Company includes within total debt the following: accounts payable and accrued expenses and subscriptions payable. Total equity includes capital stock, net unrealized gains (losses) on AFS financial assets and retained earnings (deficit).

The Company has no externally imposed capital requirements as of December 31, 2015 and 2014.

20 The table below demonstrates the debt-to-equity ratios of the Company as of December 31, 2015 and 2014, respectively:

Total liabilities: Accounts payable and accrued expenses

Total equity: Capital stock Net unrealized gains on AFS financial assets Retained earnings Debt-to-equity ratio

2015

2014

P =315,494 P =315,494

P255,928 = =255,928 P

P =163,000,000 4,440,684 (1,891,086) P =165,549,598 0.002:1

=163,000,000 P 10,141,454 7,594,952 =180,736,406 P 0.001:1

There were no changes in the objectives, policies or processes for the years ended December 31, 2015 and 2014.

Item 3 - Legal Proceedings There are no pending legal proceedings to which the Company is party or which any of its property is the subject.

Item 4 - Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

21 PART II – SECURITIES OF THE REGISTRANT Item 5 – Market for Registrant’s Common Equity and Related Stockholders Matters a)

Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matters.

1.

Market Information Stock Market Price and Dividend on Registrant’s Common Equity (last 2 years) 1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

1st Quarter

2015 2014 2015 2014 2015 2014 2015 2014 2016 P1.00 P1.00 P1.00 P1.00 P1.00 P1.00 P1.00 P1.00 P1.00 2.95 1.99 2.96 3.50 3.20 3.28 2.98 2.99 2.45 2.68 1.50 2.65 1.76 2.07 2.36 2.40 2.63 2.05 4.834M 1.805M .580M 7.69M 4.693M 14.70M .463M 1.33M .530M The Company’s common equity is traded in the Philippine Stock Exchange (PSE). The market price of SPM’s common stock as of April 05, 2016 (latest practicable trading date) is P 2.46.

ParValue High Low Volume

2.

Holders

As of March 15, 2016, the Company has 4,756 stockholders.

Hereunder is the list of the top 20 Stockholders (as of 15 March 2016): STOCKHOLDERS TITLE OF CLASS 1. PCD Nominee Corporation (Filipino) Common 2. Pan Malayan Mgnt & Inv. Corp.(PMMIC) Common 3. Alsons Consolidated Resources, Inc. Common 4. China Banking Corporation T/A-SCA-#0010 Common 5 China Banking Corporation T/A-SCA-#0011 Common 6. House of Investments, Inc. Common 7. Dee, Helen Y. Common 8. Yuchengco, Alfonso T. Common 9. Hydee Management & Resources Corporation Common 10. China Banking Corporation T/A-SCA-#0013 Common 11. China Banking Corporation T/A-SCA-#0012 Common 12 Ong, Clemente Common 13. Pacific Basin Sec. Co., Inc. Common 14. Floreindo, Antonio O. Common 15. PCD Nominee Corporation (NF) Common 16. Paz, Wenceslao R. de la Common 17. A.T. Yuchengco, Inc. Common 18. Pua Yok Bing Common 19. Reyes, Vicenta S. Common 20. Santiago, Violeta G. Common Sub-Total Others Grand Total

SHARES 64,256,565 30,469,858 15,544,911 14,178,625 10,204,120 4,697,613 1,914,014 1,283,348 1,042,093 571,427 556,122 287,644 271,248 214,104 207,292 195,594 186,637 159,799 147,850 147,655 146,536,519 16,463,481 163,000,000

PERCENT OF CLASS 39.42% 18.69% 9.54% 8.70% 6.26% 2.88% 1.17% 0.79% 0.64% 0.35% 0.34% 0.18% 0.17% 0.13% 0.13% 0.12% 0.12% 0.11% 0.10% 0.09% 89.90% 10.10% 100%

1. None of the holders of the Company’s common shares registered under the name of PCD owns more than 5% of the Company’s common shares.

2. The corporate acts of PMMIC are carried out by its Board of Directors and Management. Ambassador Alfonso T. Yuchengco is the current Chairman of the Company.

3. The corporate acts of Alsons Consolidated Resources Inc. are carried out by its Board of Directors. Mr. Tomas I. Alcantara is the current President of the Company.

4. CBC T/A-SSC#0010 and T/A-SSC#0011 are Trust Accounts between China Banking Corporation as Trustee. The Corporate acts of CBC are carried out by its Board of Directors and Management. Mr. Ricardo R. Chua is the current CBC President and CEO.

22 3.

Dividends In accordance with the Corporation Code of the Philippines, the Company intends to declare dividends (either in cash or stock or both) in the future. Shareholders of the Company are entitled to receive a proportionate share in cash dividends that may be declared by the Board of Directors out of surplus profits derived from the Company’s operations. The same right exists with respect to a stock dividend, the declaration of which is subject to the approval of stockholders representing at least two-thirds (2/3) of the outstanding shares entitled to vote. The amount of dividend will depend on the Company’s profits and its capital expenditure and investment requirements at the relevant time.

The Company did not declare any cash or stock dividends in the last two (2) fiscal years 2015 and 2014.

The last stock dividend (15%) was paid in 1997. Prior to 1997, the last cash/stock dividend paid was in 1990.

4.

Recent sale of Unregistered Securities There was no sale of unregistered securities for the past three years.

5.

Minimum Public Ownership The Company is compliant with the required Minimum Public Ownership of at least 10% of the total issued and outstanding capital stock, as mandated by Section 3, Article XVlll of the Continuing Listing Requirements of the Listing and Disclosure Rules. As of March 15, 2016, the Company’s public float was 80.03%.

b)

Description of Registrant`s Securities 1.

Common Stock The details of the Company’s capital stock are as follows:

Authorized - (P1.00 par value) Issued and outstanding 2.

Debt Securities - Not Applicable

3.

Stock Options - Not Applicable

No. of Shares 388,000,000 163,000,000

Amount P388,000,000.00 P163,000,000.00

23 PART 111 - FINANCIAL INFORMATION Item 6 - Management’s Discussion and Analysis or Plan of Operation Management’s Discussion and Analysis of Financial Conditions and Results of Operations 1. Financial Condition (As of December 31, 2015 and 2014)

31-Dec-15 ASSETS Cash & cash equivalents Short-term investments Financial assets at fair value through profit or loss Receivables Other current assets Available-for-sale financial assets TOTAL ASSETS

31-Dec-14

% Change

% Asset

P12,035,696 -

P10,100,819 18,307,362

19.16% -100.00%

7.26% 0.00%

40,650,199 315,262 769,176 112,094,759 165,865,092

47,627,704 716,954 689,257 103,550,237 180,992,333

-14.65% -56.03% 11.59% 8.25% -8.36%

24.51% 0.19% 0.46% 67.58% 100.00%

315,494 315,494

255,928 255,928

23.27% 23.27%

0.19% 0.19%

165,549,598

180,736,406

-8.40%

99.81%

P165,865,092

P180,992,334

-8.36%

100.00%

LIABILITIES AND EQUITY Accounts payable and accrued expenses TOTAL LIABILITIES EQUITY TOTAL LIABILITIES AND EQUITY

Total assets amounted to P165.865 million as of December 31, 2015 compared to P180.992 million as of December 31, 2014.

The Company’s cash and cash equivalents amounted to P12.036 million as of December 31, 2015 compared to P10.101 million as of December 31, 2014. The 19.16% net increase was due to maturity of short-term investments.

Short-term investments (STI) refer to money market placements (MMP) with maturity of more than three months but less than one year. There are no STI’s in December 31, 2015 as compared to P18.307 million STI as of December 31, 2014, this is because the Company has disbursed a total of about P18 million during the period for the 2:1 Stock Rights Offer of PetroEnergy wherein the Company invested additional P5.276 million in FVPL and P5.623 million in AFS and payment of portion of its subscriptions payable to Hermosa amounting to P7.115 million.

Financial assets at fair value through profit or loss amounted to P40.650 million and P47.628 million as of December 31, 2015 and as of December 31, 2014, respectively. The 14.65% net decrease is due to negative movement in the market values of investments in stocks traded at PSE. Receivables account as of December 31, 2015 amounted to P0.315 million compared to P0.717 million as of December 31, 2014. The 56.03% net decline accounts for the collection of outstanding receivables.

Other current assets consists prepayments, prepaid taxes and input tax carry-overs. This amounted to P0.769 million and P0.689 million as of December 31, 2015 and as of December 31, 2014, respectively. The 11.59% net increase in this account mainly represents additional input taxes recorded during the period.

24 Available-for-sale (AFS) financial assets account as of December 31, 2015 amounted to P112.095 million compared to P103.550 million as of December 31, 2014. The 8.25% net increase is due to the 2:1 Stock Rights Offer of PetroEnergy wherein the Company subscribed additional 5.623 shares at P4.38/ share totalling to P5.623 million.

Accounts payable and accrued expenses amounted to P0.315 million and P0.256 million as of December 31, 2015 and December 31, 2014, respectively. The 23.27% net increase in this account is due to higher accrual of professional fees and other expenses.

Total Stockholders’ Equity as of December 31, 2015 amounted to P165.550 million or P1.016 book value per share compared to P180.736 million or P1.109 book value per share as of December 31, 2014.

The following liquidity and profitability ratios indicate acceptable levels of financial condition and performance of the Company:

Current Ratio Debt-Equity Ratio Net Profit (loss) Margin Asset to Equity ratio Asset Turnover Earnings (loss) per Share

31-Dec-15 170.432:1 0.002:1 -107.34% 1.002:1 0.053:1 (P0.0582)

31-Dec-14 Formula 302.593:1 Total Current Assets/Total Current Liabilities 0.001:1 69.24% 1.001:1 0.027:1 P0.02079

Liabilities/Total Stockholders’ Equity Income/Total Revenue Total Assets/ Total Equity Revenue/Total Assets Net Income /Issued & Outstanding Shares

The decrease in current ratio is due to the 30.57% decline in current assets.

The decline in debt to equity ratio is mainly due to decrease in the equity account resulting from the negative market value changes in investments in stocks.

As of December 31, 2015, there’s a net loss margin of 107.34% and loss per share of P0.0582 as compared to 69.24% net profit margin and P0.02079 as of December 31, 2014 due to decline in the market values of investments in FVPL traded in PSE. The increase in asset turnover is mainly due to the dividend income from investment in HEDC amounting to P8.250 million.

Except for items discussed above, there are no more changes in the financial statements that will reach the materiality threshold of 5%.

Please refer to Financial Soundness Indicators for additional KPI’s of the Company.

The only material commitment of the Company is the balance on its subscription to HEDC in the amount of P12.354 million. The liquidity of the Company will be affected if HEDC declares a call on said subscription. Possible source of fund is through bank loan. Aside from the subscription payable to HEDC, there are no known trends, demands, commitments, events or uncertainties that will have material impact on the Company’s liquidity.

The Philippine economy is still affected by economic crisis, resulting in fluctuating foreign exchange rates and increase stock market uncertainties. Uncertainties remain as to whether the country will continue to be affected by regional trends in the coming months. The financial statements do not include any adjustments that might result from these uncertainties.

Related effects will be reported in the financial statements, as they become known and estimable.

25

2. Results of Operations (For the years ended December 31, 2015, 2014 and 2013)

% Change 31-Dec-15 REVENUES Dividend income Interest income Net gains on fair value changes on financial assets at fair value through prot or loss Gain on sale of available -for-Sale financial assets Other income-net TOTAL REVENUES (LOSS) COST AND EXPENSES Net gains on fair value changes on financial assets at fair value through prot or loss Impairment loss of avialable-for-sale financial assets General & administrative Net realized forex loss (gain) TOTAL EXPENSES Income/(Loss) before income tax Provision for income tax NET INCOME (LOSS)

31-Dec-14

8,250,779 234,403

2015 vs. 2014

31-Dec-13

% in Total Revenue

306,664 755,773

468,811 960,324

2590.49% -68.98%

93.37% 2.65%

P3,227,634

P463,616

-100.00%

0.00%

352,337 8,837,519

603,924 4,893,995

2,795,425 334,617 5,022,793

0.00% -41.66% 80.58%

0.00% 3.99% 3.99%

12,253,726

-

-

-

-

4,621,872 1,440,389 523 18,316,510 (9,478,991) 7,047 (9,486,038)

1,498,239 (402) 1,497,837 3,396,158 7,100 3,389,058

1,834,529 (2,658) 1,831,871 3,190,922 6,692 3,184,230

-3.86% -230.10% 1122.86% -379.11% -0.75% -379.90%

16.30% 0.01% 207.27% -107.26% 0.08% -107.34%

-

OTHER COMPREHENSIVE INCOME (LOSS) Net unrealized gain (loss) on availablefor-sale securities Transfers to profit and loss

(10,322,642) 4,621,872

3,281,483 -

(11,859,863) -

414.57% -

-116.80% -

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR

(P15,186,808)

P6,670,541

(P8,675,633)

327.67%

-224.15%

The Company posted a net loss of P9.486 million or a loss per share of P0.0582 as of December 31, 2015, and a net income of P3.389 million or P0.02079 earnings per share as of December 31, 2014.

Dividend income increased from P0.307 million as of December 31, 2014 to P8.251 million as of December 31, 2015. Bulk of the increase was due to cash dividend received from Hermosa Ecozone Development Corporation during the period.

Interest income amounted to P0.234 million and P0.756 million as of December 31, 2015 and December 31, 2014, respectively. There was a 68.98% decrease because for 2014, aside from recurring interest income from MMPs, this account includes interest on collection of long outstanding loans receivable, while for 2015, this only includes recurring interest income from MMPs. In addition, lower balance of the reinvested cash equivalents, contributed to the decline.

The Company’s net loss on fair value changes on financial assets at fair value through profit or loss amounted to P12.254 million and P3.228 million gain as of December 31, 2015 and 2014, respectively. The negative variance is due to decline in market prices of investments in stocks traded in the PSE. Other income as of December 31, 2015 mainly pertains to recurring service income for accounting services rendered by the Company to HEDC and rental income. There was a 41.66% decrease because in 2014, this includes one- time recovery of long outstanding receivables which were already written-off.

26

In December 31, 2015, the Company recognized impairment loss amounting P =4.6 million on investment in PERC’s share.

General and administrative expenses amounted to P1.440 million and P1.498 million as of December 31, 2015 and December 31, 2014, respectively. The 3.86% decrease is due to lower expenses during the period.

There was a minimal unrealized loss on forex resulting from reinstatement of dollar investment of the Company.

Provision for income tax pertains to the Minimum Corporate Income Tax (MCIT) set-up. The Company set-up MCIT rather than the 30% regular tax because most of its income are from unrealized market changes of investments and passive income subject to final tax. Lower MCIT in as of December 31, 2015 pertains to lower taxable income compared to December 31, 2014.

Other comprehensive loss amounted to P10.322 million as of December 31, 2015 versus other comprehensive income of P3.281 million as of December 31, 2014. The negative turn-around is mainly due to a decrease in market value of investments. Also as a result of the 25.16% decline in market value of investment in PERC, the Company transferred P4.622 million from other comprehensive income to the Profit and Loss Statement.

Except for items discussed above, there are no more changes in the financial statements that will reach the materiality threshold of 5%.

3. Financial Conditions (As of December 31, 2014 and 2013) Total assets amounted to ₱180.992 million as of December 31, 2014 compared to ₱174.601 million as of December 31, 2013.

The Company’s cash and cash equivalents amounted to P10.101 as of December 31, 2014 compared to ₱6.125 million as of December 31, 2013. The 64.92% net increase was due to collection of loans receivable from Karrivin Holdings Corporation amounting to P2.881 million and proceeds from investment in Government securities amounting P2.003 million.

Short-term investments refer to money market placements with maturity of more than three months but less than one year.

This amounted to P18.307 million and P17.775 million as of December 31, 2014 and December 31, 2013, respectively. The 3% net increase represents additional investments made during the period.

Financial assets at fair value through profit or loss amounted to P47.628 million and P46.403 million as of December 31, 2014 and as of December 31, 2013, respectively. Positive changes in the market values of investments in stocks traded at PSE contributed to the 2.64% increase in this account.

Receivables account as of December 31, 2014 amounted to P0.717 million compared to P3.418 million as of December 31, 2013. The 79.03% decline accounts for the collection of outstanding loans receivable from Karrivin Holding Corporation amounting to P2.881 million.

Other current assets consists prepayments, prepaid taxes and input tax carry-overs. This amounted to P0.689 and P0.611 as of December 31, 2014 and as of December 31, 2013, respectively. The 12.77% net increase in this account mainly represents additional input taxes recorded during the period.

Available-for-sale (AFS) financial assets account as of December 31, 2014 amounted to P103.550 million compared to P100.269 million as of December 31, 2013. The 3.27% net increase is due to higher market values of investments during the period.

Accounts payable and accrued expenses amounted to P0.256 and P0.535 million as of December 31, 2014 and December 31, 2013, respectively. The 54.14% decline in this account is due to payments made for various accrued expenses such as professional fees and other payables.

27 Total Stockholders’ Equity as of December 31, 2014 amounted to P180.736 million or P1.109 book value per share compared to P174.066 million or P1.068 book value per share as of December 31, 2013.

4. Results of Operations (For the years ended December 31, 2014 and 2013) The Company posted a net income of P3.389 million or P0.0207 earnings per share as of December 31, 2014, and P3.184 million or P0.0195earnings per share as of December 31, 2013.

The Company’s net gain on fair value changes on financial assets at fair value through profit or loss amounted to P3.228 million and P0.464 million as of December 31, 2014 and 2013, respectively. The increase accounts for the positive market price movements of investments.

Gain on sale of available for sale financial assets in 2013 refers to the sale of 150,000 HEDC shares to EEI. Dividend income decreased from P0.469 million as of December 31, 2013 to P0.307 million as of December 31, 2014. The decline was due to lower dividend income received from investments for the year compared to 2013.

Interest income amounted to P0.756 million and P0.960 million as of December 31, 2014 and December 31, 2013, respectively. The 21.30% decrease is maily due to lower interest rates from 2.6%-3.4% rate in 2013 to 2.2%-2.8% rate in 2014.

Other income mainly pertains to recurring service income for accounting services rendered by the Company to HEDC and rental income. The 80.48% increase in this account pertains to one time transaction, recovery of accounts receivable writtenoff.

General and administrative expenses amounted to P1.498 million and P1.835 million as of December 31, 2014 and December 31, 2013, respectively. The decrease accounts for the one-time payment of taxes and licenses attributed to the capital gains tax paid relative to the sale of HEDC shares in 2013.

Other comprehensive income (loss) amounted to P3.3281 and (P11.860) million as of December 31, 2014 and December 31, 2013, respectively. The turn-around in the market changes is mainly due to increase in market value of investment in:  Benguet from P6.90/share as of December 31, 2013 to P8.43/share as of December 31, 2014; and  PERC from P6.10/share as of December 31, 2013 to P6.20/share as of December 31, 2014.

The Company’s losses from the market declines in its investment portfolio traded in the market are considered “unrealized losses” which are fully provided with allowances. Although the market values of these investments have declined, the Company nevertheless realized income through dividends from these investments, thereby significantly reducing the losses.

In order to mitigate losses, the Company will closely monitor these investments and will look for opportunity of when to best dispose them and replace them with more viable and less risky investments.

Plan of Operations A. Investment in AFS not traded in the market (Investment in HEDC) As of December 31, 2015 the Company holds 11.33% interest in its investment in Hermosa Development Corporation (HEDC).

The Management of HEDC is taking all efforts to sell portion of its saleable property, proceeds of which will be used to finance the development of the undeveloped portions of the property.

B. Investment in Financial Assets at FVPL and AFS traded in the market The Company will continue to closely monitor the prices of its securities as well as those specific factors which could directly or indirectly affect the prices of these instruments. Because such investments are subject to price risk due to changes in market values, an expected decline in the portfolio will prompt the Company to dispose or trade the securities for replacement with more viable and less risky investments in the future.

28 With the Company’s current cash position, it can sustain its needs for its operating expenses. Its only possible material commitment is a cash call from HEDC, of which is not expected to call in the next twelve months. Thus, it does not intend to raise additional funds.

Aside from the Company’s investments stated above, there are no other researches or development plans, and purchase or sale of significant equipment that the Company expects perform.

The Company will continue to engage the services of PetroEnergy Resources Corporation for its administrative, accounting and legal services.

Outlook/Prospect for the Future Prospective client’s interest to acquire land within HEDC’s leisure estate area has compelled the management to expedite the full conversion of the remaining 108 hectares of the corporation from its present use to that of a mixed residential/commercial/leisure land use as originally envisioned in the Approved Master Plan of the property.

The Management of HEDC is taking all efforts to sell portion of its saleable property, proceeds of which will be used to finance the developments of the undeveloped property. As of December 31, 2013, there are prospective clients (both foreign and local companies) under negotiation.

On September 16, 2014, HEDC got its License to Sell and Certification of Registration for the 52.46 hectares in Phase II from HLURB. Processing of registration and issuance of individual lot titles is on - going at Registry of Deeds, Bataan. Issuance will take 6-8 months due to on-going computerization.

In order to enhance the value of HEDC and attract prospective locators, HEDC is currently developing Phase 2 which includes site Grading of Phase2, 4-lanes main road construction, retaining wall and fence along Bock 2 and Barangay Road and construction of and installation of Centralized waste water treatment plant.

Commitments Except for a possible cash call from Hermosa Ecozone Project, the Company has no commitment for the purchase of property, plant and equipment.

Discussion of indicators of the Company’s level of performance Receivable Management The Company manages it’s receivables by monitoring on a regular basis to ensure timely execution of necessary intervention efforts.

(Please refer to the 2015 Audited Financial Statements, Note 9 for the breakdown of receivables account) Liquidity management The Company has substantial investments in shares of stock which are not listed in the Philippine Stock Exchange and may not be readily convertible to liquid assets necessary to meet any potential additional liquidity requirements of the Company. Investment in unquoted securities included in AFS investments amounted to P100.1 million as of December 31, 2015 and 2014.

Management of liquidity requires a flow and stock perspective. Constraint such as political environment, taxation, foreign exchange, interest rates and other environmental factors can impose significant restrictions on firms in management of their financial liquidity.

Seafront has considered the above factors and paid special attention to its cash flow management. The Company identifies all its cash requirements for a certain period and invests unrestricted funds to maximize interest earnings, i.e. money market placements.

Rate of return of each stockholder The company has no existing dividend policy. However, the Company intends to declare dividends in the future out of its unrestricted retained earnings accordance with the Corporation Code of the Philippines.

Cost-reduction effort In order to minimize expenses, the Company has engaged the services of PetroEnergy Resources Corporation to handle its legal, administrative, accounting and treasury functions.

29

Item 7 - Financial Statements The 2015 Audited Financial Statements and Supplementary Schedules of the Company are incorporated herein by reference.

Item 8 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Due to 5-year rotational requirement, the Company engaged a new SGV and Co. Partner, Michael C. Sabado for the year 2013 2015, replacing SGV and Co. Partner Cyril Jasmin B. Valencia as engagement partner (Audit partner from 2008-2012).

As of December 31, 2015, there are no disagreements with Accountants on Accounting and Financial Disclosure.

PART IV – MANAGEMENT AND CERTAIN SECURITY HOLDERS Please refer to Item 5 of the Information Statement for the discussion on the identity of each of Company’s directors and executive officers, their principal occupation or employment, the name of the principal business of any organization by which such directors and executive officers are employee.

PART V – CORPORATE GOVERNANCE Compliance with Leading Practices on Corporate Governance a.

Evaluation System to Determine Compliance with Manual of Corporate Governance – The Company’s Board of Directors and management substantially adhere to and complied with the principles and best practices contained in its Manual on Code of Corporate Governance. The Company adopts the Corporate Governance Self-Rating Form (CG-SRF) as an evaluation system for the company to measure or determine the level of compliance of the Board of Directors and top management with its Manual of Corporate Governance.

b.

Measures Undertaken to Comply with Leading Practices on Corporate Governance – Among the measures undertaken to comply the Company’s Manual of Corporate Governance, as follows: 1.

The attendance of each Director in the scheduled meetings of the Board of Directors is monitored and recorded.

2.

The Company has Committee on Audit, Governance/Nomination and Compensation.

3.

The financial reports and reports of operations are thoroughly reviewed by the external auditor before these are released to shareholders, SEC and PSE.

c.

Deviation from the Company’s Manual of Corporate Governance - There is no deviation from the Company’s Manual of Corporate Governance.

d.

Plan to Improve Corporate Governance – The Company has no plan to improve its manual provided no new instructions or rules are issued by the Securities and Exchange Commission.

30 General Notes to Financial Statements 1.

Assets subject to Lien and Restrictions on Sales of Assets As of December 31, 2015, there were no assets mortgaged, pledged or otherwise subject to lien.

2.

Subsequent Events There were no subsequent events that required adjustments on the December 31, 2015 Audited Financial Statements.

3.

Defaults - None

4.

The following are not applicable in the preparation of this report. a. b. c. d.

5.

6.

Adjustments made that lead to the revenue recognition but which adjustments cannot be properly supported.

Changes in estimates without proper disclosure which have the impact of improving results of operations.

Non-application or misapplication of accounting principles and standards, misstatements, omissions, etc.

Other cases involving accounting and auditing matters resulting to possible concealment of a fraud or the creation of a risk for the commission of fraud.

Schedule of Receivable account – please refer to the 2015 Audited Financial Statements, Note 9 Breakdown of Accounts payable and accrued expenses

Accounts payable and accrued expenses Professional fee - External Audit Trust fee Retainer fee - Internal Audit Other payables

P

216,562 40,273 7,275 51,384

Total

P

315,494

7.

As of December 31, 2015, the Corporation has no receivables from any officer, directors, employees, related parties and principal stockholders.

8.

The Company has no liability guaranteed by others.

9.

There were no assets pledged against secured liabilities.

ANNEX

&Art

GERTIFICATION OF INDEPENDENT DIRECTOR

CERTIFICATION OF INDEPENDENT DIRECTORS I, Nicasio L Alcantara, Filipino, of legal age and a resident of #1 Tamarind Road, Forbes Park, Makati City, after having been duly swom to in accordance with law do hereby declare that:

1. I am an independent director of The Seafront Resources

2.

Corporation.

I am affi-liated with the following companies or organizations:

Name of Company

Position

Term

Aces Technical Sen/ices. Inc,

Dfuector

Acil Corporation

Director

Alcor Transpon Corporation

Dfuector

Alsi-ng Power Holdings, Inc.

Dbector

Alsons Aquaculh:re Corooration

Director

Alsons/ AWS Information System, Inc.

Director

Alsons Corporarion

Director

AIsons Development & lnvestments Corp.

Director

December 1962-Present

Alsons Ilsuralce Brokers Com.

Director

Mard

Alsons Land Comoration

Director

November 199u|-Present

Alsons Power Holdings Corporation

Director

December 2011-Present

Alsons Properties Comoration

Director

November 1997 - Present

Alsons Securiw Co.. Inc.

Director

May 201-3 - Pr€sent

Aquasur Resources Corporation

Director

June l-987

Aviana Development Corporation

Vice-Chairman

March 13, 2015

BDO Private Banl! Inc.

Director

Buayan Catde Co., Inc.

Director

January 1978 - Present

Conal Corporarion Conal Corporation

Chairnan Director

May 2006 -Present JnJy 1984 - Present

Conal Holdings Corporation

Director

May 2011-Present

Finfi sh Hatcheries,Ilc.

Director

May 1996-Present

Indophil Resources NL

Director

December 2011-Present

The Philodrill Corporation

Director

December 1991 to Present

San Ramon Power, Inc.

Director

July 2012 to PreseDt

July 2011 - Present

May 1997 - Present

1973-Present

-

Present

-

Present

Sarangani Agricultural Co., lnc.

Director

October 1957-Present

Sarangani Energy Corporation

Dtector

July 2012-Present

Seawood Holdings Incorporated

Director

January 2013 - Presenr

Sunfoods Agri. Ventures, Inc.

Dilector

October 2012 - Present

Site Group Intemational, Ltd.

Dtector

October 2010-Present

Southern Philippines Power Corporation

DiJector

May 2011-Presenr

Western Mindanao Power Comoration

Director

May 2011-Present

3.

I possess

al1 the qualifications ald none of the disqualifications to sewe as an Independent Director of Seafront Resources Corporation, as provided for in Section 38 of the Securities Regulation Code and its ImDlemenths Rules and Regulations.

I shall faithfully and diligently comply with my duries and responsibilities independent director under the Securities Regulation Code.

5.

I shall inform the Corporate Secretary of Seafront Resources Corporation of any chalges in the above-mendoned information within five days from i$ occurTence.

Done, this

.!ff

day of March 2016, at M

NICASIO I, ALCANTARA Affiant

?115

ti]js

x,|AR 1 7 suBScRIBED AND SWORN to before me ar Makati city, affiant personally appeared before me and exhibited to me his passport No, E86289358 issued on 07 September 20I2by DFA Manila.

Doc.

No.

X.bQ

:

No. {3 ; BookNo. LX Page

Series of 20 lb

:

TRENEO U. GACA.D, ComEiasisr N0 M- I Notsry Puhl;c for Malah C;ry Uoril D.retubs i t, ?0t 7

R0!lNo ?2596

t6-t0

'li:r,lrr;

ufr (0

Nur!u,

rr.r

CERTIFICATION OF INDEPENDENT DIRECTOR I, ERNESTIN.E CARMEN JO DESIDERIO VILLAREALFERNANDO, Filipinq of legal age and a resident of22 Bright Hill Street, New Manila" Rolling Hills Subdivision, Quezon Ciry, after having been duly swom in accordance with law do hereby declare that:

l.

I

2.

I

am aa eligible candidate as an Independent Director of SEAIRONT RESOURCES CORPORAIION. am affiliated with the following companies or organizations:

, "

Position/Relationship

..

Director Director Director and Treasure

Suldies and Guest Evaluator Managing Director Legal Cotrnsgl Partner

I

the qualifications and none of the disqualifcations to serve as an Diiector of SEA-FRONT RESOURCES CORPORATION. as provided for in Section 38 of the Securiries Regulation Code and its Implementing Rules and Regulations.

A

I

shall faithfirlly and diligently comply with my duries and responsibilities tle Securities Regulation Code.

as

hdependent Director under 5.

I shall i51;qrm the corporate secretary of

SEAIRONT

RESOIIRCES

CORPORATION of any changes in the abovetnentioned information within five (5) days from its oCcurrence.

Done rhis &ko^d day

o;lrfu.Uaotht

CARMENJO D.

suBscRrBED ANn swonrv,"

affiant issued Doc No.

Page No. Book No. Series of 2016

r.r"*l[44l[12ma6",

",

d his Communily Tax No.

Pol(

|

April 01,2016 THE SECURITIES AND EXCHANGE COMMISSION SEC Buitding, EDSA, Greenhills Mandaluyong City, Metro Manila

Attention

:

Re

Gentlemen

Mr. Vicente Graciano p. Felizmenio, Jr Director, Markets and Securities negutailon

Department

SEC Form 20-lS of Seafront Resources Corporation .

government employee.

we hope that this certification compries with the requirement of the commission.

Very truly yours,

SEAFRONT RESOURCES CORPORATION

February'19,2016

Securities and Exchange Commission SEC Burlding, Edsa Greenhills

Mandaluyong, ijletro Manila

The management of Seafront Resources Corporation is responsible for the preparation and fair presentation of the financial statements for the years ended December 31, 20'15 & 2014, including the additional components attached therein, in accordance wth the prescribed financial reporting framework indicated therein. This responsibility includes designing and implementing internal controls relevant to the oreparation and fair presentation of financial statements that are free from materjal misstatement, whether due to fraud or error' selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstanc€s.

The Board of Director reviews and appfoves the flnanclal statements and submits the same to the stockholders or members

sycip, Gorres, velayo & co. the independent auditors, appointed by the stockholders has examined the financial statements of the Company in accordance wth the Philippine Standards on Auditing, and its report to the stockholders or members, has expressed its opinion on the faimess of preseniation upon completion of such examination

Helen Y./Dee

Treasurer

Afflants exhibited to me their Tax ldentification Numbers indicated below each name.

NAi/ES Helen

Y

TAX IDENTIFICATION NO '101-562-982

Dee

Milagros V Reyes Perry Y. Uy

M l.lo.--p-i

ooc.No. eagu

No. /l

Book Series of 2016.

100-732-775 101-563-055

arl

rr

r

nir7njii

r..-.

_,r

:

;

SEAFRONT RESOURCES CORPORATION

4

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDING MARCH 31, 2016

SEAFRONT RESOIJRCES CORPORATTON STATEMENTS OF FINAAICIAL FOSITTON Amounts in Philippine Peso Unaudited

Unaudted

31-Mar-16

3l -Mar- l5

PIr,490,0s8

P26,180,632

Audited

3l -Dec-

l5

ASSETS

Curcnt Asseb Cash and cash equilalefts

Short-term ilves[rErfs F

i'Enchl asseb at

6i

vale

) )e) through

proft or bss

Receivables

P12,035,696

ao'7

45,50r,04E

47,4't9,773

40,650,199

339,7 46

457,E96

315,262

Oth€r curent assets Total Curertr Assets

Avalabh-fr r-sale ft|ancbl asse6

LIAsII.ITIES AND EQIINY Curr€nt Liabilities Accorrfs and accrued

17

Total Curent Liabilities

l7

F,Suity

Capitalstock

-I

par v-abe

Ar-thoriad - 38t,000,000 shares Isued ard ornstarding - 163,000,000 shares Net urcalircd gains on available-frr-sale ftanciat

163,000,000

163,000,000

163,000,000

7,641,408

9,522,9t2

4,440,684

assets

Retained

Total

-l

7

I PI

179.811

PI

I Pl65

,092

SEAFRONT RESOURCES CORPORATION STATEMENTS OF INCOME Amounts in Philippine Peso Unaudited Unaudited For the 1s t ouarter

sr-Mar-i6----3Jffirs REVENUES Net gains (loss) on fair value changes on financial assets at fair value through profrt or loss Interest income

Divilend income Other income-net TOTAL REVENUES E)(PENSES

& administrative TOTALE)(PENSES General

Income (loss) before income rax Provision Ior rfuv||rron for tncome income lax tax

P4,850,949 20,413 53,717 88,084 5,013,063

(P14793r)

453,089 453,089 4,559,974

418.170

102,770

74,760

418.170

(3MJ30)

S &IFRONT RES OI]RCES CORPORAIION STATET{INIS OFCOMPREIINSIVEINCOME

Amounts in Philippine Peso

For the

lst Ouarter

31-Mar-l6

oTHrR COIUPRE{E{SrvE IN@ME opSS) Item ao b r€plassifpd ao Fofit or loss In .

ssbe$GDt

Frio&

Nct unrealized gain Qoss) on availabb-for-sab ftrancial

asseB

.

ro'rAl, CoMPREE{STVETNCOME(rOSS) K)R

3200,723

(618J42)

SEAFRONT RESOIJRCES CORPORATION STATEMENTS OF CHANGES IN EQUITY Amounts in Philippine Peso Net Nca utrrealized

gains on alailrHe for salc

Retain€d

FlDancial asseb

Balances at the beginning

of

For the I st Qurrter [&rch

3l, 20t 5 (Unaudteo

P4,440,684 (P1,89 r

Pr65,549,s98

Net incorE Other

ive loss MCOIIF

ofthe

Balances at end

4,5582r2

4,558,212

4,ss82r2

7,7 58,935

3,200,723

3200,723 P163,000,000

P7,641,,407

3,200,n3

P2,667,126 P1731308,533

lst Quarter March Balances at the

Net

P

163,000,000

Pl0,141,454

los s

Other

ive loss

Total

ive loss

Balances at end

31, 2015

P7,5%,952

P180,n6,406

(3062.r)

Q06,n1) 6tE,sa)

QM,nt)

'163)

618,s42)

(618,5A)

ofthe

P163,000,000

P9,522,912

P'7,288,731

Pt79,Ell,643

For the Year Ended December 31, 2015 (Audited) Balances at the

ofyear

P

163,000,000

P

10,141,454

Net loss

(9,486,038)

Other

Ioss

(s;100,770)

Total conprehensive inconr Balances at end

P7,594,952

of

P4,440,6U

(9,486,03E) (s,700,770)

(5,700, P163,000,000

P180,736,406

(15,r 86,E0t)

(Pr,E91,086)

P165,549,598

S

EAFRONT RES OIIRCES CORPORATION

STATn|U\TS OF CASHFI,OWS Amounts in Philipf ne Peso Unaudited

31-lVbr-I6 CASH FI]OWS FROM OPNATING ACTIVIIIES Inconrc (loss) before income tax

Adjustrnents fo r: Dividend incorne Interest income Impairement loss on available for sale financial assets Net unrealized loss (gains) on fair value changes on financial assets at fair value thro Operating loss before working capital changes

P4,559,97 4

('74,760)

(20,413)

(102,770)

(4,8s0,849) (3 6

s,00s)

(69,49r)

Other current assets

(50,148)

Short-term investments Increase (decrease) in: Net cash used for operations Ilterest received Net cash provided by (used in) o activities CASH FI-/OWS FROM IUVTES TINC ACTWIIIES Dividends received Paynent of s ubscdptions payable

(8,2s0;r'19) (234,403)

147,931

12,253,'126

Q34,129)

t6,024,765 180,tJ (664,7

7

s)

rt9,t37

E{D OF YEAR

(79,91e)

52,5t9

15,939,633

t'7,124,245

140,180

8,501,361

(7,114,7s0) (5.276,221)

A vialable-fo r-s ale fm ancia I as sets

BEGII\IIING OF TI{E YEAR CAS II AND CAS II QTNVAI,BiiS AT

(67,142)

18,307,362

I

Financial assets at FVPL

investins activities IIET INCRMSE (DECREASD IN CASH AI\ID CASE EQUryAI.U{TS CASHAI\ID CASH EQT]IVALNTS AT

(1,088,s75)

296,408 (31,80e)

Acquisition of:

Net cash

-Dec- l5

4,621,8'.12

Receiv ables

le and accrued

Audited 3 I

(P304,s30) (w,478,991)

(s3,7r7)

Changes in openting assets and liabilities: Decrease (increase) in:

Accounts

Unaudited 31-Mar-15

| |.152.41

rt9,l37

r40,180 0

(s4s,638)

t6,079,813

12,035,696 Pr 1,490,058

10,100,819 P26.f

1,934,877

10,100,819

80,632 Pt2,035,6%

Management Discussiotr and Anarysis of Financial conditions and Results of operations

l.Financial Condition (As of March 31, 2016 and March 31,2015) yo

3l -tr[.r-16

31-Mar-15

o/o

to

Asset

Change

ASSETS Cash & cash equivalents

P26,t80,632 -56.ltyo 2,282,597 -|OO.OOVo

Pl1,490,058

Shoft-term investnents

6.620/0 O.OOo/o

Financial assets ar faL value rhrough

prcfit or loss Receivables Other cufient assets

Available-for-s ale financial TOTAL ASSETS

as

s

ets

45,501,048

47,479,773

4.t1vo

26-23yo

339,746 a2t,97 4

457,896

-25.80yo

0.2tr/o

72t,066

t3.99yo

o.47yo

r15,292,a32

t02,93t,696

t2.otYo

66.4'70/0

173,445,658

180,053,660

-3.67yo

100.00%

-43.34yo

o.o8yo

LIABILITIES AND @TIITY Accounts payable and accrued elpenses

r37,r25

TOTAL LIABILITIES

137,t 25

242,017

43.34yo

73,308,53J

179,81|,643

-3.62yo

P173,44s,658

P180,053,660

EQUITY

r

TOTAL LIABILITIES AIID EQIIITY

Total assets amounted to pr73.446 March 31,2015.

242,017

mi ion as of March 3r,2016

99.92yo

-3.67yo rm.olyo

compared to pIE0.054

milion as of

The company's cash and cash equivarents amounted to pr 1.490 mi ion as of March 3 r,2016 compared to P26.181 million as ofMarch 3r,2016. The 56. r l % net decrease wasdueto payment of subscription of 2:l stock Righrs offer ofpetroEnergy wherein the company invested additionar p5.276 million i; FVPL and P5'623 million in AFS and payment of portion of its subscriptions payable to Hermosa amounting to

P7, I

l5 million.

Short-term investments refer to money market placements (MMp) with matunty

months but less than one year. This amounted to nil as of Marctr 31, 2015. The net decrease represents maturity ofinvestments.

3l, )0rc

ana

of more than three pZ.ztl million as of uailn

ir value through profit or loss amounted to P45.501 million and p47,4g0 million as

ofMarch 31,2015, respectively. The 4.17% minimal decline is

investments in stocks traded at pSE.

as

of

Aue to ctranges in

Receivables account as of March 31, 20r6 amounted to p0.340 mi ion compared to p0.45g million - as -- of March 31,2015. The 25.80% net decline accounts for the collection oioutstandine receivabie;.

glh::^*T:it

assets consist of prepayments, prepaid taxes and input tax carry_overs. This amounted to P0.822 million and. P0.72r mi ion as of March 31,2016 and as of March zots, ,".p."tiu.iy.

13.9902 net increase mainly represents additionar input taxes recorded during the perioi.

li,

it.

Available-for-sale (AFS) financial assets account as of March 3r, 2016 amounted to pl 15.293 million compared to P102,932 million as of March 3I , 2015. The l2.olyo ne't increase is due to the 2:l Stock Risftjls offel of PetroEnergy wherein the Company subscribed additional 5.623 shares at p4.3g/ sharc totalling to P5.623 million. l199unt9 -narable and accrued expenses amounted ro P0. I 37 million and p0.242 million as of March 3l 2016 and March 31, 2015, respectiv ery. The 43.34v" decrease accounts for settrement ofpayables.

Total Stockholders' Equity as ofMarch3r,2016 amounted to pl73.309 million or p1.063 book value per share as compared to P179.812 million or pl.103 book value per share as of March 31, 201 5.

2, Results of Operations (For the

euarter ended March 31, 2016 anrl March 31, 2015) % Change

% in Total

2015 vs. 2014

Revenue

REI1ENUES Net gains (loss) on fair value changes on financial assets at fair value thrcugh profit or loss Interest income

Dividend income

P4,850,849

(P141,931)

20,4t3

102,770 '14,760

53,711

84.041 I

t3

3379.13% -80.14% .28.15%

431% 4311j5%

EXPENSES

lncome (Loss) before income tax

2990.400/0

12.58%

33.1\%

54j0% 3090.40y"

170

8.350/"

279.32%

t'|0

L3:l% 738%

2't9.320/"

4.20%

|.09%

11.09%

OTI{ER COMPREHENSIVE

rNcoME (LOSS) Net uruealized gain (loss)on available-forsale securities

617.46%

TOTAL COMPRf,HENSIVE INCOME FOR THf, YEAR

The company posted a net income ofp4.55g mi[ion or p0.02g eamings per share as of march 31, 2016 and net loss ofP0,306 million or p0.00l9loss per share as of Varch 31, ZittS. ) on fair value changes on financial

assets

and (p0.l4g) million as of March 31, 2 crease in market prices of investments in s

through profit or loss

t5, reipectively-

The

in the fSE.

Interest income amounted to p0.020 milion and p0.103 million as of March 3r,2016 andMarch 3r 2015, respectively. g0.

There was a

r

4olo

decrease au" to

a".tin" ln

"ush

and cash equivarents.

Dividend income decreased from P0.075 million as of March 31,2015 to P0.054 million as of March 31.

2016 due to minimal dividend income received from investments.

Other income for March 2015 mainly pertains to recurring service income for accounting services

rendered by the company to HEDC and rental income. This amounts to p0.0gg million uid po.ogc million as of March 31, 2016 and March 31, 2015, respectively, the 4.g l % increase is due to higher rental income during the period.

lt9 administrative expenses amounred to p0.453 million and p0.418 million as of March 31, 2016 and.March 31, 2015, respectively, The 8.35% increase accounts for higher administrative expenses incurred during the period.

9-.1:.d

Provision for income tax pertains to the Minimum corporate lncome Tax (MCIT) serup. The company set-up MCIT rather than the 30% regular tax because most of its income are from unrealized markit changes of investments and passive income subject to final tax. Higher MCIT in as of March 31, 2016 pertains to higher taxable income compued to March 31, 201 5. co.Tqrehgnsive income (loss) amounted to p3.201 million and (p0.6lg) million as of March 31, ^o^tl!r 2016 and March 31,2015, respectively. The tum-around in rhe market changei is mainly due to increase in market value ofinvestments.

3.Financial Conditions (As of March J1, 2016 and December 31,2015)

31-lar-16

3l-Dec-15

9/o

Change 7o Asset

ASSETS Cash & cash equivalents

Pl1,490,058

Financial assets at fair value through profit or loss Receivables

LhBLITIES AND

as sets

6.620/0

45,501,048

40,650,199

I I.93yo

26.230/0

339,7 46

7.Ttvo

o.20yo

821,97 4

315,262 't69,1'76

6.86yo

0.47yo

115,292,A32

I t2,094,'7 59

2.850/0

66.470/o

3,44s,65a

16s,86s,092

4.57yo rm.0e/o

Other curent assets

Available-for-saie financial TOTAL ASSETS

P12,035,696 4.53yo

17

EQLJTTY

Accounts payable and accrued 137,t2S 137,r25

'lt54qa

73J08,533

165,549,598

99.92yo

P173,445.658

PI65,865,092

4.570/o tm.Oy/o

TOTAL LIABILXTIES EQI,'ITY

TOTAL LIABtrXTIES AND EQ{IITY

t

315,494

-56.54Vo

o.o8vo

-56.54yo

0.08%

Total assets amounted to pr73.446 milion as of March 31, 20r6 compared to pI65.g65 million as

December 31, 2015,

of

The Company's cash and cash equivalents amounted to Pl1.490 million as of March 31. 2016 comoared P12.036 million as of December 31, 2015. The 4,53% net decrease was due to pavment of administrative expenses during the period.

to

Financial assets at FVPL account as of March 31, 2016 amounted to p45.501 million comoared to P40.650 million as of March 31,2015, The 11.93% increase pertains ro positive movemenrs oi market values of investments in stocks traded at PSE. Receivables account as of March 31, 2016 amounted to p0,340 million compared to p0,315 million as of December 31, 2015' The 7.77%o increase is attributed to additional recorded receivables during the period.

Other currcnt assets as of March 31, 2016 amounted to P0.822 million compared to p0.769 million as of December 3l' 2015. The increase is due to additional input taxes and other assets recorded during the period.

There was slight change in available-for-sale (AFS) financial assets account fiom pl12.095 million as of December 31, 2015 to Pl 15.293 million as of March 31, 2016 resulting to a 2.85% net increase in marker values of investments.

Accounts payable and accrued expenses amormted to P0.137 million and p0.315 million as of March 31, 2016 and Decembet 31,2015, respectively. The 56.54% net decrease accounts for settlement ofpayabies

and accruals.

Total stockholders' Equity as ofMarch 31, 2016 amounted to p173.309 million or pl.063 book value per share compared to P165.865 million or pl.0l8 book value as ofDecember 31, 2015.

Excepl for items discussed above, there are no more changes in the financial statements that will reach the materiality theshold of 5%.

COVER SHEET for AUDITED FINANGIAL STATEMENTS Number

4

0

9

7

9

c o

R P

o

n

COMPANY NAME E A F R

S

o

PRINCIPAL OFFICE 7

t

h

e

n

N T

Na.

F u

/

R E

Slreet / Barcngay

o

o

/

S

r

c

U R

W / ToM / Pnvince

o r t

e

o

E S

R A T

I o

N

)

J M T

B u

I

I

d

I

e a

c

n

t

e

r

s

e

A P a

s

D B

A

I

c

c

t v

t

Deparl,'nent requiring the report

Companys

EmailAddEss

r.sc r@e

I

qclcreYala=el

No of Slockholders

4.,758

Name ol Conlacl PeFon

Carlota R. Viray

Secondary License Type, lf Appiicable

Company's Tetephone Number

| |

$7

_2917

a-- 7/n AnnualMee[ng {Mooth /

Day)

It4obile Number

N/A

|

It

FiscalYear (Month / oay)

fia--__l

Emai AddEss

l,,lobile Numb€r

crviray@petro€nergy.com.ph

N/A

7th Floor, JMT Building, ADB Avenue, Ortigas Center, pasig City

2:

All Boxes nusl be prope y and cornplelefy filetl-up F ailurc lo do so sha// c6r./se lte delay in updaling the coryoralian's rec:otds wilh lhe Connission and/ot nonreceipl ol Notice ol Deticiencies. Fulhet, non.rcceipl ol Nolbe of Deficie;cies ihalt etcuse the coryorcilon f@fi liabilw {ot ils defcbncEs

-

il

1|||il|ilIil|il|ilil|iltilililililIilililrililliltilililfl

ill

SGV Buildinq a better

Syoip Gorres Velayo & Co 6760 Ayala AveDL/e 1226 Maka! City Philipprnes

Tel (632) 891

O3O7

Far i632) e19

oB72

eycom/ph

Reg No 0001.

December 14.2015. valid unil December3t,2018 SEC Accredrtalror No 0012-FR-4 (GroupA) Novembef 10. 2015 vald until November9,2018 BOAJPRC

INDEPENDENT AUDITORS' RXPORT

The Stockholders and the Board of Directors Seafront Resources Corporation 7th Floor, JMT Building ADB Avenue, Ortigas Center, Pasig Cify

Report on the Financial Statements We have audited the accompanying financial statements of Seafront Resources Corporation. which comprise the statements of financial position as at December 3 l, 201 5 and 2014, and the statements of rncome, statements ofcomprehensive income, statements ofchanges in equity and statements ofcash flows for each ofthe three years in the period ended December 3 t , zo t s, ania summary of significant accounting policies and other explanatory information.

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

Auditors' Responsib

il ity

our responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial.statements. The procedures selected depend on the auditor's judgment, including the assessment ofthe risks of material misstatement ofthe financial statements, whether due to frauJ or error. In making those risk assessments, the auditor considers intemal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing un opinion on the effectiveness ofthe entity's intemal control. An audit also includes evaluating the ipproiriateness ofaccounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

our audit opinion.

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sGv

Building a better

2

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of seafront Resources corporation as at December 31, 201 5 and,20l4, and its financial Derformance and its cash flows for each ofthe thr€e years in the period ended December 31, 2015 in aicordance with

Philippine Financial Reporting Standards.

Report on the Supplementary Information Required Under Revenue Regulations l5-2010 The supplementary information required under Revenue Regulations l5-2010 for purposes of filing with the Bureau oflnternal Revenue is presented by the management of Seafiont Resources corporation in a separate schedule. Revenue Regulations l5-2010 requires the information to be presented in the notes to financial statements. Such information is nof a required part ofthe basic

finalcial statements. The infomation is also not required by Securities Regulation code Rule 6g, as Amended (201 1). our opinion on the basic financial statements is not affe;ted by the presentation of the infomation in a separate schedule.

SYCIP GORRES VELAYO & CO.

Michael C. Sabado Parfirer

CPA Certificate No. E9336 SEC Accreditation No. 0664-AR-2 (Group A), March 26, 20 I 4, valid until M arch 25, 2017 Tax Identification No. 160-302-865 BIR Accreditation No. 08-001998-73-20 I 5.

Febnuy 27,2015, valid unril February26,20l8 PTR No. 532168E, January 4,2016, Makari Ciry February 19, 2016

IilItrililililfilililfl ilililtilIil|l|ilil r

n-enbe,lrm of Ensl

d,

y6!n0 Gob.tUrrn€d

SEAF'RONT RESOURCES CORPORATION STATEMENTS OF' FINANCIAL POSITION

December 31 2015

2014

ASSETS

Current Assets Cash and cash equivalents (Notes 6, 8 and l4) Short-term investrnents (Notes 6, 8 and l4) Financial assets at fair value through profit or loss (Notes 5, 7, 8 and 14) Receivables (Notes 5, 7, 8 and 9) Other cunent assets Total Current Assets

Noncurrent Asset Available-for-sale fi nancial

Pr2,035,696

Pl0,100,819 18,307,362

40,650,r99

47

315,262

769.176

,627,704 716,954

689,2s7 77,442,096

53,770,333

assets

LIABILITIES AND EQI]ITY Current Liabilities Accounts

le and accrued

'7

and 14

Equity Capital stock - Pl par value (Note l5) Authorized - 388,000.000 shares Issued and outstanding - 163,000,000 shares Net unrealized gains on available-for-sale financial assets (Notes 8 and l5) Retained earnings fNote l5

Total

163,000,000

163,000,000

4,440,684

l0,t 4t,454

I

7,594,9s2

F See

406 34

accohpanying Notes to Financiol Starcmens.

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SEAFRONT RESOURCES CORPORATION STATEMENTS OF INCOME

Years Ended December

3l

2015

2014

20t3

P8,250,779 234,403

P306,664 755,773

P468,81I 960,324

3,227 ,634

463,616

REVENUES Dividend income Interest income (Note 6) Net gains on fair value changes on financial assets at fair value through profit or loss (Note 8) Gain on sale of available-for-sale financial assets (Note 8)

2,795,425

Other income

EXPENSES Net loss on fair value changes on financial assets at fair value through profit or loss (Note 8) Impairment loss on available-for-sale financial assets (Note 8) General and administrative expenses (Note 1l)

INCOME (LOSS) BEFORE INCOME TAX PROVISION FOR INCOME TAX TNote 12)

12,253,726 4,621,872 1,440,389 523

1,498,239

(9,478,991)

3,396,158

7.047

402\

(2.65

7,100 F3,389,058

3,t90,922 6.592

F3.184.230

P0.02079 See

t,834,529

P0.01954

acconpanying Notes to Financal Statenehts

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SEAFRONT RESOURCES CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

Years Ended Decernber

2015 OTHER

C

2014

3l 2013

OMPR-EHT'NSIVE INCOME (LOSS)

Item to be reclassifed to proJit or loss in subsequent periods

Net unrealized gains (losses) on available-forsale financial assets (Note 8) Transfers to profit and loss (Note 8)

(10322,642)

3,281,483

(l1,859,863)

3.281.483

01.859

4,621,872

TOTAL COMPREIIENS N'E See accompanying Notes lo Financial Slatements

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SEAFRONT RESOURCES CORPORATION STATEMENTS OF CHANGES IN EQUITY

Net Unrealized Gains on Availablefor-Sa le

Retained

Financial

Earrings (Deficit)

Capital Stock

Assets

(Note I 5) (Notes 8 and l5)

Note

Total

15)

For the Year Ended December 3l 20t5

Net loss Other comprehensive loss

Total comprehensive Balances at end

(9,486,038)

-

(s,700,770)

Ioss

ofyear

P163,000,000

P4.440,684

(9.4E6.03t)

(Pr.891.0E0

For the Year Ended December Balances at beginning

ofyear

P163,000,000

F6,E59,971

Otler comprehensive income

beginning of

year

F174,065.865 3,3 89,05E

3.281.483

3,2E1,483 3,389,058

6,6'10,541

F163,000,000 P10,141,454 P7,594,952

PIE0,736,406

-

F

163,000,000

F I 8,7

19,834

Net income

3

I 20t3

?1,02t,664

?182;14t,498

3,1E4,230

-

Other comprehensive loss

Total comprehensive income (loss) Balances at end of

I 20t4

P4,205,894

For the Year Ended December B alances at

3

(r5.186.808) P16s.549.s98

3,389,05E 3,281,483 -

Net income Totaf comprghensive income Balances atend ofyear

(9,486,038) (5.700.770)

-

(s,700,?70)

year

(11,8s9,863)

(l1,859,E63) FI

63,000,000

F6,859,971

3,t84,230 (

3,t84,230

P4,205,894

l 1.859.E63) (8,675,63 3)

FI74,065,865

See accompanying Notes to Finahcial Statements

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SEAFRONT RESOURCES CORPORATION STATEMENTS OF CASH FLOWS

Yea rs Ended December 31

20t4

2015

2013

CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax Adjustm€nrs for:

(P9,478,991)

F3,396,r58

P3,t90,922

Net losses (gains) on fair value changes on financial

fair value through profit or loss (Note 8)

12,253,726

lmpairment loss on available-for-sal€ financial assets Interest income (Note 6) Dividend income Depreciation (Note I l) Gain on sale of available-for-sale financial assets Operating loss before working capital changes Changes in operating assets and liabilities:

4,62r,872

assets at

nF.rFreF,in.rF'cFl

(234,403)

(8,2s0,719)

(3,22'7,634) (7

(463,616) (e60,324) (468,811) 207,598

5s;t73)

(306,664)

'795.42

(r

JsEJ?t

(8fl913)

(r,289,656)

ih

18,307,362 (532,720) (5,533,51E) (61,142) 2,622,t',70 22,153

Short-tem investments Receivables Other curent assets

(79,919) (78,046)

(4e,581)

lncrease (decrease) accounts payable and accrued

Net cash generated fiom (used in) operations

l7,124,245

Interest received Income taxes paid

452,655

836,84't 827,EE3

(5.2E5)

CASH FLOWS FROM INVESTING ACTIVITIES Dividends received

8,s0r,361

Proceeds from sale of available-for-sale financial assets Proceeds from sale of financial assets at fair value thjoush profit or loss (Note 8) Payment ofsubscriptions payable (Note 5)

(7,114,7s0)

Acquisition of:

(6;trs,55'7) '7

4

|,89),

(6.692)

3t3,8',/'1 314,327 t2,'740,311 2,002,639

-

6,363

(12,t02,126)

FLnancial ass€ts at fair value though profit or loss

(Note 8) Available-for-sale financial assets (Note

(5,27 E)

(

NET INCREASE @ECREASE) IN CASH AND CASH

EQUTVALENTS

cAsH AND CASH EQUMLENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 6)

See accompanying Notes to

6,221)

l r,7s2,4r3)

r,934,817 3,9'75,96t

(5,021,483)

0,100,819 6,I24,E58

|,146,341

*12,035,696 F10,100,819

F6,r24,858

|

Financial Stalements

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SEAFRONT RESOURCES CORPORATION NOTES TO FINANCIAL STATEMENTS

l.

Corporatelnformation Seafront Resources corporation ("the company" or "SRC") was registered with the securities and Exchange Commission (SEC) on April 16, 1970 as an oil exploration and production company.

On October 1 8, 1996, the Company amended its Articles of Incorporation which provides for the revision of its primary purpose from engaging in the business of oil exploration and production into a holding company and to include oil exploration and production business as one of its secondary purposes.

The registered office address ofthe Company is 7th Floor, JMT Building, ADB Avenue, Ortigas Center, Pasig City.

The accounting and administrative functions are undertaken by PetroEnergy Resources Corporation (PERC).

The Company's shares of stock are listed and are currently traded at the Philippine Stock Exchanse.

2.

Basis ofPreparation Basis ofPreparation The accompanying financial statements of the Company have been prepared under the historical cost basis, except for the financial assets at fair value through profit or loss (FVPL) and availablefor-sale (AFS) financial assets, which have been measured at fair value. The Company's financial statements are presented in Philippine Peso (P), which is also the Company's functional currency, The transactions and balances ofthe fiust funds are consolidated on a line by line basis to the Company. The trust fund reports are prepared for the same reporting year as the Company, using consistent accounting policies Statement of Compliance The financial statements ofthe Company have been prepared in accordance with Philippine Financial Reporting Standards (PFRS).

3.

Changes in Accounting Policies and Disclosures The Company adopted the following new and amended PFRS, Philippine Accounting Standards (PAS) and Phrlippine Interpretations that became effective beginning January 1, 20t 5 in the accompanying Company's financial statements. Except as otherwise indicated, the adoption ofthe new and amended PFRS, PAS and Philippine Interpretations did not have any effect on the

financial statements of the Company.

.

PAS 19, Employee Benefits - Defned Benefit Plans; Employee Contributions PAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods ofservice as a negative benefit. These amendments cJarify that, if the amount ofthe contributions is independent ofthe number ofyears ofservice, an

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-zentity is permitted to recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. The amendments had no impact on the Company's financial statements, Annual Improvements to PFRSI (2010-2012 cycle) The Annual Improvements to PFRSs (2010-20I2 cycle) are effective for annual periods begrnning on or after January 1, 2015 and are not expected to have a material impact on the Company.

r

PFRS 2, Share-based Payment - Defnition o/ Vesting Condition

This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including:

. . . . .

A performance condition must contain a service condition A performance target must be met while the counterparty is rendering service A performance target may relate to the operations or activities ofan entity, or to those of another entity in the same group A performance condition may be a market or non-market condition Ifthe counterparty, regardless ofthe reason, ceases to provide service during the vesting period, the service condition is not satisfied.

This amendment does not apply to the Company

r

as

it has no share-based payments.

PFRS 3, Business Combinations - Accountingfor Contingent Consideration in

a

Business

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

o

PFRS 8, Operating Segments - Aggregation o/ Operating Segments and Reconciliation of the Totul of the Reportable Segments'Assets to the Entity's Assets The amendments are applied retrospectively and clari$r that:

. .

An entily must disclose thejudgments made by management in applying the aggregation criteria in the standard, including a brief description of operating segments that have been aggegated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are'similar'.

The reconciliation ofsegment assets to total assets is only required to be disclosed ifthe reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities,

The amendments affect disclosures only and had no impact on the Company's financial position or performance.

.

PAS 16, Property, Plqnt and Equipmenl - Revaluation Method - Proportionate Restdtement e d D ep r e c i a tion The amendment is applied retrospectively and clarifies in PAS l6 and PAS 38 that the asset

of

A c cumulat

may be revalued by reference to the observable data on either the gross or the net carrying amount, In addition, the accumulated depreciation or amortization is the difference between

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the gross and carrying amounts ofthe asset. The amendment Company's financial position or performance.

o

will have no impact on the

PAS 24, Related Party Disclosures - Key Monagement Personnel The amendment is applied retrospectively and clarifies that a management entity, which is an entity that provides key management personnel services, is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incuned for management services. The amendments affect disclosures only and had no impact on the Company's financial position or performance,

Annual Improvements to PFRSS (2011-2013 cycle) The Annual Improvements to PFRSs (2010-2012 cycle) are effective for annual periods beginning on or after January 1, 2015 and are not expected to have a material impact on the Company.

.

PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements The amendment is applied prospectively and clarifies the following regarding the scope exceptions within PFRS 3:

. .

Joint arrangements, notjustjoint ventures, are outside the scope ofPFRS 3.

This scope exception applies only to the accounting in the financial statements ofthejoint arrangement itself.

The amendment will have no impact on the Company's financial position or performance.

.

o

PFRS \3, Fqir Value Measurement - Portfolio Exception The amendment is applied prospectively and clarifies that the portfolio exception in PFRS l3 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of PAS 39. The amendment had no significant impact on the Company's financial position or performance.

PAS 40,Investment Property The amendment is applied prospectively and clarifies that PFRS 3, and not the description of ancillary services in PAS 40, is used to detemine ifthe transaction is the purchase ofan asset or business combination. The description of ancillary services in PAS 40 only differentiates between investment property and owner-occupied property (i.e., properly, plant and equipment). The amendment had no significant impact on the Company's financial position or performance.

The standards and interpretations that are issue, but not yet effective, up to date of issuance of the Company's financial statements are disclosed below. The Company intends to adopt these standards. ifapplicable, when they become effective.

Defered Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate This interpretation covers accounting for revenue and associated expenses by entities that undertake the construction ofreal estate directly or through subcontractors. The interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies as construction conhact to be accounted for under PAS I I or invo)ves rendering of services, in which case, revenue is recognized based on stage of completion.

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-4 Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The SEC and the Financial Reporting Standards Council have deferred the effectivity of this interpretation until the final Revenue standard is issued by the lnternational Accounting Standards Board (IASB) and an evaluation ofthe requirements ofthe final Revenue standard against the practices ofthe Philippine real estate industry is completed.

Adoption ofthe interyretation when it becomes effective will not have any impact on the financial statements of the Company.

E/fective January

.

l,

2016

PFRS 10, Consolidated Financial Statements and PAS 28, Inyestments in Associates and Joint Ventures - Sale or Contribution ofAssets befireen an Investor and its Associate or Joinl Venture These amendments address an acknowledged inconsistency between the requirements in PFRS l0 and those in PAS 28 (201 I ) in dealing with the sale or contribution of assets between an investor and its associate orjointventure. The amendments require that a full gainorloss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a fansaction involves assets that do not constitute a business, even ifthese assets are housed in a subsidiary. These amendments are effective from annual periods beginning on or after January l, 2016. The amendment will have no significant impact on the Company's financial position or performance.

.

.

PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements (Amendments) The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying PFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. For first-time adopters ofPFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date oftransition to PFRS. These amendments are not expected to have any impact to the Company.

PFRS 71, Joint Arrangements - Accountingfor Acquisitions of Interests in Joint Operations (Amendments) The amendments to PFRS 1 1 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a busjness must apply the relevant PFRS 3 principles for business combinations accounting. The amendments also clarifl that a previously held inlerest in ajoint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to PFRS 1 I to specif that the amendments do not apply when the parties sharingjoint control, including the reporting entity, are under common control ofthe same ultimate controlling party.

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

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PAS 1, Presentation o/ Financial Statements - Disclosure Initiatiye (Amendments) The amendments are intended to assist entities in applying judgment when meeting the presentation and disclosure requirements in PFRS. They clariry the following:

. o . .

That entities shall not reduce the understandability oftheir financial statements by either obscuring material information with immaterial information; or aggregating material items that have different natures or functions.

That specific line items in the statement of income and Other Comprehensive Income (OCI) and the statement offinancial position may be disaggregated.

That entities have flexibility as to the order in which they present the notes to financial slatements.

That the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss,

Early application is permitted and entities do not need to disclose that fact as the amendments are considered to be clarifications that do not affect an entity's accounting policies or accounting estimates. The Company is currently assessing the impact ofthese amendments on its financial statements.

PFRS 14, Regulatory Defewal Accounts PFRS l4 is an optional standard that allows an entity, whose activities are subject to rateregulation, to continue applying most of iLs existing accounting policies for regulatory deferral account balances upon its first-time adoption ofPFRS. Entities that adopt PFRS l4 must present the regulatory deferral accounts as separate line items on the statement offinancial position and present movements in these account balarces as separate line items in the statement ofprofit or loss and other comprehensive income. The standard requires disclosures on the nature of, and risks associated with, the entity's rate-regulation and the effects ofthat rate-regulation on its financial statements. PFRS 14 is effective for annual periods beginning on or after January l, 2016. Since the Company is an existing PFRS preparer, this standard would not apply.

PAS 16, Property, Plant and Equipmezl, and PAS 3S,Intangible Assets - Clarifcation of Acceptable Methods of Depreciation and Amortization (Amendments) The amendments clarifl the principle in PAS l6 and PAS 3 8 that revenue reflects a pattem of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use ofthe asset. As a result, a revenue-based method cannot be used to depreciate properfy, plant and equipment and may only be used in very limited chcumstanc€s to amortize intangible assets. The amendments are effective prospectively for annual periods beginning on or after January l, 2016, with early adoption permitted. The amendment will have no significant impact on the Company's financial position or performance.

PAS

16, Property, Plant and Equipmert, and PAS 41, Agriculture - Bearer Plqnts (Amendments) The amendments change the accounting requirements for biological assets that meet the definition ofbearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope ofPAS 41, Instead, PAS l6 will apply.

After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). Tbe amendments also require that produce that grows on bearer plants will remain in the scope of

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4l measured at fair value less costs to selJ. For government grants related to bearer plants, PAS 20, Accountingfor Government Grants and Disclosure of Govemmenl Assistance, will apply. The amendments are retrospectively effective for annual periods beginning on or after January I , 2016, with early adoption permitted. The amendment will have no significant impact on the Company's financial position or performance.

PAS

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

.

.

PFRS 5, Non-cuwenl Assets Heldfor Sale and Discontinued Operations - Changes in Methods of Disposal The amendment is applied prospectively and clarifies that changing from a disposal through sale to a disposal through distribution to owners and vice-versa should not be considered to be a new plan ofdisposal, rather it is a continuation ofthe original plan. There is, therefore, no interruption ofthe application ofthe requirements in PFRS 5. The amendment also clarifies that changing the disposal method does not change the date of classification. The amendment will have no significant impact on the Company's financial position or performance.

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

PFRS 7 - Applicability of the Amendnenls to PFRS 7 to Condensed Interim Financial Statements This amendment is applied rebospectively and clarifies that the disclosures on offsetting of financial assets and financial liabiiities are not required in the condensed interim financial report unless they provide a significant update to the information reported in the most recent annuar repon.

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

P

AS 34, Interim Financial Reporting - disclosure of information 'elsewhere in the interim

fnqncial reporl' The amendment is applied retrospectively and clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the geater interim financial report (e.g,, in the management commentary or risk report).

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Ef/ective January

.

l,

2 01

8

PFRS 9, Financial Instruments In July 2014, the final version ofPFRS 9,.Fjnancial Instruments, was issued. PFRS 9 reflects all phases of the financial instrumenls project and replacesPAS 39, Financial Instruments: Recognition and Measwement, and all previous versions ofPFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting.

PFRS 9 is effective for annual periods beginning on or after January l, 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory, Early application ofprevious versions ofPFRS 9 is permitted if the date of initial application is before February l, 2015.

The adoption ofPFRS 9 will have an effect on the classification and measurement of the Company's financial assets and impairment methodology for financial assets, but will have no impact on the classification and measurement ofthe Company's financial liabilities. The adoption will also have an effect on the Company's application ofhedge accounting. The Company is currently assessing the impact of adopting this standard.

The

r

following new standard issued by the IASB has not yet been adopted by the FRSC IFRS 15, Revenue from Contracts rrith Customers IFRS I 5 was issued in May 2014 and establishes a new five,step model that will apply to revenue arising from contracts with customers. Under IFRS l5 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS l5 provide a more structured approach to measuring and recognizing revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after January 1, 201 8 with early adoption permitted. The Company is cunently assessing the impact ofIFRS I5 and plans to adopt the new standard on the required effective date once adopted locally.

.

IFRS

16, Leases On January 13, 2016, the IASB issued its new standard, IFRS 16, Leases, which replaces IAS 17, the current leases standard, and the related Interpretations.

Under the new standard, lessees will no longer classiry their leases as either operating or finance leases in accordance with IAS 17. Rather, lessees will apply the single-asset model.

Under this model, Iessees will recognize the assets and related liabilities for most leases on

their balance sheets, and subsequently, will depreciate the Iease assets and recognize interest on the lease liabilities in their profit or loss. Leases with a term of 12 months or less or for which the underlying asset is of low value are exempted from these requirements.

The accounting by lessors is substantially unchanged as the new standard carries forward the principles of lessor accounting under IAS 17. Lessors, however, will be required to disclose more information in their financial statements, particularly on the risk exposure to residual value.

The new standard is effective for annual periods beginning on or after January 1,2019.

Entities may early adopt IFRS l6 but only if they have also adopted IFRS I 5. When adopting IFRS 16, an entity is permitted to use either a full retrospective or a modified rebospective approach, with options to use certain transition reliefs, The Company is currently assessing the

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-8 impact of IFRS l6 and plans to adopt the new standard on the required effective date once adopted locally.

4.

Summary of Significant Accounting Policies Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the income can be reliably measured regardless of whether the payment is being made Revenue is measured at the fair value ofthe consideration received or receivable, takirig rnto account contractually defined terms ofpayment and excluding taxes or duties. The company assesses its revenue arrangements against specific criteria in order to determine if it is actine as principal or agent. The company has concluded that it is acting as principal in all of its revinue arrangements. The following specific recognition criteria must also be met before revenue is recognized:

Dividend income Dividend income is recognized when the company's right to receive the payment is established.

Inlerest income Interest income is recognized as the interest accrues taking into account the effective yield on the asset.

Service income Income from services is recognized when the services have been rendered.

Rental income Rental income under noncancellable leases is recognized in the company's statement of income on a straight-line basis over the lease term and the terms ofthe lease, respectively, or based on a certain percentage ofthe gross revenue ofthe tenants, as provided under the terms of the lease contract.

Expenses

Expenses are recorded in the statement of income when incurred. General and administrative expenses constitute costs of administerinq the business.

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

Shoft-term Investments

short{erm investments are short-term placements with maturities ofmore than three months but less than one year from the date ofacquisition. These earn interest at the respective short-term investment rates.

Datu ofrecognition The company recognizes a financial asset or a financial liability in the stat€ment offinancial position when it becomes a party to the contractual provisions ofthe 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.

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-9

-

Ini tial

re co gnit i on offinanc ial instruments Financial assets within the scope ofPAS 39 are classified as either financial assets at FVPL. loans and receivables, held-to-maturity investments (HTM) and AFS financial assets, as appropriate.

Financial liabilities are classified as financial liabilities at FVPL and other financial I iabiiities.

The classification depends on the purpose for which the investments are required and the company determines the classification ofthe financial assets at initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year-end.

All financial instruments are recognized initially

at fair value plus, in the case of investments not at FVPL, directly atnibutable to transaction costs.

The Company's financial assets include financial assets at FVPL, loans and receivable and AFS financial assets and the financial liabilities include other financial liabilities. As of December 31,2015 and 2014, the company has no HTM investments and financial liabilities at

FVPL.

lermination offair v alue 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

De

liability takes place either:

o r

In the principal market for the asset or liability, or In the absence ofa principal market, in the most advantageous market for the

asset or

liability

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

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

All assets and liabilities for which fair value is measured or disclosed in the financial statements arc 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:

'o .

Level I - 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 tecbniques for which the iowest level input that is significant to the fair value measurement is unobservable

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

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- t0 'Day

I ' Dffirence

Where the transaction price in a non-active market is different to the fair value from other observable current market transactions in the same instrument or based on a valuation technioue whose variables include only data Iiom observable market, the Company recognizes the difference between the transaction price and fair value (a 'Day 1'difference) in the statement of comprehensive income unless it qualifies for recognition as some other type ofasset or liability.

In cases where variables used is made ofdata which is not observable. the difference between the transaction price and model value is only recognized in the statement of comprehensive income when the inputs become observable or when the instrument is derecognized. For each transaction, the Company determines the appropriate method ofrecognizing the 'Day I' difference amount.

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

After initial measurement, loans ald receivables are subsequently measured at amortized cost using the EIR method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part ofthe EIR, Classified under this category are the Company's cash and cash equivalents, short-term investments and receivables.

Financial assets at FVPL Financial assets at FVPL include financial

assets held for trading purposes, derivative instrumenm, or those designated by management upon initial recognition as at FVPL, subject to any ofthe

following criteria:

o . o

the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a different basis; or tbe assets and liabilities are part ofa group offinancial assets, financial liabilities or both which are managed and their performance are evaluated on a fair value basis, in accordance with a documented risk management or investment stratery; or the financial instrument contains an embedded derivative, unless the embedded derivative does not significantly modiq/ the cash flows or it is clear, with Iittle or no analysis, that it would not be separately recorded.

Financial assets and financial liabilities at FVPL are recorded in the statement of financial position at fair value. Changes in fair value are reflected in the statement ofcomprehensive income, Interest earned or incurred is recorded in interest income or expense, respectively,

Dividend income is recognized according to the terms ofthe contract, or when the right ofthe payment has been established.

Classified as financial assets at FVPL are the Company's investments in listed equity securities held for trading and investments in government securities classified under financial assets at fair value through profit or loss.

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AFS

financial assets

AFS financial assets are those which are designated as such and are purchased and held indefinitely, and may be sold in response to liquidity requirements or changes in market conditions. AFS financial assets include investments in equity securities classified under the available-for-sale fi nancial assets.

After initial measurement, AFS financial assets are measured at fair value. The unrealized sains and losses arising from the fair valuation ofAFS financial assets are excluded from reoortei eamings and are reported in the statement offinancial position and statement ofchanges in equiry.

When the security is disposed of, the cumulative gain or loss previously recogrized in the statement ofchanges in equity is recognized in the statement ofcomprehensive income. where the Company holds more than one investrnent in the same security, these are deemed to be disposed ofon a first-in first-out basis. Dividends eamed in AFS financial assets are recoenized in the statement ofcomprehensive income when right to receive payment has been establishe-d. The losses arising from impairment ofsuch investments are recognized in the statement of comprehensive income, O ther Jin anc ia I I i a b il it ie s other financial liabilities are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. These liabilities are carried at cost or amortized cost in the statement offinancial position. Amortization is determined using the effective interest

method.

The Company's other financial liabilities include accounts payable and accrued expenses (excluding statutory liabilities) and subscriptions payable. ized Cost The company assesses at each reporting date whether a financial asset or group offinancial assets is impaired. Ifthere is objective evidence that ar impairment loss on financial assets canied at amortized cost (e.g., receivables) has been incuned, the amount ofthe loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. Time value is generally not considered when the effect ofdiscounting is not material. The carrying amount ofthe asset shall be reduced directly ifthe impairment is assessed to be permanent. The company will reduce the carrying amount of the asset through the use of an allowance account ifthe impairment is assessed to be temporary. The amount ofthe loss shall be recognized in the statement ofcomprehensive income when the book value exceeds the fair value ofthe financial assets.

The Company first assesses whether objective evidence of impairment exists individually for finalcial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group offinancial asset with similar credit sk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a

collective assessment ofimpairment.

.

If in a subsequent period, the amount ofthe impairment

loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal ofan impairment loss is

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recognized in the statement of comprehensive income, to the extent that the carrying value ofthe asset does not exceed its amortized cost at the reversal date.

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

. .

the contractual rights to receive cash flows from the asset have expired; the Company retains the right 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 (a) the Company has transferred substantially all the risks and rewards ofthe asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transfened control ofthe asset.

when the company has transfened 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 ofthe asset, the asset is recognized to the extent ofthe company's continuing involvement in the assel. continuing involvement that takes the form ofa guarantee over the transferred asset is measured at the lower ofthe original carrying amount ofthe asset and the maximum amount of consideration that the Company could be required to repay.

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

when 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 ofthe original liability and the recognition ofa new liability, and the difference in the respective carrying amounts is recognized in the statement of income.

Inyestment ProDerW Investment property includes parking spaces that are held to be leased out under one or more operating leases. These properties are initially measured at cost, which comprises its purchase price and any directly attributable expenditure, Directly aftributable expenditure capitalized as part ofthe investment properties' cost inciudes professional fee for legal services, property transfer taxes and other transaction costs.

The initial cost ofthe investment property comprises ofpurchase price and any directly attributable costs ofbringing the asset to its working condition. Expendihrres incurred after the investment property has been put into operation, such as repairs and maintenance, are normally charged to income in the year when costs are incurred. In sjtuations 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 investment properry beyond its originally assessed standard ofperformance, the expenditures are capitalized as an additional cost of investment propefy. The Company accounts for its investment properry ar cosr.

Investment properry is derecognized when either it has been disposed of or when the investment properly is permanently withdrawn from use and no future economic benefit is expected from its disposal, Any gains or losses on the retirement or disposal ofan investment property are recognized in the statements of income in the year of retirement or disposal,

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-

13 -

Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner-occupation, commencement ofan operating lease to another party or by the end ofconstruction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sell.

Leases

The determination ofwhether an arangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment ofwhether the fulfillment ofthe anangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A reassessment is made after inception ofthe lease only if one ofthe following applies:

(a) There is a change in contractual terms, other than a renewal or extension ofthe arrangement; (b) A renewal option is exercised or extension granted, unless that term ofthe renewal or extension was initially included in the lease term; (c) There is a change in the determination ofwhether fulfillment is dependent on a specific asset or:

(d) There is a substantial change to the

asset,

Operating leases ofthe Company represent those under which substantially all the risks and benefits ofownership ofthe assets remain with the lessor. Operating lease collections are recognized as an income in the statement ofcomprehensive income on a sfiaight-line basis over the lease term of the lessee.

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

as

Contingencies Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility ofan oufflow ofresources embodying economic benefits is remote, A contingent asset is not recognized in the financial statements but disclosed when an inflow of economic benefit is probable.

Income Tax

Cuftent tax Cunent tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the repofting date.

Deferred tax Deferred tax is provided on all temporary differences at the reporting date between the tax bases assets and liabilities and their carrying amounts for financial reporting purposes.

of

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- t4

-

Deferred

ta-x liabilities are recognized for all taxable temporary differences, Deferred tax assets are recognized for all deductible temporary differences, carryforward ofunused tax credits from excess minimum corporate income tax (MCIT) over regular corporate income tax and unused net operating losses carryover (NOLCO), to the extent that it is probable that taxable profit will be

available against which the deductible temporary differences, and the carryforward of unused tax credits from excess MCIT and unexpired NOLCO can be utilized.

The carrying amount of defened 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 ofthe defened tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future ta.rable profit will allow the defened tax asset 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 reporting date,

Transactions denominated in foreign cunencies are recorded in Philippine Peso using the exchange rate prevailing as ofthe date ofthe transactions. Outstanding foreign currency denominated monetary assets and liabilities are restated using the closing rate as ofthe reporting date, Exchange gains or losses resulting from rate fluctuation upon actual settlement and from restatement at the reporting date are credited against or charged to operations.

Eamings Per Share (EPS) Basic EPS is computed on the basis ofthe weighted average number ofshares outstanding during the year after giving retroactive effect for any stock dividends declared in the current year.

Diluted EPS is computed by dividing net income applicable to common shares by the weighted average number of common shares issued and outstanding during the year after giving effect to assumed exercise of stock options and retroactive effect of stock dividends declared.

Eouiw Capital stock is measured at par value for all shares issued. Incremental costs incurred directly attributable to the issuance of new shares are shown in equity as a deduction from proceeds, net of tax. When the Company purchases its own capital stock (treasury shares), the consideration paid, including any athibutable incremental costs, is deducted from equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transactjon costs and the related tax effects is included in equity.

Retained eamings (deficit) represents accumulated income and losses of the Company and with consideration ofany changes in accounting policies and enors applied retroactively. The Company has declarable dividends amounted P5.6 million as ofDecember 31,2015. Dividend distribution is approved by the BOD. Events After the Reportine Date Post year-end events up to the date of auditors' report that provide additional information about the Company's situation at the reporting date (adjusting events) are reflected in the financial statements, ifany. Post year-end events that are not adjusting events are disclosed in the notes

when material.

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- t5

5.

-

Significant Accounting Judgments, Estimates and Assumptions The preparation of the accompanying financial statements requires management to make judgments, estimates and assumptions that affect amounts reported in the financial statements and related notes. Thejudgments, estimates and assumptions usid in the financial statements are based upon management's evaluation ofrelevant facts and circumstances as ofthe date ofthe Company's financial statements. Actual results could differ fiom such estimates.

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

Judgments In the process of applying the Company's accounting policies, management has made the following judgments, apart from those involving estimations, which has the most significant effect on the amounts recognized in the financial statements:

Going concern The Company's management has made an assessment of the Company's ability to continue as a going concern and is satisfied that the Company has the resources to continue in business for the foreseeable future. Furthermore, management is not aware ofany material uncerlainties that may cast significant doubt upon the Company's ability to continue as a going concem. Therefore, the financial statements continue to be prepared on a going concem basis. e termination of func tional currenq) The Company determines the functional currency based on economic substance of underlying circumstances relevant to the company. The company's functional cunency has been determined to be the Philippine Peso (P). The Philippine Peso is the currency ofthe primary economic environment in which the Company operates.

D

Operating Iease commitments - Company as lessor The Company owns a parking lot which is being Ieased out to a third party. The Company does not transfer substantially all the risks and benefits ofownership ofthe asset, therefore it is classified as operating lease.

Estimates and Assumptions The key assumptions conceming the future and other key sources of estimation uncertainty at the statements offinancial position date, that have a significant risk ofcausing a material adjustment to the carrying amounts ofassets and liabilities within the next financial year are discussed below.

Determination offair value offnancial assets and liabilities The fair value determinations for financial assets and liabilities are based generally on listed market prices or broker or dealer price quotations. Ifprices are not readily determinable or if liquidating the positions is reasonably expected to affect market prices, fair value is based on either intemal valuation models or management's estimate ofamounts that could be realized under current market conditions, assuming an orderly liquidation over a reasonable period of time.

The Company based its fair values for financial assets and liabilities on quoted prices in active market for identical assets or Iiabilities.

The carrying value offinancial assets at FVPL and AFS financial assets amounted to P40.7 million and Pl I2.1 million, respectively, as ofDecember 3l,2015,and P47,6 million and Pl03,6 million, respectively, as ofDecember 31,2014 (rlotes 8 and l4).

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_

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_

Evalualion of impairment ofAFS financial assets The Company determines that AFS financial assets are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination ofwhat is significant or prolonged requires judgment. In making this judgment, the Company evaluates among other factors, the normal volatility in the share price. In addition, particularly for unquoted equity instruments, impairment may be appropriate when there is evidence of deterioration in the financial condition of the investee, industry and sector performance like changes in operational and financial cash flows. Any indication ofdeterioration in the above factors can have a negative impact on the fair value. Had there been a significant or prolonged decline in fair value over its cost, the Company should recognize net realized loss from AFS financial assets in the statement of lncome.

The carrying values ofAFS financial assets amounted to P 124.4 rnillion and Pl23.0 million as of December 31,2015 and 2014, respectively. Impairment loss of F4.6 million was recognized by the Company in 2015 but nil in 2014 (Notes 8 and 14).

Evaluation oJ impairment of receiyables The Company reviews its receivables to assess impairment at least on an annual basis. In determining whether an impairment loss should be recorded in the statements of income, the Company makes judgments as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from its receivables. This evidence normally includes direct information about the financial condition of the borrower.

Allowance for impairment losses is determined based on individual assessment. The Company has not recognized impairment losses in 2015 and 2014.

The carrying values ofreceivables amounted to P0.3 million and P0.7 million as December 31,2015 and 2014, respectively (Notes 9 and l4).

of

Deferred tax assets Defened tax assets are recognized for all unused tax losses to the extent that it is probable that future taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount ofdefened tax assets that can be recognized, based upon the likely timing and level of future taxable profits together witl future tax planning strategies.

The Company did not recognize deferred tax assets amounting Pl .I million as of December 31,2015 and 2014 (Note l2). Management believes that itmay notbe probable that sufficient taxable income will be available in the near foreseeable future aeainst which the income tax benefits can be realized,

6.

Cash and Cash Equivalents and Short-term Investments

20t4

2015 Cash in bank

Short-term

investments

P6,502,459

5,533,231

P12,035,696

Pl

tt

5r5

9,988,294 F10,100,819

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cash in bank earns interest at the previiling bank deposit rates. short-term investments are made for varying periods ofup to three months depending on rhe immediate cash requirements ofthe

Company and earn interest at the prevailing short-term placement rates,

As ofDecember 31, 2014, the company has short-term investrnents with periods of more than three months but less than one year amounting F18.3 million These investments were presented under short-term investments in the statement of financial position.

Interest income eamed on cash in banks and short-term investments amounted to F0.23 million, F0.76 milfion and P0.96 million in2015,20t4 and 2013, respectively.

7.

Investment in Trust Fund The company established a trust fund (the Trust) which is being administered by a local bank under trust agreement. The details of the trust fund based on thi financial statements issued by the trustee bank follow: 2015

2014

P3,295,353 12,648,482 6,048,3s2

P9,398,071

Assets Cash and cash equivalents

Financial assets at fair value through profit and loss Available for sale hnancial assets Loans and receivables

24

,2s7 768

22,016,533

Liabilities Accounts

| 4,93',7

24,344,102

le and accrued

40.523

P24 03.579

Equity Principal fund, beginning Additions to tund

?22,730,508

P22,730,508

end

Accumulated trust fund income (loss) at beginning of yezr Trust fund income for the Accumulated trust fund income at end of

730

1,573,071

(674,544) 47

.615

1.571.071

?21

P24.303.519

The assets, Iiabilities and performance ofthe fund are consolidated in the applicable accounts the Company for financial statement presentation purposes,

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8.

Financial Assets The Company's finaacial assets are summarized by measurement categories as follows:

Cash and cash equivalents (Notes 6 and 14) Short-term investrnents (Notes 6 and l4) Financial assets at FVPL (Note I4) Receivables (Notes 9 and 14)

AFS financial

assets

2015 P12,035,696

P10,100,819

40,650,I99

4'1,627,704

2014 t8,307,362

I

315,262

7t6,954 103,550.238 F165

PI

The financial assets, except for cash and cash equivalents, short-term investments and receivables (included in each category above) are detailed as follows:

Financial Assets at FVPL The Company's financial assets at FVpL are canied at fair value and its related acquisition costs

follow:

20t4

2015 Listed equigr securities: Fair value

Acquisition cost

P40,650,199

48,096,391

P47,627,704

42,820,170

Th::_",-19* 9l fair value changes on financial assets at fair value through profit or loss amounted to F12.25 million for the year ended December 31,2015 while the net giini on fair value changes amounted to P3.23 million and F0.46 million for the years ended December 31,2014 ,'dz}l3, respectively.

In 2014, the short-term investments represent invesfinent in government securities with maturities of more than 90 days up to one year.

The movements in financial assets at FVpL for the years ended December 31, 2015 and 2014

follows:

2015 Balance at beginning ofyear

Additions Disposals Fair value Balance at end

P47,627 ,704

2014 ?46,402,709

5,276,221 (2,002,639) 3

of

?47 ,627 ,104

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-

AFS Financial Assets AFS financial assets consists ofshares of stock held for Iong-term investment purposes, Listed equity securities are canied at fair value, while the non-listed equity security ii ca.,ied at cost.

The carrying values of these investments are as follows: 2015

20r4

P13,,7 48,657

P15,918,146 7 ,046.366

Listed equity securities: PetroEnergy Resources Corporation (PERC) on

5t2

Non-l isted equity security: Hermosa Ecozone Development Corporarron

r00,054,J60 IE tO

r

}IEDC

00,054,360 9

The movements in AFS financial assets for the year ended December 31, 2015 and 2014 follows: 2015 Balance at beginning ofyear

Additions Payment of subscription payable to HEDC Fair value Balance at end

Pr03,550,238

the

of

F

103.550.23 8

7,r14,750

759

The movement in subscription payable to TIEDC for the year ended December fo llows:

Balance at end

100,268,7ss

ll,7 52,413

of

Balance at beginning ofyear

20t4 P

2015 P19,468,634

3.281.483

3

l,

2015 and

z0r4

2014

?19,468,634

I P19.468.634

In 2015, the Company recognized impairment loss amounting P4-6 million on investment in PERC's share.

Movements in the net unrealized gains on AFS financial assets are as follows:

Balance at beginning ofyear Gain (Joss) recognized in other comprehensive lncome Transferred to and loss

2015

20\ 4

P10,141,454

P6,859,97 |

(r0,322,642)

3,281,483

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_20

_

tnvestment m 17.LDC On January 31,199'1,the Company entered into a Project Shareholders' Agreement with five other companies led by Investment and capital corporation ofthe philippines and penta capital

Investment corporation to develop 500 to 600 hectares ofraw land in Fieimosa, Bataan into a new township consisting of industrial estates, residential communities, a golf and country club and a commercial center.

The project site is accessible from Roman Highway through a connecting road which has just been completed in 2007. onsite development has commenced and possible locators have been invited.

The industrial estates were the first to be develooed.

The Subic clark-Tarlac Expressway (SCTEX) was already completed and public access started in May 2008. A spur road of the expressway will be one of the ingress-egresJ to ru,DC. As of December 3 l, 2013, titles under the name ofthe original owners (a total of229 hectares) were already transfened to HEDC. On May 3 l, 2015, I{EDC declared a cash dividend to its stock}rolders of record as of December 3 l 2014 in the amount of68,874,000. Company,s share amounted 7,g00,000 which was received on June 02, 2015.

on June 06, 201 5, the company paid the amount of p7,l 14,500 for its share in r{EDC cash call on subscription in the amount of P49,45'7,311.

As ofDecember 11,2015 and 2014, the company has outstanding subscriptions payable to FIEDC which amounted to Fl2.4 million and F 19.5 million, respectively. The subscriptions payable are due on demand Q''lote 14). Investment in HEDC is presented in the statement offinancial position at cost net of subscription payable.

Inyestment in PERC The Company's total investments in PERC follow: 2015 P12,901,452

Financial assets at FVPL

AFS financial assets fNote

14

13,7

20t 4

Pt4,937,257 1

09

5,91 8. 1 46

P10,855.403

PERC provides administrative, accounting and legal services to the Company.

9.

Receivables

Dividends receivable Receivable from HEDC Q.{ote 14) Accrued interest receivable Receivable from Wealth Securities Inc.

20r5

2014

P194,080 7s,000 29,040

?444,662 25,000 24'1

,292

t7.142

Receivable from TIEDC pertains to advances to HEDC to assist them in completing its approved plans and programs as well as to sustain its financial requirements in the coming year o\loie 13).

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-21

Receivable from wealth Securities, Inc. pertains to rental income from leased parking spaces. ' The carrying amounts disclosed above reasonably approximate fair values at year-enJ. For the terms and conditions ofrelated party transactions, refer to Note 13.

As ofDecember 31,2014, the rollforward analysis ofthe allowance for impairment losses

follows: Balance at beginning ofyear Reversal of provision

P288, r 85

I

10, Other Income

Service income Rental income Qllotes Reversal of

13

and 19)

2015

2014

P267,857 84,480

P267,857 84,480 251.587

F352.337

P603

20t3 Pzl5,4t7 59,200

P334.6\7

Service income pertains to accounting services rendered by the company to TIEDC (Note l3).

Rental income pertains to rentals earned from the two (2) parking slots owned by the company which are classified as investment property. The canying value ofthe investment properfy amounted to nil as ofDecember 31,2015 and20r4. AsofDecember3t,zotsandzot+.tire carrying value of investment prop€rty follows: Cost

P207,598 207

The fair value of the investment property amounted to p500,000 per slot as ofDecember 31,2015 has been determined on the basis ofrecent sales of similar properties in the same area as the investment property and taking into account the economic conditions prevailing at the time the valuation was made. There are no related costs for the operations ofthe investment

and20l4. This

property.

Reversal ofprovision represents previously recognized allowance on loan receivables collected in full in 2014.

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-22

I

1. General and Administrative Expenses 2015 +414,618

Stock}olders' meeting expenses Professional fees Stock transfer expenses Stock Iisting maintenance fees

20t3

2014 ?450,145

322,r63

6t I,448

P369,932 508,194

256,964

Directors' fees Taxes and licenses IT services

Advertising Insurance expense Depreciation

253,000 70,000

259,t 69 58,529

250,820

48,104

6t,192

43,68r 1l,100

288,37'7 39,503

26,200

23,320

7,362

3,973

63,000

14,223

207,598

Condominium dues

1,960

Miscellaneous

26

.602 P1.834.529 67

Pt.498.239

12. Income Taxes The provision for income tax for the years ended December

MCIT.

3

I, 2015,2014

and 2013 represents

As ofDecember 31,2015 and2014, the company did not recognize defened tax assets on the following deductible temporary differences and carry forward benefit ofNoLCo and excess MCIT over RCIT as management assessed that there will be no future ayailable taxable income against which the defened tax assets can be utilized.

2015 P3,728,808 20,839

NOLCO

MCIT Unrealized forex Ioss

2014 ?3,45'7 ,428

20,429

523

The related unrecognized deferred lax assets on these temporary differences amounted to Fl,1 3 9,63 7 and FI,057,53 7 as of December 3 t, 2015 and 2014, respectively, The details of unexpired MCIT and NOLCO are as follows:

incurred 2015

Year

2014 2013

20t5

MCIT NOLCO Exnirv Date ?7,041 pr,088,0st---- Dec;GiJi 2018 7,100 6.692 P20.839

1 141)AA

December 31, 2017 December 31. 2016

r.497.912 p1 ??o

I

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20t 4

2014 2013

F7, r 00

6,692

20t2

?1,143,244 1,497,912

7

December 31, 2017 December 31, 2016 December 31.2015

81

429

P3.457 .428

Rollforward of NOLCO follows:

Balances at beginning ofyear

20ls

2014

P3,457,428

P6,652,495

1,088,052

t,143,244

Additions Balances at end

I

of

729

P3.457.428

Rollforward of MCIT follows:

Balances at beginning of year

Additions Balances at end

20r5 *20,429

2014 ?20,094

7,041

7,100 7 429

of

The reconciliation ofthe income tax computed at the statutory tax rate to the provision for income tax shown in the statements of income follows: 2015

Provision for income tax at statutory tax rate Add (deduct) reconciling items: Net gains on fair value changes on financial assets at FVPL

Nondeductible expenses Expired NOLCO Movement in unrecognized

DTA Expired MCIT Interest income subjected to lower tax rate Dividend income Gain on sale of available-forsale

securities

(?2,843,697)

2014 Fr,018,847

3,676,n8 r,386,562 244,882

82,100 6,637 Q0,s2r)

(e68,290)

2013

paal )11

(r 39,08s)

600 1,301,493

(r,032,984)

(2,47s,234)

6,76s

(226,732)

(9r,999)

-

-

r

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209,438 231

,t77

14,653 (288,097) (140,643) (838,628)

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2413. Related Party Transactions Related party relationship exists when one parry has the abiliry to contror, directry, or indirectly through one or more intermediaries, the other party or exercisi significant influence over the oiher party in making financial and operating decisions. Such relationship also exists between and./or among entities, which are under common control with the repofiing enterprises and its key management personnel, directors, or its shareholders. In considering each related party relationship, attention is directed to the substance of the relationship, and not merely the legal IOrTn.

The company in its regular conduct of business has entered into the following transactions with related panies consisting ofreimbursement ofexpenses and management and-accounting services agreements.

The company's statements of financial position include the following amounts resulting from transactions with related parties: 2015

Reimbursements

HEDC

Accounting

Services

Natur€

of

Am0unV

Outstanding

olume

Bslance Nonihter€st b€rring, payable in 30 days

P3,E36

B9,641

300,000

AmounV Volume

75,000

_do_

Unsecured _

do

_

Outstanding

P5l 70?

F-

Noninterest bearing, payable in 30 days

Unsecured

As ofDecember 31, 2015 and 2014 the Company has I1.33% investment in IIEDC for P100.05 million, of which, subscription payable amounted to p12.3 5 million and F19.47 rnillion, respectively (Note 8). The Company also holds investment in pERC asofDecember3l,20l5 and 2014 (Note 8), Terms and conditions of transactions with related parties

outstanding balances at year-end are unsecured, interest-free and set ement occun in cash. There havebeen no guarantees provided or received for any rerated party receivables or payables. These mainly consist ofadvances and reimbursement ofe*p"ns"r. ih"'company has noi rlcognized any impairment on amounts du€ from affiliated companiis for the years endedDecemuer : t, zo t ana s 2014. This assessment is underlaken each financial year through a review ofthe financial position ofthe related party and the market in which the related party oferates.

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-25 -

I

4. Financial Instruments The Company's principal financial assets and liabilities include cash and cash equivalents, trading and investment securities (financial assets at FVPL and AFS financial assets). short-term investmentJ, receivables, accounts payable and accrued expenses and subscriptions payable.

The main purpose ofthese financial instruments is to fund tbe Company's working iapital requlrements. nts

The carrying amounts ofthe Company's financial assets and financial liabilities approximate their fair values as of December 3 I ,2014 and 2013 The methods and assumptions used by the company in estimating the fair values of the financial instruments are: Cash and cash equiyalents, receivables and shortJerm inyestmenls Due to the short-term nature ofthe instruments, carrying amounts approximate fair values as of the

reporting date.

Goyernment securities Fair values are generally based on quoted market prices at reporting date.

Equity securities For quoted equities, fair values are based on published quoted prices. unquoted equity securities are carried at cost less impairment.

Accounts payable and accrued expenses Carrying values approximate fair values due to their short-term nature.

Subscriptions payable Carrying values approximate fair values because this is due and demandable fNote g).

The company's financial instruments comprise cash and cash equivalents, short-term investments, receivables, financial assets at FVPL, AFS financial assets, accounts payable and accrued expenses and subscriptions payable, The main purpose ofthese financial instruments is to fund its own operations and capital expenditures. Inherent in using these financial instruments are the following risks on liquidity, market and credit. The BoD reviews and approves policies for managing these risks. Also, the Audit committee of the BoD meets regu-larly and exercises oversight role in managing these risks.

Financial Risks The_main financial risks arising from the company's financial instruments are liquidity risk, market risk and credit risk.

Liquidity risk Liquidiry risk is the risk thal the company is unable to meet its financial obligation when due, The company has substantial investments in shares ofstock which are not Iisied in the philippine Stock Exchange and may not be readily convertible to liquid assets necessary [o meer any potential additional Iiquidity requirements ofthe company. Investments in unquoted equity securities included in AFS investments amounted to F 100.1 m illion as of December 3 l,-z0is and 2015 CNote 8).

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-26

The company monitors its cash position and overall liquidity position in assessing its exposure to liquidity risk, The company maintains a level ofcash and cash equivalents deemed sufficient to finance operations and to mitigate the effects of fluctuation in cash flows.

The Company's accounts payable and accrued expenses z e all settled on a monthly basis.

Subscriptions payable are payable on demand and are non-interest bearing.

The tables below summarize the maturiry profile of the company's financial assets and liabilities as ofDecember 31,2015 and20l4 based on contractual undiscounteo Davmenrs,

Within Financial assets at FVPLI Equity securities

F40,650,199

Loans and receivables: Cash and cash equivalents Short-term investments Receivables - netl Kecervaole lrom tlTLJL Receivable from Wealth Securities, lnc.

Accrued interest receivable Dividends receivable AFS financial assets: Listed equity securities: PERC Benguet Corporation Nonlisted equify security:

HEDC*

Investment in government

t2,035,696

one

Mor€ than

P-

f_

75,000 11,142 29,040

-

194,080

F40,650,199

-

r1.03s,696

-

75,000 11,142 29,040 194,080

13,748,657

4,s97,274

100,054,360

securiries

13,748,651

4,597,214

too,o54,36o

6,048,352

6,04g,352

Financial liabilities Accounts payable and accrued

expenses *315,494

P-

F-

Frr,669r?8 r_ ** Presented

,35

as a deduction ta AFS for Jinancial statenent

?315,494

*_ rlry

3,884

pr*entation purposes.

20t4 On

Within one

More than

year

one year

demand

Total

Financial assets Financial assets at FVPLi Equity securities Loans and receivables: Cash and cash equivalents Short-term investments Receivables - net: Receivable from HEDC Accrued interest receivable

F47,627,704

F47,627,704

10,100,819

10,100,8

t8,30't ,362

r8,307,362

25,000

25,000 24'1,292

)47 )A)

r

9

(Forward)

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2014

Within

one

More than

On demand

Dividends receivable AFS financial assets: Listed equity securitiesl

Total 444,662

444,662

PERC Benguet Corporation Nonlisted equity security:

15,918,146 '7,046,366

HEDC'I

15,918,146 '1,046,366 100

?199.77

Accounts payable and accrued expenses

|

?255,928

F-

F-

Ft9,724.562

Net financial assets a Gross ofsubscription payable to HEDC amounting p 19,468,634 a* Presented as a deduction to AFS for Jinoncial stotehent presektation purposes.

Market risk Market risk is the risk of loss on future eamings, on fair values or on future cash flows that may re-sult from changes in market prices- The value ofa financial instrument may change as aresult of changes in interest rates, foreign currency exchanges rates, commodity priies, eqiity prices and other.market changes, The company's market risk emanates from its holdings in d;bt a;d equity securities.

Equit_y Price Risk The Company closely monitors the prices of its debt and equity securities as well as macroeconomic and entity-specific factors which could directly or indirectly affect the prices of these insftuments. In case of an expected decline in its portfolio of equity securities, the company readily disposes or trades the securities for replacement with more viabli and less risky

investments.

Such investment securities are subject to price risk due to changes in market values of instruments arising either from factors specific to individual instruments or their issuers, or factom affecting all instruments traded in the market.

The analysis below is performed for reasonably possible movements in the philippine stock Exchange (PSE) index with all other variables held constant, showing the impaci on income before tax (due to changes in fair value of financial assets at FVpL whose faii value chanees are recorded in the statements of income), 2015

Increase/decrease

Impact on income before tax

+9yo

P3,528,913

-9Vo

lncrease/decrease

(3,s28,e13) 2014 Impact on income before tax

+40

Pt o?1 oto

-4%

(t,973,e2e)

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_28

_

The analysis below is performed for reasonably possible movements in the pSE index with all other variables held constant, showing the impact on equity (due to changes in the fair value of AFS financial assets whose fair value changes are recorded in equiry), 2015

Increase/decrease

in market

price

Impact on Equity

+6Yo -6Vo

P1,152,117

(1,7s2,1r7)

20t4 Increase/decrease

+3% -3%

?129,381 (129,38'7)

The impact on the Company's equity already excludes the impact on transactions affecting the net lncome.

Credit risk There are no significant concentrations of credit risk within the Company.

The table below the comparative summary of maximum credit risk exposures on financial -shows instruments as ofDecember 31,2015 and 2014:

2075

2014

Frnancial assets at FVPL:

Equity securities Loans and receivables Cash and cash equivalents Short term investments

F40,6s0,199

Receivable from IIEDC Receivable from Wealth Secudties, Inc. Accrued interest receivable AFS financial assets: Listed equity securities: PERC

Benguet Corporation Nonlisted equity security: Investment in

12,035,696

10,100,8 t 9

7s,000

18,307,362 25,000

t7,142 29,040

247 ,292

13,7 48,657

I 5,91 8, 146

4

7,046,366

4,,597 ,27

FIEDC *

87,700,476

80,58s,726

securities

The following tables show financial instruments recognized at fair value and20l4, analyzed between those whose fair values are based on:

l.

2

P47,621,704

as

of December

3

r, 2015

Quoted prices in active markets for identical assets or liabilities (Level l); Those involving inputs other than quoted prices included in Level l that are observabre for the asset or liability, either directly or indirectly (Level 2); and

11||il|ililililililililIilililtiililtilililIililtilItililil

_29 -

3.

Those wirh inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

2015

Level

Financial assets: Financial assets at F\?L: Equity securities AFS financial assets: PERC Benguet Corporation InYestment in goyernment securities

I

Level2

Level

P-

P40,650,199

-

73,748,657 4,597,274

2014 Level 2

Level I

PERC

?47 ,627

,7

04

Fair Value

P40,650,r99 13,7 48,657 4,597 ,27 4

P-

F_

Financial assets: Financial assets at FVPL: Equity securities AFS financial assets:

3

LCVCI J

P-

F_

ls,918,r46

Fair Value

?47,62',7,704 | 5,918,146

7

7.046.366

F70 There were no transfers betwe€n Level I and Level 2 fair value measurements and no transfers into and out ofLevel 3 fair value measurements in 2015 and 2014.

The tables below show the credit quality by class ofasset based on the Company,s intemal evaluation as ofDecember 3l ,2015 andZ0l4.

Neither past due nor impaired

2015 Past due

Saandard

Loans and receivables: Cash in bank Short-term investments

P-

P6,s02,4s9 5,533,237

P-

P6,502,459 < {11 trt

Receivables:

Receivable lrom HEDC Receivable from Wealth

Securiti€s,Inc Accrued inter€st rcceivable Financial ass€ts at FVPL: Equity securities AFS financialassets: PERC Benguet Corporation

75,000

75,000

t7,142 29,040

l7 ,t 42 29,040

40,650,199

40,650,199

13,148,657

13,748,651

4,597,27 4

HEDC* Investment in government

securities

81,100,416

6.04E.3S2

-

4,597,27 4

87,700,476 6 ndr 1<,,

C atnounting p 12,353,884.

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30-

2014

Loans and receivables: Cash in bank Short-term investments Receivables: Receivable fiom HEDC Accrued interest receivable Financial assets at FVPL: Equity securities

Pt 1t srs

F-

F

FI I?

28,295,656

25,000

)O)

25,000 141 7qt

47,627,703

4't,627 ,'t03

15,918,146 7,046,36'7

15,9

t 41

AFS financial assets: PERC Benguet Corporation

5?S

28,295,656

t8,146 7,046,361

HEDC*-80,585,726_80,585.?26 * Net of subscnptton peyable ta HEDC dmounting P19,468,6j4

The Company uses the following criteria to rate credit quality: Class

High Grade Standard Grade

1

Description Financial assets that are deposited in/or fiansacted with reputable banks which have low probability of insolvency.

Financial assets of companies that have the apparent ability to satisry its obligations in firll.

5. Capital Management The primary objective ofthe Company's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to suppoft its business and maximize shareholders' value.

The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares, The Company monitors capital using a debt-to-equity ratio, which is total debt divided by total equity. The Company includes within total debt the following: accounts payable and accrued expenses and subscriptions payable, Total equity includes capital stock, net unrealized gains (losses) on AFS financial assets and retained earnings (deficit).

The Company has no extemaliy imposed capital requirements as of December

3I

,2015

and 2014.

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3l

-

-

The table below demonstrates the debt-to-equity ratios ofthe Company as ofDecember 31,2015 and 201 4, respectively:

20t4

2015

Total liabilities:

Total equity: Capital stock

P163,000,000

Net unrealized gains on AFS financial

Pr

63,000,000

to l4t 4s4

4,440,684

assets

I

Retained

0.0019:

I

There were no changes in the objectives, policies or processes for the years ended December 3 1, 201 5 and 2014.

The Company's track record ofcapital stock is as follows:

Nurnber of shares

Listing date - May 7, 1974 Add (deduct): 50% stock dividend 60% stock dividend l:2.400 stock rights offering l:2.125 stock rights offering l5% stock dividend Change in par value Fom

P0.0l/sharetoPl,oo/sharc

December3l,20l0 Add (deduct): Movement

10,000,000,000 5,000,000,000 9,000,000,000 10,000,000,000 16,000,000,000 7,500,000,000

0.0l/share

November 5, 1973

0.0I/share November 27, l98l

0.0l/share

October 31, 1990

0.01/share September 28, 1992

0.0l/share F€bruary 8, 1994 0.01/share luuary20,1997

(56,925,000,000)

Augusr 14, 1997 October 5, 1998

163,000,000

December 31, 201 I Add (deduct): Movement

163,000,000

December 31, 2012

163,000,000

Movement December3l,2o@ 4E!lG!glirct): Movement

lssue/

offer Drice

4,941 (3 8) 4,903

-

Add (deduct)r

December 31, 2014 December

31,2015

-

-

4,7

47

7l 4,818

163,000,000

(32) 4,786

163,000,000

4

i.A

16. Basic and Diluted Earnings Per Share The computations ofthe Company's basic eamings per share are

20r5 Net income (loss)

Weighted average number ofshares Basic earnings per share

as

follows: 2014

(F9,486,038)

P3,389,0s8

163,000,000 (P0.05S20)

163,000,000 ?0.02079

20t3 F3,184,230 r63.000.000 F0.01954

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-)zThe Company has no dilutive potential common stock in2015,2014 and 2013.

17. Lease Commitments Company as lessor The Company has entered into cancellable lease agreements as a lessor with terms ofone (l) year.

The leases contain renewal options and a clause enabling annual upward revision ofthe rental charges based on prevailing market conditions. The related rent income derived from this transaction included under "Other income" amounted to PE4,4E0 in 20i5 and 2014 (Note l0).

Future minimum lease receivable as of December 3 l, 2015 and 2014 amounted to P33,898.

18. Reclassilication of Accounts In 2014, subscription payable to HEDC amounting F19.49 million was shown as a separate line item under cunent liabilities in the statements offinancial position. The 2014 subscriotion payable to HEDC was offset against the cost of investneni in IDDC classified as available-forsale financial assets (Note 8) to conform with the 2015 presentation ofaccounts, Management believes that th€ new presentation is more appropriate.

.

19. Approval ofFinancial Strtements The accompanying financial statements ofthe Company were approved and autlorized for issue by the Board ofDirectors (BOD) on February 19, 2016.

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mber

1O-

2015, valid untrl Novembe.9. 2018

INDEPENDENT AUDITORS' REPORT ON SI]PPLEMENTARY SCHEDIJLES

The Stocklrolders and the Board of Directors Seafront Resources Corporation 7th FIoor, JMT Building ADB Avenue, Ortigas Center, Pasig City

We have audited in accordance with Philippine Standards on Auditing, the financial statements of Seafront Resources Corporation as at December 3 l, 201 5 and 2014 and for each of the three years in the period ended December 31, 201 5, included in this Form l7-A and have issued our report thereon dated February 19,2016. 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 Financial Statements and Supplementary Schedules are the responsibilify ofthe Company's management. These schedules are presented for purposes of complying with the Securities Regulation Code Rule No. 68, As Amended (2011) and are not part ofthe basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit ofthe basic financial statements and, in our opinion, fairly state, in all rnaterial respects, the information required to be set forth therein in relation to the basic financia, statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Partner

CPA Cerrificare No. 89336 SEC Accreditation No. 0664-AR-2 (Group A), March 26, 2014, v alid until March 25, 2017 Tax Identification No. I60-3 02-865 BIR Accreditation No. 08-001998-73-2015, February 27,2015, valid until February 26, 2018 PTR No. 5321 688, January 4, 2016, Makati City February 19, 2016

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SEAFRONT RESOURCES CORPORATION INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES SEC X'ORM I7-A

FINANCIAL STATEMENTS Statement of Management's Responsibility for Financial Statements

Report of Independent Auditors' Report Statements of Financial Position as at December

3

l.

2015 and

20lc

Statements of Income for the years ended December 31, 2015,2014 and 2013 Statements ofComprehensive lncome for the years ended

December 31,2015,2014 xrd 2013 Statemenis ofChanges in Equity for the years ended December 31, 201 5,2014 and 2013 Statements ofCash Flows for the years ended December 31. 2015. 2014 and 2013

Notes to Financial Statements

SIJPPLEMENTARY SCI{EDIJLES Report of Independent Auditors' on Supplementary Schedules Schedules Required under SRC Rule 68-E Financial Assets

A. B.

C. D. E. F. G. H.

Amounts Receivable from Directors, Officers, Employees, Related Parties, and Principal Stockholders (Other than Related Parties) Amounts Receivable from Related Parties which are Eliminated durine the Consolidation of Financial Statements Intangible Assets - Other Assets Long-term Debt Indebtedness to Related Parties Guarantees of Securities of Other Issuers Capital Stock

Additional Components Schedule of Financial Soundness Indicators Reconciliation of Retained Eamings Available for Dividend Declaration Schedule

ofall

the effective standards and interpretations under PFRS as ofDecember 31,2015

Map of Relationship of the Companies within the Group

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SEAFRONT RESOURCES CORPORATION SUPPLEMENTARY INFORMATION AND DISCLOSURES REQUIRED ON SRC RULE 68 AS AMENDED DECEMBER 31,2014 Philippine securities and Exchange commission (SEC) issued the amended Securities Regulation Code Rule SRC Rule 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 ofsecurities to the public.

Below are the additional information and schedules required by SRC Rule 68, as Amended (201 l) that are relevant to the company. This information is presented for purposes of filing with the SEC and is not required part ofthe basic financial statements.

Schedule A. Financial Assets Below is the detailed schedule ofthe Company's financial assets Number Shares

of

or

Amount Shown

Principal

Name of Issuing Entity and Association

ofEach Issue Financial assets at F\IPL

as ofDecember 3l , 2015:

of Bonds and Notes Amount

in the Statement of

Financial Position

Income Received and

Accrued

Equity Securities:

Aboitiz Trans Sys ABS.CBN

-

Prefened

Araneta Prop,

Ayala Corp.-A Ayala Land, Inc.

5,000

P23,8s0

F-

I3,000

804,700

9,98'7

3,'t 56,'7 88

4,207,603 845,208 4,416,249 245,341

1,1

128,193

Holcim ankard Belle Corp.

Belle Corp.

l8

l'7,229 49,100

B

436,500 72,750

Cyber Bay Corp.

EEI Corporation Empire East Land BDO-Equitable Bank

E0,000

36,000

312,500 28,200

2,011,500

House oflnvestments

Interport Res.

,250

278

835

2,484,000

13,686,840

t't'|,060

South China Bancorp, ,Eier/Alco

00,000 152,250

33,495

30,000

10,200

3,613,852

12,901,452

PetroEnergy Resources Corporation *Mabuhay Vinyl Corporation

37

t4 29,t90

RCB

Waterfront

45,7 50

21,'.7

125,000 59,400 50 700 1,980

Pefon Corp.

PLDT PLDT Series X

t4,t28

64,812

25,000

150,000

5l,861

r

I1,t93,638

141,250 415,205

2,9'70

103,000

7,600

1

,000

65,340 71,000

P40,650,199

,J2 1,82',7

9 r .200 F450,779

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-2Number Shares

Name oflssuing Entity and Association Each Issue

of

of or Amount

Shown

Principal in the Amount of Statement of Income Bonds and Financial Received and Notes Position Accrued

Available-for-sale securities Debt equities

-

Philippine Govemment Quoted: Benguet

Corporation

PetroEnergyResourcesCorporation

835,868

3,851,164 4,687,032

?6,048,352

F-

4,597,274 13,748,657 18,345,93 r

Unquoted: Hermosa Ecozone Development

Corporation

-

87,700/76

4,687,032 Pt12,094;7s9

7,800,000 F7,800,000

The fair value for financial instruments traded in active markets at the reporting date is based on their quoted market price without any deduction for transaction costs. For securities in which cuEent bid and asking prices are not available, the price ofthe most recent transaction provides evidence ofthe current fair value as long as there has not been a significant change in economic circumstances since the time ofthe transaction.

For unquoted financial securities, the most recent sales transaction was used determining the fair value as ofDecember 3 l, 201 5.

as the basis

for

The Company has no outstanding receivables from its directors, officers, employees, related parties and principal stockholders as ofDecember 31,2015.

Consolidation of Financial Statements

Not applicable.

Schedule D. Intangible Asset The Company has no intangible assets as of December

3

l,

2015-

Schedule E. Lons-term Debt

The Company has no outstanding long-term debt as ofDecember 31,2015.

The Company has no long-term indebtedness to related parties as of December 31, 2015.

Schedule G. Guarantees of Securities of Other Issuers The Company does not have guarantees ofsecurities ofother issuers as of December 31, 2015,

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-3

-

Schedule H. Capital Stock

of Number of issued Shares and rescrved for outstanding options, as shown waffants, Number of under related conversion shares balance sheet and other Number

shares

Numbcr of

hcld relatod

shares

by

-

Dirgctors,

officers and

2,085,6?4

t

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160,914,326

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SEAFRONT RESOURCES CORPORATION SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS AS OF DECEMBER 31. 2015 and 2014 F inan cial S oundn

e

ss

Indi c at ors

Below are the financial ratios that are relevant to the ComDanv for the vears ended December 31. 2015 and 2014:

Financial ratios Cu[ent ratio

Cunent assets Cunent liabilities

Debt to assets

Total debt

Total Asset-to-equity ratio

20t5 170.43

302.59

0.0019

0.0014

r.0019

t.0014

2014

assets

Total assets

Total equity Eamings per share

Net income

N/A

F0.0208

Weighted average no. of shares Prioe eamings

Return on

Closing prjce Eamings per share

ratio

revenue

Long-term debt to equity

Net income Total revenue

ratio

Long-term debt

41,24

126.44

N/A

69,24%

N/A

N/A

NiA

N/A

Equity

EBITDA to total interest pajd

EBITDA* T^tt1 ihf.rF.f h.i.l

rEarnings before interest, lares, depreciation and amortization (EBITDA)

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SEAFRONT RESOURCES CORPORATION RECONCILIATION OF RETAINED EARNINGS AVAILABLE F'OR DIVIDEND DECLARATION DECEMBER 31.20T5

Unadjusted retained earnings, beginning Prior year

17,594,952

adj ustments:

Adjusted retained earnings, beginning

2,797,4lg

Net income (loss) during the period closed to retained eamings

(9,486,038)

Add: Non-actual/unrealized income net oftax Less: Non-actuaVunrealized income net oftax Fair value adjustments (mark-to-market) Impairment loss on available-for-sale financial

12,253,126 4,621,872

assets

Net income actually incurred during the y€ar

10,,776,979

Less: Dividend declarations during the year

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SEAFRONT RESOURCES CORPORATION SCHEDULE OF ALL THE EFFECTIVE STANDARDS AND INTERPRETATIONS UNDER PFRS AS OF DECEMBER 31. 2015 Below is the list ofall effective PFRS, Philippine Accounting Standards (PAS) and Philippine Interpretations of International Financial Reporting Interpretations Committee (IFRIC) as of December 31, 2015:

Framework for the Preparation and Presentation of Financial Statements Conceptual Framework Phase A: Objectives and qualitative characteristics PFRSS Practice Statement Management Commentarv

Philippine Financial Reporting Standards .I

PFRS @evised)

First-time Adoption of Philippine Financial Reponing Standards

Amendments to PFRS I and PAS 27: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to PFRS time AdoDters

l: Additional Exemptions for First-

AmeDdmont to PFRS 1: Limited Exemption from Comparative PFRS 7 Disclosures for Fimt-time Adopters Amendments to PFRS I : Severe Hyperinflation and Removal ofFixed Date for Ffst-time Adopters Amendments to PFRS

PFRS 2

l:

Govemment Loals

Share-based Payment

Amendments to PFRS 2: Vasting Conditions and Cancellations Amendrnents to PFRS 2: Group Cash-settled Share-based Payment Transactions PFRS 3

Business Combinations

(Revised) PFRS 4

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

PFRS 5

Noncunent Assets Held for Sale and Discontinued Operations

PFRS 6

Exploration for and Evaluation ofMineral Resources

PFRS 7

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

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2

PFRS 7 (cont.)

Am€ndments to PAS 39 and PFRS ?; Reclassification of Financial Assets - Effective Date and TraNition Amendments to PFRS 7: lrnproving Disclosures about Financial Instruments Amendments to PFRS 7: Disclosures - Transfers of Financial Assets Amendments to PFRS 7: Disclosures - Offsettine Financial Assets and Financial Liabilities Amendments to PFRS 7: Mandatory Effective Date PFRS 9 and Transition Disclosures

PFRS 8

Operating Segments

PFRS 9

Financial Instruments Amendments to PFRS 9: Mandatory Effectiye Date PFRS 9 and Transition Disclosures

of

of

New Hedge Accounting Requirements

PFRS IO

Consolidated Financial Statements

Amerdments to PFRS 10r lnvestment Entities PFRS IT

Joint Arrangements

PFRS 12

Disclosure of Interests in Other Entities Amendments to PFRS 12: Investment Entities

PFRS 13

Fair Value Measulement

Philippine Accounting Standards PAS 1 (Revised)

Presentation of Financial Statements Amendment to PAS

l:

CaDital Disclosures

Amendments to PAS 32 and PAS l: Puftable Financial Instruments and Obligations Arising on Liquidation Amendments to PAS l: Presentation of Items ofOther Comprehensive Income or OCI PAS 2

Inventories

PAS 7

Statement ofCash Flows

PAS 8

Accounting Policies, Changes in Accounting Estimates and Errors

PAS 10

Events after the Reporting Date

PAS

Construction Contacts

11

PAS 12

Income Taxes Amendment to PAS l2 - Defened Tax: Recoverv of

Underlvins Assets

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3

PAS T6

Property, Plant and Equipment

PAS

I7

Leases

PAS

I8

Revenue

PAS T9

(Revis€d)

PAS 20

Employee Benefits Amendments to PAS l9: Defined Benefit Plans EmDlovee Contributions

Accounting for Government Grants and Disclosure of Government Assistance

PAS

2I

The Effects ofChanges in Foreign Exchange Rates Amendment; Net Inyestment in a Foreign Operation

PAS 23

Borrowing Costs

(Revised) PAS 24

Related Party Disclosures

(Revised) PAS 26

Accounting and Reporting by Retirement Benefit Plans

PAS 27

Separate Financial Statements

(Amended) PAS 2E

Amendments to PAS 27: Investment Entities lnvestments in Associates and Joint Ventues

(Amended) PAS 29

Financial Reporting in Hyperinflationary Economies

PAS 32

Financial Instruments: Disclosure and Presentation Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation Amendmeot to PAS 32: Classification ofRishts Issues Amendments to PAS 32r Offsetting FinancialAssets and

Financial Liabilities PAS 33

Eamings per Share

PAS 34

Interim Firancial Repofi ing

PAS 36

lmpairment of Assets Amendments to PAS 36: Impairment ofAssets Recoverable Amount Disclosures for Non-Financial Assets

PAS 37

Provisions, Contingent Liabilities and Contingent Assets

PAS 3E

Intangible Assets

PAS 39

Financial lnstruments: Recosnition and Measurement Amendments to PAS 39: Transition and lnitial Recognition of Finarcial Assets and Financial Liabilities

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4

Amendments to PAS 39: Cash Flow Hedge Accounting of Forecast Intragroup Transactions Amendments to PAS 39: The Fair Value ODtion

PAS 39

(cort.)

Amendments to PAS 39 ard PFRS 4: Financial GuaranteE

lortracts Amendments to PAS 39 and PFRS 7: Reclassification

of

Financial Assets A.mendments to PAS 39 and PFRS 7: Reclassification iinancial Assets - Effective Date and Tra$ition

of

PAS 40

Amendments to Philippine lnterpretation IFNC 9 and PAS 39: Embedded Derivatives Amendment to PAS 39: Eligible Hedged Items Amendments to PAS 39; Financial lnstruments: Recognition and Measurement - Novation of Derivafives rnd Continuation of Hedge Accountinq lnYestment Property

PAS 41

{Bricultule

Philippine Interpretations IFRIC I 3hanges in Existing Decommissioning, Restoration and Jimilar Liabilities Members' Share in Co-operative Entities and Similar IFRIC 2 lnstruments

IFRIC

4

TFRIC 5

IFRIC

6

Determining Whether an Arrcngement Contains a Leqse lights to Interests arising from Decommissioning, lestoration and Environmental Rehabilitation Funds t-iabilities arisingfrom Participating in a Specifc Market tyaste Electrical atld Electronic EauiDment

TFRIC 7

Applying the Restatement Approach under PAS 29 Financiat Repo inp in HyDerinllationary Economies

TFRIC 8

Scope

IFRIC

Reassessment of Embedded Derivatives

9

IFRIC

IO

IFRIC

1T

o/ PFRS 2

Amendments to Philippine lnterpretation IFRIC 9 and PAS l9: Embedded Derivatives (nterim Financial Reporting and lmpqi ent PFRS 2 - GrouD and Treasurv Share Tmrsactions

TFRIC 12

Service Concession Arrangements

IFRIC

13

Customer Loyalty Progrannes

IFRIC

14

The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Amendments to Philippine Interyretations IFRIC- 14, Prepayments ofa Minimum Funding RequLement

IFRIC I5

Affeements for the Construction ofReal Estate

IFRIC

16

Hedges ofa Net Investment in a Foreign Operation

IFRIC

17

Disrributions ofNon-cash Assels to Owners

IFRIC

lt

Transfers ofAssets from Customers

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5

IFRIC I9

Extinguishing Financial Liabilities with Equity Instruments

IFRIC 20

Stfipping Costs in the Production Phase ofa Surface Mine

IFRIC 2I

Levies

stc-r0

Govemment Assistauce - No Specific Relation to Operating Activities

sIc-12

Consolidation - Special Purpose Entities Amendment to SIC -

sIc-13

l2:

ScoDe

ofSlC l2

Johtly Conlrolled Entities . Non-Monetary Contributions

by Ventures

src-t5 sIc-21

Operating Leases - Incentives lncome Taxes - Recovery ofRevalued Non-Depreciablo Assets

sIc-25

Income Taxes - Changes in the Tax Status ofan Entity or its Shareholderc

sIc-27

Evaluating the Substance ofTransactions Involving the

Lesal Form ofa Lease

sIc-29

Service ConcessionAraneements: Disclosures

sIc-3r

Revenue - Barter Transactions Involving Advertising Services

sIc-32

lntangible Assets - Web Site Costs

Standards tagged as "Not applicable" have been adopted by the Company but have no significant covered transactions for the year ended December 31, 2015.

Standards tagged as "Not adopted" are standards issued but not yet effective as ofDecember 31, 2015.

The Company will adopt the Standards and Interpretations when these become effective.

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SEAFRONT RESOURCES CORPORATION MAP OF RELATIONSIIIPS OF THE COMPANIES WITHIN THE GROUP Group Structure

Al I existing stockholden as of December 3 I , 20 I 5 neidler constitute control nor significant influence over the Company. Also, the Company's investnents neither constitute control nor significant