Issuu

CO VER SH EET 4 0 9 7 9 SEC Registration Number S E A F R O N T

R E S O U R C E S

C O R P O R A T I O N

(Company’s Full Name) 7 T H

F L O O R

A D B

A V E N U E

P A S I G

J M T

B U I L D I N G

O R T I G A S

C E N T E R

C I T Y (Business Address: No. Street City/Town/Province)

MILAGROS V. REYES (Contact Person) 1 2 3 1 Month Day (Fiscal Year)

637-2917 (Company Telephone Number) 1

Form Type 7 - A

0 7 Month

2 7 Day

(Annual Meeting)

(Secondary License Type, If Applicable)

Dept. Requiring this Doc.

Amended Articles Number/Section Total Amount of Borrowings

4, 692 Total No. of Stockholders

Domestic

Foreign

__________________________________________________________________________________________ To be accomplished by SEC Personnel concerned

File Number

LCU

Document ID

Cashier

STAMPS Remarks: Please use BLACK ink for scanning purposes.

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES 1.

For the fiscal year ended December 31, 2019

SEC Identification Number 40979

Exact name of issuer as specified in its charter Seafront Resources Corporation

Metro Manila, Philippines (SEC Use Only) Province, Country or other jurisdiction of incorporation or organization

3. BIR Tax Identification No.000-194-465-000

6. Industry Classification Code:

7th F, JMT Bldg., ADB Avenue, Ortigas Center, Pasig City Address of principal office

1605 Postal Code

(632) 637-2917 Issuer's telephone number, including area code

Not Applicable Former name, former address, and former fiscal year, if changed since last report.

10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA Title of Each Class

Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding

Common (par value of P =1.00/share)

163,000,000

11. Are any or all of these securities listed on a Stock Exchange. Yes [X] No [ ] If yes, state the name of such stock exchange and the classes of securities listed therein: Philippine Stock Exchange 12. Check whether the issuer: (a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports); Yes [X]

No [ ]

(b) has been subject to such filing requirements for the past ninety (90) days. Yes [X] No [ ] 13. As of December 31, 2019 the aggregate market value of the voting stock held by non-affiliates of the Company is equivalent to Two Hundred Ninety Two Million Eight Hundred Eighty Thousand Seven Hundred Twenty Seven Pesos and 36/100. (P292,880,727.36) or 132,525,216 shares at P2.21/share.

DOCUMENTS INCORPORATED BY REFERENCE  2019 Audited Financial Statements (AFS)  Sustainability Report

TABLE OF CONTENTS Page No. PART I – BUSINESS AND GENERAL INFORMATION Item 1. Item 2. Item 3. Item 4.

Business Development Properties Legal Proceedings Submission of Matters to a Vote of Security Holders

5 8 9 9

PART II – OPERATIONAL AND FINANCIAL INFORMATION Item 5. Item 6. Item 7. Item 8.

Market for Registrant’s Common Equity and Related Stockholder’s Matters Management’s Discussion and Analysis or Plan of Operation Financial Statements Changes and Disagreements with Accountants on Accounting and Financial Disclosure

10 12 16 16

PART III – CONTROL AND COMPENSATION INFORMATION Item 9. Item 10. Item 11. Item 12.

Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management Certain Relationships and Related Transactions

17 20 21 22

PART IV – EXHIBITS AND SCHEDULES Item 13.

Item 14.

Exhibits and reports a. 2019 and 2018 Financial Statements with Management Responsibility b. Supplementary information and disclosures required on SRC Rule 68 and 68.1 as amended c. General form for Financial Statements (GFFS) d. Reports on SEC Form 17-C(Current Report) e. Reports on SEC Form 17-Q (Quarterly Report) General Notes to Financial Statements

SIGNATURES

23 24

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’s shares of stock were listed on May 7, 1974 and are currently traded at the Philippine Stock Exchange. The registered office address of the Company is 7th Floor, JMT Building, ADB Avenue, Ortigas Center, Pasig City. Business of Issuer A. Investments in Financial Assets at Fair Value through Profit and Loss (FVTPL) (Note 8 of the AFS) 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 securities: Equity securities

2019

2018

P =45,288,418

P = 44,850,901

B. Investment in Financial Assets at Fair value through other comprehensive income (FVOCI) (Note 8 of the AFS) Financial assets at FVOCI consist of quoted and unquoted shares of stock held for long-term investment purposes and are carried at fair value. The carrying values of these investments are as follows Listed equity securities: PetroEnergy Resources Corporation (PERC) Benguet Corporation Non-listed equity security: Hermosa Ecozone Development Corporation (HEDC) Subscriptions payable to HEDC Investment in Government Securities

2019

2018

P =15,789,774 2,833,593 18,623,367

P =13,479,075 3,761,406 17,240,841

517,176,832 517,176,832 4,610,013 P = 540,410,212

406,063,952 (12,353,884) 393,710,068 5,402,780 P =416,353,329

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. As of December 31, 2018, the Company has outstanding subscriptions payable to HEDC which amounted P =12.35 million. The subscriptions payable are due on demand. Investment in HEDC, is presented in the statement of financial position at fair value net of subscription payable. On January 26, 2019, the Company has paid up all the subscription payable to HEDC. The fair value of investment in HEDC is determined using the adjusted net asset method wherein the assets of HEDC consisting mainly of parcels of land are adjusted from cost to its fair value. The valuation of the parcels of 5

land was performed by a Securities and Exchange Commission - accredited independent valuer as at December 31, 2019 and 2018. This measurement falls under Level 3 in the fair value hierarchy. Fair value measurement disclosures for the determination of fair value of unquoted equity securities are provided in Note 14 of the AFS. 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, 2019 amounted to P34.646 million, bulk of which is from the dividend income from the investment in HEDC. 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. Percentage of sale or revenue and net income contributed by foreign sales There are no revenues from foreign sales. Distribution Method Not applicable Status of publicly –announced new product or service The Company has no new product or service. 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. Sources and Availability of Raw Materials and Names of Principal Suppliers The Company is not into manufacturing and has no need for raw materials for its business. Dependence on a single customer or few customers The Company is not dependent upon a single customer or a few customers. Transaction with and/or dependence on related parties Not applicable Summary of principal terms and expiration dates of all patents, trademarks, copy rights, licenses, franchises, concessions and royalty agreements The Company has no existing patents, trademarks, copyrights, licenses, franchises, concessions or royalty agreements. Need for Government approvals of Principal Products and effect of existing or probable governmental regulation No government approval is needed for its principal product. 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. 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. 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 6

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. 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 (Note 14 of AFS) The Company’s financial instruments comprise cash and cash equivalents, receivables, financial assets, accounts payable and accrued expenses and subscriptions payable. The main purpose of these financial instruments is to fund its own operations and capital expenditures. 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 classified as financial assets at FVOCI amounted to P517.18 million and P393.71 million, net of subscription payable, as of December 31, 2019 and 2018, respectively 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. Please refer to Note 14 of the AFS 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. The Company closely monitors the prices of its debt and equity securities as well as macroeconomic and entityspecific 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.

Equity Price Risk The Company closely monitors the prices of its debt and equity securities as well as macroeconomic and entityspecific 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. 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 Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. With respect to credit risk arising from cash and cash equivalents, receivables, financial assets at FVTPL and financial assets at FVOCI, the Company’s exposure to credit risk is equal to the carrying amount of these instruments. The Company limits its credit risk on these assets by dealing only with reputable counterparties. For cash and cash equivalents, the Company applies the low credit risk simplification where the Company measures the ECLs on a 12-month basis based on the probability of default and loss given default which are publicly available. The Company also evaluates the credit rating of the bank and other financial institutions to determine whether the debt instrument has significantly increased in credit risk and to estimate ECLs. The Company considers its cash and cash equivalents as high grade since these are placed in financial institutions of high credit standing. Accordingly, ECLs relating to these debt instruments rounds to nil. The Company’s receivables are aged current as of December 31, 2019 and 2018. No receivables are considered credit-impaired. As of December 31, 2019 and 2018, the carrying values of the Company’s financial instruments represent maximum exposure as of reporting date. Please refer to Note 14 of the AFS for the maximum credit risk exposures on the financial instruments. Capital Management (Note 15 of the AFS) 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, accrued expenses and subscriptions payable. Total equity includes capital stock, net unrealized gains (losses) on financial assets at FVOCI and retained earnings (deficit). The Company has no externally imposed capital requirements as of December 31, 2019 and 2018. Please refer to Note 15 of the AFS for the table of the debt-to-equity ratios of the Company as of December 31, 2019 and 2018, respectively: There were no changes in the objectives, policies or processes for the years ended December 31, 2019 and 2018.

Item 2 - Properties Aside from the investments in Financial Assets discussed above, the Company owns two parking lot slots in Tektite Tower in Ortigas City. This property is accounted as investment property of the Company. In 2013, the Company fully depreciated the investment. Fair value of this investment is estimated at ₱800,000 - ₱1,000,000 per slot. 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.

PART II - OPERATIONAL AND FINANCIAL INFORMATION Item 5 - Market for Registrant’s Common Equity and Related Stockholder 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 2019 2018

2nd Quarter 2019 2018

3rd Quarter 2019 2018

P1.00

High

2.79

2.87

2.45

2.62

2.80

2.83

2.45

2.60

2.21

Low

2.25

2.53

2.38

2.55

2.41

2.55

2.20

1.90

.194M

1.61M

.246M

1.29M

2.196M

0.194M

0.249M

ParValue

Volume

.244M

2.14M

4th Quarter 2019 2018

1st Q 2020

Holders As of December 31, 2019, the Company has 4,692 stockholders. Hereunder is the list of the top 20 Stockholders (as of 31 December 2019): Stockholders Title of Class No. of Shares

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

Common Common Common Common Common Common Common Common Common Common Common Common Common Common Common Common Common Common Common Common

Percent of Class

66,515,875 30,469,858 15,544,911 14,178,625 10,204,120 4,697,613 1,283,348 1,042,093 571,427 556,122 341,964 287,644 271,248 214,104 195,594 186,637 159,799 147,850 147,655 138,207 147,154,694 15,845,306 163,000,000

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.

The corporate acts of PMMIC are carried out by its Board of Directors and Management. Ms. Helen Y. Dee is the current Chairman of the Company.

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.

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. William C. Whang is the current CBC President and COO.

40.81% 18.69% 9.54% 8.70% 6.26% 2.88% 0.79% 0.64% 0.35% 0.34% 0.21% 0.18% 0.17% 0.13% 0.12% 0.11% 0.10% 0.09% 0.09% 0.08% 90.28% 9.72% 100%

As of December 31, 2019, the Company has a total of 163,000,000 shares issued and outstanding. Of the total outstanding common capital stock, 162,155,326 shares or 99.48% are owned by Filipino citizens, while 844,674 shares or 0.52% are owned by foreigners. 1.

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 XVIII of the Continuing Listing Requirements of the Listing and Disclosure Rules. As of December 31, 2019, the Company’s public float was 81.30%.

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 2019 and 2018. The last stock dividend (15%) was paid in 1997. Prior to 1997, the last cash/stock dividend paid was in 1990.

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

Description of Registrant’s Securities 1. Common Stock The details of the Company’s capital stock are as follows: No. of Shares

Authorized (P 1.00 par value) Issued and outstanding 2. Debt Securities - Not Applicable

388,000,000 163,000,000

3. Stock Options - Not Applicable 4. Securities Subject to Redemption call – Not Applicable 5. Warrants – Not applicable 6. Market Information for Securities Other than Common Equity – Not Applicable 7. Other Securities – Not Applicable

Amount P388,000,000.00 P163,000,000.00

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, 2019 and 2018)

ASSETS Cash & cash equivalents Financial assets at fair value through profit or loss Receivables Other current assets Financial assets at fairvalue through other comprehensive income TOTAL ASSETS

31-Dec-19

31-Dec-18

P43,037,269

P10,402,418

313.72%

6.83%

45,288,418 406,512 1,068,543 540,410,211

44,850,901 12,537,600 981,625 416,353,329

0.98% -96.76% 8.85% 29.80%

7.19% 0.06% 0.17% 85.75%

630,210,953

485,125,873

29.91%

100.00%

582,595 62,568,371 63,150,966

654,816 45,901,439 46,556,255

-11.03% 36.31% 35.64%

0.09% 9.93% 10.02%

567,059,987 P630,210,953

438,569,618 P485,125,873

29.30% 29.91%

89.98% 100.00%

% Change % in Total Asset

LIABILITIES AND EQUITY Accounts payable and accrued expenses Deferred tax liability TOTAL LIABILITIES EQUITY TOTAL LIABILITIES AND EQUITY

Total assets amounted to P630.211 million and P485.126 million as of December 31, 2019 and December 31, 2018, respectively. The net increase is mainly due to the increase in fair value re-measurement of the investment in HEDC shares based on current market valuation (of the land held for sale of HEDC) and income generated during the period. The Company’s cash and cash equivalents amounted to P43.037 million and P10.402 million as of December 31, 2019 and 2018, respectively. The 313.72% net increase was due to proceeds from dividend income during the year, net of payment of subscriptions payable and other working capital requirements during the period. Financial assets at fair value through profit or loss amounted to P45.288 million and P44.851 million as of December 31, 2019 and as of December 31, 2018, respectively. The minimal change of 0.98% is due to net market value movements in the market values of investments in stocks traded at PSE. Receivables account as of December 31, 2019 amounted to P0.407 million as compared to December 31, 2018 of P12.538 million. The 96.76% decrease mainly pertains to collection of HEDCs dividend declaration on August 2018; payable on January 2019. Other current assets consists of prepayments, prepaid taxes and input tax carry-overs. This amounted to P1.069 million and P0.982 million as of December 31, 2019 and 2018, respectively. The 8.85% net increase in this account mainly represents additional input taxes recorded during the period. Financial Assets at fair value through other comprehensive income account as of December 31, 2019 amounted to P540.410 million as compared to December 31, 2018 of P416.353 million. The net increase pertains to the upward adjustment of the revaluation of the investment in HEDC (please refer to Note 8 of the 2019 AFS). Accounts payable and accrued expenses amounted toP0.583 million and P0.655 million as of December 31, 2019 and December 31, 2018, respectively. The 11.03% net decrease in this account is due to lower accrual of professional fees and other expenses during the period. The Company recognized deferred tax liability amounting to P62.568 million and P45.901 million. The increase 12

is due to the additional set-up of Deferred tax liability associated with the increase in the revaluation of the investment in HEDC, more particularly, the related 15% capital gains tax should there be any sale of HEDC shares. HEDC shares are not traded in the PSE, and thus, any gain on sale of such shares would be subject to 15% capital gains tax. Total Stockholders’ Equity as of P567.060 million or P3.48/share book value as compared to December 31, 2018 of P438.570 million or P2.69 book value per share. 2. Results of Operations (For the years ended December 31, 2019, 2018 and 2017)

31-Dec-19 REVENUES Dividend income Net gains on fair value changes on financial assets at fair value through profit or loss Interest income Other income-net Foreign exchange gain TOTAL REVENUES COST AND EXPENSES General & administrative Foreign exchange loss Net loss on fair value changes on financial assets at fair value through profit or loss TOTAL EXPENSES Income/(Loss) before income tax Provision for income tax NET INCOME (LOSS)

31-Dec-18

31-Dec-17

P 33,463,784 P 12,885,767 P

% Change % in Total 2019 vs. 2018 Revenue

294,713

159.70%

96.59%

437,517 415,615 328,897 34,645,813

117,951 352,337 5,573 13,361,628

15,387,048 96,516 352,337 16,130,614

100.00% 252.36% -6.65% -100.00% 159.29%

1.26% 1.20% 0.95% 0.00% 100.00%

2,216,330 1,232 -

2,217,206 17,994,390

1,451,900 -

-0.04% 100.00% -100.00%

6.40% 0.00% 0.00%

2,217,562 32,428,251 6,578 P 32,421,673

20,211,596 (6,849,968) 7,047 (6,857,015)

1,451,900 14,678,714 7,047 14,671,667

-89.03% -573.41% -6.66% -572.82%

6.40% 93.60% 0.02% 93.58%

The Company posted a net income of P32.42 million or P0.1989/share as of December 31, 2019 as compared to net loss of P6.857 million in December 31, 2018. The upturn in the bottom-line figure is mainly due to the positive movements of the market values of the investments in stocks traded in the PSE and higher dividend received from investment in HEDC. The significant increase in dividend income from P12.886 million as of December 31, 2018 to P33.464 million in 2019 is mainly due to higher cash dividend declaration of HEDC’s during the period. The changes in market values (of investment in stocks at FVPL) amounted to net gain of P0.437 million as of December 31, 2019 as compared to net loss of P17.994 million loss as of December 31, 2018, respectively. The upturn is mainly due to the positive movements of the market values of the investments in stocks traded in the PSE. Interest income amounted to P0.416 million and P0.118 as of December 31, 2019 and December 31, 2018, respectively. The increase is attributed to higher interests from the RCBC trust account during the year. Other income as of December 31, 2019 and 2018 pertains to recurring service income for accounting services rendered by the Company to HEDC and rental income. General and administrative expenses amounted to P2.216 million and P2.217 million as of December 31, 2019 and December 31, 2018, respectively. 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.

3. Financial Conditions (As of December 31, 2018 and 2017) Total assets amounted to P485.126 million and P501.589 million as of December 31, 2018 and December 31, 2017, respectively. The decline is mainly due to the fair value re-measurement of the investment in HEDC shares based on current market valuation (of the land held for sale of HEDC). The Company’s cash and cash equivalents amounted to P10.402 million and P8.652 million as of December 31, 2018 and 2017, respectively. The 20.23% net increase was due to maturity of investment in Government Security which were previously accounted under Investment in AFS. Financial assets at fair value through profit or loss amounted to P44.851 million and P62.845 million as of December 31, 2018 and as of December 31, 2017, respectively. The 28.63% net decrease is due to downward movement in the market values of investments in stocks traded at PSE. Receivables account as of December 31, 2018 amounted to P12.538 million compared to P0.262 million as of December 31, 2017. The P12.27 million increase pertains to HEDCs dividend declaration on August 2018; payable on January 2019. Other current assets consists of prepayments, prepaid taxes and input tax carry-overs. This amounted to P0.982 million and P0.900 million as of December 31, 2018 and 2017, respectively. The 9.05% net increase in this account mainly represents additional input taxes recorded during the period. Financial Assets at fair value through other comprehensive income account as of December 31, 2018 amounted to P416.353 million as compared to December 31, 2017 of P428.930 million. The net decrease pertains to the downward movement of the investment in stocks. Accounts payable and accrued expenses amounted to P0.655 million and P0.711 million as of December 31, 2018 and December 31, 2017, respectively. The 7.87% net decrease in this account is due to lower accrual of professional fees and other expenses during the period. The Company recognized deferred tax liability amounting to P45.901 million and P45.730 million relative to the 15% deferred tax on unrealized gains on untraded shares of stock classified as AFS financial assets. Total Stockholders’ Equity as of December 31, 2018 amounted to P438.570 million or P2.69 book value per share as compared to December 31, 2017 of P455.149 million or P2.79 book value per share. 4. Results of Operations (For the years ended December 31, 2018 and 2017) The Company posted a net loss of P6.857 million in December 31, 2018 as compared to net income of P14.672 million or P0.09 earnings per share as of December 31, 2017. The downturn in the bottom-line figure is mainly due to the negative movements of the market values of the investments in stocks traded in the PSE. The significant increase in dividend income from P0.295 million in 2017 to P12.886 million in 2018 is mainly due to HEDC’s declaration of Dividends in August 2018, payable January 2019, none in 2017. Interest income amounted to P0.118 million and P0.097 as of December 31, 2018 and December 31, 2017, respectively. The increase is attributed to higher interests from the RCBC trust account during the year. Other income as of December 31, 2018 and 2017 pertains to recurring service income for accounting services rendered by the Company to HEDC and rental income. The changes in market values (of investment in stocks at FVPL) amounted to net loss of P17.994 million loss and net gain of P15.387 million as of December 31, 2018 and 2017, respectively. The downturn is mainly due to the negative movements of the market values of the investments in stocks traded in the PSE. General and administrative expenses amounted to P2.217 million and P1.452 million as of December 31, 2018 and December 31, 2017, respectively. The 52.71% increase is due to payment of the Company’s share in the Plug and Abandonement (P&A) of TARA South-1 Well that the Department of Energy required for funding. As a result, SRC paid its original corresponding share in the P&A amounting to $13,702.41 (P735,545). 14

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. Except for items discussed above, there are no more changes in the financial statements that will reach the materiality threshold of 5%. 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. Key Performance Indicators (KPI) Please refer to Financial Soundness Indicators Plan of Operations A. Investment in AFS not traded in the market (Investment in HEDC) As of December 31, 2019 the Company holds 11.3% interest in its investment in Hermosa Development Corporation (HEDC). The Management of HEDC is taking all efforts to sell 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 FVOCI 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. 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 for the development of Hermosa Ecozone Leisure Estate , 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. 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 financial assets at FVOCI amounted to P517.176 million and P393.710 million as of December 31, 2019 and 2018. 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. Commitments The only material commitment of the Company is the balance on its subscription to HEDC in the amount of P12.354 million. This was called and settled by the Company in the 1st quarter 2019. Aside from the subscription 15

payable to HEDC, there are no known trends, demands, commitments, events or uncertainties that will have material impact on the Company’s liquidity. Item 7 - Financial Statements The 2019 AFS of the Company are incorporated herein by reference. The schedules listed in the accompanying index to Supplementary Schedules are filed as part of this Form 17-A. Item 8 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Information on Independent Auditor 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, 2019 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. Pursuant to SRC Rule 68 Paragraph 3 (b) (1V) (Re: Rotation of External Auditors), the Company has not engaged Ms. Ana Lea Bergado, partner of SGV & Co., for more than five (5) years. She was engaged by the Company for examination of the Company’s 2019 AFS. 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. Disagreements with Accountants on Accounting and Financial Disclosures As of December 31, 2019, there are no disagreements with Accountants on Accounting and Financial Disclosure. Audit and audit- related fees External audit fees amounted to P366,912 (inclusive of VAT) as of December 31, 2019. 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 Ernestine Carmen Jo D. Villareal-Fernando

Chairman Independent Director Member Member Independent Director

PART III - CONTROL AND COMPENSATION INFORMATION Item 9 - Directors and Executive Officers of the Registrant Roberto Jose L. Castillo Milagros V. Reyes Ernestine Carmen Jo Villareal-Fernando Nicasio I. Alcantara Raul M. Leopando Victor V. Benavidez Yvonne S. Yuchengco Perry Y. Uy Medel T. Nera Officers: Milagros V. Reyes Perry Y. Uy Samuel V. Torres Arlan P. Profeta

Chairman of the Board President and Director Independent Director Independent Director Director Director Director Treasurer and Director Director President Treasurer Corporate Secretary Asst. Corporate Secretary

a) Board of Directors Seafront’s Board of Directors is composed of nine (9) members elected by and from among the Company’s stockholders. The Board is responsible for providing overall management and direction to the Company. Board meetings are held on a quarterly basis or as often as required to discuss the Company’s operations, business strategy, policies and other corporate matters. A brief background of each member of the Company’s Board of Directors is provided below: Directors: Name of Director Roberto Jose L. Castillo Milagros V. Reyes Perry Y. Uy Raul M. Leopando Yvonne S. Yuchengco Nicasio I. Alcantara Victor V. Benavidez Medel T. Nera Ernestine Carmen Jo D. Villareal-Fernando

Age

Position

Nationality

Tenure

66 78 74 68 66 77 68 64 58

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

2018 to present 1999 to present 2007 to present 2017 to present 2000 to present 1995 to present 2017 to present 2011 to present 2012 to present

Age 78 74 55 46

Position President Treasurer Corporate Secretary Asst. Corporate Secretary

Nationality Filipino Filipino Filipino Filipino

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

Executive Officers: Name of officer 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.

Below is the list of the members of the Board and the corporate officers, and their business experience during the past five (5) years: Mr. Roberto Jose L. Castillo, 66, Filipino, is presently the President & CEO of EEI Corporation, an 87-year old company that provides construction services in the Philippines, the Middle East, South Pacific and Africa. Mr. Castillo also oversees EEI subsidiaries namely: Equipment Engineers, EEI Construction and Marine, Inc., EEI Power Corporation, Al Rushaid Petroleum Investment Company in Saudi Arabia, EEI Realty Corporation and Gulf Asia International Corporation. EEI is a member of the Yuchengco Group of Companies. He is also a Director of the following: PetroWind Energy, Inc., PetroGreen Energy Corporation, PetroSolar Corporation, Brightnote Assets Corporation, Hermosa Ecozone Development Corporation, Kubota-Kasui Philippines Corporation, SQ Resources, Inc., SN Resources, Inc., Somerset Hospitality Holdings Philippines, Inc., Ascott Hospitality Holdings Philippines, Inc. and Tong Hsing Electronics Philippines, Inc. He is also Chairman of the Advisory Board, Carmelray Industrial Corporation and Chairman CJC Corporation. Educational Background: Master’s degree in Business Administration, Wharton Graduate School of the University of Pennsylvania, Bachelor of Science in Commerce, University of Santo Tomas, Bachelor of Arts, University of Santo Tomas. Professional Qualification: Certified Public Accountant (CPA) Ms. Milagros V. Reyes, 78, Filipino, is presently the Chairman/President of PetroGreen Energy Corporation, Chairman of Maibarara Geothermal, Inc. She is also the President of PetroEnergy Resources Corporation, an oil exploration and development company 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. Educational Background: Bachelor of Science in Geology and Physical Sciences (Double Degree) from the University of the Philippines. She pursued various technical trainings from the National Iranian Oil Co., University of Illinois and Ajman Fields in U.A.E. Mr. Perry Y. Uy, 74, 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. Educational Background: Bachelor of Science in Mechanical Engineering from De La Salle University, Master’s Degree in Business Administration at Wharton Graduate School of the University of Pennsylvania. Mr. Raul M. Leopando, 68, Filipino, He is the Chairman of RCBC Securities, Inc., President and Director of Investment Houses Association of the Phils. (IHAP), Consultant of RCBC Capital Corporation, Director, Bankard, Inc. He is also formerly Chairman of the Board and Nominee of Philippine Stock Exchange, Inc and formerly President and CEO of RCBCCapital Corporation. Educational Background: Bachelor of Arts in Economics from the University of the Philippines and Bachelor of Science in Commerce-Accounting from San Beda College. Ms. Yvonne S. Yuchengco, 66, 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. Educational Background: Bachelor of Arts in Interdisciplinary Studies from the Ateneo De Manila University. Mr. Nicasio I. Alcantara, 77, 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: 18

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. Educational Background: Bachelor of Science in Business Administration from the Ateneo de Manila University, Master’s in Business Administration from Sta. Clara University, California, USA. Mr. Victor V. Benavidez, 68, Filipino, He is the Nominee of Alakor Securities Corporation, Director of Boulevard Holdings, Inc. Formerly: General Manager of Alakor Securities, Inc, Director, Mariwasa Siam Holdings, Anglo Philippines Holdings Corporation, VP and Director Mabuhay Holdings Corporation and Tagaytay Properties & Holdings Corporation, Columnist, The Daily Globe, Investment Research Consultant of James Capel, Manager/Corplan of Banco Filipino and Manager/Investment Research of Anselmo Trinidad & Co. Educational Background: Bachelor of Science in Economics from the University of Sto. Tomas, Master’s Degree in Economics from the University of Sto. Tomas, Professional Development Program from CRC. MEDEL T. NERA, 64, Filipino, is a Director of House of Investments, Inc. from 2011 to present. He is also a Director of iPeople inc., EEI Corp., Seafront Resources Corp., National Reinsurance Corporation and Generika Group. His past experiences include: President & CEO of House of Investments, Inc.; President of Honda Cars Kalookan, Inc., Director and President of RCBC Realty Corp.; Chairman of the Board of Greyhounds Security & Investigation Agency Corp., Zamboanga Industrial Finance Corporation, EEI Realty Corp., Hi-Eisai Pharmaceuticals Inc., Investments Manager Inc., Landev Corp., Malayan Colleges Laguna, Inc., Manila Memorial Park Cemetery Inc., YGC Corporate Services, Director and Chairman of Risk Committee of Rizal Commercial Banking Corp.; Director and Treasurer of CRIBS Foundation, Inc., and Senior Partner at Sycip Gorres Velayo & Co. Educational Background: Master in Business Administration from Stern School of Business, New York University, USA and Bachelor of Science in Commerce from Far Eastern University, Philippines, International Management Program from Manchester Business School, UK, Pacific Rim Program from University of Washington, USA. Atty. Ernestine Carmen Jo Villareal-Fernando, 58, 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 PanagsaganBantilan Law Office. Educational Background: Bachelor of Laws from the University of the Philippines, A.B. Economics-College Scholar, Dean’s Medal from the University of the Philippines, Certificate in Math and Computer Programming at Michigan State University, Computer Center. Atty. Samuel V. Torres, 55, 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 FunerariaPaz-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. Educational Background: Bachelor of Science in Business Economics from the University of the Philippines and Bachelor of Laws from Ateneo de Manila University.

Atty. Arlan P. Profeta, 46, Filipino, is the Asst. Corporate Secretary/Compliance Officer of PERC. He is the Corporate Secretary of Maibarara Geothermal, Inc., PetroGreen Energy Corporation and PetroSolar Corporation. Corporate Secretary of PetroWind Energy, Inc. and formerly Tax Manager of Punongbayan and Araullo. Educational Background: Bachelor of Science in Accountancy from San Beda College. He is a Certified Public Accountant. He took his Bachelor of Laws degree from the Arellano University School of Law. Significant Employees Other than the aforementioned Directors and Executive Officers identified in the item on Directors and Executive Officers in this report, 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. There is no significant employee of the registrant that is expected to make significant contribution to the business. The Directors of the Company are elected at the annual stockholders’ meeting to hold office until the next succeeding annual meeting and until their respective successors have been elected and qualified. Officers are appointed or elected annually by the Board of Directors at its first meeting following the Annual Meeting of Stockholders, each to hold office until the next annual stockholders’ meeting or until a successor shall have been elected, appointed or shall have qualified. Family Relationship There are no 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 Please refer to Note 13 of the 2019 AFS for the disclosure of the related party transactions. Aside from the disclosure in the Audited Financial Statements, there were no other related transactions or proposed transactions during the last two (2) years to which the registrant was or is to be a party. Item 10 - Executive Compensation Compensation of Directors and Executive Officers Summary Compensation Table (CEO and Top 4 Highest Paid Executive Officer) Name Milagros V. Reyes Perry Y. Uy Atty. Samuel V. Torres Atty. Arlan P. Profeta

Designation President Treasurer Corporate Secretary Asst. Corporate Secretary

Compensation * -

Summary Compensation Table (All Directors as a group)

Particulars

Year

Salary

2017 2018 All Directors as a group* 2019 2020*

Bonuses

Other Annual Compensation

Total

85,000 175,000 170,000 175,000

*all executive officers of the company do not receive any compensation. ** 2020 projected per diem during BOD meetings. There is no employment contract between the registrant and the Chairman and all others Executive Officers. There are no other arrangements pursuant to which any director of the company was compensated, or is to be compensated, directly or indirectly. Item 11 - Security Ownership of Certain Record and Beneficial Owners and Management (as of December 31, 2019) a) 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 December 31, 2019. Title of Class Common

Common

Common Common

Common

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

Stockholder

Various clients (Note 1)

Stockholder

Stockholder Stockholder

Pan Malayan Management and Investment Corporation (Note 2) Alsons Consolidated Resources, Inc.(Note 3)

China Banking Corp. (Note 4)

-do-

Stockholder

Others Total

Citizenship

No. of shares held

Percentage of Ownership

Filipino

66,857,839 *

41.02%

Filipino

30,469,858

18.69%

Filipino

15,544,911

9.54%

Filipino

14,178,625

8.70%

Filipino

10,204,120

6.26%

25,744,647

15.79%

163,000,000

100.00%

NOTE: 1.

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. 2. The corporate acts of PMMIC are carried out by its Board of Directors and Management. Mrs. Helen Y. Dee is the Chairman of PMMIC. 3. 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. 4. 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. William C. Whang is the current CBC President and COO. * PCD total shares include Filipino and Non-Filipino.

b) Security Ownership of Management as of December 31, 2019.

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

Name of Beneficial Owner Name and Position

Common

Roberto Jose L. Castillo Chairman of the Board Milagros V. Reyes President and Director Perry Y. Uy Director/Treasurer Yvonne S. Yuchengco Director Nicasio I. Alcantara Independent Director Medel T. Nera Director

Common

Ernestine Carmen Jo D. Villareal-Fernando Independent Director

Common

Raul M. Leopando Director

Common

Victor V. Benavidez Director

Common

Samuel V. Torres Corporate Secretary

Common

Arlan P. Profeta Asst. Corporate Secretary

Common Common Common Common Common

Total

Amount and Nature of Beneficial Ownership

Citizenships

Percent of Class

1 “Direct”

Filipino

1 “Direct”

Filipino

1 “Direct”

Filipino

1 “Direct”

Filipino

1 “Direct”

Filipino

661 “Indirect”

Filipino

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

1,000 “Direct” -

4,926 shares

Filipino

0 .00%

As of December 31, 2019, the Company’s directors and executive officers owned an aggregate of 4,926 shares equivalent to 0.003% 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 12 - 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.

PART IV - EXHIBITS AND SCHEDULES Item13 - Exhibits and Reports a. b. c. d. e.

2019 and 2018 Audited Financial Statements Supplementary Information and Disclosures required on SRC Rule 68 and 68.1 as amended Organizational Structure (not applicable) Reports on SEC Form 17-Q (1stQuarter, 2nd Quarter, 3rd Quarter) Reports on SEC Form 17-C 1. February 28, 2019 - Notice of Annual Stockholders’ Meeting 2. April 10, 2019 - Approval of AFS 2018 3. May 30, 2019 - Results of Organizational Meeting of Board of Director 4. May 30, 2019 - Results of Annual Stockholders’ Meeting 2019 5. October 7, 2019 - Change in Corporate Contact Details and/or Website

Item 14- General Notes to Financial Statements 1.

Assets subject to Lien and Restrictions on Sales of Assets As of December 31, 2019, there were no assets mortgaged, pledged or otherwise subject to lien.

Subsequent Events There were no subsequent events that required adjustments on the December 31, 2019 Audited Financial Statements.

Defaults -None

The following are not applicable in the preparation of this report. a. Adjustments made that lead to the revenue recognition but which adjustments cannot be properly supported. b. Changes in estimates without proper disclosure which have the impact of improving results of operations. c. Non-Application or misapplication of accounting principles and standards, misstatements, omissions, etc. d. 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.

The Company has no liability guaranteed by others.

There were no assets pledged against secured liabilities.

Events after the date of Statement of Financial Position. a. Dividends There is no dividend proposal or declaration neither after the Statement of Financial Position date nor before the financial statements are authorized for issue. b.

Discontinuing Operations There were no significant events after the Statement of Financial Position date but before the financial statements are authorized for issue that may warrant suspension of the Corporation’s operations.

Earnings per share There are no significant events after the Statement of Financial Position date that will affect the computation of earnings per share.

SIGNATURES: The President acts as the Principal Operating Officer and Principal Executive Officer; and the Treasurer Principal Financial Officer of the Company.

as the

SIGNATURES Plrsuant to the requirements of Section 17 of the Code and Section

signed

on behalf of the issuer by the on

l4l of the Corporation Code, this report is undersigned, thereunto duly auihorized, in the Citv of

SEAFRONT RESOURCES CORPORATION Issuer

MILAGROS V. REYES President/CEO/COO

PERRY Y. UY

.4 SAMUEL V. TORRES Corporate Secretary

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NAMES MILAGROS V. REYES PERRY Y. UY SAMUEL V. TORRES

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PTR No. 5242299; 0111512020: Pasig City IBP No. 113855; 01/15/2020; RSM MCLE Compliance No. Vl'0018291 02106119

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Series of2020

.A LN

4 STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS May 25,2020

Securities and Exchange Commission PICC, Roxas Boulevard, Pasay City

The management ofSeafront Resources Corporation is responsible for the preparation and fair presentation ofthe financial statements including the schedules attached therein, for the years ended December 3l , 2019 and 20 I 8, in accordance with the prescribed financial reporting framework indicated therein, and for such intemal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or eror. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going conoem, disclosing, as applicable matters related to going concern and using the going concem basis ofaccounting unless management either intends to liquidate the Company or to cease operations, or has not realistic alternative but to do so. The Board of Directors is responsible for overseeing the Company's financial reporting process. The Board ofDirectors reviews and approves the financial statements including the schedules attached therein, and submits the same to the stockholders or members.

SyCip Gorres Velayo & Co., the independent auditor appointed by the stockholders, has audited the financial

ofthe company in accordance with Philippine Standards on Auditing, and in its report to the stockholders or

this

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l{AY ? 5 ?l|?0 SUBSCzuBED AND SWoRN to me before PAS!6 Affiants exhibited to me their Tax Identification Numbers (TIN) indicated below each

NAMES

TIN

Roberto Jose L. Castillo Jr.

123-304-975

Milagros V. Reyes

100-732-775 I 0l -563-055

Perry Y. Uy

No. cbZ PageNo. {l BookNo. 3

Io ?i ohlltt ?)L Notary Publ for Pasig, San Juan and Pateros | 31 Decembet 2021 7F JMT Bldg. Ortigas Center, Pasig City

ATTY.

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Roll No. 63341

Doc.

' ; ;

PTR No. 5242299', 01t1512020; Pasig City IBP No. 113855; 01/15/2020; RSM MCLE Compliance No. Vl-0018291; 02106119

Series of2020.

SEAFRONT RESOURCES CORPORATION

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COMPANY INFORMATION Company's Email

Address

No. of Stockholders

4,692

Mobile Number

Company's Telephone Number

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Annual Meeting (Month /

N/A

Day)

Fiscal Year (Month / Day)

COMPAIIY INFORMATION The designated contact person

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be an Officer of the Corporation

Name of Contact Person

Email Address

Teleohone Number/s

Mobile Number

Milagros V. Reyes

mvreyes@petroenergy.com.ph

637-2917

N/A

CONTAGT PERSOI{'s ADDRESS

7th Floor, JMT Buitding, ADB Avenue, Ortigas Center, Pasig City d as antact person, such incident shall be repotled to tllr- Commission within thirly (30) calendar days from the occurrence thereof with infonnation and complete contact details of the new contact percon designated. ' 2 : All 6oxes nust be properly and completely ftlled-up. Failure to do so shal/ cause the delay in updating the corporation's records witft the Commission andlor non-receipt of Notice ;f D;ficiendes. Fufther, non+eceipt of Notice of Ddiciencies shall not excuse the corpwation fron liabilify tw its deficiencies'

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BCA,'PRC Reg. No. 0001 . October 4, 2018, valid until August 24. 2021 SEC Accreditation No. 0012-FR-5 (Group A), Novenrber 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR'S REPORT

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

Report on the Audit of the Financial Statements

Opinion We have audited the financial statements of Seafront Resources Corporation (the Company), which comprise the statements of financial position as at December 31, 2019 and 2018, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31,2019, and notes to the financial statements, including a summary of significant accounting policies,

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 201 8, and its financial performance and its cash flows for each of the three years in the period ended December 31,2019 in accordance with Philippine Financial Reporting Standards (PFRSs). Basis for Opinion We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described inthe Auditor's Responsibilitiesfor the Audit of the Financial Statemenls section of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audit of the financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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

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-2We have fulfilled the responsibilities described inthe Auditor's Responsibilitiesfor the Audit of the Financial Statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial statements.

Valuation of unquoted equity securities The Company has an investment in the unquoted equity security of Hermosa Ecozone Development Corporation (HEDC) classified as financial assets at fair value through other comprehensive income which is caried at the estimated fair value of P5 I 7. I 8 million as of Decemb er 3l , 2019 representing 82.06% of its total assets. This matter is significant to our audit because estimating the fair value of an unquoted equity instrument is inherently subjective as it involves the application of significant judgment in selecting the valuation technique and in using valuation inputs that are not observable in the market. The Company's disclosures about its unquoted equity investment in HEDC are included in Note 8 to the

financial statements.

Audit response We involved our internal specialist in the review of the scope, bases, methodology assumptions used in the valuation and results of the work by the Company's external appraiser. The assumptions include comparative sales price of substitute properties and cost to develop the parcels of land of HEDC by reference to historical and market data on comparable properties. We reviewed the Company's disclosures on the sensitivity of the fair value measurement to changes in unobservable inputs. We also considered the competence, capabilities and objectivity of management's external appraiser who prepared the valuation estimates.

Other Information Management is responsible for the other information. The other information comprises the information included in the SEC Form 20-IS (Definitive Information Statement), SEC Form l7-A and Annual Report for the year ended December 3L,2019, but does not include the financial statements and our auditor's report thereon. The SEC Form 20-IS (Definitive Information Statement), SEC Form l7-A and Annual Report for the year ended December 3l , 2019 are expected to be made available to us after the date of this auditor's report.

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

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

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-3Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with PFRSs, 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 or

eror. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concem, disclosing, as applicable, matters related to going concem and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic altemative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or eror and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identiff and assess the risks of material misstatement of the financial statements, whether due to fraud or elror, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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Obtain an understanding of intemal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's intemal conffol. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and" based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast siguificant doubt on the Company's ability to continue as a going concem. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modiff our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concem.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identiff during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

Report on the Supplementary Information Required Under Revenue Regulations No. 15-2010 The supplementary information required under Revenue Regulations No. I 5-201 0 for purposes of filing with the Bureau of Internal Revenue is presented by the management of Seafront Resources Corporation in a separate schedule. Revenue Regulations No. l5-2010 requires the information to be presented in the notes to financial statements. Such information is not a required part of the basic financial statements. The information is also not required by the Revised Securities Regulation Code Rule 68. Our opinion on the basic financial statements is not affected by the presentation of the information in a separate schedule. The engagement partner on the audit resulting in this independent auditor's report is Ana LeaC. Bergado.

SYCIP GORRES VELAYO & CO.

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CPA Certificate No. 80470 SEC Accreditation No.0660-AR-4 (Group A), October 22,2019, valid until October 21,2022 Tax Identification No. 102-082-670 BIR Accreditation No. 08-00 I 998-63-20 I 8. February 14,2018, valid until February 13,2021 PTR No. 8125214, January 7,2020, Makati City

May 25,2020

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SEAFRONT RESOURCES CORPORATION STATEMENTS OF FINANCIAL POSITION

December 31 2019

201 8

P43,037,269 406,512

P10,402,418 12,537,600

45,288,418

44,850,901

ASSETS

Current Assets Cash and cash equivalents (Notes 6,7 ,8 and 14) Receivables (Notes 8, 9 and 14) Financial assets at fair value through profit or loss (FVTPL) (Notes 8 and 14) Other current assets Total Current Assets

98r.62s

68,772,544

99,800,742

Noncurrent Asset Financial assets at fair value through other comprehensive income FVOCD (Notes 8 and 14

4t6.353"329

P630,210,953

TOTAL ASSETS

P485,125,873

LIABILITIES AI\D EQUITY Current Liabilities Accounts payable and accrued expenses (Notes

Noncurrent Liability tax liabiliw (Note Total Liabilities

P654.816

P582,595

and 14)

62,568,371

12)

45,901,439 46,5

Equity Capital stock - Pl par value (Note 15) Authorized - 388,000,000 shares Issued and outstanding - 163,000,000 shares Net unrealized gains on financial assets at FVOCI (Notes 8 and Retained earnings (Note

total gquiw

15)

TOTAL LIABILITIES AND EOUITY See accompanying Notes to

15)

163,000,000 359,414,236

44'645'751

163,000,000

263,345,540 12,224'q7q

567,059,9ffi 485@$ft P630,2I0,953

P485,125,873

Financial Statements.

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SEAFRONT RESOURCES CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 3l 2019

201 8

2017

*33,463,7U

P12,885,767

*294,713

REVENUES Dividend income (Note 9) Net gain on fair value changes on financial assets at FVTPL (Note 8) Interest income (Note 6) Foreign exchange gain - net Other income fNote l0)

15,387,048

437,517

4rs,6r1

ll7,95l

96,516

5 57?

3s2,337 13,361,628

352,337 16,130,614

2,216,330 1,232

2,217,206

1,451,900

2.217,562

20,211,596

1,451,900

32,428,251

(6,849,968)

14,678,714

328,897 34.645.813

EXPENSES AND CHARGES General and administrative expenses (Note 11) Foreign exchange loss - net Net loss on fair value chanses on financial assets at FVTPL (Note 8)

INCOME (LOSS) BEFORE INCOME TAX PROVISION FOR INCOME TAX (Note

12)

17.994.390

6,578

7,047

NET TNCOME (LOSS)

32,421,673

(6,857,015)

OTHER COMPREHENSIVE INCOME (LOSS) Item to be reclassified to profit or loss in subsequent periods: Net unrealized gains (losses) on financial assets at FVOCI - net of tax (Notes 3 and 8)

96,068,696

(9,722,397)

TOTAL COMPREHENSM INCOME

(LOSS)

Basic and Diluted Earnings (Loss) Per Share

(Note

16)

See accompanying Notes to

P128,490,369 (P16,579,412)

+0.1989r

(P0.04207)

7.047

t4,671,667

231'065:716 P245,738,383

F0.09001

Financial Statements.

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SEAFRONT RESOURCES CORPORATION STATEMBNTS OF CHANGES IN EQUITY

Net Unrealized Gains (Losses) on Financial Assets at

FVOCI (Note tS) (Notes 8 and 15)

Capital BALAIICES AT JANUARY Net income Other comprehensive Total comprehensive

1,2017

income income

BALANCES AT DECEMBER 31, Net loss Other comprehensive

loss

Total comprehensive loss BALAI\CES AT DECEMBER Net income Other comprehensive

Total comprehensive

2017

31,2018

income income

Stock

Retained Earnings (Note 15)

PI63,000,000 P12,001,221 P4,409,426

Total P209,410,647

14,671,667 14,671,667 231.955J]6 231,066,716 245,738,383 14,671,667 231,066,716 163,000,000 273,067,937 19,081,093 455,149,030 (6,857,015) (6,857,015) (9,722,397) (9,722,397) (16,579,412) (6,857,015) (9,722,397) 163,000,000 263,345,540 12,224,078 438,569,618 32,421,673 32,421,673 96,068'696 96,068,696 128,490,369 32,421,673 96,068,696 -

BALANCES AT DECEMM See accompanying Notes to

Financial Statements.

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SEAFRONT RESOURCES CORPORATION STATEMENTS OF CASH FLOWS

Years Ended December 3l 2019

CASH FLOWS FROM OPERATING ACTI\TTIES Income (loss) before income tax Adjustments for: Net loss (gain) on fair value changes on financial assets at FVTPL (Note 8) Dividend income (Note 9) Interest income (Note Operating loss before working capital changes Decrease (increase) in:

*32,428,25L (P6,849,968)

P14,678,714

(437,517) 17,994,390

(15,387,048) (294,713) (96'516) (1,099,563)

Receivables Other cunent assets Increase (decrease) in accounts payable and accrued Cash used in operations Interest received

Net cash used in operating

expenses

CASH FLOWS FROM IIWESTING ACTIVITIES Dividends received (Note 9) Proceeds from disposal (Acquisitions) of: Financial assets at FVOCI (Note 8) Financial assets at FVTPL (Note 8) Pavment of subscription payable (Note 8)

(33,463,7U)

(12,885,767)

(415,615) (117,951) (1,859,296)

(1,888,665)

(28,388) (88,425)

(19,550) (86,918)

activities

2017

201 8

99,859

(74,065)

(55,938) (78,798) (2,073,931\ (2,032,047)

lll,163

361,850

(1,712,081) (1,920,884)

45,668,186

275,877

645,154

3,026,268

1,032,630

140,067

(933,702) 67,532 (866,170)

(2,478,543)

(4,522) (12,353'8M)

3,67r,422

(2,207,188)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

32,634,851

1,750,538

(3,073,358)

CASH AND CASH EQUTVALENTS AT BEGINNING OF YEAR

10,402,418

8,651,880

11,725,238

CASH AND CASH EQUIVALENTS AT END OF YEAR(Note 6 See accompanying Notes to

Financial Statements.

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SEAFRONT RESOURCES CORPORATION NOTES TO FINANCIAL STATEMENTS

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 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's shares of stock were listed on May 7,1974 and are currently traded at the Philippine Stock Exchange.

The registered office address

of the Company is 7th Floor, JMT Building, ADB Avenue,

Ortigas Center, Pasig City.

The accompanying financial statements were approved and authorized for issue by the Board of Directors (BOD) on May 25,2020.

Basis of Preparation 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 (FVTPL) and financial assets at fair value through other comprehensive income (FVOCI), which have been measured at fair value. The Company's financial statements are presented in Philippine Peso (F), which is also the Company' s fu nctional and presentation currency.

The Company has invesftnent in trust funds. The transactions and balances of the Company's trust funds (see Note 7) are consolidated on a line by line basis with the Company. The trust fund reports are prepared for the same reporting year as the Company, using consistent accounting policies in accordance with Philippine Financial Reporting Standards (PFRSs). Statement of Compliance The financial statements of the Company have been prepared in accordance with PFRSs. The term PFRSs, in general, include all applicable PFRSs, Philippine Accounting Standards (PASs) and

Interpretations issued by the Standing Interpretations Committee, the Philippine Interpretations Committee (PIC) and the International Financial Reporting Interpretations Committee (IFRIC), which have been approved by the Philippine Financial Reporting Standards Council (FRSC) and adopted by the Philippine SEC.

Changes in Accounting Policies and Disclosures

The Company adopted the following new accounting pronouncements starting January L, 2019. Except as specifically stated, the adoption of these new accounting pronouncements did not have any impact on the Company's financial statements.

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.2PFRS 16, Leases

PFRS 16 supersedes PAS 17, Leases, Philippine Interpretation IFRIC 4, Determining whether an Arrangement contains a Lease, Philippine Interpretation Standard Interpretations Committee ("SIC") -15, Operating Leases-Incentives and Philippine Interpretation SIC-27, Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentafion and disclosure of leases and requires lessees to recognize most leases on the balance sheet. Lessor accounting under PFRS 16 is substantially unchanged from today's accounting under PAS 17. Lessors will continue to classiff all leases using the same classification principle as in PAS l7 and distinguish between two types of leases: operating and finance leases. Philippine Interpretation TFRIC-23, Uncertainty over Income Tax Treatments

Philippine Interpretation IFRIC 23 addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of PAS 12,Income Taxes, and does not apply to taxes or levies outside the scope of PAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses the following: Whether an entity considers uncertain tax treatrnents separately

. .

The assumptions an entity makes about the examination of tax treatrnents by taxation

How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax

credits and tax rates How an entity considers changes in facts and circumstances

authorities

The entity is required to determine whether to consider each uncertain tax treatrnent separately or together with one or more other uncertain tax treatments and use the approach that better predicts the resolution of the uncertainty. The entity shall assume that the taxation authority will examine amounts that it has a right to examine and have full knowledge of all related information when

making those examinations. If an entity concludes that it is not probable that the taxation authority will accept an uncertain tax ffeatment, it shall reflect the effect of the uncertainty for each uncertain tax treatment using the method the entity expects to better predict the resolution

the uncertainty.

Upon adoption of the Interpretation, the Company assessed that it has no material uncertain tax treatrnents, accordingly, the Interpretation did not have an impact on the Company's financial statements.

The Company also adopted the following new accounting pronouncements starting January 1,2019. The adoption of these pronouncements did not have any significant impact on the Company's financial position or performance.

o o o o

Amendments to PFRS 9, Prepayment Features with Negative Compensation Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures

Annual Improvements to PFRSs 2015-2017 Cycle . Amendments to PFRS 3, Business Combinations, and PFRS I l, Joint Arrangements, Previously Held Interest in a Joint Operation

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Amendments to PAS 12, Income Tax Consequences of Payments on Financial Instruments Classified as Equity Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligiblefor Capitalization

Standards Issued but not yet Effective Pronouncements issued but not yet effective are listed below. The Company is currently assessing the impact of the following standards and plans to adopt the new standards when these become

effective. Effective beginning on or after January 1, 2020

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Amendments to PFRS 3, Definition of a Business

Amendments to PAS 1, Presentation of Financial Statemenfs, and PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material

Effective beginning on or after January 1, 202I

PFRS lT,Insurance Contracts

Deferred effectivity

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

The Company continues to assess the impact of the above new and amended accounting standards and interpretations effective subsequent to 20L9 on the Company's financial statements in the period of initial application. Additional disclosures required by these new pronouncements will be included in the financial statements when these are adopted.

Summary of Significant Accounting Policies Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash equivalents are short-term, higttly liquid investments that are readily convertible to known amounts of cash with original maturities of three (3) months or less and that are subject to an insignificant risk ofchanges in value.

Financial Instruments

Initial recognition and subs equent measurement A financial instrument is any conffact that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets - Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortized cost; FVOCL and FVTPL. The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. The Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.

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-4In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it needs to give rise to cash flow that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is refened to as the SPPI test and is performed at an instrument level.

The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Subs equent measurement

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

o o o o

Financial assets at amortized cost (debt instruments) Financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments) Financial assets designated at FVOCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) Financial assets at FVTPL

Financial assets at amortized cost (debt instruments) The Company measures financial assets at amortized cost if both of the following conditions are met:

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The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Company's financial assets at amortized cost includes cash and cash equivalents and receivables.

Financiql assets at FWPL Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at fair value through OCI, as described above, debt instruments may be designated as at FVTPL on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes in fair value recognized in profit or loss. This category includes derivative instruments and quoted equity investrnents which the Company had not irrevocably elected to classiff at fair value through OCI. Dividends on quoted equlty investnents are also recognized as other income in profit or loss when the right of payment has been established.

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-)The Company's financial assets at FVTPL consists of investments in quoted equity securities held for trading.

Financial qssets designated at FVOQ @quity instruments) Upon initial recognition, the Company can elect to classi$ irrevocably its equity invesfinents as equity instruments designated at FVOCI when they meet the definition of equity under PAS 32 and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in profit or loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at FVOCI are not subject to impairment assessment. The Company's financial assets at FVOCI include quoted and unquoted equity securities and quoted govemment securities. Impairment offinancial lssets The Company recognizes an allowance for ECLs for all debt instruments not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next l2-months (a l2-month ECL). For those credit exposgres for which there has been a significant increase in credit risk since initial recognition, a loss allbwance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). The Company may consider a financial asset to be in default when internal or extemal information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the confractual cash flows.

Financial liabilities - Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

initially at fair value and, in the case of loans and borrowings transaction costs' attributable and payables. net of directly

All financial liabilities

are recognized

Subs equent measurement

The measurement of financial liabilities depends on their classification, as described below:

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Financial liabilities at FVTPL Loans and bonowings

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-6Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are

subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of compreher, sive income. The Company's loans and borrowings include accounts payable and accrued expenses, excluding statutory liabilities. and financial liabilities Financial assets A financial asset (or where applicable, a part of a financial asset or part of a group of similar financial

D er eco gnition

offinancial

qs s ets

assets) is derecognized when:

o o o

the rights to receive cash flows from the asset have expired;

the Company retains the rights to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a "pass-through" arrangement; or the Company has transferred its right to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transfened nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Company's continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transfened asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Financial liabilities A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has expired.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified" such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss. Offsetting of Financial Instruments Financial assets and financial liabitities are set off and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

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-7 Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

o o

In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to 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 relevant observable inputs and minimizing the use of unobservable inputs.

All

assets and liabilities for which

o 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 techniques for which the lowest level input that is significant to the fair

fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

value measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recturing basis, the Company determines whether transfers have occurred between Levels in the hierarchy by reassessing 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. Capital Stock

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 attributable 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 ffansaction costs and the related tax effects is included in equity. Retained Eamines Retained earnings represent accumulated earnings of the Company less dividends declared and with consideration ofany changes in accounting policies and other adjusfrnents applied retroactively. The retained earnings of the Company are available for dividends only upon approval and declaration of the BOD.

Eamines Per Share (EPS) Basic earnings per share are computed on the basis of the weighted average number of shares outstanding during the year after giving retroactive effect for any stock dividends declared in the current year.

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-8Diluted earnings per share, if applicable, is computed on the basis of the weighted average number of shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion ofall the dilutive potential ordinary shares into ordinary shares. There are no dilutive potential common shares that would require disclosure of diluted eamings per common share in the financial statements. Revenue Recoqnition Revenue from contracts with customers is recognized when control of the services is transfened to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company has concluded that it is the principal in its revenue arrangement since it is the primary obligor in all revenue arrangements, has pricing latitude and is also exposed to credit risk.

Dividend income

Dividend income is recognized when the Company's right to receive the payment is established, which is generally when the BOD approves the dividend declaration. Interest income Interest income is recognized as the interest accrues taking into account the effective yield on the asset.

Service income

The Company recognizes revenue from services over time, using an input method to measure progress towards complete satisfaction of the service, because the customer simultaneously receives and consumes the benefits provided by the Company.

Rental income Rental income under non-cancellable leases is recognized in the on a straight-line basis over the lease terms, as provided under the terms of the lease contract. General and Administrative Expenses

Expenses are recorded when administering the business.

incurred. General and administrative

expenses constitute costs

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

Defened tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences. Defened tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits from excess minimum corporate income tax (MCIT) over regular corporate income tax and unused net operating loss 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.

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-9The 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 of the deferred tax asset to be utilized. Unrecognized defened tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply 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. Provisions and Contingencies Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are determined by discounting the expected funrre cash flows at a pretax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is use4 the increase in the provision due to the passage of time is recognized as an interest expense. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed when an inflow of economic benefits is probable. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virnrally certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the financial statements. Events After the Reoorting 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, if any. Post year-end events that are not adjusting events are disclosed in the notes when material.

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' The judgments, estimates and assumptions used in the financial statements are based upon management's evaluation of relevant facts and circumstances as of the date of the Company's financial statements. Actual results could differ from such estimates. Judgments and estimates are contractually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

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-10Judsments 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:

Recognition ofdeferred tqx assets The Company's deferred tax assets pertain to the carryforward benefits of NOLCO and excess MCIT over RCIT. Judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The Company did not recognize defened tax assets amounting to P4.87 million and P3.96 million as of December 31,2019 and 2018, respectively (see Note l2). Management believes that it may not be probable that sufficient taxable income will be available against which the income tax benefits can be realized prior to their expiration. Estimates and Assumptions The key assumptions conceming the future and other key sources of estimation uncertainty at the statements of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimation offoir value of unquoted equity securities classified as financial assets at FVOCI The Company uses its judgment to select the most appropriate valuation methodology to value its unquoted equity investnents and make assumptions that are mainly based on market conditions existing at each reporting period. As of December 31, 2019 and 2018, the Company valued the unquoted equity securities classified as financial assets at FVOCI using the adjusted net asset method which is a combination of the market and income approaches. It involves directly measuring the fair value of the assets and liabilities of the investee company. Assets of the investee company consist mainly of parcels of land for sale which is adjusted to its fair value. The fair value adjustments arising from changes in fair value of unquoted equity securities are fully disclosed in Note 8.

Cash and Cash Equivalents

Cash in banks (Note 7) Cash equivalents (Note

2019

2018

F690.233 42,347,036

P6,197,418 4,205,000

*43,037,269 Cash

F10,402,418

in banks earn interest at the prevailing bank deposit rates. Cash equivalents are

short-term

investments that are made for varying periods of up to three months depending on the immediate cash requirements of the Company and earn interest at the prevailing short-term placement rates.

Interest income earned on cash in banks and cash equivalents amounted F0.12 million andP0.l0 million rn2019,2018 and 20IT,respectively.

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Investment in Trust Funds The Company established trust funds (the Trust) which are being administered by a local bank under two trust agreements. The details of the trust funds based on the financial statements issued by the trustee bank as of December 31 follow: 2018

2019 Assets Cash and cash equivalents (Note 6) Financial assets at FVTPL (Note 8) Financial assets at FVOCI - govemment securities (Note 8)

Liabilities Accounts payable and accrued

Equity

expenses

fund

Principal Accumulated tnrst fund income (loss) at beginning ofyear Trust fund income (loss) for the Accumulated trust fund loss at end of

year year

P5,561,000 P4,268,251 14,816,793 12,648,482 5,402,780

4,610,013

(90,389) (177,02il P22299,684 *u,88lw

28,056,417

(5,756,733)

3,446,541

2r5qts35

(9,203,274)

(3,175,198)

r24-fl,8r2r'

(5,756,733)

Prr.r99.684

The assets, liabilities and performance of the fund are consolidated in the applicable accounts of the Company for financial statement presentation purposes.

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

Cash and cash equivalents (Note 6)

Receivables (Note 9)

Financial assets at FVTPL (Note 7) Financial assets at FVOCI (Note 3

2019

201 8

*43,037,269

PrO,402,4t8

406,512 45,288,418

12,537,600 44,850,901

10.211

*629,142,410

4r6.3s3.329

P484,144,248

Financial Assets at FVTPL Details of financial assets at FVTPL consisting of quoted equity securities follow: 2019 Fair value

Acquisition cost

P45,288,418 48,100,916

20t8 F44,850,901 48,100,916

The net gain on fair value changes on financial assets at FVTPL amounted to P0.44 million and FI5.39 million for the years ended December 31,2019 and2017, respectively, while the net loss on fair value changes on financial assets at FVTPL amounted to P17.99 million for the year ended December 31. 2018.

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-12The movements in financial assets at FVTPL for the years ended December

3l follow:

2019

2018 P62,845,291

P44,850,901

Balance at beginning of year Fair value gain (l gatance at end ofyear

Financial Assets at FVOCI

Financial assets at FVOCI consist of quoted and unquoted shares of stock held for long-term investment purposes and are carried at fair value. The carrying values of these investments are as follows: 2018

2019 Quoted equity securities: PetroEnergy Resources Corporation (PERC)

Benzuet

Corporation

*15,789,774

P13,479,075

218331592

18,623,366 Unquoted equity security Hermosa Ecozone Development Corporation

(HEDC) Subscription payable to

HEDC

lnvestments in govemment securities (Note

3,761,406 r7,240,48L

517,176,832

406,063,952

517,176,832

393.710.068 5,402,780

(12,351

4,610,013 *sao,atoptt *qr6,3$w

The movements in financial assets at FVOCI for the years ended December

3l follow: 2018

2019 Balance at beginning of year Fair value gain (loss) recognized during the year Payment of subscription payable to

HEDC govemment securities Movement of

*416,353,329

P428,930,206

112,735,629

(9,550,609)

12,353'884

(1,032,630)

(3,026,268)

Movements in the net unrealized gains on financial assets at FVOCI in equity are as follows: 2019 Balance at beginning of year Unrealized gain (loss) recognized in other comDrehensive

income Birl""* ^t""d"ty"*

*263,345,540

2018 P273,067,937

96,068,696

(9,722;97)

*359,aM$6

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 (ICCP) and Penta Capital Investment Corporation (PCIC) 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.

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-13As of December 31, 2018, the Company has outstanding subscriptions payable to HEDC which amounted to P12.35 million. The subscriptions payable are due on demand (see Note l4). The investment in HEDC is presented in the statement of financial position at fair value net of subscription payable. On January 25,2019, the Company has paid up all the subscription payable to HEDC. The fair value of investment in HEDC is determined using the adjusted net asset value method wherein the assets of HEDC consisting mainly of parcels of land are adjusted from cost to its fair value. The valuation of the parcels of land was performed by a Securities and Exchange Commission-accredited independent valuer as at December 31,2019 and 2018. This measurement falls under Level 3 in the fair value hierarchy.

Fair value measurement disclosures for the determination of fair value of unquoted equity securities are provided in Note 14.

Receivables 2019 *217,814

Dividends receivable Accrued interest receivable

receivable

Rent Receivable from HEDC (Note

124,089

2018

P12,422,217 70,323

26,663 37,946

13)

*406,512

23,408 21,652

P12,537,600

Dividend income earned on its investments amounted to ?33.46 million, P12.89 million and P0.29 million in 2019, 2018 and 2017, respectively. Dividend receivable from HEDC amounting ?12.23 million in 2018 was collected in Januarv 2019.

10. Other Income 2019 Service income (Note 13) Rental income

*267,857

2018 P267.857

84,480 61,040 F328,897 ?352,337

20t7 P267,857 84,480

?352,337

Service income pertains to accounting services rendered by the Company to HEDC (see Note l3). Rental income pertains to rentals eamed from the two (2) parking slots owned by the Company which

are classified as investment property. As of December 31, 2019 and 2018, the cost depreciated parking slots amounted to F207,598.

of the fully

The fair value of the investment property ranges from P800,000 to P1,000,000 and P600,00 to P 800,000 per slot as of December 31,2019 and 2018, respectively. This has been determined on the basis of recent 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 operation of the investment properfy.

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l. General and Administrative

Expenses

Professional fees and services

Stockholders' meeting expenses Stock transfer expenses Stock listing maintenance fees

Directors'fees Taxes and licenses

Advertising IT services

2019 P889,271 320,246

201 8

2017

P1,085,946 378,830

P318,750 302,149

266,257 250,000 170,000 153,339 I 1,1 18

253,538 264,116

259,5r3 265,660

175,000 32,749

85,000 37,722 10,704

4,390 3,202

6,5r6 3,682

16r,957 3,592

148,507 P2,216,330

6,617

6,853

P2,2r7,206

P1,451,900

Insurance expense

Miscellaneous

10,212

Miscellaneous consist of penalties paid, oflice supplies, bank charges, notarial fees, among others.

12. Income Taxes

The provision forincome tax forthe years ended December 31,2019,2018 and20l7 represents

MCIT.

As of December 3I, 2019 and 2018, the Company did not recognize defened tax assets on the carryforward benefits of the following NOLCO and excess MCIT over RCIT as management assessed that there will be no future available taxable income against which the defened tax assets can be utilized prior to their expiration. 2019 P4,853,099 20,672

NOLCO MCIT

2018 P3,939,030

2L,I4T

The details of unexpired MCIT and NOLCO are as follows:

2019

Year incurred 2019 2018 2017

MCIT P6,578 7,047 7,047

*20,672

NOLCO

Expiry Date December3l,2022 F1,888,667 1,864,869 December3l,202l 1,099,563 December3lr2020 P4,853,099

2018 Year incurred 2018 2017

20r6

MCIT P7,047 7,047

7,047

Pzl,r4r

NOLCO

Expiry Date

Pl,864,869 December 31,202I 1,099,563 December3l,2020 974,598 December 31,2019 F3,939,030

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-15Rollforward of NOLCO follows: 2019

P3,939,030

Balances at beginning of year

1,888,667

Additions

Expirations

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(974,598)

y"t

2018 P3,162,213 1,864,869 (1,088,052)

Rollforward of MCIT follows:

20t8

2019

*2l,l4l

Balances at beginning of year

Additions Expirations g"t*..r

"t."d "f

P21,1,41

6,578 (7,047)

7,047

(7,047\

y.*

As of December 31,2019 and 2018, the Company recognized defened tax liability amounting to P62.57 million and F45.90 million, respectively, which pertains to the setup of 15% deferred tax on unrealized gains on unquoted shares of stock classified as financial assets at FVOCI. The reconciliation of the income tax computed at the statutory tax rate to the provision for income tax as shown in the statements of comprehensive income follows: 2019 Income tax at statutory tax rate

30% Add (deduct) reconciling items: Dividend income Movement in unrecognized DTA Interest income subjected to final tax

Net loss (gain) on fair value changes on financial assets at FVTPL

Provision for income tax

20t7

2018

*9,728,474 (P2,054,990) P4,403,614 (10,039,135)

(3,865,730)

573,178 564,835 (35,385) (124,684) (131,255) 5,398,317

F6,578

P7,047

(88,414) 336,916 (28,955)

(4,616,114)

PU47

13. Related ParW Transactions

Related party relationship exists when one party has the ability to control, directly, or indirectly through one or more intermediaries, the other party or exercise significant influence over the other party in making financial and operating decisions. Such relationship also exists between and/or among entities, which are under common control with the reporting 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 form.

The Company in its regular conduct of business has entered into the following transactions with related parties consisting of reimbursement of expenses and management and accounting services agreements.

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-16The Company's financial statements include the following amounts resulting from transactions with related parties:

AmounU Volume Nature of transaction

Receivables/

(Accounts

pavable)

Terms

Conditions

Afliliate:

Reimbursements F100,806 (Pl2,4l7r*

PERC HEDC

Accounting services (Note 10)

267.857

Noninterest bearing; due and

demandable - do

37,946

Unsecured Unsecured, no

impairment

P36E,663 * included

part of accounts payable and accrued expenses 2018 Receivables/ (Accounts

Nature of

AmounV transaction Volume

pavable)

Terms

Conditions

Affiliate:

PERC HEDC

Reimbursements *123,667 (*123,667)*

Accounting services (Note l0)

267,857

Noninterest bearing; due and

demandable - do -

21,652

Unsecured

Unsecured, no

impairment

*39t.524 * included

part ofaccounts payable and accrued expenses

The Company has no employee. PERC provides administrative support to the Company. Therefore, no compensation and short-term benefits for key management personnel were charged in profit or loss for the years ended December 31,2019,2018 and20l7 . Terms and conditions of transactions with relqted parties Outstanding balances at year-end are to be settled in cash. There have been no guarantees provided or received for any related party receivables or payables.

14. Financial Instruments Catesories and Fair Values of Financial Instruments The methods and assumptions used by the Company in estimating the fair values of the financial instruments are: Cash and cash equivalents and receivables

Due to the short-tenn nature of the instruments, carrying amounts approximate fair values as of the reporting date. Government securities

Fair values are generally based on quoted market prices at reporting date. This is under Level I category of the fair value hierarchy. Equity securities

For quoted equity securities, fair values are based on published quoted prices. This is under Level I category of the fair value hierarchy.

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-17For unquoted equity securities, fair values are determined using the adjusted net asset value method which involves directly measuring the fair value of the assets and liabilities of the investee company. This measurement falls under Level 3 in the fair value hierarchy. Accounts payable and accrued expenses Carrying values approximate fair values due to their short-term nature.

Description of significant unobservable inputs to valuation: The significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 3l December 2019 and 2018 are shown below:

Valuation technique

Ranqe Significant unobservable inputs 2018 2019 - P4,000 per F5,650 F440 meter F450 square Unquoted equity Adjusted net asset Price shares at FVOCI value method

The appraised value of the land was determined using the market approach which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets. Net adjustment factors arising from external and internal factors (i.e. location, sizelshape/terrain, and development) affecting the subject properties as compared to the market listing of comparable properties ranges from -5Yo to -10%o. Significant favorable (unfavorable) adjustments to the aforementioned factors based on the professional judgment of the independent appraisers would increase (decrease) the fair value of land, in return the fair value of the unquoted financial asset. Financial Risk Management Objectives and Policies The Company's financial instruments comprise cash and cash equivalents, receivables, financial assets, accounts payable and accrued expenses and subscriptions payable. The main purpose of these financial instruments is to fund its own operations and capital expenditures. 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. Liquidity risk Liquidity risk is the risk that the Company is unable to meet its financial obligation when due. The Company has substantial invesbnents 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 classified as financial assets at FVOCI amounted to P517.18 million and P393.71 million" net of subscription payable, as of Decemb er 3l , 2019 and 201 8, respectively (see Note 8). 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.

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-18The tables below summarize the maturity profile of the Company's ftnancial assets and liabilities as of December 3l , 2019 and 201 8 based on contractual undiscounted payments. 2019

Financial assets Financial assets at FVTPL: Equity securities Financial assets at amortized cost: Cash and cash equivalents

Within one year

More than

On demand

F{5,288,418

P-

Receivables: Receivable from HEDC

Rent receivable Accrued interest receivable Dividends receivable Financial assets at FVOCI: Quoted equity securities: PERC Benguet Corporation Unquoted equity security:

43,037,269

37,946 26,663

37,946 26,663 124,089 217,814

-217,814

HEDC

88,514385 exDenses

Net financial assets

F45,288,418

43,037,269

t24,089

Government securities Financial liabilities Accounts oavable and accrued

one year

15,799,774 2,933,592

15,789,774

517,176,832 4,610,013

517,176,832

540,410,211

629,142,410

217,814

2,833,592

4,6{p13

582.595 582,595

582.595

582.595 P87,931,790 217,814 540,410,211

628,51X!!5

2018 On demand

yea.r

More than one year

Pt4,850,901

Within one Financial assets Financial assets at FVTPL: Equity securities Financial assets at amortized cost: Cash and cash equivalents

Total p44,850,901

10,402,418

21,652 23,408 70,323

Receivables:

Receivable from HEDC Rent receivable Accrued interest receivable

r.t A1., alL l| LL.1La,a

Dividends receivable f inancial assets at FVOCI: Quoted equity securities: PERC Benguet Corporation Unquoted equity security:

HEDC'} lnvestments in sovernment

securities

Financial liabilities Accounts payable and accrued Subscrintions

oavable**

Net financial assets

12,422,217

13,479,075 3,761,406

406,063,952

406,063,952 5,402,780

5,402,780

ss,368,702 12,422,217 428J0128 -_495A93)2_

expenses 654,816 12.353.884

654,816 12,353,884

13.008.700

13,008,700

p42.360,002 *12,422,217 *428,707,213 P483489,432

* Gross of subscriptionpayable to HEDC amounting to FI2,353,884. *+ Presented as a deductionfromfinancial assets at FVOCIforfinancial statement presentation purposes.

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-19Market risk Market risk is the risk of loss on future eamings, 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 crurency exchanges rates, commodity prices, equity prices and other market changes. The Company's market risk emanates from its holdings in debt and equity securities. 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. [n 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. The analysis below is performed for reasonably possible change in the market price of quoted shares classified as financial assets at FVTPL, with all other variables held constant, showing the impact on income before tax:

2019

Effect on income before tax +0.94Vo *431,932

2018

+1.53o/o

Increase (decrease) in market price

-0.94Yo

-1.53%

(431,932') P685,521 (685,521)

The table below demonstrates the sensitivity to a reasonably possible change in the market price of quoted shares classified as financial assets at FVOCI, with all other variables held constant, showing the impact on equity: Increase (decrease) in market 2019 201 8

price +0.76.|

Effect on equi8 *140,822

-0.760/0

(140,822',)

+1.70% -r.70%

P292.834 (292,834\

The percentage of increase and decrease in market price is based on the movement in the Philippine Stock Exchange lndex from beginning to end of the year. Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. With respect to credit risk arising from cash and cash equivalents, receivables, financial assets at FVTPL and financial assets at FVOCI, the Company's exposure to credit risk is equal to the carrying amount of these instruments. The Company limits its credit risk on these assets by dealing only with reputable counterparties. For cash and cash equivalents and quoted govemment securities, the Company applies the low credit

risk simplification where the Company measures the ECLs on a l2-month basis based on the probability of default and loss given default which are publicly available. The Company also evaluates the credit rating of the bank and other financial institutions to determine whether the debt instrument has significantly increased in credit risk and to estimate ECLs. The Company considers its cash and cash equivalents and quoted government securities as high grade since these are placed in financial institutions of high credit standing. Accordingly, ECLs relating to these debt instruments rounds to nil.

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-20 -

The Company's receivables are aged current as of December 31, 2019 and 2018. No receivables are considered credit-impaired.

As of December 31, 2019 and 2018, the carrying values of the Company's financial instruments represent maximum exposure as of reporting date.

The table below shows the comparative summary of maximum credit risk exposures on financial instruments as of Decemb er 3l . 2019 and 20 I 8: 20r8

2019 Financial assets at FVTPL:

Equity securities

P45,288,418

P44,850,901

43,037,269

10,402,418

37,946 26,663

21,652 23,408

Financial assets at amortized cost: Cash and cash equivalents

Receivable from HEDC Rent receivable Accrued interest receivable Dividend receivable

124,089

70,323

217,814

12,422,217

15,789,774

13,479,075

2,833,592 s17,176,832 4'610'013

3,761,406

Financial assets at FVOCI: Quoted equity securities: PERC Benguet Corporation

Unquoted equity security: HEDC* Investments in government

securities

393,710,068

*629,142,410

5,402,780 F484,144,248

* Net of subscription payable to HEDC amounting to P12,353,884 in 2018.

The following tables show financial instruments recognized at fair value as of December 31,20t9 and 2018, analyzedbetween those whose fair values are based on:

2. 3.

quoted prices in active markets for identical assets or liabilities (Level 1); those involving inputs other than quoted prices included in Level I that are observable for the asset or liability, either directly or indirectly (Level 2); and

those with inputs for the asset (unobservable inputs) (Level 3).

or liability that are not based on

observable market data

2019

Level

Level2

Level3

Fair Value

P-

f45,288,418

Financial assets: Financial assets at FVTPL:

Equity securities Financial assets at FVOCI: PERC Benguet Corporation

P45,288,418

2,833,592 517,176,832

2,833,592

5t7,176,$;

HEDC Investments in government

15,789,774

securities 4,610,013 t68,52L,797

*- *517,176,832

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4'610'013 ?585,698,629

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2018

Level Financial assets: Financial assets at FWPL:

Equity securities Financial assets at FVOCI: PERC Benguet

Corporation

Level2

13,479,075 3,761,406 5.402.780 p67,494J62

Fair Value

F-

P44,850,901 P_

44,850,901 13,479,075

3,761,406

393,710,068

HEDC* Investrnents in government securities

Level

P393,710,068

393,710,068

5,402,780 P461,204,230

* Net of subscriptionpayable to HEDC amounting P|2,353,884.

There were no transfers between Level I and Level 2 fair value measurements and no transfers into and out of Level 3 fair value measurements in 2019 and 2018.

15. 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 stoclq net unrealized gains (losses) on financial assets at FVOO and retained earnings (deficit). The Company has no extemally imposed capital requirements as of December 31, 2019 and 2018. The table below demonstrates the debt-to-equity ratios of the Company as of December 31, 2019 and 2018:

Accounts payable and accrued

expenses

Total equity: Capital Net unrealized gains on financial assets at

stock

F(etained

emnings

OeUrto-equiw

ratto

P582r595

P654,816

P163,000'000

P163,000,000 263,345,540 44,645,'151 12,224,078 P56?,059,98? F438

FVOCI 359,414,236 O

There were no changes in the objectives, policies or processes for the years ended December 31,2019 and 2018. The Company has declarable dividends amounting to P47 .46 million as of Decemb er 31, 2019

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-22The Company's track record of capital stock is as follows: Number shares

Number of

Issue./

registered

offer

10,000,000,000 F0.01/share

Listing date - May 7,1974 Add (deduct): stock dividend stock dividend | :2.4N stock rights offering 1:2.125 stock rights offering 15% stock dividend Change in par value from 50Plo 60Plo

approval

holders as

ofyear-end

November 5.1973

5,000,000,000 0.01/share November 27,l98l October 31, 1990 9,000,000,000 0.01/share 10,000,000,000 0.01/share September 28,1992 February 8,1994 16,000,000,000 0.0l/share January 20,1997 7,500,000,000 0.01/share

P0.0l/share toPl.0O/share (56,925,000,000) (412,000,000)

Quasi-reoreanization December 31, 2010 Add (deduct):

l/share

August 14,1997 October 5. 1998 4,941 (38) 4,903 (156) 4,747

163,000,000

Movement

December 31, Add (deduct):

price

Date of SEC

2011 Movement

163,000,000

December 31. 2012 Add (deduc0: Movement

163,000,000

December 31. 2013

163,000,000

4,818 (32)

163.000.000

4,786

163,000,000

4,758

Add (deduct): Movement December 31.2014 Add (deduct): Movement

(28)

December 31, 2015

Add (deduc0: Movement Add (deduct): December

r63.000.000

December 31. 2016

Movement

4,759

31,2017

(41)

163,000,000

4,717

163.000.000

4.706

(l t)

Add (deduct): Movement December 31.

2018

(l+;

Add (deduct): Movement December

31,2019

163,000,000

4,692

16. Basic and Diluted Earnings Per Share The computations of the Company's basic earnings per share are as follows:

20t9 Net income (loss) Weiehted averaqe number of

g".i"Ditrted

*irgr

*32,421,673

163.000.000

2018

2017

(F6,857,016)

?14,671,667

163.000.000

(t"t

The Company has no potentially dilutive common stock in 2019,2018 and2017.

17. Events

After the Reporting Period

In the light of the Govemment's decision to declare Code Red Sub-level 2 resulting in national and localized community quarantine effective March 15, 2020, the Company has instituted specific guidelines to mitigate the risks brought by COVID-I9 and to ensure business continuity.

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-23 -

SRC, being an investment holding company, is exposed to market risk or loss on future earnings due

to volatility in financial instruments due to uncertainties in the capital market. The Company's market risk emanates from its holdings in debt and equity securities. To address this, the Company closely monitors the prices of its debt and equity securities as well as the macroeconomic and entityspecific factors which could directly or indirectly affect the prices of these instruments. There are also the risks associated with operations of HEDC, a joint-venture project of SRC and five other companies led by ICCP and PCIC. HEDC is a master planned township consisting of industrial

center. COVID-l9 may affect the manpower and operating schedules of the locators in the ecozone, which may lead to negative financial impact in their businesses. To mitigate this risk, SRC, together with its partners will work closely with HEDC estates, residential communities, and commercial

administration to ensure that the locators have their respective business continuity plans in place. The Company assures its shareholders that while it fully supports the Government's actions to combat COVID-I9, it will also ensure that the Company's business operations will remain unhampered.

The Company considers the measure taken by the government as a non-adjusting subsequent event,

which does not impact its financial position and performance as of and for the year ended December 31,2019. However, it could have a material impact on its 2020 financial results and even periods thereafter. Considering the evolving nature of this outbreak, the Company cannot determine at this time the impact to its financial position, performance and cash flows. The Company will continue to monitor the situation.

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2o2t ;iii'^?:,:T,_xrJ'-"" H;'?Jgi;;,'fJi, ]Bliif.?ix.H::?l!r,rusust24 Accreditation No' 0012-FR-5 (Group A)' sEc ev com/ph

Philippines l?i:r$:::t' "*

November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY SCHEDULES

The Board of Directors and Stockholders Seafront Resources Corporation 7th Floor, 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 31, 2019 and 2018 and for each of the three years in the period ended December 31,2019, included in this Form l7-A and have issued our report thereon dated May 25,2020. 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 responsibility of the Company's management. These schedules are presented for purposes of complying with the Revised Securities Regulation Code Rule 68 and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state, in all material respects, the information required to be set forth therein in relation to the basic financial statements taken as a whole.

SYCP GORRES VELAYO & CO.

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Ana Lea C. Bergado Parfirer

CPA Certificate No. 80470 SEC Accreditation No.0660-AR-4 (Group A), October 22,2019, validuntil October 21,2022 Tax Identification No. I 02-082-670 BIR Accreditation No. 08-001 998-63-20 I 8, February 14,2018, valid until February 13,2021 PTR No. 8125214, January 7,2020, Makati City

May 25,2020

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INDEPENDENT AUDITORS' REPORT ON COMPONENTS OF FINANCIAL SOUNDNESS INDICATORS

The Board of Directors and Stockholders Seafront Resources Corporation 7th Floor, 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 (the Company) as at December 3l , 2019 and 201 8 and for each of the three years in the period ended December 31,2019, and have issued our report thereon dated May 25,2020. Ov audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplementary Schedule on Financial Soundness lndicators, including their definitions, formulas, calculation, and their appropriateness or usefulness to the intended users, are the responsibility of the Company's management. These financial soundness indicators are not me:Nures of operating performance defined by Philippine Financial Reporting Standards (PFRSs) and may not be comparable to similarly titled measures presented by other companies. This schedule is presented for the purpose of complying with the Revised Securities Regulation Code Rule 68 issued by the Securities and Exchange Commission, and is not a required part of the basic financial statements prepared in accordance with PFRSs. The components of these financial soundness indicators have been traced to the Company's financial statements as at Decemb er 31, 2019 and 201 8 and for each of the three years in the period ended December 31,2019 andno material exceptions were noted.

SYCP GORRES VELAYO & CO.

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CPA Certificate No. 80470 SEC Accreditation No. 0660-AR-4 (Group A), October 22, 2019, valid until October 2t, 2022 Tax Identification No. 102-082-670 BIR Accreditation No. 08-001 998- 63-2018, February 14,z0l8,valid until February 13,2021 PTR No. 8125214, January 7,2020, Makati City

May 25,2020

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SEAFRONT RESOURCES CORPORATION

SUPPLEMENTARY INFORMATION REVISED SRC RULE NO. 68

AIID DISCLOSURES REQUIRED

DECEMBER 31,2019 Philippine Securities and Exchange Commission (SEC) issued the Revised Securities Regulation Code Rule No. 68 (Revised SRC Rule No. 68) which consolidates the two separate rules and labeled in the amendment as "Part I" and "Part II", respectively. It also prescribed the additional information and schedule requirements for issuers of securities to the public.

Below are the additional information and schedules required by Revised SRC Rule No. 68, that are relevant to the Company. This information is presented for purposes of filing with the SEC and is not required part of the basic financial statements. Schedule A. Financial Assets Below is the detailed schedule of the Company's financial assets as of December Number Shares

Name of Issuing Entity and of Each Issue Financial assets at FVTPL Equity Securities:

3I,2019:

Amount Shown in the Statement

Income of of Financial Received and Position Accrued Bonds andNotes

Association

Principal

Amount

PetroEnergy Resources Corporation House of Investments, Inc.

3,613,852 2,484,000

PL4,816,793

P-

12,916,800

Ayala Land, Inc. Araneta Properties, Inc. EEI Corporation

128,193

3,756,799 372,500

5,832,782 5,522,478

161,460 64,983

Others

3,650,500

74,500

2,549,065

P45,288,418

P340,784

-2Number Shares

of or Amount Shown

in the Principal of Statement of Financial Bonds and Position Notes

Income

Amount Name of lssuing Entity and Association Each Issue

Received and

Accrued

Financial assets at FVTOCI Debt equities Philiooine

Government

P4,610,013

Quoted: Benguet PetroEnergv Resources

2,507,604 2,833,592 Corporation Corporation 3,851,164 15,789,774

18.623.366 Unquoted: Hermosa Ecozone Development

Comoration

517,176,832

33,123,000

ed on their current bid and in which For securities costs. price for transaction quoted market without any deduction provides the current of evidence asking prices are not available, the price of the most recent transaction time of fair value as long as there has not been a significant change in economic circumstances since the

the transaction.

For unquoted financial securities, the most recent sales transaction was used as the basis for determining the fair value as of December 31,2019. Schedule

B. Amounts Receivable from Directors. Offrcers. Employees. Related Parties and Princioal

Stockholders (Other than Related Parties) The Company has no outstanding receivables from its directors, officers, employees, related parties and principal stockholders as of December 31,2019.

Schedule C. Amounts Receivable fromlPayable Consolidation of Financial Statements

to Related Parties which are Eliminated durine the

Not applicable. Schedule D. Lone-term Debt The Company has no outstanding long-term debt as of December 31,2019. Schedule E. lndebtedness to Related Parties (Lone Term Loans from Related Companies) The Company has no long-term indebtedness to related parties as of Decemb er 3I , 2019 . Schedule F. Guarantees of Securities of Other Issuers The Company does not have guarantees of securities of other issuers as of Decemb er 3l , 2019 .

-3Schedule G. Capital Stock Number shares

and

issued

outstanding

of shares

Number

Title of

issue

Common

Number of Shares

reserved

for

options,

shown warrants,

related conversion balance sheet and other

under

authorized caption

Shares 388,000,000 163,000,000

rights -

Number of

held Directors, related ofFtcers and parties emplovees 30,469,858 4,926 shares

Others

\32,525,216

SEAFRONT RESOURCES CORPORATION SCHEDULE OF FINAI\CIAL SOUNDNESS INDICATORS AS OF'DECEMBER 31. 2019 AND 2018 Financial Soundness Indicators Below are the financial ratios that are relevant to the Company for the years ended December 31,2019 and 2018:

Financial

2019

ratios

Current ratio

Current assets Current liabilities

Debt to assets

Total debt Total assets

Asset-to-equity

ratio

Total assets Total equity

Eamings per share

Net income Weighted average no. of shares

Price eamings ratio

Closing price

l54.l4zl

2018 105.03:1

0.10:1

0.10: I

1.11:1

0.19891:1

NiA

11.11

N/A

0.94

N/A

Eamings per share

Net income Total revenue

Return on revenue

Long-term debt to equity

ratio

Long-term debt Equity

EBITDA to total interest

paid

EBITDA* Total interest paid

*Earnings before interest, taxes, depreciation and amortization (EBITDA)

SEAFRONT RESOURCES CORPORATION RECONCILIATION OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION DECEMBER3I,2019

Unadjusted retained earnings, beginning Unrealized fair value loss adjustment

(marked-to-market) Adiusted retained earninss. besinnine Net income (loss) during the period closed to retained earnings Add: Non-actuaUunrealized income net of tax Less: Non-actuaVunrealized income net of tax Fair value gain adjustments (mark-to-market) Impairment loss on available-for-sale financial assets

*12,224,078 3,2501015 15,4741093

32,421,673

(437,51;)

Less: Dividend declarations during the year

available for Total retained earnings -

dividends

*47,4581249

SEAFRONT RESOURCES CORPORATION MAP OF RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP Group Structure existing stockholders as of December 31, 2019 neither constitute control nor significant influence over the Company. Also, the Company's investments neither constitute control nor significant influence.

All

SEAFRONT RESOURCES CORPORATION INDEX TO F'INANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES SEC FORM 17.A

FINANCIAL STATEMENTS Statement of Management's Responsibility for Financial Statements

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

. 201 9 and 20 I 8

Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

Statements of Changes in Equity for the years ended December 3l , 2019, 2018 and 2017 Statements of Cash Flows for the years ended December 3 l, 2019, 2018 and 2017 Notes to Financial Statements

SUPPLEMENTARY SCHEDULES Report of Independent Auditors' on Supplementary Schedules Schedules Required under SRC Rule 68-E

A. B.

Financial Assets

Amounts Receivable from Directors, Officers, Employees, Related Parties, and Principal Stockholders (Other than Related Parties)

Amounts Receivable from Related Parties which are Eliminated during the Consolidation of Financial Statements

D. Long-term Debt E. Indebtedness to Related Parties F. Guarantees of Securities of Other Issuers G.

Capital Stock

Additional Components Schedule of Financial Soundness Indicators Reconciliation of Retained Earnings Available for Dividend Declaration Map of Relationship of the Companies within the Group