2go annual report 2011

Looking Ahead. 1

TABLE OF CONTENTSHIGHLIGHTS 3 Financial Highlights 3 Vision, Mission 3 Brand Core Values

MESSAGES 7 From the Chairman 9 From the President and Chief Executive Officer 11 From the Chief Finance Officer

2G0 GROUP, INC. 13 2GO Travel 17 2GO Freight 18 2GO Express 18 2GO Distribution 19 2GO Logistics 21 Information Technology 22 Corporate Social Responsibility 24 Corporate Governance 29 Risk Management 30 Audit Committee Report 32 Shareholders Information

THE TEAM 34 Board of Directors 38 Executive Officers

2011 CONSOLIDATED FINANCIAL INFORMATION 42 Statements of Managements Responsibility for Financial Statements 43 Independent Auditors Report 44 Consolidated Balance Sheets 46 Consolidated Statements of Income 48 Consolidated Statements of Comprehensive Income 49 Consolidated Statements of Changes in Equity 50 Consolidated Statements of Cash Flows 52 Notes to Consolidated Financial Statements

107 2GO Group, Inc. Facts

THE COVERLooking ahead is getting ahead.

2GO Group Inc. braved the shipping industrys rough

sailing in 2011. We are thankful to have endured;

otherwise, we would not have nurtured the spirit of

resilience and resolve.

As we continue our voyage, we train our sights on

wider vistas of opportunity, confident that the nets we

cast will yield bountiful returns.

3Annual Report 20113

Income Statement

Revenue

EBITDA

Net Income (Loss) Attributable to Equity Holders

Balance Sheet

Total Assets

Total Interest Bearing Debt

Total Stockholders Equity

Cash Flow

Net Cash Flow from Operating Activities

Net Cash Provided by (Used in) Investing Activities

Net Cash Provided by (Used in) Financing Activities

Cash and Cash Equivalents

Stock Information

Market Capitalization - Year End

Stock Price - Year End

Earnings (Loss) Per Common Share

12,971

1,027

(634)

12,132

1,343

3,306

(463)

225

340

906

3,253

1.33

(0.26)

11,611

709

(809)

12,575

2,043

3,956

619

(3,410)

2,500

805

4,476

1.83

(0.33)

10,510

1,621

546

10,622

1,444

5,160

1,034

(1,409)

378

1,096

2,886

1.18

0.22

FINANCIAL HIGHLIGHTS2011 2010 2009

BRAND CORE VALUESCorporate Governance

Commits to corporate values and accepted ethical and moral rules and norms that apply inside and outside the

organization.

Integrity and Transparency Doing the right things for the right reasons. Treating

people fairly and with respect.

Teamwork The ability to work in unison to achieve a common goal.

Our People Our people are the central movers of the organization.

Innovation Process by which new ideas for continuous improvement and breakthroughs toward organizational effectiveness

and efficiency are promoted and institutionalized.

Excellence A talent or quality which is unusually good and

surpasses ordinary standards. It is also aimed for standard of performance.

VISION 2020

MISSION

To be the best and biggest company in the transport

and supply chain industry

providing memorable travel experiences, moving

products and catalyzing business growth in domestic

and international markets.

Our business is to create memorable, fun-filled and safe travel for passengers and provide total supply chain solutions

and excellent services to clients building on our 180 years of existence.

We delight our customers with innovative and technology driven services while customizing to their needs and ensuring

seamless operations.

We connect the Philippines 7,107 islands to Asia and the world, catalyzing business growth, promoting tourism and

partnering in nation building.

We offer employees a rewarding working environment while delivering value to our shareholders.

Looking Ahead. 4

OutlookOutlook


momentum.

Our new business identity integrates all of 2GO. We are no longer just a shipping company, but one that provides solutions for the movement of people and cargo, both for domestic and international.2GO Group Inc. is the new name of ATS Consolidated Inc.

2GO Travel combines our Passage brands Negros Navigation, SuperFerry, SuperCat and Cebu Ferries. We shall re-define sea travel by providing memorable experiences that bring people and places together.

2GO Supply Chain service scope includes Freight, Express, and Logistics. 2GO Freight is the traditional movement of containerized cargo. It is the bridge to the Visayas and Mindanao. 2GO Express is the movement of all non-containerized cargo. Under 2GO Express we move anything from courier, to less cargo loads for domestic and international distribution. 2GO Logistics completes 2GOs already extensive range of services by offering Warehouse Management, Order Entry & Releasing, and In-store Merchandising, to name a few.2GO Distribution represents ScanAsia Overseas, Inc. one of the leading importers and distributors of well renowned products in the Philippine market.

2GO is a brand that would best describe our business. It is unique to the industry and depicts a fresh, dynamic, and safe image.

momentum.

Our new business identity integrates all of 2GO. We are no longer just a shipping company, but one that provides solutions for the movement of people and cargo, both for domestic and international.2GO Group Inc. is the new name of ATS Consolidated Inc.

2GO Travel combines our Passage brands Negros Navigation, SuperFerry, SuperCat and Cebu Ferries. We shall re-define sea travel by providing memorable experiences that bring people and places together.

2GO Supply Chain service scope includes Freight, Express, and Logistics. 2GO Freight is the traditional movement of containerized cargo. It is the bridge to the Visayas and Mindanao. 2GO Express is the movement of all non-containerized cargo. Under express we move anything from courier, to less cargo loads for domestic and international distribution. 2GO Logistics completes 2GOs already extensive range of services by offering Warehouse Management, Order Entry & Releasing, and In-store Merchandising, to name a few.2GO Distribution represents ScanAsia Overseas, Inc. one of the leading importers and distributors of well renowned products in the Philippine market.

2GO is a brand that would best describe our business. It is unique to the industry and depicts a fresh, dynamic, and safe image.

Looking Ahead. 6

FRANCIS C. CHUAChairman of the Board

We know that the success of the

country is our own

success as well.


FRANCIS C. CHUAChairman of the Board

Message from the Chairman

DEAR SHAREHOLDERS

2011 has indeed been a challenging year for the entire global economy. The Arab Spring, which led to the replacement of regimes in the Middle East had, for a time, resulted to higher than normal fuel prices, eroding what was already a fragile recovery by the world economies from a crisis that is continues to be categorized as worse than the Great Depression of 1929. The Tsohoku Tsunami in Japan, as well as the flooding in Thailand greatly disrupted supply chains and exacerbated the overall weakness of the global economy.

As a result of all of these external factors, the recovery of the European and US economies, which are our major trade partners, have been stalled and have wobbled the local economy. GDP grew by a feeble 3.7% in 2011 compared to the robust 7.6% growth in 2010. Agriculture, Industry and the Service Sectors were key factors in driving the GDP number forward, but the anemic performances in Public Consumption, Government Spending and Exports, neutralized any headway that could have been achieved.

Against this backdrop, 2GO Group met the year full of challenges and your company came out better than ever. Primordial among the objectives for the year was the integration of the operations of Negros Navigation, Co., Inc. (NENACO) and 2GO Group, Inc., paving the way for the combined NENACO-2GO entity to become a complete logistic solutions company from what was largely a passage and freight company in the past.

We have studied the strengths of the two companies and have created a union of these strengths resulting in what we believe is a company that is poised to take advantage of a resilient Philippine Economy that has weathered the storms of the global economic downturn and is primed to expand once the global economies restart their recovery.

We remain true to our objectives of maximizing shareholder wealth. With this in mind, we continue on towards the path of sustainability. Our successful integration of the two entities will result in better passenger volumes, more cargo business and greater market coverage. We continue to enhance our reliability, ensuring that we will remain the top choice among our customers. Our enhanced approach of viewing customer needs from a total logistics solutions standpoint has started to pay dividends. We will continue to build on the solid foundation we have laid out in 2011 as we look forward to a brighter future in 2012 and beyond.

Our objectives though go beyond maximizing shareholders wealth. We recognize that, as the biggest and most dominant player in the industry, we are a key part of the economic development of the Philippines. We shall continue to play our role to help uplift the lives of our countrymen through the delivery of key services, as we know that the success of the country is our own success as well.

Looking Ahead. 8

SULFICIO O. TAGUD, JR.President and

Chief Executive Officer

We have determined the right size for

the company and have

taken steps to reach that

optimal point.


SULFICIO O. TAGUD, JR.President and Chief Executive Officer

Message from the President &Chief Executive Officer

The combined NN-ATS will remember 2011 as a year full of change. While the global economies reeled from rising fuel prices brought about by the Arab Spring, and the disruption in supply chain brought about by twin natural disasters in Japan and Thailand, your company had been taking this time to introspect and to find the best in it and standardize practices in both companies.

The vision behind the acquisition of ATS by NN has always been that the combination of the top two players in the industry will result in a stronger and more responsive entity which will deliver the best service for its customers in passage and cargo. We have concretized this vision and redefined our business model into that of a complete supply chain provider, combining the best of shipping business with the sunrise industry of the logistics and supply chain management. 2011 will be remembered as the year that the groundwork for the metamorphoses of these two businesses was actualized into the new 2GO Group Inc., which appropriately became the new corporate brand reflecting this new vision.

Right at the start of the year, a route rationalization program was put in place, ensuring that the right vessel and the right route are properly matched. This has been executed but is continuously being evaluated to ensure that we are well-positioned to take advantage of new opportunities in routes that we both service, and routes that we would like to service. This rationalization program has resulted in the disposal of four aging and less efficient vessels.

As with all business combinations, excesses had to be trimmed in order to realize operational efficiencies. To this end, we have consolidated most of our container yard services, especially for ports and branches actively being serviced by both NN and ATS when they were still separate entities. At the start of the 4th quarter, we managed to gain control over the (ship) management of our vessel fleet, allowing us to have an even greater opportunity to optimize our cost position.

A single ticketing system has been employed ensuring that standard pricing is put in place and that passage customers can purchase a ticket for any available destination, regardless of whether it is an NN vessel or an ATS vessel servicing this route.

Back office services have been consolidated and centralized, ensuring that servicing of the needs of our service providers and suppliers are done in a standardized and orderly manner.

We have determined the right size for the company and have taken steps to reach that point, further reducing costs while retaining the best talent in order that we may continually operate at our peak. We have acquired seasoned talents and continue to be on the lookout for complementing talent to add to our pool to ensure that new and innovative ideas are always put on the table, with the aim of further enhancing the services that we provide to our customers.

And, in line with the vision of transforming the company into a complete supply chain solution provider, we have streamlined processes wherein customers can now fully avail of all services without having to speak to several representatives of different subsidiaries within the group.

We initiated financial restructuring at the start of the year, culminating in the consolidation and terming out of our short term supplier financing into a medium term loan with Banco de Oro. We are thankful with the confidence shown by the Philippines largest lender and continue to enhance our relationship with them and our other partner financial institutions.

We note with delight the change that has been seen in the industry. Today, the spirit of cooperation pervades among the players in the industry. Gone are the days of cut-throat competition and industry players have banded together, realizing that the shipping industry is a vital cog in the economic development of the country and seeing that only through this new found spirit will the industry be able to best serve the needs of individuals and industries alike.

We are confident that the groundwork we have laid out in 2011 will reap handsome dividends for us in the years to come. We are by no means finished with our task of continuously seeking improvement, as should be the case in a dynamic market such as ours. But we are confident that we are way past the difficult part of the integration process and, armed with our unwavering and passionate commitment to serve our customers, we look forward to 2012 with renewed optimism and confidence.

We sincerely thank our customers, business partners, suppliers, bankers, and the communities where we operate for the strong partnership and support.

Finally, it is our commitment to work towards a sustainable growth and long-term value creation for our stakeholders.

DEAR SHAREHOLDERS

Looking Ahead. 10

JEREMIAS E. CRUZABRAChief Finance Officer

The cost of integration...Taking a bitter pill to swallow

to usher in a better tomorrow.

11

Annual Report 201111

Message from the Chief Finance Officer

2011 shall best be remembered as the integration year for Negros Navigation Corporation and ATS Consolidated, Inc. During the year, Management undertook certain significant steps to consolidate operations and improve operational efficiencies. The realization of most synergies became more pronounced towards the last quarter of the year when the integration has reached its stabilized state providing significant cost improvements across the entire Group.

A look at 2GO Groups 2011 performance would not be complete if it were not seen through the perspective of Negros Navigation (NN).

NEGROS NAVIGATION CO., INC. AND SUBSIDIARIES Total revenues increased by 2% to P15.3 billion this year from P15.0 billion of last year. This resulted in an operating loss of P129.0 million which is an improvement of P480 million compared to the P608 million operating loss last year. Net loss after tax reached P1.39 billion largely due to the recognition of P1.2 billion exceptional items. Net loss after tax last year stood at P1.18 billion. Normalized EBITDA jumped by 51% to P1,521 million versus P1,009 million last year. Consolidated assets decreased to P14.8 billion from P16.6 billion largely due to decrease in current assets of P1,055 million, asset disposals of P283 million and vessel impairment loss of P554 million. Total liabilities plummeted 4% to P10.9 billion from 11.36 billion in 2010.

2GO GROUP, INC. CONSOLIDATEDConsolidated revenues are up 12% for this year, to P12.97 billion. This is expected to be further increased in the following years as the full effect of integration is not yet reflected in our 2011 financials. Freight and Passage Businesses posted 7% and 9% growth in revenues respectively.

Supply Chain posted a revenue increase of 7% and International Logistics increased its consolidated revenues by 23%.

Expenses were kept in check for 2011 and only partially reflected the cost savings from integration. Shipping expense grew by only 1%. Supply Chain posted a modest 12% expense growth owing largely to the recognition of inventory losses.

The Group also obtained key support from Banco De Oro in the form of a Medium Term Loan Facility in the amount of P4 billion to replace the P2 billion corporate notes that were issued in 2010 as well as to term out certain supplier finance. These supplier financings were mismatched in terms of their duration (short term) versus the assets they financed (long term).

The Group incurred extra ordinary items amounting to about P642 million as a result of integration. These came chiefly from recognition of vessel impairment, integration, redundancy and inventory clean up. This depressed income and EBITDA levels resulting in a NIBT of negative P821 million and consolidated EBITDA of P1,027 million. Had this extra-ordinary items (amounting to P642 million) not been incurred, NIBT and EBITDA levels would have stood at negative P179 million and positive P1,668 million, respectively.

Absorbing the extra-ordinary integration/clean-up cost into our financial performance today, is like a bitter pill we need to swallow, to usher in a better tomorrow.

Income and Loss StatementShipping business. Consolidated Revenues were up 12% to P12.97 billion brought about by strong performances from all business units. Shipping, on a consolidated basis, posted a healthy 14% growth in total revenues for this year. This was led by Freight, posting a 7% growth in revenues to end the period at P5.7 billion. Passage posted almost 9% growth in revenues to increase revenues to P2.4 billion on the back of a 5% increase in passage volumes. Shipping expenses were impacted by the 18% rise in fuel prices due to the advent of what the world now knows as the Arab Spring. Also, ship management was only fully integrated into the company in the latter part of the year, reducing the benefit that could have been derived in terms of cost efficiencies had this been integrated at the earlier part of the year. Despite this, a 30% drop in overhead expenses resulted in the muting of the fuel price increase and the delayed benefit from the folding of ship management into ATSCs operations. Due to this, overall cost and expenses rose by only 9% for the full year 2011.

Supply chain business. The Group contributed P4.8 billion to the consolidated revenues, an increase of 7% from previous year. ScanAsia Overseas Inc. was again the biggest contributor to this, with a revenue performance of P3.1 billion in 2011, on the back of stronger sales revenues contributed by a greater focus on sales of new principals such as P&G. ATS

DEAR SHAREHOLDERS

NEGROS NAVIGATION CO., INC. AND SUBSIDIARIES COMPARATIVE P&L - 2011 AND 2010

In Millions Pesos2011 2010

(Audited) (Pro Forma)Revenues 15,258 14,967 Costs and expenses 15,387 15,575 OPERATING GAIN (LOSS) (129) (608)Interest and financing charges (537) (346)Loss before other income (charges) (665) (954)Other income (charges) (762) (317)Loss before transaction and integration costs (1,427) (1,271)Transaction and integration costs (213) (341)Net loss before tax (1,640) (1,612)Benefit from income tax 249 433 NET GAIN (LOSS) (1,391) (1,179)

Looking Ahead. 12

JEREMIAS E. CRUZABRAGroup Chief Financial Officer

Director

Express posted a 27% decrease in revenues. The decrease is due to transfer of some accounts to other subsidiaries for rationalization (e.g. P&G moved to ATSC; Globe warehousing moved to ATS Distribution). ATS Distribution, on the other hand, posted an impressive 42% revenue growth, brought about by double digit growths in both Offsite warehouse and transport revenues plus new revenue coming from cross dock activities. Supply chain expenses, as a whole grew by 12%. This was led by a 19% increase in cost of sales.

International logistics. The Group posted a 23% growth in consolidated revenues to P891 million from 2010. Hansa-Meyer continued to be the biggest contributor to the pie, accounting for over 53% of total revenues. Hapag-Lloyd is the largest contributor to the Net Income pie for international logistics, posting a P21 million and cornering over 38% of the total Net Income of International Logistics.Overall, 2GO Group, Inc. posted a P821million loss brought about by about P642 billion in extra-ordinary integration/clean-up costs. These non-recurring items included the recognition of impairment losses on vessels which have been identified by the board as for sale, process integration, redundancy and retirement, and inventory clean up in the supply chain group. Please note that these items are no longer expected to recur for the 2012, and some of them were even conservative loss appropriation, which are expected to turn into other income for the following year.

Consolidated EBITDA of the group stood at P1,027 million, for the full year 2011, compared to P709 million for 2010.

Balance SheetConsolidated assets as of December 31, 2011 amounted to P12.13 billion, posting a 4% decrease against last year. Property, plant and equipment registered 25% decreased from P6.2 billion in 2010 to P4.65 billion in 2011. The Company sold one (1) Ropax vessel for a net cash proceeds of P104 million that resulted to a gain from sale amounting to P5 million. The Group also disposed some of its property and equipment which include vessel parts, containers, freight equipment, transportation equipment and handling equipment, for net proceeds of P58 million, resulting to a gain from asset sale worth P7 million.

Total current assets increased by 22% from P4.84 billion in 2010 to P5.90 billion in 2011. This was mainly attributable to the classification of five (5) of the Groups existing vessels as assets held for sale with total carrying values of P693 million, net of impairment losses. The criteria for the assets held for sale was assessed by management for the five (5) vessels due to the following reasons: (1) they are available for immediate sale; (2) preliminary negotiations were executed for those buyers that are willing to buy; and (3) that the sale is expected to be completed within 12 months from the end of the reporting period.

There was a 2% increase in total liabilities (or P207 million) from P8.62 billion in 2010 to P8.83 billion in 2011. The Company paid its P2 billion short-term debt by obtaining a P4 billion Facility, the balance of which were used to pay off other critical obligations.

The Stockholders equity decreased by 16% (or P650 million) to P3.3 billion from P3.9 billion as of 2010 due to net loss incurred for the year.

Cashflow StatementCash used in Capital Expenditure for the year decreased markedly to P398 million in 2011 from P3.6 billion in 2010. Asset disposals contributed to a swing in Cash from Investing Activities from a net use of P3.41 billion in 2010 to a net inflow of P225 million in 2011.

The Companys year-end 2011 cash balance amounted to P906 million, 13% (or P102 million) higher, compared to 2010. Net cash generated from operating activities was negative P463 million, which was a P1,082 million reversal, from prior years positive P619 million cash generated from operations. This was the result of the Groups initiative to update payment of its trade and other payables, including income tax and all other creditable withholding taxes, totaling 795.3 million.

Net cash from investing activities amounted to P225 million which was due to the sale of investments in subsidiary and property & equipment, offset by the capital expenditure of P398 million spent for vessel drydocking and major repairs. During the year, the company secured a 4 billion Loan Facility from BDO that was used as follows: (1) to refinance its P2 billion (in-default) corporate loan; (2) pay-off due portion of the P1.7 billion worth of payables; (3) settle P363.3 million worth of interest; (4) settle debt transaction costs and finance lease obligations of P48.9 million and P100.6 million respectively.

OUTLOOKHaving successfully hurdled most of the major integration targets for 2011 and having completed a major clean-up of the company, we are confident that 2012 will be the year when we realize fully the fruits of the integration and renewed focus we have done in the past year. We approach the year with a renewed vigour and focus and we are certain that 2012 will be the year that 2GO Group Inc., will take its place as the leading Supply Chain and Logistics Solutions provider for our current and future customers.

13


In 2011, 2GO improved its course not only as a low-cost operator with unbundled price structure through its former SuperFerry, Cebu Ferries and SuperCat brands, but also as a leisure travel option as it is now jointly operated with Negros Navigation (the parent companys passage brand). It is also the year where the integration of all passage brands, namely: Negros Navigation, SuperFerry, CebuFerries and SuperCat, was completed. During the year, all policies, procedures and systems were enhanced and aligned. Streamlining efforts included route rationalization (geared towards elimination of duplicates) and work force right-sizing covering NENACO, ATS and all other subsidiaries within the Group.


Looking Ahead. 14

In December 2011, the Company operated additional 3 RoRo/Pax vessels under time charter from NENACO. Thus, towards the end of the year, all passage brands of the Company were fully integrated and now took on a new passage brand, 2GO Travel starting 2012. The new brand aims to provide exciting tour packages and activities as well as more affordable, comfortable, safe and reliable travel experience.

To drive passenger volume and sales, the Company offered various signature price promotions such as the Crazy Tawad Fares, the year-round low price regular fare offering and Todo Todo Sale Sail, a special promo with defined selling and sailing dates. Special price promotions are also offered coinciding with festivities in the ports the company serves.

Ticketing systems were further developed to accept credit and ATM (automated teller machine) cards through the Internet as modes of payment. Ticket delivery service, through our in-house call center, was offered as another ticket access option for customers. Ticket delivery is offered in partnership with its subsidiary, 2GO Express. During the last quarter of 2011, more than eighty percent (80%) of ticketing outlets were converted into the web-based ticketing system that allows for ticketless transactions. This innovation will bring significant savings in terms of printing and administrative costs for these outlets.

15


To drive early build-up of volumes, larger discounts are offered to customers who buy their tickets in advance. A ticket to the Visayas region can be bought for as low as P450, while a ticket to Mindanao can be bought for as low as P750. The ticketing system is linked to pricing software or a revenue management system that automatically adjusts prices based on demand. The pricing software is similar to those employed by hotels and airlines. The best practices of 2GO and its parent company, NENACO, on revenue management are being integrated into this pricing software.

2GO Travel sells tickets using four distribution channels: (1) the over 1,200 online outlets nationwide composed of corporate outlets, third party outlets and network agencies; (2) an in-house call center; (3) the 2GO Travel website; and (4) on-line third party-operated marketing websites (i.e. ensogo.com).

As of March 1, 2012, 2GO Travel calls 18 ports, namely: Manila, Bacolod, Cagayan de Oro, Cebu, Tagbilaran, Batangas, Caticlan, Dumaguete, Puerto Princessa, General Santos, Iligan, Iloilo, Ormoc, Butuan, Ozamis, Dipolog, Surigao, and Zamboanga,

Looking Ahead. 16

with varying frequencies depending on destination. Customers have six (6) types of accommodations to choose from: stateroom, cabin, tourist, mega value, super value and airline seat.

With the introduction of the new Batangas-Caticlan route, 2GO Travel has set in motion to establish itself as the premiere Domestic Cruise Line. The vessels servicing the new route have undergone renovation on their interior designs, modernization of furniture, amenities and suites to entice large segment of the Boracay-bound tourist market. 2GO Travel is now available as one of the transportation options to foreign travel websites as the company marked the beginning of its partnerships with international travel websites such as myboracayguide.com, myboholguide.com and mycebuguide.com.

2GO Travel has also opened the 2GO TraveLink service for customers who opt to purchase bus or boat transfers with their ferry tickets issued in one e-ticket. This provides a hassle-free, seamless transportation service that the Company is well-known for. 2GO TravelLink service is preliminarily offered to its Boracay package and will eventually be replicated to the rest of its ports of call. The 2GO TravelLink service also enables 2GO Travel to offer more travel frequencies to its customers while it only have once a week call on Dumaguete, it can actually serve customers in Dumaguete daily through the 2GO TravelLink service via Bacolod or Cebu where 2GO Travel offers five to six times weekly service. 2GO Travel also has numerous hotel partners who offer customers with attractive hotel accommodations packaged with the purchase of transportation tickets. Shuttle services are also offered as a premium to serve selected routes, depending on market demand.

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With the coming together of 2GO and its parent companys freight business, now called 2GO Freight, routes served by the Companys vessels were rationalized. Port links previously served by both 2GO and NENACO on the same departure dates were eliminated. This allowed the Company and NENACO to retire four vessels (2 RoRo/Pax and 2 freighters) resulting in substantial savings in fuel and other vessel operating costs. While the number of vessels has been reduced, the scope of ports served has increased.

Freight Revenue grew by P352.3 million or 7% year-on-year despite a reduction in the number of trips by 242 trips or a reduction of 13%. This is attributed to a 5% increase in rates and a 1% increase in volume or an increase of 1,503 TEUs.

While revenue increased, costs were reduced substantially with the integration of container yards in almost all major ports. These include Bacolod, Iloilo, Cebu, Palawan, Cagayan de Oro, Ozamis, Iligan, Zamboanga, Davao, and General Santos.

Looking Ahead. 18Looking Ahead. 18

Further, under the 2GO Express unit of the registrant, 2GO introduced new products and services that helped boost revenues in its domestic and international courier, such as the Budget Box and International Budget Box, US Visa delivery, and expanded offerings under its partnership with international logistics provider United Parcel Service (UPS).

2GO has been bundling more value-added services and offering more flexible solutions for our customers that would further strengthen our position as the countrys only integrated chain solutions provider.

ScanAsiaScanAsia Overseas, Inc. continues to expand its portfolio, representing over 80 renowned international and domestic-based multinational brands, for both food and non-food lines.

ScanAsia reformulated its strategies by applying category management principles and better brand management across all its principals. Identifying the right product mix per channel, providing better assortment to the consumer, boosting brand awareness, and right-sizing distribution range were among the activities the team was busy in 2011.

New international and local brands were added to our portfolio.

In the same year, ScanAsia aligned its Information Technology, Finance, Human Resources processes with 2GO Group, eliminating non-value adding practices. Performance management system was also pushed to increase accountability and commitment of its members.

Systems were established to increase margins and manage both revenue and cost drivers through the implementation of proper demand planning.

Working with market leaders as their preferred trading and distribution solutions provider will continue to be our direction. And raising levels of team competence and ability to innovate is still our top priority.

Distribution

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Annual Report 201119 Annual Report 201119

Warehousing

Third party logistics remained robust with an increase in warehouse capacity to nearly 39,000 pallets. In 2011, the warehouse capacity increased by 56,000 pallets with the completion of its 3rd warehouse.

Project Logistics

The ever reliable formula of combining international and local expertise in the partnership of Hansa Meyer Global Transport and 2Go Group, Inc. has resulted in the successes experienced by Hansa Meyer ATS Project, Inc. (HATS) in its 15 years of existence. The company engages in specialized transport services such as movement of oversized and heavy lift cargoes and consultancy in various industries like Mining, Power Generation, Renewable Energy, Telecommunication, Transmission & Distribution and Infrastructure. With the continued growth of Projects in these sectors and a truly capable and focused management team with Project Managers for each sector, we expect that 2012 will be another successful year. Projects that are currently secured include the Petron Power Plant Expansion Project (Boiler 3 & 4) and Masbate Gold Supply Logistics Services. Various other Projects are being developed and bided for as well.

Looking Ahead. 20

Hapag-Lloyd Philippines, Inc.

As the local unit of leading international container shipping liner Hapag-Lloyd AG, we experienced a remarkable turnaround through a renewed commitment on strengthening our vision of achieving results through a can do and must do attitude. Hapag-Lloyd Philippines exceeded its targets despite a reduction of our agency remuneration to support the cost cutting initiatives of the principal units.

The global business strategy remains committed to creating better value for our customers by staying competitive in terms of pricing, technology, and processes. Hapag-Lloyd Philippines aligns its vision with its mother company while its commitment is sealed with the same burning passion of achieving, if not exceeding its targets.

Our extensive business plan which is based on substantial business drivers, extensive market research, and viable strategies, provides a clear foundation for the realization of this vision.

International logistics

The partnership between Kerry ATS Logistics, Inc. (KALI) and international logistics company, Kerry Logistics Network Limited of Hong Kong allowed both companies to benefit from the hefty growth in total imports and exports following the global economic recovery in 2010.

Kerry-ATS Logistics offers our customers dedicated international freight forwarding solutions across the globe. Based in Hong kong, Kerry operates in 24 countries with a strong focus on China.

KALI aims to deliver more results as it continues to move along with the growth of global economic activity. It focuses on expanding its customer base, improving yield and cost management, making processes more efficient to meet the rising expectations of customers, and leveraging further on the global influence of KLN.

Our KerrierVIsion system creates greater visibility throughout the supply chain by providing end-to-end transparency and real-time information about each shipment, product and item. It incorporates multiple currencies, multiple languages and can be multimodal to better meet the needs of our customers in the world market.

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INFORMATION TECHNOLOGY

The year 2011 can be summarized as a transition year for the entire organization. With Information Technology (IT) already playing an important and strategic role for both NENACO and 2GO, the integration of the different IT applications, infrastructure and IT organization was seen as a critical success factor of the Business Integration, and Information Technology was a primodial priority at the highest level of management.

Since both NENACO and 2GO had their own passage and freight systems, a formal selection process consisting of internal evaluation and a third party (i.e., SGV & Co.) assessment were conducted to identify the best system to be adopted by the integrated company. And at the end of the day, the Freight Division easily selected the eFOS system from 2GO, while the Passage Division after taking some time eventually selected the Nexus system from 2GO.

Part of the agreement, however, are the enhancements on both eFOS and Nexus systems to accommodate other key functionalities from the NENACO systems that were deemed better and more appropriate for the integrated Freight and Passage processes. By December 2011, the Freight and Passage divisions were already using similar systems for Freight (eFOS) and Passage (Nexus) business.

For the Supply Chain systems, Quikair (for 2GO Express) and SAP (for 2GO Distribution), were expectedly retained. Today, an integrated Financial and HR systems using the Oracle EBS R12 platform is being developed and will reach Go Live status by end of July 2012.

The NENACO and IT teams also underwent its own integration program. After physically putting together both NENACO IT and 2GO IT teams in one office, the two groups joined hands to provide more focus on Applications Development as well as End-User Support activities two critical areas needed for the ongoing business units integration programs. A job-and-task analysis project was also initiated to further review the current IT structure and its complements. The increase in attrition affecting mostly the rank & file IT employees was addressed by an aggressive retention program, in tandem with an increased effort to hire replacements.

Looking Ahead. 22

On the infrastructure front, pro-active maintenance activities have become a way-of-life to ensure the security and integrity of the Groups extensive data centre and network infrastructure. With the integration of systems, some of the NENACO hardware infrastructure have already been made redundant and are being slowly decommissioned to reduce the IT operations cost.

With IT outsourcing as a major direction for cost reduction objectives, the email service was one of the first items to be outsourced to a third party email provider by the end of 2011. Future areas for outsourcing include Backup and Recovery services, Collaboration and Workflow.

CORPORATE SOCIAL RESPONSIBILITYIn the companys pursuit of its mission to become more responsible corporate citizens of the nation, efforts of 2GO on corporate social responsibility programs for 2011 were all geared toward three (3) main facets : education, social advocacy and environmental protection and rehabilitation.

NENACO-2GO SCHOLARSHIP GRANT AND CAREER ASSISTANCE PROGRAMSince the birth of 2GOs Scholarship Program in 2008 for students who wanted to pursue a course in Supply Chain, a total of twenty-three (23) students have benefited from the Program. Out of 23 students, eight (8) joined the roster of graduates in March of this year of which five (5) students were pinned cum laude. Further, six (6) of those graduates are now employed with 2GO under the Logistics Team. The year 2011 was a meaningful partnership with Jose Rizal University and Technological Institute of the Philippines.

The development of said curriculum is in collaboration with the Philippine Institute of Supply Management and its foundation, the Society of Fellows in Supply Chain Management, aimed at addressing the need for well-trained supply chain practitioners in the country.

On the other hand, while more and more Filipino seafarers have tried their luck overseas, NENACO-2GO saw the need for the organization to also develop its own resource which will complement its future deck and engine officers. Last year, the Company employed top four (4) of the graduating class of the Technological Institute of the Philippines of Marine Engineering and Marine Transportation courses. Those students who also belonged to the Companys Scholarship Program are now assigned in various 2GO vessels as full-time employees of the Company as a testament of the companys goal to assist its scholars operating under the education-to-employment philosophy. To further build its vessel workforce, the Company has also launched its Career Assistance Program (CARP) which purports to provide supportive assistance to existing vessel crew and officers who desire to further develop their career but are impeded by lack of financial means to pursue their dreams. The CARP allows employees to go on leave while on training and/or while taking their licensure examinations, get compensated and get rewarded in their respective job assignments. Two years ago, the first two top officers, a Captain and a Chief Mate, and the youngest in their line, and some other vessel officers were produced by this Program.

ANTI-HUMAN TRAFFICKINGDuring the year, the Group affirms its commitment in anti-human trafficking efforts. 2GO Group together with the various international organizations participated in the Commitment Week Against Trafficking of Persons to show their commitment to fight human trafficking in the Philippines represented by its passage business unit SuperFerry, now known as 2GO Travel.

Organized by the non-government organization Visayan Forum Foundation (VFF) with the support from United States Agency for International Development, the week long celebration involved series of events which gave the different organizations the opportunity to affirm their support in the war to end the said crime.

At least more than 20 members from the 2GO Group joined the RAT Race (Run Against Trafficking) held last March 13, 2011 at Taguig. Further, the Group through its participants declared its commitment to the cause during the Commitment Day Against Trafficking in Persons held last March 15, 2011 at Ortigas, Pasig City. The said event

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was also attended by some government officials such as Vice-President Jejomar Binay and US Ambassador Harry Thomas who both pledged their support to the program as well.

FREE TRANSPORT OF RESCUE EQUIPMENT AND RELIEF GOODSImmediately after Typhoon Sendong struck Cagayan de Oro, Iligan and Dumaguete in December 2012, Mr. Sulficio O. Tagud, Jr., President and CEO of 2Go Group, Inc. came out with an announcement to the public that 2GO Freight will provide free freight services for relief goods for Sendong victims. 2Go/ SuperFerry/ Negros Navigation ticket and LCL consolidation outlets in Metro Manila, Cebu, Bacolod and Iloilo were designated as drop-off centers for free shipment of such items. The response was overwhelming not only from civic and religious organizations and companies but also from individuals.

In a span of 2 weeks after the typhoon, 2Go was able to transport for free approximately 700 tons of relief goods to Cagayan de Oro, Iligan and Dumaguete. The Company provided transport for relief goods coming from various groups including: Philippine Red Cross, American Chamber Foundation, World Food Program, St. James COPA Parish Foundation, Rotary Club of San Francisco del Monte, Sen. Koko Pimentel, Sen. Ping Lacson, Ms. Risa Hontiveros, Cebu Provincial Government, ABS-CBN, GMA, Bombo Radyo, and many others.

2GO Travel also transported rescue volunteers and equipment of MMDA, La Salle-Bacolod as well as water purification equipment for the Oro Chamber of Commerce care of Ambassador Raul Rabe.

SUSTAINABILITY PROGRAMSWe subscribe to the triple bottomline approach in business which states that a business will thrive not just by achieving financial profits and looking after the welfare of its people but also by ensuring the sustainability of the planet.

In fulfillment of this goal, 2GO pledged its support to different causes such as the Earth Day movement by conducting a clean-up drive in parks and ports, as supported by our branches nationwide.

In its continuous support to the campaign for the rehabilitation of the Pasig River, 2GO participated and joined the record-breaking 11.20.2011 Run for Pasig River.

Further, as part of the Earth Day celebration, Supercat together with other transport companies under NENACO-2GO Group and its alliances, renewed its commitment for protecting Mother Earth as they organized Bakawan Para Sa Karagatan. The annual tree planting and coastal clean-up activities in the coastal areas of Tungkil, Minglanilla, Cebu was held last April 30, 2011.

Looking Ahead. 24

There have been studies relating managerial behaviour and organizational performance to good corporate governance. While academic research and institutional studies have very limited explanatory power to draw substantive conclusions about the impact of corporate governance on corporate performance, there are plenty of hard evidence to show that investors pay more for well-governed companies. There is also widespread recognition on the importance of transparency and accountability both in government and in the business community.

As businesses continue to open up to the global market and liberalization happens, the decision-making process becomes more diffused. This brings up the level of accountability of corporate leaders to all their stakeholders, including employees, customers and in particular, their shareholders.

In 2GO, no less than its Board of Directors, at the top of the Companys corporate governance structure, who takes the lead. It is the Board who is tasked to strike a balance between conformance and performance; long-term strategy and day-to-day operations; form and substance.

The Board is the key to the success of any corporate governance directive.

BOARD STRUCTURE

Compliance to the principles of good governance starts at the top. The directors position is one built on trust and integrity. The Board has the fiduciary responsibility to ensure the companys prosperity by collectively directing the companys affairs, while meeting the appropriate interests of all its stakeholders.

The 2GO Board is a team of nine (9) highly respectable individualsseven (7) non-executive directors which includes the Chairman and only two (2) executive directors. Of the nine (9), there are three (3) independent directors, including the Chairman, who are experts in their respective fields.

Chairman : Francis C. Chua, Independent DirectorMembers : Sulficio O. Tagud, Jr. Jeremias E. Cruzabra Raul Ch. Rabe, Independent Director Monico V. Jacob, Independent Director Nelson T. Yap Mark E. Williams Geoffrey M. Seeto Patrick Ip

Separating the role of the Chairman and the Chief Executive Officer (CEO) was brought into focus when improved corporate governance were observed in companies where the two roles were split. Thus, to foster an appropriate balance of power, increased transparency, accountability and control over company operations, the elected Chairman of the Board, a non-executive director, has been made separate and distinct from the appointed CEO of 2GO.

CORPORATE GOVERNANCE

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BOARD MEETINGS

In the January 16, 2012 report to the SEC, the 2GO Corporate Secretarys Certification on Directors Attendance in Board Meetings summarized the attendance record of the members of the Board of Directors of the corporation for the period January 1, 2011 to December 29, 2011.

P = PresentX = AbsentM = Maximum Number of Meetings that the relevant Board Member could have attended during the period January 1 to

December 29, 2011NA = Not Applicable because the Board Member was not a member of the Board during the relevant meeting date.

BOARD COMMITTEES

The Board has three (3) committeesthe Compensation, Remuneration and Nomination Committee, the Audit and Corporate Governance Committee, and the Risk Management Committee. The Board and its committees oversee and advise management in developing the companys financial and business goals, oversee its public disclosures and the processes behind them, and evaluate managements performance in pursuing and achieving those goals.

COMPENSATION, REMUNERATION AND NOMINATION COMMITTEE

The Nomination and Compensation Committee is mainly responsible for

Establishing the criteria for the selection of directors and seniormanagement and recommendBoard nominees and committee membership.

Establishingtheoverallcompensationphilosophyofthecompanyincludingdirectorsandemployeecompensation, benefits and incentive plans.

Director Jan 21 Mar2 Apr 28 Jun 1 Jun 15 Jul 6 Jul 19 Oct 13 Dec 5 Dec 29 P/M

Francis C. Chua P P P P P P P P P P 10/10

Sulficio O. Tagud, Jr. P P P P P P P P P P 10/10

Jeremias E. Cruzabra P P P P P P P P P P 10/10

Nelson T. Yap NA NA NA NA NA NA NA NA P P 2/2

Mark E. Williams P P P P P P P P P P 10/10

Geoffrey K. Seeto NA NA NA NA NA NA NA P P P 3/3

Raul Ch. Rabe P P P P P P P P P P 10/10

Patrick Ip NA NA NA NA NA NA NA P P P 3/3

Monico V. Jacob NA NA NA NA NA NA NA NA P P 2/2

Ramon G. Villordon, Jr. NA NA NA P P P P P NA NA 5/5

Michelle Lu P P P P P P P X NA NA 7/8

Jon Ramon M. Aboitiz P P P P X NA NA NA NA NA 4/5

Enrique M. Aboitiz, Jr. P P P P X NA NA NA NA NA 4/5

Bob D. Gothong P P X P NA NA NA NA NA NA 3/4

Meetings Held in 2011

Looking Ahead. 26

This committee is likewise is responsible in reviewing the management development and succession policies.

In 2011, the committee membership was as follows:

Chairman : Mr. Sulficio O. Tagud, Jr. Members : Mr. Mark E. Williams Mr. Geoffrey M. Seeto

Mr. Geoffrey M. Seeto was appointed by the Board as a member of the Committee in October 2011, replacing Ms. Michelle X. Lu upon her resignation. AUDIT AND CORPORATE GOVERNANCE COMMITTEE

The Board Audit and Corporate Governance Committee has oversight function over the audit activities performed by the companys internal auditors and the nominated external auditor for the year. The committee oversees internal and disclosure controls and procedures.

The committee also takes the lead in promulgating and overseeing the principles of corporate governance by reviewing committee charters, directors independence as well as code of ethics for executives, employees and directors.

Composition

The Board Audit and Corporate Governance Committee is composed of four (4) board members, one (1) of which is an independent director and one (1) ex-officio member.

Chairman : Mr. Francis C. Chua, Independent Director Members : Mr. Patrick Ip Mr. Mark E. Williams Mr. Geoffrey M. Seeto Mr. Evan C. Mcbride, Ex-Officio member

Mr. Patrick Ip was appointed by the Board as a member of the Committee in October 2011, replacing Ms. Michelle X. Lu upon her resignation. Mr. Evan C. Mcbride, on the other hand, is a Director of NENACO.

Committee Meetings

The Audit and Corporate Governance Committee met three (3) times in 2011. All three meetings were duly attended by the committee members.

In its meetings, the committee tables for discussion the audit master plan for the year; the highlights of internal audit results and the corresponding action plans; the performance of the internal audit team; the selection and approval of the external auditor for the year and their audit timetable; and the presentation and endorsement for Board approval of the prior years audited financial statements.

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In the presentation of the audit master plan for the year, the committee reviews and assesses the robustness of the audit risk assessment methodology used by internal audit as this becomes the basis in allocating its limited manpower resources to auditable units that are rated to be comparatively riskier than others.

A detailed Audit Committee Report for 2011 is presented in a subsequent section.

RISK MANAGEMENT COMMITTEE

The ultimate accountability over risk oversight and risk management in the organization rests with the Board. However, the Risk Management Committee, as a Board subcommittee, is responsible in leading the organizations strategic direction in the management of material business risks such that leaders are able to make informed decisions. The committee also provides oversight for the establishment, implementation, and effectiveness review and assessment of the companys risk management framework.

The 2GO Risk Management Committee in 2011 was composed of the following: Chairman : Amb. Raul C. Rabe Members : Mr. Mark E. Williams Mr. Geoffrey M. Seeto Mr. Evan C. Mcbride, Ex-Officio Member Mr. Patrick Ip Mr. Patrick Ip was appointed by the Board as a member of the Committee in October 2011, replacing Ms. Michelle Lu upon her resignation. Mr. Enrique M. Aboitiz, Jr. was also appointed by the Board as a member of the Risk Management Committee from March until his resignation on June 15, 2011.

EXECUTIVE COMPENSATION POLICY

Meritocracy based. This is the corporate compensation philosophy for executive remuneration in 2GO. Commensurate compensation is given based on the annual performance evaluation of its executives. Any change in compensation is subject to full discussion and concurrence by the Board upon the review and recommendation of its Board Nomination and Compensation Committee.

COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

The table of the monthly fixed allowance and per diem per meeting attendance of the 2GO Board of Directors in 2011 is shown below.

Compensation Director Chairman of the BoardMonthly Fixed Allowance P80,000 P120,000 Board Meeting Per Diem P30,000 P45,000 Committee Meeting Per Diem P30,000

Looking Ahead. 28

SOCIAL RESPONSIBILITYAs a responsible corporate citizen, the 2GO Group Inc. has embarked on social responsibility program for 2011 focused on three (3) main areas: Education, Social Advocacy, and Environmental Protection and Rehabilitation.

CODE OF BUSINESS CONDUCT

The 2GO Code of Business Conduct serves to guide employees actions aligned with the companys corporate values. The Code consists of policies relating to ethical and legal standards of behaviour that 2GO expects of its employees. Its applicability extends to all the business units in the organization. The Code explicitly states the corresponding disciplinary actions that include suspension and termination for violations committed against company policies and the Code.

CORPORATE GOVERNANCE SCORECARD

While companies are not expressly mandated to comply with recommended best practices on corporate governance, the comply-or-explain approach employed by the SEC and PSE through its Corporate Governance scorecard and disclosures definitely exerted pressure for companies to comply.

For the past 4 years, 2GO has participated in the assessment of corporate governance standards and practices of publicly listed companies. This is an annual appraisal conducted by the Institute of Corporate Directors in partnership with the Securities and Exchange Commission.

2GO corporate governance scorecard has improved from its 70% rating in 2007 to 90.3% in 2009 or from a second quartile ranking up to the Silver Category.

The improvement is a testimony of the companys unwavering pursuit of systemic corporate governance reforms within the organization.

OUTLOOK

For any company, more so for publicly listed companies such as 2GO, the practice of good corporate governance is believed to bring about added shareholder value. Thus, there is a willingness to pay a premium for well-governed companies.

Under the new management, there is assurance to uphold the same level of commitment to the standards and principles of good corporate governance. The direction is to lead the business to a healthy and robust future as businesses become more complex and as markets become more open and global.

FURTHER INFORMATION

The following are available on www.atsc.com.ph/IR/governance 2GOCorporateGovernance 2GOArticlesofIncorporation 2GOCodeofBusinessConduct 2GOBy-Laws 2GOAnti-MoneyLaunderingStatementofPolicies&Procedures

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RISK MANAGEMENTIn 2011, initiatives were focused on the integration of NENACO and 2GO. Policies and procedures were integrated in order to support the merging of processes of two separate companies.

Risk Management team focused on integrating the insurance requirements for both NENACO and 2GO. Insurance policies were reviewed and correspondingly, adopt an insurance program that best fit the requirements of NENACO and 2GO under a cost-effective package.

The management of both NENACO and 2GO considers Risk Management as an integral part of business operations, maintaining its direction that ERM is a shared responsibility, company-wide, and ensure that risk exposures are identified and proactively manage in order to create value-adding service to the organization and consistently achieve stakeholders expectation.

Risk Management team has developed a road map for re-launching of ERM program to the newly-integrated NENACO and 2GO. The road map will run its full course within 2012 with the following phases:

The end goal is that by the end of 2012, ERM philosophy and framework is already re-established within the 2GO Group, Inc and its allied companies.

Concurrently, Risk Management team will embark on re-assessing the Strategic Risks which were previously identified. There is a need to validate if risk exposures are still applicable after the change in management and integration of NENACO and 2GO.

The following has to be validated:What are the new Strategic Risks that the company considers?Are previously identified strategic risks still applicable?Are there new Strategic Risks identified based on the current company strategies and objectives?What strategic risks need to be address immediately?

What are the new Strategic Risks that the company considers?Are the identified risk treatment implemented? If not, how we effectively address the risks?What are the current controls in order to minimize the impact of the identified risks?

Within the first half of 2012, it is expected the new top risks are already identified and the risk owner will treat their risks and corresponding programs and projects will be instituted as risk response to effectively manage its risk exposures.

We saw in previous years the importance of implementing Risk Management framework as a tool in handling difficult times. Hence, re-establishing ERM to the newly-integrated NENACO and 2GO will be of utmost value-adding initiative for the whole organization.

Focus and attention on raising risk awareness and re-embedding risk management culture within the policies and processes throughout the organization will provide more confidence in achieving corporate goals, thereby delighting those we serve and delivering our vision as face the future of NENACO and 2GO.

POLICY CREATION Revisit current ERM philosophy and framework Validating if philosophy and frame will still be applicable Establishing Risk Management Council who will drive

ERM initiatives

CONCEPT LOADING Re-launching ERM philosophy and framework to all

business units Cascading ERM concepts to all team members

PLANNING AND MANAGEMENT Creating Risk Register on a per business unit level Validating if current identified risk and its treatment are

still applicable Identifying, assessing and treating new risks inherent to

integration of NENACO and 2GO

ESTABLISH BUSINESS CONTINUITY MANAGEMENT

Assessing the need for Business Continuity Program

Establishing business continuity plan for the top identified risk exposure

VALIDATION AND REVIEW Validating if risk treatment are being

implemented Reviewing if the risk treatment strategies are

effective and efficient Assessing the maturity of Risk Awareness

within the group

Looking Ahead. 30

The Board Audit Committee (AudCom) is an independent operating body directly reporting to the Board of Directors. It assists the Board in the carrying out its functions by providing an oversight role in ensuring the integrity of the companys financial reports, its compliance with regulatory requirements, and the performance of the companys internal audit function.

The AudCom maintains an effective working relationship with the Board by providing them information necessary in making good governance and audit-related decisions.MEMBERSHIP The Board Audit Committee is composed of four (4) Directors and one (1) Ex-Officio member: Francis C. Chua, Chairman, Independent Director Michelle X. Lu, Director Mark E. Williams, Director Geoffrey M. Seeto Evan C. McBride, Ex-OfficioMEETINGS The Board AudCom held three (3) meetings in 2011. All meetings were attended by the AudCom members.

Committee Member Feb 25 Apr 28 July 20Francis C. Chua Mark E. Williams Geoffrey M. Seeto Evan C. McBride Michelle X. Lu (attendance via phone patch)

In the February 25 meeting, the AudCom reviewed, discussed and endorsed for Board approval 2010 Audited Financial Statements of 2GO presented by SGV & Co., the Companys external auditing firm. The general assessment of the companys internal control system and the internal audit plans and programs for 2011 were likewise presented to during this meeting.

In the subsequent meetings, internal audit reports were presented and discussed extensively. For 2011, discussion highlights were focused in the areas of vessel and passenger safety and security, physical and environmental data security and access as well as process controls in its supply chain and freight businesses. The selection and approval of the external auditor for the year 2011SGV & Co. -- was agreed upon and endorsed to the Board during the AudComs midyear meeting in July. SYSTEM OF INTERNAL CONTROLSThe framework of control, risk management and governance processes are existing within the 2GO group of companies. The integration and streamlining efforts of management as a result of the buyout caused some of these processes to be combined and/or reduced to provide the basic elements of control and good governance needed to sustain operations. There is continuous effort to further enhance and align processes to meet organizational goals.

The culture of accountability is apparent with the general adherence of employees to management policies and directives in order to achieve company objectives.

The internal control system is effectively designed to safeguard assets; to secure the relevance, reliability and integrity of information and as far as possible the completeness and accuracy of records; and to ensure compliance with statutory requirements.

For 2011, most business units posted increases in their audit ratings compared to the previous year. The less-than-satisfactory results of the supply chain operations and systems audits caused management to focus its efforts in improving this segment of the business.

Various measures are being undertaken by management including organization restructuring across all business units to allow streamlining of functions for the effective execution of responsibilities.

Continuous enhancement of performance metrics and speedy resolution of audit issues raised are likewise given focus to assure company objectives are met.

AUDIT COMMITTEE REPORT

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Moving forward, 2GO management is responsible in maintaining the internal control system and ensuring that resources are properly applied in the manner and to the activities intended.

The AudCom is pleased to note that the business units have been proactive in addressing recommendations with regards to the enhancement of the internal control environment.

INTERNAL AUDITIn accordance with established Standards and Code of Ethics of the profession, the Internal Audit Department (IAD) continually strives to improve the proficiency, effectiveness and quality of the internal audit activities.

The IAD reports to the Board AudCom the highlights on the validation of the operational effectiveness of key activities and controls. The assessment focused on policies and procedures relating to processes in finance, operations, and IT systems.

The accomplishments realized by IAD in 2011 were not without difficulties. There were a number of constraints and limiting factors such as unfilled manpower plantilla in Audit and changes in the organizational processes that warranted a shift in the audit focus and strategies more relevant to the situation.

Despite above operational challenges and with limited resources at hand, IAD continued to deliver its value-adding services to help improve operations; to serve the shareholders and management of 2GO; to partner with the business units in enhancing current performance and future competitiveness; to supply a source of future management talent; and to be an active participant in the improvement of 2GO.

RISK MANAGEMENTRisk management is fast becoming an ingrained concept and way-of-life in the organization. However, the establishment of a comprehensive Business Continuity Plan remains a major area that needs top management support and directive to see it to completion.

CORPORATE GOVERNANCE Good corporate governance is practiced not because it is required by law but because it promotes 2GO core values of transparency, openness, and accountability. For 2GO, corporate governance and a value-oriented management are pillars of business resilience.

EXTERNAL AUDIT SGV & Co. was appointed external auditor of 2GO for 2011. In compliance with corporate governance policy, SGV & Co. reported during the November 2010 meeting, that it will be replacing its Lead Financial Audit Partner, Ladislao Z. Avila in 2011 as it is his fifth year as SGV partner assigned to 2GO. Josephine H. Estomo is serving her first year term as the signing partner designated by SGV & Co.

SGV & Co audit work focused mainly on audits of internal controls and how these safeguard the financial reporting including the financial statements of the Company.

2011 FINANCIAL RESULTS During the period covered by this report, the new Board AudCom concurred with the opinions expressed by SGV & Co., on the overall presentation of the financial statements of the Company.

The audit also included an evaluation of the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management.

The audit concluded that the balance sheets and the related statement of income and expenses, cash flows, changes in capital and reserves present fairly, in all material aspects, the financial position of 2GO.

Based on the judgment about quality of accounting principles, SGV & Co. disclosed that the accounting principles used by 2GO are in compliance with the Philippine Financial Reporting Standards. Significant accounting principles are disclosed in the notes to the financial statements, as required by the standards.

APPROVALApproved by the 2GO Board of Directors, upon the favorable recommendation of the Board Audit Committee, and signed on its behalf by:

Mr. Francis C. ChuaChairman, 2GO Board Audit Committee

Looking Ahead. 32

STOCK EXCHANGE INFORMATION

2GO common shares and redeemable preferred shares are listed and traded on the Philippine Stock Exchange under the ticker 2GO and 2GOP, respectively.

In 2011, 2GO common shares traded a low of P1.20 per share and a high of P1.95 per share.

SHAREHOLDERS ON RECORD

As of March 31, 2012, there were about 1,976 common shareholders on record.

ANNUAL REPORT IN SEC FORM 17-A

The financial information included in this report conforms to the information required in the SEC Form 17-A submitted to the SEC. Hard copies may be obtained free of charge upon written request to Investor Relations. Soft copies can also be viewed at our website under the Investor Relations section.

ANNUAL MEETING

2GOs 2011 Annual Meeting of Shareholders was held last June 22, 2011 at the Midas Hotel, Manila.

INVESTOR RELATIONS

Inquiries from institutional and retail shareholders may be directed to: Mr. Rommel H. Aniag

Vice President/Head - Corporate Finance and Investor Relations2GO Group Inc.12th floor Times Plaza Building,United Nations Avenue corner Taft Avenue, Manila, 1000 PhilippinesPhone: (+63 2) 528-7586Email: [email protected] [email protected]

EXTERNAL AUDITORSycip Gorres Velayo & Co., CPAs6790 Ayala Avenue, Makati City 1226PhilippinesPhone (+63 2) 891-0307Fax: (+63 2) 819-0872Website: www.sgv.com.ph

STOCK TRANSFER AGENT REGISTRAR

For inquiries regarding dividend payments, change of address or account status of lost or damaged stock certificates, please write or call:

Mr. Ricardo B. YatcoGeneral ManagerSecurities Transfer Services, Inc.Ground Floor Benpres Building,Exchange Road corner Meralco Avenue, Ortigas Center, Pasig City, PhilippinesP.O. Box No. 13951 OCPO, Pasig CityPhone: (+63 2) 490-0060 local 112Fax: (+63 2) 631-7148E-mail: [email protected]

SHAREHOLDERS INFORMATION

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Looking Ahead. 34

BOARD OF DIRECTORS

MR. FRANCIS C. CHUA, 61 years old, Filipino, has served as Chairman of the Board since July 2011 and as an Independent Director of 2GO since January 2011. He is also the Chairman of the Board Audit and Corporate Governance Committees. Mr. Chua also sits as the Chairman of the Board of NENACO since July 2011. His other current positions include Honorary Consulate General of the Republic of Peru in Manila; President and Eminent Adviser of the Philippine Chamber of Commerce and Industry; Chairman of the Philippine Chamber of Commerce and Industry Foundation, CLMC Group of Companies, and Green Army Philippines Network Foundation; President of DongFeng Automotive, Inc. and Philippine Satellite Corporation; Director of Philippine Stock Exchange, National Grid Corporation of the Philippines, Bank of Commerce, Basic Energy, and Overseas Chinese University; and Trustee of Xavier School Educational Trust Fund, and Adamson University. He graduated with a Bachelor of Science degree in Industrial Engineering from the University of the Philippines.

MR. SULFICIO O. TAGUD, JR., 61 years old, Filipino, has served as the President and Chief Executive Officer and a Director of 2GO since December 2010. Mr. Tagud is also the Chairman of the Compensation, Remuneration and Nomination Committee of the Company. He has also served as the Chairman and President of KGLI-NM Holdings, Inc. since July 2008; Chairman and Chief Executive Officer of NENACO since August 2004; and Chairman and CEO of Negros Holdings & Management Corporation since December 2006. He graduated Class Valedictorian with a Bachelor of Science degree in Business Administration, major in Economics (Magna Cum Laude) at Xavier University, Cagayan De Oro City. He also completed his Masters in Industrial Economics at the Center for Research and Communication in Manila, and Masters in Business Administration at the Ateneo de Manila University. He also completed Real Estate Development Program at the Urban Land Institute at Washington, D.C., U.S.A.

FRANCIS C. CHUAChairman of the Board and

Independent Director

SULFICIO O. TAGUD, JR.President and

Chief Executive Officer

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BOARD OF DIRECTORS BOARD OF DIRECTORS

MR. JEREMIAS E. CRUZABRA, 45 years old, Filipino, has served as Director since December 2010, Treasurer and Group Chief Finance Officer since June 2011, and Corporate Information Officer since December 2011. He has also served as the Group Chief Finance Officer of Negros Navigation Co. (NN) and its subsidiaries since April 2004. He was appointed as President & Chief Operating Officer of NN from March 2009 up to March 2010. Mr. Cruzabra is also the Chief Finance Officer and Board Director of KGLI-NM Holdings, Inc. since July 2008; Vice-President & Chief Finance Officer/Treasurer of Negros Holdings & Management Corporation since December 2006; Chief Finance Officer (and later Trustee) of Sapphire Securities, Inc. (defunct) from 1997 to 1999. In 1999, he co-founded Business Sense, Inc. (BSI), a business-consulting firm that specializes in strategy formulation and productivity improvement. He started his career with SGV & Co. (a member company of Ernst & Young) from 1988 to 1992. After his stint with SGV, Mr. Cruzabra joined Metro Pacific Corporation Group (now Metro Pacific Investment Corporation) where he was posted as finance executive in various companies. Mr. Cruzabra, who is a Certified Public Accountant, graduated with a Bachelor of Science degree in Commerce, major in Accounting (Magna Cum Laude). He completed his Masters in Business Administration at Murdoch University in Perth, Western Australia.

AMB. RAUL CH. RABE, 71 years old, Filipino, has been an Independent Director of 2GO since December 2010. He is also the Chairman of the Risk Management Committee. He has also served as a member of the Board of Directors of KGLI-NM Holdings, Inc. since July 2008; Bancommerce Investment Corporation since 2007; PET Plans, Inc. since 2007; Vivant Corporation since 2002; Bank of Commerce since 2001; Corporate Secretary of Manila Economic and Cultural Office since 2001, and of Counsel for Rodrigo, Berenguer and Guno since 1999. He graduated with a Bachelor of Arts degree at the University of Santo Tomas, and Bachelor of Laws degree from the Ateneo de Manila Law School. He also completed the Colombo Plan Scholarship on Diplomacy at the Australian Institute of Foreign Service in Canberra, Australia.

JEREMIAS E. CRUZABRADirector and

Chief Finance Officer

AMB. RAUL CH. RABEIndependent Director

Looking Ahead. 36

ATTY. MONICO V. JACOBIndependent Director

GEOFFREY M. SEETODirector

PATRICK IPDirector

NELSON T. YAPDirector

MARK E. WILLIAMSDirector

BOARD OF DIRECTORS

37


ATTY. MONICO V. JACOB, 66 years old, Filipino, has served as an Independent Director of 2GO since December 2011. He also sits on the Board of NENACO as an Independent Member since December 2010. As a partner of the Jacob & Jacob Law Firm, he has been involved in corporate recovery work including rehabilitation receiverships and restructuring advisory in the following firms: The Uniwide Group of Companies, ASB Holdings, Inc., RAMCAR Group of Companies, Atlantic Gulf and Pacific Company of Manila, Inc., Petrochemicals Corporation of Asia-Pacific, All Asia Capital and Trust Corporation (now know as Advent Capital and Finance Corporation), Nasipit Lumber Company, Inc. and NENACO. His current positions include: President and CEO of Systems Technology Institute, Inc. (STI), Information and Communications Technology Academy, Inc., PhilPlans First, Inc., Philhealthcare, Inc., Banclife Insurance Co. Inc., and JTH Davies Holdings, Inc.; Member of the Boards of Jollibee Foods, Inc., Advent Capital and Finance Corp., Asian Life Financial Assurance, Asian Terminals, Inc., Mindanao Energy, Inc., Phoenix Petroleum Philippines, Inc., De los Santos STI College, De los Santos STI Medical Center, Philippine Health Educators, Inc., and Anvaya Cove Beach and Nature Club; and Chairman of the Boards of Total Consolidated Asset Mgmt, Inc., and Global Resource for Outsourced Workers, Inc. He received his Bachelor of Arts in Liberal Arts from Ateneo de Naga and Bachelor of Laws from the Ateneo de Manila University. MR. NELSON T. YAP, 53 years old, Filipino, has served as Director of 2GO since December 2011. Mr. Yap has over 30 years of professional experience in public accounting, financial management, treasury, analysis, controls, accounting, budgeting, tax planning and management reporting with a multinational insurance company, a Hong Kong regional headquarter overseeing operations in Netherlands Antilles, U.K., France, Australia, and the U.S., and with a listed BPO company. During the past 5 years, He has served as a Director of NENACO since December 2011; Group Comptroller of Paxys, Inc., a publicly-listed BPO company, from 2006 to September 2011; and as Treasurer/Comptroller of NGL Pacific Limited from 2005 to June 2006. Mr. Yap, a Certified Public Accountant (15th Board placer), graduated with a Bachelor of Science degree in Commerce, major in Accounting (Cum Laude) from the Xavier University, Cagayan De Oro City. He took his Masters in Business Administration from Ateneo Graduate School of Business (no thesis) and further completed the same from Murdoch University in Perth, Western Australia.

MR. MARK E. WILLIAMS, 38 years old, American, has served as Director of 2GO since December 2010. He is also a member of the Board Compensation, Remuneration and Nomination, and Board Audit and Corporate Governance Committees. He currently sits as a Director of NENACO and has also served as Investment Director of KGLI-KSCC since 2008. He obtained his Bachelor of Science degrees in Accounting, Business Administration, and Finance at the University of Akron in Akron, Ohio, U.S.A. He completed his Juris Doctorate degree at Case Western Reserve University, Cleveland, Ohio, U.S.A., and also obtained a Masters degree in Business Administration, concentration in Finance, from Weatherhead School of Management of the same university.

MR. GEOFFREY M. SEETO, 42 years old, Australian, has been appointed as a Director of 2GO since October 2011. Mr. Seeto is also a Member of the following Company Board Committees: (i) Compensation, Remuneration and Nomination; (ii) Audit and Corporate Governance; and (iii) Risk Management. He is also a member of the Board of NENACO since December 2010. He is the Head of Asia Infrastructure, Singapore with Babcock and Brown. He led infrastructure investments including PPP transactions throughout Singapore, Thailand and other ASEAN countries. Prior to Babcock and Brown, he spent 10 years with ABN Amro Bank in Singapore, the Netherlands and Canada, also specializing in infrastructure investments, mergers and acquisitions. He received his Bachelor of Economics Degree and Masters of Law from the University of Sydney, Australia. MR. PATRICK IP, 42 years old, Chinese, was appointed as Director of 2GO since October 2011. He currently sits as a Member of the Board Risk Management and Board Audit and Corporate Governance Committees of 2GO. Mr. Ip is also a Director of NENACO, a Member of the Hong Kong Institute of Directors and is the Head of Portfolio Supervision Management for China-ASEAN Capital Advisory Company, the advisor to the China-ASEAN Investment Cooperation Fund. Prior to this he was the Chief Financial Officer of the private equity arm of the French bank, Natixis. There he was responsible for all private equity activities in Asia (e.g. India). Throughout his career he gained substantial experience in auditing and financial transaction advisory, legal and compliance, litigation and arbitration as well as hedge fund and alternative investment. Mr. Ip is a Chartered Financial Analyst, a Certified Public Accountant (Hong Kong) and a Chartered Certified Accountant with PwC in London. He took his Bachelor of Laws degree from the London University Law Schools and his Bachelor of Arts degree major in Accounting and Finance from the Leeds University, UK.

BOARD OF DIRECTORS

Looking Ahead. 38

EXECUTIVE OFFICERS EXECUTIVE OFFICERS

FRED S. PAJO

ALEJANDRO M. DIAZ DE RIVERA NORISSA L. RIDGWELL

JOSE MANUEL L. MAPA KLAUS SCHROEDER

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EXECUTIVE OFFICERS EXECUTIVE OFFICERS

WILMER A. ALFONSO

ATTY. AMADO R. SANTIAGO III ATTY. MANUEL EDUARDO C. CARLOS

ZENAIDA R. CABRAL STEPHEN REY R. TAGUD

Looking Ahead. 40

MR. FRED S. PAJO, 57 years old, Filipino, is the Executive Vice-President and Chief Operating Officer of NENACO. He concurrently handles the same function in 2GO Group, Inc. Further, Mr. Pajo has been with NENACO for more than 30 years, holding various significant positions such as Branch Manager, Officer-in-Charge, Deputy Area Head, Assistant Vice President for Freight Business and Vice President for Operations. He has served as VP Head of Freight Business Division and President for Brisk Nautilus Dock Integrated Services, Inc., a wholly owned subsidiary of the NENACO since 2005. Mr. Pajo also became the President of the NENACO in January 2007 and 2010. Further, he currently serves as Director of Hansa Meyer-ATS Projects, Inc., Hapag-Lloyd Philippines, Inc. Mr. Pajo earned his degree in Bachelor of Science in Business Administration from the Ateneo de Cagayan Xavier University.

MR. JOSE MANUEL L. MAPA, 45 years old, Filipino, is the Executive Vice-President Freight Sales of NENACO and 2GO Group. Mr. Mapa has been with NENACO for more than fourteen (14) years and his career progression has indicated that he has made major contributions in the companys operations. He started as an Executive Assistant for Marketing and Special Projects, gradually moving up to be the AVP/Deputy Area Head-Negros Occidental Area for NENACO, taking charge of the freight and passage business of the area and on to Vice President / Head National Freight Business, later on to Executive Vice President/Head Passage Business. He obtained his Masters degree in Business Administration at the University of St. La Salle Graduate School, Bacolod City. He also completed his Bachelor of Science degree in Agribusiness Management at the University of the Philippines in Los Banos, Laguna where he received several awards including the University of the Philippines Presidents Award (National Award) for Outstanding Student, the UPLB University Council Award for Outstanding Student, UPLB Outstanding Student Leader Award.

MR. KLAUS SCHROEDER, 64 years old, German, President and Chief Executive Officer of Hapag Lloyd Philippines, Inc., Kerry-ATS Logistics, Inc. and Hansa Meyer ATS Projects, Inc since1992. He is also a Senior Vice President of 2GO Group. Mr. Schroeder is a graduate of Gorchfock from Germany. He further completed his Masters in Business Administration focusing on Transportation Management from Asian Institute of Management.

MR. ALEJANDRO M. DIAZ DE RIVERA, 46 years old, Filipino, President of 2GO Logistics, Inc. and Scanasia Overseas, Inc. Prior to this, he was the Senior Vice President for Business Development of both companies. Mr. Diaz de Rivera, prior to joining the group, has had extensive experience in the Logistics industry. He has worked with reputable logistics, shipping, forwarding and transport firms growing into senior positions in both local and Asia regional roles. He has also been engaged as a Logistics and Supply Chain Consultant for a number of companies primarily in the areas of 3PL outsourcing, network consolidation, and transport design. He is a graduate of the University of the Philippines with degrees in Business and Fisheries. He has completed Cranfield Universitys program on Logistics Solutions Design.

MS. NORISSA EILEEN L. RIDGWELL, 57 years old, Filipino, has served as COO for Kerry ATS Logistics Inc. and as Senior Vice President for Human Resources of 2GO Groups International Logistics and Supply Chain division since March 2012. Prior to this, she was the Senior Vice President for Operations of 2GO from June 2005 to April 2009 and then as Chief Operating Officer of 2GO Freight from 2009 to 2010. She has been with 2GO Group since 1994. She graduated with a Bachelor of Science degree in Commerce, major in Management from Silliman University.

MR. WILMER A. ALFONSO, 58 years old, Filipino, Vice President for Ports Services since 2006. He has been with 2GO Group since January 1971. He holds the following positions: Chairman of Attina Security

PROFILES PROFILES

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Services Inc., and Vestina Security Services Inc., President of North Harbor Tugs Corp., United South Dockhandlers, Inc., Supersail Services Inc., Astir Engineering Works, Inc., J&A Services Corporation, Red.Dot Corporation, Sun-Gold Forwarding Corporation and NN-ATS Logistics Management & Holdings Co., Inc. Mr. Alfonso is a Certified Public Accountant. He graduated with a Bachelor of Science degree in Accounting from the University of San Carlos.

MS. ZENAIDA R CABRAL, 51 years old, Filipino, is the Executive Vice-President and Chief Corporate Services Officer of the NENACO and 2GO Groups. She joined NENACO in 2008, and has worked in all facets of Human Resources and Organization Development field for over 20 years largely in a managerial/executive role with varied experiences in different industries such as service, pharmaceutical, electronics, manufacturing, consultancy services, manning and executive search, allowing her to distinctly excel in her career. One of her most remarkable work stints was with Solid Electronics Corporation of the Solid Group which handles all the branches that carries the Sony brand in the Philippines. Her remarkable contribution to the company for 10 years was significantly acknowledged by Sony, Thailand when she was officially invited to share her HR expertise before the 50-member management team of the region. Ms. Cabral graduated with a Bachelor of Arts degree major in Psychology. She earned her masters degree units in Labor Management Relations from the University of the Philippines, School of Labor and Industrial Relations and completed her Organization Development course from the Ateneo de Manila University.

MR. STEPHEN REY R. TAGUD, 32 years old, Filipino, is the Vice-President Passage of NENACO and 2GO Group. He has over nine (9) solid years of professional experience in sales, marketing, business operations, international hospitality operations management, hotel sales, operations and destination management from Europe and the USA and has handled several clients such as Hewlett Packard, LG, Unilever, Wells Fargo, Ford, and Carlson Marketing Group. Mr. Tagud introduced significant innovations to the company such as the Revenue Management concept where he spearheaded aggressive revenue management strategies that significantly increased both passenger revenue and volume in a highly competitive transportation

market. He also launched the NN Freight brand to further bring the Freight business to the next level of service and efficiency. He further launched other revenue-generating programs such as the Suite Sweet Sale and creative in-house merchandising to boost sales of food & beverage items on-board the passenger vessels. He completed his undergraduate

2go annual report 2011

Documents

financial statements

financial information

consolidated balance

financial highlights2011

operating activitiesnet

investing activitiesnet

annual report

corporate values