COVER SHEET

SEC Registration Number 1 9 0 7 3

Company Name

F I R S T P H I L I P P I N E H O L D I N G S C O R P

O R A T I O N

Principal Office (No./Street/Barangay/City/Town/Province)

6 t h F l o o r , R o c k w e l l B u s i n e s s

C e n t e r T o w e r 3 , O r t i g a s A v e n u e ,

P a s i g C i t y

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

1 7 - Q

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

InvRel@fphc.com (02) 631-8024

No. of Stockholders

Annual Meeting Month/Day

Fiscal Year Month/Day

12,224 May 23 December 31

CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation

Name of Contact Person Email Address Telephone Number/s Mobile Number

Gemma C. Roque GCRoque@fphc.com 449-6091 09175874022

Contact Person’s Address

6th Floor, Rockwell Business Center Tower 3, Ortigas Avenue, Pasig City, 1604 Philippines Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

12. Indicate by check mark whether the registrant:

(a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or Sections 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 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 [ ]

BUSINESS DISCUSSION

TABLE OF CONTENTS PART I ­ FINANCIAL INFORMATION

Item 1 Information on Financial Statement …………………………….................... 1

Item 2 Management’s Discussion and Analysis or Plan of Operation….................... 6

Item 3 Key Performance Indicators………………………………………………... 19

Item 4 Schedules

Long­term Debt……………..…………………………………...…… 24

Trade Payables and Other Current Liabilities………………….…...... 25

Aging of Trade and Other Receivables…………….………………… 26

Item 5 List of Financial Reporting Standards (PFRS)…………….……………….. 27

Item 6 Corporate Structure…………………………………………………............ 31

Item 7 Other Financial Information...…………………………………….................35

PART II ­ OTHER INFORMATION………………………………………………...…...…....36 SIGNATURES………………………………………………………………………...…...……..36 EXHIBIT “A”

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE PERIODS ENDED MARCH 31, 2016 AND 2015 (WITH COMPARATIVE AUDITED FIGURES AS AT DECEMBER 31, 2015)

PART I­­FINANCIAL INFORMATION Financial Statements. The unaudited interim financial statements of the registrant are incorporated herein by reference to the enclosed document. They are prepared in compliance with the Philippine Financial Reporting Standards (PFRS) as issued by the Financial Reporting Standards Council and adopted by the Philippine SEC. See Exhibit A . References to PFRS standards include the application of Philippine Accounting Standards (PAS), Philippine Financial Reporting Standards (PFRS), and Philippine Interpretations of the International Financial Reporting Interpretations Committee (IFRIC). Earnings per share is presented on the face of unaudited statements of income for the three months ended March 31, 2016 and 2015. The accompanying notes to financial statements describe the basis of computation thereof. The interim financial statements followed the same accounting policies and methods of computations as used in the December 31, 2015 annual financial statements under Summary of Significant Accounting Policies. The nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size or incidents are described in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations. Issuances, repurchases, and repayments of debt and equity securities, if any, are described in Item 2, Other Financial Information. Cases relating to the recovery of certain PCIB Shares FPH was allowed by the Supreme Court in FPH vs. Sandiganbayan, G.R. No. 88345 to intervene and litigate its claim of ownership over 6,299,177 sequestered PCIBank shares of stock in the case of the Republic of the 1

Philippines (“Republic”) vs. Benjamin Romualdez, et al., Civil Case No. 0035, which is pending before the Sandiganbayan. FPH anchors its claim on, among other facts, the nullity or voidability of the contract transferring the shares from itself to Romualdez, et al. The Sandiganbayan dismissed FPH’s Complaint­in­Intervention as against Trans Middle East (Phil) Equities, Inc., as well as FPH’s subsequent motions for reconsideration/petitions. In a related case, the Presidential Commission on Good Government and FPH separately filed petitions for review before the Supreme Court for the dismissal of the Republic’s Third Amended Complaint before the Sandiganbayan. The petitions and FPH’s subsequent Motion for Reconsideration were denied. Meanwhile, FPH continues to pursue its interest in the Sandiganbayan against the other defendants. In the Sandiganbayan case, the Republic filed a Partial Compliance with Motion for Production and Inspection dated 30 April 2014, which was denied. The Republic’s Motion for Reconsideration thereon was denied. FPH filed a Petition for Certiorari dated 20 January 2016 with the Supreme Court assailing the Sandiganbayan’s denial. The Petition remains pending. Tax Cases

Several companies within the Group received Final Assessment Notices (FAN) from the BIR Large Taxpayers Service (LTS) for the taxable year 2009 amounting to ₱ 1,953 million for alleged deficiency taxes. Alleged interest and penalties indicated in the FANs amounted to ₱ 1,861 million. The companies duly protested on

1 BDO is the successor of PCIBank.

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factual, due process and legal grounds, including prescription of some assessments and have filed Petitions for Review with the CTA questioning the validity of the assessment on the same foregoing grounds following the inaction by the BIR on their protest. The management of the companies, based on consultation with their legal counsels, believes that the final settlement of the cases, if any, would not adversely affect the companies’ financial position or results of operations Other legal proceedings West Tower Condominium Corporation, et al. vs. First Philippine Industrial Corporation, et al. G.R. No. 194239, Supreme Court of the Philippines On November 15, 2010, a Petition for the Issuance of a Writ of Kalikasan was filed before the SC by the West Tower Condominium Corporation, et al., against respondents First Philippine Industrial Corporation (FPIC), the Company, their respective boards of directors and officers, and John Does and Richard Roes. The petition was filed in connection with the oil leak which is being attributed to a portion of FPIC’s white oil pipeline located in Bangkal, Makati City. The oil leak was found in the basement of the West Tower Condominium. The petition was brought by the West Tower Condominium Corporation purportedly on behalf of its unit owners and in representation of the inhabitants of Barangay Bangkal, Makati City. The petitioners sought the issuance of a Writ of Kalikasan. . On November 19, 2010, the SC issued a Writ of Kalikasan with Temporary Environmental Protection (TEPO). The Company and its impleaded directors and officers filed a verified Return in November 2010 and a Compliance in January 2011 which the SC took note of. In January 2011, FPIC asked the SC to temporarily lift the Writ for the conduct of a pressure­controlled leak test. On November 22, 2011, the SC issued a Resolution ordering the temporary lifting of the TEMPO for 48 hours. The SC issued an order to remand the case to the Court of Appeals. On December 21, 2012, the Court of Appeals rendered its Report and Recommendation. Petitioners filed a Motion for Partial Reconsideration in January 2013 praying, among others, that the Department of Science and Technology (DOST) be tasked to chair the monitoring of FPIC’s compliance with the directives of the court. In a Compliance dated January 25, 2013, FPIC submitted to the SC a Certification signed by the DOE stating that the black oil pipeline is safe for commercial operation. In a Compliance dated January 25, 2013, FPIC submitted to the SC a Certification signed by the DOE stating that the black oil pipeline is safe for commercial operation. In a Resolution dated July 30, 2013, the SC adopted the CA’s recommendation that FPIC secure a DOE certification stating that the pipeline is already safe for commercial operation before the white oil pipeline may resume its operations. On October 25, 2013, the DOE issued a certification that the white oil pipeline is safe to return to commercial operations. FPIC submitted the certification to the SC on October 29, 2013. As of March 12, 2015, the final resolution of the Writ remains pending with the SC. On June 16, 2015, the SC issued another resolution recognizing the powers of the DOE to oversee the operation of the pipelines. The resolution also stated that the DOE is fully authorized by law to issue an order for the return to commercial operations of the pipeline following the conduct of integrity tests. Petitioners have filed several motions urging the SC to reconsider this resolution. As of December 31, 2015, the final resolution of the Writ remains pending with the SC. In the meantime, FPIC has been coordinating with the DOE for the issuance of said order.

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Arbitration Proceedings First PV and First Philec Nexolon Corporation (FPNC) The Parent Company’s (or “FPH”) subsidiaries, First PV Ventures Corporation (First PV) and First Philec Nexolon Corporation (FPNC) initiated arbitration proceedings against Nexolon Co Ltd (Nexolon) with the International Court of Arbitration of the International Chamber of Commerce (“ICC”) in 2012 on the basis of Nexolon’s breaches of the Supply Agreement. The arbitral tribunal rendered the final award in October 2014 which required Nexolon to pay damages and pre­award interest to FPNC in the amount of $24.8 million and a put option price to First PV in the amount of ₱2.09 billion (FPNC and First PV are referred to as the “Companies”) . To date, no payments have been received on the award fromNexolon which is reported to be in rehabilitation proceedings. The Companies have filed their appropriate claims in Korean rehabilitation courts. At the same time, to mitigate its losses, FPNC is searching for ways to realize value from its remaining assets. First Philippine Electric Corporation and FPSC Also in 2012, First Philippine Electric Corporation (First Philec) and First Philec Solar Corporation (FPSC) initiated arbitration proceedings against SunPower Philippines Manufacturing Limited (SPML) with the ICC. In January 2015, a partial award was granted by the arbitral tribunal in favor of First Philec and FPSC which required SPML to pay FPSC a net sum of $25.2 million as compensation for wafers not taken by SPML and unpaid services, and First Philec the price of $30.30 million as payment for First Philec’s shares in FPSC.

In July 2015, a Second Partial Award was granted to First Philec ordering SPML: (a) to purchase First Philec’s shares in FPSC for the price of US$23.2 million by August 13, 2015 (subject to any extension granted by the arbitral tribunal for the purposes of compliance with applicable governmental and/or regulatory requirements), and (b) within 14 days of the completion of the share transfer, to pay FPSC the net sum of US$25,239,860. The arbitral tribunal found it appropriate to reduce the purchase price to be paid by SPML to First Philec for First Philec's shares in FPSC (equal to 74.54% of the total) from US$30.3 million to US$23.2 million, the reduction of US$7.1 million being approximately equal to the amount that the Individual Shareholders have committed to accepting from SPML for their 10.97% stake.

On July 21, 2015, FPH was advised that SPML has filed an application to set aside the first Partial

Award dated 28 January 2015 (First Partial Award) with the Hong Kong Court of First Instance and intends to file an application to set aside the second Partial Award dated July 14, 2015 (Second Partial Award). FPH was also advised that SPML has filed a complaint with the Regional Trial Court of Biñan City, Laguna seeking an order restraining and enjoining: (a) First Philec from transferring its shares in FPSC to SPML; and (b) First Philec and FPSC from applying for the recognition and enforcement of the First Partial Award and the Second Partial Award. Furthermore, FPH has been advised that SPML has filed a complaint with the Regional Trial Court, Branch 2, Batangas City, Special Commercial Court to compel First Philec and FPSC to produce FPSC's corporate books and records and allow SPML to inspect the same. As a result of these events, no payments have been received from SPML to date.

In view of these favorable decisions by the arbitral tribunal which makes the transfer of the ownership

of FPH (through its subsidiaries) in FPSC and FPNC highly probable, the Group had considered that the wafer slicing operations of both FPNC and FPSC met the definition of discontinued operations as at December 31, 2015 and 2014, and as such, the assets, liabilities and results of operations that can be clearly distinguished operationally and for financial reporting purposes from the rest of the Group have been terminated. The Group have not recognized any gains or income arising from the foregoing favorable Awards.

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Significant Transactions of the Parent On April 08, 2015, the BOD approved the investment of up to the amount of ₱ 1.4 billion in its subsidiary, First Philippine Properties Corporation, for purposes of land and related acquisitions. Part of the funds was used for the purchase of the property located at the Philtown Industrial Park as disclosed on January 14, 2015. On the same date, the BOD approved the declaration of cash dividends of ₱ 13.75 per preferred share in favor of FPH’s preferred stockholders of record as of May 07, 2015, payable on or before June 02, 2015 and ₱ 1.0 per common share in favor of FPH’s common stockholders of record as ofMay 7, 2015, payable on or before June 02, 2015. The BOD also approved the AFS for the calendar year ended December 31, 2014. On May 25, 2015, at the meeting of the stockholders, the following resolutions were approved by the stockholders:

1. Approval of the Minutes of the Annual Stockholders’ Meeting held last May 26, 2014; 2. Approval/Ratification of the December 31, 2014 Reports and the Audited Financial Statements for

the year ended December 31, 2014; 3. Ratification of the Acts of the Board, of the Executive Committee and of the Management; and the 4. Appointment of SGV & Co., as External Auditors.

On October 7, 2015, FPH sold, through the Exchange, 35,688,070 of its Series F Preferred Shares inFirst Gen for P110.00 per share resulting in total net proceeds of P3.9 billion. After the said sale, FPH will still have 16,745,930 Series F Preferred Shares. On February 4, 2016, the Board approved the infusion of up to 1 Billion Pesos, or its dollar equivalent, in the form of loan, equity or advances, in First Philippine Electric Corporation (“First Philec”) and First Philec, Inc. (“FPI”). First Philec is the wholly­owned manufacturing subsidiary of FPH. FPI, which is engaged in manufacturing transformers, is a subsidiary of First Philec. On April 8, 2016, the Board approved the Audited Financial Statements for the calendar year ended December 31, 2015. On May 3, 2016, the BOD approved the declaration of cash dividends of ₱ 13.75 per preferred share in favor of FPH’s preferred stockholders of record as of May 18, 2016, payable on or before June 02, 2016 and ₱ 1.0 per common share in favor of FPH’s common stockholders of record as ofMay 18, 2016, payable on or before June 02, 2016. FPH’s most recent dividend declarations are presented below:

Declaration Date Record Date Payment date Amount

Common Shares May 3, 2016 May 18, 2016 June 2, 2016 ₱ 1.00 per share

Preferred Shares May 3, 2016 May 18, 2016 June 2, 2016 ₱ 13.75 per share

Common Shares November 5, 2015 November 20, 2015 December 2, 2015 ₱ 1.00 per share

Preferred Shares November 5, 2015 November 20, 2015 December 2, 2015 ₱ 13.75 per share

Common Shares April 8, 2015 May 7, 2015 June 2, 2015 ₱ 1.00 per share

Preferred Shares April 8, 2015 May 7, 2015 June 2, 2015 ₱ 13.75 per share

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Certain subsidiaries and associates have contingent liabilities with respect to claims, lawsuits and tax assessments. The respective management of the subsidiaries and associates, after consultations with outside counsels, believes that the final resolution of these issues will not materially affect their respective financial position and results of operations. There is no seasonality or cyclicality of interim operations during the period. There are no changes in contingent liabilities or contingent assets since the last annual balance sheet date.

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Item 2. Management’s Discussion and Analysis or Plan of Operation

The following management’s discussion and analysis of the FPH Group’s (the Group) financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related notes as at March 31, 2016 (unaudited) and December 31, 2015 (audited) and for the three months ended March 31, 2016 and 2015 (unaudited). This discussion includes forward­looking statements, which may include statements regarding future results of operations, financial condition or business prospects, which are subject to significant risks, uncertainties and other factors and are based on the Group’s current expectations, some of which are beyond the Group’s control and are difficult to predict. These statements involve risks and uncertainties and our actual results may differ materially from those anticipated in these forward­looking statements. FINANCIAL HIGHLIGHTS………………………………………………………………… …iiii The financial highlights and analysis of account movements for the comparative periods are in Philippine pesos (unless specifically indicated), which is the Group’s functional currency. The financial statements of the consolidated subsidiaries and associates with functional currency other than the Philippine peso such as the First Gen group are translated to Philippine peso as follows:

Assets and liabilities using the spot rate of exchange prevailing at financial reporting date; Components of equity using historical exchange rates; and Income and expenses using the monthly weighted average exchange rate.

The table below summarizes the relevant exchange rates used throughout the comparative periods:

Whenever necessary, the impact of exchange rate movements are separately discussed in order to properly explain the movement in account balances in conjunction with business results and transactions. Consolidated Statements of Income For the three months ended March 31, 2016 vs. March 31, 2015 Revenues

The Group’s consolidated revenues for the three months ended March 31, 2016 decreased by₱2.5 billion or 10% (from ₱25.3 billion to ₱22.7 billion) largely on account of the following: Sale of electricity was down by₱2.3 billion or 10% despite the improvement in the dispatch of the

two gas plants, First Gas Power Corporation (FGPC or Sta. Rita) and FGP Corp. (FGP or San Lorenzo), from a combined average net capacity factor of 78.0% in 2015 to 83.9% in 2016 together with the increase in revenues from Energy Development Corp.’s (EDC) Burgos and Unified Leyte plants. This was due to to the lower pass­through fuel prices of the gas plants (average of $7.0/MMBtu in 2016 compared to $11.0/MMBtu in 2015) as well as First Gen Hydro Power Corp.’s (FG Hydro) decline in revenue caused by lower dispatch andWholesale Electricity Spot Market (WESM) prices during the first quarter.

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Revenues from contracts and services declined by₱147 million or 12% caused by the lower value of project completion booked by First Balfour for the first quarter of 2016. This reflects the tapering of earnings from the last year’s major construction project (Burgos­Vestas) that was substantially completed in early 2015.

Revenues from sale of merchandise declined by₱133 million or 26%mainly due to lower volume

of electrical transformers sold by First Philec’s EU Sector. Net Income

Consolidated net income increased by ₱973 million or 27% (from ₱3.6 billion to ₱4.6 billion) primarily due to: (a) higher margins on the sale of electricity and (b) forex gains (up₱528 million) arising from higher peso appreciation for the period. Net Income Attributable to Equity Holders of the Parent

Net income attributable to equity holders of the Parent increased by₱436 million or 26% (from₱1.7 billion to ₱2.1 billion) reflecting the upward movement in consolidated net income as well as the decrease in finance costs incurred by the Parent. Detailed discussions of the changes in the Consolidated Statements of Income are presented in the succeeding sections of this report. Consolidated Statements of Financial Position March 31, 2016 vs. December 31, 2015 Assets

Total assets of the Group increased by₱5.1 billion or 1% (from₱340.9 billion to₱346.0 billion) as a result of the following: Cash and cash equivalents grew by₱3.0 billion or 7% (from₱39.7 billion to₱42.6 billion) mainly

due to increase in cash balance of First Gen group, coupled with the reclassification from short­term investments to cash and cash equivalents to reflect placements with less than 3 months maturity. Consequently, short term investments account was reduced by ₱1.8 billion or 27%.

Other noncurrent assets is up by₱1.4 billion or 8% (from ₱17.8 billion to ₱19.2 billion) mainly

due to EDC’s long­term receivables, capitalization of FGPC and FGP’s operations and maintenance (O&M) charges during the period and Rockwell’s higher balance of noncurrent advances to contractors and land held for future development.

Trade and other receivables were up by₱1.5 billion or 6% (from ₱26.8 billion to ₱28.3 billion)

mainly because of higher period­end outstanding billings of First Philec Inc. and First Balfour for transformer sales and construction contracts, respectively.

Other current assets increased by₱1.2 billion or 10% (from ₱12.1 billion to₱13.3 billion) due to

(a) EDC’s purchase of various materials and supplies for the maintenance and rehabilitation activities of power plants as well as additional withholding tax certificates, (b) increase in First

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Gen’s FVPL investments and input VAT from higher purchases related to the construction of the San Gabriel and Avion power plants, and (c) Rockwell’s higher advances to contractors.

The above increases were partially offset by the₱456 million decrease (from₱133.0 billion to₱132.5 billion) in property plant and equipment due to the depreciation booked for the first three months of 2016. In addition, inventories went down by₱342 million (from₱16.7 billion to₱16.4 billion) due to decrease in Rockwell’s condominium inventory. Liabilities and Equity

Total liabilities of the Group increased by ₱812 million (from ₱213.4 billion to ₱214.2 billion) primarily due to the following movements:

Trade payables and other current liabilities increased by₱2.2 billion or 7% (from₱28.9 billion to ₱31.1 billion) on account of: (a) higher period­end dividends payables of EDC for common and preferred stockholders, (b) First Gen’s higher interest and financing cost accruals mainly as a result of its new $200 million notes facility, and the increase in First Gen's other accrued expenses brought about by the performance bond drawn by Prime Meridian Powergen Corporation (PMPC), and (c) the increase in Rockwell’s short­term payables caused by unpaid purchases for various condominium projects.

Income tax payable is up by ₱881 million (from ₱516 million to ₱1.4 billion) mainly due to the

higher accrual of income tax expense for the first quarter 2016 of First Gen group. Derivative liabilities increased by₱377 million or 30% (from ₱1.2 billion to₱1.6 billion) mainly

due to the increase in the current portion of the derivative liabilities for EDC BurgosWind Power Corp. (EBWPC) as its interest rate swap agreements resulted in losses.

Other noncurrent liabilities increased by₱326 million or 20% (from₱1.6 billion to₱1.9 billion) as

a result of Rockwell’s higher customer deposit on the pre­selling of the Proscenium project and additional contractor retention payables for The Grove CD, 8 Rockwell and Proscenium projects.

The above increases were partially offset by the combined₱3.3 billion or 2% decrease (from₱169.3 billion to ₱166.0 billion) in the current and noncurrent portion of long­term debts mainly due to the Group’s restatement of foreign currency denominated loans, principal repayments of various long­term loans, and debt issue cost amortization (see discussion on long­term debts in the detailed analysis of the Statement of Financial Position below). Total equity increased by ₱4.3 billion or 3% (from₱127.4 billion to₱131.7 billion) mainly due to the net income for the current period, and the increase in unrealized fair value gains on the Group’s Meralco shares. These were further increased by the cumulative translation gains arising from the foreign exchange movements during the period.

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DETAILED ANALYSIS OF MATERIAL CHANGES Consolidated Statements of Income (Results of Operations) Horizontal and Vertical Analyses of Material Changes for the quarter ended March 31, 2016 vs. 2015

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Revenues

The Group’s consolidated revenues for the first quarter ended March 31, 2016 totaled₱22.7 billion, lower by ₱2.5 billion or 10% compared to the previous period. The significant movements in the Group’s revenues consist of: Sale of electricity – decreased by ₱2.3 billion or 10% (from ₱22.2 billion to ₱19.9 billion) and accounted for 88% of total revenues for both periods. The decline is attributed to the lower fuel charges of the two gas plants FGPC and FGP, which had a combined decrease of₱2.9 billion due to lower average gas prices for the first quarter ($7.0/MMBtu in 1Q 2016 compared to $11.0/MMBtu in 1Q 2015). Also, FG Hydro’s revenues dropped by₱31 million due to lower electricity generation for the period and lower WESM spot prices (₱2.24/kwh in 2016 vs₱4.03/kwh in 2015). These were partially offset by the increase in EDC’s revenues (without FG Hydro) by ₱625 million driven by higher revenue contributions of the Burgos Wind and Unified Leyte plants. Sale of real estate –went up slightly by ₱45 million or 3% (from ₱1.30 billion to ₱1.35 billion) and accounted for 5% of total revenues for both periods. The increase was largely attributable to the higher completion of Rockwell’s Proscenium, The Grove and 32 Sanson projects for the first quarter. However, this was significantly offset by the absence of industrial land sales from First Philippine Industrial Park (FPIP) this year vs. last year’s sales of 24 hectares or ₱101 million. Contracts and services – is lower by ₱147 million or 12% (from ₱1.2 billion to ₱1.0 billion) and accounted for 5% of total revenues for both periods. The decrease resulted mainly from lower value of completion on the construction contracts of First Balfour during the first quarter of 2016, coupled by the absence of substantial revenues booked on the completion of the Burgos­Vestas project during the early part of 2015. Sale of merchandise – decreased by ₱133 million or 26% (from ₱517 million to ₱384 million) and accounted for 2% of total revenues for both periods. Lower volume of distribution and padmounted transformers sold by the EU sector of First Philec during the current period drove the decline in revenues. Costs and expenses Consolidated cost and expenses decreased by₱2.8 billion or 15% (from₱18.8 billion to₱16.0 billion) and accounted for 70% and 74% of total revenues for 2016 and 2015, respectively. Details of cost and expenses line items as well as significant changes for the comparative periods are discussed as follows: Cost of sale of electricity –declined by ₱2.5 billion or 18% (from ₱13.6 billion to₱11.1 billion) and accounted for 49% and 54% of revenues for 2016 and 2015, respectively. The movement was brought about by the following cost components: Decrease in the fuel expenses incurred by the gas plants of₱3.2 billion or 33% from₱9.8 billion

in 2015 to ₱6.6 billion in 2016, mainly due to a decrease in average gas prices ($7.4/MMBtu in 1Q 2016 as compared to $11.0/MMBtu in 1Q 2015). This was partially offset by the higher dispatch of Santa Rita and San Lorenzo in 2015 (a combined average net capacity factor of 83.9% in 1Q 2016 versus 78.0% in 1Q 2015).

Lower operations and maintenance (O&M) expenses for the quarter ended March 31, 2016

primarily due to decrease in O&M expenses of EDC as a result of its lower purchased services

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and utilities for its Burgos, BacMan and Leyte operations, and the absence of last year’s significant plant repairs and maintenance costs primarily for the restoration of field facilities and typhoon­proofing expenses incurred for EDC’s Leyte plants. These were partially offset by Santa Rita’s and San Lorenzo’s O&M expense which became higher primarily due to the appreciation of the Euro vis­à­vis the US Dollar supplemented by a higher chargeable net electrical output (NEO) as result of higher dispatch for the period. The gas plants’ O&M expenses are denominated in Philippine Peso, U.S. Dollars, and Euro.

Increase in depreciation and amortization due to higher depreciation of FG Hydro, BacMan,

Nasulo and Burgos Wind plants. Cost of real estate sold –decreased slightly by ₱65 million or 6% (from ₱1.1 billion to ₱1.0 billion) and accounted for 4% of total revenues for both periods. The decrease was primarily due to the absence of land sales of FPIP for the first quarter of 2016. However, this was partly offset by higher direct costs booked by Rockwell for the Proscenium and 32 Sanson projects. Cost of contracts and services – decreased by ₱265 million or 31% (from ₱863 million to ₱598 million) and accounted for 3% of total revenues for both periods. The decline reflects First Balfour’s lower project completion for the current period. Cost of merchandise sold – decreased by₱41 million or 13% (from₱315 million to₱274 million) and accounted for 1% of revenues for both periods. Cost of merchandise sold mostly comprise transformer manufacturing costs that declined due to lower sales volume and unit direct cost for the current period. General and administrative expenses – increased by ₱60 million or 2% (from ₱2.98 billion to ₱3.04 billion) and accounted for 13% and 12% of total revenues for 2016 and 2015, respectively. The increase was driven largely by higher operating expenses (Opex) of FPIP, First Philec EU and First Balfour, partially offset by lower Opex of the First Gen group. Finance costs Finance cost increased by₱79 million or 3% (from₱2.4 billion to₱2.5 billion) and accounted for 11% and 9% of total revenues for 2016 and 2015, respectively. Higher finance costs resulted from the following major loans obtained during the intervening period:

These additional loans were partially offset by scheduled principal payments on the existing loans of the Group. Foreign exchange gain

Foreign exchange gains increased₱528 million (from ₱12 million to₱540 million) and accounted for 2% and 0% of total revenues for 2016 and 2015, respectively. The increase was due to the effect of appreciation of the Philippine peso against the US Dollar during the current period (refer to foreign exchange table above).

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Dividend income

Dividend income increased ₱66 million or 18% (from ₱376 million to ₱442 million) and accounted for 2% and 1% of total revenues for 2016 and 2015, respectively. This is attributed to higher dividends received from Meralco for the first quarter (₱9.92 Per share in 2016 vs. ₱8.49 per share in 2015). Other income ­ net

The account reversed from last year’s other charges of ₱1 million to this year’s other income of₱114 million mainly due to First Gen’s derivative gains and management fees. Income before income tax

As a result of the foregoing, income before income tax for the period increased by₱923 million or 19% (from ₱4.9 billion to ₱5.8 billion) compared to last year.

Provision for income tax

Provision for income tax decreased ₱54 million or 5% (from ₱1.2 billion to ₱1.1 billion) and accounted for 5% of revenues for both periods. The movement was largely attributable to the deferred income tax benefit recognized by FGPC for the current period due to appreciation of the Philippine peso. This was compounded by the lower income tax of First Philec EU, Rockwell and First Balfour.

Net loss from discontinued operations

Net loss from discontinued operations represent losses incurred by First Philec’s investments in photovoltaic component manufacturing subsidiaries, First Philec Nexolon Corporation (FPNC) and First Philec Solar Corporation (FPSC), that were classified as held for sale beginning December 2014 after the favorable arbitration decisions which makes the transfer of ownership of the shares in these companies highly probable. The slight increase was attributable to higher forex losses from restatement of its dollar­denominated receivables and payables. Net income Net income is up by ₱973 million or 27% (from₱3.6 billion to₱4.6 billion) mainly due to the decline in direct costs and the forex gains recognized for the period. Net income attributable to equity holders of the Parent Net income attributable to equity holders of the Parent increased by₱436 million or 26% (from₱1.7 billion to ₱2.1 billion) reflecting the upward movement in consolidated net income as well as the decrease in finance costs incurred by the Parent. Net income attributable to non­controlling interests Net income attributable to non­controlling interest grew by₱537 million or 27% (from₱1.9 billion to ₱2.5 billion) due to the higher net income of First Gen group for the period. The significant portion of this account pertain to the share of non­controlling stockholders of EDC and First Gen to the consolidated net income.

12

Earnings per share (EPS) Basic EPS for the current period was₱3.741 while diluted EPS is ₱3.740. Last year’s basic EPS and diluted EPS were ₱2.956 and ₱2.954, respectively. The increase was largely due to the growth in net income available to parent common shareholders this period compared to the previous period. Consolidated Statements of Comprehensive Income For the period ended March 31, 2016 vs. March 31, 2015

Total comprehensive income for the period Total comprehensive income decreased by₱364 million or 6% (from₱5.9 billion to₱5.6 billion). The major movements in the comprehensive income of the Group were as follows:

(1) Net income decreased by ₱973 million or 27% (from ₱3.6 billion to ₱4.6 billion) due to factors discussed in the preceding section.

(2) Exchange gains (losses) on foreign currency translation account declined by ₱1.5 billion

(from ₱2.0 billion to ₱492 million) mainly due to the foreign exchange movements from the translation of First Gen’s U.S. dollar­denominated financial statements into Philippine peso for consolidation purposes.

(3) Net gains (losses) on cash flow hedge deferred in equity registered a reversal of₱398 million

(from ₱169 million loss to ₱229 million gain) due to the changes in MTM valuation of First Gen’s FGPC and FGP’s derivative instruments, particularly its interest rate swap agreements for its covered and uncovered facilities.

13

(4) Unrealized fair value gains on investment in equity securities, which largely pertains to the movements in fair value of Meralco shares held by the Group, was lower by₱339 million or 69% due to lower share price appreciation during the period (from ₱320.0 per share at end­2015 to ₱323.0 per share at March 31, 2016 against ₱256.0 per share at end­2014 to ₱267.0 per share at March 31, 2015). The group currently owns a total of 44.5 million shares in Meralco.

Total comprehensive income for the period attributable to equity holders of the Parent Total comprehensive income attributable to equity holders of the Parent decreased by₱205 million or 6% (from ₱3.2 billion to ₱3.0 billion) despite the increase in Net Income largely due to the lower unrealized gains on investment in equity securities and currency translation gains for the period. Total comprehensive income for the period attributable to non­controlling interests Total comprehensive income attributable to the non­controlling interests decreased by₱159 million or 6% (from ₱2.7 billion to ₱2.6 billion) primarily due to the decrease in currency translation gains from translation of First Gen’s dollar­denominated financial statements.

14

Consolidated Statements of Financial Position Horizontal and Vertical Analyses of Material Changes as of March 31, 2016 and December 31, 2015

15

Assets As of March 31, 2016, the Group’s consolidated assets totaled₱346.0 billion, higher by₱5.1 billion or 1% compared to the December 31, 2015 consolidated balance of₱340.9 billion. Material changes in asset accounts are discussed as follows: Cash and cash equivalents – increased by ₱3.0 billion or 7% (from₱39.6 billion to₱42.6 billion) and accounted for 12% of total assets for both periods. The increase was mainly attributable to First Gen’s higher cash balance from improved operations and the $3.3 million additional drawdown from the First NatGas Power Corp. (FNPC) export credit facility. First Balfour also had higher cash due to the availment of a new loan amounting to ₱425 million. These increases were partially offset by First Gen’s payment of dividends to preferred shareholders and additions to property, plant and equipment, supplemented by the Group’s payment of various loans, interest charges and operating expenses. Short­term investments – decreased by ₱1.8 billion or 27% (from ₱6.6 billion to ₱4.8 billion) and accounted for 1% and 2% of total assets for 2016 and 2015, respectively. The drop pertains to the Parent’s lower quarter­end balance of cash placements with original maturities of more than three months but less than one year. Trade and other receivables – up by ₱1.5 billion or 6% (from ₱26.8 billion to ₱28.3 billion) and accounted for 8% of total assets both periods. The upward movement was largely due to higher outstanding billings of First Philec Inc. and First Balfour for transformer sales and construction contracts, respectively. This was supplemented by higher EDC receivables from National Power Corp. (NPC). These increases were tempered by the lower trade receivables of FGPC and FGP due to lower natural gas prices. Inventories – declined by ₱342 million or 2% (from ₱16.7 billion to ₱16.4 billion) and accounted for 5% of total assets for both periods. The decrease was mainly caused by Rockwell’s lower condominium units for sale. This was partially offset by the increase in parts and supplies inventories of EDC due to the purchase of various materials and supplies, as well as First Philec EU’s higher inventory levels as of quarter­end. Other current assets – increased by ₱1.2 billion or 10% (from ₱12.1 billion to ₱13.3 billion) and accounted for 4% of total assets for both periods. The growth in the account is attributed to: (a) EDC’s purchase of various materials and supplies for the maintenance and rehabilitation activities of power plants as well as additional withholding tax certificates, (b) increase in First Gen’s FVPL investments and input VAT from higher purchases related to the construction of the San Gabriel and Avion power plants, and (c) Rockwell’s high current advances to contractors. Financial assets– increased by₱91 million or 1% (from₱14.6 billion to₱14.7 billion) and accounted for 4% of total assets for both periods. The increase is mainly attributable to the mark­to­market valuation of the Meralco shares held by the Group (₱323/per share as of March 31, 2016 vs. ₱320/share as of December 31, 2015). Property, plant and equipment – decreased by ₱456 million (from ₱133.0 billion to ₱132.5 billion) and accounted for 38% and 39% of total assets for 2016 and 2015, respectively. The decrease was mainly due to the additional depreciation of PPE for the quarter and the lower closing rate used to translate First Gen’s dollar balance (refer to forex table above). This was tempered by additions recorded from the construction of the Avion and San Gabriel power plants, and EDC’s drilling activities in Palinpinon and Unified Leyte.

16

Investment properties – increased by ₱483 million or 4% (from ₱13.7 billion to ₱14.1 billion) and accounted for 4% of total assets for both periods. The increase is mainly attributable to Rockwell’s higher balance due to additional acquisitions and FPPC group’s building construction and various land acquisitions. Other noncurrent assets – increased by ₱1.4 billion or 8% (from ₱17.8 billion to ₱19.2 billion) and accounted for 6% and 5% of total assets for 2016 and 2015, respectively. The growth was mainly due to EDC’s higher long­term receivables, capitalization of FGPC and FGP’s operations and maintenance (O&M) charges during the period and Rockwell’s higher balance of noncurrent advances to contractors and land held for future development. Liabilities and equity As at March 31, 2016, the Group’s consolidated liabilities and equity totaled₱346.0 billion, higher by ₱5.1 billion or 1% compared to the December 31, 2015 consolidated balance of ₱340.9 billion. Material movements in liability and equity accounts are discussed as follows: Trade payables and other current liabilities – increased by ₱2.2 billion or 7% (from ₱28.9 billion to ₱31.1 billion) and accounted for 9% and 8% of total liabilities and equity for 2016 and 2015, respectively. The increase was driven by higher common and preferred dividends payables of EDC at period end, supplemented by the Group’s higher interest and financing costs accruals mainly as a result of its new $200 million notes facility. This increase was partially offset by a decrease in payables to Shell Philippines Exploration B.V. (SPEX) due to lower average gas prices during together with EDC’s lower trade payables. Loans payable – increased by ₱235 million or 20% (from ₱1.2 billion to ₱1.4 billion) and accounted for 0.4% and 0.3% of total liabilities and equity for 2016 and 2015, respectively.. This was mostly due to First Balfour’s additional₱425 million short­term loans availed, offset by First Philec’s payment of its ₱235 million loan balance during the period. Income tax payable – increased by ₱881 million or 171% (from ₱516 million to ₱1.4 billion) following the accrual of income tax expense of the Group for the first quarter of 2016. Liabilities related to assets from discontinued operations held for sale ­increased by₱190 million or 9% (from ₱2.1 billion to ₱2.3 billion) and accounted for 1% of total liabilities and equity for both periods. The increase is attributed to higher accrued expenses and other short term payables. This account represents the liabilities of First Philec subsidiaries, FPNC and FPSC, that were classified as held for sale in the balance sheets following the issuance of the awards for the FPNC and FPSC arbitrations both in favor of First Philec. Long­term debt, including current portion – decreased by ₱3.3 billion or 2% (from ₱166.0 billion to ₱169.3 billion) and accounted for 48% and 50% of total liabilities and equity for 2016 and 2015, respectively. The decline was brought about by the various payments of the Group for its existing debts, restatement of foreign currency denominated loans and debt issue cost amortization. This was tempered by FNPC’s additional drawdown on its Export Credit Facility amounting to $3.3 million for the first quarter of 2016. The current portion of long­term debts increased due to the reclassification of the current amount for the quarter.

17

Derivative liabilities–net of current portion – increased by ₱377 million or 30% (from₱1.2 billion to ₱1.6 billion) due to an increase in the current portion of the derivative liabilities for EBWPC as its interest rate swap agreements resulted in losses. Deferred tax liabilities ­ net – decreased by₱145 million or 4% (from₱3.2 billion to₱3.1 billion) and accounted for 1% of total liabilities and equity for both periods. The decline was due to the lower deferred income tax liabilities of FGPC as a result of the appreciation of the Philippine Peso versus the US Dollar. Retirement and other long­term employee benefits liability– increased by ₱104 million or 3% (from ₱3.5 billion to ₱3.6 billion) and accounted for 1% of total liabilities and equity for both periods. The increase was due to the expense accruals for retirement and other long­term employee benefits incurred during the first quarter of 2016. Other noncurrent liabilities – increased by₱326 million or 20% (from₱1.6 billion to₱1.9 billion) and accounted for 1% and 0.5% of total liabilities and equity for 2016 and 2015, respectively. The increase was mainly due to higher period­end balances of Rockwell’s noncurrent customer deposits and higher retention payable for its 8 Rockwell, The Grove, and Proscenium projects. Total equity attributable to equity holders of the Parent – increased by ₱3.0 billion or 4% (from ₱69.8 billion to ₱72.8 billion) and accounted for 21% and 20% of total liabilities and equity for 2016 and 2015, respectively. The following major items brought about the net increase in the account:

(1) Unrealized fair value gains on investment in equity securities increased by₱149 million or 2% (from ₱6.2 billion to ₱6.3 billion), largely due to the revaluation of the Meralco shares held by the Group (share price of ₱323/share as of March 31, 2016 vs. ₱320/share as of December 31, 2015);

(2) Cumulative translation adjustments decreased by ₱684 billion or 8% (from ₱8.4 billion to

₱7.7 billion) due to lower translation losses arising from favorable foreign exchange movements during the first quarter of 2016;

(3) Unappropriated retained earnings increased by₱2.1 billion or 4% (from₱50.0 billion to₱52.1

billion) reflecting the net income for the period. Non­controlling interests – increased by ₱1.3 billion or 2% (from ₱57.6 billion to ₱58.2 billion) and accounted for 17% of total liabilities and equity for both periods. Non­controlling interests represent the portion of net assets not held by the Group, particularly in First Gen and EDC, Rockwell Land, FPIP, and FPIC. The increase was mainly due to non­controlling interests’ share in the Group’s net earnings and other comprehensive income for the period.

* * * * *

18

KEY PERFORMANCE INDICATORS

The following are the key performance indicators of the Group:

Performance Indicator March 31

2016 2015

Return on Average Shareholder's Equity* 2.55% 2.23%

Interest Coverage Ratio 3.34 3.04

Diluted Earnings per Share 3.740 2.954 Return on average equity increased from 2.23% in 2015 to 2.55% this year due to the increase in net income attributable to Parent by ₱436 million or 26.25% (from ₱1.66 billion to ₱2.10 billion). Interest coverage ratio increased from 3.04:1 in 2015 to 3.34:1 this year due to the₱1.00 billion or 13.81% jump in consolidated earnings before interest expense and taxes (from₱7.26 billion to₱8.26 billion) slightly offset by the increase in finance cost by₱79 million or 3.30% (from ₱2.39 billion to ₱2.47 billion). Earnings per common share (diluted) increased from₱2.954 to ₱3.740 or 26.61% as the increase in consolidated net income attributable to equity holders of the Parent resulted into higher net earnings available to common shareholders for the current year.

Performance Indicator March 31 December 31

2016 2015

Asset to Equity Ratio 2.63 2.67

Debt to Equity Ratio 1.26 1.33

Current Ratio 1.94 2.04

Quick Ratio 1.38 1.45

Book Value per Common Share* ₱151.54 ₱147.43

The ratio of total assets to total equity decreased from 2.67:1 in 2015 to 2.63:1 this year despite the increase in total assets by ₱5.10 billion or 1.00%mainly due to the₱4.29 billion or 3.36% increase in stockholder’s equity (from ₱127.46 billion at December 2015 to₱131.74 billion as of March 2016). The ₱5.10 billion growth in total assets (from₱340.89 billion to₱346.00 billion) was primarily due to the₱2.97 billion or 7.49% increase in cash and cash equivalents resulting from cash generated by First Gen’s operating subsidiaries. This was supplemented by the₱1.62 billion or 9.10% increase in Other Noncurrent Assets (from ₱17.77 billion to ₱19.38 billion) which primarily represents the capitalization of FGPC’s and FGP’s O&M charges during the year and EDC’s long­term receivables. The debt to equity ratio decreased from 1.33:1 in 2015 to 1.26:1 in 2016 due to the combined effects of the ₱3.32 billion or 1.96% decrease in total debt (from ₱169.34 billion in December 2015 to

19

₱166.02 billion in March 2016) and increase in stockholder’s equity by₱4.29 billion or 3.36% . The ₱3.32 billion decline in total debt was mainly due to lower outstanding loan balances of First Gen and EDC resulting from exchange rate restatements, principal repayments and amortization of transaction costs. Current ratio showed a downward movement from 2.04:1 in 2015 to 1.94:1 this year primarily due to the ₱4.29 billion increase in the balance of current liabilities (from₱50.41 billion in December 2015 to ₱54.71 billion in March 2016) . Increase in current liabilities was driven by (a) EDC’s higher dividends payable (b) First Gen’s higher unpaid interest and financing costs resulting from its new $200 million facility and higher accrued expenses from the performance bond drawn by PMPC and (c) higher project related and other payables of Rockwell. Quick ratio declined from 1.45:1 in 2015 to 1.38:1 this year mainly as a result of the ₱4.29 billion increase in current liabilities offset by the combined increase of₱4.48 billion from the cash and cash equivalents as well as trade and other receivables accounts. This was partly negated by the ₱1.77 billion or 26.84% decline in the Group’s short­term investments mainly pertaining to the Parent’s lower period­end balance of cash placements. Book value per common share grew from ₱147.43 in 2015 to ₱151.54 this year. The increase was brought about by the ₱2.31 billion or 2.83% increase (from ₱81.65 billion* in December 2015 to ₱83.96 billion* in March 2016) in equity attributable to equity holders of the parent for the current period, which mostly reflects the net income generated during the period.

The following are key performance indicators of First Gen group (consolidated):

Performance Indicator March 31 March 31 December 31

2016 2015 2015

Current Ratio 1.81 1.98 1.86

Asset to Equity Ratio 2.70 2.75 2.75

Debt to Equity Ratio 1.70 1.75 1.75

Quick Ratio 1.45 1.75 1.50

Return on Assets (%) 6.66% 5.55% 4.54%

Return on Equity(%) 18.14 15.30 12.52

Interest­bearing Debt to Equity Ratio (times) 1.41 1.47 1.48

20

The following are EDC group’s (consolidated) key performance indicators:

Performance Indicator March 31 March 31 December 31

2016 2015 2015

Current Ratio 1.55 1.60 1.65

Debt to equity Ratio 1.54 1.76 1.58

Net debt to equity Ratio 1.17 1.22 1.20

Return on Assets (%) 6.27 9.85 6.03

Return on Equity (%) 18.77 29.75 17.30

Solvency Ratio 0.07 0.05 0.17

Interest Rate Coverage Ratio 3.80 3.70 2.90

Asset­to­Equity Ratio 2.89 3.10 2.88 The following are the key performance indicators of the Rockwell:

Performance Indicator March 31

2016 2015

Return on assets 3.73% 3.93%

Return on equity 9.52% 10.03%

Performance Indicator March 31 December 31

2016 2015

Current ratio 2.63 2.92

Debt to equity ratio 1.00 1.01

Net debt to equity ratio 0.88 0.85

Asset to equity ratio 2.57 2.54

Interest coverage ratio 6.39 3.96

21

Key Performance Indicator/ Description

Return on Average Equity Shareholder’s Equity Net income attributable to Parent divided by average shareholder’s equity. This ratio reflects how much the firm has earned on the funds invested by the shareholders Interest Rate Coverage Ratio Earnings before interest and taxes for the period divided by interest expense of the same period. This ratio determines how easily a company can pay interest on outstanding debt. Earnings Per Share Net income attributable to Parent divided by weighted average shares outstanding. This measures the portion of Group’s profit allocated to each outstanding share of common stock Asset to Equity Ratio Total assets divided by total stockholders’ equity. This ratio shows the Group’s leverage, the amount of debt used to finance the firm. Debt to Equity Ratio Total interest­bearing debts divided by stockholders’ equity. This ratio expresses the relationship between capital contributed by the creditors and the owners. Current Ratio Total current assets divided by total current liabilities. This ratio is a rough indication of a company’s ability to pay its short­term obligations. Quick Ratio Current assets (excluding inventories and others) divided by current liabilities. This is an indicator of the Group’s ability to pay short­term obligations with its most liquid assets (cash and cash equivalents, short­term investments and trade and other receivables) Book Value Per Share Equity attributable to Parent divided by number of shares outstanding at period end. Measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid Net Debt to Equity Ratio Total interest­bearing debts less cash & cash equivalents divided by stockholders’ equity. This ratio measures the company’s financial leverage and stability. A negative net debt­to­equity ratio means that the total of cash and cash equivalents exceeds interest­bearing liabilities. Return on Assets Net income (annual basis) divided by total assets (average). This ratio indicates how profitable a company is relative to its total assets. This also gives an idea as to how efficient management is at using its assets to generate earnings.

22

Return on Equity Net income (annual basis) divided by total stockholders’ equity (average). This ratio reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet. Interest Rate Coverage Ratio Earnings before interest and taxes of one period divided by interest expense of the same period. This ratio determines how easily a company can pay interest on outstanding debt. Asset­to­Equity Ratio Total assets divided by total stockholders’ equity. This ratio shows a company’s leverage, the amount of debt used to finance the firm. Solvency Ratio Net income excluding depreciation and non­cash provisions divided by total debt obligations. This ratio gauges a company’s ability to meet its long­term obligations. Interest­bearing Debt to Equity Ratio (times) Calculated by dividing total interest­bearing debt over total equity. This ratio measures the percentage of funds provided by the lenders/creditors. * ­ Equity pertains to equity attributable to equity holders of the parent and excludes cumulative translation adjustments, share in other comprehensive income, effect of equity transaction of subsidiaries and excess of acquisition cost over carrying value of minority interest.

* * * * *

23

LONG-TERM DEBT

March 31, 2016 and December 31, 2015

(Amount in Php millions)

Current Long-Term Current Long-Term

First Gen Corporation and Subsidiaries 13,989 123,084 13,443 125,986

Rockwell Land Corporation and Subsidiaries 2,800 11,459 2,203 11,870

FPH Parent 1,541 11,376 1,536 11,526

First Balfour, Inc. and Subsidiaries 221 1,535 544 1,385

First Philippine Electric Corporation and Subsidiaries - 12 - 849

18,551 147,466 17,726 151,616

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES

March 31, 2016 December 31, 2015

24

2016 2015

First Gen Corporation and Subsidiaries 19,141 19,016

Rockwell Land Corporation and Subsidiaries 6,388 5,809

First Balfour, Inc. and Subsidiaries 2,782 1,785

FPH Parent 1,303 1,018

First Philippine Industrial Corporation 531 237

First Philippine Electric Corporation and Subsidiaries 489 553

First Philippine Industrial Park, Inc. and Subsidiaries 303 302

First Philippine Properties Corporation and Subsidiaries 112 167

First Philippine Capital Resources, Inc. 18 23

First Philippine Realty Corporation 9 5

Securities Transfer Services, Inc. 4 4

31,080 28,919

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES

TRADE PAYABLES AND OTHER CURRENT LIABILITIE

March 31, 2016 and December 31, 2015

(Amount in Php millions)

25

March 31, 2016

(Amount in Php millions)

TOTAL Less than 1 monthMore than 1 month to

3 monthsMore than 3 months to 6

months Over 6 months

Trade 24,650 19,001 2,799 257 2,593

-

Others 4,084 3,203 471 43 367

28,734 22,204 3,270 300 2,960

Allowance for doubtful accounts (420) - - (420)

28,314 22,204 3,270 300 2,540

0

FIRST PHILIPPINE HOLDINGS CORPORATION & SUBSIDIARIES

AGING OF TRADE AND OTHER RECEIVABLES

26

FIRST PHILIPPINE HOLDINGS CORPORATION SUPPLEMENTARY SCHEDULE REQUIRED UNDER SRC RULE 68, AS AMENDED (2011)

L. List of Philippine Financial Reporting Standards (PFRSs) [which consists of PFRSs, PhilippineAccounting Standards (PASs) and Philippine Interpretations] effective as at March 31, 2016

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS

Effective as of March 31, 2016

Adopted Not Adopted Not Applicable

Framework for the Preparation and Presentation of Financial Statements

Conceptual Framework Phase A: Objectives and qualitative characteristics

PFRSs Practice Statement Management Commentary

Philippine Financial Reporting Standards PFRS 1 (Revised)

First­time Adoption of Philippine Financial Reporting Standards

PFRS 2 Share­based Payment

PFRS 3 (Revised)

Business Combinations

PFRS 4 Insurance Contracts

PFRS 5 Non­current Assets Held for Sale and Discontinued Operations

PFRS 6 Exploration for and Evaluation of Mineral Resources

PFRS 7 Financial Instruments: Disclosures

PFRS 8 Operating Segments

PFRS 9 Financial Instruments* Not Early Adopted PFRS 10 Consolidated Financial Statements

Amendments to PFRS 10: Investment Entities – Applying the Consolidation

Exception*

PFRS 11 Joint Arrangements

Amendments to PFRS 11: Accounting for Acquisitions of Interests in Joint

Operations*

PFRS 12 Disclosure of Interests in Other Entities

PFRS 13 Fair Value Measurement

PFRS 14 Regulatory Deferral Accounts*

Philippine Accounting Standards

27

PAS 1 (Revised)

Presentation of Financial Statements Amendment to PAS 1: Disclosure

Initiatives*

PAS 2 Inventories PAS 7 Statement of Cash Flows PAS 8 Accounting Policies, Changes in

Accounting Estimates and Errors

PAS 10 Events after the Reporting Date PAS 11 Construction Contracts PAS 12 Income Taxes PAS 16 Property, Plant and Equipment

Amendments to PAS 16: Bearer Plants*

Amendments to PAS 16: Clarification of Acceptable Methods of Depreciation and

Amortization*

PAS 17 Leases PAS 18 Revenue PAS 19

(Amended) Employee Benefits

Amendments to PAS 19: Actuarial Gains and Losses, Group Plans and Disclosures

Amendments to PAS 19: Defined Benefit Plans: Employee Contributions

PAS 20 Accounting for Government Grants and Disclosure of Government Assistance

PAS 21 The Effects of Changes in Foreign Exchange Rates

PAS 23 (Revised)

Borrowing Costs

PAS 24 (Revised)

Related Party Disclosures

PAS 26 Accounting and Reporting by Retirement Benefit Plans

PAS 27 (Revised)

Separate Financial Statements Amendments to PAS 27: Equity Method

in Separate Financial Statements*

PAS 28 (Amended)

Investments in Associates and Joint Ventures

PAS 29 Financial Reporting in Hyperinflationary Economies

PAS 31 Interests in Joint Ventures PAS 32 Financial Instruments: Disclosure and

Presentation

PAS 33 Earnings per Share PAS 34 Interim Financial Reporting

28

PAS 36 Impairment of Assets PAS 37 Provisions, Contingent Liabilities and

Contingent Assets

PAS 38 Intangible Assets Amendments to PAS 38: Clarification of Acceptable Methods of Depreciation and

Amortization*

PAS 39 Financial Instruments: Recognition and Measurement

PAS 40 Investment Property PAS 41 Agriculture

Amendments to PAS 41: Bearer Plants*

Philippine Interpretations IFRIC 1 Changes in Existing Decommissioning,

Restoration and Similar Liabilities

IFRIC 2 Members’ Share in Co­operative Entities and Similar Instruments

IFRIC 4 Determining Whether an Arrangement Contains a Lease

IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

IFRIC 6 Liabilities arising from Participating in a Specific Market ­ Waste Electrical and

Electronic Equipment

IFRIC 7 Applying the Restatement Approach under PAS 29 Financial Reporting in

Hyperinflationary Economies

IFRIC 8 Scope of PFRS 2

IFRIC 9 Reassessment of Embedded Derivatives Amendments to Philippine Interpretation

IFRIC ­ 9 and PAS 39: Embedded Derivatives

IFRIC 10 Interim Financial Reporting and Impairment

IFRIC 11 PFRS 2­ Group and Treasury Share Transactions

IFRIC 12 Service Concession Arrangements

IFRIC 13 Customer Loyalty Programmes

IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and

their Interaction

Amendments to Philippine Interpretations

29

IFRIC­ 14, Prepayments of a Minimum Funding Requirement

IFRIC 15 Agreements for the Construction of Real Estate*

Not Early Adopted

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

IFRIC 17 Distributions of Non­cash Assets to Owners

IFRIC 18 Transfers of Assets from Customers

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

IFRIC 21 Levies Not Early Adopted SIC­7 Introduction of the Euro

SIC­10 Government Assistance ­ No Specific Relation to Operating Activities

SIC­12 Consolidation ­ Special Purpose Entities Amendment to SIC ­ 12: Scope of SIC 12

SIC­13 Jointly Controlled Entities ­ Non­Monetary Contributions by

Venturers

SIC­15 Operating Leases ­ Incentives

SIC­25 Income Taxes ­ Changes in the Tax Status of an Entity or its Shareholders

SIC­27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease

SIC­29 Service Concession Arrangements: Disclosures

SIC­31 Revenue ­ Barter Transactions Involving Advertising Services

SIC­32 Intangible Assets ­ Web Site Costs

* Standards and interpretations which will become effective subsequent to March 31, 2016.

Note: Standards and interpretations tagged as “Not Applicable” are those standards and interpretations which were adopted but the entity has no significant covered transaction as at and for the three months ended March 31, 2016.

30

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES SCHEDULE K – CORPORATE STRUCTURE

MARCH 31, 2016

Companies within the Lopez Group

31

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES SCHEDULE K – CORPORATE STRUCTURE

MARCH 31, 2016

FPH Group

32

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES SCHEDULE K – CORPORATE STRUCTURE

MARCH 31, 2016

First Gen Group

33

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES SCHEDULE K – CORPORATE STRUCTURE

MARCH 31, 2016

EDC:

34

Other Financial Information (i) Any known trends, demands, commitments, events or uncertainties that will have a material impact on the

issuer’s liquidity. There are no known trends, demands, commitments, events or uncertainties that will have a material

impact on liquidity except as otherwise disclosed or discussed herein. (ii) Any event that will trigger direct or contingent financial obligation that is material to the company,

including any default or acceleration of an obligation. The registrant’s current financing arrangements include standard provisions relating to events of default.

Any breach of the loan covenants or material adverse change may result in an event of default. (iii) All material off­balance sheet transactions, arrangements, obligations (including contingent obligations),

and other relationships of the company with unconsolidated entities or other persons created during the reporting period.

The company did not enter into any material off­balance sheet transactions, arrangements, obligations

(including contingent obligations), and other relationships with unconsolidated entities or other persons during the reporting period.

(iv) Any material commitment for capital expenditures, the general purpose of such commitments, and the

expected sources of funds for such expenditures should be described. There are no material commitments for capital expenditures except as otherwise disclosed or discussed

herein. (v) Any known trends, events or uncertainties that have had or that are reasonably expected to have a material

impact on net sales or revenues or income from continuing operations. There are no known trends, events or uncertainties that have had or that are reasonably expected to have a

material impact on net sales or revenues or income from continuing operations except as otherwise disclosed or discussed herein.

(vi) Any significant elements of income or loss that did not arise from the registrant’s continuing operations. During the period, there are no significant elements of income or loss that did not arise from the registrant’s

continuing operations. Losses (not significant) arising from discontinued operations were properly presented and disclosed in the financial statements.

PART II­­OTHER INFORMATION The Company has no other information that needs to be disclosed other than disclosures made under SEC Form 17­C or as discussed herein.

35

PART II – OTHER INFORMATION SIGNATURE

Pursuant to the requirements of the Securities Regulation Code, the issuer has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Issuer…… FIRST PHILIPPINE HOLDINGS CORPORATION

Date: May 12, 2016

36

COVER SHEET

for UNAUDITED INTERIM FINANCIAL STATEMENTS

SEC Registration Number 1 9 0 7 3

Company Name

F I R S T P H I L I P P I N E H O L D I N G S C O R P

O R A T I O N

Principal Office (No./Street/Barangay/City/Town/Province)

6 t h F l o o r , R o c k w e l l B u s i n e s s

C e n t e r T o w e r 3 , O r t i g a s A v e n u e

P a s i g C i t y

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

C F S - U N A U D I T E D

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

InvRel@fphc.com (02) 631-8024

No. of Stockholders

Annual Meeting Month/Day

Fiscal Year Month/Day

12,224 May 23 December 31

CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation

Name of Contact Person Email Address Telephone Number/s Mobile Number

Gemma C. Roque GCRoque@fphc.com 449-6091 09175874022

Contact Person’s Address

6th Floor, Rockwell Business Center Tower 3, Ortigas Avenue, Pasig City, 1604 Philippines Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

37

EXHIBIT “A”

38

First Philippine Holdings Corporation and Subsidiaries

Unaudited Consolidated Financial Statements March 31, 2016 and 2015 (With Comparative Audited Figures as at December 31, 2015)

39

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITION(Amounts in Millions)

(Unaudited) (Audited)March 31 December 31

2016 2015 Amount %

ASSETS

Current AssetsCash and cash equivalents ₱42,630 ₱39,656 ₱2,974 7%Short-term investments 4,812 6,577 (1,765) -27%Trade and other receivables - net 28,314 26,804 1,510 6%Inventories 16,384 16,726 (342) -2%Other current assets 13,311 12,119 1,192 10%

105,451 101,882 3,569 4%Assets of discontinued operations held for sale 713 720 (7) -1% Total Current Assets 106,164 102,602 3,562 3%

Noncurrent AssetsAvailable-for-sale financial assets 14,696 14,605 91 1%Investments accounted for at equity method 3,731 3,691 40 1%Property, plant and equipment - net 132,546 133,002 (456) 0%Investment properties - net 14,144 13,661 483 4%Goodwill and intangible assets 53,157 53,183 (26) 0%Deferred tax assets - net 2,330 2,380 (50) -2%Other noncurrent assets - net 19,221 17,767 1,454 8% Total Noncurrent Assets 239,825 238,289 1,536 1%

TOTAL ASSETS ₱345,989 ₱340,891 ₱5,098 1%

LIABILITIES AND EQUITY

Current LiabilitiesTrade payables and other current liabilities ₱31,080 ₱28,919 2,161 7%Loans payable 1,418 1,183 235 20%Income tax payable 1,397 516 881 171%Current portion of long-term debts 18,551 17,726 825 5%

52,446 48,344 4,102 8%Liabilities related to assets of discontinued operations held for sale 2,259 2,069 190 9% Total Current Liabilities 54,705 50,413 4,292 9%

(Forward)

Increase (Decrease)

40

(Unaudited) (Audited)March 31 December 31

2016 2015 Amount %Noncurrent LiabilitiesLong-term debts - net of current portion ₱147,466 ₱151,616 ₱(4,150) -3%Derivative liabilities - net of current portion 1,624 1,247 377 30%Deferred tax liabilities - net 3,091 3,236 (145) -4%Retirement and other long-term employee benefits liab 3,554 3,450 104 3%Asset retirement and preservation obligations 1,871 1,863 8 0%Other noncurrent liabilities 1,937 1,611 326 20% Total Noncurrent Liabilities 159,543 163,023 (3,480) -2% Total Liabilities 214,248 213,436 812 0%

Equity Attributable to Equity Holders of the ParentCommon stock 6,097 6,093 4 0%Preferred stock 360 360 - 0%Capital in excess of par value 5,506 5,494 12 0%Treasury stock (3,345) (3,345) - 0%Unrealized fair value gains on investment in equity securities 6,319 6,170 149 2%Cumulative translation adjustments (7,718) (8,402) 684 -8%Equity reserve (12,951) (12,951) - 0%Retained earnings - Unappropriated 52,110 49,965 2,145 4% Appropriated 26,432 26,432 - 0%

Equity Attributable to Equity Holders of the Paren 72,810 69,816 2,994 4%Non-controlling Interests 58,931 57,639 1,292 2% Total Equity 131,741 127,455 4,286 3%

TOTAL LIABILITIES AND EQUITY ₱345,989 ₱340,891 ₱5,098 1%

Increase (Decrease)

41

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Amounts in Millions Except Per Share Data)

2016 2015

REVENUESSale of electricity ₱19,949 ₱22,245 ₱(2,296) -10%Sale of real estate 1,346 1,301 45 3%Contracts and services 1,042 1,189 (147) -12%Sale of merchandise 384 517 (133) -26%Equity in net earnings of associates and joint venture 24 28 (4) -14%

22,745 25,280 (2,535) -10%

COSTS AND EXPENSESCosts of sale of electricity 11,076 13,585 (2,509) -18%Real estate sold 1,013 1,078 (65) -6%Contracts and services 598 863 (265) -31%Merchandise sold 274 315 (41) -13%General and administrative expenses 3,037 2,977 60 2%

15,998 18,818 (2,820) -15%

OTHER INCOME (EXPENSES)Finance costs (2,470) (2,391) (79) 3%Finance income 417 409 8 2%Foreign exchange gain (loss) 540 12 528 4400%Dividend income 442 376 66 18%Other income - net 114 (1) 115 11500%

(957) (1,595) 638 40%INCOME BEFORE INCOME TAX 5,790 4,867 923 19%

PROVISION FOR (BENEFIT FROM) INCOME TAX Current 1,220 1,214 6 0%Deferred (97) (37) (60) -162%

1,123 1,177 (54) -5%

NET INCOME FROM CONTINUING OPERATIONS 4,667 3,690 977 26%NET LOSS FROM DISCONTINUED OPERATIONS (76) (72) (4) -6%NET INCOME ₱4,591 ₱3,618 ₱973 27%

Attributable ToEquity holders of the Parent ₱2,097 ₱1,661 ₱436 26%Non-controlling Interests 2,494 1,957 537 27%

₱4,591 ₱3,618 ₱973 27%

(Forward)

Three Months Ended March 31 Increase (Decrease)Amount Percent (%)

(Unaudited)

42

2016 2015

Earnings Per Share for Net Income Attributable to the Equity Holders of the ParentBasic ₱3.741 ₱2.956 ₱0.785 27%Diluted 3.740 2.954 0.786 27%

Earnings Per Share from ContinuingOperationsBasic ₱3.878 ₱3.085 ₱0.793 26%Diluted 3.877 3.083 0.794 26%

Loss Per Share from Discontinued OperationsBasic (₱0.137) (₱0.129) (₱0.008) 6%Diluted (0.137) (0.129) (0.008) 6%

Amount Percent (%) Increase (Decrease)Three Months Ended March 31

(Unaudited)

43

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Amounts in Millions)

(Unaudited) Total Equity

Balance at December 31, 2015 ₱6,093 ₱360 ₱5,494 ₱(3,345) ₱6,170 ₱(8,402) ₱(12,951) ₱49,965 ₱26,432 ₱69,816 ₱57,639 ₱127,455 Net income - - - - - - - 2,097 - 2,097 2,494 4,591 Other comprehensive income (loss) - - - - 149 684 - 48 - 881 95 976 Total comprehensive income - - - - 149 684 - 2,145 - 2,978 2,589 5,567 Issuances of shares 4 - 12 - - - - - - 16 - 16 Dividends of subsidiaries - - - - - - - - - - (1,297) (1,297)Acquisition of non-controlling interests - - - - - - - - - - - Balance at March 31, 2016 ₱6,097 ₱360 ₱5,506 ₱(3,345) ₱6,319 ₱(7,718) ₱(12,951) ₱52,110 ₱26,432 ₱72,810 ₱58,931 ₱131,741

(Audited)

Balance at January 1, 2015 ₱6,090 ₱360 ₱5,483 ₱(3,345) ₱3,299 ₱(6,087) ₱(12,741) ₱45,968 ₱26,432 ₱65,459 ₱51,189 ₱116,648 Net income - - - - - - - 5,406 - 5,406 6,771 12,177 Other comprehensive income (loss) - - - - 2,871 (2,315) - (202) - 354 (583) (229)Total comprehensive income - - - - 2,871 (2,315) - 5,204 - 5,760 6,188 11,948 Issuances of shares 3 - 11 - - - - - - 14 1,791 1,805 Cash dividends - - - - - - - (1,207) - (1,207) (1,650) (2,857)Acquisition of non-controlling interests - - - - - - (210) - - (210) 121 (89)Balance at December 31, 2015 ₱6,093 ₱360 ₱5,494 ₱(3,345) ₱6,170 ₱(8,402) ₱(12,951) ₱49,965 ₱26,432 ₱69,816 ₱57,639 ₱127,455

Unrealized Fair Value Gains on Investment in

Treasury Stock

Preferred Stock

Capital in Excess of Par Value

Attributable to Equity Holders of the Parent Capital

in Excess of Par

Preferred

Stock

Common Stock

Non- controlling Interests

Unrealized Fair Value Gains on

Treasury Stock

Cumulative Transalation Adjustments

Appropriated Retained

Unappropriate

d Retained

Total Equity Reserve

Common Stock

Cumulative Transalation Adjustments

Attributable to Equity Holders of the Parent Total Equity Non- controlling

Interests Equity Reserve

Unappropriated Retained Earnings

Appropriated Retained Earnings

Total

44

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Amounts in Millions)

(Unaudited) Total Equity

Balance at December 31, 2015 ₱6,093 ₱360 ₱5,494 ₱(3,345) ₱6,170 ₱(8,402) ₱(12,951) ₱49,965 ₱26,432 ₱69,816 ₱57,639 ₱127,455 Net income - - - - - - - 2,097 - 2,097 2,494 4,591 Other comprehensive income (loss) - - - - 149 684 - 48 - 881 95 976 Total comprehensive income - - - - 149 684 - 2,145 - 2,978 2,589 5,567 Issuances of shares 4 - 12 - - - - - - 16 - 16 Dividends of subsidiaries - - - - - - - - - - (1,297) (1,297)Acquisition of non-controlling interests - - - - - - - - - - - - Balance at March 31, 2016 ₱6,097 ₱360 ₱5,506 ₱(3,345) ₱6,319 ₱(7,718) ₱(12,951) ₱52,110 ₱26,432 ₱72,810 ₱58,931 ₱131,741

(Unaudited)

Balance at December 31, 2014 ₱6,090 ₱360 ₱5,483 ₱(3,345) ₱3,299 ₱(6,087) ₱(12,741) ₱45,968 ₱26,432 ₱65,459 ₱51,189 ₱116,648 Net income - - - - - - - 1,661 - 1,661 1,957 3,618 Other comprehensive income (loss) - - - - 593 1,002 - (73) - 1,522 791 2,313 Total comprehensive income - - - - 593 1,002 - 1,588 - 3,183 2,748 5,931 Issuances of shares 1 - 6 - - - - - - 7 - 7 Cash dividends - - - - - - - - - - (617) (617)Acquisition of non-controlling interests - - - - - - (291) - - (291) (148) (439)Balance at March 31, 2015 ₱6,091 ₱360 ₱5,489 ₱(3,345) ₱3,892 ₱(5,085) ₱(13,032) ₱47,556 ₱26,432 ₱68,358 ₱53,172 ₱121,530

Unrealized Fair Value Gains on Investment in

Cumulative Transalation Adjustments

Equity Reserve

Attributable to Equity Holders of the Parent Treasury

Stock Common

Stock Capital in Excess of Par Value

Preferred Stock

Total Equity Appropriated Retained Earnings

Non- controlling Interests

Non- controlling Interests

Unappropriate

d Retained

Appropriated Retained

Total Unappropriated Retained Earnings

Preferred Stock

Common Stock

Equity Reserve

Attributable to Equity Holders of the Parent Treasury

Stock Cumulative Transalation Adjustments

Unrealized Fair Value Gains on

Total Capital in Excess

of Par

45

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Amounts in Millions)

2016 2015 Amount Percent (%)

NET INCOME ₱4,591 ₱3,618 ₱973 27%

OTHER COMPREHENSIVE INCOME (LOSS)Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods: Unrealized gains on investment in equity securities 153 492 (339) -69% Net gains (losses) on cash flow hedge deferred in equity - net of tax 229 (169) 398 -236% Exchange gains on foreign currency translation 492 1,990 (1,498) -75%

874 2,313 (1,439) -62%Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Actuarial gain on retirement benefit asset/liability 102 - 102 100%

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ₱5,567 ₱5,931 (364) -6%

Attributable ToEquity holders of the Parent ₱2,978 ₱3,183 ₱(205) -6%Non-controlling Interests 2,589 2,748 (159) -6%

₱5,567 ₱5,931 ₱(364) -6%

(Unaudited)Three Months Ended March 31 Increase/(Decrease)

46

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in Millions)

(Unaudited)

2016 2015

CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax ₱5,790 ₱4,867Adjustments for:

Finance costs 2,470 2,391 Depreciation and amortization 2,564 2,308 Finance income (417) (409) Retirement benefit expense 140 108 Equity in net earnings of associates and a joint venture (24) (28) Unrealized foreign exchange loss (gain) - net (540) (12)

Operating income before working capital changes 9,983 9,225 Decrease (increase) in:

Trade and other receivables (1,510) 598 Inventories 342 (245) Other current assets (1,192) (2,085) Assets held for sale 7 191

Liabilities related to assets held for sale 190 (474) Increase (Decrease) in trade payable and other current liabilities 2,161 2,670 Cash generated from operations 9,981 9,880 Interest received 417 409 Unrealized gains in AFS investments (149) - Income tax paid (339) (914) Net cash from operating activities 9,910 9,375

CASH FLOWS FROM INVESTING ACTIVITIESAdditions to:

Property, plant and equipment and investment properties (3,327) (6,856) Exploration and evaluation assets and intangible assets (12) (65) Intangibles (3) -

Decrease (Increase) in:Short-term investments 1,765 (458) Available for sale financial assets 220 (649) Investment in a joint venture (31) (25) Other noncurrent assets (1,616) (1,263)

Increase in Derivative liabilities 377 233 (Forward)

Three Months Ended March 31

47

(Unaudited)

2016 2015Dividends received from an associate 14 10 Proceeds from sale and incidental income from 13 -

testing property, plant and equipmentContributions to plan assets (20) (20) Net cash used in investing activities (2,620) (9,093)

CASH FLOWS FROM FINANCING ACTIVITIESPayments of borrowings from banks and other financial institutions (2,441) (530) Proceeds from:

Subscriptions to and issuances of shares of capital/preferred sto 16 7 Borrowings from banks and other financial institutions 990 10,912

Payments of:Interest (1,155) (724) Cash dividends to preferred and common shareholders - (896) Acquisition of non-controlling interests - (439) Dividends to non-controlling interests (1,297) (617)

Increase in other noncurrent liabilities 490 228 Net cash provided by (used in) financing activities (3,397) 7,941

EFFECT OF EXCHANGE RATE CHANGESON CASH AND CASH EQUIVALENTS (919) 1,829

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,974 10,052 CASH AND CASH EQUIVALENTS AT BEGINNING

OF PERIOD 39,656 45,872

CASH AND CASH EQUIVALENTS AT END OF PERIOD ₱42,630 ₱55,924

See accompanying Notes to Unaudited Consolidated Financial Statements.

Three Months Ended March 31

48

FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Information

First Philippine Holdings Corporation (FPH or the Parent Company) was incorporated and registered with the Philippine Securities and Exchange Commission (SEC) on June 30, 1961. On June 29, 2007, the Philippine SEC approved the extension of the Parent Company’s corporate life for another 50 years from June 30, 2011. FPH and its subsidiaries (collectively referred to as the Group) is engaged primarily in, but not limited to, power generation, real estate development, manufacturing and construction, financing and other service industries.

FPH is 46.48% and 46.50%­owned by Lopez Holdings Corporation (Lopez Holdings), a publicly­listed Philippine­based entity, as at March 31, 2016 and December 31, 2015, respectively. Majority of Lopez Holdings is owned by Lopez, Inc., a Philippine entity and the ultimate Parent Company.

The registered office address of FPH is 6th Floor, Rockwell Business Center Tower 3, Ortigas Avenue, Pasig City.

2. Summary of Significant Accounting Policies

Basis of Preparation The interim condensed consolidated financial statements for the three months ended March 31, 2016 and 2015 have been prepared in accordance with PFRS Philippine Accounting Standards (PAS) 34, Interim Financial Reporting. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required in the annual consolidated financial statements, and should be read in conjunction with FPH’s annual consolidated financial statements as at and for the year ended December 31, 2015. Basis of Consolidation The unaudited interim condensed consolidated financial statements comprise the financial statements of the FPH and its subsidiaries. Control is achieved when FPH is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, FPH controls an investee if and only if FPH has: Power over an investee (i.e. existing rights that give it the current ability to direct the relevant

activities of the investee) Exposure, or rights, to variable returns from its involvement with the investee; and The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control. To support the presumption and when the Group has less than a majority of the voting rights of an investee, the

49

Group considers all relevant facts and circumstances in assessing whether it has power over the investee, including:

the contractual arrangements with the other vote holders of the investee rights arising from other contractual arrangements the Group’s voting rights and potential voting rights

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statements of comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of FPH and to the non­controlling interests even if this results in the non­controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra­group asset, liabilities, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Any excess or deficit of consideration paid over the carrying amount of the non­controlling interest is recognized as part of “Equity reserve” account in the equity attributable to the equity holders of the Parent.

If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non­controlling interest and other components of equity while any resultant gain or loss is recognized in profit or loss. Any movement retained is recognize at fair value.

Significant Changes in Accounting Policies and Disclosures The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new and amended accounting standards. The Group also applied for the first time standards and amendments below, which are effective for annual periods, beginning on or after January 1, 2015. The nature and the impact of each new standard and amendment are described below: Amendments to PAS 19, Defined Benefit Plans: Employee Contributions— PAS 19 requires

an entity to consider contributions from employees or third parties when accounting for defined benefit plans. These amendments clarify that, if the amount of the contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating contributions to the period of service. This amendment is effective for annual periods beginning on or after July 1, 2014.

This amendment is not relevant to the Group, since none of the entities of the Group has defined benefit plans with contribution from employees or third parties.

50

Annual Improvements to PFRSs 2010–2012 Cycle These improvements are effective from July 1, 2014 and the Group has applied these amendments for the first time in these financial statements. Unless otherwise stated, these amendments have no impact on the Group’s financial statements. They include: PFRS 2, Share­based Payment – Definition of Vesting Condition — This improvement is

applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions.

PFRS 3, Business Combinations – Accounting for Contingent Consideration in a Business

Combination — The amendment clarifies that a contingent consideration that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of PAS 39, Financial Instruments: Recognition and Measurement.

PFRS 8, Operating Segments – Aggregation of Operating Segments and Reconciliation of the

Total of the Reportable Segments’ Assets to the Entity’s Assets — The amendments are applied retrospectively and clarify that an entity must disclose the judgments made by management in applying the aggregation criteria in the standard and requires the reconciliation of segment assets to total assets if the reconciliation is reported to the chief operating decision maker.

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets – Revaluation

Method – Proportionate Restatement of Accumulated Depreciation and Amortization — The amendment clarifies that the asset may be revalued by reference to the observable data on either the gross or the net carrying amount. In addition, the accumulated depreciation or amortization is the difference between the gross and carrying amounts of the asset.

PAS 24, Related Party Disclosures – KeyManagement Personnel— The amendment clarifies

that a management entity, which is an entity that provides key management personnel services, is a related party subject to the related party disclosures. Where such entity is used, the expenses incurred for management services shall be disclosed.

Annual Improvements to PFRSs (2011–2013 Cycle) These improvements are effective from July 1, 2014 and the Group has applied these amendments for the first time in these financial statements. Unless otherwise stated, these amendments have no impact on the Group’s financial statements. They include:

PFRS 3, Business Combinations ­ Scope Exceptions for Joint Ventures, clarifies that joint arrangements, not just joint ventures, are outside the scope of PFRS 3 This scope exception applies only to the accounting in the financial statements of the joint arrangement itself.

PFRS 13,Fair Value Measurement ­ Portfolio Exception,clarifies that the portfolio exception in PFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of PAS 39, Financial Instruments: Recognition and Measurement (or PFRS 9 , if early adopted).

PAS 40, Investment Property, clarifies clarifies that PFRS 3, and not the description of ancillary services in PAS 40, is used to determine if the transaction is the purchase of an asset or business combination.

51

3. Operating Segment Information

Operating segments are components of the Group (a) that engage in business activities from which they may earn revenues and incur expenses; (b) with operating results which are regularly reviewed by the Group’s chief operating decision­maker (the BOD) to make decisions about how resources are to be allocated to the segment and assess their performances; and (c) for which discrete financial information is available.

The Group’s operating businesses are organized and managed separately according to the nature of the products and services, with each segment representing a strategic business unit that offers different products and serves different markets.

The Group conducts majority of its business activities in the following areas:

Power generation – power generation subsidiaries under First Gen Real estate development – residential and commercial real estate development and leasing of

Rockwell Land and First Philippine Realty Corporation (FPRC), and sale of industrial lots and ready­built factories by First Philippine Industrial Park (FPIP)

Manufacturing – manufacturing subsidiaries under First Philec Construction and other services – investment holdings, oil transporting company,

construction, securities transfer services and financing

Segment revenue, segment expenses and segment performance include transfers between business segments. The transfers are accounted for at competitive market prices charged to unrelated customers for similar products. Such transfers are eliminated in consolidation. The operations of these business segments are substantially in the Philippines. First Gen’s revenues are substantially generated from sale of electricity to Meralco, the sole customer of FGP and FGPC; while close to 36.8% of EDC’s total revenues are derived from existing long­term PPAs with NPC. Total revenues from sale of electricity to Meralco amounted to₱10,852 million and ₱13,712 million for the periods endedMarch 31, 2016 and 2015, respectively, which account for more than 10% of the Group’s consolidated revenues.

52

Financial information about the business segments follows: March 31, 2016

(Php in Millions) Power

Generation Real Estate

Development Manufacturing Construction and Other Services Eliminations Consolidated

Revenues: External sales ₱19,949 ₱1,726 ₱384 ₱663 ₱­ ₱22,722Inter­segment sales 583 (583) ­Equity in net earnings of associates and a joint venture ­ 54 ­ (31) ­ 23Total revenues 19,949 1,780 384 1,215 (583) 22,745Costs and expenses (13,107) (1,481) (462) (1,524) 577 (15,997)Finance income 108 273 0 36 ­ 417Finance costs (2,169) (91) (14) (208) 12 (2,470)Foreign exchange gain (loss) 559 1 (4) (16) ­ 540Other income (loss) 107 (21) (1) 2,316 (1,845) 556Income (loss) before income tax 5,447 461 (97) 1,819 (1,839) 5,791Provision for income tax (1,015) (124) (5) 12 8 (1,124)Net income from continuing operations 4,432 337 (102) 1,831 (1,831) 4,667Net loss from discontinued operations ­ ­ (76) ­ ­ (76)Net income ₱4,432 ₱337 (₱178) ₱1,831 (₱1,831) ₱4,591 March 31, 2015

(Php in Millions) Power

Generation Real Estate

Development Manufacturing Construction and Other Services Eliminations Consolidated

Revenues: External sales ₱22,245 ₱1,548 ₱535 ₱924 ₱­ ₱25,252Inter­segment sales ­ ­ ­ 1,149 (1,149) ­Equity in net earnings of associates and a joint venture ­ 106 ­ (78) ­ 28Total revenues 22,245 1,654 535 1,995 (1,149) 25,280Costs and expenses (16,021) (1,367) (495) (2,077) 1,142 (18,818)Finance income 95 276 1 30 7 409Finance costs (2,002) (122) (36) (231) 0 (2,391)Foreign exchange gain (loss) 38 0 (25) (1) ­ 12Other income (loss) 37 134 0 2,393 (2,189) 375Income (loss) before income tax 4,392 575 (20) 2,109 (2,189) 4,867Provision for income tax (971) (164) 0 (55) 13 (1,177)Net income from continuing operations 3,421 411 (20) 2,054 (2,176) 3,690Net loss from discontinued operations ­ ­ (72) ­ ­ (72)Net income ₱3,421 ₱411 (₱92) ₱2,054 (₱2,176) ₱3,618

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4. Subsidiaries, Significant Acquisitions and Discontinued Operations

The accompanying consolidated financial statements comprise the financial statements of FPH and the following subsidiaries. All subsidiaries, except for FGHC International Limited (FGHC International), FPH Fund Corporation (FPH Fund), FPH Ventures Corporation (FPH Ventures), Bluespark Management Limited (Bluespark) [formerly Lisbon Star Management Limited] and certain subsidiaries of Energy Development Corporation (EDC), are incorporated in the Philippines. FGHC International, FPH Fund and FPH Ventures are registered in the Cayman Islands. Bluespark is incorporated in British Virgin Islands while certain subsidiaries of EDC are incorporated in Hong Kong, Peru, Chile and Indonesia.

Details of the Group’s subsidiaries as at March 31, 2016 and December 31, 2015 are set out below.

March 31, 2016 December 31, 2015 Place of Incorporation Percentage of Ownership Held by the Group Subsidiaries and Operation Direct Indirect Direct *Indirect Power Generation First Gen Corporation (First Gen) Philippines 66.24 – 66.24 –

First Gen Renewables, Inc. Philippines – 100.00 – 100.00 First Gen Bukidnon Power Corp. (FG Bukidnon) Philippines – 100.00 – 100.00 Unified Holdings Corporation Philippines – 100.00 – 100.00 FGP Corp. (FGP) 5 Philippines – 100.00 – 100.00 Allied Gen Power Corporation Philippines – 100.00 – 100.00 First NatGas Power Corporation (FNPC) Philippines – 100.00 – 100.00 First Gen Luzon Power Corporation. Philippines – 100.00 – 100.00 First Gen Visayas Hydro Power Corporation Philippines – 100.00 – 100.00 First Gen Mindanao Hydro Power Corporation (FG Mindanao) Philippines – 100.00 – 100.00 First Gen Northern Mindanao Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Bubunawan Hydro Corporation Philippines – 100.00 – 100.00 First Gen Cabadbaran Hydro Corporation Philippines – 100.00 – 100.00 First Gen Puyo Hydro Corporation Philippines – 100.00 – 100.00 FG Mindanao Renewables Corp. Philippines – 100.00 – 100.00 FGen Tagoloan Hydro Corporation Philippines – 100.00 – 100.00 FGen Tumalaong Hydro Corporation Philippines – 100.00 – 100.00 First Gen Eco Power Solutions, Inc. Philippines – 100.00 – 100.00 First Gen Energy Solutions, Inc.(FGES) Philippines – 100.00 – 100.00

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First Gen Premier Energy Corporation Philippines – 100.00 – 100.00 First Gen Prime Energy Corporation Philippines – 100.00 – 100.00 First Gen Visayas Energy Corporation Philippines – 100.00 – 100.00 Northern Terracotta Power Corporation (Northern Terracotta) Philippines – 100.00 – 100.00 Blue Vulcan Holdings Corporation Philippines – 100.00 – 100.00 Prime Meridian Powergen Corporation (PMPC) Philippines – 100.00 – 100.00 Goldsilk Holdings Corporation (Goldsilk) Philippines – 100.00 – 100.00 Dualcore Holdings, Inc. (Dualcore) Philippines – 100.00 – 100.00 Onecore Holdings, Inc. (Onecore) Philippines – 100.00 – 100.00 First Gas Holdings Corporation (FGHC) Philippines – 100.00 – 100.00 First Gas Power Corporation (FGPC) Philippines – 100.00 – 100.00 First Gas Pipeline Corporation Philippines – 100.00 – 100.00 FG Land Corporation Philippines – 100.00 – 100.00 First Gen LNG Corporation Philippines – 100.00 – 100.00 First Gen LNG Holdings Corporation Philippines – 100.00 – 100.00 First Gen Meridian Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Northern Power Corp. (FGEN Northern Power) Philippines – – – – First Gen Power Ventures, Inc. Philippines – 100.00 – 100.00 First Gen Casecnan Hydro Power Corp. Philippines – 100.00 – 100.00 First Gen Power Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Prime Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Eco Solutions Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Liquefied Natural Gas Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Natural Gas Supply, Inc. Philippines – 100.00 – 100.00 First Gen Reliable Energy Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Power Solutions, Inc. Philippines – 100.00 – 100.00 First Gen Vibrant Blue Sky Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Aqua Power Holdings, Inc. Philippines – 100.00 – 100.00 First Gen Power Operations, Inc. Philippines – 100.00 – 100.00 First Gen Fuel Line System, Inc. Philippines – 100.00 – 100.00 First Gen Hydro Power Corporation (FG Hydro) Philippines – 40.00 – 40.00

Prime Terracota Holdings Corporation (Prime Terracota) Philippines – 100.00 – 100.00 Red Vulcan Holdings Corporation (Red Vulcan) Philippines – 100.00 – 100.00 Energy Development Corporation (EDC) Philippines – 60.00 – 60.00 EDC Drillco Corporation Philippines – 100.00 – 100.00

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EDC Geothermal Corp. Philippines – 100.00 – 100.00 Green Core Geothermal Inc. (GCGI) Philippines – 100.00 – 100.00 Bac­Man Geothermal Inc. (BGI) Philippines – 100.00 – 100.00 Unified Leyte Geothermal Energy Inc. Philippines – 100.00 – 100.00 Southern Negros Geothermal, Inc. Philippines – 100.00 – 100.00 First Gen Hydro Power Corporation Philippines _ 60.00 _ 60.00 EDC Mindanao Geothermal, Inc. Philippines – 100.00 – 100.00 Bac­Man Energy Development Corporation (BEDC) Philippines – 100.00 – 100.00 Kayabon Geothermal Inc. Philippines – 100.00 – 100.00 Mount Apo Renewable, Inc. Philippines – 100.00 – 100.00 EDC Wind Energy Holdings, Inc. Philippines – 100.00 – 100.00 EDC Burgos Wind Power Corporation (EBWPC) Philippines – 100.00 – 100.00 EDC Pagudpud Wind Power Corporation Philippines – 100.00 – 100.00 EDC Bayog Burgos Power Corporation Philippines _ 60.00 _ 60.00 EDC Pagali Burgos Wind Power Corporation (EPBWPC) Philippines _ 60.00 _ 60.00 EDC Corporation Chile Limitada Santiago, Chile – 100.00 – 100.00 EDC Holdings International Limited (EHIL) British Virgin Islands – 100.00 – 100.00 EDC Hong Kong Limited (EDC HKL) British Virgin Islands – 100.00 – 100.00 EDC Chile Holdings SpA Santiago, Chile – 100.00 – 100.00 EDC Geotermica Chile SpA Santiago, Chile – 100.00 – 100.00 EDC Peru Holdings S.A.C Lima, Peru – 100.00 – 100.00 EDC Geotermica Peru S.A.C Lima, Peru – 100.00 – 100.00 EDC Quellaapacheta Lima, Peru – 70.00 – 70.00 EDC Geotermica Del Sur S.A.C. Lima, Peru – 100.00 – 100.00 EDC Energia Azul S.A.C. Lima, Peru – 100.00 – 100.00 Geothermica Crucero Peru S.A.C. Lima, Peru – 42.00 – 42.00 EDC Energía Perú S.A.C. Lima, Peru – 100.00 – 100.00 Geotermica Tutupaca Norte Peru S.A.C. Lima, Peru – 42.00 – 42.00 EDC Energía Geotérmica S.A.C. Lima, Peru – 100.00 – 100.00 EDC Progreso Geotérmico Perú S.A.C. Lima, Peru – 100.00 – 100.00 Geotermica Loriscota Peru S.A.C. Lima, Peru – 42.00 – 42.00 EDC Energía Renovable Perú S.A.C. Lima, Peru – 100.00 – 100.00 PT EDC Indonesia Jakarta Pusat, Indonesia – 100.00 – 100.00 PT EDC Panas Bumi Indonesia Jakarta Pusat, Indonesia – 100.00 – 100.00 EDC Soluciones Sostenibles Ltd Chile _ 60.00 _ 60.00

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EDC Energia Verde Chile SpA Chile _ 60.00 _ 60.00 EDC Energia de la Tierra SpA Chile _ 60.00 _ 60.00 EDC Desarollo Sostenible Ltd Peru _ 60.00 _ 60.00 EDC Energia Verde Peru SAC Peru _ 60.00 _ 60.00 EDC Bright Solar Energy Holdings, Inc. Philippines _ 60.00 _ 60.00 EDC Bago Solar Power Corporation Philippines _ 60.00 _ 60.00 EDC Burgos Solar Corporation Philippines _ 60.00 _ 60.00

Manufacturing First Philippine Electric Corporation (First Philec) Philippines 100.00 – 100.00 –

First Philec Inc. Philippines – 100.00 – 100.00 First Philippine Power Systems, Inc. (FPPSI) Philippines – 100.00 – 100.00 First Philec Manufacturing Technologies Corporation Philippines – 100.00 – 100.00 First PV Ventures Corporation (First PV) Philippines – 100.00 – 100.00 First Philec Nexolon Corporation Philippines – 70.00 – 70.00 First Philec Solar Solutions Corporation Philippines – 100.00 – 100.00 Philippine Electric Corporation Philippines – 99.20 – 99.20 First Philec Solar Corporation Philippines – 74.54 – 74.54 Cleantech Energy Holdings PTE, Ltd. Philippines – 100.00 – 100.00 First Philec Energy Solutions, Inc. Philippines – 100.00 – 100.00

Real Estate Development First Philippine Realty Development Corporation (FPRDC) Philippines 100.00 – 100.00 – First Philippine Realty Corporation (FPRC) Philippines 100.00 – 100.00 – First Philippine Properties Corporation (FPPC) Philippines 100.00 – 100.00 –

First Philippine Development Corp. (FPDC) Philippines – 100.00 – 100.00 FPH Land Venture, Inc. Philippines – 100.00 – 100.00 Terraprime, Inc. Philippines – 100.00 – 100.00 First Industrial Township, Inc. Philippines – 100.00 – 100.00 First Industrial Water, Inc. Philippines – 100.00 – 100.00 First Industrial Utilities, Inc. Philippines – 100.00 – 100.00 FWV Biofields Corp. Philippines – 100.00 – 100.00 First Sumiden Realty, Inc. Philippines – 60.00 – 60.00 FPHC Realty and Development Corporation Philippines 98.00 – 98.00 –

Rockwell Land Corporation (Rockwell Land) (see Note 10) Philippines 86.58 – 86.58 – Rockwell Integrated Property Services, Inc. Philippines – 100.00 – 100.00 Rockwell Primaries Development Corporation (Rockwell Primaries) Philippines – 100.00 – 100.00

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Rockwell Primaries South Development Corp. Philippines – 60.00 – 60.00 Rockwell Hotels & Leisure Management Corporation Philippines – 100.00 – 100.00 Stonewell Property Development Corporation Philippines – 100.00 – 100.00 Primaries Properties Sales Specialist Inc. Philippines – 100.00 – 100.00 Rockwell Leisure Club, Inc. (see Note 2) Philippines – 69.00 – 69.00 Retailscapes, Inc. Philippines – 100.00 – 100.00

First Philippine Industrial Park, Inc. (FPIP) Philippines 70.00 – 70.00 – FPIP Property Developers and Management Corporation Philippines – 100.00 – 100.00 FPIP Utilities, Inc. Philippines – 100.00 – 100.00 Grand Batangas Resort Development, Inc. Philippines – 85.00 – 85.00

Construction First Balfour, Inc. (First Balfour) Philippines 100.00 – 100.00 –

Therma Prime Drilling Corporation Philippines – 100.00 – 100.00 Therma One Transport Corp. Philippines – 100.00 – 100.00

Others First Philippine Utilities Corporation (FPUC) Philippines 100.00 – 100.00 – Securities Transfer Services, Inc. Philippines 100.00 – 100.00 – FPH Capital Resources, Inc. (formerly) Philippines 100.00 – 100.00 – FGHC International Cayman Islands 100.00 – 100.00 – FPH Fund Cayman Islands 100.00 – 100.00 – FPH Ventures Cayman Islands – 100.00 – 100.00 FPH International Finance Limited Cayman Islands 100.00 – 100.00 – FPHC International, Inc. U.S.A 100.00 – 100.00 – First Philippine Industrial Corporation (FPIC) Philippines 60.00 – 60.00 –

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5. Investments in Equity Securities

The Group classified its remaining investment in Meralco shares to investment in equity securities in accordance to PAS 39, Financial Instruments: Recognition and Measurement. Accordingly, the remaining investment in Meralco is measured at fair value in the consolidated statement of financial position and any fair value changes are recognized directly in equity The Group’s remaining interest in Meralco was 3.95% as at March 31, 2016 and December 31, 2015. As at March 31, 2016 and December 31, 2015, the carrying amount of the Group’s investment in Meralco amounted to ₱14,366 million (valued at ₱323 a share) and ₱14,232 million (valued at ₱320 a share), respectively. Dividend income from Meralco amounted to ₱441.2 million and ₱377.6 million for the periods ended March 31, 2016 and 2015, respectively.

6. Earnings Per Share Computation

The following table presents information necessary to compute earnings per share as of March 31, 2016 and 2015 : 2016 2015 (In Millions, Except Number of Shares and Per Share Data) Net income attributable to equity holders of the Parent ₱2,097 ₱1,661 Less dividends on preferred shares 25 25(a) Net income (loss) available to common shares 2,072 1,636From Continuing Operations 2,148 1,708From Discontinued Operations (76) (72) Number of shares: Common shares outstanding at beginning of year 553,821,834

553,564,971

Effect of common share issuances and buyback during the year 169,318 92,936 (b) Adjusted weighted average number of common shares outstanding ­ basic 553,991,152 553,657,907 Effect of dilutive potential common shares under the ESOP 120,571 333,159

(c) Adjusted weighted average number of common shares outstanding ­ diluted 553,111,722 553,991,065

EPS: Basic (a/b) ₱3.741 ₱2.956 From Continuing Operations 3.878 3.085From Discontinued Operations (0.137) (0.129) Diluted (a/c) 3.740 2.954

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7. Financial Risk Management Objectives and Policies

The Group’s principal financial liabilities consist of loans payable, bonds payable and long­term debts. The main purpose of these financial liabilities is to raise financing for the Group’s growth and operations. The Group has other various financial instruments such as cash equivalents, short­term investments, trade and other receivables, investments in equity securities, trade payables and other current liabilities which arise directly from its operations. The Group also enters into derivative and hedging transactions, primarily interest rate swaps, cross­currency swap and foreign currency forwards, as needed, for the sole purpose of managing the relevant financial risks that are associated with the Group’s borrowing activities and as required by the lenders in certain cases.

The Group has an Enterprise­wide Risk Management Program which aims to identify risks based on the likelihood of occurrence and impact to the business, formulate risk management strategies, assess risk management capabilities and continuously monitor the risk management efforts. The main financial risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, liquidity risk, credit concentration risk, and equity price risk. The Board of Directors (BOD) reviews and approves policies for managing each of these risks as summarized below.

Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long­term debts with floating interest rates. The Group policy is to manage interest cost through a mix of fixed and variable rate debt. On a regular basis, the Finance team of the Group monitors the interest rate exposure and presents it to management by way of a compliance report. To manage the exposure to floating interest rates in a cost­efficient manner, the Group may consider prepayment, refinancing, or entering into derivative instruments as deemed necessary and feasible.

As at March 31, 2016 and December 31, 2015, approximately 73% and 72%, respectively, of the Group’s borrowings are subject to fixed interest rate.

Interest Rate Risk Table. The following table set out the carrying amounts, by maturity, of the Group’s financial instruments that are subject to interest rate risk as at March 31, 2016 and December 31, 2015.

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March 31, 2016

Interest Rates Within 1 Year

More than 1 Year up to 3 Years

More than 3 Years up to 5 Years

More than 5 Years Total

(In Millions) Floating Rate

Parent Company 4,800 million FRCNs 1.5% + 6 months PDST F rate

or BSP overnight rate, whichever is higher ₱1,008 ₱2,064 ₱– ₱– ₱3,072

Power Generation Companies

FGP Term Loan Facility 2.97% 1,185 2,649 1,090 7,555 12,480 $150.0M ECA Debt Facility 2.75% 311 639 847 4,703 6,500 5.6 B Commercial Debt Facility 2.75% 123 247 247 4,782 5,400 US$175M Refinanced Syndicated Term Loan 2.35% 807 4,010 – – 4,817 Red Vulcan’s Staple Financing 2.93% 1,664 2,122 – – 3,786 US$80.0 million Term Loan 2.39% 184 3,313 – – 3,497 FG Hydro’s 4.3 billion Loan 5.00% 375 832 915 1066 3,187 $37.5M Commercial Debt Facility 6.19% 78 160 211 1,191 1,640 US $188 million Uncovered Facility 4.50% 302 310 – – 611

December 31, 2015

Interest Rates Within 1 Year

More than 1 Year up to 3 Years

More than 3 Years up to 5 Years

More than 5 Years Total

(In Millions) Floating Rate

Parent Company 4,800 million FRCNs 1.5% + 6 months PDST F rate or

BSP overnight rate, whichever is higher ₱1,008 ₱2,064 ₱– ₱– ₱3,072

Power Generation Companies FGP Term Loan Facility 2.97% 1,211 2,706 1,113 7,718 12,748 $150.0M ECA Debt Facility 2.75% 318 653 865 5,082 6,918 5.6 B Commercial Debt Facility 2.75% 126 252 252 4,867 5,497 US$175M Refinanced Syndicated Term Loan 2.35% 824 4,117 – – 4,941 Red Vulcan’s Staple Financing 2.93% 1,700 2,168 – – 3,868 US$80.0 million Term Loan 2.39% 188 3,426 – – 3,614 FG Hydro’s 4.3 billion Loan 5.00% 383 850 935 1,020 3,188 $37.5M Commercial Debt Facility 6.19% 80 163 216 1,271 1,730 US $188 million Uncovered Facility 4.50% 308 316 – – 624 Manufacturing Company First Philec’s $20.6 million Long Term Loan 3 months LIBOR + 3.50% 121 243 243 243 850

Floating interest rates on financial instruments are repriced semi­annually on each interest payment date. Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates for the years ended March 31, 2016 and December 31, 2015, with all other variables held

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constant, of the Group’s income before income tax and equity (through the impact of floating rate borrowings, and derivative assets and liabilities):

Increase/ Decrease

in Basis Points

Effecton Income

Before Income Tax

Effecton Equity

(In Millions) March 31, 2016 Parent Company ­ floating rate borrowings +100 (31) – ­100 31 –Subsidiaries ­ floating rate borrowings ­ U.S. Dollar +100 (295) 133 ­100 295 (131) Philippine Peso +100 (124) – ­100 124 – December 31, 2015 Parent Company ­ floating rate borrowings +100 (31) – ­100 31 –Subsidiaries ­ floating rate borrowings ­ U.S. Dollar +100 (314) 699 ­100 314 (707) Philippine Peso +100 (126) – ­100 126 –

The effect of changes in interest rates in equity pertains to the fair valuation of derivatives designated as cash flow hedges and is exclusive of the impact of changes affecting the Group’s consolidated statements of income.

The Group determined the +/­ 1% reasonably possible change based on linear estimates of the future foreign exchange rate based on the previous 12­month average monthly foreign exchange rates.

Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Foreign Currency Risk with Respect to U.S. Dollar. The Group, except First Gen group, FSRI, FPSC, First PV, FPNC, FGHC International and FPH Fund, is exposed to foreign currency risk through cash and cash equivalents and short­term investments denominated in U.S. dollar. Any depreciation of the U.S. dollar against the Philippine peso posts foreign exchange losses relating to cash and cash equivalents and short­term investments.

To better manage the foreign exchange risk, stabilize cash flows, and further improve the investment and cash flow planning, the Group may consider derivative contracts and other hedging products as necessary. The U.S.dollar denominated monetary assets are translated to Philippine peso using the exchange rate of₱46.07 to US$1.00 and₱47.06 to US$1.00 as at March 31, 2016 and December 31, 2015, respectively.

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Credit Risk Exposure. The table below shows the gross maximum exposure to credit risk of the Group as at:

March 31,

2016December 31,

2015

(In Php Millions)

Loans and receivables: Cash and cash equivalents* ₱42,268 ₱39,651 Short­term investments 4,812 6,577 Trade and other receivables: Trade 24,650 23,208 Others 3,664 3,596 DSRA 1,224 1,324 Special deposits and funds 121 174 Other current assets 195 195Total credit exposure ₱77,294 ₱74,725

* Excluding the Group’s cash on hand amounting to ₱2 million in March 31, 2016 and December 31, 2015. The Group’s deposit accounts in certain banks are covered by the Philippine Deposit Insurance Corporation insurance coverage.

The Group holds no significant collateral as security and there are no significant credit enhancements in respect of the above assets.

Aging Analysis of Financial Assets.The following tables show the Group’s aging analysis of past due but not impaired financial assets as at December 31:

March 31, 2016 Neither Past Due Past Due but not Impaired

nor

Impaired< 30 Days

30–60 Days

61–90 Days

91–120 Days

> 120 Days Total Impaired Total

(In Php Millions) Loans and Receivables Cash and cash equivalents ₱42,628 ₱– ₱– ₱– ₱– ₱– ₱– ₱– ₱42,628Short­term investments 4,812 – – – – – – – 4,812

Trade and other receivables 24,029 1,335 371 362 384 1,883 4,285 420 28,734Special deposits and funds 121 – – – – – – – 121AFS financial assets 14,612 – – – – – – – 14,612DSRA 1,224 – – – – – – – 1,324Other current assets 195 – – – – – – – 195Financial asset at FVPL: Derivative asset 1,641 – – – – – – – 1,641Financial asset accounted for as cash flow hedge ­ Derivative asset 261 – – – – – – – 261 ₱89,523 ₱1,335 ₱371 ₱362 ₱384 ₱1,833 ₱4,285 ₱420 ₱94,228

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December 31, 2015 Neither Past Due Past Due but not Impaired

nor

Impaired < 30 Days

30–60 Days

61–90 Days

91–120

Days > 120 Days Total Impaired Total

(In Php Millions) Loans and Receivables Cash and cash equivalents ₱39,651 ₱– ₱– ₱– ₱– ₱– ₱– ₱– ₱39,651Short­term investments 6,577 – – – – – – – 6,577Trade and other receivables 22,761 1,265 351 343 364 1,720 4,403 415 27,219Special deposits and funds 174 – – – – – – – 174AFS financial assets 14,735 – – – – – – – 14,735DSRA 1,324 – – – – – – – 1,324Other current assets 195 – – – – – – – 195Financial asset at FVPL: Derivative asset 1,417 – – – – – – – 1,417Financial asset accounted for as cash flow hedge ­ Derivative asset 382 – – – – – – – 382 ₱87,216 ₱1,265 ₱351 ₱343 ₱364 ₱1,720 ₱4,403 ₱415 ₱91,674

Credit Quality of Neither Past Due Nor Impaired Financial Assets. The payment history of the counter parties and their ability to settle their obligations are considered in evaluating credit quality. Financial assets are classified as high grade if the counterparties are not expected to default in settling their obligations, thus, credit exposure is minimal. These counterparties normally include banks, related parties and customers who pay on or before due date. Financial assets are classified as standard grade if the counterparties settle their obligations to the Group with tolerable delays. Low grade accounts are accounts which have probability of impairment based on historical trend. These accounts show propensity of default in payment despite regular follow­up actions and extended payment terms.

As at March 31, 2016 and December 31, 2015, the financial assets categorized as neither past due nor impaired are viewed by management as high grade.

Concentration of Credit Risk The Group, through First Gen’s operating subsidiaries namely, FGP and FGPC, earns a substantial portion of its revenues from Meralco. Meralco is committed to pay for the capacity and energy generated by the San Lorenzo and Santa Rita power plants under the existing long­term PPAs which are due to expire in September 2027 and August 2025, respectively. While the PPAs provide for the mechanisms by which certain costs and obligations including fuel costs, among others, are passed­through to Meralco or are otherwise recoverable fromMeralco, it is the intention of First Gen, FGP and FGPC to ensure that the pass­through mechanisms, as provided for in their respective PPAs, are followed.

EDC’s geothermal and power generation businesses trade with NPC as its major customer. Any failure on the part of NPC to pay its obligations to EDC would significantly affect EDC’s business operations.

Under the current regulatory regime, the generation rates charged by FGP and FGPC toMeralco are not subject to regulations and are complete pass­through charges to Meralco’s customers.

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The Group’s exposure to credit risk arises from default of the counterparties, with a maximum exposure equal to the carrying amounts of the receivables from Meralco, in the case of FGP and FGPC, and the receivables from NPC, in the case of EDC.

The table below shows the risk exposure in respect to credit concentration of the Group as at March 31, 2016 and December 31, 2015.

March 31

2016December 31,

2015Trade receivables from Meralco ₱5,696 ₱7,347 Trade receivables from NPC 2,606 1,882

Total receivables ₱28,314 ₱26,804

Credit concentration percentage 29.32% 34.43%

Liquidity Risk The Group’s exposure to liquidity risk refers to lack of funding needed to finance its growth and capital expenditures, service its maturing loan obligations in a timely fashion, and meet its working capital requirements. To manage this exposure, the Group maintains internally generated funds and prudently manages the proceeds obtained from fundraising in the debt and equity markets. On a regular basis, the Group’s Treasury Department monitors the available cash balances. The Group maintains a level of cash and cash equivalents deemed sufficient to finance the operations.

In addition, the Group has short­term investments and has available credit lines with certain banking institutions. FGP and FGPC, in particular, maintain a Debt Service Revenue Account to sustain the debt service requirements for the next payment period. As part of its liquidity risk management, the Group regularly evaluates its projected and actual cash flows. It also continuously assesses the financial market conditions for opportunities to pursue fund raising activities.

As at March 31, 2016 and December 31, 2015, 20% and 21% respectively, of the Group’s debts will mature in less than one year, based on the carrying value of borrowings reflected in the consolidated financial statements.

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The tables summarize the maturity profile of the Group’s financial assets used for liquidity management and liabilities as at March 31, 2016 based on contractual undiscounted receipts and payments. March, 31, 2016

On

Demand Less than 3 Months

3 to 12 Months

> 1 to 5 Years

More than

5 Years Total (In Php Millions) Financial Assets Cash and cash equivalents ₱42,630 ₱– ₱– ₱– – ₱42,630 Short­term investments – – 4,812 – – 4,812Trade receivables 24,029 2,068 2,217 – – 28,314Special deposits and funds – – – 121 – 121DSRA 1,224 – – – – 1,224AFS financial assets 14,482 – – 130 – 14,612Other current assets – – 195 – – 195 82,365 2,068 7,224 251 – 91,908Financial Liabilities Carried at Amortized Cost Loans payable – 563 855 – – 1,418Trade payables and other current

liabilities 7,776 14,925 6,758 1,621 – 31,080Long­term debts, including current

portion 614 612 16,501 41,936 106,355 166,018 ₱8,390 ₱16,100 ₱24,114 ₱43,557 ₱106,355 ₱198,516

December 31, 2015

On

Demand Less than 3 Months

3 to 12 Months

> 1 to 5 Years

More than

5 Years Total (In Php Millions) Financial Assets Cash and cash equivalents ₱39,656 ₱– ₱– ₱– ₱– ₱39,656 Short­term investments – – 6,577 – – 6,577Trade receivables 23,116 1,604 988 1,096 – 26,804Special deposits and funds – – – 174 – 174AFS financial assets 14,605 – – 130 – 14,735DSRA 1,324 – – – – 1,324Other current assets – – 195 – – 195 78,701 1,604 7,760 1,400 – 89,465Financial Liabilities Carried at Amortized Cost Loans payable – 470 713 – – 1,183Trade payables and other current

liabilities 5,997 11,510 5,212 1,250 – 23,969Long­term debts, including current

portion 614 612 16,501 45,260 106,355 169,342 ₱2,499 ₱11,200 ₱25,988 ₱61,459 ₱88,813 ₱189,959

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Equity Price Risk The Group’s quoted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment in equity securities. The Group manages the equity price risk through diversification and by placing limits on individual and total equity instruments. The Group’s BOD reviews and approves all equity investment decisions.

The following table demonstrates the sensitivity to a reasonably possible change in share price, with all other variables held constant:

Change in

Equity Price* Effect on Equity

Investment in equity securities March 31, 2016 6% ₱877 (6%) (877) December 31, 2015 10% ₱1,420 (10%) (1,420)

* The sensitivity analysis includes the Company’s quoted equity securities with amounts adjusted by the specific beta for these investments as of reporting date.

Capital Management The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business, comply with its financial loan covenants and maximize shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in business and economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years endedMarch 31, 2016 and December 31, 2015.

The Group monitors capital using a debt­to­equity ratio, which is total debt divided by total equity. The Group’s practice is to keep the debt­to­equity ratio not more than 2.50:1.

March

31, 2016December 31,

2015 (In Php Millions) Long­term debts ₱166,018 ₱169,342Total debt 166,018 169,342

Total equity 131,741 127,455

Debt­to­equity ratio 1.26:1 1.33:1

The Parent Company and certain of its subsidiaries are obligated to perform certain covenants with respect to maintaining specified debt­to­equity and minimum debt­service­coverage ratios, as set forth in their respective agreements with the creditors.

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8. Financial Instruments

Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments in the consolidated financial statements as at March 31, 2016 and December 31, 2015.

March 31, 2016 December 31, 2015

Carrying Value Fair Value Carrying Value Fair Value (In Php Millions) Financial Assets Derivative assets accounted for as cash flow hedges ₱261 ₱261 ₱382 ₱382 Designated at FVPL 1,641 1,641 1,417 1,417Loans and receivables Cash and cash equivalents 42,630 42,630 39,656 39,656Short­term investments 4,812 4,812 6,577 6,577Trade and other receivables 28,314 28,314 26,804 26,804Long­term receivables 59 59 59 59 Special deposits and funds 121 121 174 174DSRA 1,224 1,224 1,324 1,324Other current assets 195 195 195 195 78,033 78,033 74,789 74,789AFS Financial assets: 14,612 14,612 14,735 14,735Total Financial Assets 92,645 92,645 91,323 96,054Financial Liabilities Financial liabilities carried at amortized cost ­ Long­term debts, including current portion 168,201 184,359 169,342 183,583 Retention payable (including noncurrent portion) 632 596 783 765Derivative liabilities accounted for as cash flow hedges 1,656 1,656 1,247 1,247Total Financial Liabilities ₱170,589 ₱185,552 ₱171,372 ₱185,595

The fair values of cash and cash equivalents, short­term investments, trade and other receivables, restricted cash deposits, loans payable, trade payables, and other current liabilities approximate the carrying amounts at financial reporting date due to the short­term nature of the accounts.

The fair values of investments in equity securities and FVPL financial assets are based on quoted market prices as at financial reporting date. For equity instruments that are not quoted, the investments are carried at cost less allowance for impairment losses due to the unpredictable nature of future cash flows and the lack of suitable methods of arriving at a reliable fair value.

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FGP and FGPC long­term debts The fair values of long­term debts were computed by discounting the instruments’ expected future cash flows using the prevailing credit adjusted U.S. dollar interest rates ranging from 0.6359% to 1.3200% and 0.6460% to 1.6270% as at March 31, 2016 and December 31, 2015, respectively.

First Gen’s and FNPC’s long­term debts The fair values of the First Gen U.S. dollar­denominated long­term debts were computed by discounting the instruments’ expected future cash flows using the prevailing credit adjusted U.S. dollar interest rates on March 31, 2016 and December 31, 2015 ranging from 0.363% to 2.295% and 0.3940% to 2.4040%, respectively. Long­term debts of Red Vulcan, EDC and FG Hydro The fair values for EDC’s and FG Hydro’s long­term debts are estimated using the discounted cash flow methodology with the applicable rates ranging from1.75% to 3.4% onMarch 31, 2016 and 1.75% to 11.27% on December 31, 2015. The fair value of Red Vulcan’s Staple Financing was computed by discounting the instrument’s expected future cash flows using the prevailing credit­adjusted PDST­F interest rates ranging from 2.63% to 1.73% on March 31, 2016 and 2.67% to 3.99% on December 31, 2015.

Interest­bearing Loans and Borrowings of Rockwell Land Fixed Rate : The fair values of fixed rate loans were calculated by discounting the expected future cash flows at prevailing credit adjusted PDEx interest rates ranging from 1.7% to 4.1% as at March 31, 2016 and 2.7% to 5.2% as at December 31, 2015.

Floating Rate The fair values of floating rate loans approximate the carrying values as of financial reporting date due to the monthly and quarterly repricing of interest rates.

Installment Payable of Rockwell Land. The fair value of installment payable were calculated by discounting the expected cash flows at prevailing credit adjusted PDEx interest rates ranging from 2.6% to 4.3% as at March 31, 2016 and 2.7% to 5.1% as at December 31, 2015

Retention Payable. The fair values were calculated by discounting the expected future cash flows at prevailing credit adjusted PDEx interest rates ranging from 1.8% to 3.6% as at March 31, 2016 and 2.9% to 4.9% as at December 31, 2015.

Fair Value Hierarchy of Financial Assets and Liabilities The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) 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; and Level 3: valuation techniques for which the lowest level input that is significant to the fair

value measurement is unobservable.

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March 31, 2016 Level 1 Level 2 Level 3 Total (In Php Millions) Financial Assets

Long­term receivables ₱– ₱– ₱59 ₱59 AFS financial assets: 14,366 – 246 14,612

Derivative assets accounted for as cash flow hedges – 261 – 261 Designated at FVPL – 1,641 – 1,641 Total Financial Assets ₱14,366 ₱1,902 ₱305 ₱16,573 Financial Liabilities

Derivative liabilities accounted for as cash flow hedges ₱– ₱1,637 ₱– ₱1,656

December 31, 2015 Level 1 Level 2 Level 3 Total (In Php Millions) Financial Assets

Long­term receivables ₱– ₱– ₱59 ₱59 AFS financial assets 14,619 – 116 14,735

Derivative assets accounted for as cash flow hedges – 382 – 382 Designated at FVPL – 1,417 – 1,417 Total Financial Assets ₱14,619 ₱1,457 ₱175 ₱16,593 Financial Liabilities

Derivative liabilities accounted for as cash flow hedges ₱– ₱1,246 ₱– ₱1,246

As at March 31, 2016 and December 31, 2015, there were no transfers between Level 1 and Level 2 fair value measurements and there were no transfers into and out of Level 3 fair value measurements.

Derivative Financial Instruments The Group, through First Gen group, enters into derivative transactions such as interest rate swaps to hedge its interest rate risks arising from its floating rate borrowings, cross currency swap and foreign currency forwards to hedge the foreign exchange risk arising from its loans and payables. These derivatives (including embedded derivatives) are accounted for either as Derivatives not designated as accounting hedges or Derivatives designated as accounting hedges.

The table below shows the fair value of First Gen group’s outstanding derivative financial instruments, reported as assets or liabilities, together with their notional amounts as at March 31, 2016 and December 31, 2015 (amounts in millions). The notional amount is the basis upon which changes in the value of derivatives are measured. March 31, 2016 December 31, 2015

Derivative

Assets Derivative Liabilities

Notional Amount

Derivative Assets

Derivative Liabilities

Notional Amount

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Derivatives Designated as Accounting Hedges Freestanding derivatives:

Interest rate swaps ₱– ₱1,636 $497.1 ₱– ₱1,246 $500 Cross­currency swaps 261 – 110.0 382 – 110.00 261 1,636 382 1,246

Derivatives not Designated as Accounting Hedges Freestanding derivatives ­

Foreign currency forwards – – – – – – Total derivatives 261 1,636 382 1,2446

Presented as: Current 41 12 – 58 5 – Noncurrent 220 1,624 – 324 1,241 – Total derivatives ₱261 ₱1,636 $ – ₱382 ₱1,246 $ –

Derivatives Designated as Accounting Hedges The Group (through First Gen Group) has entered into interest rate swaps accounted for as cash flow hedges for its floating rate loans and cross­currency swaps and foreign currency forwards accounted for as cash flow hedges of its Philippine peso and U.S. dollar denominated borrowings and Euro denominated payables, respectively. Under a cash flow hedge, the effective portion of changes in fair value of the hedging instrument is recognized as cumulative translation adjustments in other comprehensive income (loss) until the hedged item affects earnings. Interest Rate Swaps – FGPC. On November 14, 2008, FGPC entered into 8 interest rate swap agreements with the following hedge providers namely: Société Générale (Singapore Branch), Bayerische Hypo­und Vereinsbank AG (Hong Kong Branch), Calyon and Standard Chartered Bank. On the same date, FGPC designated the interest rate swaps as hedges of the cash flow variability in the Covered and Uncovered Facilities, attributable to the movements in the 6­month U.S. LIBOR.

Under the four interest rate swap agreements that hedge 100% of the Covered Facility, FGPC pays a fixed rate of 4.4025% and receives a 6­month U.S. LIBOR on the aggregate amortizing notional amount of $312.0 million, simultaneous with the interest payments every May and November on the hedged loan. The notional amounts of the interest rate swaps are amortizing based on the repayment schedule of the hedged loan. The interest rate swap agreements have a term of 12 ½ years and will mature on May 10, 2021 (coinciding with the maturity of the hedged loan).

Under the four interest rate swap agreements that hedge 75% of the Uncovered Facility, FGPC pays a fixed rate of 4.0625% and receives a 6­month U.S. LIBOR on the aggregate amortizing notional amount of $141.0 million, simultaneous with the interest payments every May and November on the hedged loan. The notional amounts of the interest rate swaps are amortizing based on the repayment schedule of the hedged loan. The interest rate swaps have a term of 8 ½ years and will mature on May 10, 2017 (coinciding with the maturity of the hedged loan).

As March 31, 2016 and December 31, 2015, the aggregate negative fair value of the interest rate swaps that was deferred to “Cumulative translation adjustments” account in the consolidated statements of financial position amounted to ₱57.0 million, net of related deferred tax effect of ₱24 million ($1.2 million, net of related deferred tax effect of $0.5 million) and₱729.4, net of

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related deferred tax effect of₱394 million ($15.5 million, net of related deferred tax effect of $6.7 million), respectively. Interest Rate Swaps – FGP In April 2013, FGP entered into two interest rate swap agreements with ING Bank and Standard Chartered Bank to hedge its floating rate exposure on $80.0 million of its $420.0 million term loan facility. Under the interest rate swap agreements, FGP pays a fixed rate of 1.425% and receives a floating rate of U.S. LIBOR, on a semi­annual basis, simultaneous with the interest payments every June and December on the hedged loan.

In May 2013, FGP entered into another interest rate swap agreement with RCBC to hedge its floating rate exposure on another $20.0 million of the $420.0 million term loan facility. Under the interest rate swap agreement, FGP pays a fixed rate of 1.28% and receives a floating rate of U.S. LIBOR, on a semi­annual basis, simultaneous with the interest payment every June and December on the hedged loan. The notional amounts of interest rate swap is amortizing based on the repayment schedule of the hedged loan. The interest rate swaps were designated as cash flow hedges and will mature on June 10, 2020.

As at March 31, 2016 and December 31, 2015,the positive fair value of the interest rate swaps that was deferred to “Cumulative translation adjustments” account in the consolidated statements of financial position amounted ₱42.7 million, net of related deferred income tax effect of ₱19.0 million ($0.9 million, net of related deferred income tax effect of $0.4 million) and₱23.5 million, net of related deferred income tax effect of ₱9.1 million ($0.5 million, net of related deferred income tax effect of $0.2 million)

There was no ineffective portion recognized in the consolidated statements of income for the years ended March 31, 2016 and December 31, 2015.

The outstanding aggregate notional amount and the related cumulative mark­to­market gains and losses of the interest rate swaps designated as cash flow hedges as of December 31 are as follows:

March 31,

2016December 31,

2015Notional amount $350,134 $350,134Cumulative mark­to­market losses (1,130) (1,044)Cumulative mark­to­market gains – 31

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The net movements in the fair value of interest rate swaps of FGPC and FGP are as follows:

March 31,

2016December 31,

2015

Fair value at beginning of year (₱1,013) (₱1,237) Fair value changes taken into equity during the year (268) (287)Fair value changes realized during the year 125 564Foreign exchange differences 26 (53) Fair value at end of year (1,130) (1,013)Deferred tax effect on cash flow hedges 339 304Fair value deferred into equity (₱791) (₱709)

Fair value changes during the year, net of deferred income tax, are recorded in the consolidated statements of comprehensive income and under the “Cumulative translation adjustments” account in the consolidated statements of financial position. The fair value change realized during the year was taken into “Finance costs” account in the consolidated statements of income. This pertains to the net difference between the fixed interest paid/accrued and the floating interest received/accrued on the interest rate swap agreements as at financial reporting date.

For the three months ended March 31, 2016 and 2015, fair value changes taken to the consolidated statements of income amounted to₱123.4 million ($2.6 million) and₱146.8 million ($3.3 million), respectively.

Cross Currency Swaps ­ EDC In 2014 and 2012, EDC entered into 6 and an additional 6 non­deliverable cross­currency swap (NDCCS) agreements with an aggregate notional amount of ₱2,907 million ($65.0 million) and ₱1,998 million ($45.0 million), respectively, to partially hedge the foreign currency and interest rate risks on its Refinanced Syndicated Term Loan that is benchmarked against US LIBOR and with flexible interest reset feature that allows EDC to select what interest reset frequency to apply (i.e., monthly, quarterly, or semi­annually). As it is EDC’s intention to reprice the interest rate on the hedged loan quarterly, EDC utilizes NDCCS with quarterly interest payments and receipts.

Under the NDCCS agreements, EDC receives floating US$ interest based on 3­month US LIBOR plus 175 basis points and pays fixed peso interest. On specified dates, EDC also receives specified U.S. dollar amounts in exchange for specified peso amounts based on the agreed swap rates. These U.S. dollar receipts correspond with the expected interest and fixed principal amounts due on the hedged loan. Effectively, the 12 NDCCS converted 62.86% of the hedged loan into a fixed rate peso loan.

Pertinent details of the NDCCS are as follows: Notional amount (in millions)

Trade Date

Effective Date

Maturity Date Swap rate Fixed rate

Variable rate

$15.00 03/26/12 03/27/12 06/17/17 ₱43.05 4.87% 3­month LIBOR + 175 bps$10.00 04/18/12 06/27/12 06/17/17 42.60 4.92% ­ do ­ $10.00 05/03/12 06/27/12 06/17/17 42.10 4.76% ­ do ­ $10.00 06/15/12 06/27/12 06/17/17 42.10 4.73% ­ do ­ $10.00 07/17/12 09/27/12 06/17/17 41.25 4.58% ­ do ­

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$10.00 10/29/12 12/27/12 06/17/17 41.19 3.44% ­ do ­ $7.50 05/14/14 06/27/14 06/17/17 43.60 3.80% ­ do ­ $7.50 05/14/14 06/27/14 06/17/17 43.57 3.80% ­ do ­ $7.50 06/09/14 06/27/14 06/17/17 43.55 3.60% ­ do ­ $7.50 06/09/14 06/27/14 06/17/17 43.55 3.60% ­ do ­ $7.50 07/10/14 9/27/14 06/17/17 43.29 3.50% ­ do ­ $7.50 07/09/14 9/27/14 06/17/17 43.37 3.68% ­ do ­

The maturity date of the 12 NDCCS coincides with the maturity date of the hedged loan.

As of March 31, 2016 and December 31, 2015, the outstanding aggregate notional amount of EDC’s NDCCS amounted to ₱3,501 million ($75.0 million). The aggregate fair value changes on these NDCCS amounting to ₱47 million ($1.2 million) gain and ₱14 million ($0.3 million) gain, were recognized by EDC under “Cumulative translation adjustments” account in the unaudited interim consolidated statements of financial position as of March 31, 2016 and December 31, 2015, respectively. Interest Rate Swap Contracts – EDC In the last quarter of 2014, EBWPC entered into four (4) interest rate swaps (IRS) with aggregate notional amount of ₱6,705 million ($150.0 million). This is to partially hedge the interest rate risks on its ECA and Commercial Debt Facility (the Foreign Facility) that is benchmarked against U.S. LIBOR and with flexible interest reset feature that allows EBWPC to select what interest reset frequency to apply. Under the IRS agreement, EBWPCwill receive semi­annual interest of 6­month USD­LIBOR and will pay fixed interest. EBWPC designated the IRS as hedging instruments in cash flow hedge against the interest rate risk arising from the Foreign Facility. Pertinent details of the IRS are as follows:

Notional amount

(in million)

Trade Date

Effective Date

Maturity Date

Fixed rate

Variable rate US$62.00 10/20/14 12/15/14 10/23/29 2.635% 6­month LIBOR 40.00 10/20/14 12/15/14 10/23/29 2.635 6­month LIBOR 39.00 12/11/14 12/15/14 10/23/29 2.635 6­month LIBOR 9.00 10/20/14 12/15/14 10/23/29 2.508 6­month LIBOR

The maturity date of the four IRS coincides with the maturity date of the Foreign Facility.

As of March 31, 2016 and December 31, 2015, the outstanding aggregate notional amount of EBWPC's IRS amounted to ₱6,772 million (US$147 million) and ₱6,708 million (US$150 million), respectively. The aggregate fair value changes on these IRS amounted to ₱289 million ($6.1 million) and ₱204 million ($4.5 million) loss as of March 31, 2016 and December 31, 2015, respectively.

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Hedge Effectiveness Results Since the critical terms of the hedged loan and the NDCCS match, except for one to two days timing difference on the interest reset dates, the hedges were assessed to be highly effective. As such, the aggregate fair value changes on these IRS/NDCCS amounting to ₱422 million ($8.9 million) loss and ₱258 million ($5.7 million) gain as of March 31, 2016 and December 31, 2015, respectively, were recognized under s of the hedged loan and the IRS/NDCCS match, except consolidated statements of financial position. No ineffective portion was recognized in the unaudited interim consolidated statements of income for the three months endedMarch 31, 2016 and year ended December 31, 2015.

As at March 31, 2016 and December 31, 2015, the net movement of changes made to “Cumulative translation adjustment” account for EDC’s cash flow hedges are as follows:

March 31, 2016 December 31, 2015Balances at beginning of year (₱200) (₱184) Fair value change taken into equity during the year (421) (259)Fair value change realized during the year 73 271 (548) (196)Deferred income tax effect on cash flow hedges 19 (4)Balances at end of year (₱529) (₱200)

9. Event After the Financial Reporting Period

Declaration of dividends FPH On May 3, 2016, FPH’s BOD approved the declaration of cash dividends as follows: (a) ₱13.75 per share cash dividend to all Series C Preferred shareholders of record as of May 18, 2016, payable on or before June 2, 2016 and (b) ₱1.00 per share cash dividend to all common shareholders of record as of May 18, 2016, payable on or before June 2, 2016. MERALCO On April 25, 2016 BOD meeting, MERALCO approved the declaration (a) ₱1.68 per share cash dividend to all common shareholders of record as of May 25, 2016, payable on or before June 17, 2016. Share buyback EDC On April 8, 2016, May 2, 2016 and May 3, 2016 EDC purchased 2,000,000 shares, 390,000 shares, and 1,000,000 shares from the market at average prices of₱5.6370, ₱5.6623 and ₱5.635, respectively.

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