COVER SHEET

AA SS 90 3
9 30 -0 8 8 1 1 2 27 7
S. E. C. Registration Number

A P C G R O U P , I N C .

(Company's Full Name)

G / F M Y T O W N N E W Y O R K B L D G .

G E N E R A L E . J A C I N T O S T . C O R N E R

C A P A S S T . B R G Y . G U A D A L U P E N U E V O

M A K A T I C I T Y
(Business Address: No. Street City/Tow n/province)

JACKSON T. ONGSIP 8662-8888

662-8888
Contact Person Company's Telephone Number

1 2 3 1 20-IS
Month Day FORM TYPE Month Day
Fiscal Year Annual Meeting

Secondary License Type, If Applicable

Dept. Requiring this Doc. Amended Articles Number/Section

Total Number of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

L CU

Cashier

S T A MPS
 2

Notice of Annual Stockholders’ Meeting

August 10, 2020 | 2:00 p.m.

TO: ALL STOCKHOLDERS

Please take notice that the annual meeting of the stockholders of APC GROUP INC. will be held on
August 10, 2020 at 2:00 p.m. Given the current circumstances, the meeting will be conducted virtually,
and voting will be conducted in absentia through the Corporation’s secure online voting facility.

AGENDA

1. Call to Order
2. Certification of Notice and Quorum
3. Approval of the Minutes of the Annual Meeting of Stockholders held on July 1, 2019
4. Approval of 2019 Operations and Results
5. Ratification of All Acts and Proceedings of the Board of Directors, Board Committees and
the Management during their term of office
6. Election of Directors for 2020-2021
7. Appointment of External Auditor
8. Other Matters
9. Adjournment

Attached is the rationale for the above agenda items for reference.

The Board of Directors has fixed the end of trading hours of the Philippine Stock Exchange on July 9,
2020 as the record date for the determination of stockholders entitled to the notice of, participation via
remote communication, and voting in absentia at such meeting and any adjournment thereof.

The conduct of the meeting will be streamed live, and stockholders may attend the meeting by emailing
apccorsec@bellecorp.com and submitting the required documents until August 5, 2020. All information
submitted shall be verified and validated by the Corporate Secretary.

Stockholders who wish to cast votes through a proxy may accomplish the proxy form (which need not
be notarized) and submit the same on or before August 5, 2020. In view of the community quarantine,
scanned forms will be accepted. Paper copies shall be sent to the office of the Corporate Secretary at the
23rd Floor, Philippine Stock Exchange Centre, East Tower Exchange Road, Ortigas Center, Pasig City
once the community quarantine is lifted.

Stockholders who successfully validated/registered can cast their votes in absentia through the
Corporation’s secured e-mail for this meeting. In order to participate remotely, they will also be provided
with access to the meeting that will be held virtually. The “Guidelines for Participation via Remote
Communication and Voting in Absentia” as appended to the Definitive Information Statement labeled as
Schedule A is posted in the Corporation’s website http://www.apcaragorn.net/index.php/disclosures/sec-
filings/sec-form-20-is-information-statement and PSE Edge.

City of Pasig, June 30, 2020

RICHARD ANTHONY D. ALCAZAR

Corporate Secretary
 3

RATIONALE FOR AGENDA ITEMS

1. Call to Order. The Chairman of the Board of Directors, Mr. Willy N. Ocier, will call the meeting to order.

2. Certification of Notice and Quorum. The Corporate Secretary, Atty. Richard Anthony D. Alcazar will
certify that copies of this Notice were sent to Stockholders of record as of July 9, 2020. The Corporate
Secretary will also certify the number of attendees, whether in person or by proxy, for the purpose of
determining the existence of quorum to validly transact business.

3. Approval of the Minutes of the Annual Meeting of Stockholders held on July 1, 2019. The Minutes of
the July 1, 2019 Annual Stockholders’ Meeting (ASM) are available on the Corporation’s website:
http://www.apcaragorn.net/index.php/component/jdownloads/summary/109-minutes-of-all-general-or-
special-stockholders-meetings-2019/401-july-1-2019-minutes-of-the-annual-stockholders-meeting-2019.
Copies of the minutes of the annual stockholders’ meeting held on July 1, 2019 are available for inspection
during office hours at the office of the Corporate Secretary and will also be made available during the ASM.
The results of last year’s annual stockholders’ meeting were also timely disclosed with the Philippine Stock
Exchange, Inc. and the Securities and Exchange Commission (SEC). The minutes, as recommended by the
Board of Directors, are subject to stockholders’ approval during this year’s stockholders’ meeting.

4. Approval of 2019 Operations and Results. The Company’s 2019 performance results have been
summarized in the Annual Report, which includes the Audited Financial Statements (AFS) of the Company
for the year ended 31 December 2019. The AFS, as audited by the external auditor which expressed an
unqualified opinion therefor, have been reviewed and approved by the Audit Committee and the Board of
Directors. Stockholders, after identifying themselves, will be given an opportunity to raise questions
regarding the operations and report of the Company during the ASM.

5. Ratification of all Acts of the Board of Directors, Board Committees and the Management during their
term of office. All actions, proceedings and contracts entered into, as well as resolutions made, including
approvals of significant related party transactions, of the Board of Directors, the Board Committees and the
Management from the last ASM held on July 1, 2019 until August 10, 2020 will be presented to the
shareholders for their confirmation, approval and ratification. The Company’s performance in 2019, as
detailed in the Annual Report, is attributed to the strategic directions and key policies set by the Board of
Directors which were effectively executed and complied with by Management in conformance with good
corporate governance and ethical best practices. The ratification of the acts undertaken by the Board of
Directors, Board Committees, and Management is subject to stockholders’ approval during this year’s
stockholders’ meeting.

6. Election of Directors for 2020-2021. Incumbent Directors of the Company, including Independent
Directors, have been pre-qualified by the Company’s Corporate Governance Committee for election as
directors for 2020-2021. Their proven competence, expertise and qualifications based on current regulatory
standards, will help sustain the Company’s solid performance for the benefit of all its shareholders. The
profiles of the Board of Directors are contained in the Definitive Information Statement for reference of the
stockholders and are likewise posted on the Company’s website. Directors for 2020-2021 will be elected
during this year’s stockholders’ meeting. If elected, they shall serve as such from August 10, 2020 until their
successors shall have been duly qualified and elected.

7. Appointment of External Auditor. As pre-screened and recommended by the Audit Committee, the Board
has endorsed for stockholder approval the re-appointment of SyCip Gorres Velayo & Co. (SGV&Co.) as the
Company’s external auditor for 2020. SGV&Co. is one of the top auditing firms in the country and is duly
accredited by the SEC. The appointment of SGV&Co. as external auditor of the Company for 2019 is subject
to stockholders’ approval during this year’s stockholders’ meeting. The Stockholders will also be requested
to delegate to the Board the authority to approve the appropriate audit fee for 2020.

8. Other Matters. The Chairman will open the floor for comments and questions by the stockholders.
Stockholders may raise other matters or issues that may be properly taken up at the meeting.

9. Adjournment. After all business has been considered and resolved, the Chairman shall declare the meeting
adjourned.
 PROXY FORM

The undersigned stockholder of APC Group Inc. (the “Company”), registered in the name of Philippine Central Depository
Nominee Corporation, if applicable*, hereby appoints ______________________ (as sub-proxy,*) or in his absence, the
Chairman of the meeting, as attorney and proxy, with power of substitution, to represent and vote all shares registered in
his/her/its name as proxy of the undersigned stockholder, at the Annual Meeting of Stockholders of the Company on August
10, 2020 and at any of the adjournments thereof for the purpose of acting on the following matters:

1. Approval of Minutes of Previous Meeting 6. At their discretion, the proxies named above are
held on July 1, 2019 authorized to vote upon such other matters as may be
properly come before the meeting
___ Yes ___ No ___ Abstain
___ Yes ___ No ___ Abstain
2. Approval of 2019 Operations and Results

___ Yes ___ No ___ Abstain ___________________________________________

Printed Name of Stockholder/Broker/PCD Participant
3. Ratification of all Acts of the Board of Directors, Board
Committees and the Management during their term of ___________________________________________
office Signature of Stockholder or Name and Signature of
Authorized Signatory of Corporate Stockholder/
___ Yes ___ No ___ Abstain Broker/PCD Participant

4. Election of Directors for 2020 to 2021 ___________________________________________

Date
___ 4.1 Vote for all nominees listed below:
This Proxy must be submitted together with the following:
a. Willy N. Ocier
b. Jackson T. Ongsip For Individual Stockholders
c. Virginia A. Yap If a representative will sign on behalf of stockholder, this proxy
d. Bernardo D. Lim must be submitted together with a duly executed Special of
e. Edmundo L. Tan General Power of Attorney showing the authority of the
f. Tomas D. Santos (Independent) representative to sign on behalf of the individual stockholder.
g. Rafael M. Alunan III (Independent)
___ 4.2 Withhold authority for all nominees above For Corporate Stockholders
___ 4.3 Withhold authority to vote for the nominees A duly executed Secretary’s Certificate showing the authority of
the representative to sign on behalf of the stockholder
listed below: corporation. Enclosed is a sample Secretary’s Certificate for your
_______________ _______________ reference.
_______________ _______________
_______________ _______________ For PCD Participants/Brokers
A duly executed Secretary’s Certificate showing the authority of
5. Appointment of External Auditor the representative to sign on behalf of the PCD
Participant/Broker, as well as the duly accomplished proxy or
___ Yes ___ No ___ Abstain certificate of shareholdings issued by the PDTC. Enclosed is a
sample Secretary’s Certificate for your reference.

THIS PROXY SHOULD BE RECEIVED BY THE CORPORATE SECRETARY AT LEAST THREE (3) BUSINESS
DAYS BEFORE THE DATE SET FOR THE ANNUAL MEETING AS PROVIDED IN THE BY-LAWS.

THIS PROXY IS NOT REQUIRED TO BE NOTARIZED, AND WHEN PROPERLY EXECUTED, WILL BE VOTED
IN THE MANNER AS DIRECTED HEREIN BY THE STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED “FOR” THE ELECTION OF ALL NOMINEES AND FOR THE APPROVAL OF THE
MATTERS STATED ABOVE AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING IN THE MANNER DESCRIBED IN THE INFORMATION STATEMENT AND/OR AS RECOMMENDED
BY MANAGEMENT OR THE BOARD OF DIRECTORS.

A STOCKHOLDER GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME BEFORE THE RIGHT
GRANTED IS EXERCISED. A PROXY IS ALSO CONSIDERED REVOKED IF THE STOCKHOLDER ATTENDS
THE MEETING IN PERSON AND EXPRESSED HIS INTENTION TO VOTE IN PERSON.

THIS PROXY FORM SHALL BE VALID FOR FIVE (5) YEARS FROM DATE HEREOF.

* For PCD Participants/Brokers

 5

SPECIAL POWER OF ATTORNEY

Know all men by these presents:

I, __________________________________________ , __________________ citizen, of legal age and a resident

of ____________________________________________________________________________, do hereby
name, constitute, and appoint ______________________________, __________________ citizenship, of legal
age and a resident of _________________________________________________________________________,
to be my true and lawful attorney-in-fact for myself and in my name, place and stead, to do and perform the
following acts and things, namely:

1. To attend the 2020 Annual Stockholders’ Meeting of APC Group, Inc., or at any adjournments thereof, of
which I am a shareholder, and then and there to exercise my voice and vote and whatsoever privileges, rights,
and prerogatives may correspond to me by reason of my shares therein; and

2. To delegate in whole or in part any or all of the powers and authorities herein covered, by means of an
instrument in writing in favor of any third person or persons whom the attorney-in-fact may select.

Acknowledgement

Republic of the Philippines )

_____________________ )

Before me, a Notary Public for and in the City of ______________, this __ day of ___________ 2020 personally
appeared ________________________ who presented to me his/her (Gov’t. issued ID No.) issued on _________
at ______________ and who was identified by me through his/her competent evidence of identity to be the same
person described in the foregoing instrument, who acknowledged before me that his/her signature on the
instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she
has executed the instrument as his/her free and voluntary act and deed.

This instrument refers to the Special Power of Attorney consisting of (__) pages, including this page, and signed
by the persons executing this instrument and sealed with the notarial seal.

WITNESS MY HAND AND SEAL on the date and place first above written.

Doc. No. ______;

Page No. ______;
Book No. ______;
Series of ______.
 6

SECRETARY’S CERTIFICATE

I, _______________________________________, ____________________ citizen, of legal age and

with office address at
________________________________________________________________________, do hereby
certify that:

1. I am the duly appointed Corporate Secretary of_________________________ (the “Corporation”), a

corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines,
with office address at ____________________________________________.

2. Based on the records, during the lawfully convened meeting of the Board of Directors of the Corporation
held on _____________________________, the following resolutions were passed and approved:

“RESOLVED, That ______________________________________________________,

_____________________________________________ be authorized and appointed, as he
is hereby authorized and appointed, as the Corporation’s Proxy (the “Proxy”) to attend all
meetings of the stockholders of APC Group, Inc. (APC) whether the meeting is regular or
special, or at any meeting postponed or adjourned therefrom, with full authority to vote the
shares of stock of the Corporation held in APC and to act upon all matters and resolution
that may come before or presented during meetings, or any adjournments thereof, in the
name, place and stead of the Corporation.

“RESOLVED, FINALLY, That APC be furnished with a certified copy of this resolution
and APC may rely on the continuing validity of this resolution until receipt of written notice
of its revocation.”

3. The foregoing resolutions have not been modified, amended or revoked in accordance with the records
of the Corporation presently in my custody.

IN WITNESS WHEREOF, I have signed this instrument in ________________________________ on

__________________________.

___________________________
Printed Name and Signature of the
Corporate Secretary

SUBSCRIBED AND SWORN TO BEFORE ME on __________________ in _________________.

Affiant exhibited to me his Competent Evidence of Identity by way of _____________________ issued
on _______________ at ________________.

Doc. No. ______;

Page No. ______;
Book No. ______;
Series of ______.
 7

EXPERIENCE / EDUCATION
WILLY N. OCIER Mr. Ocier, 63, is the Chairman of the Company. He is also an Executive
Director and the Chairman of Belle Corporation and Premium Leisure
Corp., Chairman and Director of PremiumLeisure and Amusement, Inc. and
the Vice Chairman of Tagaytay Highlands International Golf Club, Inc. and
Highlands Prime, Inc. He is the Chairman and Director of Tagaytay
Midlands Golf Club, Inc., The Country Club at the Tagaytay Highlands,
Inc., The Spa and Lodge, Inc. Mr. Ocier is also the Chairman, President,
and Chief Executive Officer of Philippine Global Communications, Inc.,
Chairman and President of Pacific Online Systems Corporation, and
Chairman of Total Gaming and Technologies, Inc. He is a Director of
Leisure and Resorts World Corporation. He also sits as a Director to the
following unaffiliated corporations, IVantage Equities, Philequity
Management, Inc., Abacore Capital Holdings, Inc. and Toyota Corporation
Batangas. He was formerly President and Chief Operating Officer of
Eastern Securities Development Corporation. Mr. Ocier graduated from
Ateneo de Manila University with a Bachelor of Arts degree in Economics.
In recognition of Mr. Ocier’s corporate leadership and role in providing
employment opportunities to Filipinos, the University of Batangas
conferred him a degree in Doctor of Humanities, honoris causa.

JACKSON T. ONGSIP Mr. Ongsip, 46, is the President, Chief Executive Officer and Chief Risk
Officer of the Company. He is also the Vice President for Finance and Chief
Financial Officer (CFO) of Premium Leisure Corp., Vice President for
Portfolio Investments of SM Investments Corporation, Executive Vice
President and CFO of Belle Corporation. Mr. Ongsip is also a Certified
Public Accountant with an extensive audit and finance background
accumulated from 5 years in external audit with SyCip, Gorres, Velayo &
Co., 11 years with Globe Telecom and 8 years now with the SM Group. He
graduated from the University of Santo Tomas with a Bachelor of Science
in Accountancy.

VIRGINIA A. YAP Ms. Yap, 68, is a Director of APC Group, Inc. Ms. Yap holds key positions
in SM Investments Corporation as a Senior Vice President – Office of the
Chairman Emeritus and Securities Department. She is also a Director of
Belle Corporation.

She holds a Bachelor of Science in Commerce (Major in Accounting)

degree from the University of Mindanao.

EDMUNDO L. TAN Atty. Tan, 74, is a Director of APC Group, Inc. from 2000 up to the present
and as Corporate Secretary from 2000 until 2016. He serves as Director of
Philippine Global Communications, Inc. from 2000 up to the present and as
Corporate Secretary from 2000 until 2010. He is a director of Aragorn Power
and Energy Corporation from 2005 up to the present and as Corporate
Secretary from 2005 up to 2012. He is currently a Director of PRC MAGMA
Resources, Inc. (2010 up to the present). He is a director of OCP Holdings,
Inc. from July 2012 up to the present. He was elected as director of
Sagittarius Mines, Inc. in March 2016. On 12 December 2019 he was elected
Director of Concrete Aggregates Corporation. He serves as Corporate
Secretary of BDO Unibank, Inc. from July 2007 up to the present and BDO
Private Bank from February 2012 up to the present. He was formerly a
Director of BDO Leasing & Finance, Inc. and now serves as Adviser of the
Board.

He was a founder and was elected President of Philippine Dispute

Resolution Center, Inc. (PDRCI) in July 2017.
 8

EXPERIENCE / EDUCATION
Atty. Tan is the Managing Partner of Tan, Acut Lopez & Pison Law Offices
(1993 up to present). He was formerly Senior Partner in Ponce Enrile
Cayetano Reyes & Manalastas Law Offices, a Partner in Angara Abello
Concepcion, Regala & Cruz Law Offices, and an Associate in Cruz Villarin
Ongkiko Academia & Durian Law Offices

BERNARDO D. LIM Mr. Lim, 72, is a Director of the Company since 2001. He was the General
Manager for Finance of P.T. Bakrie Sumatra Plantations in Indonesia before
he joined APC Group. He also assumed various positions in the firms he
joined earlier: Vice President for Finance and Administration of
Westinghouse Asia Controls Corporation and Cellophil Resources
Corporation; Vice President and Treasurer of Atlantic Gulf & Pacific
Company of Manila and AG&P Industrial Corporation; Vice President for
Finance of Trans-Philippines Investment Corporation; Treasurer of Fluor
Daniel/AG&P, Inc., Technoserve International Corporation, and Wire Rope
Corporation of the Philippines; Vice President and Director of Philippine
Global Communications. Mr. Lim was also Controller of Philippine Iron
Mines. He was previously the President of Aragorn Power and Energy
Corp., Aragorn Coal and APC Mining. He was also Executive Vice
President and Chief Financial Officer of APC Group, Inc. before he retired
on March 31, 2014. Mr. Lim holds a Bachelor of Science in Business
Administration degree from the University of the Philippines. He is a
Certified Public Accountant.

TOMAS D. SANTOS Mr. Santos, 67, is one of the Independent Directors of the Company from 6
June 2012 up to the present. He is also the President of Irvine Construction
Corporation from 1994 to present. He is the owner of Shamu Marketing and
the President of Filipino Chinese Youth Volunteer Fire Department, Inc.
from 2011 to present.

Mr. Santos holds a Bachelor of Science in Business Administration degree

from the University of the East.

RAFAEL M. ALUNAN III Mr. Alunan sits on various Boards of Directors: as Vice-Chair, Pepsi Cola
Products (Philippines), Inc. and chairs the Audit Committee (PCPPI); Metro
Global Holdings Corp. and chairs the Risk and Corporate Governance
Committees; as Chairman, Philippine Council for Foreign Relations (PCFR)
and Harvard Kennedy School Alumni Association of the Philippines Inc.
(HKSAAPI); as President, Philippine Taekwondo Foundation;

He also sits on the board of the Spirit of EDSA Foundation; founded One
Philippines Party List; and serves as Senior Adviser to United Harvest Corp.,
Kaltimex Energy Phils, and United Defense Manufacturing Corp.

Mr. Alunan is an Eminent Fellow of the Development Academy of the

Philippines (DAP); and Fellow of the Institute of Corporate Directors (ICD)
and Institute for Solidarity in Asia (ISA). He co-authored the book entitled
“Silver Linings”; and produced the documentary entitled “Tagaligtas”; and
is a member of the Maritime League; the Fraternal Order of Eagles of the
Philippines; and Zeta Phi Omega fraternity.

He holds the rank of Colonel in the Armed Forces of the Philippines, and
commanded the 131st Infantry Division (Standby Reserve) and the 9 th
Infantry Division (Ready Reserve) of the Philippine Army. He is an adopted
member of Philippine Military Academy Marangal Class of 1974, PC-
Special Action Force, Special Forces Regiment (Airborne) and First Scout
Ranger Regiment.
 9

EXPERIENCE / EDUCATION
Mr. Alunan obtained his double degree in Business Administration and
History-Political Science from De La Salle University; attended Ateneo de
Manila University’s Master in Business Administration-Senior Executive
Program; earned a Master’s degree in Public Administration and a certificate
in Executive Education from Harvard Kennedy School of Government; and
graduated from the Philippine Army’s Command and General Staff College
Operations Course.

Mr. Alunan served in the Cabinets of Presidents Corazon C. Aquino and

Fidel V. Ramos as Secretary of Tourism and Secretary of the Interior and
Local Government, respectively.
 10

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 20-IS

Information Statement Pursuant to Section 20 of the Securities Regulation Code

1. Check the appropriate box:

√ Preliminary Information Statement

_____ Definitive Information Statement

2. Name of Registrant as specified in its charter: APC GROUP, INC.

3. Province, country or other jurisdiction of incorporation: Philippines

4. SEC Identification Number: AS93008127

5. BIR Tax Identification Number: 002-834-075

6. Address of principal office

G/F MyTown New York Bldg. Gen. E. Jacinto St. corner Capas St.,
Brgy. Guadalupe Nuevo, Makati City, 1212

7. Registrant’s telephone number, including area code: (632) 8662-8888

8. Date, time and place of the meeting of security holders:

Date: August 10, 2020
Time: 2:00 PM
Venue: Not applicable (given the current circumstances, the meeting will be conducted
virtually)

9. Approximate date on which the Information Statement is first to be sent or given to security
holders: July 12, 2020

10. Securities registered pursuant to Sections 8 and 12 of the Code or Sections 4 and 8 of the SRC

Number of Shares of Common Stock

Title of Each Class Outstanding and Amount of Debt Outstanding

Common Stock 7,504,203,997 shares (As of May 31, 2020)

11. Are any or all of these securities listed on a stock exchange?

Yes ( x ) No ( )

12. If yes, disclose the name of such Stock Exchange and the class of securities listed therein:

Philippine Stock Exchange- Common Shares

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE

REQUESTED NOT TO SEND US A PROXY.
 11

A. GENERAL INFORMATION

Item 1. Date, time and place of meeting of security holders.

(a) Date: August 10, 2020

Time: 2:00 PM
Place: Not applicable. The meeting will be done virtually.

(b) The approximate date on which the Information Statement is first to be sent or given to
security holders is on July 12, 2020

(c) The complete mailing address of the principal office of APC Group, Inc. (“the Company”)
is: G/F MyTown New York Bldg. Gen. E. Jacinto St. corner Capas St., Brgy Guadalupe
Nuevo, Makati City

Item 2. Dissenters’ Right of Appraisal

The matters to be voted upon in the Annual Stockholders’ Meeting on August 10, 2020 are not
among the instances enumerated in Sections 41 and 80 of the Revised Corporation Code (“Revised
Code”) whereby the right of any stockholder to dissent and demand payment of the fair value of
his shares may be exercised. The instances where the right of appraisal may be exercised are as
follows:

1. In case any amendment to the Articles of Incorporation has the effect of changing or restricting
the rights of any stockholders or class of shares, or of authorizing preferences to any respect
superior to those outstanding shares of any class, or of extending or shortening the term of
corporate existence;
2. In case of sale, lease, exchange, transfer, mortgage, pledge or other dispositions of all or
substantially all of the corporate property and assets as provided in the Revised Code;

3. In case of the investment of the corporate funds in another corporation or business or for any
purpose other than its primary purpose; and
4. In case of merger or consolidation.

In case the right of appraisal will be exercised, Section 82 of the Revised Corporation Code
provides for the appropriate procedure, viz:

The appraisal right may be exercised by any stockholder who shall have voted against the proposed
corporate action, by making a written demand on the corporation within thirty (30) days after the
date on which the vote was taken for payment of the fair value of his shares: Provided, that failure
to make the demand within such period shall be deemed a waiver of the appraisal right. If the
proposed corporate action is implemented or affected, the corporation shall pay to such
stockholder, upon surrender of the certificate(s) of stock representing his shares, the fair value
thereof as of the day prior to the date on which the vote was taken, excluding any appreciation or
depreciation in anticipation of such corporate action.

If within a period of sixty (60) days from the date the corporate action was approved by the
stockholders, the withdrawing stockholder and the corporation cannot agree on the fair value of
the shares, it shall be determined and appraised by three (3) disinterested persons, one of whom
shall be named by the stockholder, another by the corporation and the third by the two thus chosen.
The findings of the majority of the appraisers shall be final, and their award shall be paid by the
corporation within thirty (30) days after such award is made: Provided, that no payment shall be
made to any dissenting stockholder unless the corporation has unrestricted retained earnings in its
books to cover such payment: and Provided, further, that upon payment by the corporation of the
agreed or awarded price, the stockholder shall forthwith transfer his shares to the corporation.
 12

Item 3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon

(a) No person who has been a director or officer or a nominee for election as director of the
Company or associate of such persons, has a substantial interest, direct or indirect, in any
matter to be acted upon other than the election of directors for the year 2020-2021.

(b) The Company is not aware of any director or security holder who intends to oppose any
action to be taken by the Registrant during the stockholders’ meeting.

B. CONTROL AND COMPENSATION INFORMATION

Item 4. Voting Securities and Principal Holders Thereof

(a) As of May 31, 2020, the Registrant has 7,504,203,997 common shares outstanding and each
share is entitled to one vote. As of May 31, 2020, out of the outstanding capital stock of the
Corporation, 515,363,564 common shares or 6.87% is owned by foreigners.

The record date with respect to the determination of the stockholders entitled to notice of and
vote at the Annual Stockholders' Meeting is July 9, 2020

(b) With respect to the election of directors of seven (7) directors, each stockholder may vote
such number of shares for as many as seven (7) persons he may choose to be elected from
the list of nominees, or he may cumulate said shares and give one candidate as many votes
as the number of his shares multiplied by seven (7) shall equal, or he may distribute them on
the same principle among as many candidates as he shall see fit, provided that the total
number of votes cast by him shall not exceed the number of shares owned by him multiplied
by seven (7).

(c) Security ownership of certain record and beneficial owners and management.

1. Security Ownership of Certain Record and Beneficial Owners

The persons or groups identified in the table below are known to the Company as directly
or indirectly the record or beneficial owners of more than five percent (5%) of the
Company’s voting securities as of May 31, 2020:

Name of Beneficial
Name and Address of No. of %
Title of Owner and Citizens
Record Owner and Shares Hel
Class Relationship with hip
Relationship with Issuer Held d
Record Owner
Common Belle Corporation
(Belle) * Belle Corporation Filipino 3,500,000,0 46.6
(affiliate shareholder) 00 4
5/F Tower A, Two E-
Com Center Palm Coast
Ave., Mall of Asia
Complex, CPB-1A
Pasay City

Common PCD Nominee Corp.

(Filipino) ** (please see footnote) Filipino 2,326,518,1 31.0
65 0
G/F Makati Stock
Exchange,
6767 Ayala Avenue,
Makati City

*Belle Corporation is an affiliate of APC Group Inc. The shares held by Belle
Corporation, being a corporate shareholder, shall be voted or disposed of, by the persons
 13

who shall be duly authorized by Belle for the purpose. The natural person/s that has/have
the power to vote on the shares of Belle shall be determined upon the submission of its
proxy form to the Company, which is not later than three (3) business days before the
date of the meeting.

**PCD Nominee Corporation (“PCDNC”) is a wholly-owned subsidiary of Philippine

Central Depository, Inc. (“PCD”). The beneficial owners of such shares registered under
the name of PCDNC are PCD’s participants who hold the shares in their own behalf or in
behalf of their clients. The PCD is prohibited from voting these shares; instead the
participants have the power to decide how the PCD shares in APC Group, Inc. are to be
voted.

2. Security Ownership of Management

The following table shows the shareholdings beneficially held by the directors and
officers of the Company as of May 31, 2020:

Title of Name of Beneficial Amount and nature of Citizenship Percent

Class Owner beneficial ownership
Common Willy N. Ocier 2,207,001 Direct/ Filipino 0.03%
Indirect
Common Edmundo L. Tan 234,701 Direct/ Filipino 0%
Indirect
Common Virginia A. Yap 10,001 Direct Filipino 0%
Common Bernardo D. Lim 1,000 Direct Filipino 0%
Common Jackson T. Ongsip 1 Direct Filipino 0%
Common Tomas D. Santos 1 Direct Filipino 0%
Common Laurito E. Serrano 1 Direct Filipino 0%
n/a Ian Jason R. Aguirre - n/a Filipino 0%
n/a Richard Anthony D. - n/a Filipino 0%
Alcazar
Total 2,452,706

3. Voting Trust Holders of 5% or More

The Company is not aware of any party which holds any voting trust or any similar
agreement for 5% or more of APC Group Inc.’s voting securities.

4. Changes in Control

There is no arrangement which may result in a change in control of APC.

 14

Item 5. Directors and Executive Officers of the Registrant

The names and ages of all incumbent Directors, elected on July 1, 2019 during the Annual
Stockholders’ Meeting and who are to serve a term of one (1) year until their successor shall have
been elected and qualified, and the Executive Officers are:

Name Age/yrs Date of Initial Position Nationality

Appointment
Willy N. Ocier 63 Year 1999 Chairman Filipino
August 13, Director/President/CEO/
Jackson T. Ongsip 46 Filipino
2015 CRO
Edmundo L. Tan 74 Year 2000 Director Filipino
Bernardo D. Lim 72 Year 2001 Director Filipino
Virginia A. Yap 68 June 6, 2012 Director Filipino
Tomas D. Santos 67 June 6, 2012 Independent Director Filipino
June 18, 2013 Independent Director
Laurito E. Serrano 59 Filipino
(Lead)
August 13, EVP-CFO /
Ian Jason R. Aguirre 44 2015 Chief Compliance Filipino
Officer
Richard Anthony D.
49 May 31, 2017 Corporate Secretary Filipino
Alcazar

The Company’s Board of Directors is vested, by the by-laws of the Company, over-all
responsibility for the management of the Company’s business. The Board of Directors elects the
executive officers of the Company.

The Company amended its Amended By-Laws by adding Section 13 of Article IV providing rules
and regulation for the nomination and election of independent directors and which amendment
was approved by the SEC on November 28, 2006.

The composition of the Board of Directors and the incumbent executive officers of the Company
are as follows:

Willy N. Ocier
Chairman of the Board
Non-Executive Director
Date of First Appointment: Year 1999
Chairman, Executive Committee
Chairman, Compensation and Remuneration Committee

Mr. Ocier, 63, is the Chairman of the Company. He is also an Executive Director and the Chairman
of Belle Corporation and Premium Leisure Corp., Chairman and Director of PremiumLeisure and
Amusement, Inc. and the Vice Chairman of Tagaytay Highlands International Golf Club, Inc. and
Highlands Prime, Inc. He is the Chairman and Director of Tagaytay Midlands Golf Club, Inc., The
Country Club at the Tagaytay Highlands, Inc., The Spa and Lodge, Inc. Mr. Ocier is also the
Chairman, President, and Chief Executive Officer of Philippine Global Communications, Inc.,
Chairman and President of Pacific Online Systems Corporation, and Chairman of Total Gaming
and Technologies, Inc. He is a Director of Leisure and Resorts World Corporation. He also sits as
a Director to the following unaffiliated corporations, IVantage Equities, Philequity Management,
Inc., Abacore Capital Holdings, Inc. and Toyota Corporation Batangas. He was formerly President
and Chief Operating Officer of Eastern Securities Development Corporation. Mr. Ocier graduated
from Ateneo de Manila University with a Bachelor of Arts degree in Economics. In recognition of
Mr. Ocier’s corporate leadership and role in providing employment opportunities to Filipinos, the
University of Batangas conferred him a degree in Doctor of Humanities, honoris causa.
 15

Jackson T. Ongsip
President and Chief Executive Officer
Executive Director
Date of First Appointment: August 2015
Member, Executive Committee
Chief Risk Officer

Mr. Ongsip, 46, is the President, Chief Executive Officer and Chief Risk Officer of the
Company. He is also the Vice President for Finance and Chief Financial Officer of
Premium Leisure Corp., Vice President for Portfolio Investments of SM Investments
Corporation, Executive Vice President and CFO of Belle Corporation. Mr. Ongsip is also
a Certified Public Accountant with an extensive audit and finance background
accumulated from 5 years in external audit with SyCip, Gorres, Velayo & Co., 11 years
with Globe Telecom and 8 years now with the SM Group. He graduated from the
University of Santo Tomas with a Bachelor of Science in Accountancy.

Edmundo L. Tan
Non-Executive Director
Date of First Appointment: Year 2000
Member, Compensation and Remuneration Committee

Atty. Tan, 74, is a Director of APC Group, Inc. from 2000 up to the present and as Corporate
Secretary from 2000 until 2016. He serves as Director of Philippine Global Communications,
Inc. from 2000 up to the present and as Corporate Secretary from 2000 until 2010. He is a director
of Aragorn Power and Energy Corporation from 2005 up to the present and as Corporate
Secretary from 2005 up to 2012. He is currently a Director of PRC MAGMA Resources, Inc.
(2010 up to the present). He is a director of OCP Holdings, Inc. from July 2012 up to the present.
He was elected as director of Sagittarius Mines, Inc. in March 2016. On 12 December 2019 he
was elected Director of Concrete Aggregates Corporation. He serves as Corporate Secretary of
BDO Unibank, Inc. from July 2007 up to the present and BDO Private Bank from February 2012
up to the present. He was formerly a Director of BDO Leasing & Finance, Inc. and now serves
as Adviser of the Board.

He was a founder and was elected President of Philippine Dispute Resolution Center, Inc.
(PDRCI) in July 2017.

Atty. Tan is the Managing Partner of Tan, Acut Lopez & Pison Law Offices (1993 up
to present). He was formerly Senior Partner in Ponce Enrile Cayetano Reyes &
Manalastas Law Offices, a Partner in Angara Abello Concepcion, Regala & Cruz Law
Offices, and an Associate in Cruz Villarin Ongkiko Academia & Durian Law Offices

Bernardo D. Lim
Non-Executive Director
Date of First Appointment: Year 2001
Chairman, Risk Oversight Committee
Member, Audit Committee
Member, Corporate Governance Committee
Member, Related Party Transactions Committee

Mr. Lim, 72, is a Director of the Company since 2001. He was the General Manager for Finance
of P.T. Bakrie Sumatra Plantations in Indonesia before he joined APC Group. He also assumed
various positions in the firms he joined earlier: Vice President for Finance and Administration of
Westinghouse Asia Controls Corporation and Cellophil Resources Corporation; Vice President
and Treasurer of Atlantic Gulf & Pacific Company of Manila and AG&P Industrial Corporation;
Vice President for Finance of Trans-Philippines Investment Corporation; Treasurer of Fluor
Daniel/AG&P, Inc., Technoserve International Corporation, and Wire Rope Corporation of the
Philippines; Vice President and Director of Philippine Global Communications. Mr. Lim was also
Controller of Philippine Iron Mines. He was previously the President of Aragorn Power and
 16

Energy Corp., Aragorn Coal and APC Mining. He was also Executive Vice President and Chief
Financial Officer of APC Group, Inc. before he retired on March 31, 2014. Mr. Lim holds a
Bachelor of Science in Business Administration degree from the University of the Philippines. He
is a Certified Public Accountant.

Virginia A. Yap
Non-Executive Director
Date of First Appointment: June 2012
Member, Executive Committee
Member, Compensation and Remuneration Committee

Ms. Yap, 68, is a Director of APC Group, Inc. Ms. Yap holds key positions in SM Investments
Corporation as a Senior Vice President – Office of the Chairman Emeritus and Securities
Department. She is also a Director of Belle Corporation.

She holds a Bachelor of Science in Commerce (Major in Accounting) degree from the University
of Mindanao.

Tomas D. Santos
Independent Director
Non-Executive Director
Date of First Appointment: June 2012
Chairman, Corporate Governance Committee
Chairman, Related Party Transactions Committee
Member, Risk Oversight Committee
Member, Audit Committee

Mr. Santos, 66, is an independent director of the Company from 6 June 2012 up to the present.
He is also the President of Irvine Construction Corporation from 1994 to present. He is the owner
of Shamu Marketing and the President of Filipino Chinese Youth Volunteer Fire Department,
Inc. from 2011 to present.

Mr. Santos holds a Bachelor of Science in Business Administration degree from the University of
the East.

Laurito E. Serrano
Lead Independent Director
Non-Executive Director
Date of First Appointment: June 2013
Chairman, Audit Committee
Member, Risk Oversight Committee
Member, Corporate Governance Committee
Member, Related Party Transactions Committee

Corporate Finance. Mr. Serrano currently serves as independent director and Chairman of the
Audit and Compliance Committee of Rizal Commercial Banking Corporation (RCBC),
independent director and Chairman of the Audit and Risk Management Committee of Atlas
Consolidated Mining Development Corporation (AT), independent director and Chairman of the
Audit Committee of 2Go Group, Inc., and independent director of Pacific Online Systems
Corporation (LOTO). He also serves as a director in Axelum Resources Corporation (AXLM)
and MRT Development Corporation, among others. Mr. Serrano is also a former partner of the
Corporate Finance Consulting Group of SGV & Co.
 17

Ian Jason R. Aguirre

Executive Vice President
Chief Finance Officer and Chief Compliance Officer

Mr. Ian Jason R. Aguirre, 45, was appointed as the Executive Vice President, Chief Financial
Officer and Compliance Officer of the Company effective August 13, 2015. Mr. Aguirre is
concurrently a Vice President of SM Investments Corporation (“SMIC”). He has worked in various
management positions over a 16-year career that included local and international experience in
strategic planning, operations and business development. His last stint prior to joining SMIC was
as a Director for CEMEX Asia Pte. Ltd.

Mr. Aguirre holds a Bachelor of Science degree in Industrial Engineering from the University of
the Philippines and a Master’s degree in Business Management from the Asian Institute of
Management.

Richard Anthony D. Alcazar

Corporate Secretary

Atty. Richard Anthony D. Alcazar is the Corporate Secretary of Philippine Global

Communications, Inc. since June 22, 2010. He was appointed Corporate Secretary of BDO
Leasing & Finance Inc. in 2009. He is a partner in Tan Acut Lopez & Pison Law Offices and his
practice is primarily devoted to the fields of corporation law and taxation. He was formerly a
Director in the Tax Division of Sycip Gorres Velayo & Co. where he worked as a tax practitioner
from November 1994 to December 2002.

Atty. Alcazar graduated with a Bachelor of Science degree in Business Economics from the
University of the Philippines School of Economics and a Bachelor of Laws degree from the
University of the Philippines College of Law. He also holds a Master of Arts degree in
International Development from the International University of Japan with Public Finance as field
of concentration. He is a member of the Integrated Bar of the Philippines and the Tax Management
Association of the Philippines.

Independent Directors

Mr. Tomas D. Santos and Mr. Laurito E. Serrano were re-elected as Independent Directors during
July 1, 2019 Annual Stockholders’ Meeting to comply with the requirements set forth in Section
38 of the Securities Regulation Code.

Currently, no independent director has exceeded the cumulative term of nine (9) years per SEC
Memorandum Circular No. 4, Series of 2017.

The nomination, pre-screening and election of independent directors were made in compliance
with the requirements of the Code of Corporate Governance and the Securities and Exchange
Commission’s Guidelines on the Nomination and Election of Independent Directors which have
been adopted and made part of the Corporation’s By-Laws.

The Corporate Governance Committee constituted by the Company’s Board of Directors, indorsed
the nomination by Maritoni Z. Liwanag and Martin Israel L. Pison in favor of Mr. Tomas D. Santos
and Mr. Rafael M. Alunan III, respectively, for their re-election and election as Independent
Directors.

The Corporate Governance Committee, composed of Tomas D. Santos, Bernardo D. Lim and
Laurito E. Serrano have determined that the nominees for Independent Director possess all the
qualifications and has none of the disqualifications for independent director as set forth in the
Company’s Manual on Corporate Governance and Rule 38 of the Implementing Rules of the
Securities Regulation Code (SRC).
 18

Directorships in Other Publicly Listed Companies:

The following are directorships held by Directors and Officers in other reporting companies in the
last five years:

Type of Directorship
Name of Name of Listed Company (Executive, Non-Executive,
Director Independent); Indicate if
director is also the
Chairman
Willy N. Ocier Belle Corporation Chairman, Executive Director
Premium Leisure Corp. Chairman, Executive Director
Pacific Online Systems Corporation Chairman and President
Leisure & Resorts World Corp. Non-Executive Director
Vantage Equities, Inc. Non-Executive Director
AbaCore Capital Holdings, Inc. Non-Executive Director
Virginia A. Yap Belle Corporation Non-Executive Director
Laurito E. Serrano Atlas Consolidated Mining and
Independent Director
Development Corporation
2GO Group Inc. Independent Director
Pacific Online Systems Corporation Independent Director
Rizal Commercial Banking Corporation Independent Director
Axelum Resources Corp. Independent Director

None of the directors and officers of the Company works in the government or any of its
subdivisions, agencies and instrumentalities.

Family Relationships

None.

Significant employee

There is no significant employee.

Involvement in Certain Legal Proceedings

As of the date of this information statement, the Company is not aware of any if the following
events wherein any of its directors, nominees for election as director, executive officers,
underwriter or control person were involved during the past five (5) years up to date of the
Information Statement:

(a) Any bankruptcy petition filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy or within two years prior to
that time.
(b) Any conviction by final judgment in a criminal proceeding, domestic or foreign, or being
subject to a pending criminal proceeding.
(c) Any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining,
barring, suspending or otherwise limiting the involvement of any of the above persons in any
type of business, securities, commodities or banking activities; and,
(d) Any finding by a domestic or foreign court of competent jurisdiction (in civil action), the
SEC or comparable foreign body, or a domestic or foreign exchange or other organized
trading market or self-regulatory organization, to have violated a securities or commodities
law or regulation and the judgment has not been reversed, suspended or vacated.

Parent of Registrant and Basis of Control

Belle Corporation owns 3,500,000,000 shares of the Company’s capital stock or 46.64%.
 19

Certain Relationships and Related Transactions

No director or executive officers or any member of their immediate family has, during the last two
years, had a direct or indirect, material interest in a transaction or proposed transaction to which
the Company was a party.

Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions. This
includes: (a) individuals owning, directly or indirectly through one or more intermediaries; (b)
associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the
Company that gives them significant influence over the Company, key management personnel,
including directors and officers of the Company and close members of the family of any such
individual; and (d) affiliate, which is a party that, directly or indirectly through one or more
intermediaries, control, is controlled by, or is under common control with the Company. Related
party transactions pertain to the availment of noninterest-bearing advances from a stockholder and
other related parties.

The related party transactions are described in Note 16 (Related Party Transactions) of the Notes
to the Consolidated Financial Statements.

Disagreement with Director

No director has resigned nor declined to stand for re-election to the Board of Directors because of
a disagreement with the Company on any matter relating to the latter’s operations, policies or
practices since the date of the last Annual Stockholders’ Meeting.

Item 6. Compensation of Directors and Executive Officers

Each director is entitled to a transportation allowance of P5,000 per board meeting attended to
cover transportation expenses.

The aggregate compensation paid or incurred during the last two fiscal years and estimated to be
paid in the ensuing fiscal year to the Chief Executive Officer and Chief Finance Officer of the
Company are as follows:

Name and Principal Position

1. Jackson T. Ongsip1
CEO & President
2. Ian Jason Aguirre1
CFO & Executive Vice-President

Summary of Compensation Table

Salary/Per Diem Other Annual
Year Allowance Compensation
2018 (actual) =1,404,000
P =1,066,000
P
CEO & Most Highly Compensated 2019 (actual) 1,404,000 1,066,000
Executive Officer 2020
1,404,000 1,066,000
(estimate)

All Other officers as a group 2018 (actual) − −

unnamed 2019 (actual) − −
2020 − −
(estimate)
1
CEO and Most Highly Compensated Executive Officers

Except as provided above, there are no other officers of the Company receiving compensation.
 20

Below table shows the attendance of each Board member in the meetings conducted in 2019:

Attendance in Board of Directors’ Meetings in 2019

Director 02/15/19 05/14/19 07/01/19 08/08/19 10/22/19 11/06/19 12/11/19
Willy N.
1 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Ocier
Jackson T.
2 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Ongsip
Bernardo D.
3 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Lim
Edmundo L.
4 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Tan
Virginia A.
5 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Yap
Laurito E.
6 ✔ - ✔ ✔ ✔ ✔ ✔
Serrano
Tomas D.
7 ✔ ✔ ✔ - ✔ ✔ ✔
Santos

Employment Contracts and Termination of Employment and Change-in-Control

Arrangements

There are no compensatory plans or arrangements with any executive officer/director that resulted
in or will result from the resignation, retirement or termination of such executive officer/director
or from change-in-control in the Company.

Warrants and Options Outstanding

None. All outstanding options of all executive officers and directors expired in 1999.

No Action on Compensation Plans

No action will be taken on the Registrant's Compensation Plans.

Item 7. Independent Public Accountants

a. The Company’s external auditors for 2018-2019 is SyCip Gorres Velayo & Co. (SGV), with
Mr. Johnny F. Ang as the partner-in-charge.

b. Representatives of SGV are expected to be present at the Annual Meeting to respond to

appropriate questions and will be given the opportunity to make a statement if they so desire.

c. There was no event in the past five (5) years where SGV and the Company had any
disagreement with regard to any matter relating to accounting principles or practices,
financial statement disclosure or auditing scope or procedure.

d. In compliance with SRC Rule 68 3 (b) (iv), the assignment of SGV’s engagement partner for
the Company shall not exceed five (5) consecutive years.

e. The aggregate fees paid by the Company for professional services rendered by the external
auditor for the audit of financial statements for the years ended December 31, 2019 and 2018
are as follows:
2019 =510,000
P
2018 486,000

f. There were no other assurance and related services by the external auditor that are reasonably
related to the performance of the audit or review of the registrant's financial statements.
 21

g. The Audit Committee, composed of Mr. Laurito E. Serrano (Chairman), Mr. Tomas D.
Santos and Mr. Bernardo D. Lim, recommends to the Board of Directors the appointment of
the external auditors. The Board of Directors and the stockholders approve the Audit
Committee’s recommendation. The Executive Committee approves the audit fees as
recommended by the Management.

h. The Audit Committee recommended the re-appointment of SGV as the Company’s external
auditor of fiscal year 2020-2021 and the Board approved and endorses the re-appointment
for stockholders’ approval.

Item 8. Compensation Plans

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

C. ISSUANCE AND EXCHANGE OF SECURITIES

Item 9. Authorization or Issuance of Securities Other than for Exchange

No action will be presented for shareholders’ approval at this year’s annual meeting which
involves authorization or issuance of any securities.

Item 10. Modification or Exchange of Securities

No action will be presented for shareholders’ approval at this year’s annual meeting which
involves the modification of any class of the Company’s securities, or the issuance of one of
Company’s securities in exchange for outstanding securities of another class.

Item 11. Financial and Other Matters

The Audited Financial Statements of the Company and the Management Report, incorporating the
Management’s Discussion & Analysis, is attached as Annex “B”.

Representatives of the external auditor, Sycip Gorres Velayo & Co., are expected to be present at
the annual meeting, and they will have the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions from the shareholders. The
Company has had no material disagreement with Sycip Gorres Velayo & Co. on any matter of
accounting principle or practices or disclosures in the Company’s financial statements.

Item 12. Mergers, Consolidations, Acquisitions and Similar Matters

No action will be presented for shareholders’ approval at this year’s annual meeting which
involves any mergers, consolidation, acquisition and other similar transactions.

Item 13. Acquisition or Disposition of Property

No action will be presented for shareholders’ approval at this year’s annual meeting in respect of
any acquisition or disposition of property of the Company.

Item 14. Restatement of Accounts

No action will be presented for shareholders’ approval at this year’s annual meeting which
involves the restatement of any of the Company’s asset, capital or surplus account.
 22

D. OTHER MATTERS

Item 15. Action with Respect to Reports

There is no action to be taken with respect to any report of the Company or of its directors, officers
or committees except for the approval of the minutes of the previous annual meeting of the
Company.

At the annual meeting, shareholders will be asked to approve and rectify the acts of the Board of
Directors during their term of office. The matters for stockholders’ ratification are acts of the
Board, its Committees and Management for the previous year up to the date of the annual meeting
which were entered into or made in the ordinary course of business, the significant acts or
transactions of which are covered by appropriate disclosures with the Securities and Exchange
Commission and Philippine Stock Exchange, Inc. are as follows:

Date Subject
July 2, 2019 Submission of the Results of the Annual Stockholders’ and
Organizational Board Meetings of APC Group Inc.
December 18, 2019 Setting of Annual Stockholders’ Meeting on June 11, 2020
(3:00pm), to be held at SMX Convention Cente, Seashell Lane,
Mall of Asia Complex, Pasay City, with May 8, 2020 as the
Record Date for shareholders entitled to notice of and to vote at,
the meeting.
February 14, 2020 Approval of the Agenda for the 2020 Annual Stockholders’
Meeting
Approval of the proposed amendment to the Articles of
Incorporation
February 28, 2020 Submission of the 2019 Audited Financial Statements
Advisement on Material Related Party Transaction
April 29, 2020 Postponement of 2020 Annual Stockholders’ Meeting
June 25, 2020 Amended Notice of 2020 Annual Stockholders’ Meeting

Item 16. Matters Not Required to be submitted

No action is to be taken with respect to any matter which is not required to be submitted to a vote
of security holders.

Item 17. Other Proposed Actions

Other than the matters indicated in the Notice and Agenda included in this Information Statement,
there are no other actions proposed to be taken at the annual meeting.

Item 18. Voting Procedures

Vote required for approval

Matters subject to stockholder approval, except in cases where the law provides otherwise, shall be decided
by the plurality vote of stockholders present in person or by proxy and entitled to vote, a quorum being
present in such meeting. Each stockholder entitled to vote may cast the vote to which the number of shares
he owns entitles him.

Matters presented to stockholders for approval at this year’s Annual Stockholders’ Meeting require only
a majority of the stockholders for approval. For election of directors, the stockholders are entitled to
cumulate their votes.
 23

Methods by which votes will be casted and counted

The Corporation’s By-laws does not prescribe a specific manner of voting by stockholders. For this year’s
Annual Stockholders’ Meeting, the Board of Directors approved a resolution allowing stockholders to
participate in the meeting via remote communication and to vote in absentia.

Stockholders as of Record Date who have successfully registered their intention to participate in the annual
meeting via remote communication and to vote in absentia, duly verified and validated by the Corporation,
shall be provided with unique log-in credentials to securely access the voting portal.

Stockholders and proxy holders can then cast their votes on specific matters for approval, including the
election of directors. Votes will then be automatically tabulated and counted at the close of voting for each
agenda item during the meeting.

The Corporate Secretary is tasked and authorized to validate, count and tabulate votes by stockholders.

Pursuant to the Corporation’s By-laws, duly accomplished proxy forms must be submitted to the Corporate
Secretary at least three (3) business days prior the meeting. Duly signed proxy forms should therefore be
submitted no later than August 5, 2020 at the Office of the Corporate Secretary at the 23rd Floor, Philippine
Stock Exchange Centre, East Tower Exchange Road, Ortigas Center, Pasig City for validation. A sample
format of the proxy form is here attached and are also available at the Corporation’s website.

The Corporate Secretary will lead the validation of proxies, in coordination with APC’s stock and transfer
agent. Any questions and issues relating to the validity and sufficiency of proxies, both as to form and
substance, shall be resolved by the Corporate Secretary. The Corporate Secretary’s decision shall be final
and binding on the stockholders, and those not settled at such forum shall be deemed waived and may no
longer be raised during the meeting.

The detailed guidelines for participation and voting for this meeting are set forth in the “Guidelines for
Participating via Remote Communication and Voting in Absentia” appended as Schedule “A” to this
Information Statement.
 24

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth
in this report is true, complete and correct.

This is signed in the City of Makati this 30th day of June, 2020.

APC GROUP, INC.

JACKSON T. ONGSIP
President, Chief Executive Officer
and Chief Risk Officer
 25

MANAGEMENT REPORT

APC GROUP, INC.

BUSINESS AND GENERAL INFORMATION

BACKGROUND

APC Group, Inc. (APC or the Company) was incorporated in the Philippines on October 15, 1993 and was
originally organized to engage in the oil and gas exploration and development in the Philippines. On
April 30, 1997, the Philippine Securities and Exchange Commission (SEC) approved the change in the
primary purpose of the Company to that of a holding company. The Company’s shares of stock were
approved for listing with the Manila Stock Exchange on February 16, 1994. The Company is 46.64% owned
by Belle Corporation, another publicly-listed company.

In 2005, the Company created Aragorn Power and Energy Corporation (APEC), a subsidiary. This
company was established in line with the government’s thrust in developing the country’s energy sector.
The prospects in this subsidiary are bolstered by the government’s decision to open up the energy sector to
foreign investors. Thus, the Company will concentrate in energy resource exploration and development.
The government’s thrust to encourage investments in the energy sector augurs well with the Company’s
investment direction. Other subsidiaries are in the pre-operating stage.

The subsidiaries of the Company, which are all incorporated in the Philippines, are as follows:

Percentage
Nature of Date of Incorporation of
Company Business Ownership
Aragorn Power and Energy Corporation (APEC) (1, 3) Energy January 6, 2005 95.6%
PRC-Magma Energy Resources Inc. (PRC - Magma) (1, 2) Energy June 10, 2009 85.0%
APC Cement Corporation (APC Cement) (1) Manufacturing November 15, 1994 100.0%
APC Energy Resources, Inc. (APCERI) (1) Mining January 31, 2005 100.0%
APC Mining Corporation (APC Mining) (1) Mining March 17, 2005 83.0%

(1) Still in the pre-operating stage

(2) A direct subsidiary of APEC
(3) On April 10, 2018, the Parent Company subscribed to additional shares of APEC through capital
infusion amounting to = P 76.5 million which increased the ownership interest of the Parent Company
from 90% to 95.6%. This resulted to change in ownership interests in APEC without loss of control
and accounted for as deemed acquisition of NCI. Loss on dilution of NCI amounted to = P 3.4 million,
presented as part of “Equity Reserves” in the Consolidated Statement of Financial Position.

Employees

APC Group and subsidiaries had a total of 6 employees as of May 31, 2020.

Subsidiaries and Status of Operations

a. Aragorn Power and Energy Corporation (APEC)

▪ Kalinga Apayao Geothermal Service Project (Project)

As at May 31, 2020, APEC is still in the exploration stage. It was established to engage in
renewable energy resource exploration, development and utilization.

In 2008, APEC was granted a Geothermal Service Contract (GSC) by the Republic of the
Philippines, through Department of Energy (DOE), for the exploration, development and
exploitation of geothermal resources covering a total area of 26,139 hectares located in the
Province of Kalinga (the “Kalinga Geothermal Project” or “KGP”). The GSC was granted after
a Certificate Precondition from the National Commission of Indigenous People, covering a major
portion of the geothermal service area, was secured. The GSC was converted into a Geothermal
Renewable Service Contract (GRESC) in March 2010 to avail of the incentives provided under
 26

the Renewable Energy (RE) Act of 2008. GRESC has a term of not exceeding 25 years (including
the used term under the GSC) and renewable for not more than 25 years. The total period from
pre-development stage to the development/commercial stage shall not exceed 50 years.

In November 2010, APEC and its partner Guidance Management Corporation (GMC) forged a
partnership with AllFirst Kalinga Ltd. (AKL, formerly Chevron Kalinga Ltd.), a wholly owned
subsidiary of AllFirst Geothermal Philippines Holdings, Inc., (formerly Chevron Geothermal
Philippines Holdings, Inc.) in developing the geothermal area. The parties signed a Farm-out
Agreement (FOA) which gives APEC and GMC the option to take an equity position of up to
40% in the geothermal project. The parties also signed a Joint Operating Agreement. Under the
agreement, AKL will be responsible for the exploration, development and operation of the steam
field and power activities.

On August 13, 2018, APEC has secured an extension of the GRESC exploration period from
DOE until September 23, 2020. On August 14, 2018, pursuant to Executive Order No. 30, the
Energy Investment Coordinating Council (EICC), through the DOE, granted KGP a Certificate
of Energy Project of National Significance (CEPNS) for Pre-Development Phase. The CEPNS
entitles KGP to all the rights and privileges provided for under Executive Order No. 30 series
2017.

On September 18, 2018, AKL has assigned its Farm-out interest, including all associated rights
and obligations under the FOA, in favor of its affiliate, Allfirst Kalinga Holdings, Inc. (AKHI).

Through letter dated December 28, 2018, the DOE gave KGP the clearance to undertake a system
impact study (SIS) of its proposed 120 MW Kalinga Geothermal Project. The SIS of the KGP is
currently on-going.

In 2019, KGP completed securing all the remaining necessary permits from the regulatory
agencies (i.e. DENR and NWRB), and maintained and complied with its commitments with each
of the representative Council of Elders and Leaders (COEs) under the Memoranda of Agreements
(MOAs) supporting the NCIP Certificates of Precondition. KGP has also engaged contractors
and suppliers necessary for the construction of access roads, well pads, and well drilling
activities.

With the completion of the negotiation for right-of-way, remaining regulatory permits, as well as
the engagement of the needed contractors and suppliers, KGP has completed the construction of
well pads and access roads, and continues to implement geo-hazard mitigation measures.

On October 12, 2019, the Project commenced drilling of the PAS-02 exploration well, and
drilling operations are currently on-going. Consistent with and in compliance to the work
program of the Project, KGP is preparing for the conversion of the Project from its pre-
development phase to development phase.

The KGP continues to provide scholarship grants and educational assistance to deserving youths
from the eight (8) ancestral domains within its contract area. As of school year 2019-2020, the
KGP has already extended scholarships to 351 grantees and has produced 221 graduates in
various courses. Three (3) scholar graduates in engineering and geology have been hired for the
Project.

As at February 28, 2020, APEC has completed sub-phases 1 and 2, covering geochemical and
geophysical surveys. APEC is already in the sub-phase 3 stage of the project. In line with this,
the consent of nine (9) out of eleven (11) ancestral domains has been secured, covering 85% of
the GRESC area. In addition, all of the Community Development (CD) Projects have been fully
completed and turned over to the respective community beneficiaries.

This KGP involves the development of steam fields that can generate around 120 megawatts
(MW) of new capacity, providing an additional source of clean, indigenous and reliable baseload
power to the Luzon grid. A 120 MW geothermal project will approximately cost more than
US$300.0 million.
 27

b. APC Energy Resources Inc. (APC Energy)

APC Energy was established to engage in exploration, development and utilization of renewable
energy resources. As at May 31, 2020, APC Energy is still in the pre-operating stage.

c. APC Mining Corporation (APC Mining)

APC Mining was organized to engage in mining, processing, manufacturing, buying and selling
of all kinds of ores, metals and minerals. As at May 31, 2020, APC Mining is still in the pre-
operating stage.

d. APC Cement Corporation (APC Cement)

APC Cement was established to engage in the manufacture of cement. As at May 31, 2020, APC
Cement is still in the pre-operating stage.

e. PRC-Magma Energy Resources, Inc. (PRC Magma)

PRC Magma was established to engage in the business of exploration, development, and
processing of renewable and non-renewable energy resources, including, but not limited to, wind
power, solar power, hydropower, biofuels, biomass, and coal; exploration, mining and processing
of metalliferous and non-metalliferous mineral and ore resources; trading and supply of energy
and mineral resources; and generation of electric power using energy resources. As at May 31,
2020, PRC Magma is still in the pre-operating stage.

MARKET INFORMATION

The principal market where the registrant’s common equity is traded is the Philippine Stock Exchange.

The high and low sales prices for each quarter within the last two fiscal years of registrant’s common
shares as quoted on the Philippine Stock Exchange are as follows:

2020 2019 2018

High Low High Low High Low
First Quarter 0.47 0.25 0.53 0.51 0.59 0.49
Second Quarter - - 0.51 0.50 0.57 0.49
Third Quarter - - 0.57 0.55 0.76 0.49
Fourth Quarter - - 0.48 0.48 0.57 0.47

The price information as of the close of the latest practicable trading date, June 29, 2020, is Php0.310.

SECURITY HOLDERS

As of May 31, 2020, Registrant had 592 shareholders of common equity. On the said date, the following
were the Top 20 registered shareholders of the common equity of the Company:

Percentage owned out of

No. of Common
Total outstanding
Shares Held
common shares
1. Belle Corporation 3,500,000,000 46.64
2. PCD Nominee Corporation- Filipino/Others 2,326,518,165 31.00
3. Dominion Equities, Inc. 340,000,000 4.53
4. Compact Holdings, Inc. 281,000,000 3.74
5. Integrated Holdings, Inc. 180,000,000 2.40
6. Elite Holdings, Inc. 168,500,000 2.25
7. Parallax Resources, Inc. 165,722,334 2.21
8. Equinox International Resources Corp. 100,000,000 1.33
9. Richold Investor Corporation 100,000,000 1.33
10. Eastern Sec. Dev. Corp. 80,000,000 1.07
11. Gilt-Edged Properties, Inc. 68,616,665 0.91
 28

12. Headland Holdings Corporation 55,500,000 0.74

13. Eastern Sec. Dev. Corp. 23,869,114 0.32
14. Lim Siew Kim - Others 18,000,000 0.24
15. Tak Chang Investments Co., Ltd. - Others 18,000,000 0.24
16. Coscolluela, William V. 10,000,000 0.13
17. Reyes, Vicente O. ITF:Peter Paul Phil. Cor 8,332,000 0.11
18. Dharmala Sec. (Phils), Inc. 5,050,000 0.07
19. Singson, Evelyn R. ITF: Gilt-Edged Prop. 3,933,333 0.05
20. Singson, Evelyn R. ITF: Jaime F. Singson 3,000,000 0.04

DIVIDENDS

Dividends shall be declared only from the surplus profit and shall be payable at such time and in such
manner and in such amounts as the Board of Directors shall determine. No dividends shall be declared
which would impair the capital of the Corporation. There is no legal restriction that limits or would likely
limit the Company’s ability to pay dividends, aside from its retained earnings available for such.

The Company has not declared any dividends on common stock since the time it was incorporated. The
Company is not in a position to declare cash dividends because of its deficit.

RECENT SALE OF UNREGISTERED OR EXEMPT SECURITIES

There was no recent sale of unregistered or exempt securities.

FINANCIAL AND OTHER INFORMATION

Financial Statements

The audited Consolidated Financial Statements and Supplementary Schedules for the year 2019 are filed
as part of this Form 20-IS.

Changes in and Disagreement with Accountants on Accounting and Financial Disclosures

No principal accountant or independent accountants of the registrant has resigned, was dismissed or has
ceased to perform services during the two (2) most recent fiscal years or any subsequent interim period.

There have been no disagreements with any accountant or any matter of accounting principles or practices,
financial statement disclosure or auditing scope of procedure.

External Audit Fees and Services

1. The aggregate audit fees paid by the Company for professional services (excluding Value Added Tax)
rendered by the external auditor for the audit of the Company’s annual financial statements amounted
to P510,000 and P486,000 in 2019 and 2018, respectively.

2. No other assurance and related services were rendered in 2019 and 2018.

3. No tax services were rendered by the external auditor in 2019 and 2018.

4. There were no other fees paid to the external auditor in 2019 and 2018.

5. The audit committee approved the policies and procedures of the above services. The Board of Directors
has established an audit committee to provide oversight of the external audit function and review of the
internal audit function of the company.

The Audit Committee has the responsibility to recommend an external auditor to be selected and
appointed by the stockholders during each annual stockholder’s meeting.

It reviews the audit coverage of the External Auditors and deliberates on their audit report prior to
endorsement to the Board of Directors and presented to the stockholders for approval.
 29

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

For The Financial Year Ended 2019 compared to Year Ended 2018

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year on Year Horizontal Analysis Vertical Analysis

Amounts in Pesos, Inc (Dec)
except percentages Dec 31, 2019 Dec 31, 2018 Amount % 2019 2018

Interest income 4,651,666 3,569,449 1,082,217 30% 94% 93%

Dividend income 319,476 279,224 40,252 14% 6% 7%
Total revenues 4,971,142 3,848,673 1,122,469 29% 100% 100%

General and administrative expenses (10,264,576) (12,350,727) 2,086,151 -17% -206% -321%
Total costs and expenses (10,264,576) (12,350,727) 2,086,151 -17% -206% -321%

Loss on sale of investment property - (3,015,807) 3,015,807 -100% 0% -78%

Total other income / (loss) - (3,015,807) 3,015,807 -100% 0% -78%

Net Loss (5,293,434) (11,517,861) 6,224,427 -54% -106% -299%

Net loss attributable to:

Equity holders of the Parent Company (5,274,618) (11,470,031) 6,195,413 -54% -106% -298%
Non-controlling interests (18,816) (47,830) 29,014 -61% 0% -1%
(5,293,434) (11,517,861) 6,224,427 -54% -106% -299%

APC Group, Inc. reported consolidated net loss of = P5.3 million for 2019, 54% better than the
=11.5 million net loss reported in the previous year.
P

Revenue
The Company recorded revenues of P =5.0 million for the year ended 2019, 19% higher than the
=3.8 million revenues recognized in 2018. The increase in revenue is due to the Company’s higher interest
P
income from money market placements during the period. In addition, dividend income increased by 14%
in 2019 due to higher dividends declared and paid from the Company’s financial assets at fair value
through other comprehensive income (FVOCI).

Costs and Expenses

The Company’s costs and expenses amounting to P =10.3 million in 2019 is 17% lower than the P=12.4
million expenses recorded in 2018 due to the one-time expenses incurred by the Company in 2018
comprising of capital gains taxes from the sale of investment property and additional documentary stamp
taxes paid during the year.

Other Income (Loss)

In 2018, the Company incurred a loss of =
P3.0 million from the sale of investment properties with a total
fair market value of =
P12.3 million.
 30

Year on Year Horizontal Analysis Vertical Analysis

Amounts in Pesos, Inc (Dec)
except percentages Dec 31, 2019 Dec 31, 2018 Amount % 2019 2018

Net Loss (5,293,434) (11,517,861) 6,224,427 -54% -106% -299%

Other Comprehensive Income (Loss)

Item not to be reclassified to profit or loss in subsequent periods:
Change in fair value of financial assets at FVOCI (1,547,491) (3,497,450) 1,949,959 -56% -31% -91%
Total Comprehensive Loss (6,840,925) (15,015,311) 8,174,386 -54% -138% -390%

Total comprehensive loss attributable to:

Equity holders of the Parent Company (6,822,109) (14,967,481) 8,145,372 -54% -137% -389%
Non-controlling interests (18,816) (47,830) 29,014 -61% 0% -1%
(6,840,925) (15,015,311) 8,174,386 -54% -138% -390%

Total Comprehensive Loss

The Company incurred unrealized loss amounting to P =1.5 million in 2019 due to the movement in the
share price of its financial assets at FVOCI. This resulted to total comprehensive loss of =
P6.8 million for
2019.
 31

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Year on Year Horizontal Analysis Vertical Analysis

Inc (Dec)
Amounts in Pesos, except percentages Dec 31, 2019 Dec 31, 2018 Amount % 2019 2018

ASSETS
Current Assets
Cash and cash equivalents 137,491,340 144,787,138 (7,295,798) -5% 50% 52%
Receivables 1,585,194 300,718 1,284,476 427% 1% 0%
Other current assets 2,585 11,515 (8,930) -78% 0% 0%
Total Current Assets 139,079,119 145,099,371 (6,020,252) -4% 51% 52%
Noncurrent Assets
Property and equipment 62,234 15,620 46,614 298% 0% 0%
Investment property 10,028,870 10,028,870 - 0% 4% 4%
Financial assets at FVOCI 3,624,630 5,172,121 (1,547,491) -30% 1% 2%
Deferred exploration costs 111,520,001 110,878,886 641,115 1% 41% 40%
Input value added tax (VAT) 8,962,888 8,704,647 258,241 3% 3% 3%
Other noncurrent assets 23,822 23,822 - 0% 0% 0%
Total Noncurrent Assets 134,222,445 134,823,966 (601,521) 0% 49% 48%
273,301,564 279,923,337 (6,621,773) -2% 100% 100%

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables 28,627,801 28,449,031 178,770 1% 10% 10%
Advances from a related party 79,978,631 80,047,381 (68,750) 0% 29% 29%
Total Current Liabilities 108,606,432 108,496,412 110,020 0% 40% 39%
Noncurrent Liabilities
Accrued retirement costs 3,441,697 3,170,606 271,091 9% 1% 1%
Other noncurrent liabilities - 161,959 (161,959) -100% 0% 0%
Total Noncurrent Liabilities 3,441,697 3,332,565 109,132 3% 1% 1%
Total Liabilities 112,048,129 111,828,977 219,152 0% 41% 40%

Equity Attributable to Equity Holders of the Parent Company

Capital stock 6,388,078,749 6,388,078,749 - 0% 2337% 2282%
Additional paid-in capital 1,613,942,096 1,613,942,096 - 0% 591% 577%
Cumulative change in FVOCI 2,776,629 4,324,120 (1,547,491) -36% 1% 2%
Remeasurement loss on defined benefit obligation (2,237,878) (2,237,878) - 0% -1% -1%
Equity reserves (3,140,235) (3,140,235) - 0% -1% -1%
Deficit (7,801,877,957) (7,796,603,339) (5,274,618) 0% -2855% -2785%
Treasury shares - 7,606,000 shares (29,435,220) (29,435,220) - 0% -11% -11%
Total Equity Attr to Equity Holders of the Parent Company 168,106,184 174,928,293 (6,822,109) -4% 62% 62%
Non-controlling Interests (6,852,749) (6,833,933) (18,816) 0% -3% -2%
Total Equity 161,253,435 168,094,360 (6,840,925) -4% 59% 60%
TOTAL LIABILITIES and EQUITY 273,301,564 279,923,337 (6,621,773) -2% 100% 100%

Assets

The Company recorded consolidated assets of P

=273.3 million as at December 31, 2019, lower by 2% from
=279.9 million in 2018. The main movements in the balance sheet are as follows:
P

• Cash and cash equivalents amounted to P =137.5 million as of December 31, 2019, 5% lower
compared to P=144.8 million as of December 31, 2018. The decrease was mainly attributable to
the payment of the Company expenses and payables for the year.
• Financial assets at FVOCI decreased by 30% as a result of the movement in stock prices of the
shares held by the Company as of December 31, 2019.
• Deferred exploration costs increased by 1% due to additional expenses for the Kalinga
Geothermal Project.

Liabilities

There is no significant movement in the Company’s total liabilities as of December 31, 2019.
 32

Equity

Stockholders’ equity decreased by 4% from P =168.1 million in 2018 down to P =161.3 million in 2019 due
to the incurred net loss and change in fair value of financial assets at FVOCI recognized in 2019 amounting
to P
=5.3 million and = P1.5 million, respectively.

The Company does not foresee any cash flow problems during the next twelve months. The Company has
enough cash to meet cash requirements in 2020.

There were no off-balance sheet transactions.

As of December 31, 2019, except for what have been mentioned in the preceding, there were no material
events or uncertainties known to management that had a material impact on past performance, or that
would have a material impact on the future operations, in respect of the following:

• Known trends, demands, commitments, events or uncertainties that would have a material impact on
the Company;
• Material commitments for capital expenditure;
• Known trends, events or uncertainties that are expected to have a material impact on revenues from
continuing operations;
• Significant elements of income or loss that did not arise from the Company’s continuing operations
aside from those mentioned in this report;
• Seasonal aspects that had a material impact on the Company’s results of operations; and
• Material changes in the financial statements of the Company from the year ended December 31, 2019
to May 31, 2020.

PLAN OF OPERATION

The Company will focus on the following directions in the next 12 months:
1. Continue with the development of its geothermal resources. Pursue the exploration work program
for the Kalinga project.
2. Seek other renewable energy development investment opportunities.
 33

For the Financial Year Ended 2018 compared to Year Ended 2017

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Pesos, except percentages) Year on Year Horizontal Analysis Vertical Analysis
Dec 31 Dec 31 Increase (Decrease)
2018 2017
2018 2017 Amount %

Interest Income 3,569,449 3,900,176 (330,727) -8% 93% 96%

Dividend Income 279,224 178,688 100,536 56% 7% 4%
Total Revenue 3,848,673 4,078,864 (230,191) -6% 100% 100%

General and Administrative Expenses (12,350,727) (20,511,515) 8,160,788 -40% -321% -503%
Total Costs and Expenses (12,350,727) (20,511,515) 8,160,788 -40% -321% -503%

Loss on Sale of Investment Properties (3,015,807) - (3,015,807) -100% -78% 0%

Other Income/Loss - 17,816 (17,816) -100% 0% 0%
Total Other Income(Loss) (3,015,807) 17,816 (3,033,623) -17028% -78% 0%

Net Loss (11,517,861) (16,414,835) 4,896,974 -30% -299% -402%

Net Loss Attributable to:

Equity holders of the Parent Company (11,470,031) (16,324,751) 4,854,720 -30% -298% -400%
Non-controlling interests (47,830) (90,084) 42,254 -47% -1% -2%
(11,517,861) (16,414,835) 4,896,974 -30% -299% -402%

APC Group, Inc. reported consolidated net loss of =

P11.5 million for 2018, 30% better than the P
=16.4 million
net loss reported in the previous year.

Revenue
The Company recorded revenues of P =3.8 million for the year ended 2018, 6% lower than the P =4.1 million
revenues recognized in 2017. This decrease in revenue is due to the Company’s lower interest income from
money market placements because the cash and cash equivalent decreased by 26% during the period. On
the other hand, dividend income increased by 56% in 2018 due to higher dividends declared and paid from
the Company’s available-for-sale (AFS) investments.

Costs and Expenses

The Company’s costs and expenses amounting to P =12.4 million in 2018 is 40% lower than the P
=20.5 million
expenses recorded in 2017 due to the one-time expenses incurred by the Company in 2017 comprising of
the listing fee and professional fees paid amounting to P
=4.9 million and P
=2.9 million, respectively.

Other Income (Expenses)

The Company incurred a loss of =
P3.0 million from the sale of investment properties with a total fair market
value of P
=12.3 million.
 34

(Amounts in Pesos, except percentages) Year on Year Horizontal Analysis Vertical Analysis
Dec 31 Dec 31 Increase (Decrease)
2018 2017
2018 2017 Amount %

Net Loss (11,517,861) (16,414,835) 4,896,974 -30% -299% -402%

Other Comprehensive Income (Loss)

Unrealized mark-to-market gain/(loss)
on available-for-sale financial assets (3,497,450) 1,144,620 (4,642,070) -406% -91% 28%
Remeasurement gain on defined benefit
obligation - 625,727 (625,727) -100% 0% 15%
Total Comprehensive Loss for the period (15,015,311) (14,644,488) (370,823) 3% -390% -359%

Total Comprehensive Loss Attributable to:

Equity holders of the Parent Company (14,967,481) (14,554,404) (413,077) 3% -389% -357%
Non-controlling interests (47,830) (90,084) 42,254 -47% -1% -2%
(15,015,311) (14,644,488) (370,823) 3% -390% -359%

Comprehensive Loss
The Company incurred unrealized loss amounting to P =3.5 million in 2018 due to the movement in the share
price of its AFS. This resulted to total comprehensive loss of P
=15.0 million for 2018.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in Pesos, except percentages) Year on Year Horizontal Analysis Vertical Analysis
Dec 31 Dec 31 Increase (Decrease)
2018 2017
2018 2017 Amount %

ASSETS
Cash and cash equivalents 144,787,138 196,586,234 (51,799,096) -26% 52% 66%
Trade and other receivables - net 300,718 941,677 (640,959) -68% 0% 0%
Available-for-sale financial assets 5,172,121 8,669,571 (3,497,450) -40% 2% 3%
Other current assets 8,716,162 8,504,516 211,646 2% 3% 3%
Property and equipment 15,620 24,546 (8,926) -36% 0% 0%
Investment properties 10,028,870 22,374,000 (12,345,130) -55% 4% 8%
Other noncurrent assets - net 110,902,708 59,892,558 51,010,150 85% 40% 20%
Total Assets 279,923,337 296,993,102 (17,069,765) -6% 100% 100%

LIABILITIES AND EQUITY

Trade and other payables 28,449,031 31,051,650 (2,602,619) -8% 10% 10%
Advances from related parties 80,047,381 80,004,536 42,845 0% 29% 27%
Subscriptions payable 161,959 161,959 - 0% 0% 0%
Accrued retirement costs 3,170,606 2,665,286 505,320 19% 1% 1%
Total Liabilities 111,828,977 113,883,431 (2,054,454) -2% 40% 38%

Capital Stock 6,388,078,749 6,388,078,749 - 0% 2282% 2151%

Additional paid-in capital 1,613,942,096 1,613,942,096 - 0% 577% 543%
Unrealized mark-to-market gain on
available-for-sale financial assets 4,324,120 7,821,570 (3,497,450) -45% 2% 3%
Gain on dilution 226,304 226,304 - 0% 0% 0%
Remeasurement loss on defined benefit
obligation (2,237,878) (2,237,878) - 0% -1% -1%
Deficit (7,796,603,339) (7,785,133,308) (11,470,031) 0% -2785% -2621%
Treasury shares (29,435,220) (29,435,220) - 0% -11% -10%
Equity Attributable to
Non-controlling Interests (10,200,472) (10,152,642) (47,830) 0% -4% -3%
Total Equity 168,094,360 183,109,671 (15,015,311) -8% 60% 62%
Total Liabilities and Equity 279,923,337 296,993,102 (17,069,765) -6% 100% 100%
 35

Assets
The Company recorded consolidated assets of P
=279.9 million as at December 31, 2018, lower by 6% from
=297.0 million in 2017. The main movements in the balance sheet are as follows:
P

• Cash and cash equivalents amounted to P =144.8 million as of December 31, 2018, 26% lower
compared to P =196.6 million as of December 31, 2017. The decrease was mainly attributable to the
additional exploration costs of Aragorn Power and Energy Corporation (a subsidiary) (APEC) and
the release of the 2nd tranche funds for the Kalinga project community development scholarships
for the school year 2017-2018 which are presented as part of Other noncurrent assets account. The
decrease was slightly offset by the collection from the sale of investment properties.
• Available-for-sale financial assets decreased by 40% as a result of the movement in stock prices
of the shares held by the Company as of December 31, 2018.
• Investment property decreased by 55% or P =12.3 million due to the sale of parcels of lots in Cebu
in 2018.
• Other noncurrent assets increased by 85% due to the additional deferred exploration costs of
APEC.

Liabilities
The Company’s consolidated liabilities decreased slightly by 2% due to the release of the 2nd tranche funds
for community development scholarships for the school year 2017-2018.

Equity
Stockholders’ equity decreased by 8% from P =183.1 million in 2017 down to P
=168.1 million in 2018 due to
comprehensive net loss and unrealized mark-to-market loss on AFS recognized in 2018 amounting to
=11.5 million and =
P P3.5 million, respectively.

The Company does not foresee any cash flow problems during the next twelve months. The Company has
enough cash to meet cash requirements in 2019.

There were no off-balance sheet transactions.

As of December 31, 2018, except for what have been mentioned in the preceding, there were no material
events or uncertainties known to management that had a material impact on past performance, or that would
have a material impact on the future operations, in respect of the following:

• Known trends, demands, commitments, events or uncertainties that would have a material impact on
the Company;
• Material commitments for capital expenditure;
• Known trends, events or uncertainties that are expected to have a material impact on revenues from
continuing operations;
• Significant elements of income or loss that did not arise from the Company’s continuing operations
aside from those mentioned in this report;
• Seasonal aspects that had a material impact on the Company’s results of operations; and
• Material changes in the financial statements of the Company from the year ended
December 31, 2018 to December 31, 2017.

PLAN OF OPERATION

The Company will focus on the following directions in the next 12 months:
3. Continue with the development of its geothermal resources. Pursue the exploration work program
for the Kalinga project.
4. Seek other renewable energy development investment opportunities.
 36

For the Financial Year Ended 2017 compared to Year Ended 2016

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Pesos, except percentages) Year on Year Horizontal Analysis Vertical Analysis
Dec 31 Dec 31 Increase (Decrease)
2017 2016
2017 2016 Amount %

Interest Income 3,900,176 1,225,022 2,675,154 218% 96% 90%

Dividend Income 178,688 136,719 41,969 31% 4% 10%
Total Revenue 4,078,864 1,361,741 2,717,123 200% 100% 100%

General and Administrative Expenses (20,511,515) (21,920,354) 1,408,839 -6% -503% -1610%
Write-off and Provisions - (12,911,061) 12,911,061 -100% 0% -948%
Total Costs and Expenses (20,511,515) (34,831,415) 14,319,900 -41% -503% -2558%

Loss on Sale of Investment Properties - (18,689,020) 18,689,020 -100% 0% -1372%

Loss on Impairment of Goodwill - (5,992,907) 5,992,907 -100% 0% -440%
Gain on Fair Value Change in Investment Property - 7,515,020 (7,515,020) -100% 0% 552%
Other Income 17,816 3,571,832 (3,554,016) -100% 0% 262%
Total Other Income(Loss) 17,816 (13,595,075) 13,612,891 -100% 0% -998%

Net Loss (16,414,835) (47,064,749) 30,649,914 -65% -402% -3456%

Net Loss Attributable to:

Equity holders of the Parent Company (16,324,751) (46,129,738) 29,804,987 -65% -400% -3388%
Non-controlling interests (90,084) (935,011) 844,927 -90% -2% -69%
(16,414,835) (47,064,749) 30,649,914 -65% -402% -3456%

APC Group, Inc. reported consolidated net loss of =

P16.4 million for 2017, 65% lower than the =
P47.1 million
net loss reported in the previous year.

Revenue
The Company recorded revenues of P =4.1 million for the year ended 2017, 200% higher than the =
P1.4 million
revenues recognized in 2016. This increase in revenue is due to the Company’s higher interest income for
2017 as the Company continues to invest its cash in interest-earning investments.

Costs and Expenses

The Company’s costs and expenses amounting to P =20.5 million in 2017 is 41% lower than the P=34.8 million
in 2016 due to the one-off recording of provisions in 2016 related to discontinued projects that was not
present in 2017, the lower taxes and licenses recorded in 2017 versus 2016 wherein the Company capital
gains taxes on the sale of investment properties and the lower rental and utilities in 2017 in line with the
Company transferring to an office space with a lower lease rate.

Other Income (Expenses)

Other expenses decreased by 100% in 2017 as the Company recognized one-off losses in 2016 related to
the sale of investment property and others, which are only partially offset by the gain on fair value change
in investment property.
 37

(Amounts in Pesos, except percentages) Year on Year Horizontal Analysis Vertical Analysis
Dec 31 Dec 31 Increase (Decrease)
2017 2016
2017 2016 Amount %

Net Loss (16,414,835) (47,064,749) 30,649,914 -65% -402% -3456%

Other Comprehensive Income

Unrealized mark-to-market gain on available-for-sale
financial assets 1,144,620 3,370,270 (2,225,650) -66% 28% 247%
Remeasurement gain on defined benefit obligation 625,727 - 625,727 100% 15% 0%
Total Comprehensive Loss (14,644,488) (43,694,479) 29,049,991 -66% -359% -3209%

Total Comprehensive Loss Attributable to:

Equity holders of the Parent Company (14,554,404) (42,759,468) 28,205,064 -66% -357% -3140%
Non-controlling interests (90,084) (935,011) 844,927 -90% -2% -69%
(14,644,488) (43,694,479) 29,049,991 -66% -359% -3209%

Comprehensive Loss
Due to the improvement in the Company’s net income, its comprehensive net loss improved by 66% from
=43.7 million in 2016 to P
P =14.6 million in 2017. Unrealized mark-to-market gain on its AFS as well as
remeasurement gain on its defined benefit obligation also contributed to a better comprehensive net income
for 2017.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in Pesos, except percentages) Year on Year Horizontal Analysis Vertical Analysis
Dec 31 Dec 31 Increase (Decrease)
2017 2016
2017 2016 Amount %

ASSETS
Cash and cash equivalents 196,586,234 138,624,426 57,961,808 42% 66% 44%
Trade and other receivables - net 941,677 81,769,879 (80,828,202) -99% 0% 26%
Available-for-sale financial assets 8,669,571 7,524,951 1,144,620 15% 3% 2%
Other current assets 8,504,516 7,533,539 970,977 13% 3% 2%
Property and equipment 24,546 125,585 (101,039) -80% 0% 0%
Investment properties 22,374,000 22,374,000 - 0% 8% 7%
Other noncurrent assets - net 59,892,558 59,203,236 689,322 1% 20% 19%
Total Assets 296,993,102 317,155,616 (20,162,514) -6% 100% 100%

LIABILITIES AND EQUITY

Trade and other payables 31,051,650 36,595,555 (5,543,905) -15% 10% 12%
Income tax payable - 71,437 (71,437) -100% 0% 0%
Advances from related parties 80,004,536 79,772,006 232,530 0% 27% 25%
Subscriptions payable 161,959 161,959 - 0% 0% 0%
Accrued retirement costs 2,665,286 2,800,500 (135,214) -5% 1% 1%
Total Liabilities 113,883,431 119,401,457 (5,518,026) -5% 38% 38%

Capital Stock 6,388,078,749 6,388,078,749 - 0% 2151% 2014%

Additional paid-in capital 1,613,942,096 1,613,942,096 - 0% 543% 509%
Unrealized mark-to-market gain on
available-for-sale financial assets 7,821,570 6,676,950 1,144,620 17% 3% 2%
Gain on dilution 226,304 226,304 - 0% 0% 0%
Remeasurement loss on defined benefit
obligation (2,237,878) (2,863,605) 625,727 -22% -1% -1%
Deficit (7,785,133,308) (7,768,808,557) (16,324,751) 0% -2621% -2450%
Treasury shares (29,435,220) (29,435,220) - 0% -10% -9%
Equity Attributable to
Non-controlling Interests (10,152,642) (10,062,558) (90,084) 1% -3% -3%
Total Equity 183,109,671 197,754,159 (14,644,488) -7% 62% 62%
Total Liabilities and Equity 296,993,102 317,155,616 (20,162,514) -6% 100% 100%
 38

Assets
The Company recorded consolidated assets of P =297.0 million as at December 31, 2017, lower by 6% from
=317.2 million in 2016. The main movements in the balance sheet are as follows:
P
• Cash and cash equivalents increased by 42% from = P138.6 million in 2016 to P
=196.6 million in 2017.
This is mainly attributable to the full collection on the outstanding receivables from the sale of
investment property amounting to P =80.0 million during the year. The increase in cash was offset by
disbursements for general and administrative expenses amounting to = P 20.5 million.
• In relation to the collection of receivables, trade and other receivables decreased by 99% from 2016.
• Available-for-sale financial assets increased by 15% from P =7.5 million in 2016 to =
P8.7 million in
2017 mainly due to the favorable increase in market price of stocks held by the Company as of
yearend.

Liabilities
Consolidated liabilities decreased by 5% or by =
P5.5 million. This is primarily due to the payment of trade
and other payables of the Company especially in relation to the community development of APEC.

Equity
Stockholders’ equity decreased by 7% from P=197.8 million in 2016 down to P
=183.1 million in 2017 due to
comprehensive net loss recognized in 2017 amounting to P=14.6 million.

The Company does not foresee any cash flow problems during the next twelve months. The Company has
enough cash to meet cash requirements in 2018.

There were no off-balance sheet transactions.

As of December 31, 2017, except for what have been mentioned in the preceding, there were no material
events or uncertainties known to management that had a material impact on past performance, or that would
have a material impact on the future operations, in respect of the following:

• Known trends, demands, commitments, events or uncertainties that would have a material impact on
the Company;
• Material commitments for capital expenditure;
• Known trends, events or uncertainties that are expected to have a material impact on revenues from
continuing operations;
• Significant elements of income or loss that did not arise from the Company’s continuing operations
aside from those mentioned in this report;
• Seasonal aspects that had a material impact on the Company’s results of operations; and
• Material changes in the financial statements of the Company from the year ended
December 31, 2017 to December 31, 2016.

KEY PERFORMANCE INDICATORS

Management uses the following key performance indicators to evaluate the performance of the Group.
Except for Net Income, these key performance indicators are not measurements in accordance with
Philippine Financial Reporting Standards (PFRS) and should not be considered as an alternative to net
income or any other measure of performance which are in accordance with PFRS.

1. Return on Assets Ratio (ROA). ROA is an indicator of how profitable a company is relative to its
total assets. ROA gives an idea as to how efficient management is at using its assets to generate
earnings and is calculated by dividing the Company's annual earnings by its total assets.
 39

2. Return on Equity Ratio (ROE). ROE measures how much profit is generated with the money
shareholders have invested in the Company. It is expressed as a percentage and calculated by
dividing net income by total Stockholders’ Equity.

3. Current Ratio. Current ratio is computed by dividing current assets by current liabilities. This
indicates the liquidity of the Company in the short term and measures the peso amount of current
asset available to cover a peso amount of current liability.

4. Debt-to-Equity Ratio (DER). DER gives an indication of the Company’s leverage position and is
computed by dividing total liabilities with total stockholders’ equity.

5. Asset-to-Equity Ratio (AER). AER is computed using total assets divided by the total
stockholders’ equity. This ratio shows the relationship of the total assets of the firm owned by
shareholders and an indicator of the leverage used to finance the Company.

The table below shows the comparative figures of the key performance indicators for the period in review.
YTD YTD
31 December 31 December
Financial Ratios 2019 2018
Return on Assets Ratio (0.02) (0.04)
Return on Equity Ratio (0.03) (0.07)
Current Ratio 1.28 1.34
Debt to Equity Ratio 0.69 0.67
Asset to Equity Ratio 1.69 1.67

Discussion on the key performance indicators

Return on Assets Ratio and Return on Equity Ratio

The Company’s ROA and ROE for 2019 and 2018 are negative due to the reported a net loss for both
years. The negative ratio improved for 2019 because of the decrease in the net loss incurred in the current
year compared to 2018.

Current Ratio

Current Ratio decreased in 2019 due to the decrease in the current assets brought by the payment of
liabilities and general and administrative expenses.

Debt to Equity Ratio

There is no significant change in the Company’s debt to equity ratio as of December 31, 2019 and 2018.

Assets to Equity Ratio

There is no significant change in the Company’s assets to equity ratio as of December 31, 2019 and 2018.

Key Variables and other Qualitative and Quantitative Factors

The Company expects no material commitments for capital expenditures and expected funds in 2019. To
the best of the Company’s knowledge, aside from what has already been mentioned in the preceding, there
are no known trends, events or uncertainties that will have a material impact on sales; no significant
elements of income or loss that did not arise from continuing operations aside from those disclosed in the
 40

Notes to the Audited Financial Statements; and no seasonal aspects with material effect on results of
operations.

APC maintains sufficient cash balances to meet minimum operational requirements, as determined by
management from time to time. Additional cash requirements are sourced from affiliates. To the best of
the Company’s knowledge, there are no known trends, events or uncertainties that will have a material
impact on its liquidity.
 41

1st Quarter 2019 Management’s Discussion and Analysis

Item 1. Financial Statements

APC GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

March 31, 2020 December 31, 2019

(Unaudited) (Audited)

ASSETS
Current Assets
Cash and cash equivalents P 23,080,658 P 137,491,340
Trade and other receivables - net 3,755,640 1,585,194
Other current assets 2,585 2,585
Total Current Assets 26,838,883 139,079,119

Noncurrent Assets
Property and equipment 54,796 62,234
Investment property 10,028,870 10,028,870
Financial assets at fair value through other comprehensive income 1,939,495 3,624,630
Deferred exploration costs and other noncurrent assets 230,859,340 120,506,711
Total Noncurrent Assets 242,882,501 134,222,445

P 269,721,384 P 273,301,564

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables P 28,557,792 P 28,627,801
Advances from a related party 79,978,631 79,978,631
Total Current Liabilities 108,536,423 108,606,432

Noncurrent Liabilities
Accrued retirement costs 3,441,697 3,441,697
Other noncurrent liabilitie
Total Noncurrent Liabilities 3,441,697 3,441,697
Total Liabilities 111,978,120 112,048,129

Equity Attributable to Equity Holders of the Parent Company

Capital stock 63,880,788 6,388,078,749
Additional paid-in capital 144,295,958 1,613,942,096
Unrealized gain on financial assets at fair value through
other comprehensive income 1,091,494 2,776,629
Remeasurement loss on defined benefit obligation (2,237,878) (2,237,878)
Equity reserves (3,140,235) (3,140,235)
Deficit (9,855,364) (7,801,877,958)
Treasury shares - 7,606,000 shares (29,435,220) (29,435,220)
Total Equity Attributable to Equity Holders of the
Parent Company 164,599,543 168,106,183
Equity Attributable to Non-controlling Interests (6,856,279) (6,852,748)
Total Equity 157,743,264 161,253,435

P 269,721,384 P 273,301,564
 42

APC GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended March 31

2020 2019
(Unaudited) (Unaudited)

INCOME
Interest income P 763,558 P 1,271,726
Dividend income 319,476 319,476
1,083,034 1,591,202
EXPENSES
General and administrative expenses (2,908,069) (2,513,763)

NET LOSS BEFORE AND AFTER INCOME TAX (1,825,035) (922,561)

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized loss on financial assets at fair value
through other comprehensive income (1,685,135) 317,950
TOTAL COMPREHENSIVE LOSS P (3,510,170) P (604,611)

Net Loss Attributable to:

Equity holders of the Parent Company (1,821,505) (914,698)
Non-controlling interests (3,530) (7,863)
(1,825,035) (922,561)
Total Comprehensive Loss Attributable to:
Equity holders of the Parent Company (3,506,640) (596,748)
Non-controlling interests (3,530) (7,863)
(3,510,170) (604,611)
Basic/Diluted Loss Per Common Share
(P-1,825,035/7,504,203,997) March 31, 2020 P (0.000243)
(P-922,561/7,504,203,997) March 31, 2019 P (0.000123)

Weighted average number of common shares:

Total common shares 7,511,809,997 7,511,809,997
Less: Treasury shares 7,606,000 7,606,000
Weighted average common shares 7,504,203,997 7,504,203,997
 43

APC GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months Ended March 31

2020 2019
(Unaudited) (Unaudited)

Authorized:
Preferred stock - P1 par value 6,000,000,000 shares 6,000,000,000 shares
Common stock - P1 par value in 2019; P0.01 par value
effective February 20, 2020 14,000,000,000 shares 14,000,000,000 shares

Issued P 59,981,491 P 5,998,149,059

Subscribed (net of subscription receivable) 3,899,297 389,929,690

Capital stock 63,880,787 6,388,078,749

Additional paid-in capital 144,295,958 1,613,942,096

Unrealized gain/loss on financial assets at fair

value through other comprehensive income
Balance at the beginning of period 2,776,629 4,324,120
Other comprehensive income (1,685,135) 317,950
Balance at the end of period 1,091,494 4,642,070
Remeasurement loss on defined benefit
obligation (2,237,878) (2,237,878)
Equity Reserves (3,140,235) (3,140,235)
Deficit
Balance at the beginning of period (7,801,877,958) (7,796,603,339)
Effect of quasi-reorganization 7,793,844,099 -
Net loss (1,821,505) (914,698)
Balance at the end of period (9,855,364) (7,797,518,037)

Treasury shares - 7,606,000 shares (29,435,220) (29,435,220)

Minority interest (6,856,279) (6,841,796)

Total Equity P 157,743,264 P 167,489,749

 44

APC GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31

2020 2019
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax P (1,825,035) P (922,561)
Adjustments for:
Interest income (763,558) (1,271,726)
Dividend income (319,476) (319,476)
Depreciation and amortization 7,438 2,231
Operating loss before working capital changes (2,900,631) (2,511,532)
Decrease (increase) in:
Trade and other receivables (2,170,446) (734,948)
Other current assets - (118,157)
Decrease in:
Trade and other payables (70,009) (435,130)
Advances from a related party - (68,750)
Cash used in operations (5,141,086) (3,868,517)
Interest received 763,558 1,271,726
Dividends received 319,476 319,476
Net cash used in operating activities (4,058,052) (2,277,315)

CASH FLOWS FROM INVESTING ACTIVITIES

Increase in deferred exploration costs and noncurrent assets (110,352,630) (177,395)
Net cash used in investing activities (110,352,630) (177,395)

NET DECREASE IN CASH AND CASH EQUIVALENTS (114,410,682) (2,454,710)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 137,491,340 144,787,138

CASH AND CASH EQUIVALENTS AT END OF PERIOD P 23,080,658 P 142,332,428

 45

Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Statements of Financial Position

March 31, 2020 December 31, 2019 Horizontal Analysis Vertical Analysis
(Unaudited) (Audited) Increase (Decrease) 2020 2019
Amount % % %
ASSETS
Current Assets
Cash and cash equivalents P 23,080,658 P 137,491,340 (114,410,682) -83% 51% 50%
Trade and other receivables - net 3,755,640 1,585,194 2,170,446 137% 0% 1%
Other current assets 2,585 2,585 - 0% 3% 0%
Total Current Assets 26,838,883 139,079,119 (112,240,236) -81% 55% 51%

Noncurrent Assets
Property and equipment 54,796 62,234 (7,438) -12% 0% 0%
Investment property 10,028,870 10,028,870 - 0% 4% 4%
Financial assets at fair value through other comprehensive income 1,939,495 3,624,630 (1,685,135) -46% 2% 1%
Deferred exploration costs and other noncurrent assets 230,859,340 120,506,711 110,352,629 92% 40% 44%
Total Noncurrent Assets 242,882,501 134,222,445 108,660,056 81% 45% 49%

P 269,721,384 P 273,301,564 (3,580,180) -1% 100% 100%

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables P 28,557,792 P 28,627,801 (70,009) 0% 10% 10%
Advances from a related party 79,978,631 79,978,631 - 0% 29% 29%
Total Current Liabilities 108,536,423 108,606,432 (70,009) 0% 39% 40%

Noncurrent Liabilities
Accrued retirement costs 3,441,697 3,441,697 - 0% 1% 1%
Other noncurrent liabilitie
Total Noncurrent Liabilities 3,441,697 3,441,697 - 0% 1% 1%
Total Liabilities 111,978,120 112,048,129 (70,009) 0% 40% 41%

Equity Attributable to Equity Holders of the Parent Company

Capital stock 63,880,788 6,388,078,749 (6,324,197,961) -99% 2291% 2337%
Additional paid-in capital 144,295,958 1,613,942,096 (1,469,646,138) -91% 579% 591%
Unrealized gain on financial assets at fair value through
other comprehensive income 1,091,494 2,776,629 (1,685,135) -61% 2% 1%
Remeasurement loss on defined benefit obligation (2,237,878) (2,237,878) - 0% -1% -1%
Equity reserves (3,140,235) (3,140,235) - 0% -1% -1%
Deficit (9,855,364) (7,801,877,958) 7,792,022,594 -100% -2797% -2855%
Treasury shares - 7,606,000 shares (29,435,220) (29,435,220) - 0% -11% -11%
Total Equity Attributable to Equity Holders of the
Parent Company 164,599,543 168,106,183 (3,506,640) -2% 63% 62%
Equity Attributable to Non-controlling Interests (6,856,279) (6,852,748) (3,531) 0% -2% -3%
Total Equity 157,743,264 161,253,435 (3,510,171) -2% 60% 59%

Total Liabilities and Equity P 269,721,384 P 273,301,564 (3,580,180) -1% 100% 100%

As of March 31, 2020, consolidated assets of APC Group, Inc. and its subsidiaries (the Company)
amounted to P269.7 million, P3.6 million lower compared to the December 31, 2019 balance of P273.3
million.

• Cash decreased substantially for the first quarter of 2020 mainly due to the increase in contributed
funds to the Kalinga Geothermal Project (KGP) of its subsidiary, Aragorn Power and Energy
Corporation (APEC). The KGP is a project of APEC in partnership with Guidance Management
Corporation (GMC) and AllFirst Kalinga Ltd. (AKL, formerly Chevron Kalinga Ltd.), a wholly
owned subsidiary of AllFirst Geothermal Philippines Holdings, Inc., (formerly Chevron
Geothermal Philippines Holdings, Inc.) for the exploration, development and exploitation of
geothermal resources covering a total area of 26,139 hectares located in the Province of Kalinga.
• In relation to this, the Company’s deferred exploration costs under other noncurrent assets increased
as well.

The Company’s consolidated liabilities amounted to P112 million. The movement in this account
pertains to the payment of the accrued and other payables.
 46

Total equity as of March 31, 2020 and December 31, 2019 amounted to P157.7 million and P161.3
million, respectively. The decline, amounting to P3.5 million, is attributable to the comprehensive loss
incurred during the period.

• On February 20, 2020, the SEC approved the Company’s application for the decrease in par value
of its common shares from P1.00 to P0.01. This resulted to a decrease in capital stock by P6.32
billion and an increase in additional paid-in capital for the same amount. On the same date, the SEC
also approved the Company’s application for equity restructuring, allowing the Company to wipe
out the deficit of
P7.80 billion as of December 31, 2018 against APIC. As a result, deficit for the first quarter of 2020
decreased from P7.80 billion as of December 31, 2019 to P9.86 million.

There were no off-balance sheet transactions.

Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31 Horizontal Analysis Vertical Analysis
2020 2019 Increase (Decrease) 2020 2019
(Unaudited) (Unaudited) Amount % % %

INCOME
Interest income P 763,558 P 1,271,726 (508,168) -40% 71% 80%
Dividend income 319,476 319,476 - 0% 29% 20%
1,083,034 1,591,202 (508,168) -32% 100% 100%
EXPENSES
General and administrative expenses (2,908,069) (2,513,763) (394,306) 16% -269% -158%

NET LOSS BEFORE AND AFTER INCOME TAX (1,825,035) (922,561) (902,474) 98% -169% -58%
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized loss on financial assets at fair value
through other comprehensive income (1,685,135) 317,950 (2,003,085) -630% -156% 20%
TOTAL COMPREHENSIVE LOSS P (3,510,170) P (604,611) (2,905,559) 481% -324% -38%

The Company ended the first quarter of 2020 with total net loss of Php1.8 million. This higher net
loss versus that in the same period in 2019 is attributable mainly to the decline in interest income from
its cash and cash equivalents because of the decline in its cash balance and the increase in general and
administrative expenses of the Company.

Unrealized mark-to-market loss on its investments at FVOCI contributed to bringing the Company’s
comprehensive loss to P3.51 million as of March 31, 2020.

As of March 31, 2020, except for what has been noted in the preceding, there were no material events
or uncertainties known to management that had a material impact on past performance, or that would
have a material impact on the future operations, in respect of the following:

• Known trends, demands, commitments, events or uncertainties that would have a material impact
on the Company;
• Material commitments for capital expenditures that are reasonably expected to have a material
impact on the Company’s short-term or long-term liquidity;
• Known trends, events or uncertainties that have had or that are reasonably expected to have a
material favorable or unfavorable impact on net sales/revenues/income from continuing
operations;
• Significant elements of income or loss that did not arise from the Company’s continuing
operations;
• Seasonal aspects that had a material impact on the Company’s results of operations; and
• Material changes in the financial statements of the Company for the periods ended March 31,
2020 and March 31, 2019 except those mentioned above.
 47

KEY PERFORMANCE INDICATORS

Management uses the following key performance indicators to evaluate the performance of the
Company and its subsidiaries. Except for Net Income, these key performance indicators are not
measurements in accordance with Philippine Financial Reporting Standards (PFRS) and should not
be considered as an alternative to net income or any other measure of performance which are in
accordance with PFRS.

1. Return on Assets Ratio (ROA). Return on Assets is an indicator of how profitable a company
is relative to its total assets. ROA gives an idea as to how efficient management is at using its
assets to generate earnings and is calculated by dividing the Company’s annual earnings by its
total assets.

2. Return on Equity Ratio (ROE). Return on Equity measures how much profit is generated with
the money shareholders have invested in the Company. It is expressed as a percentage and
calculated by dividing net income by total Stockholders’ Equity.

3. Current Ratio. Current ratio is computed by dividing current assets by current liabilities. This
indicates the liquidity of the Company in the short term and measures the peso amount of current
asset available to cover a peso amount of current liability.

4. Debt-to-Equity Ratio (DER). DER gives an indication of the Company’s leverage position and
is computed by dividing total liabilities with total stockholders’ equity.

5. Asset-to-Equity Ratio (AER). Asset-to-Equity Ratio is computed using total assets divided by
the total stockholders’ equity. This ratio shows the relationship of the total assets of the firm
owned by shareholders and an indicator of the leverage used to finance the Company.

The table below shows the comparative figures of the key performance indicators for the period in
review.

YTD YTD YTD

March 31, 2020 December 31, 2019 March 31, 2019
Return on Assets Ratio (0.01) (0.00) (0.00)
Return on Equity Ratio (0.01) (0.01) (0.01)
Current Ratio 0.25 1.28 1.46
Debt to Equity Ratio 0.71 0.69 0.66
Asset to Equity Ratio 1.71 1.69 1.66

Discussion on the key performance indicators

Return on Assets Ratio and Return on Equity Ratio

The Company’s ROA and ROE as of March 31, 2020 and 2019 are negative due to the reported net
loss for both years. There is no significant change in the ROA and ROE of the Company as of March
31, 2020 and 2019.

Current Ratio

Current ratio declined from 1.28 as of December 31, 2019 to 0.25 as of March 31, 2020 due to the
decline in the cash balance of the Company as discussed above.

Debt to Equity Ratio

There is no significant change in the debt to equity ratio of the Company as of March 31, 2020 and
as of December 31, 2019.
 48

Assets to Equity Ratio

There is no significant change in the asset to equity ratio of the Company as of March 31. 2020 and
as of December 31, 2019.

PART II OTHER INFORMATION

Other than what has been reported, no event has since occurred.
 49

ANNEX TO THE MD&A SECTION

1. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Parent Company and the following
subsidiaries (collectively referred to as the “Company”):

Percentage of Ownership
Subsidiaries Direct Indirect Total
Aragorn Power & Energy Corporation (APEC) (1) 95.6% - 95.6%
PRC Magma Energy Resources Inc. (PRC-Magma) (2) - 85.0% 85.0%
APC Cement Corporation (APC Cement) (2) 100.0% - 100.0%
APC Energy Resources, Inc. (APC Energy) (2) 100.0% - 100.0%
APC Mining Corporation (APC Mining) (2) 83.0% - 83.0%

(1) Still in exploration stage

(2) Still in the pre-operating stage

2. RISK EXPOSURES

Financial Risk Management

The Company’s principal financial instruments comprise advances from related parties. The main
purpose of these financial liabilities is to finance the Company’s operations. The Company has cash
and cash equivalents, trade and other receivables, deposits and trade and other payables that arise
directly from its operations. Other financial instruments consists of financial assets at fair value
through other comprehensive income (FVOCI) and advances from a related party.

The main risks arising from the Company’s financial instruments are credit risk, liquidity risk and
equity price risk. The BOD and the management review and approve policies of managing each of
the risks and they are summarized below.

Credit Risk
Credit risk is the risk that a counterparty will not meet its obligation under a financial instrument or
customer contract, leading to a financial loss.

Exposure to credit risk is monitored on an ongoing basis, credit checks are performed on all clients
requesting credit over certain amounts. Credit granted is subject to regular review, to ensure it remains
consistent with the customers’ current credit worthiness and appropriate to the anticipated volume of
business. The investment of the Company’s cash resources is managed so as to minimize risk while
seeking to enhance yield. The Company is exposed to credit risk, if the counterparty is unwilling or
unable to fulfill its obligations and the Company consequently suffers financial loss. Credit risk
management involves entering into financial transactions only with counterparties with acceptable
credit rating.

There are no significant concentrations of credit risk within the Company. Since the Company trades
only with recognized third parties, there is no requirement for collateral. The carrying values of the
Company’s financial assets represent the maximum exposure to credit risk as at the reporting date.

Liquidity Risk
Liquidity risk arises from the possibility that the Company may encounter difficulties in raising funds
to meet commitments from financial instruments. The Company’s objective is to maintain continuity
of funding. The Company’s policy is to maximize the use of suppliers’ credit for all its major
purchases and limit major capital expenditures at a reasonable level.

The Company monitors its cash position by a system of cash forecasting. All expected collections,
check disbursements and other payments are determined on a weekly basis to arrive at the projected
cash position to cover its obligations.
 50

Equity Price Risk

The Company’s investments in equity securities are susceptible to market price risk arising from
uncertainties about future values of the investment securities. The Company manages the equity price
risk through diversification and placing limits on individual and total equity instruments. Reports on
equity portfolio are submitted to the Company’s senior management on a regular basis. The
Company’s BOD reviews and approves all equity investment decisions.

There is no material change in the financial risk exposures of the company and its subsidiaries
particularly on currency, interest, credit, market and liquidity risks on its March 31, 2020 interim
financial statements compared to the December 31, 2019 audited consolidated financial statements
of APC Group Inc.

Fair value of Financial Instruments

A comparison by category of the carrying values and estimated fair values of the Company’s
financial instruments that are carried in the consolidated financial statements as of March 31, 2020
and December 31, 2019 are as follows:
March 31, 2020 December 31, 2019
Carrying Carrying
Value Fair Value Value Fair Value
Financial assets:
Loans and receivables:
Cash and cash equivalents 23,080,658 23,080,658 137,491,340 137,491,340
Trade and other Receivables 3,755,640 3,755,640 1,585,194 1,585,194
Deposits* 190,398 190,398 190,398 190,398
AFS financial assets 1,939,495 1,939,495 3,624,630 3,624,630
Total financial assets 28,966,191 28,966,191 142,891,562 142,891,562
Financial liabilities -
Other financial liabilities:
Trade and other payables** 27,921,660 27,921,660 36,531,489 36,531,489
Advances from related parties 79,978,631 79,978,631 79,978,631 79,978,631
Total current financial liabilities 107,900,291 107,900,291 116,510,120 116,510,120
*Excluding cash on hand amounting to P10,000 as at March 31, 2020 and December 31, 2019
** Included in “Other noncurrent assets” account
***Excluding statutory liabilities.

Cash and Cash Equivalents, Trade and Other Receivables, Trade and Other Payables and
Advances from Related Parties
Due to the short-term nature of the transactions, the carrying values approximate the fair values at
reporting dates.

Financial Assets at FVOCI

The fair values of quoted equity securities were determined by reference to market bid quotes as
of reporting dates.

Deposits and Subscription Payable

Due to non-availability of definite payment terms, there is no reliable source of fair values as of
reporting dates.
 51

The following tables provide the fair value measurement hierarchy of the Company’s assets and
liabilities as at March 31, 2020 and December 31, 2019:
March 31, 2020
Total Level 1 Level 3
Assets measured at fair value:
Investment properties P 10,028,870 P – P 10,028,870
Financial assets at FVOCI 1,939,495 1,939,495 –
Total financial assets P 15,200,991 P 5,172,121 P 10,028,870

December 31, 2019

Total Level 1 Level 3

Assets measured at fair value:
Investment properties P 10,028,870 P – P 10,028,870
Financial assets at FVOCI 3,624,630 3,624,630 –
Total financial assets P 15,200,991 P 5,172,121 P 10,028,870

There were no transfers between Level 1 and Level 2 fair value measurements and no transfers into
and out of Level 3 fair value measurements during the period ended March 31, 2020 and year ended
December 31, 2019.

3. OTHER REQUIRED DISCLOSURES

A.) The attached interim financial reports were prepared in accordance with accounting
standards generally accepted in the Philippines. The accounting policies and methods of
computation followed in these interim financial statements are the same compared with the
audited financial Statements for the period ended December 31, 2019.

B.) Except as reported in the Management’s Discussion and Analysis of Financial Condition and
Results of Operations (“MD&A”), there were no unusual items affecting assets, liabilities,
equity, net income or cash flows for the interim period.

C.) There were no material changes in estimates of amounts reported in prior periods that have
material effects in the current interim period.

D.) Except as disclosed in the MD&A, there were no other issuance, repurchase and repayments
of debt and equity securities.

E.) There were no material events that occurred subsequent to March 31, 2020 and up to the date
of this report that need disclosure herein.

F.) There were no changes in the composition of the Company during the interim period such
as business combinations, acquisition or disposals of subsidiaries and long-term investments,
restructuring and discontinued operations, except as what has been discussed in the MD&A
on the Company’s quasi-reorganization.

G.) There were no changes in contingent liabilities or contingent assets since December 31, 2019
and as of March 31, 2020.

H.) There exist no material contingencies and other material events or transactions affecting the
current interim period.
FINANCIAL STATEMENTS

The audited Financial Statements and Supplementary Schedules for the year 2019 are filed as part of Form
17A.

APC GROUP AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
FORM 17-A, Item 7

Consolidated Financial Statements

Statement of Management’s Responsibility for Financial Statements Report

Report of Independent Auditors
Consolidated Statement of Financial Position as of December 31, 2019
and 2018 CSFP
Consolidated Statements Comprehensive Income
for the years ended December 31, 2019, 2018 and 2017 CSCI
Consolidated Statements of Changes in Equity
for the years ended December 31, 2019, 2018 and 2017 CSCE
Consolidated Statements of Cash Flows
for the years ended December 31, 2019, 2018 and 2017 CCFS
Notes to Consolidated Financial Statements

Supplementary Schedules

Report of Independent Auditors on Supplementary Schedules:

I. Map of the Relationships of the Companies within the Group Attached

II. Supplementary Schedules Required by Paragraph 6D, Part II

of SRC Rule 68, as Amended (2011)
A. Financial Assets Attached
B. Amounts Receivable from Directors, Officers, Employees,
and Principal Stockholders (Other than Related Party) Attached
C. Amount Receivable from Related Parties which are Eliminated
during the Consolidation of Financial Statements Attached
D. Intangible Assets - Other Assets Attached
E. Long-term Debt Not Applicable
F. Indebtedness to Related Parties Not Applicable
G. Guarantees of Securities of Other Issuers Not Applicable
H. Capital Stock Attached

III. Financial Ratios – Key Performance Indicators

Attached
IV. Schedule of all the effective standards and interpretation Attached

V. Reconciliation of Retained Earning Available for Dividend Declaration Not Applicable

 53

Compliance with Corporate Governance Practices

The Company remains focused on ensuring the adoption of systems and practices of good corporate
governance in enhancing value for its shareholders.

Board Attendance
Regular meetings of the Board are scheduled before the beginning of the year and are held at least six (6)
times annually. Special meetings may also be called by the Chairman, the President or Corporate
Secretary. A director’s absence or non-participation in more than fifty percent (50%) of all meetings in a
year is a ground for temporary disqualification in the succeeding election. During 2019, each of the
Company’s directors have complied with the requirements.

Below table shows the attendance of each board member in the meetings conducted during the year:

Attendance in Board of Directors’ Meetings in 2019

Director 02/15/19 05/14/19 07/01/19 08/08/19 10/22/19 11/06/19 12/11/19
Willy N.
1 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Ocier
Jackson T.
2 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Ongsip
Bernardo D.
3 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Lim
Edmundo L.
4 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Tan
Virginia A.
5 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Yap
Laurito E.
6 ✔ - ✔ ✔ ✔ ✔ ✔
Serrano
Tomas D.
7 ✔ ✔ ✔ - ✔ ✔ ✔
Santos

Board Performance Evaluation

The Company conducts annual performance evaluations of the Board, its individual members and Board
Committees to ensure optimum Board performance. In this evaluation process, directors identify areas for
improvement, some of which are: the timeliness and integrity of information given to them, directors’
access to management, the Corporate Secretary and Board Advisors, and other forms of assistance as
needed. The Board reviews the results of these evaluations and agrees on clear action plans to address any
issues raised. In line with governance best practices, the board evaluations shall be facilitated by a third-
party independent assessor every three (3) years reckoned from January 1, 2017 (effectivity date of the
2016 Code of Corporate Governance for Publicly Listed Companies).

Continuing Education Programs

The Board identifies areas of continuing education on corporate governance topics they require. To keep
the Board and key officers well-informed of governance-related developments, regular annual education
programs are conducted in coordination with SM Investments Corporation and training providers duly
accredited by the SEC.

Manual on Corporate Governance

In compliance with the initiative of the SEC, APC submitted its Revised Manual on Corporate Governance
(the “Revised Manual”) to the SEC. The Revised Manual institutionalizes the principles of good corporate
governance in the entire Company. APC believes that corporate governance, the framework of rules,
systems and processes governing the performance of the Board and Management of their respective duties
 54

and responsibilities, and from which the organization’s values and ethics emerge, is of utmost importance
to the Company’s shareholders and other stakeholders, which include, among others, clients, employees,
suppliers, financiers, government and community in which it operates. The Company undertakes every
effort possible to create awareness throughout the entire organization.

Board Committees
Even prior to the submission of its Manual, the Company already created various Board-level committees.
These committees were comprised of:

1. The Executive Committee – to oversee the management of the Company and is responsible for
the Company’s goals, finances and policies;
2. Audit Committee – to review financial and accounting matters;
3. Compensation and Remuneration Committee – to look into an appropriate remuneration system;
4. Risk Oversight Committee – to review the policies and procedures relating to the identification,
analysis, management, monitoring and reporting of financial and non-financial risks;
5. Related Party Transactions Committee – to assess material agreements with related parties to
ensure that the RPT are conducted at market rates and on an arm’s length basis; and
6. Corporate Governance Committee – to assist and advise the Board in performing corporate
governance compliance responsibilities in relation with the Company’s Revised Manual on
Corporate Governance, the Philippine Code of Corporate Governance, and the disclsoure rules
of the SEC and the PSE.
• Nomination Committee – for the selection and evaluation of qualifications of directors and
officers.
On May 9, 2018, the Nomination Committee was merged with the Corporate Governance
Committee.

Each of the above is guided by their respective Committee Charters that indicates the purpose,
composition, duties and responsibilities. The Board Committee Charters are reviewed annually.

Corporate Objectives
The Board establishes the corporate objectives, which are:
• To create opportunities for growth through strategic and viable investments and to enhance shareholder
value for APC's partners and investors; and

• To promote mutually beneficial relationship with all the stakeholders that is grounded on transparency,
integrity and respect and to enhance the quality of life of the communities it serves.

• Participation in activities that develop the quality of life in the communities it serves through
scholarship and other programs for ancestral domains.

Code of Business Conduct and Ethics

The Company remains committed to align with the best corporate governance practices following the
release of the 2016 Code of Corporate Governance for Publicly-Listed Companies. In addition to the
Revised Manual, the Company’s Code of Business Conduct and Ethics (CBCE) defines good governance,
ethics and compliance practices expected throughout the organization. The Revised Manual and CBCE
are communicated to directors, officers and employees to ensure familiarity and adherence. These
documents are also made public through the Company’s website.

Governance Policies
Corporate policies on governance were developed, submitted to and approved by the Board to protect the
interests and rights of the shareholders and stakeholders and to promote transparency and accountability.
Such governance related policies are shown below and may be viewed through the APC Corporate website
http://www.apcaragorn.net: These policies and procedures are initially cascaded throughout the
 55

organization via email blast, intranet portal and annual corporate governance trainings. The Board, through
its various Board Committees, ensures that adequate internal control mechanisms are implemented and
properly complied in all levels.

1. Accountability, Integrity and Vigilance (Whistle-Blowing)

2. Alternative Dispute Resolution
3. Board Diversity
4. Conflict of Interest
5. Corporate Disclosures
6. Directors’ Board Seats Held in Other Companies
7. Employees’ Safety, Health and Welfare
8. Gifts / Hospitality / Entertainment
9. Insider Trading
10. Related Party Transactions
11. Succession Planning and Retirement Age for Directors and Key Officers
12. Tenure of Independent Directors
13. Vendor Accreditation and Selection
14. Material Related Party Transactions

Board Diversity
The Corporate values and promotes a diversity policy in the composition of our Board to reinforce its
effectiveness in providing strategic direction, oversight and compliance with laws and regulations.

Diversity in age, gender, ethnicity, experience, field expertise, and personal qualities shall be considered
by the Board as it installs a process of selection to ensure a mix of competent directors and key officers.
Diversity will foster critical discussion and promote balanced decisions by the Board by utilizing the
difference in perspective of its directors.

APC also prohibits its directors, officers, and employees from using privileged corporate information for
personal gain. Trading/ownership of Company shares as of May 31, 2020 is shown below:
Shareholdings Ownershi
Shareholding
Acquisitio Dispositio as of 05/31/20 p
s
n n Percenta
as of 12/31/18 Direct
ge
Willy N. Ocier 310,001 - - 310,001 0.00
Bernardo D. Lim 1,000 - - 1,000 0.00
Edmundo L. Tan 1 - - 1 0.00
Tomas D. Santos 1 - - 1 0.00
Virginia A. Yap 10,001 - - 10,001 0.00
Laurito E. Serrano 1 - - 1 0.00
Jackson T. Ongsip 1 - - 1 0.00
Total 321,006 - - 321,006
 56

NON-FINANCIAL PERFORMANCE INDICATOR (as of December 31, 2019)

Total Headcount:
Headcount % Change
YE 2019 3 -25%
YE 2018 4

Gender Distribution:
Year Headcount % Distribution
Male Female Total Male Female
YE 2019 2 1 3 67% 33%
YE 2018 2 2 4 50% 50%

Performance Review
By Gender Distribution
Year Headcount % assessed by gender % over total
Male Female Total Male Female headcount
YE 2019 2 2 4 100% 100% 100%
YE 2018 2 2 4 100% 100% 100%

By Distribution by Rank:
Year % over
Senior Middle Rank- Total Senior Middle Rank- total
Mgt Mgt and- Mgt Mgt and- headcount
File File
YE - 1 3 4 - 1 3 100%
2019
YE - 1 3 4 - 1 3 100%
2018

For governance related issues or concerns, stakeholders may refer to:

Governance and Corporate Affairs Department
5th Floor Tower A, Two E-com Center
Palm Coast Avenue, Mall of Asia Complex
Pasay City 1300 Philippines
Tel.No.:(632) 8662-8888
Email: governance@bellecorp.com

The Company, through its Chief Compliance Officer, stresses its compliance with applicable laws and
adherence to ethical practices as stated in the CBCE and the Revised Manual. APC is not aware of any
non-compliance with the Revised Manual by any of its directors, officers or employees.
 57

CERTIFICATION

UNDERTAKING TO PROVIDE COPIES OF THE INFORMATION

STATEMENT AND THE ANNUAL REPORT

UPON WRITTEN REQUEST OF ANY SHAREHOLDER OF RECORD ENTITLED TO NOTICE OF

AND VOTE AT THE MEETING, THE COMPANY SHALL FURNISH SUCH SHAREHOLDER WITH
A COPY OF THE COMPANY’S ANNUAL REPORT ON SEC FORM 17-A WITHOUT CHARGE.
ANY SUCH WRITTEN REQUEST SHALL BE ADDRESSED TO:

ATTY. RICHARD ANTHONY D. ALCAZAR

Corporate Secretary
Tan Acut Lopez & Pison Law Offices
23rd Floor, Philippine Stock Exchange Centre
East Tower Exchange Road, Ortigas Center
Pasig City 1605
 58

Schedule “A”

2020 ANNUAL STOCKHOLDERS’ MEETING

Guidelines for Participating via Remote Communication and Voting in Absentia

The 2020 Annual Stockholders’ Meeting (ASM) of APC Group, Inc. (“APC” or the
“Corporation”) will be held on August 10, 2020, Monday, at 2:00 P.M. and the Board of
Directors of the Corporation has fixed the end of trading hours of the Philippine Stock Exchange,
Inc. on July 9, 2020 (“Record Date”) as the record date for the determination of stockholders
entitled to the notice of, to attend, and to vote at such meeting and any adjournment thereof.

The Board of Directors of the Corporation has approved and authorized stockholders to participate in the
ASM via remote communication and to exercise their right to vote in absentia or by proxy. This is in view
of the community quarantine currently implemented in various areas of the country and in consideration
of health and safety concerns of everyone involved.

Registration Period: The conduct of the meeting will be streamed live, and stockholders may attend the
meeting by registering until August 5, 2020, 2:00 P.M. via apccorsec@bellecorp.com and by submitting
the following requirements and documents, subject to verification and validation:

1. Individual Stockholders

1.1. Clear digital copy of the front and back portion of a valid government-issued
identification card/s (ID/s), which include the passport, driver’s license, SSS ID, senior
citizen ID, among others in order to validate the registration of the shareholder (up to
2MB)
1.2. Stock certificate number
1.3. Active e-mail address/es
1.4. Active contact number/s, with area and country codes

2. Multiple Stockholders or with joint accounts

2.1. Clear digital copy of the front and back portion of a valid government-issued
identification card/s (ID/s), which include the passport, driver’s license, SSS ID,
senior citizen ID, among others in order to validate the registration of the
shareholders (up to 2MB)
2.2. Stock certificate number/s
2.3. Active e-mail addresses of the stockholders
2.4. Active contact numbers, with area and country codes
2.5. Digital copy of an authorization letter executed by all named holders,
authorizing a holder to vote for and on behalf of the account

3. Corporate Stockholders
3.1. Digital copy of the Secretary’s Certificate (or equivalent for non-resident)
attesting to the authority of the representative to vote for and on behalf of the
corporation
3.2. Clear digital copy of the front and back portion of a valid government-issued
identification card/s (ID/s), which include the passport, driver’s license, SSS ID,
senior citizen ID, among others to validate the registration of the authorized
representative (no more than 2MB)
3.3. Active e-mail address/es of the authorized representative
3.4. Active contact number of authorized representative, with area and country codes
 59

4. PCD Participants/Brokers
4.1. Digital copy of the Secretary’s Certificate (or equivalent for non-resident)
attesting to the authority of the representative to vote for and on behalf of the
PCD participant/broker
4.2. Digital copy of the certificate of shareholdings issued by the PCD/broker
4.3. Clear digital copy of the front and back portion of a valid government-issued
identification card/s (ID/s), which include the passport, driver’s license, SSS ID,
senior citizen ID, among others to validate the registration of the authorized
representative (no more than 2MB)
4.4. Active e-mail address/es of the authorized representative
4.5. Active contact number of authorized representative, with area and country codes

Online Voting

Stockholders who have successfully registered and validated shall be provided by a ballot with a brief
description of each item for stockholders’ approval are appended as Annex A to the Notice of Meeting.

A stockholder has the option to vote “Yes”, “No”, or “Abstain” on each agenda item for
approval.

For the election of directors, the stockholder has the option to vote for all nominees, withhold
vote for any of the nominees, or vote for certain nominees only.

Note: A stockholder may vote such number of his/her shares for as many persons as there are
directors to be elected or he may cumulate said shares and give one candidate as many votes as
the number of directors to be elected (7 directors for Premium Leisure Corp.) multiplied by the
number of his shares shall equal, or he may distribute them on the same principle among as
many candidates as he shall see fit, provided, that the total number of votes cast shall not exceed
the number of shares owned by the stockholder.

ASM Livestream

The ASM will be broadcasted live and stockholders who have successfully registered and validated can
participate via remote communication. Details of the meeting will be sent to stockholders in the emails
provided to the Corporation.

Video recordings of the ASM will be adequately maintained by the Corporation and will be made available
to participating stockholders upon request.

Open Forum

During the virtual meeting, the Corporation will have an Open Forum, during which, the meeting’s
moderator will read and where representatives of the Corporation shall endeavor to answer as many of the
questions and comments received from stockholders as time will allow.

Stockholders may send their questions in advance by sending an email bearing the subject “ASM 2020
Open Forum” to apccorsec@bellecorp.com on or before 6 August 2020. A section for stockholder
comments/questions or through a “Q&A” button shall also be provided in the livestream platform.
 60

Questions/comments received but not entertained during the Open Forum due to time constraints will be
addressed separately by the Corporation’s Investor Relations.

For any concerns, please contact the Corporation’s Governance and Corporate Affairs Department at
(+632) 8662-8888 local 2179 or via email at governance@bellecorp.com.

For complete information on the annual meeting, please visit http://www.apcaragorn.net/.

 COVER SHEET
for
AUDITED FINANCIAL STATEMENTS

SEC Registration Number

A S - 0 9 3 8 1 2 7

COMPANY NAME

A P C G R O U P , I N C . A N D S U B S I D I A R I

E S

PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )

G / F M y T o w n N e w Y o r k B l d g , G e n e

r a l E . J a c i n t o S t . c o r n e r C a p a

s S t . , B r g y G u a d a l u p e N u e v o , M

a k a t i C i t y

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

A A C F S S E C N A

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

apcgrpinc@gmail.com c/o 6628888 loc. 2144 –

No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)

593 Second Thursday of June 12/31

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

Jackson T. Ongsip apcgrpinc@gmail.com c/o 6628888 loc. –

2144

CONTACT PERSON’s ADDRESS

G/F MyTown New York Bldg, General E. Jacinto St. corner Capas St., Brgy Guadalupe Nuevo,
Makati City
NOTE 1 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.
2 All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission
and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies.

*SGVFS038989*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT

The Stockholders and the Board of Directors

APC Group, Inc.
G/F MyTown New York Bldg.
General E. Jacinto St. corner Capas St.
Brgy. Guadalupe Nuevo, Makati City

Opinion

We have audited the consolidated financial statements of APC Group, Inc. and its subsidiaries
(the Group), which comprise the consolidated statements of financial position as at December 31, 2019
and 2018, and the consolidated statements of comprehensive income, consolidated statements of changes
in equity and consolidated statements of cash flows for each of the three years in the period ended
December 31, 2019, and notes to the consolidated financial statements, including a summary of
significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at December 31, 2019 and 2018, and its consolidated
financial performance and its consolidated cash flows for each of the three years in the period ended
December 31, 2019 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics)
together with the ethical requirements that are relevant to our audit of the consolidated financial
statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of
the risks of material misstatement of the consolidated financial statements.

*SGVFS038989*
A member firm of Ernst & Young Global Limited
 -2-

The results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying consolidated financial statements.

Recoverability of Deferred Exploration Costs

As at December 31, 2019, the carrying value of the Group’s deferred exploration costs amounted to
=111.5 million. These deferred exploration costs pertain to the Aragorn Power and Energy Corporation
P
(APEC)’s participating interest in Geothermal Renewable Service Contract (GRESC) and the
expenditures incurred by APEC for the Kalinga Geothermal Project. Under PFRS 6, Exploration for and
Evaluation of Mineral Resources, these deferred exploration costs shall be assessed for impairment when
facts and circumstances suggest that the carrying amount exceeds the recoverable amount. The ability of
APEC to recover its deferred exploration costs would depend on the commercial viability of the reserves.
We considered this as a key audit matter because of the materiality of the amount involved and the
significant management judgment required in assessing whether there is any indication of impairment.

The Group’s disclosures about deferred exploration costs are included in Notes 1, 3 and 10 to the
consolidated financial statements.

Audit Response

We obtained management’s assessment on whether there is any indication that deferred exploration costs
may be impaired. We inspected the license/permit of the exploration period of GRESC to determine that
the period for which APEC has the right to explore in the specific area has not expired. We reviewed the
summary of the status of APEC’s exploration project as at December 31, 2019, as certified by APEC’s
President, and compared it with the disclosures submitted to regulatory agencies. We reviewed the
contracts and agreements, and budget for GRESC exploration costs. We checked the work program and
corresponding budget furnished to the Department of Energy. We also read the minutes of the meetings
of the Group’s Board of Directors for the discussion of management plans.

Other Information

Management is responsible for the other information. The other information comprises the information
included in the SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report
for the year ended December 31, 2019, but does not include the consolidated financial statements and our
auditor’s report thereon. The SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and
Annual Report for the year ended December 31, 2019 are expected to be made available to us after the
date of this auditor’s report.

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

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

*SGVFS038989*
A member firm of Ernst & Young Global Limited
 -3-

Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with PFRSs, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with PSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

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

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

· Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.

*SGVFS038989*
A member firm of Ernst & Young Global Limited
 -4-

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

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the audit. We remain solely
responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

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

The engagement partner on the audit resulting in this independent auditor’s report is Johnny F. Ang.

SYCIP GORRES VELAYO & CO.

Johnny F. Ang
Partner
CPA Certificate No. 0108257
SEC Accreditation No. 1284-AR-2 (Group A),
May 16, 2019, valid until May 15, 2022
Tax Identification No. 221-717-423
BIR Accreditation No. 08-001998-101-2018,
November 6, 2018, valid until November 5, 2021
PTR No. 8131119, January 9, 2020, Makati City

February 28, 2020

*SGVFS038989*
A member firm of Ernst & Young Global Limited
APC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31
2019 2018

ASSETS

Current Assets
Cash and cash equivalents (Notes 5, 18 and 19) =137,491,340
P =144,787,138
P
Receivables (Notes 6, 18 and 19) 1,585,194 300,718
Other current assets 2,585 11,515
Total Current Assets 139,079,119 145,099,371

Noncurrent Assets
Property and equipment (Note 8) 62,234 15,620
Investment property (Notes 9 and 19) 10,028,870 10,028,870
Financial assets at fair value through other comprehensive income
(FVOCI) (Notes 7, 18 and 19) 3,624,630 5,172,121
Deferred exploration costs (Note 10) 111,520,001 110,878,886
Input value added tax (VAT) 8,962,888 8,704,647
Other noncurrent assets (Notes 18 and 19) 23,822 23,822
Total Noncurrent Assets 134,222,445 134,823,966
=273,301,564
P =279,923,337
P

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables (Notes 11, 18 and 19) P28,627,801
= P28,449,031
=
Advances from a related party (Notes 16, 18 and 19) 79,978,631 80,047,381
Total Current Liabilities 108,606,432 108,496,412

Noncurrent Liabilities
Accrued retirement costs (Note 14) 3,441,697 3,170,606
Other noncurrent liabilities (Notes 18 and 19) – 161,959
Total Noncurrent Liabilities 3,441,697 3,332,565
Total Liabilities 112,048,129 111,828,977

Equity Attributable to Equity Holders of the Parent Company

Capital stock (Notes 12 and 18) 6,388,078,749 6,388,078,749
Additional paid-in capital (Notes 12 and 18) 1,613,942,096 1,613,942,096
Cumulative change in fair value of financial assets at FVOCI (Note 7) 2,776,629 4,324,120
Remeasurement loss on defined benefit obligation (Note 14) (2,237,878) (2,237,878)
Equity reserves (Note 2) (3,140,235) (3,140,235)
Deficit (7,801,877,957) (7,796,603,339)
Treasury shares - 7,606,000 shares (Notes 12 and 17) (29,435,220) (29,435,220)
Total Equity Attributable to Equity Holders of the
Parent Company 168,106,184 174,928,293
Non-controlling Interests (6,852,749) (6,833,933)
Total Equity 161,253,435 168,094,360

=273,301,564
P =279,923,337
P

See accompanying Notes to Consolidated Financial Statements.

*SGVFS038989*
APC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31

2019 2018 2017
REVENUES
Interest income (Note 5) =4,651,666
P =3,569,449
P =3,900,176
P
Dividend income (Note 7) 319,476 279,224 178,688
4,971,142 3,848,673 4,078,864
EXPENSES
General and administrative expenses (Note 13) (10,264,576) (12,350,727) (20,510,625)
OTHER INCOME (EXPENSES)
Loss on:
Sale of investment property (Note 9) – (3,015,807) –
Disposal of property and equipment (Note 8) – – (26,684)
Other income - net – – 44,500
– (3,015,807) 17,816
LOSS BEFORE INCOME TAX (5,293,434) (11,517,861) (16,413,945)
PROVISION FOR INCOME TAX (Note 15) – – 890
NET LOSS (5,293,434) (11,517,861) (16,414,835)
OTHER COMPREHENSIVE INCOME (LOSS)
Item not to be reclassified to profit or loss in
subsequent periods:
Change in fair value of financial assets at FVOCI (Note 7) (1,547,491) (3,497,450) –
Remeasurement gain on defined benefit
obligation (Note 14) – – 625,727
Item to be reclassified to profit or loss in
subsequent periods:
Unrealized gain on available for sale financial assets – – 1,144,620
(1,547,491) (3,497,450) 1,770,347
TOTAL COMPREHENSIVE LOSS (P
=6,840,925) (P
=15,015,311) (P
=14,644,488)

Net Loss Attributable to:

Equity holders of the Parent Company (Note 17) (P
=5,274,618) (P
=11,470,031) (P
=16,324,751)
Non-controlling interests (18,816) (47,830) (90,084)
(P
=5,293,434) (P
=11,517,861) (P
=16,414,835)
Total Comprehensive Loss Attributable to:
Equity holders of the Parent Company (P
=6,822,109) (P
=14,967,481) (P
=14,554,404)
Non-controlling interests (18,816) (47,830) (90,084)
(P
=6,840,925) (P
=15,015,311) (P
=14,644,488)
Basic/Diluted Loss Per Common Share (Note 17) (P
=0.000703) (P
=0.001528) (P
=0.002175)

See accompanying Notes to Consolidated Financial Statements.

*SGVFS038989*
APC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

Equity Attributable to Equity Holders of the Parent Company

Cumulative
Change in Fair Remeasurement
Value of Loss on
Additional Financial Assets Defined Benefit Treasury
Capital Stock Paid-in Capital at FVOCI Obligation Shares Non-controlling
(Notes 12 and 18) (Notes 12 and 18) (Note 7) (Note 14) Equity Reserves Deficit (Notes 12 and 17) Total Interests Total

Balances at January 1, 2019 = 6,388,078,749

P = 1,613,942,096
P = 4,324,120
P (P
= 2,237,878) (P
= 3,140,235) (P
= 7,796,603,339) (P
= 29,435,220) = 174,928,293
P (P
= 6,833,933) = 168,094,360
P
Net loss during the year – – – – (5,274,618) – (5,274,618) (18,816) (5,293,434)
Other comprehensive loss – – (1,547,491) – – – – (1,547,491) – (1,547,491)
Total comprehensive loss – – (1,547,491) – – (5,274,618) – (6,822,109) (18,816) (6,840,925)

Balances at December 31, 2019 = 6,388,078,749

P = 1,613,942,096
P = 2,776,629
P (P
= 2,237,878) (P
= 3,140,235) (P
= 7,801,877,957) (P
= 29,435,220) = 168,106,184
P (P
= 6,852,749) = 161,253,435
P

Balances at January 1, 2018 =

P6,388,078,749 =1,613,942,096
P =7,821,570
P (P
=2,237,878) =226,304 (P
P =7,785,133,308) (P
=29,435,220) =193,262,313
P (P
=10,152,642) =183,109,671
P
Net loss during the year – – – – – (11,470,031) – (11,470,031) (47,830) (11,517,861)
Other comprehensive income – – (3,497,450) – – – – (3,497,450) – (3,497,450)
Total comprehensive loss – – (3,497,450) – – (11,470,031) – (14,967,481) (47,830) (15,015,311)
Change in ownership interest in a subsidiary
without loss of control (Note 2) – – – – (3,366,539) – – (3,366,539) 3,366,539 –

Balances at December 31, 2018 =6,388,078,749

P =1,613,942,096
P =4,324,120
P (P
=2,237,878) (P
=3,140,235) (P
=7,796,603,339) (P
=29,435,220) =174,928,293
P (P
=6,833,933) =168,094,360
P

Balances at January 1, 2017 =

P6,388,078,749 =1,613,942,096
P =6,676,950
P (P
=2,863,605) =226,304 (P
P =7,768,808,557) (P
=29,435,220) =207,816,717
P (P
=10,062,558) =197,754,159
P
Net loss during the year – – – – – (16,324,751) – (16,324,751) (90,084) (16,414,835)
Other comprehensive income – – 1,144,620 625,727 – – – 1,770,347 – 1,770,347
Total comprehensive loss – – 1,144,620 625,727 – (16,324,751) – (14,554,404) (90,084) (14,644,488)
Balances at December 31, 2017 =
P6,388,078,749 =1,613,942,096
P =7,821,570
P (P
=2,237,878) =226,304 (P
P =7,785,133,308) (P
=29,435,220) =193,262,313
P (P
=10,152,642) =183,109,671
P

See accompanying Notes to Consolidated Financial Statements.

*SGVFS032929*
APC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31

2019 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax: (P
=5,293,434) (P
=11,517,861) (P
=16,413,945)
Adjustments for:
Interest income (Note 5) (4,651,666) (3,569,449) (3,900,176)
Dividend income (Note 7) (319,476) (279,224) (178,688)
Retirement costs (Note 14) 271,091 505,320 490,513
Depreciation (Notes 8 and 13) 15,868 8,926 65,522
Loss on:
Sale of investment property (Note 9) – 3,015,807 –
Disposal of property and equipment (Note 8) – – 26,684
Operating loss before working capital changes (9,977,617) (11,836,481) (19,910,090)
Decrease (increase) in:
Receivables (1,299,988) 640,959 80,828,202
Other current assets 8,930 5,513 (17,027)
Input VAT (258,241) (217,159) (953,950)
Increase (decrease) in:
Trade and other payables 178,770 (2,602,619) (5,543,905)
Advances from a related party (68,750) 42,845 232,530
Cash generated from (used for) operations (11,416,896) (13,966,942) 54,635,760
Interest received 4,667,178 3,569,449 3,900,176
Dividend received 319,476 279,224 178,688
Income taxes paid – – (72,327)
Net cash provided by (used in) operating activities (6,430,242) (10,118,269) 58,642,297
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (Note 8) (62,482) – (26,777)
Proceeds from:
Sale of investment property (Notes 9 and 20) – 9,329,323 –
Disposal of property and equipment (Note 8) – − 35,610
Decrease (increase) in:
Deferred exploration costs (641,115) (51,176,727) (528,137)
Other noncurrent assets – 166,577 (161,185)
Decrease in other noncurrent liabilities (161,959) – –
Net cash used in investing activities (865,556) (41,680,827) (680,489)

NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS (7,295,798) (51,799,096) 57,961,808
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR (Note 5) 144,787,138 196,586,234 138,624,426
CASH AND CASH EQUIVALENTS
AT END OF YEAR (Note 5) =137,491,340
P =144,787,138
P =196,586,234
P

See accompanying Notes to Consolidated Financial Statements.

*SGVFS038989*
APC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. General Information

Corporate Information
APC Group, Inc. (the Parent Company or APC) and subsidiaries (the Group) were all incorporated in
the Philippines and are registered with the Philippine Securities and Exchange Commission (SEC).
The Parent Company was incorporated in the Philippines on October 15, 1993 and was originally
organized to engage in the oil and gas exploration and development in the Philippines.

On April 30, 1997, the Philippine SEC approved the change in the primary purpose of the Parent
Company to that of a holding company. The Parent Company’s shares of stock are publicly traded in
the Philippine Stock Exchange (PSE).

The registered office address of the Parent Company is G/F MyTown New York Bldg, General E.
Jacinto St. corner Capas St., Brgy Guadalupe Nuevo, Makati City.

The accompanying consolidated financial statements were approved and authorized for issue by the
Board of Directors (BOD) on February 28, 2020.

Status of Operations

As at February 28, 2020, the following are the status of operations of the Group.

a. Aragorn Power and Energy Corporation (APEC)

§ Kalinga Apayao Geothermal Service Project (Project)

As at February 28, 2020, APEC is still in the exploration stage. It was established to engage in
renewable energy resource exploration, development and utilization.

In 2008, APEC was granted a Geothermal Service Contract (GSC) by the Republic of the
Philippines, through Department of Energy (DOE), for the exploration, development and
exploitation of geothermal resources covering a total area of 26,139 hectares located in the
Province of Kalinga (the “Kalinga Geothermal Project” or “KGP”). The GSC was granted after a
Certificate Precondition from the National Commission of Indigenous People, covering a major
portion of the geothermal service area, was secured. The GSC was converted into a Geothermal
Renewable Service Contract (GRESC) in March 2010 to avail of the incentives provided under
the Renewable Energy (RE) Act of 2008. GRESC has a term of not exceeding 25 years
(including the used term under the GSC) and renewable for not more than 25 years. The total
period from pre-development stage to the development/commercial stage shall not exceed 50
years.

In November 2010, APEC and its partner Guidance Management Corporation (GMC) forged a
partnership with AllFirst Kalinga Ltd. (AKL, formerly Chevron Kalinga Ltd.), a wholly owned
subsidiary of AllFirst Geothermal Philippines Holdings, Inc., (formerly Chevron Geothermal
Philippines Holdings, Inc.) in developing the geothermal area. The parties signed a Farm-out
Agreement (FOA) which gives APEC and GMC the option to take an equity position of up to
40% in the geothermal project. The parties also signed a Joint Operating Agreement. Under the
agreement, AKL will be responsible for the exploration, development and operation of the steam
field and power activities.
 -2-

On August 13, 2018, APEC has secured an extension of the GRESC exploration period from
DOE until September 23, 2020. On August 14, 2018, pursuant to Executive Order No. 30, the
Energy Investment Coordinating Council (EICC), through the DOE, granted KGP a Certificate of
Energy Project of National Significance (CEPNS) for Pre-Development Phase. The CEPNS
entitles KGP to all the rights privileges provided for under Executive Order No. 30 series 2017.
On September 18, 2018, AKL has assigned its Farm-out interest, including all associated rights
and obligations under the FOA, in favor of its affiliate, Allfirst Kalinga Holdings, Inc. (AKHI).

Through letter dated December 28, 2018, the DOE gave KGP the clearance to undertake a system
impact study (SIS) of its proposed 120 MW Kalinga Geothermal Project. The SIS of the KGP is
currently on-going.

In 2019, KGP completed securing all the remaining necessary permits from the regulatory
agencies (i.e. DENR and NWRB), and maintained and complied with its commitments with each
of the representative Council of Elders and Leaders (COEs) under the Memoranda of Agreements
(MOAs) supporting the NCIP Certificates of Precondition. KGP has also engaged contractors and
suppliers necessary for the construction of access roads, well pads, and well drilling activities.

With the completion of the negotiation for right-of-way, remaining regulatory permits, as well as
the engagement of the needed contractors and suppliers, KGP has completed the construction of
well pads and access roads, and continues to implement geo-hazard mitigation measures.

On October 12, 2019, the Project commenced drilling of the PAS-02 exploration well, and
drilling operations are currently on-going. Consistent with and in compliance to the work
program of the Project, KGP is preparing for the conversion of the Project from its pre-
development phase to development phase.

The KGP continues to provide scholarship grants and educational assistance to deserving youths
from the eight (8) ancestral domains within its contract area. As of school year 2019-2020, the
KGP has already extended scholarships to 351 grantees and has produced 221 graduates in
various courses. Three (3) scholar graduates in engineering and geology have been hired for the
Project.

As at February 28, 2020, APEC has completed sub-phases 1 and 2 covering, geochemical and
geophysical surveys. APEC is already in the sub-phase 3 stage of the project. In line with this,
the consent of nine (9) out of eleven (11) ancestral domains has been secured covering 85% of the
GRESC area. In addition, all of the Community Development (CD) Projects have been fully
completed and turned over to the respective community beneficiaries.

This KGP involves the development of steam fields that can generate around 120 megawatts
(MW) of new capacity, providing an additional source of clean, indigenous and reliable baseload
power to the Luzon grid. A 120 MW geothermal project will approximately cost more than
US$300.0 million.
b. APC Energy Resources Inc. (APC Energy)
APC Energy was established to engage in exploration, development and utilization of renewable
energy resources. As at February 28, 2020, APC Energy is still in the pre-operating stage.

*SGVFS038989*
 -3-

c. APC Mining Corporation (APC Mining)

APC Mining was organized to engage in mining, processing, manufacturing, buying and selling
of all kinds of ores, metals and minerals. As at February 28, 2020, APC Mining is still in the
pre-operating stage.
d. APC Cement Corporation (APC Cement)
APC Cement was established to engage in the manufacture of cement. As at February 28, 2020,
APC Cement is still in the pre-operating stage.

e. PRC-Magma Energy Resources, Inc. (PRC Magma)

PRC Magma was established to engage in the business of exploration, development, and
processing of renewable and non-renewable energy resources, including but not limited to wind
power, solar power, hydropower, biofuels, biomass, and coal; exploration, mining and processing
of metalliferous and non-metalliferous mineral and ore resources; trading and supply of energy
and mineral resources; and generation of electric power using energy resources. As at
February 28, 2020, PRC Magma is still in the pre-operating stage.

2. Basis of Preparation and Consolidation, Statement of Compliance and Summary of Significant

Accounting Policies
Basis of Preparation
The accompanying consolidated financial statements have been prepared on a historical cost basis,
except for financial assets at fair value through other comprehensive income (FVOCI) and investment
properties which are measured at fair value. The consolidated financial statements are presented in
Philippine peso (P
=), which is the Group’s functional and presentation currency under Philippine
Financial Reporting Standards (PFRS). All values are rounded to the nearest peso, except when
otherwise indicated.
Statement of Compliance
The consolidated financial statements, which are prepared for submission to the SEC, have been
prepared in compliance with PFRS.
Basis of Consolidation
The consolidated financial statements include the accounts of the Parent Company and the following
subsidiaries as at December 31, 2019 and 2018:

Percentage of Ownership
Subsidiaries Nature of Business Direct Indirect Total
APEC (1) Energy 95.6 − 95.6(3)
PRC - Magma (1, 2) Energy − 85.0 85.0
APC Cement (1) Manufacturing 100.0 − 100.0
APC Energy (1) Mining 100.0 − 100.0
APC Mining (1) Mining 83.0 − 83.0
(1) Still in the pre-operating stage
(2) A direct subsidiary of APEC
(3) On April 10, 2018, the Parent Company subscribed to additional shares of APEC through capital infusion amounting to
=76.5 million which increased the ownership interest of the Parent Company from 90% to 95.6%. This resulted to change in
P
ownership interests in APEC without loss of control and accounted for as deemed acquisition of NCI. Loss on dilution of NCI
amounted to = P 3.4 million, presented as part of “Equity Reserves” in the Consolidated Statement of Financial Position.

All of the subsidiaries were incorporated in the Philippines.

*SGVFS038989*
 -4-

Control is achieved when the Parent Company is exposed, or has right, to variable returns from its
involvement with the investee. Specifically, the Parent Company controls an investee, if and only if,
the Parent Company has:
· power over the 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 voting rights results in control. To support this
presumption, and when the Parent Company has less than a majority of the voting or similar rights of
an investee, the Parent Company considers all relevant facts and circumstances in assessing whether
it has power over an investee, including:
· the contractual arrangements with the other vote holders of the investee;
· rights arising from other contractual arrangements; and
· the Group’s voting rights and potential voting rights.

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

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity
holders of the Parent Company and to the non-controlling interests, even if this results in the non-
controlling 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 intra-group assets and liabilities, equity, income and expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.

The financial statements of the subsidiaries are prepared for the same reporting year as the Parent
Company using consistent accounting policies.

A change in the ownership interest of a subsidiary, without loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it derecognizes the related assets
(including goodwill), liabilities, non-controlling interest and other components of equity while any
resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair
value.

Non-controlling Interests (NCI)

NCI represent the portion of profit or loss and the net assets not held by the Group and are presented
separately in the consolidated statements of comprehensive income and within equity in the
consolidated statements of financial position, separately from equity attributable to owners of the
Parent Company. Any losses applicable to a non-controlling shareholder of a consolidated subsidiary
in excess of the non-controlling shareholder’s equity in the subsidiary are charged against the NCI
even if this results in NCI having a deficit.

Changes in Accounting Policies and Disclosures

The accounting policies adopted are consistent with those of the previous financial year, except that
the Group has adopted the following new accounting pronouncements starting January 1, 2019:
Adoption of these pronouncements did not have any significant impact on the Group’s financial
position or performance unless otherwise indicated.

*SGVFS038989*
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· PFRS 16, Leases

PFRS 16 supersedes Philippine Accounting Standard (PAS) 17, Leases, Philippine Interpretation
IFRIC-4, Determining whether an Arrangement contains a Lease, SIC-15, Operating Leases-
Incentives and SIC-27, Evaluating the Substance of Transactions Involving the Legal Form of a
Lease. The standard sets out the principles for the recognition, measurement, presentation and
disclosure of leases and requires lessees to recognize most leases on the balance sheet. Lessor
accounting under PFRS 16 is substantially unchanged from PAS 17. Lessors will continue to
classify leases as either operating or finance leases using similar principles as in PAS 17 and
distinguish two types of leases: operating lease and finance lease. Therefore, PFRS 16 does not
have an impact for leases where the Group is the lessor.

The Group adopted PFRS 16 using the modified retrospective approach and elected to apply the
standard to contracts that were previously identified as leases applying PAS 17 and Philippine
Interpretation IFRIC-4. The Group will therefore not apply the standard to contracts that were not
previously identified as containing a lease applying PAS 17 and Philippine Interpretation
IFRIC-4.

The Group has lease contracts for office space. Before the adoption of PFRS 16, the Group
classified these leases (as lessee) at the inception date as operating leases. Refer to the accounting
policy prior to January 1, 2019.

Upon adoption of PFRS 16, the Group applied a single recognition and measurement approach
for all leases except for short-term leases. Refer to the accounting policy on leases upon adoption
of PFRS 16. The Group applied practical expedient wherein it applied the short-term leases
exemptions to leases with lease term that ends within 12 months of the date of initial application.
The Group only has short-term lease. Thus, there is no significant impact on the adoption of
PFRS 16.

· Philippine Interpretation IFRIC-23, Uncertainty over Income Tax Treatments

The Interpretation addresses the accounting for income taxes when tax treatments involve
uncertainty that affects the application of PAS 12, Income Taxes. It does not apply to taxes or
levies outside the scope of PAS 12, nor does it specifically include requirements relating to
interest and penalties associated with uncertain tax treatments. The Interpretation specifically
addresses the following:
· Whether the Group considers uncertain tax treatments separately
· The assumptions the Group makes about the examination of tax treatments by taxation
authorities
· How the Group determines taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates
· How the Group considers changes in facts and circumstances

The Group is required to determine whether to consider each uncertain tax treatment separately or
together with one or more other uncertain tax treatments and use the approach that better predicts
the resolution of the uncertainty. The Group shall assume that the taxation authority will examine
amounts that it has a right to examine and have full knowledge of all related information when
making those examinations. If the Group concludes that it is not probable that the taxation
authority will accept an uncertain tax treatment, it shall reflect the effect of the uncertainty for
each uncertain tax treatment using the method the entity expects to better predict the resolution of
the uncertainty.

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The Group determined that it is probable that its tax treatments (including those for the
subsidiaries) will be accepted by the taxation authorities. The Interpretation did not have an
impact on the consolidated financial statements of the Group.

· Amendments to PFRS 9, Prepayment Features with Negative Compensation

· Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement
· Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures
· Annual Improvements to PFRSs 2015-2017 Cycle
o Amendments to PFRS 3, Business Combinations and PFRS 11, Joint Arrangements,
Previously Held Interest in a Joint Operation
o Amendments to PAS 12, Income Tax Consequences of Payments on Financial Instruments
Classified as Equity
o Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligible for Capitalization

Future Changes in Accounting Policies

Pronouncements issued but not yet effective are listed below. The Group intends to adopt the
following pronouncements when they become effective. Adoption of these pronouncements is not
expected to have a significant impact on the Group’s consolidated financial statements.
.
Effective beginning on or after January 1, 2020

· Amendments to PFRS 3, Definition of a Business

The amendments to PFRS 3 clarify the minimum requirements to be a business, remove the
assessment of a market participant’s ability to replace missing elements, and narrow the
definition of outputs. The amendments also add guidance to assess whether an acquired process
is substantive and add illustrative examples. An optional fair value concentration test is
introduced which permits a simplified assessment of whether an acquired set of activities and
assets is not a business.

An entity applies those amendments prospectively for annual reporting periods beginning on or
after January 1, 2020, with earlier application permitted.

These amendments will apply on future business combinations of the Group.

· Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,

Changes in Accounting Estimates and Errors, Definition of Material

The amendments refine the definition of material in PAS 1 and align the definitions used across
PFRSs and other pronouncements. They are intended to improve the understanding of the
existing requirements rather than to significantly impact an entity’s materiality judgements.

An entity applies those amendments prospectively for annual reporting periods beginning on or
after January 1, 2020, with earlier application permitted.

Effective beginning on or after January 1, 2021

· PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts covering

*SGVFS038989*
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recognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replace
PFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types of
insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of
entities that issue them, as well as to certain guarantees and financial instruments with
discretionary participation features. A few scope exceptions will apply.

The overall objective of PFRS 17 is to provide an accounting model for insurance contracts that
is more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are
largely based on grandfathering previous local accounting policies, PFRS 17 provides a
comprehensive model for insurance contracts, covering all relevant accounting aspects. The core
of PFRS 17 is the general model, supplemented by:
· A specific adaptation for contracts with direct participation features (the variable fee
approach)
· A simplified approach (the premium allocation approach) mainly for short-duration
contracts

PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, with
comparative figures required. Early application is permitted.

Deferred effectivity

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

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of
control of a subsidiary that is sold or contributed to an associate or joint venture. The
amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint
venture involves a business as defined in PFRS 3. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however, is recognized only to the
extent of unrelated investors’ interests in the associate or joint venture.

On January 13, 2016, the Financial Reporting Standards Council deferred the original effective
date of January 1, 2016 of the said amendments until the International Accounting Standards
Board (IASB) completes its broader review of the research project on equity accounting that may
result in the simplification of accounting for such transactions and of other aspects of accounting
for associates and joint ventures.The Group is currently assessing the impact of this amendment.

Summary of Significant Accounting Policies

Current versus Noncurrent Classification

The Group presents assets and liabilities in consolidated statements of financial position based on
current/noncurrent classification. An asset is classified as current when it is:

§ Expected to be realized or intended to be sold or consumed in the normal operating cycle;

§ Held primarily for the purpose of trading;
§ Expected to be realized within twelve months after the reporting period, or
§ Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as noncurrent.

*SGVFS038989*
 -8-

A liability is classified as current when it is:

§ Expected to be settled in normal operating cycle;

§ Held primarily for the purpose of trading;
§ Due to be settled within twelve months after the reporting period, or
§ There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.

The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue
of equity instruments do not affect its classification.

The Group classifies all other liabilities as noncurrent.

Deferred tax assets and liabilities are classified as noncurrent.

Cash and Cash Equivalents

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

Determination of Fair Value

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

a) In the principal market for the asset or liability, or

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

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

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

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

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

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

· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

· Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable

*SGVFS038989*
 -9-

· Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable

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

The Group determines the policies and procedures for both recurring and non-recurring fair value
measurements. For the purpose of fair value disclosures, the Group has determined classes of assets
and liabilities on the basis of the nature, characteristics and risks of the assets or liability and the level
of the fair value hierarchy.

The Group recognizes transfers into and transfers out of fair value hierarchy levels by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as a
whole) as at the date of the event or change in circumstances that caused the transfer.

External valuers are involved for the valuation of significant assets, such as investment properties.
Involvement of external valuers is decided upon annually. Selection criteria include market
knowledge, reputation, independence and whether professional standards are maintained. At each
reporting date, the movements in the value of assets which are required to be re-measured or
re-assessed as per accounting policies are analyzed. For the analysis, the major inputs applied in the
latest valuation are verified by agreeing the information in the valuation computation to the contracts
and other relevant documents.

In conjunction with the external valuers, the changes in the fair value of each assets and liabilities are
compared with the relevant external sources to determine whether the change is reasonable. This
includes a discussion of major assumptions used in the valuations. For the purpose of fair value
disclosures, classes of assets and liabilities are determined on the basis of the nature, characteristics
and risks of the asset or liability and the level of the fair value hierarchy as explained above.

‘Day 1’ Difference. When the transaction price in a non-active market is different from the fair value
based on other observable current market transactions in the same instrument or based on a valuation
technique whose variables include only data from observable market, the Group recognizes the
difference between the transaction price and fair value (a ‘Day 1’ difference) in the consolidated
statement of comprehensive income unless it qualifies for recognition as some other type of asset. In
cases where use is made of data which is not observable, the difference between the transaction price
and model value is only recognized in the consolidated statement of comprehensive income when the
inputs become observable or when the instrument is derecognized. For each transaction, the Group
determines the appropriate method of recognizing the ‘Day 1’ difference amount.

Financial Instruments - Initial Recognition and Subsequent Measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

Financial assets Starting January 1, 2018 (Upon Adoption of PFRS 9)

Initial recognition and measurement. Financial assets are classified, at initial recognition, as
subsequently measured at amortized cost, FVOCI, and fair value through profit or loss (FVTPL).

The classification of financial assets at initial recognition depends on the financial asset’s contractual

*SGVFS038989*
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cash flow characteristics and the Group’s business model for managing them. With the exception of
trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in
the case of a financial asset not at FVTPL, transaction costs. Trade receivables that do not contain a
significant financing component or for which the Group has applied the practical expedient are
measured at the transaction price determined under PFRS 15, Revenue from Contracts with
Customers.

In order for a financial asset to be classified and measured at amortized cost or FVOCI, it needs to
give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal
amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument
level.

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

Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date,
i.e., the date that the Group commits to purchase or sell the asset.

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

• Financial assets at amortized cost (debt instruments)

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

As at December 31, 2019 and 2018, the Group has no financial assets at FVOCI with recycling of
cumulative gains and losses and financial assets at FVTPL.

Financial assets at amortized cost (debt instruments). This category is the most relevant to the
Group.

The Group measures financial assets at amortized cost if both of the following conditions are met:

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

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

The Group’s cash and cash equivalents, receivables and deposits (presented under “Other noncurrent
assets” account) are classified under this category.

Financial assets designated at FVOCI (equity instruments). Upon initial recognition, the Group can
elect to classify irrevocably its equity investments as equity instruments designated at FVOCI when

*SGVFS038989*
 - 11 -

they meet the definition of equity under PAS 32, Financial Instruments: Presentation and are not
held for trading. The classification is determined on an instrument-by-instrument basis.

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

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

Derecognition. A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated
statement of financial position) when:

• The rights to receive cash flows from the asset have expired; or
• The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and
rewards of ownership of the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of ownership of the asset, but has transferred control of the
asset

When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the Group continues to recognize the transferred asset to
the extent of its continuing involvement. In that case, the Group also recognizes an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that
the Group could be required to repay.

Impairment of financial assets. The Group recognizes an allowance for expected credit losses (ECLs)
for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the
Group expects to receive, discounted at an approximation of the original EIR. The expected cash
flows will include cash flows from the sale of collateral held or other credit enhancements that are
integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).

For receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group
does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs
at each reporting date. The Group has established a provision matrix that is based on its historical

*SGVFS038989*
 - 12 -

credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.

The Group considers a financial asset in default when contractual payments are 90 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when
internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Group.
A financial asset is written off when there is no reasonable expectation of recovering the contractual
cash flows.

Financial Assets Prior to January 1, 2018 (Prior to Adoption of PFRS 9)

Date of Recognition of Financial Assets. The Group recognizes financial assets in the consolidated
statement of financial position when it becomes a party to the contractual provisions of the
instrument. Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the marketplace (regular way trades) are recognized on
trade date, i.e., the date the Group commits to purchase or sell the asset.

Initial Recognition and Subsequent Measurement of Financial Assets. Financial assets are recognized
initially at fair value plus, in the case of investments not at FVTPL, transaction costs that are
attributable to the acquisition of the financial asset.

Financial assets are classified as financial assets FVTPL, loans and receivables, held-to-maturity
(HTM) investments, available-for-sale (AFS) financial assets or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The Group determines the classification of its
financial assets at initial recognition and where allowed and appropriate, re-evaluates such
classification every financial reporting date.

The Group has no financial assets at FVTPL and HTM investments as at December 31, 2017.

· Loans and Receivables. Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial measurement, loans
and receivables are carried at amortized cost using the EIR method, less any impairment in value.
Amortized cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are not integral part of the EIR. Gains and losses are recognized in profit or loss
when the loans and receivables are derecognized or impaired, as well as through the amortization
process.

Loans and receivables are classified as current assets when the Group expects to realize the asset
within 12 months from reporting date. Otherwise, these are classified as noncurrent assets.

As at December 31, 2017, this category includes the Group’s cash and cash equivalents,
receivables and deposits (presented under “Other noncurrent assets” account).

· AFS Financial Assets. AFS financial assets are non-derivative financial assets that are designated
as AFS or do not qualify to be classified as loans and receivables, financial assets at FVTPL or
HTM investments. AFS financial assets include equity investments. Equity investments
classified as AFS are those which are intended to be held for an indefinite period of time and are
neither classified as held for trading nor designated as at FVTPL.
After initial measurement, AFS financial assets are subsequently measured at fair value with
unrealized gains or losses recognized under other comprehensive income until the financial asset

*SGVFS038989*
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is derecognized or determined to be impaired at which time the accumulated gains or losses

previously reported under other comprehensive income are reclassified to profit or loss. AFS
financial assets that are not quoted in an active market and whose fair value cannot be measured
reliably are measured at cost, being the fair value of the consideration paid for the acquisition of
the investment. All transaction costs directly attributable to the acquisition are also included in
the cost of investment. If a reliable measure ceases to be available, AFS financial assets are
thereafter measured at cost, which is deemed to be the fair value carrying amount at that date.
Assets under this category are classified as current assets if expected to be realized within 12
months from reporting date. Otherwise, these are classified as noncurrent assets.

The Group designates financial instruments as AFS if they are purchased and held indefinitely
and may be sold in response to liquidity requirements or changes in market conditions.

As at December 31, 2017, this category includes the Group’s investments in shares of stock.

Impairment of Financial Assets. The Group assesses at each reporting period whether there is any
objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or
a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events that has occurred after the initial recognition of the asset
(an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the
financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment
may include indications that the debtors or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganization and where observable data indicate that there is a
measurable decrease in the estimated future cash flows such as changes in arrears or economic
conditions that correlate with defaults.

· Financial Assets at Amortized Cost. For financial assets carried at amortized cost, the Group first
assesses whether objective evidence of impairment exists individually for financial assets that are
individually significant and collectively for financial assets that are not individually significant.
If it is determined that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, the asset is included in a group of financial assets with
similar credit risk characteristics and that group of financial assets is collectively assessed for
impairment. Assets that are individually assessed for impairment and for which an impairment
loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original EIR. The carrying amount
of the financial asset is reduced through use of an allowance account and the amount of the loss is
recognized in profit or loss. Interest income continues to be accrued on the reduced carrying
amount based on the EIR of the asset.

The Group provides an allowance for loans and receivables which they deemed to be
uncollectible despite the Group’s continuous effort to collect such balances from the respective
clients. The Group considers those past due receivables as still collectible if they become past
due only because of a delay on the fulfillment of certain conditions as agreed in the contract and
not due to incapability of the customers to fulfill their obligation. However, for those receivables
associated with pre-terminated contracts, the Group directly writes them off from the account
since there is no realistic prospect of future recovery.

*SGVFS038989*
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If, in a subsequent period, the amount of the estimated impairment loss increases or decreases
because of an event occurring after the impairment was recognized, the previously recognized
impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later
recovered, the recovery is credited to other income in the profit or loss. Any subsequent reversal
of an impairment loss is recognized in profit or loss, to the extent that the carrying value of the
asset does not exceed what its amortized cost would have been had the impairment not been
recognized at the date the impairment is reversed.

· AFS Financial Assets. For equity investments classified as financial assets, the Group assesses at
each reporting date whether there is objective evidence that an investment or a group of
investments is impaired.

In the case of equity investments classified as AFS, objective evidence would include a
significant or prolonged decline in the fair value of the investment below its cost. “Significant” is
to be evaluated against the original cost of the investment and “prolonged” against the period in
which the fair value has been below its original cost. When there is evidence of impairment, the
cumulative loss (measured as the difference between the acquisition cost and the current fair
value, less any impairment loss on that investment previously recognized in the consolidated
statement of income) is removed from other comprehensive income and recognized in the
consolidated statement of income. Impairment losses on equity investments are not reversed
through profit or loss. Increases in their fair value after impairment are recognized directly in
other comprehensive income.

The determination of what is “significant” or “prolonged” required judgment. In making this

judgment, the Group evaluates, among other factors, the duration or extent to which the fair value
of an investment is less than its cost.

Financial liabilities

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

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.

As at December 31, 2019 and 2018, the Group has no financial liabilities at FVTPL and derivatives
designated as hedging instruments in an effective hedge.

Subsequent measurement. The measurement of financial liabilities depends on their classification, as

described below:

Financial liabilities at amortized cost (Loans and borrowings). This is the category most relevant to
the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured
at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the
liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the
profit or loss.

Derecognition. A financial liability is derecognized when the obligation under the liability is

*SGVFS038989*
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discharged or cancelled or expires. When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original liability and
the recognition of a new liability. The difference in the respective carrying amounts is recognized in
the profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position if there is a currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities
simultaneously. The Group assesses that it has a currently enforceable right of offset if the right is not
contingent on a future event, and is legally enforceable in the normal course of business, event of
default, and event of insolvency or bankruptcy of the Group and all of the counterparties.

Property and Equipment

Property and equipment are stated at cost excluding the cost of day-to-day servicing, less
accumulated depreciation and accumulated impairment losses. The initial cost of property and
equipment consists of its purchase price, including import duties and any directly attributable costs,
including borrowing cost, in bringing the property and equipment to its working condition and
location for its intended use. Such cost includes the cost of replacing part of such property and
equipment when that cost is incurred if the recognition criteria are met. Expenditures incurred after
the property and equipment have been put into operation, such as repairs and maintenance, are
normally charged to operations in the period such costs are incurred. In situations where it can be
clearly demonstrated that the expenditures have resulted in an increase in the future economic
benefits expected to be obtained from the use of an item of property and equipment beyond its
originally assessed standard of performance, the expenditures are capitalized as additional costs of
property and equipment.

Depreciation are computed using the straight-line method over one (1) to five (5) years for office and
other equipment.

An item of property and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item)
is included in the consolidated statements of comprehensive income in the year the asset is
derecognized.

Fully depreciated assets are retained in the accounts until they are no longer in use and no further
depreciation are credited or charged to current operations.

The property and equipment’s residual values, useful lives and depreciation method are reviewed, and
adjusted if appropriate, at each financial year-end.

Investment Property
Investment property represents land measured initially at cost, including related transaction costs.
Subsequent to initial recognition, investment property is stated at fair value, which reflects market
conditions at the reporting date and have been determined based on the latest valuations performed by
an independent firm or appraisers. Gains or losses arising from changes in the fair values of
investment property are included in the consolidated statements of comprehensive income in the year
in which the gains or losses arise.

The standard requires all entities to measure the fair value of investment property, for the purpose of

*SGVFS038989*
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either measurement (if the entity uses the fair value model) or disclosure (if it uses the cost model).
An entity is encouraged, but not required, to measure the fair value of investment property on the
basis of a valuation by an independent valuer who holds a recognized and relevant professional
qualification and has recent experience in the location and category of the investment property being
valued.

Investment property is derecognized when either it has been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its
disposal. The difference between the net disposal proceeds and the carrying amount of the asset is
recognized in profit or loss in the period of derecognition. In determining the amount of
consideration from the derecognition of investment property, the Group considers the effects of
variable consideration, existence of a significant financing component, non-cash consideration, and
consideration payable to the buyer (if any).

Transfers are made to investment property when, and only when, there is a change in use, evidenced
by ending of owner-occupation or commencement of an operating lease to another party. Transfers
are made from investment property when, and only when, there is a change in use, evidenced by
commencement of owner-occupation or commencement of development with a view to sale. These
transfers are recorded using the carrying amount of the investment property at the date of change in
use.

Deferred Exploration Costs

Expenditures for exploration works on geothermal properties (i.e., acquisition of rights to explore,
topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching,
sampling, and activities in relation to evaluating the technical feasibility and commercial viability of
extracting a mineral resource) are deferred as incurred and presented under “Deferred exploration
costs” account in the consolidated statement of financial position.

A provision for impairment is provided for unrecoverable deferred exploration costs based on the
Group’s assessment of the future prospects of the exploration project. Full provision is made for the
impairment unless it is probable that such costs are expected to be recouped through successful
exploration and development of the area of interest, or alternatively, by its sale. If the project does
not prove to be viable, all revocable costs associated with the project and the related impairment
provisions are written off. When a project is abandoned, the related deferred exploration costs are
also written off.

Capital Stock and Additional Paid-in Capital (APIC)

Capital stock is measured at par value for all shares issued. Incremental costs incurred directly
attributable to the issuance of new shares are shown in equity as a deduction from proceeds, net of
tax. Proceeds and/or fair value of considerations received in excess of par value, if any, are
recognized as APIC.

Treasury Shares
Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted
from equity. No gain or loss is recognized in the consolidated statement of comprehensive income on
the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference
between the carrying amount and the consideration is recognized as APIC.

Deficit
The amount included in deficit includes cumulative amount of loss attributable to the Group’s equity
holders.

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Revenue Recognition Starting January 1, 2018 (Upon adoption of PFRS 15)

The Group is organized to engage in the oil and gas exploration and development in the Philippines.
Revenue from contracts with customers is recognized when control of the goods or services are
transferred to the customer at an amount that reflects the consideration to which the Group expects to
be entitled in exchange for those goods or services. The Group has generally concluded that it is the
principal in its revenue arrangements.

The Group is still in the pre-operating stage as at December 31, 2019 and 2018.

Interest Income. Revenue is recognized as the interest accrues, taking into account the effective yield
on the assets.

Dividend Income. Revenue is recognized when the Group’s right to receive the payment is
established.

Revenue Recognition Prior to January 1, 2018 (Prior to Adoption of PFRS 15)

Revenue is recognized when it is probable that the economic benefits associated with the transaction
will flow to the Group and the amount of the revenue can be reliably measured. Revenue is measured
at the fair value of the consideration received. The Group assesses its revenue arrangements against
specific criteria in order to determine if it is acting as principal or agent. The Group has concluded
that it is a principal in all of its revenue arrangements. The following specific recognition criteria
must also be met before revenue is recognized:

Interest Income. Revenue is recognized as the interest accrues, taking into account the effective yield
on the assets.

Dividend Income. Revenue is recognized when the Group’s right to receive the payment is
established.

Expenses
General and administrative expenses are recognized as incurred.

Employee Benefits

Retirement Costs. The Group has an unfunded, noncontributory defined benefit retirement plan
covering substantially all of its employees.

The defined benefit liability is the aggregate of the present value of the defined benefit obligation at
the end of the reporting period. The cost of providing benefits under the defined benefit plans is
actuarially determined using the projected unit credit method.

Defined benefit costs comprise the following:

§ Service cost
§ Interest on the defined benefit liability
§ Remeasurements of defined benefit liability

Service costs which include current service costs, past service costs and gains or losses on non-
routine settlements are recognized as expense in profit or loss. Past service costs are recognized
when plan amendment or curtailment occurs. These amounts are calculated periodically by
independent qualified actuaries.

*SGVFS038989*
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Interest on the defined benefit liability is the change during the period in the defined benefit liability
that arises from the passage of time which is determined by applying the discount rate based on
government bonds to the defined benefit liability. Interest on the defined benefit liability is
recognized as expense in profit or loss.

Remeasurements comprising actuarial gains and losses (excluding interest on defined benefit
liability) are recognized immediately in OCI in the period in which they arise. Remeasurements are
not reclassified to profit or loss in subsequent periods.

Actuarial valuations are made with sufficient regularity that the amounts recognized in the
consolidated financial statements do not differ materially from the amounts that would be determined
at the reporting period.

Other Employee Benefits. Employee entitlements to annual leave are recognized as a liability when
they are accrued to the employees. The undiscounted liability for leave expected to be settled wholly
before twelve months after the end of the annual reporting period is recognized for services rendered
by employees up to the end of the reporting period.

Leases Starting January 1, 2019 (Upon Adoption of PFRS 16)

Leases. The Group assesses at contract inception whether a contract is, or contains, a lease. That is,
if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.

Company as Lessee. The Group applies a single recognition and measurement approach for all
leases, except for short-term leases. The Group recognizes lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.

· Short-term Leases. The Group applies the short-term lease recognition exemption to its short-
term leases (i.e., those leases that have a lease term of 12 months or less from the commencement
date or initial application of PFRS 16 and do not contain a purchase option). Lease payments on
short-term leases are recognized as expense on a straight-line basis over the lease term.

Leases Prior to January 1, 2019 (Prior to Adoption of PFRS 16)

The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at the inception date of whether the fulfillment of the arrangement is dependent on the
use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is
made after inception of the lease only if one of the following applies:

a. there is a change in contractual terms, other than a renewal or extension of the agreement;
b. a renewal option is exercised or extension granted, unless the term of the renewal or extension
was initially included in the lease term;
c. there is a change in the determination of whether the fulfillment is dependent on a specified asset;
or
d. there is a substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for scenarios a, c or d and the date of renewal
or extension period for scenario b.

Group as a Lessee. Leases where the lessor retains substantially all the risks and benefits of
ownership of the assets are classified as operating leases. Operating lease payments are recognized as
expense in the consolidated statements of comprehensive income on a straight-line basis over the
lease term.

*SGVFS038989*
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Taxes

Current Tax. Current income tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the taxation authority. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted at the reporting date.

Current income tax relating to item recognized directly in equity is recognized in equity and not in the
profit or loss. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions
where appropriate.

Deferred Tax. Deferred income tax is provided using the liability method on temporary differences at
the reporting date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

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

Deferred tax assets are recognized for all deductible temporary differences the carry forward benefits
of unused tax credits and any unused tax losses from excess minimum corporate income tax (MCIT)
over regular corporate income tax (RCIT) and net operating loss carryover (NOLCO) to the extent
that it is probable that future taxable profit will be available against which the deductible temporary
differences and carry forward benefits of unused tax credits and unused tax losses can be utilized,
except:

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

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at each
reporting date and are recognized to the extent that it has become probable that future taxable profit
will allow the deferred tax assets to be recovered.

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

*SGVFS038989*
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Deferred tax relating to items recognized in OCI are included in the related OCI in the consolidated
statement of comprehensive income and not in profit or loss. Deferred tax items are recognized in
correlation to the underlying transaction either in OCI or directly in equity.

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

Value-Added Tax (VAT). Revenues, expenses, and assets are recognized net of the amount of VAT, if
applicable.

When VAT from sales of goods and/or services (output VAT) exceeds VAT passed on from
purchases of goods or services (input VAT), the excess is recognized as part of “Trade and other
payables” account in the consolidated statement of financial position. When VAT passed on from
purchases of goods or services (input VAT) exceeds VAT from sales of goods and/or services (output
VAT), the excess is recognized as under “Input value added tax” account in the consolidated
statement of financial position to the extent of the recoverable amount.

Foreign Currency-Denominated Transactions

Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-
translated using the closing exchange rate at the reporting date. All differences are taken to the
consolidated statements of comprehensive income. Nonmonetary items are translated using the
closing exchange rate as at the date of initial transaction.

Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax
rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the
increase in the provision due to the passage of time is recognized as interest expense. Where the
Group expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but
only when the receipt of the reimbursement is virtually certain.

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

Events after the Reporting Period

Post year-end events that provide additional information about the Group’s financial position at the
reporting period (adjusting events), if any, are reflected in the consolidated financial statements. Post
financial year-end events that are not adjusting events are disclosed in the notes to consolidated
financial statements when material.

Earnings (Loss) per Common Share

Earnings (loss) per share is computed by dividing net income (loss) by the weighted average number
of common shares issued and outstanding during each year after giving retroactive effect to stock

*SGVFS038989*
 - 21 -

dividends declared during the year and after deducting the treasury shares, if any. The Group has no
dilutive potential common shares outstanding.

3. Significant Judgment, Estimates and Assumptions

The preparation of the consolidated financial statements requires management to make judgment,
estimates and assumptions that affect certain reported amounts and disclosures. In preparing the
consolidated financial statements, management has made its best judgment and estimates of certain
amounts, giving due consideration to materiality. The judgment, estimates and assumptions used in
the consolidated financial statements are based upon management’s evaluation of relevant facts and
circumstances as at the date of the consolidated financial statements. Actual results could differ from
those estimates, and such estimates will be adjusted accordingly.

Judgment, estimates and assumptions are continually evaluated and are based on experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances.

The Group believes that the following represent a summary of these significant judgment, estimates
and assumptions and related impact and associated risks in its consolidated financial statements.

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

Recoverability of Deferred Exploration Costs. The Group recognizes all project related costs as part
of deferred exploration costs. An impairment review is performed when there are indicators that the
carrying amount of the deferred exploration costs may exceed their recoverable amount. The deferred
exploration costs are reassessed on a regular basis and these costs are carried forward provided that
all of the following conditions are met:

§ the period for which the entity has the right to explore in the specific area has not expired during
the period or will not expire in the near future, and is expected to be renewed;
§ substantive expenditure on further exploration for and evaluation of mineral resources in the
specific area is budgeted or planned;
§ the exploration for and evaluation of mineral resources in the specific area led to the discovery of
commercially viable quantities of mineral resources and the entity has not decided to discontinue
such activities in the specific area;
§ and sufficient data exist to indicate that, although a development in the specific area is likely to
proceed, the carrying amount of the exploration and evaluation asset will be recovered in full
from successful development or by sale.

There were no indicator of impairment of deferred exploration costs in 2019, 2018 and 2017. The
carrying value of deferred exploration costs amounted to =
P111.5 million P
=110.9 million as at
December 31, 2019 and 2018, respectively (see Notes 8 and 10).

Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below. The Group based its

*SGVFS038989*
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assumptions and estimates on parameters available when the consolidated financial statements were
prepared. Existing circumstances and assumptions about future developments, however, may change
due to market changes or circumstances arising that are beyond the control of the Group. Such
changes are reflected in the assumptions when they occur.

Recoverability and Impairment of Nonfinancial Assets (Excluding Deferred Exploration Cost). The
Group’s other nonfinancial assets include deferred exploration cost, input VAT and property and
equipment. An impairment review is performed, either individually or at the CGU level, when there
are indicators that the carrying amount of the assets may exceed their recoverable amounts. To the
extent that this occurs, the excess is fully provided against, in the reporting period in which this is
determined.

Input VAT is regularly assessed considering certain indications such as validity of the input VAT to
be applied against output tax, decline in the usage of asset and significant underperformance relative
to the expected historical or future operating results and significant negative industry or economic
trends.

The carrying values of the Group’s nonfinancial assets (excluding deferred exploration costs) that are
subject to impairment testing when certain impairment indicators are present are as follows:

2019 2018
Input VAT P
=8,962,888 =8,704,647
P
Property and equipment (see Note 8) 62,234 15,620

There were no indicators of impairment as at December 31, 2019 and 2018.

Fair Value of Investment Property. The Group engaged an independent valuation specialist to
determine the fair value of investment property. The appraiser used a valuation technique based on
Market Data Approach. In this approach, the value of the land is based on sales and listings of
comparable property registered within the vicinity. The technique of this approach requires the
adjustments of comparable property by reducing reasonable comparative sales and listings to a
common denominator. This is done by adjusting the differences between the subject property and
those actual sales and listings regarded as comparable. The properties used as basis of comparison
are situated within the immediate vicinity of the subject property. The comparison was premised on
the factors of location, size and shape of the lot and time element.

Based on the Group’s assessment, there are no significant changes in the fair value of the investment
property from the 2016 appraisal report until the latest financial reporting date. The fair value of
investment property amounted to P=10.0 million as at December 31, 2019 and 2018 (see Note 9).

Realizability of Deferred Tax Assets. The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer probable that sufficient future taxable
profit will be available to allow all or part of the deferred tax assets to be utilized. However, there is
no assurance that sufficient future taxable profit will be generated to allow all or part of the deferred
tax assets to be utilized. The Group’s assessment on recognition of deferred tax assets on deductible
temporary differences and carryforward benefits of MCIT and NOLCO is based on the forecasted
taxable income. This forecast is based on the Group’s past results and future expectations on revenue
and expenses.

Unrecognized deferred tax assets amounted to P

=46.8 million and P
=51.2 million as at
December 31, 2019 and 2018, respectively (see Note 15).

*SGVFS038989*
 - 23 -

Retirement Costs. The cost of the defined benefit pension plan and the present value of the pension
obligation are determined using actuarial valuations. An actuarial valuation involves making various
assumptions that may differ from actual developments in the future. These include the determination
of the discount rate, future salary increases and mortality rates. Due to the complexities involved in
the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in
these assumptions. All assumptions are reviewed at each reporting date.

In determining the appropriate discount rate, management considers the interest rates of government
bonds that are denominated in the currency in which the benefits will be paid, with extrapolated
maturities corresponding to the expected duration of the defined benefit obligation.

Retirement costs amounted to P=0.3 million in 2019 and P=0.5 million in 2018 and 2017. Accrued
retirement costs amounted to =
P3.4 million and =P3.2 million as at December 31, 2019 and 2018,
respectively (see Note 14).

4. Segment Information

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

As discussed in Note 1, the Group is engaged in mining and exploration activities. The Management
assessed that the Group is just considered as one business segment as it does not have other activities
other than the exploration projects. The classification of business segment is regularly reviewed by
Management Committee, which is the Chief Operating Decision Maker, to make decisions about how
resources are to be allocated to each of the segments and to assess their performances, and for which
discrete financial information is available.

Group revenue, segment expenses and segment results include transfers among entities within the
segments. Those transfers are eliminated in the consolidation. The amounts of segment assets and
liabilities and segment profit or loss are based on measurement principles that are similar to those
used in measuring the assets and liabilities and profit or loss in the consolidated financial statements,
which is in accordance to PFRS.

Information with regard to the significant business segments of the Group are shown below.

Years Ended December 31

Segment Operations 2019 2018 2017

Segment expenses (P
=10,264,576) (P
=12,350,727) (P
=20,510,625)
Loss on disposal of property and
equipment − − (26,684)
Loss on sale of investment property − (3,015,807) −
Interest income 4,651,666 3,569,449 3,900,176
Dividend and other income 319,476 279,224 223,188
Provision for income tax − − (890)
Net loss (P
=5,293,434) (P
=11,517,861) (P
=16,414,835)

*SGVFS038989*
 - 24 -

2019 2018 2017

As at December 31
Other information:
Segment assets P
=273,301,564 =279,923,337
P =296,993,102
P
Segment liabilities 112,048,129 111,828,977 113,883,431
Depreciation 15,868 8,926 65,522

5. Cash and Cash Equivalents

This account consists of:

2019 2018
Cash on hand and in banks P
=4,476,781 P4,026,348
=
Short-term investments 133,014,559 140,760,790
P
=137,491,340 =144,787,138
P

Cash in banks earn interest at the prevailing bank deposit rates. Short-term investments are made for
varying periods of up to three months depending on the immediate cash requirements of the Group,
and earn interest at the respective short-term investment rates.

Interest income earned from cash in banks and short-term investments amounted to P
=4.7 million,
=3.6 million, and P
P =3.9 million in 2019, 2018, and 2017, respectively.

6. Receivables

This account consists of:

2019 2018
Advances to AKHI P
=1,462,640 =197,770
P
Advances to officers and employees 83,836 46,168
Others 38,718 56,780
P
=1,585,194 =300,718
P

The terms and conditions of the above receivables are as follows:

§ Advances to AKHI are noninterest-bearing and are normally settled within a 30-day term.

§ Advances to officers and employees are noninterest-bearing and are normally settled within a
30-day term.

§ Other receivables consist of advances to contractors and suppliers.

*SGVFS038989*
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7. Financial assets at Fair Value Through Other Comprehensive Income

This account consists of:

2019 2018
Premium Leisure Corp. (PLC) P
=3,624,630 =5,087,200
P
Others – 84,921
P
=3,624,630 =5,172,121
P

Movements of financial assets at FVOCI as at December 31 are as follows:

2019 2018
Balance at beginning of year P
=5,172,121 P8,669,571
=
Change in fair value of financial assets at FVOCI (1,547,491) (3,497,450)
Balance at end of year P
=3,624,630 =5,172,121
P

Changes in fair value of financial assets at FVOCI attributable to the shareholders of the Parent
Company (presented in the equity section of the consolidated statements of financial position) follow:

2019 2018
Balance at beginning of year P
=4,324,120 =7,821,570
P
Cumulative change in fair value of financial assets
at FVOCI (1,547,491) (3,497,450)
Balance at end of year P
=2,776,629 =4,324,120
P

The Group received dividend income from PLC shares amounting to P

=0.3 million in 2019 and 2018,
and P
=0.2 million in 2017.

8. Property and Equipment

This account consists of office and other equipment:

2019 2018
Cost
Balance at beginning and end of year P
=1,614,133 =1,614,133
P
Additions 62,482 –
1,676,615 1,614,133
Accumulated Depreciation
Balance at beginning of year P
=1,598,513 =1,589,587
P
Depreciation (see Note 13) 15,868 8,926
Balance at end of year 1,614,381 1,598,513
Net book value P
=62,234 =15,620
P

There were no idle assets as at December 31, 2019 and 2018.

*SGVFS038989*
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9. Investment Property

The movement of this account follows:

2019 2018
Balance at beginning of year P
=10,028,870 =22,374,000
P
Disposal – (12,345,130)
Balance at end of year P
=10,028,870 =10,028,870
P

Investment property consists of parcels of land which is being held by the Group for capital
appreciation.

In 2018, the Group sold parcels of land for a total consideration amounting to P
=9.3 million which
resulted to a loss on sale of investment property of P
=3.0 million.

The fair value of the remaining investment property as at December 31, 2019 was determined by
Colliers International Philippines, Inc., an independent appraiser, on October 12, 2016. The appraiser
is an industry specialist in valuing these types of investment property. Fair value represents the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair values of investment property are determined
using the market data approach by gathering available market evidences.

The Group has no limitations to any particular class of heirs or restrictions, but subject to the
limitations of eminent domain, police power and taxation.

Fair value hierarchy disclosures for investment property has been provided in Note 19.

Description of valuation techniques used and key inputs to valuation on investment property are as
follows:

Highest and Best Use

Based on analysis of prevailing land usage in the neighborhood and the property itself, diversified
agro-industrial land development would represent the highest and best use of the property.

Highest and Best Use is defined as the most profitable likely use to which a property can be put. The
opinion of such use may be based on the highest and most profitable continuous use to which the
property is adapted and needed or that use of land which may reasonably be expected to produce the
greatest net return to land over a given period of time. Alternatively, it is that use, from among
reasonably probable and legal alternative uses, found to be physically possible, appropriately
supported, financially feasible, and which results in highest land value.

Market Data Approach

The value of the land was arrived at using the Market Data Approach. In this approach, the value of
the land was based on sales and listings of comparable property registered within the vicinity. The
technique of this approach requires the adjustments of comparable property by reducing reasonable
comparative sales and listings to a common denominator. This was done by adjusting the differences
between the subject property and those actual sales and listings regarded as comparable. The
properties used as bases of comparison are situated within the immediate vicinity of the subject
property. The comparison was premised on the factors of locations, size and shape of the lot, time
element and others.

*SGVFS038989*
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The sensitivity analysis of the market value of the investment properties are as follows:

Increase (decrease) in
Increase (decrease) fair value of investment
in sales adjustment property
10.0% P
=523,536
(10.0%) (523,536)

While fair value of the investment property was not determined as at December 31, 2019, the Group’s
management believes that there were no conditions present in 2019 that would significantly reduce
the fair value of the investment properties from that determined in 2016.

10. Deferred Exploration Costs

This account consists of:

2019 2018
Cost:
KGP P
=111,520,001 =110,878,886
P
Other exploration costs 63,664,924 63,664,924
Mining rights 48,254,908 48,254,908
Balance at end of year 223,439,833 222,798,718
Less allowance for impairment 111,919,832 111,919,832
Net book value P
=111,520,001 =110,878,886
P

The movement of KGP are as follows:

2019 2018
Balance at beginning of year P
=110,878,886 =59,702,160
P
Additions 641,115 51,176,726
Balance at end of year P
=111,520,001 =110,878,886
P

Deferred exploration costs relate to geothermal projects. The ability of the Group to recover its
deferred exploration cost would depend on the success of exploration activities and on the
commercial viability of the reserves (see Note 1).

The Group incurred exploration costs amounting to = P0.6 million and =P51.2 million in 2019 and 2018,
respectively, in connection with the exploration activities, engineering design and technical feasibility
of its Geothermal Kalinga Project.

11. Trade and Other Payables

This account consists of:

2019 2018
Trade P
=4,974,345 P4,825,199
=
Payable to third parties 12,978,971 12,978,972
Nontrade payables 8,735,254 8,735,254
(Forward)

*SGVFS038989*
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2019 2018
Accrued expenses:
Professional fees P
=1,304,826 =1,308,826
P
Others 562,384 575,703
Payable to government agencies 72,021 25,077
P
=28,627,801 =28,449,031
P

The terms and conditions of the above payables are as follows:

§ Trade payables are noninterest-bearing and are normally settled on a 30-day term.

§ Payable to third party mostly pertain to payables that are noninterest-bearing and are due and
demandable.

§ Nontrade payables are noninterest-bearing and payable on demand.

§ Accrued expenses mainly pertain to payable to utility and other service providers which are
normally settled within the next financial year.

§ Payable to government agencies mainly pertain to statutory liabilities such as withholding taxes
and premiums on Social Security System (SSS), Philhealth and Pag-IBIG fund which are
normally settled within the next financial year.

12. Equity

a. Details of authorized and issued capital stock both for December 31, 2019 and 2018 follow:

Number
of Shares Amount
Authorized:
Preferred stock - P
=1 par value 6,000,000,000 P6,000,000,000
=
Common stock - P =1 par value 14,000,000,000 14,000,000,000

Number
of Shares Amounts
Issued - Common shares 5,998,149,059 =5,998,149,059
P
Subscribed - Common shares 1,513,660,938 1,513,660,938
7,511,809,997 7,511,809,997
Less subscription receivable 1,123,731,248 1,123,731,248
6,388,078,749 =6,388,078,749
P

b. As at December 31, 2019 and 2018, the Group has 7,606,000 treasury shares with cost amounting
to =
P29.4 million.

c. The cumulative, convertible preference shares are redeemable and may be issued from time to
time by the Parent Company’s BOD, which is authorized to adopt resolutions authorizing the
issuance thereof in one or more series for such number of shares and relative rights and
preferences, as it may deem beneficial to the Parent Company. As at February 28, 2020, the
Parent Company’s BOD has not authorized any issuance of preferred shares.

*SGVFS038989*
 - 29 -

d. The following summarizes the information on the Parent Company's registration of securities
under the Securities Regulation Code:

Issue/
Date of SEC Approval Type of Issuance Authorized Shares Offer Price
January 7, 1994 Initial public offering 80,000,000,000 =0.01
P
July 9, 1996 Additional public offering 100,000,000,000 0.01
July 12, 1996 Stock option 5,300,000,000 0.01

The total number of shareholders is 593 and 595 as at December 31, 2019 and 2018, respectively.

On August 9, 2017, the Parent Company’s BOD approved the reduction of the par value of the
Parent Company’s capital stock from = P1 par value per share to =
P0.01 par value per share. The
authorized capital stock of the Parent Company will be = P200.0 million, divided into 140.0 million
common shares and 60.0 million preferred shares. This was approved by the Parent Company’s
stockholders on September 27, 2017.
The reduction in par value will generate sufficient APIC to wipe out the Group 's deficit. On
February 20, 2020, the SEC approved the Company’s equity restructuring, the decrease of capital
stock and the Company’s amended articles of incorporation.

13. General and Administrative Expenses

This account consists of:

2019 2018 2017

Salaries and employee benefits P
=4,441,668 =4,899,059
P =4,933,334
P
Professional fees and outside services 2,302,035 2,366,669 6,147,392
Entertainment, amusement and
recreation 1,293,790 1,298,363 1,495,626
Transportation and travel 987,307 852,331 660,685
Taxes and licenses 335,566 1,775,476 5,430,419
Retirement costs (see Note 14) 271,091 505,320 490,513
Dues and subscriptions 140,590 346,412 283,609
Rental 53,571 53,571 405,054
Depreciation (see Note 8) 15,868 8,926 65,522
Others 423,090 244,600 598,471
P
=10,264,576 =12,350,727
P =20,510,625
P

14. Retirement Plan

The Group has an unfunded, noncontributory defined benefit retirement plan covering substantially
all of its employees. The plan provides for a lump sum benefit payment upon retirement.

Under the existing regulatory framework, Republic Act (RA) No. 7641, an act amending Article 287
of Presidential Decree (PD) No. 442, as amended, otherwise known as the Labor Code of the
Philippines, requires a provision for retirement pay to qualified private sector employees in the
absence of any retirement plan in the entity, provided however that the employee’s retirement
benefits under any collective bargaining and other agreements shall not be less than those provided
under the law. The law does not require minimum funding of the plan.

*SGVFS038989*
 - 30 -

The latest valuation of retirement plan was performed by E.M. Zalamea Actuarial Services, Inc., an
independent actuarial, on January 19, 2018.

Changes in accrued retirement costs are as follows:

2019 2018 2017

Balance at beginning of year P
=3,170,606 =2,665,286
P =2,800,500
P
Retirement costs (Note 13):
Current service cost 108,845 351,000 331,165
Interest cost 162,246 154,320 159,348
271,091 505,320 490,513
Remeasurement loss (gain) in other
comprehensive income:
Actuarial changes due to
experience adjustments − − (1,209,385)
Actuarial changes arising from
changes in financial
assumptions − − 583,658
− − (625,727)
P
=3,441,697 =3,170,606
P =2,665,286
P

The principal assumptions used to determine retirement obligations for the Group’s plan are shown
below:

Discount rate 5.79%

Future salary increase rate 8.00%

The following are other defined benefit plan information:

2019 2018
A. Weighted average duration of present value
of defined benefit obligation 7.90 years 8.90 years

B. Maturity analysis of undiscounted retirement

benefit payments
More than one year up to 5 years P
=517,628 =517,628
P
More than 5 years up to 10 years 2,087,323 2,087,323

C. Plan membership information

Number of active plan members 5 7
Average attained age 47.2 years 41.9 years
Average past service 11.1 years 7.8 years
Average future service 12.7 years 18.1 years

*SGVFS038989*
 - 31 -

15. Income Tax

a. In 2017, the current provision for income tax is computed using MCIT. There were no provision
for income tax in 2018 and 2019.

b. The reconciliation of benefit from income tax computed at the statutory income tax rate to
provision for income tax shown in the consolidated statements of comprehensive income follows:

2019 2018 2017

Benefit from income tax at statutory
income tax rate (P
=1,588,030) (P
=3,455,358) (P
=4,924,184)
Increase (decrease) in income
tax resulting from:
Expired NOLCO and MCIT 7,078,825 5,143,848 2,748,167
Change in unrecognized deferred
tax assets (4,387,804) (936,656) 2,951,878
Interest income subjected to
final tax (1,395,500) (1,070,835) (1,170,053)
Nondeductible expenses 388,137 402,768 448,688
Dividend income exempt
from income tax (95,843) (83,767) (53,606)
Others 215 − −
Effective income tax P
=− =−
P =890
P

c. Following are the deductible temporary differences and carryforward benefits of the excess of
MCIT over RCIT and NOLCO for which no deferred tax assets were recognized:

2019 2018 2017

Allowance for impairment of
deferred exploration costs and
mining rights (see Note 10) P
=111,919,832 =111,919,832
P =111,919,832
P
NOLCO 40,725,019 55,383,285 59,009,651
Accrued retirement costs 3,441,697 3,170,606 2,665,286
Excess of MCIT over RCIT 890 72,327 72,669
Others − 714 714
P
=156,087,438 =170,546,764
P =173,668,152
P
Unrecognized deferred tax assets P
=46,826,854 =51,214,658
P =52,151,314
P

Deferred tax assets were not recognized as at December 31, 2019 and 2018 as management
believes it is not probable that future taxable profits will be sufficient against which these can be
utilized.

d. As at December 31, 2019, the Group’s NOLCO and MCIT, which can be carried forward and
claimed as deductions against regular taxable income and as tax credit against regular corporate
income tax due, respectively, are as follows:

Year Incurred / Paid Expiry Date NOLCO MCIT

2017 2020 =18,506,671
P =890
P
2018 2021 13,518,653 –
2019 2022 8,699,695 –
=40,725,019
P =890
P

*SGVFS038989*
 - 32 -

The movements in NOLCO and MCIT follow:

2019 2018
NOLCO:
Balance at beginning of year P
=55,383,285 =59,009,651
P
Additions 8,699,695 13,518,653
Expirations (23,357,961) (17,145,019)
Balance at end of year P
=40,725,019 =55,383,285
P

2019 2018
MCIT:
Balance at beginning of year P
=72,327 =72,669
P
Expirations (71,437) (342)
Balance at end of year P
=890 =72,327
P

16. Related Party Transactions

Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions. This includes:
(a) individuals owning, directly or indirectly through one or more intermediaries; (b) associates; (c)
individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them
significant influence over the Group, key management personnel, including directors and officers of
the Group and close members of the family of any such individual and; (d) affiliate, which is a party
that, directly or indirectly through one or more intermediaries, control, is controlled by, or is under
common control with the Group. Transactions with related parties are normally settled in cash.
There have been no guarantees provided or received for any related party receivables or payables and
settlement occurs in cash.

Related party transactions pertain to the availment of noninterest-bearing advances from a

stockholder and other related parties. The details of advances from related parties are as follows:

Amount/
Volume of Advances from
Category Year Transactions a Related Party Terms Conditions
Stockholder
Belle
(1) Advances 2019 P–
= (P
= 79,406,947) On demand; Unsecured
2018 – (79,406,947) Noninterest-bearing

(2) Share in expenses 2019 – (571,684) On demand; Unsecured

2018 (42,845) (640,434) Noninterest-bearing
Total
Advances from a related party 2019 P68,750
= (P
= 79,978,631)
2018 =42,845
P (P
=80,047,381)

Compensation and benefits of key management personnel of the Group for the year ended
December 31 consists of the following:

2019 2018 2017

Salaries and short-term employee
benefits P
=3,770,000 =3,480,000
P =3,480,000
P
Retirement costs 190,543 190,543 190,543
P
=3,960,543 =3,670,543
P =3,670,543
P

*SGVFS038989*
 - 33 -

17. Basic/Diluted Loss Per Common Share

The calculation of loss per share for the years ended December 31 follows:

2019 2018 2017

Loss attributable to equity holders of
the Parent Company (a) (P
=5,274,618) (P
=11,470,031) (P
=16,324,751)
Weighted average number
of common shares 7,511,809,997 7,511,809,997 7,511,809,997
Treasury shares (7,606,000) (7,606,000) (7,606,000)
Divided by weighted average
common shares (b) 7,504,203,997 7,504,203,997 7,504,203,997

Basic/diluted loss per share (P

=0.000703) (P
=0.001528) (P
=0.002175)

There were no dilutive potential common shares for purposes of calculation of loss per share in 2019,
2018 and 2017.

18. Financial Risk Management Objectives and Policies

The Group’s principal financial liabilities comprise trade and other payables and advances from
related parties. The main purpose of these financial liabilities is to finance the Group’s operations.
The Group’s principal financial assets include cash and cash equivalents and receivables that derive
directly from its operations. Other financial instruments consists of financial assets at FVOCI and
deposits.

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and equity
price risk. The BOD and management review and approve policies of managing each of the risks and
they are summarized below.

Credit Risk
Credit risk is the risk that a counterparty will not meet its obligation under a financial instrument or
customer contract, leading to a financial loss.

Exposure to credit risk is monitored on an ongoing basis, credit checks are performed on all clients
requesting credit over certain amounts. Credit granted is subject to regular review, to ensure it
remains consistent with the customers’ current credit worthiness and appropriate to the anticipated
volume of business. The investment of the Group’s cash resources is managed so as to minimize risk
while seeking to enhance yield. The Group is exposed to credit risk, if the counterparty is unwilling
or unable to fulfill its obligations and the Group consequently suffers financial loss. Credit risk
management involves entering into financial transactions only with counterparties with acceptable
credit rating.

There are no significant concentrations of credit risk within the Group. Since the Group trades only
with recognized third parties, there is no requirement for collateral. The carrying values of the
Group’s financial assets represent the maximum exposure to credit risk as at the reporting date.

*SGVFS038989*
 - 34 -

The aging analyses of financial assets as at December 31 are follows:

2019
Neither
Past Due nor Past Due but not Impaired
Impaired 1-60 Days >60 Days Impaired Total
Cash and cash equivalents* = 137,481,340
P =–
P =–
P =–
P = 137,481,340
P
Receivables:
Advances to AKHI 1,431,578 – 31,062 – 1,462,640
Advances to officers and employees 83,836 – – – 83,836
Others 37,718 – – – 37,718
Deposits** 23,822 – – – 23,822
Financial assets at FVOCI 3,624,630 – – – 3,624,630
= 142,682,924
P =–
P = 31,062
P =–
P = 142,713,986
P
**Excluding cash on hand amounting to =
P 10.0 thousand
***Presented under “Other noncurrent assets” account.

2018
Neither
Past Due nor Past Due but not Impaired
Impaired 1-60 Days >60 Days Impaired Total
Cash and cash equivalents* =144,777,138
P =–
P =–
P =–
P =144,777,138
P
Receivables:
Advances to AKHI – – 197,770 – 197,770
Advances to officers and employees 1,086 – 45,082 – 46,168
Others 15,512 – 41,268 – 56,780
Deposits** 23,822 – – – 23,822
Financial assets at FVOCI 5,172,121 – – – 5,172,121
=149,989,679
P =–
P =284,120
P =–
P =150,273,799
P
**Excluding cash on hand amounting to =
P 10.0 thousand
***Presented under “Other noncurrent assets” account.

The financial assets are grouped according to stage whose description is explained as follows:

Stage 1 - Those that are considered current and up to 90 days past due, and based on change in rating,
delinquencies and payment history, do not demonstrate significant increase in credit risk.

Stage 2 - Those that, based on change in rating, delinquencies and payment history, demonstrate
significant increase in credit risk, and/or are considered more than 90 days past due but does not
demonstrate objective evidence of impairment as of reporting date.

Stage 3 - Those that are considered in default or demonstrate objective evidence of impairment as of
reporting date.

As at December 31, 2019, the credit quality of the Group’s financial assets are as follows:

2019
ECL Staging
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL Total
Financial assets at amortized cost
Cash and cash equivalents* =137,481,340
P P−
= P−
= =137,481,340
P
Receivables 1,584,194 − − 1,584,194
Deposits** 23,822 − − 23,822
Financial assets at FVOCI 3,624,630 − − 3,624,630
Gross carrying amount =142,713,986
P =−
P =−
P =142,713,986
P
*Excluding cash on hand amounting to =
P 10.0 thousand
**Presented under “Other noncurrent assets” account

*SGVFS038989*
 - 35 -

As at December 31, 2018, the credit quality of the Group’s financial assets are as follows:

2018
ECL Staging
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Lifetime ECL Total
Financial assets at amortized cost
Cash and cash equivalents* =144,777,138
P P−
= P−
= =144,777,138
P
Receivables 300,718 − − 300,718
Deposits** 23,822 − − 23,822
Financial assets at FVOCI 5,172,121 − − 5,172,121
Gross carrying amount =150,273,799
P =−
P =−
P =150,273,799
P
*Excluding cash on hand amounting to =
P 10.0 thousand
**Presented under “Other noncurrent assets” account

Liquidity Risk
Liquidity risk arises from the possibility that the Group may encounter difficulties in raising funds to
meet commitments from financial instruments. The Group’s objective is to maintain continuity of
funding. The Group’s policy is to maximize the use of suppliers’ credit for all its major purchases
and limit major capital expenditures at a reasonable level. The Group monitors its cash position by a
system of cash forecasting. All expected collections, check disbursements and other payments are
determined on a weekly basis to arrive at the projected cash position to cover its obligations. The
Group’s financial assets, which are used to meet its short-term liquidity needs, include cash and cash
equivalents, receivables and financial assets at FVOCI totaling P
=142.7 million and
=150.3 million as at December 31, 2019 and 2018, respectively.
P

The table below summarizes the maturity profile of the Group’s other financial liabilities based on
contractual undiscounted payments as at December 31.

2019
Less than 3 to 12 Over
On Demand 3 Months Months 1 Year Total
Trade and other payables* P
=28,555,780 P
=– P
=– P
=– P=28,555,780
Advances from a related party 79,978,631 – – – 79,978,631
P
=108,534,411 P
=– P
=– P
=– P
=108,534,411
*Excluding statutory liabilities to the government.

2018
Less than 3 to 12 Over
On Demand 3 Months Months 1 Year Total
Trade and other payables* =28,423,954
P =–
P =–
P =– P
P =28,423,954
Advances from a related party 80,047,381 – – – 80,047,381
Subscriptions payable – – – 161,959 161,959
=108,471,335
P =–
P =–
P =161,959 =
P P108,633,294
*Excluding statutory liabilities to the government.

Equity Price Risk

The Group’s investments in equity securities are susceptible to market price risk arising from
uncertainties about future values of the investment securities. The Group manages the equity price
risk through diversification and placing limits on individual and total equity instruments. Reports on
the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s
BOD reviews and approves all equity investment decisions.

The Group’s exposure to quoted securities amounted to =

P3.6 million and P
=5.2 million as at
December 31, 2019 and 2018, respectively (see Note 7).

*SGVFS038989*
 - 36 -

The effect on the consolidated income or equity, depending on whether or not decline is significant or
prolonged (as a result of a change in fair value of quoted equity instruments held as AFS financial
assets as at December 31, 2019 and 2018) due to reasonably possible change in equity indices, with
all other variables held constant, is as follows:

Effect on
Change in Equity Price* Equity
2019 4% =161,095
P
(4%) (161,095)

2018 7% P356,539
=
(7%) (356,539)
*Based on PSE market index

Capital Management
The main objective of the Group is to maintain a strong and healthy financial position.
Presently, the cash requirements of the Group are financed mainly from internally generated sources.
Major projects will be financed by debt and/or equity funds from strategic partnerships with investors
(both foreign and local) who are willing to put a stake in the projects. Through a combination of debt
and equity financing, the Group should be able to maintain a strong and solid capital structure.

The capital structure of the Group consists of capital stock and additional paid-in capital amounting to
=7,972.6 million after deduction treasury shares at December 31, 2019 and 2018, respectively.
P

There were no changes in the objectives, policies or procedures during the years ended
December 31, 2019 and 2018.

19. Financial Assets and Liabilities

A comparison by category of the carrying values and estimated fair values of the Group’s financial
instruments that are carried in the consolidated statements of financial position as at
December 31, 2019 and 2018 are as follows:

Cash and Cash Equivalents, Receivables, Trade and Other Payables, and Advances from Related
Parties
Due to the short-term nature of the transactions, the carrying values approximate the fair values at
reporting dates.

Financial Assets at FVOCI

The fair values of quoted equity securities were determined by reference to market bid quotes as of
reporting dates.

The following tables provide the fair value measurement hierarchy of the Group’s assets and
liabilities as at December 31, 2019 and 2018:

2019
Valuation Date Total Level 1 Level 3
Assets measured at fair value:
Investment property October 12, 2016 P
=10,028,870 P
=– P
=10,028,870
Financial assets at FVOCI
(Note 7) December 31, 2019 – 3,624,630 –
Total financial assets P
=10,028,870 P
=3,624,630 P
=10,028,870

*SGVFS038989*
 - 37 -

2019
Valuation Date Total Level 1 Level 3
2018
Valuation Date Total Level 1 Level 3
Assets measured at fair value:
Investment property October 12, 2016 =10,028,870
P =–
P =10,028,870
P
Financial assets at FVOCI
(Note 7) December 31, 2018 5,172,121 5,172,121 –
Total financial assets =15,200,991
P P5,172,121
= =10,028,870
P

There were no transfers between Level 1 and Level 2 fair value measurements and no transfers into
and out of Level 3 fair value measurements during the year ended December 31, 2019 and 2018.

20. Events after the Reporting Period

On February 20, 2020, SEC approved the Parent Company’s application for equity restructuring,
decrease in capital stock and amended articles of incorporation.

On January 29, 2020, APEC made a capital call in the amount of = P118,000,000 to Parent Company
and its shareholders. On February 26, 2020, the deadline of the capital call, Parent Company has paid
its equivalent share in the capital call amounting to P
=112,813,182. As of February 28, 2020, no other
shareholder has participated in the capital call. As a result, Parent Company’s shareholding in APEC
increased from 95.6% to 97.6%.

*SGVFS038989*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT

ON SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors

APC Group, Inc.
G/F MyTown New York Bldg.
General E. Jacinto St. corner Capas St.
Brgy. Guadalupe Nuevo, Makati City

We have audited in accordance with Philippine Standards on Auditing the consolidated financial
statements of APC Group, Inc. and subsidiaries (the Group) as at December 31, 2019 and 2018, and for
each of the three years in the period ended December 31, 2019 and have issued our report thereon dated
February 28, 2020. Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in the Index to the Consolidated
Financial Statements and Supplementary Schedules are the responsibility of the Group’s management.
These schedules are presented for purposes of complying with Revised Securities Regulation Code
Rule 68 and are not part of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly state, in all material respects, the information required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Johnny F. Ang
Partner
CPA Certificate No. 0108257
SEC Accreditation No. 1284-AR-2 (Group A),
May 16, 2019, valid until May 15, 2022
Tax Identification No. 221-717-423
BIR Accreditation No. 08-001998-101-2018,
November 6, 2018, valid until November 5, 2021
PTR No. 8131119, January 9, 2020, Makati City

February 28, 2020

*SGVFS038989*
A member firm of Ernst & Young Global Limited
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT ON

COMPONENTS OF FINANCIAL SOUNDNESS INDICATORS

The Stockholders and the Board of Directors

APC Group, Inc.
G/F MyTown New York Bldg.
General E. Jacinto St. corner Capas St.
Brgy. Guadalupe Nuevo, Makati City

We have audited in accordance with Philippine Standards on Auditing the consolidated financial
statements of APC Group, Inc. and subsidiaries (the Group) as at December 31, 2019 and 2018, and for
each of the three years in the period ended December 31, 2019, and have issued our report thereon dated
February 28, 2020. Our audits were made for the purpose of forming an opinion on the basic consolidated
financial statements taken as a whole. The Supplementary Schedule on Consolidated Financial
Soundness Indicators, including their definitions, formulas, calculation, and their appropriateness or
usefulness to the intended users, are the responsibility of the Group’s management. These financial
soundness indicators are not measures of operating performance defined by Philippine Financial
Reporting Standards (PFRS) and may not be comparable to similarly titled measures presented by other
companies. This schedule is presented for the purpose of complying with the Revised Securities
Regulation Code Rule 68 issued by the Securities and Exchange Commission, and is not a required part
of the basic consolidated financial statements prepared in accordance with PFRS. The components of
these financial soundness indicators have been traced to the Group’s consolidated financial statements as
at December 31, 2019 and 2018 and for each of the three years in the period ended December 31, 2019
and no material exceptions were noted.

SYCIP GORRES VELAYO & CO.

Johnny F. Ang
Partner
CPA Certificate No. 0108257
SEC Accreditation No. 1284-AR-2 (Group A),
May 16, 2019, valid until May 15, 2022
Tax Identification No. 221-717-423
BIR Accreditation No. 08-001998-101-2018,
November 6, 2018, valid until November 5, 2021
PTR No. 8131119, January 9, 2020, Makati City

February 28, 2020

*SGVFS038989*
A member firm of Ernst & Young Global Limited
 APC GROUP, INC. AND SUBSIDIARIES
Index to the Consolidated Financial Statements and
Supplementary Schedules
December 31, 2019

Schedule I. Map of the Relationships of the Companies within the Group

Schedule II. Supplementary Schedules Required by Revised SRC Rule 68

APC GROUP, INC. AND SUBSIDIARIES
MAP OF THE RELATIONSHIP OF THE COMPANIES WITHIN THE GROUP
DECEMBER 31, 2019
APC GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULES REQUIRED BY REVISED SRC RULE 68
DECEMBER 31, 2019

Schedule A. Financial Assets

Value based
Number of shares on market
or principal Amount shown in quotation at Income
Name of issuing entity and amount of bonds the statement of end of reporting received
association of each issue and notes financial position period and accrued

Financial assets at amortized

costs
Cash and cash equivalents =137,491,340
P =137,491,340
P N/A =4,651,666
P
Receivables
1,501,358 1,501,358 N/A −
Advances to officers and
employees 38,718 38,718 N/A −
Deposits 23,822 23,822 N/A −
139,055,238 139,055,238 4,651,666
Financial assets at fair value
through other
comprehensive income
Premium Leisure Corp 6,359,000 3,624,630 3,624,630 –
6,359,000 3,624,630 3,624,630 –
=142,679,868
P =3,624,630
P =4,651,666
P

Schedule B. Amounts Receivable from Directors, Officers, Employees, and Principal

Stockholders (Other than Related Parties)

Balance at
Beginning Amounts Amounts Balance of
Account of Period Additions Collected Written Off Current Not Current end of Period
Officers and
employees =46,168
P =504,000
P (P
=511,450) =−
P =38,718
P =–
P =38,718
P

Schedule C. Amounts of Receivable from Related Parties which are eliminated during the
consolidation of financial statements

Name and Balance at Allowance for Balance at

Designation of Beginning of Amounts Doubtful Not end of
Debtor Period Additions Collected Account Current Current Period
APC Mining
Corporation =78,558,106
P =17,501
P =−
P (P
=78,575,607) =−
P =−
P =−
P
APC Cement
Corporation 5,675,698 19,711 − (5,695,409) − − −
APC Energy
Resources,
Inc. 7,593,901 48,222 − (7,642,123) − − −
Aragorn Power
and Energy
Corporation 4,991,185 2,038,634 − − 538,634 6,491,185 7,029,819
=96,818,890
P =2,124,068
P =−
P (P
=91,913,139) =538,634
P =6,491,185
P =7,029,819
P
 -2-

Schedule D. Long-term Debt

Amount Shown under

caption “Current portion of Amount Shown under
long-term debt” the “Long-Term Debt” the
Title of Issue and Type Amount Authorized by statement of financial statement of financial
of Obligation Indenture position position
None − − −

Schedule E. Indebtedness to Related Parties

Balance at
Name of Related Beginning Balance at
Parties of Period Additions Amounts Paid Current Not Current end of Period
Belle Corporation =80,047,381
P =−
P (P
=68,750) =79,978,631
P =−
P =79,978,631
P

Schedule F. Guarantees of Securities of Other Issuers

Name of issuing Amount

entity of securities owned by
guaranteed by the Title of issue of person
company for which each class of Total amount for which
this statement is securities guaranteed and statement Nature of
filed guaranteed outstanding is filed Guarantee
None − – – –

Schedule G. Capital Stock

Number of
shares Number of
issued and shares
outstanding as reserved for
shown under options,
related warrants, Directors,
Number of statements of conversion Number of officers,
Title of shares financial and other shares held by and
issue authorized position caption rights related parties employees Others
Common 14,000,000,000 7,511,809,997* NA 3,665,722,334 2,452,706 3,843,634,957
Preferred 6,000,000,000 – NA – – –

*inclusive of Treasury shares - 7,606,000

 APC GROUP, INC. AND SUBSIDIARIES
Components of Financial Soundness Indicators
As of December 31, 2019

Financial Ratios Formula 2019 2018

Current Ratio Total Current Assets divided by Total Current Liabilities 1.28 1.34

Total Current Assets P

=139,079,119
Divide by: Total Current Liabilities 108,606,432
Current Ratio 1.28

Acid Test Ratio Quick assets (Total Current Assets less Inventories and
Other Current Assets) divided by Total Current Liabilities 1.28 1.34

Total Current assets P

=139,079,119
Less: Other current assets (2,585)
Quick assets 139,076,534
Divide by: Total Current Liabilities 108,606,432
Acid test ratio 1.28

Solvency Ratio After tax net income (loss) plus Depreciation divided by
Total liabilities (0.05) (0.10)

After tax net income (loss) (P

=5,277,566)
Add: Depreciation
Divide by: Total Liabilities 112,048,129
Solvency Ratio (0.05)

Debt-to-Equity Ratio Total liabilities divided by Total stockholders’ equity 0.69 0.67

Total liabilities P
=112,048,129
Divide by: Total stockholders’ equity 161,253,435
Debt-to-Equity Ratio 0.69

Asset to Equity Ratio Total assets divided by Total stockholders’ equity 1.69 1.67

Total assets P
=273,301,564
Divide by: Total stockholders’ equity 161,253,435
Asset-to-Equity Ratio 1.69

Return on Equity Net income (loss) divided by Total stockholders’ equity

Ratio (0.03) (0.07)

Net income (loss) (P

=5,293,434)
Divide by:Total stockholders’ equity 161,253,435
Return on Equity Ratio (0.03)
 -2-

Financial Ratios Formula 2019 2018

Return on Assets Ratio Net income (loss) divided by Total assets (0.02) (0.04)

Net income (loss) (P

=5,293,434)
Total assets 273,301,546
Return on Assets Ratio (0.02)

Net Debt-to-Equity Total interest-bearing debt less cash and cash equivalents
Not Applicable
Ratio divided by Total stockholders ‘equity

Interest Rate Coverage Earnings before interest and taxes divided by Interest
Not Applicable
Ratio Expense

Net Profit Margin Net income (loss) divided by Net sales Not Applicable
 MINUTES OF THE STOCKHOLDERS’ MEETING OF

APC GROUP, INC.

Held on 01 July 2019 at 3:00 P.M.

at SMX Convention Center, Seashell Lane,
Mall of Asia Complex, Pasay City

DIRECTORS PRESENT:

WILLY N. OCIER Chairman of the Board

Director
Chairman, Executive Committee
Chairman, Compensation and Remuneration Committee

JACKSON T. ONGSIP President & CEO

Director
Chief Risk Officer
Member, Executive Committee

BERNARDO D. LIM Director

Chairman, Risk Management Committee
Member, Audit Committee
Member, Corporate Governance Committee
Member, Related Party Transactions Committee

TOMAS D. SANTOS Independent Director

Chairman, Corporate Governance Committee
Chairman, Related Party Transactions Committee
Member, Audit Committee
Member, Risk Management Committee

LAURITO E. SERRANO Independent Director

Chairman, Audit Committee
Member, Risk Management Committee
Member, Corporate Governance Committee
Member, Related Party Transactions Committee

EDMUNDO L. TAN Director

Member, Compensation and Remuneration Committee

VIRIGINIA A. YAP Director

Member, Executive Committee
Member, Compensation and Remuneration Committee

ALSO PRESENT:

RICHARD ANTHONY D. ALCAZAR Corporate Secretary

CATHERINE GAIL C. DIZON Asst. Corporate Secretary

Stockholders present in person or 4,966,519,917 shares (Please see the

represented by proxy Record of Attendance here attached as
Annex “A”)

The representatives from the Company’s external auditor, Sycip Gorres Velayo & Co., Messrs.
Ramon D. Dizon and Johnny Ang, were likewise in attendance to address questions from the
stockholders during the Meeting.
=====================================================================
 Minutes of the Stockholders Meeting
APC Group, Inc. held on
01 July 2019
____________________________ Page 2

1. Call To Order

Mr. Willy N. Ocier, the Chairman of the Board, welcomed the stockholders, called the
meeting to order, and presided over the proceedings. The Corporate Secretary, Atty. Richard
Anthony D. Alcazar, recorded the minutes of the meeting.

2. Certification of Notice and Quorum

The Corporate Secretary certified that written notices of the annual stockholders’ meeting
together with the agenda and the Definitive Information Statement were sent beginning 31 May
2019 to all stockholders of record as of 31 May 2019 by personal delivery and by mail.

The Chairman inquired from the Corporate Secretary whether there was a quorum for the
transaction of business by the stockholders.

The Corporate Secretary certified that based on the proxies recorded and on the
registration of those personally present at the meeting, that 4,966,519,917 shares representing
66.1831 % of the aggregate number of 7,504,203,997 shares issued, outstanding and entitled to
vote, were either present in person or represented by proxy at the meeting. He then certified that
a quorum was present for the transaction of business by the stockholders.

The Chairman then declared that there was a quorum for the transaction of business.

3. Approval of the Minutes of the Annual Meeting of Stockholders held on 27

September 2018

The Chairman proceeded to the next item in the agenda which is the approval of the
minutes of the annual meeting of the stockholders held on 27 September 2018.

Upon motion duly made and seconded, the stockholders approved the minutes of the
annual meeting of the stockholders held on 27 September 2018 and the following resolution was
passed and adopted:

“RESOLVED, that the Minutes of the Annual Stockholders’ Meeting of

APC Group, Inc. held on 27 September 2018 is approved.”

Below is the tabulation of votes:

In Favor Against Abstain

No. of Shares % No. of % No. of Shares %

Shares
4,966.519,917 100% 0 0% 0 0%

4. Approval of the Annual Report and Audited Financial Statements for the Year 2018

The Chairman then requested the President and CEO, Mr. Jackson T. Ongsip, to render
his report on the Company’s results of operations for 2018. The President reported as follows:

“Good afternoon, ladies and gentlemen. To our fellow stockholders,

members of the Board of Directors and friends, welcome and thank you for
joining us today at the 2019 Annual Stockholders Meeting of APC Group,
Inc.

I am pleased to report that your Company through its subsidiary, Aragorn

Power and Energy Corporation (APEC), is making great strides in its
Kalinga Geothermal Project (KGP). Obtaining a Certificate of Energy
Project of National Significance (CEPNS) in the previous year, the KGP
exploration phase is now in full swing.
 Minutes of the Stockholders Meeting
APC Group, Inc. held on
01 July 2019
____________________________ Page 3

The KGP has successfully achieved the following milestone to date:

a) community development projects for the concerned ancestral domains
have been completed;
b) land use agreements for the project have been assured;
c) major bottlenecks on the main road access have been cleared; and
d) permits for water and special land use have also been secured.

These preparatory feats will enable the Company to continue pursuing

advancement in the Kalinga project that we expect will result in full commercial
operations.

We are continuing to find better ways to do things as we advocate and strengthen

our community relationships with the indigenous people in Kalinga through
college scholarship grants and community development projects that aim to uplift
their lives and future. Beyond educational grants, we have also provided
employment opportunities to the locals, starting with two of our own scholars
who are now graduate geologists. We constantly look for opportunities to
increase local hiring and community engagement to provide better livelihood and
stable employment. As a result of our efforts, the concerned ancestral domains
have committed to cooperate with the project and have approved our undertaking
for the Project.

The effects of these accomplishments have yet to manifest in the Company’s

financial statements for 2018, where your Company recognized a consolidated
net loss of Php11.5 million to cover project-related costs and general and
administrative expenses.

As of December 31, 2018, APC Group, Inc. recorded total Assets worth
Php279.9 million, Liabilities of Php111.8 million and Stockholders’ Equity of
Php168.1 million. Details of the financial statements are contained in the
Information Statement sent to the stockholders.

In closing, I would like to take this opportunity to thank you, our dear
shareholders for your continued patience, trust and confidence. On behalf of the
Management Team, I would like to extend our gratitude for the wisdom and
guidance imparted by our Board of Directors. And finally, I wish to
acknowledge the dedication and hard work of our employees. We look forward
to working together with our many stakeholders to move our project further in
2019.

Thank you.”

The Chairman explained that the 2018 Audited Financial Statements of the Company
were appended to the Definitive Information Statement sent to all stockholders of record.

The Chairman opened the floor to stockholders for questions or comments. There being
no comments nor questions from the stockholders, the following resolution was passed and
approved upon motion duly made and seconded:

“RESOLVED, That the 2018 Annual Report and the 2018 Audited
Financial Statements of APC Group, Inc. are approved.”

Below is the tabulation of votes:

 Minutes of the Stockholders Meeting
APC Group, Inc. held on
01 July 2019
____________________________ Page 4

In Favor Against Abstain

No. of Shares % No. of Shares % No. of Shares %
4,996,519,917 100% 0 0% 0 0%

5. Approval and Ratification of the Acts of the Board of Directors and Management

The next item in the agenda is the ratification of all acts, transactions and contracts
entered into, as well as resolutions made and adopted by the Board of Directors, its Committees,
and Management from the date of the last annual stockholders’ meeting up the present
stockholders’ meeting. These corporate acts are detailed in the Definitive Information Statement
provided to all stockholders of record.

On motion duly made and seconded, the stockholders approved the following resolutions
were passed and adopted:

“RESOLVED, that all acts, transactions and contracts entered into as

well as resolutions made and adopted by the Board of Directors, Board
Committees, and Management of APC Group, Inc. (the ‘Corporation’) from the
date of the last Annual Stockholders’ Meeting up to the date of meeting are
approved, ratified, and confirmed.

“RESOLVED FINALLY, that all acts, proceedings, elections and

appointments performed or taken pursuant to the foregoing resolution, be in all
respects approved, ratified and confirmed.”

Below is the tabulation

In Favor Against Abstain

No. of Shares % No. of % No. of Shares %
Shares
4,996,519,917 100% 0 0% 0 0%

6. Election of Directors for 2019-2020

The next item in the agenda is the election of directors for the year 2019-2020. The
Chairman requested, Mr. Tomas D. Santos, Chairman of the Corporate Governance Committee,
to present the nominees to the Board. Mr. Santos stated that the Corporate Governance
Committee had pre-screened and short -listed all candidates qualified and nominated to the Board
of Director and announced that the following have been nominated and qualified for election of
the Board for the year 2019 to 2020:

WILLY N. OCIER
BERNARDO D. LIM
JACKSON T. ONGSIP
EDMUNDO L. TAN
VIRGINIA A. YAP

Independent Directors

TOMAS D. SANTOS
LAURITO E. SERRANO

Upon motion duly made and seconded, all unqualified votes were cast equally in favor of
the nominees who were thus elected to the Board for the period 2019-2020. The following
resolution was passed and approved:
 Minutes of the Stockholders Meeting
APC Group, Inc. held on
01 July 2019
____________________________ Page 5

“RESOLVED, that the following persons are elected directors of APC

Group, Inc. for a period of one (1) year until their successors shall have been
duly elected and qualified.

WILLY N. OCIER
BERNARDO D. LIM
JACKSON T. ONGSIP
EDMUNDO L. TAN
VIRGINIA A. YAP

Independent Directors

TOMAS D. SANTOS
LAURITO E. SERRANO

The votes received and cast in favor of the said nominees are as follows:

Nominee Number of shares %

voting in favor

Willy N. Ocier 4,996,519,917 100%

Jackson T. Ongsip 4,996,519,917 100%
Bernardo D. Lim 4,996,519,917 100%
Edmundo L. Tan 4,996,519,917 100%
Virginia A. Yap 4,996,519,917 100%
Laurito E. Serrano 4,996,519,917 100%
Tomas D.Santos 4,996,519,917 100%

7. Appointment of External Auditor

The next item in the agenda is the appointment of the Company’s External Auditor for
2019. The Chairman informed the shareholders that the Audit Committee pre-screened the
nominees for External Auditor and qualified SyCip, Gorres, Velayo & Co. for appointment as
External Auditor for 2019. The Board of Directors likewise approved and endorses this
appointment.

Upon motion made and seconded, SyCip, Gorres, Velayo & Co. was appointed as the
External Auditor of the Company for 2019 and the following resolution was passed and
approved:

“RESOLVED that SyCip, Gorres, Velayo & Co. is appointed as the

External Auditor of APC Group, Inc. for 2019, under such terms and conditions
as may be approved by the Board.”

Below is the tabulation of votes:

In Favor Against Abstain

No. of Shares % No. of % No. of Shares %
Shares
4,996,519,917 100% 0 0% 0 0%

8. Other Matters

The Chairman inquired if there were other matters that could properly be taken up at this
meeting. The Corporate Secretary confirmed that there was none.
 Minutes of the Stockholders Meeting
APC Group, Inc. held on
01 July 2019
____________________________ Page 6

9. Adjournment

There being no further business to transact, the meeting was upon motion duly made and
seconded thereupon adjourned.

CERTIFIED CORRECT:

RICHARD ANTHONY D. ALCAZAR

Corporate Secretary

ATTESTED BY:

WILLY N. OCIER
Chairman of the Meeting

Nilda/2019Minutes/01 July 2019 ASM Minutes