AYALA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in Thousands)

December 31
2016 2015
ASSETS
Current Assets
Cash and cash equivalents (Notes 5, 31, 32 and 33) P=60,223,324 P=82,154,542
Short-term investments (Notes 6, 31, 32 and 33) 1,008,705 2,052,288
Accounts and notes receivable (Notes 7, 31, 32 and 33) 116,841,963 82,595,788
Inventories (Note 8) 76,752,875 68,430,908
Other current assets (Notes 9 and 32) 33,638,483 27,617,032
Total Current Assets 288,465,350 262,850,558
Noncurrent Assets
Noncurrent accounts and notes receivable (Notes 7, 32 and 33) 36,484,347 41,793,499
Investments in bonds and other securities
(Notes 10, 31, 32 and 33) 4,565,079 3,737,816
Land and improvements (Note 11) 101,049,171 92,894,879
Investments in associates and joint ventures (Note 12) 180,313,743 162,711,420
Investment properties (Note 13) 110,916,644 83,669,492
Property, plant and equipment (Note 14) 64,074,471 39,644,489
Service concession assets (Note 15) 82,422,249 78,828,840
Intangible assets (Note 16) 9,716,403 3,909,603
Deferred tax assets - net (Note 25) 12,414,647 9,742,797
Pension and other noncurrent assets (Note 17) 21,282,399 14,291,330
Total Noncurrent Assets 623,239,153 531,224,165
Total Assets P=911,704,503 P=794,074,723

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued expenses
(Notes 18, 31, 32 and 33) P=164,600,578 P=145,597,876
Short-term debt (Notes 20, 31, 32 and 33) 30,858,137 24,387,515
Income tax payable 2,270,315 1,943,217
Current portion of:
Long-term debt (Notes 20, 31, 32 and 33) 19,792,669 28,153,532
Service concession obligation (Notes 15, 32 and 33) 754,519 1,255,644
Other current liabilities (Notes 19, 32 and 33) 17,522,984 4,629,680
Total Current Liabilities 235,799,202 205,967,464
Noncurrent Liabilities
Long-term debt - net of current portion
(Notes 20, 31, 32 and 33) 245,203,145 210,799,647
Service concession obligation - net of current portion
(Notes 15, 32 and 33) 6,822,862 7,538,374
Deferred tax liabilities - net (Note 25) 9,543,754 6,440,505
Pension liabilities (Note 27) 2,469,140 2,545,978
Other noncurrent liabilities (Notes 21, 32 and 33) 40,870,522 32,238,772
Total Noncurrent Liabilities 304,909,423 259,563,276
Total Liabilities 540,708,625 465,530,740
(Forward)
 December 31
2016 2015
Equity
Equity attributable to owners of the parent
Paid-in capital (Note 22) P=74,379,760 P=73,919,322
Share-based payments (Note 28) 495,759 568,847
Remeasurement gains (losses) on defined benefit plans
(Note 27) (1,548,192) (1,249,716)
Net unrealized gain (loss) on available-for-sale
financial assets (Note 10) (466,676) (554,297)
Cumulative translation adjustments 1,414,550 288,683
Equity reserve (Notes 2 and 24) 12,211,275 12,402,311
Equity conversion option (Note 20) 1,113,745 1,113,745
Retained earnings (Note 22) 145,622,311 124,468,464
Treasury stock (Note 22) (2,300,000) (2,300,000)
230,922,532 208,657,359
Non-controlling interests 140,073,346 119,886,624
Total Equity 370,995,878 328,543,983
Total Liabilities and Equity P=911,704,503 P=794,074,723
AYALA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Earnings Per Share Figures)

Years Ended December 31

2016 2015 2014
INCOME
Sale of goods (Note 31) P=137,307,163 P=118,285,566 P=105,140,825
Rendering of services (Notes 13 and 31) 61,901,736 55,749,425 51,275,623
Share of profit of associates and joint ventures
(Note 12) 18,153,893 15,038,015 13,185,147
Interest income (Note 31) 6,776,936 7,296,799 5,493,715
Other income (Note 23) 13,146,061 11,296,937 9,180,254
237,285,789 207,666,742 184,275,564
COSTS AND EXPENSES
Costs of sales (Notes 8 and 31) 105,752,969 89,487,870 77,773,560
Costs of rendering services (Notes 23 and 31) 35,597,431 33,573,245 34,495,682
General and administrative (Notes 23, 27 and 31) 19,412,193 18,052,241 15,831,000
Interest and other financing charges
(Notes 20, 23 and 31) 14,258,189 13,276,414 11,933,781
Other charges (Note 23) 8,325,424 5,970,474 3,829,020
183,346,206 160,360,244 143,863,043
INCOME BEFORE INCOME TAX 53,939,583 47,306,498 40,412,521
PROVISION FOR (BENEFIT FROM)
INCOME TAX (Note 25)
Current 11,357,136 8,847,768 7,964,375
Deferred (850,162) 163,676 173,543
10,506,974 9,011,444 8,137,918
NET INCOME P=43,432,609 P=38,295,054 P=32,274,603
Net Income Attributable to:
Owners of the parent (Note 26) P=26,011,263 P=22,278,955 P=18,609,229
Non-controlling interests 17,421,346 16,016,099 13,665,374
P=43,432,609 P=38,295,054 P=32,274,603
EARNINGS PER SHARE (Note 26)
Basic P=39.88 P=33.89 P=29.83
Diluted P=39.31 P=33.38 P=29.35

See accompanying Notes to Consolidated Financial Statements.

AYALA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)

Years Ended December 31

2016 2015 2014

NET INCOME P=43,432,609 P=38,295,054 P=32,274,603

OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) that may be
reclassified to profit or loss in subsequent
periods:
Exchange differences arising from translations of
foreign investments 1,600,871 1,151,571 463,755
Changes in fair values of available-for-sale
financial assets (51,054) (69,805) (18,337)
Other comprehensive income not to be reclassified to
profit or loss in subsequent periods:
Remeasurement gains/(losses) on defined
benefit plans (Note 27) 162,382 78,152 304,334
Tax effect relating to components of other
comprehensive income (19,486) (18,035) (35,348)
1,692,713 1,141,883 714,404

SHARE OF OTHER COMPREHENSIVE INCOME

OF ASSOCIATES AND JOINT VENTURES
Other comprehensive income (loss) that may be
reclassified to profit or loss in subsequent
periods:
Exchange differences arising from translations of
foreign investments (70,907) 47,017 (19,454)
Changes in fair values of available-for-sale
financial assets 201,430 (588,087) (204,190)
Other comprehensive income (loss) not to be
reclassified to profit or loss in subsequent
periods:
Remeasurement gains/(losses) on defined
benefit plans (284,084) (267,438) 87,797
(153,561) (808,508) (135,847)

TOTAL OTHER COMPREHENSIVE

INCOME (LOSS), NET OF TAX 1,539,152 333,375 578,557

TOTAL COMPREHENSIVE INCOME P=44,971,761 P=38,628,429 P=32,853,160

Total Comprehensive Income Attributable to:
Owners of the parent P=26,926,275 P=22,380,172 P=19,289,618
Non-controlling interests 18,045,486 16,248,257 13,563,542
P=44,971,761 P=38,628,429 P=32,853,160

See accompanying Notes to Consolidated Financial Statements.

AYALA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
Years Ended December 31

2016 2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P=53,939,583 P=47,306,498 P=40,412,521
Adjustments for:
Interest and other financing charges - net of
amount capitalized (Note 23) 14,258,189 13,276,414 11,933,781
Depreciation and amortization (Note 23) 11,560,471 9,443,089 9,158,195
Cost of share-based payments (Note 28) 248,006 373,161 222,417
Provision for doubtful accounts (Note 23) 812,997 264,735 182,383
Provision for (reversal of) inventory obsolescence
(Note 23) (127,976) 76,621 149,077
Provision for impairment/Losses on (Note 23):
Investments in bonds and other securities – 61,701 66,834
Investments in associates and joint ventures 1,436,854 546,333 í
Property, plant and equipment 45,737 88,753 í
Intangible assets – 423,541 335,731
Mark to market gain on financial assets at fair
value through profit or loss and derivatives
(Note 23) (473,855) (243,452) (392,002)
Other investment income (Note 23) (1,283,190) (124,039) (51,008)
Gain on sale of (Note 23):
Investments (2,128,522) (1,738,349) (2,633,329)
Other assets (5,182) (51,936) (711,001)
Interest income (6,776,936) (7,296,799) (5,493,715)
Share of profit of associates and joint ventures
(Note 12) (18,153,893) (15,038,015) (13,185,147)
Operating income before changes in operating assets
and liabilities 53,352,283 47,368,256 39,994,736
Decrease (increase) in:
Accounts and notes receivable – trade (15,322,109) (17,404,502) (11,576,951)
Inventories (5,548,250) (4,344,029) (1,534,405)
Service concession assets (6,423,693) (6,609,718) (2,997,352)
Other current assets (5,387,939) 2,540,623 (3,933,236)
Increase (increase) in:
Accounts payable and accrued expenses 20,002,946 16,638,678 31,114,583
Net pension liabilities (1,143,247) 342,193 479,604
Other current liabilities 12,834,529 (3,827,639) 3,814,709
Net cash generated from operations 52,364,520 34,703,862 55,361,608
Interest received 7,054,102 7,363,940 5,595,767
Interest paid (14,029,313) (13,289,559) (11,966,127)
Income tax paid (10,172,006) (10,192,869) (9,782,770)
Net cash provided by operating activities 35,217,303 18,585,374 39,208,478
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale/maturities of investments in bonds and other
securities 1,659,387 826,148 717,072
Sale/maturities of financial assets at fair value
through profit or loss 2,948,650 28,117,351 40,417,857
Sale/redemptions of investments in associates and
joint ventures 3,672,767 5,782,807 7,300,597
Sale of a subsidiary (Note 2) 109,729 – –

(Forward)
 Years Ended December 31
2016 2015 2014
Disposals of:
Property, plant and equipment (Note 14) P=363,849 P=434,084 P=1,657,058
Investment properties (Note 13) 777,105 681,913 1,538,984
Land and improvements (Note 11) – 24,449 3,935
Maturities of (additions to) short-term investments 1,043,583 (949,250) (983,358)
Additions to:
Service concession assets (Note 15) (110,383) (217,527) (666,569)
Investments in associates and joint ventures (13,422,670) (8,767,207) (35,926,256)
Property, plant and equipment (Note 14) (24,344,093) (15,753,861) (6,233,101)
Investment properties (Note 13) (28,449,015) (12,706,724) (13,375,167)
Land and improvements (Note 11) (5,128,862) (22,475,160) (28,841,363)
Accounts and notes receivable - non trade (11,274,562) (979,350) (5,171,180)
Financial assets at fair value through profit or loss (2,742,790) (22,357,315) (33,186,064)
Investments in bonds and other securities (52,642) (1,079,053) (562,661)
Intangible assets (Note 16) (533,376) 319,530 (172,452)
Dividends received from associates, joint ventures
and investments in equity securities (Note 12) 8,560,393 8,309,970 5,742,014
Acquisitions through business combinations - net of
cash acquired (Note 24) (2,551,035) (781,687) (274,932)
Decrease (increase) in other noncurrent assets (6,709,454) 2,749,436 (14,730,215)
Net cash used in investing activities (76,183,421) (38,821,446) (82,745,801)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term and long-term debt 97,216,392 75,097,645 78,310,834
Payments of short-term and long-term debt (68,047,835) (71,223,956) (25,018,135)
Reissuance of treasury shares (Note 22) – – 13,424,121
Dividends paid (Note 22) (10,104,138) (9,130,756) (7,581,660)
Service concession obligation paid (Note 15) (858,230) (646,815) (698,927)
Collections of subscriptions receivable 139,344 166,127 113,817
Issuance of common shares (Note 22) – – 12,237,211
Increase (decrease) in:
Other noncurrent liabilities 1,368,605 5,135,008 812,972
Non-controlling interests in consolidated
subsidiaries (Note 24) (679,238) 12,223,836 (2,948,434)
Net cash provided by financing activities 19,034,900 11,621,089 68,651,799
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (21,931,218) (8,614,983) 25,114,476
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 82,154,542 90,769,525 65,655,049
CASH AND CASH EQUIVALENTS AT
END OF YEAR (Note 5) P=60,223,324 P=82,154,542 P=90,769,525

See accompanying Notes to Consolidated Financial Statements.