2009 Corporate Social Responsibility Report - Aboitiz Equity Ventures

ACKNOWLEDGMENTANNUAL REPORT 2009 1The Aboitiz Foundation, Inc. would like to acknowledge its donors and partners forhelping pursue its mission of helping people help themselves.INSTITUTIONAL DONORSAboitiz and Company, Inc.Aboitiz Construction Group, Inc.Aboitiz Energy Solutions, Inc.Aboitiz Equity Ventures, Inc.Aboitiz Jebsen Bulk Transport Corp.Aboitiz Land, Inc.Aboitiz One, Inc.Aboitiz Power CorporationAboitiz Transport System Corp.Aboitiz Air Transport Corp.Aboitiz Logistics, Inc.Aboitiz One Distribution, Inc.Aboitiz Project T.S. Corp.Hapag LloydReefer Van Specialist, Inc.Total Distribution and LogisticsSystems, Inc.Zoom In Packages, Inc.AP Renewables, Inc.Astir Engineering Works, Inc.Balamban Enerzone Corp.City Savings BankCotabato Light & Power Co.Davao Light & Power Co.Hedcor, Inc.Mactan Enerzone Corp.Pilmico Animal Nutrition Corp.Pilmico Foods Corp.Subic Enerzone Corp.Therma Luzon, Inc.Visayan Electric Co.INDIVIDUAL DONORSMr. Antonio R. MorazaMr. Enrique AboitizMr. Enrique M. Aboitiz, Jr.Mr. Ernesto R. Aboitiz (+)Mr. Erramon I. AboitizMr. Iker M. AboitizMr. Jon Ramon AboitizMr. Jaime Jose Y. AboitizMr. Jose Mari MorazaMr. Luis AboitizMr. Mikel A. AboitizMr. Robert Booth/Ms. Josephine BoothMr. Robert ParadiesMr. Roberto E. AboitizMr. Sabin M. AboitizMr. Stephen G. ParadiesMr. Xavier J. AboitizMrs. Lulu AboitizMs. Eukene AboitizABOITIZ TEAM MEMBERS(for Typhoon Ondoy)PARTNERSAgro Macro Development Corp.Annabelle O. AboitizATR Kim Eng Securities, Inc.Luis Aboitiz, Jr.Luzon Hydro Corp.Mindanao Container Corp.MRO Development Corp.Ramon Aboitiz Foundation, Inc.Renner Development Corp.Union Bank of the PhilippinesOTHER DONORSAbaca Boutique ResortAffogato Corp.Cebu International SchoolMr. & Mrs. Charles StreeganMr. Alberto De RotaecheMr. Emil RotaecheMr. Mariano PerdicesMr. Richard CanovaMs. Eleanor RiveraMs. Geraldine Richards (+)Ms. Kathleen Canova EpesMs. Lydia MackenzieMs. Maria CanovaMs. Maria Lourdes BernardoMs. Maribel AntunezMs. Patsy CanovaMs. Stella Escario-DorionPacific Traders and Mfg. Co./CharlesStreegan/Mark NorkossPilar Streegan/Charles StreeganSalud Borromeo FoundationSanfil Management Corp./Maria Luisa CanovaWindemere Management Corp./Patsy Canova

2 ABOITIZ FOUNDATIONFROM YOUR CHAIRMANAND PRESIDENTThe year 2009 saw many countries and companies still reeling from the effects of the globaleconomic meltdown that began in 2007. The Philippine economy grew just under 1% lastyear at a time when the country was still bearing the brunt of the economic challenges.As a consequence, there was much concern about reduced funding for philanthropicpurposes. However, the Aboitiz Group and the Aboitiz Foundation, Inc. (Foundation)provided funding totaling π416 million for various projects, the largest amount allocatedby far in the history of corporate social responsibility (CSR) in the Group.The Foundation’s directly funded allocations for its projects increased from π73 million in2008 to π79 million in 2009.Aside from the programs and projects approved for the different Group companies throughthe Foundation, the Aboitiz Group companies themselves implemented communitydevelopment and infrastructure programs using their own funds for the benefit of thecommunities they operate in. From the π314 million released for various social developmentactivities in 2008, appropriations increased to π337 million in 2009.These developments translated into more funds being allocated for the Foundation’s keyproject areas and other noteworthy initiatives undertaken by different Group companies, incollaboration with their partner communities.Since it was established 21 years ago, the Foundation has adopted a strategy that allows it tofocus on three vital areas of social development—education, enterprise development, andprimary health and childcare. Having a focused strategy allows the Foundation to optimizeits efforts and resources in these areas, not only by providing more funds for projects butalso identifying other projects that will complement existing ones.Due to the compelling need to address environmental concerns to help mitigate the effectsof climate change, the environment will now become the Foundation’s fourth key area offocus.Due to the compellingneed to addressenvironmentalconcerns to helpmitigate the effectsof climate change,the environment willnow become theFoundation’s fourthkey area of focus.What began years ago as scattered tree-planting activities throughout the Group hasbeen consolidated into one annual nationwide and group-wide tree planting effort.Watershed management programs and other environment-friendly initiatives have alsobeen consolidated, with best practices from the various business units coming to the fore.The Aboitiz Group continues to be actively involved in national organizations like thePhilippine Business for Social Progress, League of Corporate Foundations, Association ofFoundations and the Philippine Council for NGO Certification. It also fully supports theCoalition for Better Education, a five-pronged program aimed at instituting reforms toimprove the quality of teachers and of the educational system in the country.The Passion to Serve culture and our mission of helping people help themselves havebecome deeply inculcated among all team leaders and team members of the Aboitiz Group.Their growing participation in various CSR activities has become very evident over the years.Among these the activities are the simultaneous tree planting, Brigada Eskwela, Adopt-a-School, cooking and information technology trainings, and various outreach programs.From your Chairman and President

ANNUAL REPORT 2009 3In September 2009, Aboitiz companies and Aboitiz family members, through theFoundation, immediately heeded the plea for help by victims of typhoons Pepeng andOndoy, which wrought havoc in Luzon. Their donations to the relief operations totaledπ15 million. Team leaders and team members in companies across the country bandedtogether to assist in packing and distributing relief goods and other basic necessities.The Foundation has played a significant role in assisting the ever-growing number of Groupcompanies in establishing their CSR departments. It trains the CSR teams and coordinatesGroup efforts to establish, monitor and measure the impact of the different interventionsin their different localities throughout the country.To the members of the Aboitiz Foundation team, thank you for your contributions,dedication and passion to help the less fortunate in society. Continue your valued workand pursue finding better ways with which we can help our fellow Filipinos uplift their lives.We would also like to express our sincerest gratitude to all team leaders and team membersof the different Aboitiz Group companies for their personal commitment tobe involved in various outreach activities.Our most profound thanks also goes to the various donors of theAboitiz Foundation for their continued generosity. Without theirhelp, the Foundation would never have gained the momentum itpresently enjoys.To the Board of Trustees, thank you for your guidance andfor sharing your time, talent and resources to boostthe Foundation’s efforts to be the neighbor of choicein the communities we serve.We are optimistic that with the continued support,cooperation and partnership of all its stakeholders, theAboitiz Foundation will continue to be unrelenting infulfilling its mission to help people help themselves.Erramon I. AboitizChairmanJon Ramon AboitizPresident

4 ABOITIZ FOUNDATIONFROM YOURMANAGING TRUSTEEIn 2009, the Aboitiz Foundation, Inc. (Foundation) improved its mandate by increasing allocations tofund more social development initiatives, implement more projects and serve more beneficiaries in itspursuit to empower communities where Aboitiz Group companies operate.As the Aboitiz Group grows, so does the Foundation’s mission. With additional companies in our powergroup operating in different locations, the Foundation also moved into new locations in 2009.The Foundation immediately took steps to assist these companies in implementing corporate socialresponsibility (CSR) projects—training their CSR teams, helping them align projects with directionsset by the Foundation, and conducting immersion programs and site visits. More expansion is stillexpected and consequently new territories for the Foundation to cover.Two factors have enabled the steady and heady growth of approved allocation for projects over theyears. First, the Aboitiz Group business units that are the Foundation’s main sources of donationscontinue to achieve improved business results, allowing them to give bigger donations. Second, thesecompanies see the effectiveness of the Foundation’s deployment of funds in uplifting the quality oflives of our beneficiaries.Education remains the mainstay among the Foundation’s programs. For 2009, education-relatedinitiatives accounted for π38 million or 49% of total project appropriation. These projects involvedscholarships for students in all levels, new school buildings, computer and library kit donations, amongothers.We are very pleased withhow organized groups likecooperatives have utilizedwell the Foundation’s softloans and the learninggained from capacitybuildingtraining programsin creating their ownentrepreneurial successstories.Enterprise development, specifically our microfinance operations, is another program that has beengetting an increased share of the Foundation’s funds. For 2009, the Foundation approved a total ofπ9 million for 18 cooperatives in Cebu.We are very pleased with how organized groups like cooperatives have utilized well the Foundation’ssoft loans and the learning gained from capacity-building training programs in creating their ownentrepreneurial success stories. Nothing can be more gratifying than seeing seed funding spur a selfsustainingbusiness that provides employment to members of their communities.Microfinance is one of the program components that the Foundation will continuously grow in thecoming years. Furthermore, our member companies are slowly replicating our microfinance operationsin their local communities.In the area of primary health and child care, the Foundation allocated π11 million, which accounted for14% of total budget.We have also institutionalized employee volunteerism within the Aboitiz Group. This is evidencedby the simultaneous Group-wide implementation of employee-initiated activities in 2009 liketree-planting activities, Brigada Eskwela, Christmas outreach, and disaster relief operations. In all,employee-initiated projects of the Aboitiz Group amounted to π3 million.The Foundation’s board of trustees, with their vast business experience, has always insisted thatthe Foundation be run like an Aboitiz enterprise—responsive to change, attentive to costs, prudentwith resources, and socially responsive. These tenets guide those of us involved in the day-to-daymanagement of the Foundation and inspire us to strive for constant improvements in our systems andprocesses.On behalf of the Foundation team and the thousands of its beneficiaries, I would like to thank themembers of the board for guiding us in achieving our goals.To our donor companies, our utmost appreciation for your generosity with resources and time, as wellas your resolve to be a neighbor of choice in the areas where you operate.To all Aboitiz Group team leaders and team members, our gratitude for the time and effort youconsistently share in the different projects, showcasing your real passion to serve.To my team, my heartfelt thanks for your dedication and tireless efforts in conceptualizing andimplementing programs and projects that can help uplift the lives of our communities. Truly, you havemade a difference in pursuing our mission of helping people help themselves.Augusto P.I. Carpio, IIIManaging TrusteeFrom your Managing Trustee

EDUCATIONANNUAL REPORT 2009 5Providing public school students with computers and othereducational equipment helps maximize their learning potentials.

6 ABOITIZ FOUNDATIONEDUCATIONThe Aboitiz Foundation, Inc. (Foundation) continues to advocate better educationalopportunities to help students cope with the demands of today’s increasinglycompetitive society.Education-related projects continued to be the main thrust of the Foundation in2009. Of the π79 million allocated for projects, π38 million or 49% was used to fundeducational initiatives.Focus was on infrastructure building, scholarships and financial assistance, andequipment donations for the integrated computerization program.INFRASTRUCTURE BUILDINGThe Foundation continues building classrooms to address the perennial problem ofclassroom shortage in public schools. The availability of classrooms is instrumental inencouraging more students to go to school. Having rooms that are conducive to learninghelp improve students’ performance.School Building and Classroom DonationsIn 2009, the Foundation allocated for the construction of 17 additional classrooms,bringing to 234 the total number of classrooms donated since its inception. Sixteenclassrooms were turned over to beneficiary schools during the year. The construction of24 classrooms is presently ongoing, these will be ready for turnover on 2010.The following table provides an update on the status of these construction projects.Table 1 - School BuildingsBENEFICIARIESLOCATIONNUMBERSOF CLASSROOMSTURNED OVERF. Bustamante Mahayag Elementary School Davao City 3Tulian National High School Davao City 3Cantipla Integrated School Cantipla, Cebu City 4Talamban National High School Talamban, Cebu City 3Mabolo Elementary School Mabolo, Cebu City 3TOTAL 16APPROVED AND ONGOINGDalipuga National High School Iligan City 2Severo Sara Elementary School Iligan City 2Labangon National High School Labangon, Cebu City 3Langtad Naga Elementary School Naga, Cebu 3Canduman Elementary School Mandaue City 3Pulangbato Elementary School Cebu City 5Maguikay Elementary School Mandaue City 3Pagsabungan Elementary School Mandaue City 3TOTAL 24These structures are among theclassroom buildings that theFoundation turnover in 2009.The availability of classrooms is instrumentalin encouraging more students to go to school.Having rooms that are conducive to learninghelp improve students’ performance.Education

ANNUAL REPORT 2009 7SCHOLARSHIP AND FINANCIAL ASSISTANCE PROGRAMSThrough the Foundation, selected students from pre-school to college who have academicpotentials but don’t have adequate resources for their education are given scholarshipgrants and financial assistance. College graduates from the scholarship program are, attimes, given the opportunity to work in Aboitiz Group companies.The 2009 Scholarship PortfolioIn 2009, the Foundation sponsored 1,172 students through its different scholarshipand financial assistance programs. The table below enumerates the various programs,implemented the number of scholars and the geographic distribution of the scholars.Table 2 - Scholarship and Financial AssistanceLEVEL LOCATION IMPLEMENTOR PROGRAMSNUMBEROFSCHOLARSPre-school Cebu ABOITIZ FOUNDATION Street Education Classes 66Elementary Cebu ABOITIZ FOUNDATION Street Education through the Children of Cebu Foundation 250Secondary Lapu-Lapu ABOITIZ FOUNDATION Street Urban Working Children of Lapu-Lapu City 180Lapu-Lapu ABOITIZ FOUNDATION STEC scholars 11Region 7 ABOITIZ FOUNDATION High School Valedictorians Scholarship Program 192Benguet HEDCOR Hedcor HS Scholarship Program 36Tarlac PANC Fil-Am HS Scholarship Program 2Davao DLPC DLPC HS Scholarship Program 95Davao DLPC Boys Town Ward Scholarship Program 10Cotabato CLPC CLPC HS Scholarship Program 10Tertiary Cebu ABOITIZ FOUNDATION Aboitiz Foundation's College Scholarship Program 18Cebu VECO Customers' Dependents Scholarship Program 8Benguet HEDCOR Hedcor College Scholarship Program 3Iligan PILMICO Pilmico Purposive College Scholarship 22Davao DLPC DLPC Customer Dependents College Scholarship Program 69Cebu andDavaoABOJEB AJMAN Marine Engineering Scholars 10Others:PostBaccalaureate(Nursing)Vocational(Postsecondary)Cebu ABOJEB AJMAN Nursing Scholars 12Cebu METAPHIL MTTIT Scholarship Trip 169Technical Cebu ABOITIZ FOUNDATION Banilad Center for Professional Dev't. Scholars 9TOTAL 1,172School buildings and scholarshipgrants are given out yearly tohelp less privileged but deservingstudents achieve their dreams offinishing school.

8 ABOITIZ FOUNDATIONINTEGRATED COMPUTERIZATION PROGRAMThe Foundation recognizes that in this age of information technology, computer literacyand proficiency are essential. The need to equip students with these skills has promptedthe Foundation to be more aggressive in its campaign to see more schools with access tocomputers and the capability to use them.Through its integrated computerization program, the Foundation aims to satisfy thedemand for computer-literate personnel in workplaces, lower the number of publicschools without computer sets, and push for the integration of computer education intothe curriculum.Under the program, the Foundation donates computer sets, refurbishes computerlaboratories, and grants multi-media packages to be used by administrators as aid forteaching.On an annual basis, the Foundation ensures the program’s continuity by allocating a budgetfor the repair and maintenance of the computers. It is also considering subsidizing half thepay of the teachers who handle computer classes.Computer-Related ProjectsThe need to equipstudents withcomputer literacyskills has promptedthe Foundation to bemore aggressive in itscampaign to see moreschools with accessto computers and thecapability to use them.Computer sets are donated tohost communities to complementexisting educational facilitiesand help students keep up withtechnological advancements.The Foundation and Aboitiz companies donated 123 computer units to schools across thecountry in 2009. The donations bring to 972 the total number of units donated since 1999.Table 3 - Computer DonationsAreasNo. of UnitsDonated computers since inception 8492009 AllocationsCebu City 33Cebu Province 29Agusan Province 24Davao 25Benguet 7Iligan City 5Total Computers Appropriated 123Total to 2009 972The Foundation also refurbished the computer and science laboratories of two schools inIligan while 10 Cebu City schools that have been refurbished are just awaiting turnover.

ANNUAL REPORT 2009 9OTHER INTERVENTIONSLibrary Kits and e-LearningReading opens doors to more knowledge. The Foundation supplements the learningopportunities of students by donating library kits that contain encyclopedias, storybooksand other reference materials to develop and encourage the habit of reading.In 2009, the Foundation, through its member company Pilmico Animal Nutrition Corp.,donated library kits to four schools in Capas, Tarlac. Since the start of the program, 25schools have received library kits from different Aboitiz Group companies.UnionBank Book Donation ProgramThe “As A Filipino Learning System” (AAFLS), pioneered by member company UnionBank of the Philippines (UnionBank), seeks to develop students’ reading skills as well asstrengthen the values education curriculum of schools nationwide.The AAFLS package contains a teacher’s handbook, students’ workbook and a multimediaset. In 2009, Unionbank distributed a total of 351,304 students’ workbooks and 8,334teachers’ handbooks to 2,543 elementary schools across the country.The program was first successfully implemented in 2007 in the National Capital Region.The Ateneo Teacher Center later announced that a survey conducted among beneficiariesshowed a marked improvement in the students’ academic performance.Because of its success, the AAFLS program was replicated in Tawi-Tawi and Basilan in2008 and in Davao, Metro Cebu, and Sarangani in 2009.Capas BrainshowThe Capas Brainshow, another project of Pilmico Animal Nutrition, yearly brings togetherstudents from all public elementary schools in the municipality of Capas, Tarlac for a quizbee.The project, now on its fifth year, continues to stimulate the mental faculties and bring thespirit of competitiveness among students in the area.For 2009, the quiz bee theme was “Batang Capaseño, Karununga’y Palalawigin.”After four grueling rounds of competition, the team from Lawy Elementary School wenthome with the top prize—a computer set and cash for the school as well as for the students.Vocational and Technical Training CentersMuch as it wants its scholars to earn college degrees, the Foundation recognizes that thereare some students who are unable to pursue formal education due to lack of academicpreparation.With statistics showing that only three out of 10 high school graduates proceed to college,the Foundation and member company Aboitiz Construction Group established a weldingtraining center in Cebu to provide skills and technical training programs in partnership withthe Technical Education and Skills Development Authority (TESDA).The welding training center has so far trained 638 out-of-school youth, more than half ofwhom are employed by Aboitiz member companies.Baking laboratories and culinary arts rooms have also been established, with more facilitiesbeing eyed for each Cebu school division.The Foundation also supportsother activities being conductedto improve the quality ofeducation in the country.The Foundationsupplements thelearning opportunitiesof students by donatinglibrary kits thatcontain encyclopedias,storybooks and otherreference materials todevelop and encouragethe habit of reading.

10 ABOITIZ FOUNDATIONCoalition BuildingThe Coalition for Better Education (CBE), a non-profit organization established by theFoundation, Ramon Aboitiz Foundation, Inc. and Philippine Business for Social Progress inCebu, continues to support initiatives to institute reforms in the Philippines’ educationalsystem.The CBE, the first of its kind in the country, seeks to address five major areas of concern:teacher training and faculty development, academe-industry-government linkage,curriculum development, leadership and governance, and educational community.To date, the CBE has benefited 2,000 students and 48 teachers and principals. One of itsmain programs, In.Cube, which involves communities that assist to improve the qualityof education in their locality, was first implemented in Barangay Tayud, Consolacion innorthern Cebu.The program seeksto develop theparticipants’ leadership,discipline, interpersonalcommunication skills andspirituality. They are alsotaught how to overcomefear and help care for theenvironment.Outland Adventure CampThe Outland Adventure Camp, located in Davao City and a project of member companyDavao Light & Power Co., gathers selected students and out-of-school youth forthree days and makes them participate in activities aimed at molding their holisticdevelopment.The program seeks to develop the participants’ leadership, discipline, interpersonal, andcommunication skills and spirituality. They are also taught how to overcome fear andhelp care for the environment.In 2009, 180 participants, chosen based on their potential to become leaders and servethe community, were given the opportunity to experience the camp and take part in theactivities.At the Outland Adventure Camp in DavaoCity, selected students and out-of-schoolyouth participate in activities aimed atpromoting their holistic well-being.The camp has trained a total of 1,786 participants since it was introduced in 2002.

ANNUAL REPORT 2009 11ENTERPRISE DEVELOPMENTFarmer-beneficiaries tend to theircornfield to ensure good harvest.

12 ABOITIZ FOUNDATIONENTERPRISE DEVELOPMENTThe Foundation recognizes that one way of empowering communities to help themselvesis to provide them with sustainable income-generating opportunities.A total of π10 million was allocated in 2009 for enterprise development activities thatinclude microfinance packages, equipment donation and capability-building initiatives.The Foundation gives priority to this program area, which benefits small cooperativesand marginal communities.The microfinance program, implemented and operating for several years now, hasproven to be very successful. With a collection rate of 96%, the Foundation recoupsfunds and uses them to help more potential beneficiaries.With the success of themicrofinance program, theFoundation is consideringexpansion to othercommunities in Metro Cebuand selected areas in Davaoand Benguet.MicrofinanceA total of 21 microfinance loan packages, amounting to π9 million, were approved bythe Foundation for 18 partner cooperatives last year, with 7,232 individuals reaping thebenefits. Of the amount approved, only π8 million was released while the remainingπ2 million is due for release in 2010.With the success of these projects, the Foundation is considering expansion to othercommunities in Metro Cebu and selected areas in Davao and Benguet.Table 4 - Approved Microfinance Loan Packages (in thousand pesos)BENEFICIARYBayabas United Farmers Association Farm Productivity ProjectAMOUNTπ126Cambinocot Multi-Purpose Cooperative Livelihood 765Cobcawa Multi-Purpose Cooperative Sweet Corn Production 160Cubacub Level 3 Wwater Supply Expansion Project (ACCESS, Inc.) 500“Isang Alaga Para Sa Kinabukasan:” Swine Fattening Project of Mactan Island Multi-Purpose Cooperative (MIMPC) 223LARBA Swine Fattening Project 191Loan Assistance to Kaponungan sa mga Banikanhong Mag-uuma Alang sa Ekonomekanhong Kalambuan (KABAMEKA) 500Livelihood Enhancement and Support Services for Barangay Luz Homeowners 409Mandaue Subcon and Development Multi-Purpose Cooperative 279Panas Farmers’ Association Swine Fattening Project 191Pangan-an Island Cooperative for Community Development Swine Fattening Project 341Pung-ol Sibugay Cutflower and Vegetable Production Project 130Purok Sili Livelihood Development Project 100Small Business Development Project for Reunited Shoemakers MPC 500South Cebu Hog Raisers Multi-Purpose Cooperative Swine Fattening Project 2,700Sta. Rosa Hugpong Kauswagan Multi-Purpose Cooperative 186St. Vincent Neighborhood MPC Swine Fattening Project 1,647Uling Multi-Purpose Cooperative Swine Fattening Project 509TOTAL π9,458Enterprise DevelopmentThe Foundation supports multi-purpose cooperatives byproviding funds and extending other forms of assistance toensure the sustainability of the programs they undertake.

ANNUAL REPORT 2009 13Capability-Building ActivitiesThe Foundation also provided assistance amounting to π260,000 to its partner cooperativesto ensure that these organizations remain structurally sound. The beneficiaries benefitedfrom capability-building activities like seminars on leadership and internal controls.Equipment DonationTo boost agricultural activities and support farmers in Capas, Tarlac, Pilmico AnimalNutrition donated additional irrigation equipment worth π117,000. The Foundation is alsoconsidering incorporating ecologically sound projects, like biodigesters and vermi-basedfertilizers, into its portfolio.Table 5 - Types of Projects Assisted Through Microfinance (in thousand pesos)Project Type Amount PercentageSwine-Related Activities π6,832 72%Farm Production 1,116 12%Consumer Expansion 500 5%Water Expansion 500 5%Others/Kwarta sa Basura 509 6%TOTAL π9,458 100%The Foundation is also considering incorporatingecologically sound projects, like biodigesters andvermi-based fertilizers, into its portfolio.Multi-purpose cooperatives can expect tosee better results of their projects with theFoundation promising to allocate more funds formicrofinance enterprises.

14 ABOITIZ FOUNDATIONPRIMARY HEALTH AND CHILD CAREThe Foundation continues to identify areas wherewater systems are much needed so more people mayhave access to clean and potable water.

ANNUAL REPORT 2009 15PRIMARY HEALTH AND CHILD CAREThe Foundation continues to address the shortage of adequate infrastructure facilitiesfor basic social services. These include water systems, health, day-care and cooperativetraining centers, projects that are under primary health and child care.The Foundation also encourages more street children to go back to the mainstreameducational system. It also provides medical and dental services to the underprivileged.Having seen the need to improve the quality of life of residents in their host communities,the Foundation and Aboitiz Group companies continue to implement a variety of projectsto help address these concerns.The Foundation has sofar donated π7 millionfor 18 water systems thatbenefit 2,810 householdsin different marginalizedcommunities in Cebu,Davao and Iligan.Water systemsWater is a basic necessity not readily available to everyone. Hence, the Foundation hasmade the building of water systems the flagship project in the area of primary health andchildcare.The Foundation has so far donated π7 million for 18 water systems that benefit 2,810households in different marginalized communities in Cebu, Davao and Iligan. Most ofthese water systems are Level 3, which means water is piped directly into the individualhouseholds.A vital area of focus of theFoundation is primary health andchild care. Each year, medicalequipment and facilities andwater systems are donated tohost communities nationwide.In 2009, the Foundation began the construction of a water system for the residents ofBarangay Mulao, Liloan. Due for turnover in October 2010, the system will benefit 150households.The Foundation is currently identifying more communities where reliable water connectionsare needed.Donation of Medical EquipmentIn order to improve the medical and dental services provided in certain communities, theFoundation donates a starter set with basic medical and/or dental equipment which poorerPrimary Health and Child Care

16 ABOITIZ FOUNDATIONcommunities cannot obtain on their own. In 2009, the Foundation donated assorted dentaland medical equipment worth π1 million to seven health centers.Medical and Dental MissionsAboitiz Group companies, through the Foundation, implement medical and dental missionsaiming to make health services available to their host communities.AboitizPower subsidiary Hedcor, Inc., Pilmico Animal Nutrition Corp. and Pilmico FoodsCorp. regularly conduct medical missions in their areas of operations.The Foundation’s goalis to bring at least20% of the streetchildren to get aformal education thefollowing school year.In 2009, 10 dental and medical missions were conducted nationwide.Street Education ClassesThe Foundation hopes to eventually see more children learning in classrooms than roamingthe streets.By holding non-formal education sessions under the Street Education Classes program, theFoundation and the Children of Cebu Foundation aim for street children to be motivated togo to school. The Foundation’s goal is to bring at least 20% of these children to get a formaleducation the following school year.The Foundation supports 250 street children annually by giving them street educationclasses. In 2009, these classes were conducted in six urban centers in Metro Cebu. Asidefrom these non-formal education, the children were also given bags and other educationalsupplies to use in their classes.Aside from donating equipmentand water systems, theFoundation also counts medicaland dental missions and streeteducation classes as part of itsprograms to promote primaryhealth and child care.

ANNUAL REPORT 2009 17EMPLOYEE-INITIATED CSR PROJECTS AND OTHER INTERVENTIONSEmployees of Aboitiz Group companies initiate CSR projectsthat complement the Foundation’s program.

18 ABOITIZ FOUNDATIONEMPLOYEE-INITIATED PROJECTSMore and more team members in the Aboitiz Group embrace CSR as a part of theirworking experience. Hence, it has become an integral part of the Aboitiz employerbranding initiative. Every year, an increasing number of employees volunteer indifferent community projects.In 2009, employees of the Aboitiz Group held simultaneous CSR activities nationwide.They participated in the groupwide tree-planting activities, and Brigada Eskwela andAdopt-a-School programs. They also conducted outreach programs and volunteeredin disaster relief operations.Tree plantingThe Foundation and Aboitiz Group companies undertake projects that promoteenvironmental awareness and protection. One of these projects is the annual treeplanting, where employees plant seedlings of forest and fruit-bearing trees in selectedareas.In 2009, over 1,800 team members groupwide planted 26,350 seedlings in three areas.Christmas Outreach ActivityTo give the Christmas season more meaning by giving instead of receiving, teammembers treated 2,180 underprivileged kids from all over the country where Aboitizcompanies operate to a day of fun, games, food and gifts. The Christian LightFoundation, which has been the Foundation’s partner in all Christmas outreachactivities nationwide, donated assorted gifts packed in real shoeboxes.More than a thousand team members took time out to let the children experience theChristmas spirit.Team leaders and team members of differentAboitiz Group companies regularly conducttree planting and outreach activities as partof their programs to promote corporate socialresponsibility.Employee-Initiated Projects

ANNUAL REPORT 2009 19Disaster ReliefNever is volunteerism among team members in the Aboitiz Group more evident thanduring disaster relief operations; they immediately heed calls for help in times when theyare needed most.In 2009, team members across the country banded together to donate and gather reliefgoods for distribution to victims of typhoons Ondoy and Pepeng, which left a huge part ofLuzon inundated and thousands of families homeless.With funds mobilized from across the Group, through the efforts of Aboitiz familymembers, Aboitiz Group companies and the Foundation, a total of π15 million in assistance— food items, basic necessities and transport—was provided to the typhoon victims.Toward the end of the year, residents of Albay province who had to evacuate amid thelooming eruption of Mayon Volcano also received similar assistance.Brigada EskwelaFor two consecutive years now, Aboitiz team members nationwide have been participatingin Brigada Eskwela, a program of the Department of Education aimed at helping repair andmaintain public schools before the June opening of classes.The Foundation team quickly responds topleas for help from victims of disastersand calamities, giving out relief goods andproviding other forms of assistance asneeded.When opening of classes nears, Aboitizteam members clean up and refurbishschools in their host communities as part oftheir outreach activities.In 2009, a total of 462 employees from different Aboitiz Group companies participated inBrigada Eskwela. They repaired broken chairs and desks, repainted classrooms, spruced upgardens, cleaned computers and replaced defective lights, among others.Adopt-a-SchoolThe Adopt-a-School outreach program implemented in Cebu is an employee-initiatedprogram that provided assistance to Banilad Elementary School and Banilad Night HighSchool through projects meant to uplift teachers’ competencies.A π1 million allocation was released for eight training modules to assist students andteachers of the two schools to improve their Math, English, Science and vocational skills.Equipment and books were also donated to the school.

20 ABOITIZ FOUNDATIONCORPORATE DONATIONS AND OTHER INITIATIVESThe Foundation also extends corporate donations and other forms of assistanceto both government and non-government organizations (NGOs) operating in theirrespective areas.For 2009, a total of π13 million in donations was given out.Support to LGUsThe Foundation recognizes that local government units (LGUs) and governmentagencies also need assistance to successfully implement different projects.In 2009, the Foundation gave out π1 million for infrastructure projects, equipment andsupplies for various LGUs.Support to Foundations, Promotion of Arts & CultureThe Foundation recognizesthat local government unitsand government agenciesalso need assistance tosuccessfully implementdifferent projects.The Foundation also donatesto groups and entities withnoteworthy causes.Promoting culture, arts and religion and supporting the cause of NGOs are among theadvocacies that the Foundation supports.The companies released π2 million in financial support to the Sinulog Foundation, Inc.,Cebu Arts Foundation, NGOs and religious groups, among others.Sports-related DonationsSupporting sports and other related activities is something that the Foundation andthe companies strongly advocate.A total of π1 million was donated last year to the Aboitiz Football Cup, Kiddie ChessTournament and to the Aboitiz Soccer Field.Corporate Donations and Other Initiatives

ANNUAL REPORT 2009 21EnvironmentThe Foundation and Aboitiz Group companies have always been proactive in responding tocalls to take a step further in environment conservation efforts. In fact, environment will soonbecome a major program component of the Aboitiz Foundation. Whatever benefits gained insupporting this advocacy will be beneficial to this generation and beyond.The succeeding table details the assistance that the Foundation was able to give out in 2009.Table 6 - Corporate Donations (in thousand pesos)PARTICULARSAMOUNTEnvironment will soonbecome a major programcomponent of the AboitizFoundation. Whateverbenefits gained insupporting this advocacywill be beneficial to thisgeneration and beyond.Arts & Cultureπ214Donations to NGOs, foundations, etc. 2,885Affiliations/information dissemination 547Sports-related donations 1,238Support to LGUs and other agencies 1,081Disaster relief 4,675Environment 620Employee-initiated projects 1,622TOTAL π12,881With environment becoming theFoundation’s fourth key area of focus,more activities are conducted yearly tohelp slow down climate change.

22 ABOITIZ FOUNDATIONOTHER COMPANY INITIATIVESFor the Foundation and Aboitiz Group companies, their host communities are their partnersin development. With this mindset, it is imperative for them to take care of the localcommunities where their business units operate.Aside from donations and projects implemented in coordination with the Foundation, thesecompanies directly fund social development initiatives that address the needs in theirrespective areas of operations.In 2009, the companies donated π337 million to implement these initiatives in theircommunities. This is in addition to the projects that they coursed through the Foundation.Noteworthy is the donation of Tsuneishi Heavy Industries (Cebu), Inc., the shipbuildingcompany of the Aboitiz Group, which donated π270 million or 80% of the total amountfor various projects in different barangays in Balamban, Cebu. The amount was spent toconstruct and rehabilitate infrastructure projects like schools, markets and water systems.Educational materials and other equipment were also donated and financial assistance givento different sectors.Aboitiz Group companiespartner with organizations forthe development of their hostcommunities, like this Universityof San Jose-Recoletos (USJR)Balamban campus built throughan industry-academe partnershipbetween Tsuneishi Heavy Industries(Cebu), Inc.and Cebu Industrial ParkDevelopers, Inc. with USJR.Other Company Initiatives

ANNUAL REPORT 2009 23Below is the summary of programs and projects implemented by Aboitiz Group Companies in 2009:(in thousand pesos)COMPANY PROJECT AMOUNT TOTALGroup-wide PBSP contributions π1,535 π1,535HOLDING COMPANYAboitiz EquityVentures, Inc.POWER GROUPHedcor Inc.Davao Light& Power Corp.Cotabato Light& Power Corp.Subic EnerzoneCorp.SN AboitizPower, Inc.Luzon Hydro Corp.STEAG StatePower, Inc.Projects on Education Scholarship 1,069 1,069Projects on Education:Equipment DonationScholarshipProjects on Health concernsProjects on EnvironmentalconcernsAssistance to communitiesInfrastructure Projects inpartnership with LGUsProjects on EducationScholarshipStreet Lighting ProjectRural ElectrificationEquipment Donations forCommunitiesProjects on EnvironmentalConcernsDisaster Relief OperationsAssistance to CommunitiesProjects on Education:InfrastructureEquipment DonationEnterprise DevelopmentProject on Health ConcernsProjects on EnvironmentalConcernsEquipment DonationInfrastructure Projects inpartnership with LGUsEquipment Donations forCommunitiesProjects on Education:InfrastructureEquipment DonationScholarshipEnterprise DevelopmentProjects on Health ConcernsProjects on EnvironmentalConcernsInfrastructure projects inpartnership with LGUsEquipment Donations forCommunitiesAssistance to CommunitiesProjects on Education:Equipment DonationAlternative Learning SystemEnterprise DevelopmentProjects on Health ConcernsAssistance to Communities129431252528 5572,041938 2,9781,03742614 1,4773010815 1544733,2202,7051,6984472005,4984,414 18,6534,7944664321,0005653004,3852581,775 13,976580150750600620 2,700COMPANY PROJECT AMOUNT TOTALEast Asia UtilitiesCorp.Cebu EnergyDevelopment Corp.Western MindanaoPower Corp.SouthernPhilippines PowerCorp.Projects on Education:Equipment DonationProjects on Health ConcernsProjects on EnvironmentalConcernsInfrastructure projects inpartnership with LGUsDisaster Relief OperationsAssistance to CommunitiesProjects on Education:ScholarshipEducational Support forStudentsProjects on Health ConcernsProjects on Education:InfrastructureEquipment DonationScholarshipTeacher TrainingEducational Support forStudentsAlternative Learning SystemProjects on Health ConcernsAssistance to CommunitiesProjects on Education:InfrastructureEquipment DonationScholarshipTeacher TrainingEducational Support forStudentsAlternative Learning SystemEquipment Donations forCommunitiesAssistance to Communities15253020586553 73444512015 5801,650509134801024104142 2,6539048401,0061329315537 2,916San FernandoElectric Light andPower Company Assistance to communities 402 402BANKINGUnion Bank of thePhilippinesOthersTsuneishi HeavyIndustries (Cebu),Inc.Projects on Education:Equipment DonationDisaster Relief OperationsSupport to other foundationsand groupsProjects on Education:InfrastructureEquipment DonationEquipment Donation forCommunitiesDisaster Relief OperationsAssistance to Communities12,0002,000950 14,950266,0971,2562,518512170 270,554GRAND TOTAL π336,915Cebu Private PowerCorp.Projects on Education:Equipment DonationScholarshipEnterprise DevelopmentProjects on Health ConcernsProjects on EnvironmentalConcernsInfrastructure projects inpartnership with LGUsEquipment Donations forCommunitiesDisaster Relief OperationsAssistance to Communities39969948693243429 1,028

24 ABOITIZ FOUNDATIONFEATURESGroup bands together for Ondoy and Pepeng victimsA team’s quick and efficient response to calls for help is usually tested in the aftermath ofa natural calamity.For the Aboitiz Group team, the test came in the morning of Sept. 26, 2009 when typhoonOndoy left a major part of Luzon inundated; many cities and towns “sank” as a result ofbacked up water, swollen rivers and a Laguna de Bay bursting at the seams.Ondoy’s onslaught claimed hundreds of lives, left hundreds of thousands of peoplehomeless and destroyed millions worth of property.It was a weekend then but the daunting task that presented itself when evening camesignaled that it was time to work.The Aboitiz Foundation immediately released P1 million in relief goods for distribution todifferent evacuation centers. The total amount released eventually reached P15 million,thanks to the generosity and concern of companies in the Aboitiz Group as well as Aboitizfamily members in the Philippines and abroad.On the field, the Durian warehouse of 2GO was mobilized as receiving, sorting and releasingpoint for Aboitiz relief goods. Volunteers from various companies selflessly heeded the callfor help and showed up to do the myriad tasks of stacking, unpacking, measuring, packing,and counting in true 2GO fashion. At best, the team was able to release 7,310 relief bagsin one day!The relief bags themselves were noteworthy because they were reusable and recyclable.In line with the Group is concern for the environment and sustainability, the AboitizFoundation opted to use bags made of sturdy bonded non-woven material. The generalcomment was that our bags were coveted for the completeness of the contents.Barely two days after Ondoy, the relief team delivered a first batch of 629 packed bags ofrelief goods to the Department of Social Welfare and Development. More than 56,000 bagsmade their way to the Red Cross, Gawad Kalinga, Ateneo de Manila as well as to variousaffected local government units and schools in Marikina, Pasig, Cainta, Taguig, Pateros andLaguna.“I’m so proud of the way we have managed to raise funds so quickly and deployed the firstbatch of packed goods by Monday afternoon, the first working day after the floods. Mythanks to all the benefactors and to all those who volunteered their time and effort,” saidAEV Chairman Jon Ramon Aboitiz.Team members of business units across the country—2GO, AboitizPower, SuperFerry,City Savings Bank, Visayan Electric Co., Davao Light, Hedcor, and SN Aboitiz Power—wereeventually tapped when more hands were needed to hasten the acceptance of donationsand distribution of relief goods.“The response has been nothing but overwhelming. It is such an inspiration. Out of a diresituation, the best of our Group has come forth,” said Aboitiz Foundation EVP & ManagingTrustee Sonny Carpio.Indeed, like sticks in a bundle that are unbreakable, the Group has once again proven thatno task is daunting enough not to be accomplished if everyone works together as a team.Aboitiz Group team members are not one toback down when faced with a challenge asdaunting as immediately helping thousands lefthomeless by the fury of typhoons Pepeng andOndoy.Features

ANNUAL REPORT 2009 25Coops empower two upland communitiesMost multi-purpose cooperatives are born out of the need not only to generate income for itsmembers but also ensure an organization’s growth through the successful implementationof sustainable activities.It is also for these reasons that cooperatives approach organizations and ask them forassistance, financial or otherwise, in implementing various projects.In 2009, the Aboitiz Foundation, Inc. granted a total of 21 loan packages to 17 cooperativesin Metro Cebu to either jumpstart identified projects or ensure the continuity of existingones. These loan packages cost a total of π10 million.Officials of two of these cooperatives— one based in Cebu City and the other in Balambantown—say they chose to work with the Foundation, confident of the lasting benefits theywill gain from the partnership.For an organization as small as the Pung-ol Sibugay Multi-Purpose Cooperative, theP130,000 it received from the Foundation went a long way. Its 84 members, mostlycutflower and vegetable farmers, were able to either buy fertilizer and pesticides or expandtheir plots, enabling them to increase their income.Wedelisa Gabisay, the organization’s president, says they made the right decision toapproach the Foundation for assistance.“We didn’t have to wait long to get a feedback on our loan application. What’s more isthat our members who availed of the loan said they earned more than half of their previousearnings,” Gabisay shares.In 2009, the AboitizFoundation granteda total of 21 loanpackages to 17cooperatives inMetro Cebu to eitherjumpstart identifiedprojects or ensure thecontinuity of existingones.The Foundation extends financial and otherforms of assistance to selected multipurposecooperatives nationwide to helpthese groups become self-sustaining.The much-bigger Barangay Unity Key to Integrated Development (Bukid) Multi-PurposeCooperative, on the other hand, used the π442,000 loan from the Foundation to buyplanting materials and fertilizer, and pay for labor.Bukid’s members, comprising 152 households, engage in milk and dairy production,vermiculture and abaca production, spread in over 30 hectares of land in BarangayMagsaysay, Balamban in the western seaboard of Cebu.Bukid president Jose Bebelonio Pepito says that because of the loan, the quality ofvegetables and root crops they harvest has now improved.As for the additional abaca stalks they planted, Pepito says it will take two years for theseto grow. But once fully grown, harvesting of abaca fibers can be done every three months.Both Gabisay and Pepito say that benefits gained by their members in choosing theFoundation as their partner have done more than just increase their yield. The partnership,they share, has given them the opportunity to grow as an organization and help more peoplehelp themselves.

26 ABOITIZ FOUNDATIONBOARD OF TRUSTEESErramon I. AboitizChairmanJon Ramon AboitizPresidentAugusto P.I. Carpio IIIManaging TrusteeRoberto E. AboitizTrusteeBoard of Trustees

ANNUAL REPORT 2009 27Xavier J. AboitizTrusteeJaime Jose Y. AboitizTrusteeRoman S. RonquilloTrusteeStephen G. ParadiesTrusteeSebastian R. LacsonTrustee

28 ABOITIZ FOUNDATIONEXECUTIVE COMMITTEEXavier J. AboitizJon Ramon AboitizRoman S. RonquilloAugusto P.I. Carpio IIISebastian R. LacsonExecutive Committee

ANNUAL REPORT 2009 29CORPORATE STAFFDanny CerenceRowena Astillo Carnet Sasuman Jowelle Ann Cruz Elena Carnacer Geraldine dela SernaAlex LauronNot in photo Fred BaykingCorporate Staff

30 ABOITIZ FOUNDATIONAboitiz Group CSR InitiativesAs of December 2009 (in thousand pesos)Projects UndertakenAmount AllocatedABOITIZ FOUNDATION, INC.EDUCATION/SKILLS TRAINING/CULTUREUNRESTRICTED FUNDSInfrastructureAboitiz Foundation,Inc.Construction of 3-storey,3-classroom School Building of Maguikay NHS π881AboitizLand,Inc.Repairs for Mabolo e-skwela Center 500Aboitiz Construction Group-MetaphilConstruction of New Classroom for Kindergarten: Arpili Elementary School 808Pilmico Foods CorporationSupplemental Budget for the Construction of a 2-classroom School Building 300Construction of 2-classroom building complete w/tables and chairs 1,300Construction of Dalipuga School Building Project-Additional Fund 350Cotabato Light and Power CompanyRefurbishment of 2 classrooms of Sultan Kudarat NHS w/arm chairs 330Davao Light and Power CompanyConstruction of 3-room School Building in F. Bustamante Mahayag 1,430Construction of 3-room School Building in Tulalian NHS 1,430Construction of Library Hub for the 3rd District of Davao City 750Construction of Science Lab 1,446Mactan EnerzoneConstruction of Prep-Elem School Building 455Visayan Electric CompanyContruction of School Building - Langtad Elementary School, Naga City, Cebu 2,148Classroom Repairs -Jagobiao Elementary School, Mandaue City 788Hedcor Inc.Construction of One (1) Unit 1 -class room building inBarangay Catalunan Pequeño, Talomo District, Davao City 335Scholarship/Financial AssistanceAboitiz Foundation,Inc.An Aboitiz Foundation Comprehensive Scholarship Program 3,200Interventions in Education 500Pilmico Foods CorporationRegular College Scholarship for Mindanao State University,Iligan Institute 320Purposive Scholarship for MSU-IIT Iligan City, Central Mindanao University 434Pilmico Animal Nutrition CorporationScholarship for Highschool and College Scholarship Programfor 2HS and 7 College Students in Capas,Tarlac 146Cotabato Light and Power CompanyFinancial Assistance - Supporting Valedictorian Studentsin their Secondary Education In Public HS 60CLPC Customer’s Dependents Scholarship 150Davao Light and Power CompanyScholarshipfor High School Valedicatorians 495Scholarship for Customer Dependents 1,208Financial Assistance for Boys Town 150Financial Assistance - Indigeneous Subsidy 100Visayan Electric CompanyCustomer’s Dependents Scholarship 505Hedcor Inc.Financial Assistance for High School 188College Scholarship 120Financial Assistance for Out of School Youth 121Additional one(1) college scholar for Hedcor Inc., Davao 41Aboitiz One,Inc.Scholarship - 2 Go Supply Chain 1,075Aboitiz Jebsen Bulk Transport CorporationMarine Engineering Scholarship Program 670AJMAN Nursing Scholarship Program 330Skills TrainingAboitiz Construction Group-MetaphilSkills Training - MTII Reimbursement (June-December 2008) 806Skills Training - MTII Reimbursement (Jan-June 2009) 491Skills Training - MTIIT Reimbursement (July-December 2009) 643Davao Light and Power CompanyDLPC-AFI Skills Development for Physically-Challenged 100DLPC-AFI Support to the enhancement ofScience and Technology Learning of HS Students in Davao City 250Financial Assistance - Outland Adventure Camp 483ComputerizationAboitiz Foundation,Inc.Donation of 25 Computer Units to Public Schools w/in focus Area 450Computer Repairs 29IT Training & Competency Program for Teachers 200Aboitiz IT Trainors Group 50Pilmico Foods CorporationComputer Donation - 5 units to Luinab Elementary School 150Computer Repairs & Refurbishments - Northeast II-A Central School,Severo Sara ES & Luinab ES 150Computer Inter School Competition 20Balamban EnerzoneComputer Donation - Buanoy NHS 615Cotabato Light and Power Company5 sets of computer w/printer to Police Offices situated within the franchise area 125Davao Light and Power CompanyEquipment Donation - Computers in Davao City 675Visayan Electric CompanyComputer Donation to Talamban Elementary School 311Hedcor,Inc.Computer Donation 132Computer Repairs & Maintenance 483 units Computer Donation for Catalunan Pequeno NHS in Davao City 81Aboitiz Energy SolutionsDonation of 6 computer sets each for 2 Schools in Agusan del Sur 150Donation of 6 computer sets each for 2 Schools in Agusan del Norte 150City SavingsComputerization project 166Employee-Initiated ProjectsAboitiz Foundation,Inc.Brigada Eskwela - AEV 56Pilmico Foods CorporationBrigada Eskwela 50Pilmico Animal Nutrition CorporationBrigada Eskwela 55Aboitiz Power CompanyBook Donation,Banilad NHS 36Learning about Learning: A Worshop Series for Teachers,Banilad NHS 37Public Speaking & Presentation Skills Training.Banilad NHS 64SciMathics Club in Action 90Project BART (Becoming A Responsible Teenager) 96A Future for Our Teachers: A Cooperative Livelihood Program for Banilad ES PTA 107Project LEAD: A Leadership Skills and OrganizationManagement Development Program 123Livelihood & Entrepreneurial Skills Project for NHS Students 334Brigada Eskwela 240Visayan Electric CompanyEducational Upliftment -Lataban Elementary School 554Equipment and Book DonationsAboitiz Foundation,Inc.Upgrading of Electrical System in Banilad ES 370AboitizLand,Inc.Library Kit Donation for Don Calixto C. Yongco Tawason ES 100Aboitiz Construction Group-MetaphilDonation of Training Materials for Subangdaku Vocational HS Test Plates 87Pilmico Foods CorporationAcquisition of Science Lab Apparatus 200Pilmico Animal Nutrition CorporationLibrary Kit Donation in 2 Public Elementary School in Capas,Tarlac 170Library Kit Donation in High School in Capas, Tarlac 100Library Refubishment in 1 Public Elementary School in Capas Tarlac 130Visayan Electric CompanyUpgrading of Electrical System in Florencio Urot MHS 423Aboitiz One,Inc.Adopt A School - Sustaining Activities 300Support to TeachersPilmico Foods CorporationFinancial Assistance to 2 Kindergarten teachers and 1 Nursery Teacherof Severo Sara Memorial 143Financial Assistance to 3 Computer Teachers 234Hedcor,Inc.Teacher Training for Elementary School Teachers 75Honorarium for Computer Teachers 100OthersPilmico Foods CorporationFinancial Assistance to Day Care Center of Tag-ibo,Iligan City 100Financial Assistance to Refresher course/Summer Classesfor Northeast II - A Central School and Sara Memorial School 70Educational Enhancement Program 500Pilmico Animal Nutrition CorporationBrainshow 2009 130Brainshow 2009 - Additional Funds for Public ES in Capas,Tarlac 70Aboitiz Power CompanyAdopt-a-school Launching 65Balamban EnerzoneAdopt A School - Career Orientation & Environmental Awareness 25Sub-Total - Unrestricted 34,573RESTRICTED FUNDSAOA Educational fundsScholarship Program 2,502STEC Scholarship 2009 281Iker Aboitiz FundScholarship Program 72SGP FundScholarship Program 32Luzon Hydro CorporationScholarship Program 428Pilikao FundsElementary School Building Repair in Luz Banzon and Solano 418PKL High School Scholarship Program 140Sub-Total - Restricted 3,873Community Relation Projects

ANNUAL REPORT 2009 31ENTERPRISE DEVELOPMENTUNRESTRICTED FUNDSGrantAboitiz Foundation,Inc.Capability Building Training Program for Exisitng Coop Partners 229AboitizLand,Inc.Livelihood Training on Culinary Arts 30Pilmico Animal Nutrition CorporationAdditional Irrigation Equipment for the Neighboring Farmersof FFI Farms for the Farmers from Sitio Gullman,Brgy.Sto. Rosario(Nucleus Farm)& Sitio Kawili-wili,Brgy. Cut-cut,Capas,tarlac(Farm3) 117MicrofinanceAboitiz Foundation,Inc.South Cebu Hog Raisers 900South Cebu Hog Raisers 1,800Reunited Shoemakers Coop 500Mactan Island Coop 223KABAMEKA 400KABAMEKA 100Cubacub Level 3 Supply Expansion Project(ACCESS,Inc.) 500Uling MPC Swine Fattening Project 509Cambinocot MPC Livelihood 765Purok Sili Livelihood Development Project 100Pung-ol Sibugay Cutflower and Vegetable Production Project 130LARBA Swine Fattening Project 191Panas Farmer’s Association Swine Fattening Project 191Livelihood Enhancement and Support Services for Brgy. Luz Homeowners 410Pangan-an Island Cooperative for Community DevelopmentSwine Fattening Projects 341Mandaue Subcon and Development MPC 279Sta. Rosa Hugpong Kauswagan MPC 186St. Vincent Neighborhood MPC Meat Processing 1,148St. Vincent Neighborhood MPC Meat Processing 500Cobcawa MPC Swet Corn Production 160Bayabas United Farmers Association (BUFA) Farm Productivity Project 127Sub-Total - Unrestricted 9,836PRIMARY HEALTH AND CHILD CAREUNRESTRICTED FUNDSAboitiz Foundation,Inc.Street Education Class 2009 211Water System - Mulao Liloan Water System Project 495Pilmico Foods CorporationMedical Mission at Brgy.,Dalipuga,Donald Moraza Park MPC Building 200Pilmico Animal Nutrition CorporationAstig Ka Boy!(Free Circumcision) to all Residents ofBrgy. Sto. Rosario,Capas,Tarlac 39Ngiting Kumukutitap (Dental Mission) to theResidents of Brgy.,Aranguren,Capas,Tarlac 35Isang Malinao na Pasko (Free Eye Check-up & Eyeglasses) to10 students per school from selected public Elementary Schools in Capas,Tarlac 36Subic EnerzoneAdopt An Ambulance 100Mactan EnerzoneWater System - Repair of Water System in Agus Elementary School 74Hedcor,Inc.Medical Missions 336Donation of GI Pipes for the Rehabilitation of Amsalsal Water System 27Installation of Ceilling Wall for Banengbeng Day Care Center 28Construction of One (1) Unit 1-room conventional comfort room forBrgy., Mintal Health Center,Brgy.,Mintal Tugbok District,Davao City 52Sub-Total - Unrestricted 1,633RESTRICTED FUNDSConstruction of Proposed Feeding Center,Mabini 4,284Rogationist Seminary 16Justice Peace Integrity of Creation Integrated Dev. Center 600A. O Aboitiz Donations 324Cebu Hope Center 1,020Don Bosco Boys Home 600Philippine National Red Cross 60Sisters of the Sacred Heart of Jesus and Mary 360Missionaries of Charity c/o A.O.Aboitiz 300Missionaries of Charity 24Good Shepherd c/o Luis Ugarte Fund 17Bishop Juan De Dios Pueblos 2,000We Do Recover, Inc. 10Medical and Dental Outreach Program 160Iron for Banilad Elementary School 42Sub-Total - Restricted 9,817AFFILIATION AND INFORMATION DISSEMINATIONUNRESTRICTED FUNDSAboitiz FoundationPhilippine Council for NGO Certification 2Philippine Council for NGO Certification - sponsorship 50League of Corporate Foundations 25League of Corporate Foundations - CSR Expo 2009 100League of Corporate Foundations - CSR Expo 2009 56Association of Foundations 80Annual Report 2008 260Ramon Aboitiz Foundation,Inc (ALEX) 20Coalition for Better Education 16Sub-Total - Unrestricted 609CORPORATE AND OTHER DONATIONUNRESTRICTED FUNDSSupport to LGUsAboitiz Foundation,Inc.Mabolo Police Station Signage Repair 282 units 20 ft. Container Vans for the Mactan Bridge & Marcelo B. Fernan Bridge 120Pilmico Foods CorporationAssistance to Dalipuga Fire Department 100Assistance to Canaway Garbage Dump Site 100Donation to Hospital Equipment 200Community Peace and Order in Dalipuga,Iligan City 180Calamity Fund 100Hedcor,Inc.Computer Donation-2 Barangays 50Subic EnerzoneConstruction of Police Guard 331Disaster Relief OperationsAboitiz Foundation,Inc.Disaster Relief - Typhoon Ondoy 6,382Fabrication of Aboitiz Foundation Ecobags 200Umapad Mandaue City Relief Goods for 693 Families (Fire Victims) 150Support to other NGOs and GroupsAboitiz Foundation,Inc.Sinulog Foundation 2009 100Sinulog Foundation 2010 100PBSP - Olango Challenge:Swim for A Cause 50Boy Scout of the Phils. 20Association of Foundation 50Cebu Arts Foundation 14Junior Achievement of the Philippines Foundation 30Annual Benefit Lunch - Children’s Hour Phils. 15First Gentleman Foundation,Inc. 1,000Cebu Metropolitan Cathedral 500Pilmico Foods CorporationGawad Kalinga in Kiwalan,Iligan City 150Church Repairs of San Roque Church in Tag-ibo,Dalipuga,Iligan City 100EnvironmentAboitiz Foundation,Inc.Festival of Trees 100Aboitiz Group Reforestation Site Maintenance Project 30Davao Light and Power CompanyPunta Dumalag Regreening Project 225Hedcor,Inc.Orientation on Saving the Rivers Through Proper Waste Disposal 59Cleanest & Greenest ES 45Employee - Initiated projectsAboitiz Foundation,Inc.Cebu Christmas Outreach 2009 50Makati Christmas Outreach 2009 40AboitizLand,Inc.Aboitiz Groupwide Tree Planting 42Chistmas Gift Giving Activities in Talisay City and Gabi,Cordova 200Pilmico Foods CorporationGift Giving Activities 150Mangrove Reforestation 35Tree Planting Activity 50Pilmico Animal Nutrition CorporationTree Planting 2009 in Sitio Kawili-wili,Brgy. Cut-Cut II Tarlac 40Aboitiz Power CompanyAboitiz Groupwide Tree Planting - Metro Manila 467Aboitiz Groupwide Tree Planting - Metro Cebu 498Sports-related ProjectsAboitiz Foundation,Inc.Aboitiz Football Cup - Cebu Football 2009 690Amortization for Aboitiz Sports Field 500AboitizLand,Inc.Kiddie Chess Tournament 48Other DonationsAboitiz Foundation,Inc.Cebu Media Party 30Cotabato Light and Power CompanyContingency Fund to Support other Possible Projects 50Davao Light and Power CompanyDiscretionary Fund 1,000Sub-Total - Unrestricted 14,419RESTRICTED FUNDSFirst Gentleman Foundation, Inc. 4,000Christian Light Foundation,Inc. 150Disasters Relief-Typhoon Ondoy-SGP 50Sub-Total - Restricted 4,200TOTALSUNRESTRICTED FUNDS 61,070RESTRICTED FUNDS 17,890Sub-Total - Aboitiz Foundation 78,960OTHER COMPANY INITIATIVES(see table on p.22) 336,915TOTAL CSR FOR THE ABOITIZ GROUP 415,875

32 ABOITIZ FOUNDATIONThe Year 2009 in Figures and GraphsAboitiz Group CSR Initiatives (including Aboitiz Foundation)Cotabato1%Manila3%Benguet4%Isabela4%Davao4%Misamis1%Zamboanga1%Manila3%Benguet4%Isabela4%Iligan NationwideIligan NationwideSaranganiSarangani 1% 4%1% 4% SubicSubic1% Zamboanga1%0% Pampanga0%1%Pampanga0%0% TarlacMisamisTarlac0%1%0%Cotabato1%Davao4%Cebu76%Cebu76%Corporate andCorporate andOther DonationsOther Donations12%12%Affiliation andAffiliation andInfo. disseminationInfo. dissemination0%0%Primary HealthPrimary Healthand Child Careand Child Care4%4%EnterpriseDevelopmet3%EnterpriseDevelopmet3%Education81Education81Per locationCebuDavaoCotabatoSubicIsabelaBenguetMisamisZamboangaSaranganiPampangaManilaIliganTarlacNationwideTotalCebuDavaoCotabatoSubicIsabelaBenguetMisamisZamboangaSaranganiPampangaManilaIliganTarlacNationwideTotalCebuDavaoCotabatoSubicIsabelaBenguetMisamisZamboangaSaranganiPampangaTotal318,015,35114,886,0582,251,573585,08218,653,25915,732,9002,700,0152,652,6202,915,764401,57114,153,0005,886,0001,068,000ManilaIliganTarlacNationwide15,974,000Total415,875,193Total318,015,351TOTAL14,886,058π318,0152,251,573585,08218,653,259 14,88615,732,900 2,2522,700,0152,652,620 5852,915,764 18,653401,57114,153,00015,7335,886,000 2,7001,068,00015,974,0002,6532,916415,875,19340214,1535,8861,06815,974π415,875Per program componentTotalEducationEducation336,065,514Enterprise DevelopmetEnterprise Developmet Developmet 14,300,250Primary Health and Child CarePrimary Health and Child Care 14,680,747Primary Health AffiliationAffiliation and Info. disseminationand Info. Child dissemination609,000 CareCorporate and Other DonationsAffiliation Corporate and Other and Donations Info. 50,219,682dissemination415,875,193Corporate and Other DonationsTotalTotal336,065,51414,300,25014,680,747609,00050,219,682415,875,193TOTALπ336,06514,30014,68160950,220π415,875Aboitiz Foundation, Inc.Corporate andOther Donations23%Affiliation andInfo. dissemination1%Primary Healthand Child Care15%Education49%EnterpriseDevelopmet12%Per locationPer program componentTOTAL PER PROGRAM COMPONENTCebuIliganCotabatoDavaoTarlacBenguetManilaOtherstotalTOTALπ43,9505,68671510,2511,0681,75714,0781,455π78,960Affiliation andInfo. dissemination1%Primary Healthand Child Care3%EnterpriseDevelopmet16%Corporate andOther Donations23%EducationEnterprise DevelopmentPrimary Health and ChildcareAffiliation and InfoDisseminationEducation57%Corporate and OtherDonationsTotalTOTALπ38,4469,836Affiliation andInfo. dissemination0%11,450Primary Healthand 609 Child Care5%18,619π78,960Corporate andOther Donations23%EnterpriseDevelopmet0%Education22%2009 Figures and GraphsUNRESTRICTED PER PROGRAM COMPONENTRESTRICTED PER PROGRAM COMPONE

ANNUAL REPORT 2009 33INDEPENDENT AUDITOR’S REPORTThe Members and the Board of TrusteesABOITIZ FOUNDATION, INC.(Formerly, Aboitiz Group Foundation, Inc.)(A Non-Stock, Non-Profit Organization)Aboitiz Corporate CenterGov. Manuel A. Cuenco AvenueCebu CityWe have audited the accompanying financial statements of ABOITIZFOUNDATION, INC. (Formerly, Aboitiz Group Foundation, Inc.), which comprisethe statements of financial position as at December 31, 2009 and 2008, andthe statements of comprehensive income, statements of changes in equityand statements of cash flows for the years then ended, and a summary ofsignificant accounting policies and other explanatory notes.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation ofthese financial statements in accordance with Philippine Financial ReportingStandards. This responsibility includes: designing, implementing andmaintaining internal control relevant to the preparation and fair presentationof financial statements that are free from material misstatement, whetherdue to fraud or error; selecting and applying appropriate accounting policies;and making accounting estimates that are reasonable in the circumstances.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statementsbased on our audits. We conducted our audits in accordance with PhilippineStandards on Auditing. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurancewhether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the financial statements. The procedures selecteddepend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the entity’s preparationand fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the entity’s internal control.An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.OpinionIn our opinion, the financial statements present fairly, in all material respects,the financial position of ABOITIZ FOUNDATION, INC. (Formerly, Aboitiz GroupFoundation, Inc.) as of December 31, 2009 and 2008, and of its financialperformance and its cash flows for the years then ended in accordance withPhilippine Financial Reporting Standards.LUIS CAÑETE & COMPANYLUIS A. CAÑETEPartnerCPA Certificate No. 6507BOA/PRC Reg. No. 0127 (Until December 31, 2010)SEC Accreditation No. 00105-AR-1 (In Process of Renewal)TIN 114-622-040, BIR AN 13-004894-1-2009PTR No. 9665242 – January 04, 2010, Cebu City___________Cebu CityABOITIZ FOUNDATION, INC.(Formerly, Aboitiz Group Foundation, Inc.)(A Non-Stock, Non-Profit Organization)STATEMENTS OF FINANCIAL POSITIONDecember 31, 2009 and 2008(Amounts Expressed in Whole Philippine Pesos)ASSETSCURRENT ASSETSCashReceivablesNote 2009 200834π2,151,538122,191,395EXHIBIT “A”π1,299,75668,805,045Total Current Assets 124,342,933 70,104,801NON-CURRENT ASSETSReceivables - non currentportionHeld to maturity investmentsAvailable for sale investmentsOffice furniture and equipmentOther assetsTrust funds4-536,000,0006 41,224,645789 1,150,717570,93044,821,020552,000-23,204,422414,3841,584,29028,901,391Total Non-Current Assets 123,767,312 54,656,487LIABILITIESAccounts payableDeferred creditsTotal LiabilitiesEQUITY (Exhibit “C”)10π5,014,00511 44,821,02049,835,025198,275,220π56,05328,901,39128,957,44495,803,844TOTAL LIABILITIES AND FUND BALANCE π248,110,245 π124,761,288(See accompanying notes to financial statements)ABOITIZ FOUNDATION, INC.(Formerly, Aboitiz Group Foundation, Inc.)(A Non-Stock, Non-Profit Organization)STATEMENTS OF COMPREHENSIVE INCOMEFor the Years Ended December 31, 2009 and 2008(Amounts Expressed in Whole Philippine Pesos)SUPPORT AND REVENUESDonations receivedDonated services InterestincomeDividend income MiscellaneousincomeEXPENSESDonations madeSalaries and honorariaInterdepartmental servicesDepreciationTraining and seminarsRentProfessional feesProduction of annual reportSupplies and materialsProject expensesCommunicationMedical and hospitalizationFuel and LubricantsLight and waterInterest expenseRepairs and maintenanceTaxes and licensesRetirement benefitsMiscellaneousEXCESS OF REVENUES OVEREXPENSES (EXPENSES OVERREVENUES)OTHER COMPREHENSIVE INCOME(LOSS)Change in fair value of availablefor sale securitiesTOTAL COMPREHENSIVE INCOME(LOSS) FOR THE YEARNote 2009 20081261314(See accompanying notes to financial statements)π166,385,849165,0002,681,4291,141,242104,126EXHIBIT “B”π66,930,098265,0002,791,0842,091,7646,000170,477,646 72,083,94676,345,4474,010,4091,558,294384,596289,984270,297244,930232,000218,475214,289175,122161,66927,082103,174101,16549,61114,218-1,525,73164,174,2493,425,9891,246,098300,787269,958280,00225,788485,200125,535257,339128,839287,061115,694112,5352,317101,66520,006281,2861,463,81586,026,493 73,104,16384,451,15318,020,223P102,471,376(1,020,217)(8,437,669)(P9,457,886)Independent Auditors’ Report

34 ABOITIZ FOUNDATIONABOITIZ FOUNDATION, INC.(Formerly, Aboitiz Group Foundation, Inc.)(A Non-Stock, Non-Profit Organization)STATEMENTS OF CHANGES IN EQUITYFor the Years Ended December 31, 2009 and 2008(Amounts Expressed in Whole Philippine Pesos)Fund BalanceUnrealized Gain(loss) onAvailable For SaleInvestment (Note 6)EXHIBIT “C”Total EquityBalance at January 01, 2008 π95,567,497 π8,199,108 π103,766,605Excess of expenses over revenuesOther comprehesive loss(1,020,217)--(8,437,669)(1,020,217)(8,437,669)Total comprehensive loss for the year (1,020,217) (8,437,669) (9,457,886)Adjustments 1,495,125 - 1,495,125Balance at December 31, 2008 P96,042,405 (P238,561) P95,803,844Balance at January 01, 2009 π96,042,405 (π238,561) π95,803,844Excess of revenues over expensesOther comprehensive incom84,451,153--18,020,22384,451,15318,020,223Total comprehensive loss for the year 84,451,153 18,020,223 102,471,376Balance at December 31, 2009 π180,493,558 π17,781,662 π198,275,220(See accompanying notes to financial statements)ABOITIZ FOUNDATION, INC.(Formerly, Aboitiz Group Foundation, Inc.)(A Non-Stock, Non-Profit Organization)STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2009 and 2008(Amounts Expressed in Whole Philippine Pesos)CASH FLOWS FROM OPERATING ACTIVITIESExcess of revenues over expenses (expenses over revenues)Adjustments forDepreciationInterest incomeDividend incomeRetirement benefits expense (unrealized pension income)MCIT written-offOperating cash flow before working fund changesDecrease (increase) in:Accounts receivableLoans receivableOther assetsIncrease in accounts payableCash provided by (used in) operationsContribution to retirement fundInterest receivedIncome tax paidπ84,451,153384,596(2,681,429)(1,141,242)(104,126)68,66780,977,619(65,779,111)12,944,7611,385,7994,957,952EXHIBIT “D”2009 200834,487,020(25,364)2,441,718(71,905)(π1,020,217)300,787(2,791,084)(2,091,764)281,28648,178(5,272,814)1,011,5681,996,775(2,325)17,013(2,249,783)(220,288)1,407,609(61,344)Net cash provided by (used in) operating activities 36,831,469 (1,123,806)CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of assetAcquisition of held to maturity investmentsCapital expendituresCash dividends received-(36,000,000)(1,120,929)1,141,24262,760-(262,182)2,091,764Net cash provided by investing activities (35,979,687) 1,892,342CASH FLOWS FROM FINANCING ACTIVITIES - -NET INCREASE IN CASHCASH BALANCE AT BEGINNING OF YEAR851,7821,299,756768,536531,220CASH BALANCE AT END OF YEAR π2,151,538 π1,299,756(See accompanying notes to financial statements)ABOITIZ FOUNDATION, INC.(Formerly, Aboitiz Group Foundation, Inc.)(A Non-Stock, Non-Profit Organization)STATEMENTS OF FINANCIAL POSITIONDecember 31, 2009 and 2008(Amounts Expressed in Whole Philippine Pesos)1. CORPORATE INFORMATIONThe Aboitiz Foundation, Inc., (the “Foundation”) is a nonstock,non-profit foundation organized under Philippine lawsin 1978 with corporate name ACO Foundation, Inc. Its articles ofincorporation was amended changing its name to Aboitiz GroupFoundation, Inc. and on May 7, 2008 to Aboitiz Foundation, Inc.The office of the Foundation is located at the Aboitiz CorporateCenter, Gov. Manuel A. Cuenco Avenue, Cebu City.The Foundation is primarily a socio-economic assistance body;as such it operates exclusively for charitable, social welfare,religious, scientific, cultural, non-formal educational, andyouth and sports development purposes.The financial statements of the Foundation as of and for theyear ended December 31, 2009 (including the comparatives forthe year ended December 31, 2008) were authorized for issueby the Board of Trustees on March 10, 2010.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANDSIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONSBasis of Preparation.The financial statements of the Foundation have beenprepared under historical cost basis modified by the fairvalue measurement of available for sale investments and arepresented in whole Philippine pesos.Statement of Compliance.The financial statements have been prepared in accordancewith the Philippine Financial Reporting Standards (PFRS).Accounting Changes.The Foundation has adopted revised PFRS, amendments toand improvements to PFRS, and Philippine interpretations asfollows:• Revised standards and amendments PFRS which have noeffect in recorded amounts but have affected presentationand disclosure of financial statements:PAS 1, “Presentation of Financial Statements” (as revised in2007) introduces terminology changes (including revisedtitles for the financial statements) and changes in the formatand content of the financial statements. It introduces a newstatement of comprehensive income that combines all itemsof income and expenses recognized in the profit or losstogether with ‘other comprehensive income’. Entities maychoose to present all items in one statement, or to presenttwo linked statements, a separate statement of incomeand a statement of comprehensive income. In addition, itrequires the presentation of a statement of financial positionas at the beginning of the earliest comparative period whenan entity restates its financial statements or retrospectivelyapplies a new accounting policy.The Foundation has opted to present all items of incomeand expenses recognized in a period in a single statementof comprehensive income. Among the other changes are theIndependent Auditors’ Report

ANNUAL REPORT 2009 35replacement of balance sheet with statement of financialposition and cash flow statement with statement of cashflows.Amendments to PFRS 7, Financial Instruments Disclosureshas expanded the disclosures required in respect of fair valuemeasurements and liquidity risk. It requires, for each class offinancial instruments measured at fair value, to be disclosedby the source of the inputs in determining fair value using athree level hierarchy. Amendments to the minimum liquidityrisk disclosures include the recording of issued financialguarantee contracts in the contractual maturity analysisbased on the maximum amount guaranteed and allocated tothe earliest date they can be drawn down irrespective of thelikelihood that the guarantees will be drawn or the amountexpected to be paid and disclosure of a maturity analysis offinancial assets that an entity holds for managing liquidityrisk. Additional disclosure on maturity analysis of financialasset is included in Note 18.• Amendments and improvements to PFRS and Philippineinterpretations with no effect in the financial statementsbut mayaffect future transactions of the Foundation:• PFRS 2, Share–based Payment–Vesting Condition andCancellations (Amendment)• Philippine Interpretation IFRIC 9, Reassessment ofEmbedded Derivatives, and PAS 39, Financial instruments:Recognition Measurement – Embedded Derivatives(Amendment)• PAS 23, Borrowing Costs – RevisedImprovements to PFRS• PAS 1, Presentation of Financial Statements.• PAS 16, Property, Plant and Equipment.• PAS 19, Employee Benefits.• PAS 23, Borrowing Costs.• PAS 36, Impairment of Assets.• PAS 39, Financial Instruments: Recognition andMeasurement.Future Accounting Changes.The following Philippine interpretations and improvements tothe standards which have been issued but are not yet effectivebut may affect future transactions of the Foundation are asfollows:Effective 2010.Philippine Interpretation IFRIC 17, Distribution on Non-cashAssets to Owners (effective for periods beginning on or afterJuly 1, 2009) provides guidance on the appropriate accountingtreatment when an entity distributes assets other than cashto shareholders either as a distribution of reserves or asdividends. It requires an entity to recognize a liability for thedistribution when it is no longer at the discretion of the entity(i.e., when shareholder approval is obtained, if required). Theliability is initially recognized at the fair value of the assets tobe distributed and is re-measured at the end of each reportingperiod and immediately before settlement. At settlement date,the difference between the carrying amount of the assets tobe distributed and the liability is recognized in profit or loss asa separate item.Improvements to PFRS (issued 2009) (effective for periods onor after January 1, 2010, unless stated otherwise)PAS 7, Statement of Cash Flows – Classification of expenditureson unrecognized assets• Only expenditure that results in a recognized asset can beclassified as a cash flow from investing activities.PAS 17, Leases – Classification of land and buildings• The specific guidance on classifying land as a lease has beenremoved so that only the general guidance remains.PAS 39, Financial Instruments: Recognition and MeasurementAssessment of loan prepayment penalties as embeddedderivatives• A prepayment option is considered closely related to thehost contract when the exercise price reimburses the lenderup to the approximate present value of lost interest for theremaining term of the host contractEffective 2013.PFRS 7, Financial Instruments, specifies how an entity shouldclassify and measure financial assets, including some hybridcontracts. This standard requires all financial assets to be:(a) classified on the basis of the entity’s business model formanaging the financial assets and the contractual cash flowcharacteristics of the financial asset; (b) initially measured atfair value plus, in the case of a financial asset not at fair valuethrough profit or loss, particular transaction costs; and (c)subsequently measured at amortized cost or fair value. Therequirements of PFRS 7 improve and simplify the approach forclassification and measurement of financial assets comparedwith the requirements of PAS 39. PFRS 7 applies a consistentapproach to classifying financial assets and replaces thenumerous categories of financial assets in PAS 39, each ofwhich had its own classification criteria. They also result in oneimpairment method, replacing the numerous impairment. TheFoundation has yet to assess the impact of the standard on itsfinancial statements.Summary of Significant Accounting Principlesa. Cash and cash equivalents.Cash includes cash on hand and in banks. Cash equivalentsare short term, highly liquid investments that are readilyconvertible to known amounts of cash with originalmaturities of three months or less and that are subject to aninsignificant risk of change in value.b. Financial assets and financial liabilities.Initial Recognition of Financial Assets and Liabilities.The Foundation recognizes a financial asset or a financialliability in the statement of financial position when theFoundation becomes a party to the contractual provisions ofthe instrument.Financial assets and financial liabilities are recognized initiallyat cost which is the fair value at inception. Transaction costs,if any, are included in the initial measurement of all financialassets and liabilities, except for financial instrumentsmeasured at fair value through profit or loss (FVPL).Financial instruments are classified as liabilities or equityin accordance with the substance of the contractualarrangement. Interest, dividends, gains and losses relatingto a financial instrument or a component that is a financialliability, are reported as expense or income. Distributionsto holders of financial instruments classified as equity areIndependent Auditors’ Report

36 ABOITIZ FOUNDATIONcharged directly to equity net of any related income taxbenefits. Financial instruments are offset when there is alegally enforceable right to offset and intention to settleeither on a net basis or to realize the asset and settle theliability simultaneously.Investments in unquoted equity instruments that do nothave a quoted market price and whose fair value cannotbe reliably measured and derivatives that are linked toand must be settled by delivery of such unquoted equityinstruments are measured at cost.All regular way purchases and sales of financial assets arerecognized on the trade date, which is the date that theFoundation commits to purchase the asset. Regular waypurchases or sales are purchases or sales of financial assetsthat require delivery of assets within the period generallyestablished by regulation or convention in the marketplace.Financial assets and financial liabilities are further classifiedinto the following categories: Financial asset or financialliability at FVPL, loans and receivables, held-to-maturityinvestments (HTM), available for sale (AFS) financial assetsand other financial liabilities. The Foundation determinesthe classification at initial recognition and re-evaluates thisdesignation at every reporting date, where appropriate.Categories of Financial Assets and Financial Liabilities.Financial asset or financial liability at FVPL.Financial assets at FVPL include financial assets classifiedas held for trading and financial assets designated uponinitial recognition as at FVPL. Financial assets are classifiedas held for trading if they are acquired for the purpose ofselling in the near term or upon initial recognition if it isdesignated by management as FVPL. Derivatives, includingseparated embedded derivatives, are also classified as heldfor trading unless they are designated and considered aseffective hedging instruments. Gains or losses on financialassets held for trading are recognized in profit or loss.Where a contract contains one or more embeddedderivatives, the entire hybrid contract may be designatedas financial asset as at FVPL, except where the embeddedderivative does not significantly modify the cash flows orit is clear that separation of the embedded derivative isprohibited.Financial assets may be designated at initial recognition atFVPL if the following criteria are met: (i) the designationeliminates or significantly reduces the inconsistenttreatment that would otherwise arise from measuring theassets or recognizing gains or losses on them on a differentbasis; (ii) the assets are part of a group of financial assetswhich are managed and their performance evaluated ona fair value basis, in accordance with a documented riskmanaging strategy; or (iii) the financial asset contains anembedded derivative that would need to be separatelyrecorded.The Foundation has no financial assets and financialliabilities at FVPL as of December 31, 2009 and 2008.Held to maturity (HTM) investments.HTM investments are quoted non-derivative financial assetswith fixed or determinable payments and fixed maturitieswherein the Foundation’s has the positive intention andability to hold to maturity. HTM assets are carried atcost or amortized cost in the consolidated statement offinancial positions. Amortization is determined by using theeffective interest rate method. Assets under this categoryare classified as current assets if maturity is within twelvemonths of the statement of financial position date andnoncurrent assets if maturity is more than a year.Loans and receivables.Loans and receivables are non-derivative financial assetswith fixed or determinable payments that are not quotedin an active market. They are not entered into with theintention to sell immediately or in the near term and are notclassified as held for trading, designated as AFS investmentsor financial assets at FVPL.Loans and receivables are measured at amortized costusing the effective interest rate method. Amortized cost iscalculated by taking into account any discount or premiumon acquisition and fees and costs that are an integral part ofthe effective interest rate. The amortization is included ininterest income in the statement of comprehensive income.Included in this category are the Foundation’s cash, accountsreceivables, loans receivables and other receivables.Available for sale (AFS) financial assets.AFS investments are non-derivative financial assets thatare either designated as AFS or not classified in any of theother categories. AFS investments are measured at fairvalue with gains or losses being recognized as a separatecomponent of stockholders’ equity, until the investmentsare derecognized or until the investments are determined tobe impaired at which time, the accumulated gains or lossespreviously reported in stockholders’ equity is included inprofit or loss. Dividends earned on AFS financial assets arerecognized as dividends-equity investments in profit or losswhen the right to receive payment is established. Thesefinancial assets are classified as noncurrent assets unlessthere is an intention to dispose such assets within twelvemonths from the statement of financial position date.Included in this category are the Foundation’s investments inshares of stocks amounting to π41,224,645 and π23,204,422as of December 31, 2009 and 2008, respectively.Financial liabilities measured at amortized cost.These are the financial liabilities which are not designatedat FVPL.Financial liabilities not designated as FVPL are measured atamortized cost using the effective interest rate method.Amortized cost is calculated by taking into account anydiscount or premium on the issue and fees that are anintegral part of the effective interest rate. The amortizationis included in interest expense in the statement ofcomprehensive income.Included in this category is the Foundation’s accountspayable.Derecognition of Financial Assets and Liabilities.Financial assets.A financial asset (or, where applicable a part of a financialasset or part of a group of similar financial assets) isderecognized whereIndependent Auditors’ Report

ANNUAL REPORT 2009 37• the rights to receive cash flows from the asset haveexpired;• the Foundation retains the right to receive cash flowsfrom the asset, but has assumed an obligation to paythem in full without material delay to a third partyunder a ‘pass-through’ arrangement; or• the Foundation has transferred its rights to receivecash flows from the asset and either (a) hastransferred substantially all the risks and rewards ofthe asset, or (b) has neither transferred nor retainedsubstantially all the risks and rewards of the asset, buthas transferred control of the asset.Where the Foundation has transferred its rights to receivecash flows from an asset and has neither transferred norretained substantially all the risks and rewards of the assetnor transferred control of the asset, the asset is recognizedto the extent of the Foundation’s continuing involvement inthe asset.Financial liabilities.A financial liability is derecognized when the obligation underthe liability is discharged or cancelled or expires.Where an existing financial liability is replaced by anotherfrom the same lender on substantially different terms, or theterms of an existing liability are substantially modified, suchan exchange or modification is treated as a derecognitionof the original liability and the recognition of a new liability,and the difference in the respective carrying amounts isrecognized in profit or loss.Impairment of financial assets.The Foundation assesses at each statement of financialposition date whether there is objective evidence that afinancial asset maybe impaired. A financial asset is deemedto be impaired if there is objective evidence of impairmentas a result of one or more events that has occurred after theinitial recognition of the asset and that loss event has animpact on the estimated future cash flows of the financialasset that can be reliably estimated.Financial assets at amortized cost.For loans and receivables, the Foundation provides anallowance for impairment and credit losses when there isobjective evidence that the Foundation will not be able tocollect all amounts due according to the original contractualterms of the loan and when probable losses are present inthe components of the loan portfolio at the statement offinancial position date. Provision for specifically identifiedloans is the difference between the carrying amount and therecoverable amount, being the present value of expectedcash flows, including amounts recoverable from guaranteesand collateral, discounted at the original effective interestrate of the loans. Provision for probable losses present incomponents of the loan portfolio is estimated based onhistorical patterns of losses in each component, the creditratings allocated to the borrowers and reflecting the currenteconomic climate in which the borrowers operate.The allowance for impairment and credit losses is establishedthrough a provision for impairment and credit losses in thestatement of comprehensive income. Loans are written offagainst the allowance for impairment and credit losses whenmanagement believes that the collection of the principal isunlikely; subsequent recoveries are recognized in profit orloss. If the allowance for loan losses subsequently decreasesdue to an event occurring after a write down, the release ofthe provision is recognized in profit or loss.For HTM investments, the Foundation assesses individuallywhether there is objective evidence of impairment. If thereis objective evidence that an impairment loss has beenincurred, the amount of loss is measured as the differencebetween the assets carrying value and the present value ofestimated future cash flows. The carrying amount is reducedthrough an allowance account and the amount of loss ischarged to provision for impairment and credit losses inthe statement of comprehensive income. Interest incomecontinues to be recognized based on the original effectiveinterest rate of the asset.If, in a subsequent year, the amount of the estimatedimpairment loss decreases because of an event occurringafter the impairment was recognized, any amounts previouslycharged to provision for impairment and credit losses in profitor loss and the allowance are reduced. The HTM investmentsand the related allowance account are written off when thereis no realistic prospect of future recovery and the collateralhas been realized.Financial assets carried at cost.If there is objective evidence that an impairment loss hasbeen incurred on unquoted equity instrument that is notcarried fair value because its fair value cannot be reliablymeasured, or on a derivative asset that is linked to and mustbe settled by delivery of such unquoted equity instrument,the amount of loss which is measured as the differencebetween the asset’s carrying value and the present value ofthe estimated future cash flows discounted at the currentmarket rate of return of a similar financial asset is charged toprovision for impairment and credit losses in the statementof comprehensive income. Such impairment loss shall not bereversed.AFS financial assets.If there is objective evidence that an AFS financial asset isimpaired, the Foundation removes from equity, the netunrealized loss on AFS financial assets and transfers to profitor loss, the difference between the acquisition cost (netof any principal repayment and amortization) and currentfair value, less any impairment loss on that financial assetpreviously recognized in profit or loss.In the case of equity investments classified as AFS,impairment losses are not reversed through profit or loss.Increases in fair value are recognized directly in equity.In the case of debt instruments, if subsequently the fair valueincreases and the increase can be objectively related to anevent occurring after the impairment loss was recognized inprofit or loss, the impairment loss is reversed through profitor loss.c. Property and equipment.Property and equipment are stated at cost, net ofaccumulated depreciation and accumulated impairmentlosses.Cost of property and equipment comprises its net purchaseprice and directly attributable costs of bringing the asset toworking condition for its intended use.Independent Auditors’ Report

38 ABOITIZ FOUNDATIONSubsequent expenditures related to property and equipmentfor maintenance or repairs are expensed. Improvements arecapitalized and depreciated over expected useful life.Depreciation is computed using the straight-line methodover the estimated useful lives of the assets. Annualdepreciation rates are as follows:Computer equipmentTransportation equipmentFurniture and fixturesLeasehold improvementsAnnual Rates(%)33.33%33.33%33.33%33.33%The useful lives of the assets and depreciation methodused are reviewed periodically for any significant change inutility of the assets and in the expected pattern of economicbenefits to ensure that current and future depreciationcharges are adjusted accordingly.Gain or loss on disposal or retirement of office furniture andequipment are generally reflected in profit or loss.At each statement of financial position date, officefurniture and equipment are assessed for any indication ofimpairment in value based on internal and external sources.If any indication exists, recoverable amount of the asset isestimated and an impairment loss is recognized in profit orloss.d. Deferred credits.Donations/grants restricted by the donor for specific purposeare considered earned and reported as donation only whenexpenditures are incurred by the Foundation in accordancewith the conditions set forth by the donor. Amounts not yetexpended are reported as deferred donation/grant.e. Revenue recognition.• Donations are recognized as received.• Interest is recognized as income using the effective interestmethod.• Dividends are recognized as income when the right toreceive payment is established.• Other income is recognized as earned.f. Leases.Operating lease payments are recognized as expense on astraight line basis over the lease term.g. Retirement benefits.Retirement benefits are actuarially determined usingthe projected unit credit cost method which reflects theservices rendered by employees up to valuation date andincorporates assumptions concerning employees’ projectedsalaries. Retirement costs include current service cost plusamortization of past service cost, experience adjustmentsand changes in actuarial assumptions. Actuarial gains orlosses are recognized in profit or loss if the cumulativeactuarial gains and losses exceeded the higher of 10% of thedefined benefit obligation or 10% of the fair value of the planassets at the end of the previous reporting period, over thefuture average working lives of the employees.Significant Accounting Estimates and Assumptions.In the process of applying the accounting policies of theFoundation, management has made the following judgmentsapart from those involving estimates, which have the mostsignificant effect on the amounts recognized in the financialstatements:Held to maturity (HTM) investments.For HTM investments, the Foundation evaluates its intentionand ability to hold such investments to maturity. If theFoundation fails to keep these investments to maturity otherthan in certain specific circumstances like selling an insignificantamount close to maturity, it will be required to reclassify theentire portfolio as AFS investments. As such, the investmentswould be measured at fair value and not at amortized cost.HTM investments amounted to π36,000,000 as of December31, 2009.Allowance for doubtful accounts.The Foundation maintains an allowance for doubtful accountson receivables at a level adequate to provide for potentialuncollectible accounts. Management determines the level ofthis allowance through identification of specific accounts thatare to be provided with an allowance based on an evaluationof collection and credit experience, prevailing and anticipatedeconomic condition, and present value of future cashcollections.Receivables amounted to π122,191,395 and π69,357,045(π552,000 non current) as of December 31, 2009 and 2008,respectively.Retirement benefits.The determination of the obligation and cost of pension isdependent on certain assumptions used in calculating suchamounts. Those assumptions are described in Note 15 —Retirement benefits and include among others, discount ratesand future salary increases. While management believes thatits assumptions are reasonable and appropriate, significantdifferences in the actual experience or significant changesin the assumptions may materially affect the pension andpost employment obligations. Unrealized pension incomeamounted to π104,126 in 2009. Retirement benefit expenseamounted to π281,286 in 2008. Pension asset presented as partof other assets in the statement of financial position amountedto π148,599 and P19,109 as of December 31, 2009 and 2008,respectively.Useful lives of property and equipment.The Foundation estimates the useful lives of depreciable assetsbased on the period over which the assets are expected to beavailable for use. The estimated useful lives of these assets arereviewed annually and are updated if expectations differ fromprevious estimates due to physical wear and tear and technicalor commercial obsolescence. It is probable that the resultsof future operations could be materially affected by changesin the estimates due to changes in aforementioned factors.Reduction in estimated useful lives of depreciable assets wouldincrease depreciation expense and decrease non current assets.Carrying value of depreciable assets amounted to π1,150,717and π414,384 as of December 31, 2009 and 2008, respectively.Independent Auditors’ Report

ANNUAL REPORT 2009 39Impairment of non-financial assets.The Foundation assesses the impairment of non-financialassets whenever events or changes in circumstances indicatethat the carrying amount of an asset may not be recoverable.The impairment review requires an estimation of the presentvalue of the expected future cash flows from continued use ofthe assets and selection of an appropriate discount rate thatcan materially affect the financial statements.Carrying value of non-financial assets as of December 31, 2009and 2008 were as follows:Office furniture andequipment – netOther assetsTrust fundsFair value of financial instruments.December31, 2009π1,150,717568,59044,821,020December31, 2008π414,3841,584,29028,901,391PFRS requires that certain assets and liabilities be carried atfair value which requires the use of accounting judgmentand estimates. While significant components of fair valuemeasurement are determined using verifiable objectiveevidence, the timing and amount of changes in fair value woulddiffer with the valuation methodology used. Any change infair value of these financial assets and liabilities would directlyaffect net profit or loss or equity. As of December 31, 2009 and2008, fair value of financial assets amounted to π201,567,578and π93,861,223, respectively and fair value of financialliabilities amounted to π5,014,005 and π56,053, respectively.(see Note 19)Accounts receivable includes funds held in custody for theFoundation amounting to π112,138,491 and π48,343,952 as ofDecember 31, 2009 and 2008, respectively.Loans receivable includes a five year loan to Aboitiz EquityVentures, Inc. amounting to π16,500,000 as of December31, 2008 with interest rates ranging from 11% to 12%, whichmatured and was collected on April 1, 2009.Other loans receivable represent financial advances toproponents in carrying out their social and communitydevelopment projects which are within the foundation’sprogram and which have met the criteria set by the Foundation.Financial advances are charged an administrative fee of 2% permonth to cover cost of administering these projects. Maturitydates ranges from 1 to 5 years.5. HELD TO MATURITY INVESTMENTSThis account represents time deposits with City Savings Bank(CSB) which earn annual interest at 8% and which mature onvarious dates in 2014.6. AVAILABLE FOR SALE INVESTMENTSThis account consists of :December 312009December 312008At fair valueListed shares π41,224,645 π23,204,4223. CASHThis account consists of:December 312009December31 2008Fair values of listed shares are based on quoted market prices.Unrealized gain on AFS investments shown as a separatecomponent of equity is accounted for as follows:Cash on handCash in bankπ5,0002,146,538π2,151,538Cash in banks earns interest at current bank rates.4. RECEIVABLESThis account consists of:CurrentAccounts receivableLoans receivableDecember 312009π114,193,6787,997,717π5,0001,294,756π1,299,756December 312008π48,414,56720,390,478122,191,395 68,805,045Non CurrentLoans receivable -- 552,000π122,191,395 π69,357,045Balance at beginning ofyearFair value changesrecognized inothercomprehensiveincomeDecember 312009(π238,561)18,020,223December 312008π8,199,108(8,437,669)Balance at end of year π17,781,662 (π238,561)Dividends received from above investments amounted toπ1,141,242 and π2,091,764 in 2009 and 2008 respectively.Independent Auditors’ Report

40 ABOITIZ FOUNDATION7. OFFICE FURNITURE AND EQUIPMENTThis account consists of:December 31, 2009CostBalance, December 31, 2008AdditionsDisposal/amortizationComputerEquipmentπ1,002,546––––TransportationEquipmentπ2,083,6601,015,200(80,500)Furniture andFixturesπ90,69785,569––LeaseholdImprovementsπ116,88020,160(91,498)Totalπ3,293,7831,120,929(171,998)Balance, December 31, 2009 1,002,546 3,018,360 176,266 45,542 4,242,714Accumulated depreciationBalance, December 31, 2008DepreciationDisposal780,633111,610––2,008,069181,488(80,500)90,697––––––––––2,879,399293,098(80,500)Balance, December 31, 2009 892,243 2,109,057 90,697 –– 3,091,997Book value π110,303 π909,303 π85,569 π45,542 π1,150,717December 31, 2008CostBalance, December 31, 2007AdditionsDisposal/amortizationComputerEquipmentπ797,847204,699––TransportationEquipmentπ2,188,260––(104,600)Furniture andFixturesπ90,697––––LeaseholdImprovementsπ137,95457,483(78,557)Totalπ3,214,758262,182(183,157)Balance, December 31, 2008 1,002,546 2,083,660 90,697 116,880 3,293,783Accumulated depreciationBalance, December 31, 2007DepreciationDisposal657,982122,651––1,950,33099,579(41,840)90,697––––––––––2,699,009222,230(41,840)Balance, December 31, 2008 780,633 2,008,069 90,697 –– 2,879,399Book value π221,913 π75,591 –– π116,880 π414,384Depreciation and amortization charged to profit or loss amounted to π384,596 in 2009 and P300,787 in 2008.8. OTHER ASSETSMinimum corporate income tax (MCIT) is computed at twopercent of gross income, creditable against normal incometax within the three immediately succeeding taxable yearsas follows:This account consists of:Minimum corporateincome taxPension asset (Note 15)Office suppliesAccrued interest receivableDecember 312009π180,280148,599––239,711December 312008π179,38219,1092,3251,383,474YearSustained2006200720082009Amountπ68,66649,60461,11169,565Expired in2009π68,666––––––MCITunused12.31.2009 Expiry––π49,60461,11169,5652009201020112012π568,590 π1,584,290π248,946 π68,666 π180,280Independent Auditors’ Report

ANNUAL REPORT 2009 419. TRUST FUNDSThese are funds entrusted/conditionally donated to theFoundation to insure continuous support to certain charitableprograms of the foundation. In accordance with the terms andconditions of the trust funds, the funds are disbursed only forthe intended purpose for which each trust fund was created.Trust fund principal are credited to deferred credits uponreceipt and are recognized as income by the Foundation uponoccurrence of a specified event.10. ACCOUNTS PAYABLE14. SALARIES AND HONORARIAThis account consists of:Salaries and wagesEmployee benefitsHonorariaSSS, PHIC and Pag-ibigcontributionsπ3,320,923362,331165,000162,155π4,010,4092009 2008π2,752,522277,445265,000131,022π3,425,989This account consists of:Accounts payableOther payablesDecember 312009π4,941,50572,500December 312008––π56,053π5,014,005 π56,053Accounts payable consists mainly of supplier’s credit.15. RETIREMENT BENEFITSThe Foundation has a funded, noncontributory defined benefitplan administered by the Fund’s Trustees covering all regularand full time employees.Components of retirement cost obligation recognized in thestatement of financial position and retirement benefit expenserecognized in profit or loss are as follows:2009 200811. DEFERRED CREDITSThe following is summary of transactions for deferred grants/donations during the year.Deferred grant, beginningof yearTransfer of restricted fundsto unrestrictedDonations receivedGrants earningsDonations madeGrant expensesChange in fair values of AFSinvestmentsDecember 312009π28,901,391––18,632,0002,096,299(8,238,701)(1,969)3,432,000December 312008π43,972,309(10,622,202)16,032,0001,387,792(19,769,152)(6,614)(2,092,742)Deferred grant, end of year π44,821,020 π28,901,39112. DONATIONS RECEIVEDThis account represents donations received from privatecompanies, individuals and LGU counterparts amounting toπ166,385,849 in 2009 and π66,930,098 in 2008.Pension asset recognized in thestatement of financial positionChanges in present valueof obligationBalance beginningCurrent service costInterest costActuarial loss (gain)π80,54622,80030,2532,508,201π1,154,108259,78186,904(1,420,247)Balance end 2,641,800 80,546Changes in plan assetsBalance beginningExpected return ofplan assetsContributionsreceived fromemployerActuarial lossBenefits paid1,046,207115,08325,364(60,725)—777,21185,493220,289(36,786)—Balance end 1,125,929 1,046,207Excess of plan assets overretirement obligationUnrecognized actuarial(gain) loss(1,515,8711,664,470)965,661(946,552)Pension asset recognizedin the statement offinancial position π148,599 π19,10913. DONATIONS MADEThis account represents released funds for various projectsamounting to P76,345,447 in 2009 and P64,174,249 in 2008.Independent Auditors’ Report

42 ABOITIZ FOUNDATIONRetirement benefits expenserecognized in the revenues andexpensesCurrent service costInterest costExpected return of planassetsRecognized actuarial loss(gain)2009 2008π22,80030,253(115,083)(42,096)π259,78186,904(85,493)20,094Retirement expense (pensionincome) presented inrevenues and expenses (P104,126) P281,286Actual return of plan assets forthe year π54,358 π48,707Assumptions used to determineretirement costsDiscount rateExpected return of planassetsRate of salary increase9.54%10%8%Major categories of plan assets as a percentage of the fairvalue of the total plan assets are as follows:37.56%11%9%members or sell its assets to reduce debt. No changes weremade in the objective, policy or processes in 2009 and 2008.The Foundation manages capital using the gearing ratiowhich is net debt divided by equity plus net debt. It is theFoundation’s policy to keep the gearing ratio at 30% or below.The Foundation determines net debt as total liabilities less cash.Equity comprises all components of equity (fund balance andunrealized gain/loss on AFS investments).The gearing ratios of the Foundation at statement of financialposition date were as follows:Net debtTotal liabilitiesCashNet debt (a)EquityDecember 312009π49,835,025(2,151,538)47,683,487198,272,880December 312008π28,957,444(1,299,756)27,657,68895,803,844Equity and net debt (b) π245,956,367 π123,461,532Gearing ratio (a/b) 19% 22%Short term investmentsTime deposits2009 200894%6%94%6%18. FINANCIAL RISKS MANAGEMENT POLICIES AND OBJECTIVESThe financial instruments of the Foundation comprise principallyof cash, accounts receivable, held to maturity investments,available for sale investments and accounts payable.16. COMPENSATION OF KEY MANAGEMENT PERSONNELThe aggregate compensation and benefits paid to keymanagement personnel are as follows:The main risks arising from these financial instruments are creditrisk and liquidity risk. The Board of Trustees has reviewed andset up policies to manage these risks. It continuously upgradesthese policies and procedures to ensure that the managementof risk exposures is both progressive and reflective of theFoundation’s financial outlook.Short term employeebenefitsPost employment benefits2009 2008π1.3 million π1 million7 thousand 106 thousandCredit risk.Credit risk is the risk that the Foundation will incur a lossbecause its counterparties failed to discharge their contractualobligation.Members of the Board of Trustees donate their services to theFoundation. Donated services were valued at π165,000 in 2009and π265,000 in 2008.17. CAPITAL MANAGEMENTThe primary objective of the Foundation in managing capital isto ensure the Foundation’s ability to continue as a going concernso that the Foundation can continue to support its projects andprograms and thus achieve the purpose for which it was created.The Foundation manages its capital structure and makesadjustments to it in the light of changes in economic condition.To maintain or adjusts capital the Foundation may assess itsCredit risks arising from debtors are mitigated by subjectingdebtors to credit verification and setting of credit limits.Furthermore, the Foundation monitors receivables continuously.Outstanding receivables of the Foundation amounting toπ122,191,395 and π69,357,045 as of December 31, 2009 and2008, respectively consist of receivables that are neither pastdue nor impaired and are of standard credit quality.Credit risk from other financial assets, which comprise mainly ofcash, is mitigated by maintaining depository accounts and cashinvestments with financial institutions of high credit rating.Furthermore, the Board of Trustees sets limits on deposits thatcould be placed with a single institution. Cash amounted toπ2,151,538 and π1,299,756 as of December 31, 2009 and 2008,respectively.Independent Auditors’ Report

ANNUAL REPORT 2009 43The credit quality per class of the financial assets are as follows:December 31, 2009Neither past due nor impairedPast Due orHigh Grade Standard Sub-standard ImpairedTotalAccounts receivableLoans receivableHeld to maturity investmentsAccounts receivableLoans receivable––––––π114,193,6786,425,51836,000,000––––––––π1,572,199––π114,193,6787,997,71736,000,000–– π156,619,196 –– π1,572,199 π158,191,395––––π48,414,56719,744,639––––––π1,197,839π48,414,56720,942,478–– π68,159,206 –– π1,197,839 π69,357,045Equity price risk.Liquidity risk.Equity price risk is the risk that the fair value of traded equityinstruments decreases as the result of the changes in the levelof equity indices and the value of individual shares.As of December 31, 2009 and 2008, the Foundation’s exposureto equity price risk is minimal.Liquidity risk is the risk that an entity will encounter difficulty inmeeting obligations associated with financial liabilities.To manage this risk, the Foundation regularly monitors itsprojected and actual cash flows information. Any excess cash isinvested in short term placements.The following table presents the Foundation’s financial liabilitiesby contractual maturities and settlement dates as of December31, 2009 and 2008:As of December 31, 2009Financial liabilitiesTotalCarryingValueTotalContractual Undiscounted PaymentsOnDemand Less than 1 year 1 to 5 years >5 yearsAccounts payable π5,014,005 π5,014,005 –– π5,014,005 –– ––As of December 31, 2008Financial liabilitiesTotalCarryingValueTotalContractual Undiscounted PaymentsOnDemand Less than 1 year 1 to 5 years >5 yearsAccounts payable π56,053 π56,053 –– π56,053 –– ––The following table presents the Foundation’s financial assets by contractual maturities and collection dates as of December 31, 2009 and2008:As of December 31, 2009Financial liabilitiesCashAccounts receivableHeld to maturityinvestmentsAvailable for saleinvestmentsTotalCarryingValueπ2,151,538122,191,39536,000,000Totalπ2,151,538122,191,39536,000,000Contractual Undiscounted PaymentsOnDemand Less than 1 year 1 to 5 years >5 years––––––π2,151,538122,191,39541,224,645 41,224,645–– 41,224,645––––π201,567,578 π201,567,578 –– π165,567,578 π36,000,000 ––––––––π36,000,000––––––Independent Auditors’ Report

44 ABOITIZ FOUNDATIONAs of December 31, 2008Financial liabilitiesCashAccounts receivableAvailable for saleinvestmentsTotalCarryingValueπ1,299,75669,357,045Totalπ1,299,75669,357,045Contractual Undiscounted PaymentsOnDemand––––Less than 1year 1 to 5 years >5 yearsπ1,299,75668,805,045––π552,00023,204,422 23,204,422–– 23,204,422––––π93,861,223 π93,861,223 –– π93,309,223 π552,000 ––––––19. FINANCIAL INSTRUMENTSSet out below is a comparison by category of carrying amountsand fair values of all of the Foundation’s financial instrumentsthat are carried in the financial statements at other than fairvalues.Financial assetsLoans and receivableCashAccounts receivableHeld to maturity investmentsAvailable for sale investmentsCarryingValueπ2,151,538122,191,39536,000,00041,224,645December 31, 2009 December 31, 2008FairValueπ2,151,538122,191,39536,000,00041,224,645CarryingValueπ1,299,75669,357,045––23,204,422FairValueπ1,299,75669,357,045––23,204,422π201,567,578 π201,567,578 π93,861,223 π93,861,223Financial liabilitiesOther financial liabilitiesAccounts payable π5,014,005 π5,014,005 π56,053 π56,053Fair value is defined as the amount at which the financialinstrument could be exchanged in a current transaction betweenknowledgeable willing parties in an arms’ length transaction,other than in a forced liquidation or sale. Fair values are obtainedfrom quoted market prices, discounted cash flow models andoption pricing models, as appropriate.The carrying amounts of the Foundation’s financial assets andfinancial liabilities approximate fair value due to the relativelyshort term maturity of these financial assets.Fair Value Hierarchy.As of December 31, 2009 and 2008, the Foundation’s AFSinvestments are the only financial instruments held that aremeasured at fair value.December 31, 2009Total Level 1 Level 2 Level 3AFS investments π41,224,645 π41,224,645 –– ––December 31, 2008Total Level 1 Level 2 Level 3AFS investments π23,204,422 π23,204,422 –– ––The Foundation uses the following hierarchy for determiningthe fair value of financial instruments by valuation technique:Level 1: quoted (unadjusted) prices in active markets foridentical assets or liabilities;Level 2: other techniques for which all inputs which havesignificant effect on the recorded fair value are observable,either directly or indirectly;Level 3: technique which uses inputs which have a significanteffect on the recorded fair value that are not based onobservable market data.Independent Auditors’ Report