First Philippine : 2023 Integrated Report

ABOUT THE COVER

This year's First Philippine Holdings' (FPH) 2023 Integrated Report cover, like those of previous years, calls attention to the continuing threat of the climate crisis. It centers on one of the most pressing questions about what is to come: "Can we secure a decarbonized and regenerative future?"

The cover features two contrasting images: one visualizing the damage done to our environment by humans and the other presenting one of FPH's renewable energy investments toward a decarbonized and regenerative future.

Climate action is more critical today due to the projected acceleration of natural catastrophes from 2050 to as early as 2026, triggered by the breaching of global tipping points according to scientists. Amidst all these, energy security has emerged as an additional challenge for the Philippines which remains disaster- prone and economically on the rise. As its contribution, FPH has turned to technologies that will deliver low carbon and environmentally and socially beneficial products and services.

Moreover, the cover echoes the report on how the company is maintaining the delicate balance between the country's energy security with the concern for planetary and societal health in its areas of operation.

Through the decades, FPH continues to raise awareness, strengthen its capabilities, and carry out its respective solutions in line with its Mission.

TABLE OF CONTENTS

1. About the Cover

1. About the Report

1. Board Certification

1. Report Disclaimer
2. 2023 Highlights

1. Chairman's Message

1. President's Message

1. About the Company

1. Business Environment

1. Business Review

34 Power Generation

39 Manufacturing and Energy Solutions

42 Industrial Real Estate

46 Commercial and Residential Real Estate

48 Construction and Energy Services

50 Health and Education Services

52 Integrated Management

Framework

54 Governance

68 Risk Management

70 Strategy and Business Model

1. Metrics and Targets
2. Value Creation Process

100 Materiality

108 Values Generated

110 Financial Capital

1. Manufactured Capital

1. Natural Capital

1. Human Capital

1. Intellectual Capital

158 Social and Relationship Capital

1. Summary of Outcomes

1. Contributions to the SDGs

1. Progress on Our Mission

1. Outlook

1. Annexes

202 Annex 1 - Third Party Review

212 Annex 2 - Awards and Recognitions

214 Annex 3 - External Engagements

218 Annex 4 - Profiles of Board of Directors

232 Annex 5 - Senior Management

235 Annex 6 - Research and Publications of OML Center

1. Annex 7 - Content Indices

1. Annex 8 - Restatements

GRI 2-1,2-2,2-3,2-4

ABOUT THE REPORT

The 2023 First Philippine Holdings Corporation (FPH) Integrated Report (IR) presents information on the financial and non-financial performance of the group.

SOURCES OF GUIDANCE

Reporting Framework

Standards

We referenced our analysis of material indicators on the proposed standards in the draft SEC Memo Circular of October 2023, namely the Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), United Nations Sustainable Development Goals (UN SDGs), UN Conference on Trade and Development - International Standards of Accounting and Reporting Guidance on

Key Report Information5

REPORTING ENTITY

The entity that filed this Integrated Report is the First Philippine Holdings Corporation (FPH), the same organization that filed the consolidated financial statements of the conglomerate and its subsidiaries with the SEC in accordance with the Philippine Financial Reporting Standards (PFRS).

FPH is a publicly listed company in the Philippines with office address at the 6th Floor Rockwell Business Center Tower 3, Ortigas Avenue, Pasig City, Metro Manila. The Company operates in the three major island groups of the country, namely Luzon, Visayas, and Mindanao.

Detailed discussions are provided on our mission, the core pillars of governance, strategy, and risk management, as well as metrics and targets. We also discussed our material issues, the six capitals (financial, intellectual, human, manufactured, natural, and social and relationship) we used through our business model, the value creation process, and the values we generated for the business and our pentad stakeholders (customers, co-creators, earth, communities, and investors).

TIMING OF REPORTING

This IR covers the period January 1, 2023, to December 31, 2023 and is being filed at the same time as the financial report with the Philippine SEC.

Core Indicators for SDG (UNCTAD-ISAR), and IFRS S1 and IFRS S2, collectively known as the standards of the IFRS

• International Sustainability Standards Board (ISSB).
  We also used, as a reference, a non-mandated set of standards from the UN Guiding Principles on Business and
  Human Rights (UNGP).

MATERIALITY

Materiality Approach

The FPH mission serves stakeholders beyond the business fence. Thus, we continue to adopt the "double materiality" approach in this report. This report specifies two points of view:

• ESG information that will provide context on current challenges and expectations for the decision- making of the Board and Senior Management relative to their strategy review and goal setting;
• mandatory reporting requirements of Philippine laws and the international conventions signed by the country; and
• ESG requirements of external users of the report.

More information on the materiality assessment method and identified material ESG issues are discussed in the

SCOPE AND BOUNDARY

The scope of the report includes the business segments where FPH has major management and operational control. These include power generation, energy solutions, real estate development, construction, and health and education services. For the last segment, we are only reporting on the health sector this year while we assist the education sub-segment to complete their ESG processes in preparation for next year's report. Some ESG material issues may extend to other stakeholders in line with our mission to help the regeneration of the planet and people.

No new condition was recorded at the time of the issuance of this IR on April 11, 2024 . Conditions that prevailed during the reporting period were the same as the time of the IR issuance. Thus, amendment of the IR will not be necessary.

LOCATION OF DISCLOSURES

The information on sustainability-related and climate- related disclosures can be found in this IR as well as in FPH's ESG World platform, which can be accessed at https://www.fphc.com/investor-relations/esg-profile.

Scoping of Material Issues

section on Materiality (pages 100 to 107).

OTHER REPORTING PRINCIPLES6

Fair Presentation

The climate-related and sustainability-related risks and opportunities discussed in the report are based on the third-party materiality surveys that included a cross section of FPH investors in November to December 2022. Their involvement helped FPH capture the ESG indicators that are important to them in deciding on the

Sustainability-related and climate-related risks and opportunities can affect our prospects as well as impede our capture of ESG benefits. Scoping of material ESG issues was based on the following:

• relevance in the implementation of the FPH mission and its value creation for the business and its pentad stakeholders;

prospects of the company.

Comparative information

For a better understanding of the report, comparable

3-year data are presented under the section on "Values Generated" on pages 108 to 177.

6 The principles are referenced on the IFRS S1.

Connected Information

The connection of financial and non-financial information for a coherent and holistic discussion is assisted by the following attributes of the report:

• adoption of integrated thinking principle of the Framework;
• simultaneous submission of both the integrated report and financial report to the SEC; and
• the "system value" approach of our mission that recognizes that business is embedded in and dependent on the planet and society.

HOW TO READ THE REPORT

Our message in 2023 stems from our advocacy in 2022 where we affirmed that "While addressing climate crisis seems to be a daunting task, it is not impossible as there are solutions in sight but we need to work quickly to secure a livable planet". In 2023, we echo the report of the FPH leadership of our continuing deep analysis of climate measures and options and our focus on full execution next year and beyond to realize our mission and to have a positive contribution to avert the climate impacts. Climate change and the havoc that it brings in the form of a damaged earth and social inequity require government and the non-state actors to now contemplate on how to act as one with climate action becoming an imperative. The world needs a new track to resilience, one that is carbon neutral, nature positive, and socially equitable. We in FPH are committed to do our share towards this aspiration.

Supporting our 2023 messages are our contributions to a regenerative world in the areas where we operate. After the discussion of our performance highlights, the Chairman's and President's messages and company profile, below is the flow of our discussion explaining how we created value for the business and our pentad stakeholders.

• We describe the current developments in our business segments under the section on Business Review in
  (pages 32 to 51).
• The Business Environment that influenced our operating units in 2023 is presented in (pages 26 to 31).
• We introduce the FPH Integrated Management Framework (IMF), which refers to the core elements needed for value creation in FPH, on (pages 52 to
  95). The conglomerate's IMF is aligned with the core elements of IFRS S1 and S2, namely, Governance, Strategy, Risk Management and Metrics and Targets.
• We share updates on our value creation process on (pages 96 to 99).
• We discuss how we delivered on our Business Strategy through the six capitals that generated the values for the business and others in (pages 108 to 195).
• We project the impacts of the evolving landscape on the business under the Outlook section in (pages 196 to 199).

ASSURANCE AND CHECKS

The report went through two levels of review. The FPH Board provided internal assurance of the report, assisted by its Corporate Governance Committee. The full certification by the FPH Board is provided on page 7.

In 2023 and through 2024, we are developing guidelines for ESG Data Assurance. We aim to obtain certification by next year.

The 2023 FPH Integrated Report is uploaded on the company website: www.fphc.com.

BOARD CERTIFICATION

In line with our responsibility to ensure the integrity of the 2023 FPH Integrated Report, it is the opinion of the Board that the report is a fair presentation of the Company's operations from January

The certification is being issued based on the authorization of the FPH Board on February 4, 2021, for the annual issuance of an Integrated Report to communicate to the company's stakeholders its financial and non-financial (environmental, social, and governance) performance. The final review of the report was undertaken by the FPH Corporate Governance Committee on March 20, 2024, pursuant to its responsibility over sustainability matters based on a board resolution issued on November 8, 2018.

The Management supported the Board in the preparation of the report through the inter-departmental Technical Working Groups (TWG) from all participating FPH subsidiaries. The President and COO provided oversight in collaboration with responsible officers from the Corporate Sustainability, Environmental Safety and Health, Enterprise Risk Management, Finance and Treasury, Comptrollership, Legal and Regulatory, and Integrated Corporate Communications groups.

Based on the foregoing, the Integrated Report has been presented to the Board and was authorized by the body to be released on April 4, 2024.

Federico R. Lopez

Chairman & CEO

REPORT DISCLAIMER

Certain portions of the 2023 FPH Integrated Report contain forward-looking statements regarding our growth prospects and outlook. These are based on the Company's analysis of trends, projections, plans, and other information available as of the writing of the report. The scenarios presented are not intended to predict future events and outcomes.

While we believe that the declared expectations are reasonable, investors and other stakeholders are cautioned that the actual outcomes may differ materially from those expressed or implied. Due to risks and uncertainties that may be beyond the company's control, future situations are difficult to predict.

2023 HIGHLIGHTS

Financial Highlights

OPERATING RESULTS (IN MILLIONS, PHP)

Operational Highlights

FINANCIAL CAPITAL

• PHP165.0 billion consolidated revenue
• PHP29.1 billion consolidated net income
• PHP15.1 billion net income attributable to equity holders of the Parent

Recurring net income attributable to equity holders of the parent

Revenues

Consolidated net income

Net income attributable to equity holders of the parent

13,801

164,952

29,056

15,066

12,784

170,338

23,874

12,676

10,055

125,159

19,901

10,021

MANUFACTURED CAPITAL

• 21,604.5 GWh electricity sold
• 81 business units
• 1,736,776KVA transformers delivered to customers
• 109 thousand sq.m. residential and commercial real estate constructed
• 118 thousand sq.m. real estate sold and reserved
• 380 thousand sq.m. commercial, residential, and industrial real estate properties leased

NATURAL CAPITAL

• 127,608.0 hectares natural forests protected
• 12.4 million tCO2e emitted
• 1.7 million tCO2 sequestered by watersheds protected and restored
• 10.7 million tCO2e emissions avoided by using natural gas and RE in power generation
• 22.7 thousand tCO2e emissions avoided by using electricity from RE sources
• 14.3 thousand tonnes waste disposed

HUMAN CAPITAL

• 9,538 permanent and temporary employees
• 20.6 average training hours per employee
• 24% female employees
• Maintained partnerships with UN WEPs, PBCWE, and
  USAID E4SEA for DEI7
• Human rights protocols to respect and protect employees
• Maintained a safety incidence rate within industry benchmarks:
• • First Gen - 0.16 vs 1.0
  • First Philec - 0.13 vs 2.7
  • First Balfour - 2.34 vs 2.4
  • FPIP - 0.31 vs 0.8
  • Asian Eye - 0.0 vs. 8.5

INTELLECTUAL CAPITAL

• Subsidiaries maintained ISO certifications for quality management, environment management, occupational health and safety management, and asset management
• Two-foldincrease in cybersecurity investments
• Integration of mission in key business functions (business development, operations, and product and service offerings)

SOCIAL AND RELATIONSHIP CAPITAL

• Maintained favorable Customer Satisfaction (CSAT) results, averaging at 92% for the group
• Maintained our Human Rights Due Diligence (HRDD) process and installed Grievance Redress Mechanisms across our businesses
• 20 climate and sustainability advocacy engagements attended by 2,559 participants
• 38 projects, activities, and programs on environment, socio-economic development, education, and health
• PHP268.1 million environment and community investments

AWARDS AND RECOGNITIONS

• 9 for business excellence
• 2 for corporate governance
• 6 for sustainability reporting
• 8 for environmental initiatives
• 4 for employee health and safety
• 1 for stakeholder engagement/CSR

FINANCIAL POSITION (IN MILLIONS, PHP)

The FPH Group's Audited Financial Statements and the final numbers submitted through SEC 17-A can be viewed on our website (www.fphc.com).

• Excluding minority interests and cumulative translation adjustments
• Excluding cumulative translation adjustments

Chairman's

Message

Dear stakeholders,

2023 was a harsh year for our planet. It was the hottest year on historical record by a substantial margin of +0.15°C over the previous

high set in 2016; and it's most likely the hottest year in the last 100,000 years. It's no exaggeration that every person from every corner of the world has experienced this past year the "unprecedented fury" unleashed by all the extreme weather events that have been increasing and occurring more frequently, "supercharged" by climate change.

• Scorching and prolonged heatwaves were felt across the continents, setting new temperature records in Southern Europe, North Africa and the Middle East and in countries like the US and China.
• Raging wildfires such as in Maui Island, Canada, and Greece were considered the worst and the largest experienced in these areas, burning down forests, properties, and even claiming lives.
• Powerful hurricanes, cyclones and typhoons swept across the various regions, causing devastating floods like Cyclone Freddy, which

We must bear in mind that the ultimate goal is to solve the climate crisis that, by all accounts, is undeniably real and in urgent need of action. We have a narrowing time frame of the next 26 years to make our every action count and avoid irreversible damage to our planet.

was one of the longest lasting cyclones that lasted for 34 days. Another storm, Daniel brought record rainfall in Libya that overwhelmed dams and caused deadly flooding as more than 4,000 people died and over 10,000 more went missing. Tropical cyclone Mocha hit Myanmar and affected some 800,000 people in the region. Typhoon Mawar lashed out in Guam and was the strongest storm to affect the island since 2002. It also affected the Philippines as Super Typhoon Betty with a peak intensity of 215kph.

• There were intense rainfall and extreme precipitation too, that caused flash floods in New York, Hong Kong and parts of Northern Europe.

The extremely high temperature also contributed to record breaking levels for ocean heat and acidification, sea level rise, Antarctic sea ice loss and glacier retreat. What scientists have been fearing and warning us on the devastating effects of climate change continue to unfold every single day now, highlighting our own vulnerabilities to the powerful wrath of nature. We are in the midst of a climate crisis that we ourselves have caused and the cost of further inaction can only be catastrophic.

What's more, the 2023 Global Stocktake (GST) revealed that the world is not on track on limiting global warming to 1.5°C. The GST is a core component of the 2015 Paris Agreement that assesses each country's progress on climate action and encourages them to augment their climate goals. The slow mitigation could have been compensated by adaptation to shield us from the worsening climate change impacts, but the UN Environmental Programme (UNEP) Adaptation Gap Report of 2023 noted the world is also underfinanced and underprepared from the climate hazards.

Amidst all these, how then can we secure the future of humanity?

Many scientists have expressed the urgency for more ambitious climate action. In the words of UN secretary general Antonio Guterres: "Leaders can't kick the can any further. We're out of road."

At the conclusion of COP28 in December 2023, negotiators from all over the world worked overtime to deliver a new plan to address the mounting crisis posed by human-induced climate change. Key was the agreement to "transition away from fossil fuels in energy systems" as well as to support vulnerable nations most impacted by climate change through pledges to a loss and damage fund. There was also progress on the $100.0 Billion pledged by developed nations to finance climate mitigating and adaptation initiatives in developing countries. The Global Goal on Adaptation was also included to encourage "accelerating the use of ecosystem- based adaptation and nature-based solutions."

For the Philippines, we saw the systematic approach undertaken by our government from updating our National Greenhouse Gas (GHG) Inventory, to the crafting of the Philippine Climate Change Assessment Report 2018-2023 with the help of the Oscar M. Lopez Center, and the completion of the National Adaptation Plan focused on food security, water sufficiency, ecosystem and environmental stability and human security which are all for release in 2024. We await finalization of the implementation plan of our Nationally Determined Contribution (NDC) to complete the foundation to rally all sectors to climate action. Complementing the government blueprint are planned regulations to align the private sector to this course, borne out of recognition that businesses contribute largely to the national GHG footprint. We also anticipate the adoption by the Securities and Exchange Commission of the international sustainability and climate standards for disclosure based on the prescriptions of the International Financial Reporting Standards Board in June 2023.

At the FPH Group, we've been actively speaking about the global Journey to Net Zero through its three phases namely: (1) reducing the current level of greenhouse gas emissions of 59 gigatons per year and seeing emissions peak by 2025; (2) then eliminating all GHG emissions and getting to Net Zero by 2050; (3) and then finally reducing the concentration of GHGs in the atmosphere and achieve net negative emissions. We must bear in mind that the ultimate goal is to solve the climate crisis that, by all accounts, is undeniably real and in urgent need of action. We have a narrowing time frame of the next 26 years to make our every action count and avoid irreversible damage to our planet.

Foremost is the need to decarbonize and scale up the greening of our electricity grid. This entails not only changing the electricity system but building a new global energy system with components we have never built before and at a massive scale. We believe this to be the greatest energy transition in the history of mankind.

Our diverse portfolio of clean and renewable energy sources allows us the best opportunity to shepherd our country's energy transition to Net Zero. Aligned with the Philippine Energy Plan, we've set our

target to grow our low carbon energy portfolio to 13,000 MW by 2030, of which 9,000 MW will be from renewable energy. We've lined up our expansion and growth projects utilizing our various fuels of geothermal and hydro and we are eyeing to expand our solar and wind power facilities through several service contracts in various sites all over the country that will be explored in the next few years.

Still, we recognize the importance to keep the lights on during this energy transition, more so with the imminent depletion of our Malampaya natural gas reserves. In 2023, we completed our LNG terminal facility situated at the First Gen Clean Energy Complex and ushered our floating storage and regasification vessel, the BW Batangas into the Batangas Bay. We've began importing LNG for testing and commissioning, and the LNG facility is ready to make up for any shortfall in Malampaya production and to continue to power our natural gas plants. This early though, we are looking at new technologies and alternative fuels to repower our natural gas plants, consistent with our own commitment to Net Zero by 2050. At Energy Development Corporation, we've embarked on a massive multi-year well- drilling operation to expand output for our various geothermal power plants to ensure a more steady

and reliable supply from one of the few renewable energy sources capable of delivering power on a 24/7 basis. In May 2023, we won the bid for the 165- MW Casecnan hydro facility that, in combination with our Pantabangan-Masiway plants and our planned Project Aya pumped storage facility, gives us control over such a unique hydro asset complex. With the turnover of Casecnan in February 2024, we are now working to realize synergies in our hydro operations to supply the country's growing demand for clean energy.

As we clean up our energy grid, we are also working to scale up energy efficiency as the "first fuel" and encourage its use everywhere. Today these efforts are still sparse and fragmented but have great potential to reduce carbon emissions and bring real cost savings and enhance the bottom lines of our customers. We've been developing our own arsenal of solutions such as rooftop solar, remote energy monitoring systems that allows consumers real-time monitoring of energy consumption, energy efficiency audits and solutions for commercial and industrial establishments, and distributed microgrids and resilient power solutions that can deliver reliable electricity all with the view to address the many pain points experienced by consumers.

We recognize though that it takes more than energy security and energy transition to stabilize the distressing state of the climate. While addressing the climate crisis feels such a daunting task, we remain optimistic and hopeful. Our FPH Mission "to forge collaborative pathways to a decarbonized and regenerative future" continues to guide our path and we reaffirm our commitment to collaborate with our stakeholders, the government and the global community in the continuing fight to secure our future. Thank you for your continued and unwavering trust and support.

FEDERICO R. LOPEZ

Chairman and Chief Executive Officer

President's

Message

Dear shareholders,

The year 2023 depicts a picture of irony. While the climate crisis rages on, we at FPH made significant headway on our decarbonized and

regenerative mission. We continued to execute our strategic and operational initiatives and delivered solid financial results. It's a disorienting, uncomfortable reality where we have achievements worth being proud of, and yet we are set against the backdrop of persistent environmental, social and economic threats.

Every year, new horrors are brought to life: wildfires raging in the West; super typhoons battering those like us in archipelagic countries; and record-breaking temperatures scorching the globe. Sadly, the most vulnerable populations are unfairly hit the hardest.

This growing climate threat has catapulted humanity into "the era of global boiling"- borrowing the words of UN Secretary-General António Guterres. May 2023 presented the highest heat index on record for the

We live in exciting times by aligning our business plans with our decarbonized and regenerative mission. This clarity of purpose gives us a clear sense of direction in how we manage FPH's portfolio in power, real estate, construction, manufacturing and energy solutions, and the newer healthcare and education sectors.

year, with several days classified as "dangerous" by PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration).

Several locales experienced scorching heat indexes in the 42 to 51 degree Celsius range. The country was then hit by Super Typhoon Egay (international name Doksuri) in July, battering the agricultural sector in the northern Philippines with gusty winds of up to 240 kilometers per hour.

In the face of multiple crises, pursuing our mission at times feels frustratingly like Sisyphus' tiresome and unending task of pushing a boulder up a steep hill only for it to drop back down and then having to start over. UN Secretary-General Guterres' message reminds us that while there is progress, current practices are not enough to address the climate crisis. Scientists have long been warning us of the irreversible progression and what actions must be taken to prevent further catastrophe. We actually know what needs to get done. This is precisely the reason why we at FPH have taken painstaking effort to position our business plans to be aligned with our mission. There is a silver lining here as we increasingly realize that there are many exciting opportunities that are opening up for our businesses in power, real estate, construction, manufacturing and energy solutions, healthcare and education.

STEPPING UP OUR GAME TO SECURE A CLEAN AND RENEWABLE ENERGY FUTURE

Climate solutions must be tailored to a country's individual context. Our unique scenario makes us ask: how do we decarbonize in a just manner while addressing the need for energy security?

Countries like the Philippines are constrained with limited fossil fuel reserves. Malampaya gas has been in decline and our country's coal needs are mostly imported from Indonesia. If you turn it on its head, these constraints can be seen as an ironic blessing given Government's policy to

decarbonize the country's energy needs. Abundant renewable sources of energy - be it geothermal, solar, wind, or hydro - can be increasingly tapped subject to properly designed policies and incentives. Intermittent solar and wind combined with battery storage is just one of many logical solutions as their costs to build drop making them even more affordable.

As reported in last year's annual report, the Department of Energy updated in 2023 the Philippine Energy Plan 2020 to 2040 (PEP) that targets a 35 percent renewable energy share by 2030 and as much as 50 percent share by 2040 (based on its Clean Energy Scenario). For FPH power subsidiary, First Gen, to make a difference, it needs to grow its portfolio by almost four times from the current 3.5 GW to as much as 13 GW by 2030. Given the Government's coal moratorium, supply growth will come primarily from renewable energy combined with flexible gas-fired plants. This is entirely consistent with First Gen's existing portfolio and organizational capabilities. And even if the Government's 2030 forecast seems optimistic, First Gen nonetheless needs to possess the capabilities to pursue numerous projects simultaneously to address the growing market needs. In other words, we need to be ready when opportunities present themselves.

Some of First Gen's key challenges and opportunities are as follows:

• First Gen's gas-fired fleet will be reaching critical milestones in the next few years with the expiry of its power sales contracts with Meralco. San Gabriel's 414 MW contract expired in February 2023 while Santa Rita's 1,000 MW and San Lorenzo's 500 MW contracts expire in 2025 and 2027 respectively.
• First Gen's long-term fuel supply needs will be addressed with the completion of its LNG import terminal. Our power plants will continue to operate even with the decline of natural gas supply from Malampaya. With the eventual expiry of its power sales agreements, First Gen is now more solidly positioned to contract the output of its power plants.

• First Gen's geothermal subsidiary, Energy Development Corporation (EDC), is scaling up its well drilling campaign. This will supplement the steam requirements for its expanding power generation fleet to deliver the increasing demand for 24-hour baseload renewables.
• First Gen competed for and won the bidding for the 165-MW Casecnan hydroelectric plant which was part of the Government's privatization program.

After more than ten years of planning and development work, First Gen completed the construction and commissioning of its landmark liquefied natural gas (LNG) regasification terminal in the First Gen Clean Energy Complex in Batangas City. First Gen's current fleet of Santa Rita, San Lorenzo, San Gabriel and Avion have been tested to run simultaneously on Malampaya and regasified LNG to ensure continuous electricity production. The combined 1,500 MW of capacity of Santa Rita and San Lorenzo comprising six 250 MW units have the added unique technical benefit of being triple-fuel capable (with Malampaya, LNG or liquid fuel). LNG will also pave the way for the potential expansion of the 1,200 MW Santa Maria project to address the country's future power needs. First Gen successfully received its first LNG cargo at Subic in August 2023 and completed subsequent LNG deliveries in its Batangas complex in December 2023 and February 2024.

First Gen continues to have discussions with key suppliers for succeeding LNG cargoes to supplement Malampaya. The assets in the First Gen Clean Energy Complex are designed for resilience making it valuable for the country's energy security.

We are also reinforcing our ability to supply 24- hour baseload renewable energy through First Gen subsidiary, Energy Development Corporation (EDC). Significant effort is being undertaken by EDC to increase its geothermal energy capacity through a major 40-well drilling campaign over the next three years till 2026. An increased sense of urgency will require EDC to mobilize six drilling rigs to be conducted simultaneously. It is also building 83 MW of new geothermal power plants and 40 Mwh of Battery Energy Storage System to be commissioned in 2024 in anticipation of the increased steam production.

In addition, First Gen increased its ability to supply renewable energy to its growing customer base when it won the competitive bid for the 165 MW Casecnan hydro power plant in May. In November, it closed a Php20 billion term loan with BDO and BPI to partially finance the $526 million acquisition cost. The project was successfully turned over by PSALM to First Gen in February 2024. The Casecnan plant and First Gen's 135 MW Pantabangan-Masiway hydroelectric plant perform synergistically by making use of the large water storage capacity of the Pantabangan reservoir. A plan to construct the 100 MW Aya pumped storage hydroelectric plant in the same area will create a unique and flexible 400 MW total combined hydroelectric facility that will benefit First Gen's growing renewable energy portfolio.

Our capability to grow our clean energy portfolio requires integrating different technologies across varying energy sources to enhance the overall value of a portfolio. Geothermal energy, together with solar, wind, and hydroelectric energy sources, must be harnessed in a way that protects the environment at the same time.

Based on available data, First Gen is the leading producer of renewable energy in the Philippines in terms of energy generated. In 2023, our renewable energy portfolio alone generated 7,680.4GWh of RE, which mostly came from our geothermal capacity which is the only renewable energy source that can run 24/7.

While we are committed to increasing our renewable portfolio, we are familiar with the challenges to expand renewables such as intermittent solar and wind on a stand-alone basis. It was so important for First Gen to invest in the LNG regasification terminal to secure the fuel needs of our gas portfolio to deliver low carbon electricity to our customers whenever they need it. This unique combination of geothermal with gas technology as part of our portfolio will provide a clear pathway for First Gen to invest in intermittent solar and wind projects as part of a growing renewable-focused portfolio. This is a unique value proposition that we offer our customers.

REGENERATION ON THE RISE

Regenerative practices that lead to an improved lifestyle is a key element of our mission. As we answer the call for cleaner, reliable power, we will address other pillars of societal development craving for a higher quality of living in our growing non-power investments.

Let's begin with Rockwell Land with the recovery of its business units exceeding its pre-pandemic levels. Rockwell is capitalizing on the strength of its brand to expand geographically. It has made strides in cultivating quality living in its developments outside Metro Manila and is building a larger landbank to

sustain its growth. Apart from helping to decongest the urban capital, this will bring the best practices of our real estate development experience to more communities in economically advancing areas of the country such as Cebu City, Mactan, Bacolod City, Angeles City, Laguna, Batangas and Bulacan. The cumulative economic progress that our country has experienced through the years has opened up the opportunity for potential customers to aspire and afford a Rockwell developed and curated community.

Rockwell launched PHP16 billion worth of projects, including its new Rockwell IPI joint venture in Cebu City and a new horizontal development phase at Rockwell South in Carmelray, a much-awaited first premium horizontal project of Rockwell in Laguna that covers over 60 hectares of land. Completed projects include Arton West, a 1.9-hectare property nestled on a hill in Katipunan and comprising 80% open space, and East Bay Fordham, the first residential tower developed by Rockwell Primaries East Bay in Sucat.

This is followed by First Philippine Industrial Park (FPIP), which for over 20 years, has been committed to providing quality jobs to Filipinos by attracting export and domestic manufacturing facilities. FPIP is home to 155 locators from Japan, the US, Europe, and other parts of the world; and a workforce of over 70,000 employees. In 2023, FPIP welcomed two new industrial locators and five new commercial locators. FPIP also closed multiple deals including locator renewals covering two hectares, 1.75 hectares of additional land leased, and 2.4 hectares of land sold. FPIP now has 18.5 hectares of ready-built factories,

14.8 hectares of which are currently under lease contracts.

First Balfour builds infrastructure that will support the growing economy. The North-South Commuter Railway project is one example of providing much- needed transportation to developing locales.

First Balfour completed various projects, including the Batangas Combined Cycle Power Plant (BCCP), the McConnell Dowell LNG, Manila Water's East Bay Water Treatment Plant, the NGCP Hermosa-San Jose Overhead transmission line, and St. Luke's Medical Center-Quezon City Pivot Building.

First Balfour's order backlog also significantly increased, from PHP6.5 billion to over PHP30 billion. First Balfour is currently working to deliver on this backlog while actively pursuing planned infrastructure projects in the construction markets it serves, namely: transportation, power and energy, high-value buildings, and water. T1 Rentals, First Balfour's equipment leasing unit, is also continuing the expansion of equipment rental and transport to take advantage of infrastructure opportunities and growth in market share.

First Philec continues to enjoy significant market share domestically. It also made significant strides in the US market. It shipped and installed over 900 transformers in eight US states. First Philec has also developed its own smart meters and has been shortlisted by Meralco as a supplier for its Advanced Metering Infrastructure project. First Philec is hoping to penetrate the electric vehicle (EV) and energy storage segments in the future and is currently building in-house product and design capabilities. Additionally, First Philec partnered with Nascent Technologies, a local expert in energy storage solutions, to establish an Energy Storage Lab for developing new energy storage systems and testing Lithium-Carbon battery samples.

We are also growing our healthcare and education businesses. The acquisition of The Medical Services of America - Philippines synergizes with our existing healthcare businesses in providing accessible solutions nationwide. Meanwhile, First College continues to develop talented individuals who can contribute to national development.

FINANCIAL PERFORMANCE

For the year ended December 31, 2023, the Consolidated Net Income of the FPH Group reached PHP29.1 billion, higher by PHP5.2 billion or 22% compared to PHP23.9 billion in 2022. The significant growth is largely due to the upturn in the operating results of the power generation and real estate sectors.

The Net Income Attributable to FPH amounted to PHP15.1 billion, higher by PHP2.4 billion or 19% compared to last year driven by the stronger operating earnings coupled with one-off proceeds from construction delays and insurance claims this 2023. The corresponding Recurring Net Income (RNI) attributable to FPH grew by PHP1.0 billion or 8% to PHP13.8 billion, a record-high RNI for FPH.

• First Gen's attributable net income of PHP17.4 grew by PHP3.2 billion or 23% mainly driven by
  EDC's higher earnings contribution as it benefited from higher average Wholesale Electricity Spot Market (WESM) rates and contract prices on
  its electricity sales in 2023. These favorable price variances were further supplemented by the improved full-year results of Burgos Wind following a better wind regime and the decline in replacement power purchases due to higher generation of the geothermal plants following fewer outages. The gas plants likewise registered

improved earnings in 2023, largely reflecting San Gabriel plant's higher capacity and O&M fees after the recovery from a deration that occurred in 2022.

• Rockwell Land's attributable net income of PHP3.1 billion was higher by PHP811 million or
  35% on the back of the strong performance of the Residential Development segment driven by the growth in revenues from the completion of Arton West, increased project accomplishments from Balmori Suites, 32 Sanson - Sillion, Rockwell
  South, and Nara residences and lots, as well as the higher sales booking from Proscenium, Arton,
  Edades West, and Rockwell Center-Bacolod. The
  Commercial Leasing segment likewise surpassed last year's performance brought about by higher average rental rates and leased spaces for both retail and office areas, particularly in Proscenium and Balmori Retail.
• First Philec, Inc. closed the year with a net income of PHP1.0 billion, at par with last year's results, reflecting steady revenues from its sale of electrical transformers and new products in 2023.
• The FPIP group's net income declined by PHP45 million or 20.5%, from PHP220 million in 2022 to PHP175 million this year, as the higher revenues from recurring sources and the gain recognized from a land sale were weighed down by the higher operating and finance expenses in 2023.
• First Balfour Group reported a consolidated net loss of PHP159 million for 2023, a reversal of PHP685 million or 130% from a PHP526 million net income in 2022, due to the weaker bottom line of First Balfour on account of lower margins reported from ongoing construction projects coupled with higher finance expenses, and of
  Thermaprime due to the reduction of drilling rigs in service during the period.

• The Healthcare Group registered a combined net income of PHP7 million, a turnaround of PHP111 million or 107% from a net loss of PHP104 million in 2022, mostly reflecting the positive incremental contribution of The MSA (Philippines), a company acquired by FPH in 2023, complemented by the improved results of Asian Eye from better margins and absence of one-off losses.

THE CONFIDENCE TO CONTINUE ON

We live in exciting times by aligning our business plans with our decarbonized and regenerative mission. This clarity of purpose gives us a clear sense of direction in how we manage FPH's portfolio in power, real estate, construction, manufacturing and energy solutions, and the newer healthcare and education sectors.

The success of our initiatives can only succeed by being conscious about strengthening the distinctive capabilities of our people, our system and being aligned with strong partners. Our mission is far from being easy, but we are comforted knowing that the message of revitalizing life amid a seemingly bleak future resonates with the talented individuals we work with.

What FPH has achieved in 2023 is far from the end of our efforts. We hope that our stakeholders will continue to share in this journey energized by our behavior and actions toward a future worth fighting for. Thank you for all your support. Let's all continue to be "Powered by Good".

FRANCIS GILES B. PUNO

President and Chief Operating Officer