First Philippine : 2022 Integrated Report

About the Cover

The cover for First Philippine Holdings Corporation's (FPH) 2022 Integrated Report is a departure from the dark, alarming covers we've used in previous years.

While the climate crisis remains an urgent matter and addressing it may seem like a daunting task, it is not impossible. With solutions in sight, there is still hope but we need to work quickly to secure a livable planet for future generations.

The cover shows one of these solutions-the solar panels that are part of the microgrid project of FP Island Energy Corporation, a subsidiary of FPH, in islands off the coast of Camarines Sur. The project provides 24/7 power to off-grid island communities in Haponan, Lahuy, and Quinalasag, improving the standard of living of about 16,000 residents.

As more sectors tap into available technologies and develop new ones to provide essential services without compromising the environment, we remain hopeful that it is still possible to pass on a brighter future to the next generations.

Table of Contents

1. About the Cover

1. About the Report
2. Board Certification

1. Report Disclaimer
2. 2022 Highlights

1. Chairman's Message

1. President's Message

1. Our Business
2. Who We Are

23 What We Do

1. Organizational Structure
2. Review of FPH Business

32 Residential and Commercial Real Estate

34 Industrial Real Estate

36 Construction and Energy Services

1. Our Operating Context
2. 2022 Business Environment

46 ESG Material Issues

50 Stakeholder Engagement

54 Risks and Opportunities

70 Our Value Creation Story

1. Business Strategy

1. Business Model
2. Progress on Our Mission

1. Delivering on Our Strategy
2. Financial Capital

1. Manufactured Capital

1. Natural Capital

1. Human Capital

1. Intellectual Capital

1. Social and Relationship Capital

140 Our ESG Values

142 Contributing to Society through Our Purpose

146 Summary of Outcomes

152 Our Outlook

158 Governance

1. Board Governance
2. Board Committees

1. Governance Activities
2. Policy Updates and Tools

1. Board of Directors

1. Senior Management

184 Annexes

1. Annex 1: Third Party Review

1. Annex 2A: ESG Data Assurance

1. Annex 2B: Assured ESG Disclosures

1. Annex 3: Awards and Recognitions

1. Annex 4: External Engagements

208 Annex 5: Research and Publications of OML Center

212 Annex 6: Content Index

GRI 2-2,2-3

About the Report

The year 2022 was a banner period for First Philippine Holdings Corporation (FPH), with all of its segments registering positive financial results while staying the course on the FPH mission of contributing to a decarbonized and regenerative future for the planet and people. With the sustained aggression of climate change, our constant investment in building the competence of our employees and partners to execute our mission is the foundation of our steady transformation to an antifragile organization that is stable and enduring.

HOW TO READ THE REPORT

The key message of the report is our growing understanding of the evolving climate battle we are up against and how this challenge compelled us in 2022 to prepare for this conflict through a more granular road map that will decarbonize and regenerate our businesses since solutions are in sight (see pages 79-83).

The first part of the report describes the group in terms of our purpose, mission, products, and services, as

CERTIFICATION FROM THE BOARD

I hereby certify that the 2022 FPH Integrated Report is a fair presentation of the company's operations from January 1 to December 31, 2022. The company updated its material ESG issues at the end of 2022, and the disclosures on these material issues in the report were based on accurate information available to the company for the reporting period. This certification is being issued based on the February 4, 2021 authorization

The FPH Integrated Report (IR) for January 1 to December 31, 2022, discusses the key elements of our value creation. In addition to business developments and financial performance, the non-financial aspects reported are our mission, business strategy, business model, external environment, operating context, and value creation through our six capitals (financial, manufactured, human, intellectual, natural, and social), progress in executing the FPH mission, our outlook, and governance.

The scope of the report includes the financial and non-financial (environmental, social, and governance or ESG) elements of our major business segments, namely, power generation, manufacturing that has evolved into energy solutions venture, real estate development, and construction, where we have major management and operational control. Some ESG material issues may extend to other stakeholders in line with our mission of contributing to the regeneration of the planet and the people.

Our discussion in the 2022 report conforms with the framework for Integrated Reporting guided by the Value Reporting Foundation (VRF). We have adopted the Philippine Financial Reporting Standards (PFRS) for our financial statements. For the concerns on planet and society, we referenced our ESG data analysis on specific sustainability standards based on their material impacts following the double materiality principle:

• Financial materiality analysis used as reference the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD)
• Impact materiality analysis or the effects of our business on the planet and people adhered to the Global Reporting Initiative (GRI) and UN Guiding Principles on Business and Human Rights (UNGP). The resulting outcomes were further aligned with the UN Sustainable Development Goals (SDG).

An index of the relevant ESG parameters that we assessed, and the corresponding standards are presented on page 212.

well as the developments in our various subsidiaries over the past year (pages 20-37). The second part presents our operating conditions consisting of our external environment and its implications to FPH, our material ESG issues, our risks and opportunities, and our stakeholder engagement (pages 38-69). The third part shows our progress on our mission, made possible by the upskilling of our subsidiaries on our mission's environmental, social, and governance pillars and how those skills were applied to advance our decarbonization and regeneration goals (pages 76-85). To substantiate the progress in our mission, the fourth part of the report breaks down how we delivered our strategy through the six capitals that created value for the business and others (pages 86-149). Lastly, we inventoried the evolving future trends and issues we need to confront and how we

will continue to strengthen our arsenal of measures to address them (pages 152-157).

ASSURANCE AND CHECKS

of the FPH Board 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 and its designation of the Corporate Governance Committee to review and finalize the report.

The Management supported the Board 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, Operations, and Integrated Corporate Communications groups. Based on the foregoing, the final review of the report was conducted by the Corporate Governance Committee, and the report was presented to the Board. It was authorized by the body to be released on March 30, 2023.

MATERIALITY APPROACH

FPH reviews topics that are material to its internal and external stakeholders every three years, with 2022 being the year to review. For objectivity, we commissioned the University of Asia and the Pacific Center for Social Responsibility (UA&P-CSR) to conduct the third-party assessment of our material ESG issues. The review considered the double materiality principle embraced by the company and applied a novel approach called quadrilateral materiality assessment developed by the Center. This method is described in the ESG Material Issues section on page 46.

REPORTED IMPROVEMENTS

The following are the Company's key ESG developments and enhancements in the reporting process:

• update of our material issues derived from a more comprehensive third-party review of the issues (pages 46-49);
• third-partylimited ESG data assurance (pages 194-203);
• new policy on mandatory ESG disclosure for suppliers of the power segment to promote responsible sourcing (pages 132 and 165)
• initiated a systematic embedding of ESG into our operations (page 78);
• all subsidiaries developed their plans for our ESG pillars aligned with the FPH mission (pages 79-83)
• linking the company's ESG contributions with national plans and our country's relevant international commitments (pages 142-145); and
• active networking with and mobilization of multi-sectoral stakeholders to amplify climate action (page 207).

4 FIRST PHILIPPINE HOLDINGS CORPORATION

The report went through three 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 the right.

• P-CSR)as external and independent experts to evaluate the report (pages 186-193).

ERM Certification and Verification Services Limited (ERM CVS) was engaged to provide limited assurance of selected information. Please see ERM CVS' full assurance statement on pages 194-203.

The 2022 FPH Integrated Report is uploaded on the company website: www.fphc.com.

Federico R. Lopez

Chairman & CEO

REPORT DISCLAIMER

Certain portions of the 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 likely 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. Two major disruptions, the sustained climate crisis and the Russia-Ukraine war that

is evolving into a global economic recession, continue to pose uncertainties to our forecast of the Company's outlook.

2022 Highlights

OPERATIONAL HIGHLIGHTS

Financial Capital

• PHP170.3 billion consolidated revenue
• PHP23.9 billion consolidated net income
• PHP12.7 billion net income attributable to equity holders of the Parent

Manufactured Capital

• 22,489.9GWh electricity sold
• 70 business units
• 2,013,426KVA transformer manufactured
• 112,887.6 sqm residential and commercial real estate completed
• 132,000.0 sqm real estate sold and reserved
• 365,254.0 commercial, residential, and industrial real estate projects leased
• Drilling projects for 2 major clients

Natural Capital

• Maintained a safety incidence rate (employees) within industry benchmarks:
• • Power Generation: 0.20 vs 1.20
  • Real Estate: 0.00 vs 2.10
  • Construction: 0.00 vs 2.40
  • Energy Solutions: 1.62 vs. 4.40

Intellectual Capital

• Deepening sessions to strengthen FPH's capability to execute the mission
• Sustained IT efforts in pursuit of digitalization
• Subsidiaries maintained ISO certifications 9001:2015, 14001:2015, 45001:2018, 55001:2014
• Integration of mission in key business functions (business development, operations, product/service offerings)

Social and Relationship Capital

FINANCIAL HIGHLIGHTS

FINANCIAL RATIOS

Return on equity

Dividend payout ratio

Current ratio

Debt to equity ratio

Human Capital

• 7,448 permanent and temporary employees
• 14.18 average training hours per employee
• 2 new policies for employee development
• 23% female employees
• Signatory to the UN Women Empowerment Principles (WEPs)
• Human rights protocols to respect and protect employees
• 12,009 COVID-19 vaccines administered to employees, their family, and contractors

Awards and Recognitions

• 18 for employee health and safety
• 10 for integrated reporting and environmental initiatives
• 5 for business excellence
• 4 for corporate governance
• 4 for stakeholder engagement and CSR
• 1 for education

STOCKHOLDERS' EQUITY

PER SHARE DATA (IN PHP)

* Excluding minority interests and cumulative translation adjustments ** Excluding cumulative translation adjustments

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).

GRI 107-2,107-3

Chairman's Message

Today it's undeniable that the climate emergency being faced by humanity is real and in urgent need

of action. In the last few years, we've employed various platforms, venues, and forums, including our integrated report covers, to highlight the existential threat posed by the climate crisis. Now it feels so much more encouraging as we see a myriad of sectors of society weaving threads from their respective fields into a tapestry of solutions that aims to bring carbon emissions down to zero by 2050. While the challenge is still daunting, we know that, with the right focus, countless solutions will come to light.

The journey to Net Zero will involve three phases that need to be executed within a limited timeframe. More importantly, we must keep in mind that the overriding goal is to "solve the climate emergency", by mitigating and reversing emissions as well as adapting to its

For now at the FPH Group, our efforts remain focused largely on helping to reduce the carbon intensity of the electricity

grid and then ultimately to decarbonize it. We're making it our mission to shepherd the energy transition to Net Zero.

impacts that are already here and intensifying. Because if we don't get it right, the exponential deterioration of global climate systems and the environment will make it impossible to solve other problems like poverty, inequality, disease, food production, freshwater scarcity, mass migration, social displacement, mass extinction of species, and biodiversity loss, among others. All of this we will feel during our lifetimes and they're undeniably accelerating as we can see in news reports every single day now.

Recall that Paris COP 21 applauded the agreements that signaled we could limit global warming to 2.0 degrees Celsius if all commitments were met. Since then, the UN IPCC issued a Special Report on Global Warming, followed by its Sixth Assessment Reports from Working Groups I, II and III, all with dire warnings and consequences for a 2-degree Celsius warmer world. Taken together, they underscored the scientific consensus that our targets must not exceed 1.5 degrees by end century. This target is slipping away from us fast but the 1.5 degrees Celsius must still remain our base case.

Consequently, "solving the climate emergency" means deliberately embarking on a journey through these phases.

In PHASE ONE, we REDUCE Greenhouse Gas (GHG) emissions of carbon dioxide, methane, nitrous oxides and fluorinated gases from the current 59 gigatons (Gt) of GHG's per year, and we see emissions peak by 2025. This is where most efforts are centered today. But we cannot stop there.

Next, in PHASE TWO, we aim further to ELIMINATE all emissions of GHG's. We must get to Net Zero emissions by 2050.

The journey to Net Zero will involve three phases that need to be executed within a limited timeframe.

However in PHASE THREE by 2050, we must begin the arduous task of reducing the concentration of greenhouse gases in the atmosphere. We must get to what is called NET NEGATIVE EMISSIONS. This is best described in the words of NASA climate scientist James Hansen: "If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted…CO2 will need to be reduced…to at most 350ppm."

For reference, pre-industrialization carbon dioxide levels were at 280ppm and we sailed past 350ppm in 1986. We continued to blow through 400ppm in 2013, the same year Super Typhoon Yolanda, the most powerful typhoon on earth to ever make landfall, announced to the world, through the suffering of millions of Filipinos, that climate change is here and that we better get our acts together now. While the COVID-19 pandemic has given the world a short respite, today emissions are on the rise again and Paris COP 21 targets still aren't being met.

We now need to realize Phases One, Two and Three within the rapidly diminishing timeframe of the next

27 years. Failing to do this over the limited period will trigger irreversible tipping points, the effects of which we are already seeing in news reports from all over the world every day. The clock ticks as we speak. Winning this war and solving climate change will mean staying laser-focused on strategies, tactics and accelerating technologies that are likely to scale within this very critical timeframe of the next 27 years.

Progress through Phases One to Three in the battle to "solve the climate emergency" has many facets beyond just energy. It spans agricultural practices, food production, waste management practices, industrial