—_ SGV Skee keene 226 Makati City Building a better Phiigones ‘working world restation No, O012-FR°3 (Grou, November 15, 2022, valid unt November 16, 2015, REPORT OF FACTUAL FINDINGS The Stockholders and the Board of Directors SSI Group, Inc. 6th Floor, Midland Buendia Building 403 Sen. Gil Puyat Avenue Makati City We have performed the procedures agreed with you and enumerated below with respect to the attached Quarterly Progress Report ended June 30, 2015 on the application of proceeds from the Initial Public Offering (IPO) of SSI Group, Ine. (the Company) on November 7. 2014. ‘the procedures were performed solely to enable the Company to comply with the Philippine Stock Exchange, Inc.’s (PSE) requirement to submit an external auditor's certification on the information being presented by the Company relating to the application of procecds from the IPO. Our engagement was undertaken in accordance with the Philippine Standards on Related Services 4400. “Engagements to Perform Agreed-Upon Procedures Regarding Financial Information” applicable to agreed-upon procedures engagements. These agreed-upon procedures sind results thereo! are summarized as follows 1. We obtained a copy of the Planned Use of Proceeds from the offering of the Company’s common shares. 2. We obtained the Quarterly Progress on the Application of Proceeds from the IPO (ihe “Progress Report”) for the quarter ended June 30. 2015 and checked its mathematical accuracy. We also agreed the amounts of repayment of bank loans, capital expenditure disbursements, additional investment on the Group’s joint ventures and other corporate purposes to the related schedules, sd the 3. We obtained the supporting documents of the repayment of bank loans and aj amounts to the accounting records and supporting documems, 4. We obtained the schedule of capital expenditure disbursements, additional investments to the Group’s joint ventures and other corporate purposes and check the mathematical accuracy’ ol the schedules. On a test basis, we traced certain items to the accounting records and supporting documents, We report our findings below: ¢ of Proceeds from the offering 1. With respect to item 1, we obtained a copy of the Planned U ‘of the common shares (the Plan) of the Company. We noted from the Plan that the net proceeds from the offering will be used by the Company for store development mainly consisting of the construction of new stores, equity investments in the joint ventures, consisting of capital injection pursuant to the obligation under the joint venture agreements. repayment of existing debts and other corporate purposes,2. With respect to item 2, we found the Progress Report to be mathematically accurate and the amounts are in agreement with the respective schedules provided by management supporting the use of the IPO Proceeds. We also noted that the amounts in the schedules consist of acquisitions and/or payments recognized in the Company’s records for the period April 2015 to June 2015, With respect to item 3, we checked the accounting records for the entry made on the repayment of bank loans and noted no exceptions. We also obtained the authority to debit issued by Stores Specialists, Inc. (SSI), a wholly-owned subsidiary of the Company. to Metropolitan Bank & Trust Co, and traced the corresponding withdrawals 10 passbook. We noted that the total amount of loan paid by Stores Specialists. Inc. for the quarter was P2,859,057.42. Of this amount, P2,500,000.00 was sourced from the IPO proceeds while 359,057.42 was sourced from SSI’s operations. 4. With respect to item 4, we found the schedules to be in order and mathematically accurate ‘On a test basis, we traced capital expenditures and disbursements made for other corporate purposes and noted no exceptions, We noted that the additional investments to SIAL. CVS Retailers, Inc. and SIAL Specialty Retailers, Ine., the Group's joint ventures, for the quarter amounted to P66,900,000,00 and #100,000,000.00. respectively. Of the total amount, P79,000,000.00 was sourced from the IPO proceeds while P87.900,000.00 was sourced from SSI’s operations. 5. The Company also disclosed in the Progress Report that P!.200.235,141.94 of the total net proceeds allocated to capital expenditures but have not yet been applied was made available to pay off its short-term and long-term loans. ‘This represents the excess of the allocation tor capital expenditures amounting to P2,500,000,000.00 and the actual capital expenditure: June 30, 2015 amounting to PL,299,764.858.06. Because the above procedures do not constitute either an audit or a review made in accordance with Philippine Standards on Auditing or Philippine Standards on Review Fngagements, respecti do not express any assurance on the use of proceeds from the IPO based on the said standards, Had we performed additional procedures or had we performed an audit or review of the Financial statements in accordance with Philippine Standards on Auditing or Philippine Standards on Review Engagements, other matters might have come to our attention that would have been reported to you We have no responsibility to update this report for events or circumstances occurring after the date of this report‘Our report is solely for the purpose set forth in the first paragraph of this report and for your information and is not to be used for any other purpose or to be distributed to any other parties. ‘This report relates only to the updated report on the Company’s use of proceeds from the IPO and items specified above and do not extend to any financial statements of SS} Group. Inc.. taken as a whole. SYCIP GORRES VELAYO & CO. Ladliden Airy Ladistao Z. Avila.) Partner CPA Certificate No. 69099 SEC Accreditation No, O111-AR-3 (Group A), January 18, 2013, valid until January 17, 2016 ‘Tax Identification No, 109-247-891 BIR Accreditation No. 08-001998-43-2015, February 27, 2015, valid until February 26, 2018 PTR No. 4751254, January 5, 2015, Makati July 14, 2015