12.

Indicate by check mark whether the registrant:

(a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17
thereunder or Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections
26 and 141 of the Corporation Code of the Philippines, during the preceding twelve
(12) months (or for such shorter period the registrant was required to file such
reports)

Yes [ x ] No [ ]

(b) has been subject to such filing requirements for the past ninety (90) days.

Yes [ x ] No [ ]

PART I--
I--FINANCIAL
--FINANCIAL INFORMATION

Item 1. Financial Statements.

Please refer to the financial statements and schedules attached herewith.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of

Operations.

The following discussion and analysis of Aboitiz Equity Ventures, Inc.'s (AEV or the Company or the
Parent Company) consolidated financial condition and results of operations should be read in
conjunction with the consolidated financial statements and accompanying schedules and
disclosures set forth elsewhere in this report.

Top Five Key Performance Indicators

Management uses the following indicators to evaluate the performance of registrant Aboitiz Equity
Ventures, Inc. and its subsidiaries (the Company and its subsidiaries are hereinafter collectively
referred to as the Group):

1. EQUITY IN NET EARNINGS OF INVESTEES

Equity in net earnings (losses) of investees represents the group's share in the
undistributed earnings or losses of its investees for each reporting period
subsequent to acquisition of said investment, net of goodwill impairment cost, if
any. Goodwill is the difference between the purchase price of an investment and
the investor's share in the value of the net identifiable assets of investee at the
date of acquisition. Equity in net earnings (losses) of investees indicates
profitability of the investments and investees' contribution to the group's
consolidated net income.

Manner of Computation: Investee's Net Income (Loss) x Investor's % ownership -

Goodwill Impairment Cost.

2. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION

DEPRECIATION & AMORTIZATION (EBITDA)
The Company computes EBITDA as earnings before extra-ordinary items, net
finance expense, income tax provision, depreciation and amortization. It provides
management and investors with a tool for determining the ability of the group to
generate cash from operations to cover financial charges and income taxes. It is

2
 also a measure to evaluate the group's ability to service its debts and to finance its
capital expenditure and working capital requirements.

3. CASH FLOW GENERATED

Using the Statement of Cash Flows, management determines the sources and
usage of funds for the period and analyzes how the group manages its profit and
uses its internal and external sources of capital. This aids management in
identifying the impact on cash flow when the group's activities are in a state of
growth or decline, and in evaluating management's efforts to control the impact.

4. CURRENT RATIO

Current ratio is a measurement of liquidity, calculated by dividing total current

assets by total current liabilities. It is an indicator of the group's short-term debt
paying ability. The higher the ratio, the more liquid the group.

5. DEBT-
DEBT-TO-
TO-EQUITY RATIO
Debt-to-Equity ratio gives an indication of how leveraged the group is. It
compares assets provided by creditors to assets provided by shareholders. It is
determined by dividing total debt by stockholders' equity.

JAN-JUN 2012 JAN-JUN 2011

EQUITY IN NET EARNINGS OF INVESTEES 7,110,756 4,806,551
EBITDA 20,054,160 18,518,398
CASH FLOW GENERATED:
Net cash provided by operating activities 14,049,135 11,961,067
Net cash provided by (used in) investing
activities 809,005 (662,048)
Net cash used in financing activities (13,815,436) (8,521,995)
Net Increase in Cash & Cash Equivalents 1,042,704 2,777,024
Cash & Cash Equivalents, Beginning 29,543,492 26,097,203
Cash & Cash Equivalents, End 30,531,371 28,867,924
JUNE 30 2012 DEC 31/2011
CURRENT RATIO 2.92 2.96
DEBT-TO-EQUITY RATIO 1.12 1.12

All the key performance indicators were within management's expectation during the period under
review.

Management teams of the different businesses continued to effectively handle their respective
operating performances and financial requirements. As a result, profitability had been sustained.
This was reflected in the associates' income contributions and the Group's consolidated EBITDA
which both registered substantial growth of 48% and 8%, respectively. Higher EBITDA generated
additional funds which were used to repay debt and finance capital expenditures. Despite higher
fund usage during the current period as compared to last year, the financial position of the Group
remained strong, as indicated by healthy financial ratios at the first semester-end of 2012.

3
Financial Results of Operations

For the semester ended June 30, 2012, AEV and its subsidiaries reported a consolidated net income
of P11.81 billion, a 16% YoY increase, which translated to a P2.14 earnings per share. In terms of
income contribution, power group still accounted for the lion’s share at 79%, followed by the
banking and food groups at 17% and 4% each.

The Group generated a non-recurring net gain of P508 million (versus P512 million in 1H2011),
which comprised the following: (1) P725 million share of power group's net foreign exchange gains
from the revaluation of dollar-denominated loans and placements; (2) P11 million share of AP's
gain from its associates’ preferred share redemption in 1Q2012; (3) P183 million share of a power
subsidiary's cost reimbursement to its steam supplier; and (4) P45 million share of AP's debt
prepayment fee. Sans one-off items, the Group’s core net income for the current period amounted
to P11.3 billion, up 16% YoY.

Power

Aboitiz Power Corporation (AP or AboitizPower) and its subsidiaries ended the current period with
an income contribution of P9.36 billion, a 16% increase from last year's P8.09 billion.

AP's generation group posted a 12% YoY increase in earnings contribution to AEV, from P7.77
billion to P8.71 billion, attributed to the higher average selling prices and net generation recorded
during the semester under review. As compared to 1H2011 levels, average selling prices rose by 7%
as spot market prices improved amid surge in demand for electricity due to warmer climate, and
curtailment in supply resulting from higher plant outages in the Luzon Wholesale Electricity Spot
Market (WESM). Likewise, the group’s attributable net generation grew by 10%, from 4,640 GWh
to 5,096 GWh, resulting from the 14% expansion of sales made through bilateral contracts. In
terms of capacity, the group sold, on an attributable basis, 1,532 MW, up by 13% YoY, at the back
of rising capacity sales through bilateral contracts and improved levels of ancillary services.

AP's distribution group also registered a 39% YoY rise in earnings contribution to AEV, from P781
million to P1.09 billion. Driving this growth was the 7% YoY expansion in attributable electricity
sales, from 1,814 GWh to 1,949 GWh, mainly coming from the 9% increase in the power
consumption of industrial customers, with residential and commercial sectors posting growth rates
of 6% and 4%, respectively. Higher selling prices resulting from the implementation of the rate
increase (under a Performance Based Regulation scheme) further improved the group's profit
margins.

Financial Services

Income contribution from the financial services group grew by 37%, from last year’s P1.43 billion to
P1.96 billion. Union Bank of the Philippines (UBP or UnionBank) ended the current period with an
earnings contribution of P1.76 billion, an increase of 44% YoY, while City Savings Bank, Inc.'s (CSB
or CitySavings) share in earnings was P197 million, down 6% YoY.

UBP’s 1H2012 net income was higher at P4.07 billion (vs P2.86 billion in 1H2011) principally due to
the 24% YoY increase (P5.6 billion vs P4.5 billion) in its non-interest income attributed to hefty
trading gains. This improvement was boosted by the 8% growth (P3.7 billion vs P3.4 billion) in net
interest income, attributable to the 18% drop in interest expense resulting from the decline in
average levels of high cost deposits and lower borrowings.

The 7% YoY decrease in CSB's net income, from P212 million to P198 million, was mainly due to the
decline in operating margins as the rise in operating expenses outpaced the growth in interest
income on loans and service fees.

4
Food

Income contribution from Pilmico Foods Corporation (PFC or Pilmico) and its subsidiaries amounted
to P522 million, down 20% YoY. This decline was attributed to margin squeeze owing to lower
average selling prices and rising material costs which more than offset the higher sales volume
generated by the flour and feeds businesses.

Material Changes in Line Items of Registrant’s Statements of Income and Comprehensive Income

For the first semester of 2012, AEV's consolidated net income attributable to equity holders
registered a 16% growth, reaching P11.81 billion from P10.22 billion posted in the same period last
year.

Operating profit for the current period amounted to P11.79 billion, a 6% decline YoY, as the rise in
consolidated costs and expenses outpaced the increase in revenues.

Power subsidiaries reported a combined 4% YoY drop in operating margins resulting from the 26%
surge in costs and expenses which surpassed the 15% growth in revenues. Consolidated revenues
increased to P31.27 billion (vs P27.27 billion in 1H2011) substantially due to higher average selling
prices and GWh sold. For the generation subsidiaries, the expansion in revenues was due to
improvement in spot market prices and increase in contracted sales. For the distribution
subsidiaries, it was due to higher consumption by customers and better selling prices from the
implementation of the rate increase under a Performance Based Regulation scheme. Meanwhile,
consolidated costs and expenses rose to P21.47 billion (vs P17.08 billion in 1H2011) mainly due to
the increase in fuel costs of AP Renewables, Inc. (APRI), Therma Luzon, Inc. (TLI) and Therma
Marine, Inc. (TMI).

Food group posted a 16% YoY decrease in operating margins as the P 434 million increase in costs
and expenses more than cancelled out the P273 million rise in revenues. The 4% improvement in
sales (P7.56 billion vs P7.29 billion in 1H2011) was attributed to higher sales volume of the flour and
feed divisions. The 7% rise in costs (P6.74 billion vs P6.31 billion in 1H2011) was due to the
increasing costs of raw materials in the feed division and swine business.

CSB, the lone banking subsidiary, likewise registered a 14% YoY decrease in operating profit due to
the 44% spike in its operating expenses resulting from the implementation of its expansion
program and various initiatives. This increase in expenses offset the 23% expansion in revenues.

The P2.3 billion increase in the earnings contribution of associates, which more than made up for
the P690 million dip in consolidated operating profit, pulled up the Group's over all profitability.

Share in net earnings of associates grew by 48% YoY (P7.11 billion vs P4.81 billion in 1H2011) due to
the strong performance of UBP and the majority of the power associates. Bulk of the increase was
coming from the substantial income contributions of UBP, SN Aboitiz Power-Magat, Inc. (SNAP-
Magat), SN Aboitiz Power-Benguet, Inc. (SNAP-Benguet), Cebu Energy Development Corp. (CEDC),
and Visayan Electric Company (VECO). Improvement in UBP's net income was a result of higher net
interest income and trading gains. The spike in SNAP-Magat's and SNAP-Benguet's bottomlines
was due to significant rise in ancillary service revenues and power sales, respectively. Likewise, the
upsurge in the income contributions of CEDC and VECO was attributed to higher revenues as
CEDC's contracted sales increased and VECO's MWh sales expanded by 9%, complemented by
better selling rates.

5
The improvement in equity earnings was partially offset by the 3% YoY increase in net interest
expense (P3.50 billion vs P3.40 billion) mainly attributable to the higher accreted interest cost on
TLI's finance lease obligation.

The increase in other income enhanced the growth in the Group's consolidated net income for the
semester in review. Other income rose by 97% substantially due to higher foreign exchange (FX)
gains (P965 million vs P274 million in 1H2011). This was the result of the restatement of the dollar-
denominated debt of the power group under a higher appreciating peso scenario as of 1st
semester-end 2012, as compared to that of June 2011. As of June 30, 2012, FX rate for the US$
stood at P42.12 to a dollar, a P1.72 decline from the P43.84 rate as of the beginning of the year.
This appreciation was higher compared to the P0.51 differential as of June 30, 2011 when FX rate
was at P43.33, reckoned from the P43.84 rate as of the start of that year.

The 12% increase in provision for income tax (P828 million vs P739 million in 1H2011) was due to
the higher taxable income of the majority of the power subsidiaries.

The 19% rise in net income attributable to minority interests was mainly due to the increase in
power group's net income, 23% of which belongs to minority shareholders.

AEV's consolidated comprehensive income attributable to equity holders correspondingly rose by

8%, from P10.19 billion in 1H2011 to P11.05 billion in 1H2012. This was attributed to the 16%
increase in consolidated net income, partially offset by higher share of an associate's valuation loss
on its available-for-sale (AFS) investments.

Changes in Registrant’s Resources, Liabilities and Shareholders Equity

Compared to year-end 2011 level, consolidated assets increased 2.5% to P206.02 billion as of June
30, 2012, due to the following:

a. Cash & Cash Equivalents increased by P988 million mainly due to the excess cash
generated from operations and dividend collections, after spending for various capital
expenditures, debt servicing and cash dividend distribution.

b. Trade and Other Receivables increased by P655 million mainly due to higher loan releases
of the banking subsidiary.

c. Other Current Assets increased by 24% (P2.76 billion vs P2.22 billion in December 2011)
mainly due to the build-up of VAT inputs by power generation subsidiaries as a result of
ongoing plant construction and rehabilitation works.

d. Investments in and Advances to Associates increased by P1.1 billion (P49.89 billion vs

P48.76 billion in December 2011) mainly due to recording of P7.11 billion share in earnings
of associates during the current period. This increase was partially reduced by the P5.06
billion cash dividends received, the P696 million share of a banking associate's valuation
loss on its AFS investments, and the P290 million proceeds from the preferred share
redemption made by certain power associates.

e. Gross of depreciation expense, the resulting P3.88 million increase in Property Plant and
Equipment was mainly due to the following: 1.) rehabilitation of geothermal power plant
and power barges; 2.) on-going construction of Davao coal plant; and 4.) various capital
expenditures of power and food groups.

6
 f. Investment Properties increased by 17% YoY (P401 million vs P341 million in December
2011) due to additional foreclosed properties held by CSB.

g. Deferred Income Tax Assets increased by 45% (P389 million vs P269 million in December
2011) mainly due to the corresponding tax effect on the additional impairment loss
provision recorded by certain power subsidiaries during the current period.

The above increases were tempered by the 9% YoY decline in Inventories account resulting from
lower inventory levels carried by power and food groups as of the end of 1st semester 2012.

Liabilities

Consolidated short-term bank loans decreased by 7% (P4.93 billion vs P5.3 billion in December
2011) while long-term liabilities remained flattish (P81.22 billion vs P80.74 billion in December
2011). The decline in short-term loans was mainly due to the prepayments made by power group
using internally-generated funds. The slight upward movement in long term debt was mainly due
to the P2.8 billion new loan availments made and the P1.3 billion rise in finance lease obligation
resulting from interest accretion. Said increase was substantially countered by the P3.0 billion
pretermination of AP bonds and P600 million amortization payments on existing loans.

Trade and other payables and deposit liabilities were higher by 13%, from P17.14 billion to P19.4
billion, mainly due to: a.) power group's rise in payables to suppliers as a result of ongoing plant
construction and rehabilitation works; and b.) banking subsidiary's growth in deposits.

Income tax payable increased by 32%, from P223 million to P294 million, due to the recording of
the additional income tax due for the current period.

Pension liability increased by 31%, from P37 million to P48 million, on account of pension cost
accruals for the current period.

Payable to preferred shareholder of a subsidiary decreased by 28%, from P63 million to P45 million,
due to principal repayments.

Deferred income tax liabilities rose by P273 million mainly due to the set up of the corresponding
income tax provision on the unrealized foreign exchange gains booked during period in review.

Equity

Equity attributable to equity holders of the parent grew by 2% from year-end 2011 level of P77.08
billion to P78.76 billion, mainly due to the P3.08 billion increase in Retained Earnings, resulting
from the P11.81 billion net income recorded during the current period, reduced by the P8.72 billion
cash dividends paid. This increase was partially offset by the recognition of the following: a.) P696
million share in a banking associate's unrealized fair valuation loss on its AFS investments; b.) P61
million share of current translation adjustments recorded by power generation associates using US
dollars as functional currency; and c.) P639 million acquisition of minority interest by AEV parent in
its additional purchase of AP shares.

Material Changes in Liquidity and Cash Reserves of Registrant

For the semester ended June 2012, the group continued to support its liquidity mainly from cash
generated from operations and dividends received from associates.

7
Compared to the cash inflow during the comparable period in 2011, consolidated cash generated
from operating activities in 1H2012 increased by P2.09 billion to P14.05 billion. This increase was
largely due to higher collection of trade receivables.

The current period ended up with an P809 million net cash generated from investing activities,
compared to the P662 million cash used during the comparable period last year. This was mainly
due to the increase in cash dividends received from associates.

Net cash used in financing activities was higher at P13.82 billion, compared to P8.52 billion in
1H2011. This increase was attributed to net debt repayments made during the 1st half of 2012
versus the net debt availment last year.

For the period in review, net cash inflows surpassed cash outflows, resulting to a 3% increase in
cash and cash equivalents, from P29.54 billion as of year-end 2011 to P30.53 billion as of first
semester-end 2012.

Financial Ratios

Backed by strong operating cash inflows, liquidity was adequately preserved. Cash and cash
equivalents stood at P30.53 billion as of June 30, 2012, 3% higher than year end 2011 level, keeping
current ratio at a high level of 2.92:1 (versus last year’s 2.96:1). Debt-to-equity ratio stood at 1.12:1,
the same level as that of December 2011, while net debt-to-equity ratio improved to 0.57x (versus
year-end 2011’s 0.59x), as decline in consolidated net debt complemented the growth in equity.

Outlook for the Upcoming Year/ Known Trends, Events, Uncertainties which may have Material
Impact
Im pact on Registrant

Notwithstanding external and uncontrollable economic and business factors that affect its
businesses, AEV believes that it is in a good position to benefit from the opportunities that may
arise in 2012. Its sound financial condition, coupled with a number of industry and company
specific developments, should bode well for AEV and its investee companies. These developments
are as follows:

Power (Generation
(Generation Business)

1. Continued growth in the Power Group’s attributable capacity

76%-owned subsidiary AboitizPower ended the first semester of 2012 with a total attributable
generating capacity of 2,350 MW. The company aims to continue growing its portfolio of
generation assets by implementing the following projects.

- Rehabilitation of the Binga Hydro Power Project

In 2011, AboitizPower, together with its partner SN Power Invest AS (SN Power), commenced
the programmed rehabilitation of the 100 MW Binga hydropower plant, which is consisted of
four units with a capacity of 25 MW each. The program involves the increase of each unit’s
capacity by 5 MW. Rehabilitation of the first unit was completed in December 2011. Works on
the second unit have commenced and are expected to be completed in the third quarter of
2012. Rehabilitation of the remaining two units will commence thereafter. Full completion will
result to Binga’s total capacity reaching 120 MW, from the current 105 MW. AboitizPower has
an effective stake of 50% in this facility.

8
- Rehabilitation of the Tiwi-Makban Geothermal Power Facilities

AboitizPower’s 100%-owned AP Renewables, Inc. (APRI) is currently undertaking the

rehabilitation of several units of the Tiwi-Makban geothermal power plant complex. Works on
the Tiwi facilities are targeted for completion by the third quarter of 2012, while those for
Makban are seen to be finished by first quarter of 2013. Enhancements in the plants’
availability rate are expected following the completion of the refurbishment, rehabilitation and
resource improvements.

- Greenfield and Brownfield developments

600 MW Coal-fired Power Plant in Subic. This is a project by Redondo Peninsula Energy, Inc.
(RP Energy), a joint venture with Meralco PowerGen Corporation (MPGC) and Taiwan
Cogeneration International Corporation (TCIC). The project involves the construction and
operation of a 2x300 MW circulating-fluidized-bed (CFB) coal-fired power plant in the Subic
Bay Freeport Zone. RP Energy is awaiting the issuance of the amended Environmental
Compliance Certificate to cover two high-efficiency 300-MW units with main steam reheat
systems. In the meantime, site preparation and the finalization of the EPC contract are
underway, while suppliers of the main equipment (i.e. CFB boilers and turbines) have already
been identified. Completion of the first unit is targeted by the second quarter of 2016, with
the second unit to follow 4 to 6 months thereafter. AboitizPower, through its wholly owned
subsidiary, Therma Power, Inc., will have an equity interest of roughly 25% in RP Energy.

300 MW Coal-fired Power Plant in Davao. AboitizPower, through 100%-owned subsidiary

Therma South, Inc. (TSI), is planning to put up a 2x150 MW coal-fired power plant in Davao,
which is the biggest load center in the island of Mindanao. The project was issued an ECC by
the DENR on September 9, 2011. Pre-construction works (e.g. site clearing) have started in
June 2012. In the same month, TSI entered into construction, supply and coordination
contracts with local and foreign contractors for the project. The first generating unit (150 MW)
is expected to be completed 34 months after (or March 2015), with the second unit (150 MW)
to follow in 3 months (or June 2015).

400 MW Coal-fired Power Plant in Pagbilao, Quezon. On September 27, 2011, AboitizPower
signed a Memorandum of Understanding with Marubeni Corporation (Marubeni) to formalize
their intention to jointly develop, construct and operate a coal-fired power plant with a
capacity of approximately 400 MW. The proposed location will be within the premises of the
existing 700 MW Pagbilao Unit I and II Coal Fired Thermal Power Plant in Quezon. The terms
and conditions of the joint investment will be finalized in a definitive agreement to be agreed
upon by the parties. Marubeni is part-owner of Team Energy Corporation, which owns and
operates the Pagbilao Power Plant under a build-operate-transfer contract with the National
Power Corporation. On the other hand, AboitizPower, through wholly owned subsidiary
Therma Luzon, Inc., is the Independent Power Producer (IPP) Administrator of the Pagbilao
Power Plant under the IPP Administration Agreement with PSALM.

150 MW Coal-fired Power Plant in Misamis Oriental. On June 28, 2010, AboitizPower and its
partners in STEAG State Power, Inc., owner of the 232 MW coal plant located at the Phividec
Industrial Estate in Villanueva, Misamis Oriental, firmed up their collective intention to develop
a third unit of approximately 150 MW capacity adjacent to the existing facility. AboitizPower
and its partners agreed to maintain their shareholdings in the same proportions in the new
corporation to be established for the planned additional capacity. Certain essential facilities,
such as the jetty, coal handling facilities and stockyards and the 138-kV interconnection with
the Mindanao Grid are to be shared with the existing facilities. Depending on the interest the
market demonstrates, the agreement contemplates the possibility of putting up another unit.

9
 13.7 MW Tudaya 1 and 2 Hydro Power Plant Project. AboitizPower’s wholly owned subsidiary
Hedcor Tudaya, Inc. (Hedcor Tudaya) will implement a Greenfield project involving the
construction of run-of-river power plants to be located in the upper and downstream sections
of the existing Sibulan hydro power plants, tapping the same water resource, which are the
Sibulan and Baroring rivers. The two plants will have a combined capacity of 13.7 MW. The
project has been issued its ECC and endorsed by the local communities. Tudaya 2’s RE contract
and civil and equipment supply contracts have been signed. Meanwhile, Tudaya 1’s RE contract
is still being processed, while its civil and equipment supply contracts have been finalized and
is ready for signing. Target groundbreaking for both plants is within the third quarter of 2012.
Construction is estimated to be completed in 22 months.

13.2 MW Sabangan Hydro Power Plant Project. This involves the construction and operation of
a hydropower plant facility in Mt. Province, a province located in Northern Luzon. This project
will be undertaken by a wholly owned subsidiary of AboitizPower, Hedcor Sabangan, Inc. The
project was granted an ECC by the DENR in 2011. Engineering and design are underway and are
expected to be completed by fourth quarter of 2012. Groundbreaking is targeted in the first
quarter of 2013, with completion expected after a 2-year construction period.

11.5 MW Hedcor Tamugan Hydro Power Plant Project. In 2010, wholly owned subsidiary, Hedcor
Tamugan, Inc. (Hedcor Tamugan), has reached an agreement with the Davao City Water
District on the use of the Tamugan river. Originally planned as a 27.5 MW run-of-river facility,
Hedcor Tamugan submitted a new proposal, which involves the construction of an 11.5 MW
hydropower plant. Hedcor Tamugan is waiting for the Davao City council to approve the
project. Once approval and permits are secured, the two-year construction period will
commence.

Other Greenfield and Brownfield developments. AboitizPower, together with its subsidiaries
and associate company, is conducting feasibility studies for potential Greenfield and
Brownfield projects.

• The SN Aboitiz Power Group (“SNAP Group”) is in the process of evaluating several
hydropower plant projects. A Brownfield project is being evaluated for its Magat
hydropower plant, which involves the construction of a pumped storage facility that
could potentially increase its capacity by at least 90 MW. The SNAP Group is likewise
evaluating several Greenfield hydropower plant projects that have at least 70 MW of
potential capacity each.

• Hedcor is conducting feasibility studies for potential hydropower projects located in

both Luzon and Mindanao. Based on current findings, Hedcor sees the potential of
building plants with capacities ranging from 5 MW to 50 MW. When the projects pass
the evaluation stage and once permits are secured, the two-year construction period
for the hydropower plant facilities will commence.

2. Participation in the Government’s Privatization Program for its Power Assets

AboitizPower continues to closely evaluate the investment viability of the remaining power
generation assets that PSALM intends to auction off.

AboitizPower is also keen on participating in PSALM’s public auction for the IPP Administrator
contracts, which involves the transfer of the management and control of total energy output of
power plants under contract with NPC to the IPP administrators.

10
Distribution Business

AboitizPower remains optimistic that it will realize modest growth on its existing distribution
utilities. It continually seeks efficiency improvements in its operations to maintain healthy margins.

The implementation of the rate adjustment formula for the distribution companies under the
Performance-Based Regulation (PBR) is on a staggered basis. In addition to annual adjustments,
PBR allows for rate adjustments in between the reset periods to address extraordinary
circumstances. There is also a mandatory rate-setting every four years wherein possible
adjustments to the rate take into account current situations.

Cotabato Light’s 4-year regulatory period commenced on April 1, 2009 and ends on March 30,
2013. The company is currently in its fourth year of its regulatory period. It is likewise undergoing
its reset process in preparation for its second 4-year regulatory period, which should commence in
April 2013. Cotabato Light is the first distribution utility in the AboitizPower group to implement
this incentive-based scheme.

VECO and Davao Light are part of the third group (Group C) of private distribution utilities that
shifted to PBR, which implemented their approved rate structures in August 2010. Both companies
implemented their approved rates for the second year of its regulatory period in August 2011.

SFELAPCO and SEZ are part of the fourth batch (Group D) of private distribution utilities to enter
PBR. In July 2011, the ERC released the final determination on the applications for annual revenue
requirements and performance incentive schemes for the regulatory period October 2011 to
September 2015. Implementation of approved rates took place in January 2012 and March 2012 for
SEZ and SFELAPCO, respectively. All under-recoveries since October 2011 are allowed to be
recouped in the next regulatory year.

Market and Industry Developments

Open Access and Retail Competition

Per EPIRA, the conditions for the commencement of the Open Access and Retail Competition are as
follows:

(a) Establishment of the WESM;

(b) Approval of unbundled transmission and distribution wheeling charges;
(c) Initial implementation of the cross subsidy removal scheme;
(d) Privatization of at least 70% of the total capacity of generating assets of NPC in Luzon
and Visayas; and
(e) Transfer of the management and control of at least 70% of the total energy output of
power plants under contract with NPC to the IPP administrators.

Under the Open Access and Retail Competition, an eligible contestable customer, which is defined
as an end-user with a monthly average peak demand of at least 1 MW for the preceding 12 months,
will have the option to source their electricity from eligible suppliers that have secured a Retail
Electricity Supplier license from the ERC. Eligible suppliers shall include the following:

- Generation companies that own, operate or control 30% or less of the installed generating
capacity in a grid and/or 25% or less of the national installed capacity

- NPC-Independent Power Producers with respect to capacity which is not covered by contracts

11
- IPP Administrators with respect to the uncontracted energy which is subject to their
administration and management

- Retail Electricity Suppliers (RES) duly licensed by the ERC

The implementation of the Open Access and Retail Competition presents a big opportunity for
AboitizPower, as it has two wholly owned subsidiaries (i.e. Aboitiz Energy Solutions, Inc. and
AdventEnergy, Inc.) that are licensed retail suppliers, which can enter into contracts with the
eligible contestable customers. Moreover, AboitizPower’s generation assets that have
uncontracted capacity will be able to have direct access to eligible contestable customers through
AboitizPower’s licensed RES.

In June 2011, the ERC declared December 26, 2011 as the Open Access Date to mark the
commencement of the full operations of the competitive retail electricity market in Luzon and
Visayas. However, after careful deliberation, the ERC acknowledged that not all the necessary
rules, systems and infrastructures required for the implementation of the Open Access and Retail
Competition have been put in place to meet the contemplated timetable for implementation. In
October 2011, the ERC announced the deferment of the Open Access Date. A definitive timeline
leading to the eventual implementation will be issued by the ERC after consultation with all the
stakeholders.

Financial Services

UnionBank’s initiatives on strengthening its customer franchise will continue to be at the forefront
as it prioritizes customer engagement through enhanced retail focus and stronger sales
management approach. UnionBank will continue to invest in technology, cultivate partnerships
and develop relevant and expert financial solutions that challenge convention, and rationalize
branch network expansion in strategic areas to maximize growth channels with respect to both
deposits and loan accounts.

UnionBank will continue to focus on improving the performance of its earning assets portfolio,
with loan asset acquisition in the retail, middle-market and corporate sectors. The bank will
implement a disciplined asset allocation built on good governance and effective risk management
to ensure momentum of recurrent income stream. UnionBank will continue to focus on improving
its deposit liabilities mix by targeting low-cost funds (i.e. CASA).

UnionBank will, likewise, continue to enhance operating efficiencies through cost containment
efforts and improvements in its business processes to align with best and leading practices.

CitySavings will continue to strengthen its market position in its present niche by improving its
products and services further. Other government employees, aside from public school teachers,
and private company employees will be tapped. CitySavings plans to expand its branch network by
putting up new branches and extension offices in areas outside of its present coverage. The bank
is targeting to add six (6) branches to its network, all to be located in Luzon.

To support its expansion program, CitySavings is in the process of putting in place a new core
banking system called Finacle, which is designed to improve processes and systems to better serve
the bank’s growing clientele. With this system, operating efficiencies are seen to be enhanced as
branch processes will be standardized and backroom operations will be automated.

12
Food Manufacturing

In line with the logistics initiatives to mitigate higher freight cost, Pilmico has implemented
dredging works in its harbor in Iligan, which is expected to be completed by third quarter of 2012.
With the construction of a new mooring structure, this should enable the harbor to accommodate
higher tonnage vessels. This, together with the pneumatic unloader that was completed, should
result to the improvement in the facility’s unloading rate to 10,500 metric tons per day (MTPD)
from 7,500 MTPD.

Construction of additional silos to support the storage requirements of the second production line
of its Iligan feedmill has been completed in the second quarter of 2012.

PANC aims to continue its swine business’ expansion phase by growing further its breeding
capacity. The company’s goal is to increase its sow capacity by 28% by 2014, with 70% of the
finishing farms owned and operated by the company. To do this, PANC will continue to expand the
existing breeder farm, build a new nursery farm and increase the capacity of the growing-finishing
farms.

PART II--
II--OTHER
--OTHER INFORMATION

There are no significant information on the company which requires disclosure herein and/or were
not included in SEC Form 17-C.

13
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