CEBU AIR, INC.

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31
2020 2019
ASSETS
Current Assets
Cash and cash equivalents (Note 7) =4,324,047,495P =18,195,375,713P
Restricted cash (Note 7) 1,096,422,485 –
Receivables (Note 9) 2,233,632,383 2,717,302,820
Expendable parts, fuel, materials and supplies (Note 10) 1,906,063,822 1,974,186,020
Other current assets (Note 11) 2,578,517,403 3,083,503,980
Total Current Assets 12,138,683,588 25,970,368,533
Noncurrent Assets
Property and equipment (Notes 12 and 32) 91,320,235,967 106,555,422,616
Right-of-use asset (Note 31) 17,669,768,620 17,811,040,810
Investments in joint ventures and associates (Note 13) 546,516,067 1,221,452,018
Goodwill (Note 14) 721,648,970 566,781,533
Deferred tax assets - net (Note 26) 1,471,670,325 782,968,305
Other noncurrent assets (Note 15) 4,590,058,039 4,824,538,747
Total Noncurrent Assets 116,319,897,988 131,762,204,029
TOTAL ASSETS =128,458,581,576P =157,732,572,562P

LIABILITIES AND EQUITY

Current Liabilities
Short-term debt (Note 18) =4,802,300,000P =P–
Current portion of long-term debt (Note 18) 4,840,069,458 6,885,155,619
Accounts payable and other accrued liabilities (Note 16) 13,550,548,321 17,831,961,190
Unearned transportation revenue (Note 17) 3,671,467,764 11,881,599,591
Current lease liability (Note 31) 6,799,231,370 5,748,068,779
Current portion of derivative financial liabilities (Note 8) 32,214,937 112,805,261
Due to related parties (Note 28) 95,007,239 38,600,221
Income tax payable – 197,879,264
Total Current Liabilities 33,790,839,089 42,696,069,925
Noncurrent Liabilities
Long-term debt - net of current portion (Note 18) 48,399,864,978 50,259,365,657
Derivative financial liabilities - net of current portion (Note 8) – 13,507,241
Lease liability - net of current portion (Note 31) 11,554,419,630 11,761,406,725
Travel fund payable - net of current portion (Note 20) 3,432,763,770 –
Retirement liability (Note 25) 590,088,177 923,942,818
Other noncurrent liabilities (Note 19) 7,999,729,317 7,177,304,536
Total Noncurrent Liabilities 71,976,865,872 70,135,526,977
Total Liabilities 105,767,704,961 112,831,596,902
Equity
Common stock (Note 21) 613,236,550 613,236,550
Capital paid in excess of par value (Note 21) 8,405,568,120 8,405,568,120
Treasury stock (Note 21) (950,881,502) (906,120,839)
Other comprehensive losses (Note 29) (66,291,759) (137,395,353)
Retained earnings (Note 21) 14,689,245,206 36,925,687,182
Total Equity 22,690,876,615 44,900,975,660
TOTAL LIABILITIES AND EQUITY =128,458,581,576P =157,732,572,562P

See accompanying Notes to Consolidated Financial Statements.

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CEBU AIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31

2020 2019 2018
REVENUE
Sale of air transportation services
Passenger =12,629,120,592P =61,682,323,782P =54,259,795,992P
Cargo 5,401,966,490 5,745,173,259 5,491,327,591
Ancillary revenue (Note 22) 4,586,880,083 17,379,313,322 14,362,653,302
22,617,967,165 84,806,810,363 74,113,776,885
EXPENSES
Depreciation and amortization (Notes 6, 12 and 31) 16,074,455,051 15,399,075,784 7,479,321,315
Flying operations (Notes 10 and 23) 9,367,977,937 30,261,357,287 29,912,106,516
Repairs and maintenance (Notes 10, 19 and 23) 8,557,241,666 7,993,913,625 8,067,957,794
Aircraft and traffic servicing (Note 23) 3,374,260,034 9,262,480,358 8,111,170,564
General and administrative (Note 24) 3,219,887,830 2,976,441,881 2,358,173,730
Reservation and sales (Note 23) 1,499,182,703 4,059,163,907 3,829,521,057
Passenger service 1,009,555,914 1,919,420,047 1,654,730,940
Aircraft and engine lease (Notes 6 and 31) 284,665,157 313,939,967 5,650,909,509
43,387,226,292 72,185,792,856 67,063,891,425
(20,769,259,127) 12,621,017,507 7,049,885,460
OTHER INCOME (EXPENSES) - Net
Interest income (Notes 6 and 7) 157,917,380 670,599,817 401,621,150
Gain from:
Insurance claims (Note 12) 807,409,620 – –
Re-measurement of investment in joint venture (Note 13) 71,324,225 – –
Sale of an investment in joint venture (Note 13) 34,465,240 – –
Hedging losses - net (Note 8) (2,149,932,480) (63,352,472) (322,579,940)
Equity in net income (loss) of joint ventures and associates
(Notes 6 and 13) (316,115,081) 66,959,384 136,264,174
Loss on disposal of property and equipment - net (Note 12) (259,977,067) (225,675,379) (46,466,570)
Foreign exchange gains (losses) - net 1,731,990,762 274,565,577 (1,632,975,227)
Interest expense (Notes 6, 18 and 31) (2,203,355,297) (3,059,708,885) (2,102,581,740)
(2,126,272,698) (2,336,611,958) (3,566,718,153)
INCOME (LOSS) BEFORE INCOME TAX (22,895,531,825) 10,284,405,549 3,483,167,307
PROVISION FOR (BENEFIT FROM)
INCOME TAX (Note 26) (659,089,849) 1,161,452,869 (439,577,231)
NET INCOME (LOSS) (22,236,441,976) 9,122,952,680 3,922,744,538
OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) not to be reclassified to
profit or loss in subsequent periods:
Actuarial gains (losses) on retirement liability (Note 25) 386,098,893 (252,687,387) 9,867,738
Net fair value changes in cash flow hedge reserve (Note 8) (284,522,331) 256,816,995 –
Tax effect (Note 26) 30,472,968 1,238,882 2,960,321
71,103,594 2,890,726 6,907,417
TOTAL COMPREHENSIVE INCOME (LOSS) (P=22,165,338,382) =9,125,843,406P =3,929,651,955P
Basic/Diluted Earnings (Loss) Per Share (Note 27) (P=37.14) =15P.22 =6P.50

See accompanying Notes to Consolidated Financial Statements

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CEBU AIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Other Comprehensive Income (Loss) Retained Earnings

Remeasurement
Capital Paid in Gain (Loss) on
Excess of Par Retirement Cash flow hedge
Common Stock Value Treasury Stock Liability reserve Appropriated Unappropriated Total
(Note 21) (Note 21) (Note 21)(Note 25) (Note 8) Total (Notes 21 and 31) (Note 21) Total Equity
Balance at January 1, 2020 =613,236,550P =8,405,568,120P (P=906,120,839) (P=317,167,250) =179,771,897P (P=137,395,353) =26,000,000,000P P=10,925,687,182 P=36,925,687,182 P=44,900,975,660
Net loss – – – – – – – (22,236,441,976) (22,236,441,976) (22,236,441,976)
Other comprehensive income (loss) – – – 270,269,225 (199,165,631) 71,103,594 – – – 71,103,594
Total comprehensive income (loss) – – – 270,269,225 (199,165,631) 71,103,594 – (22,236,441,976) (22,236,441,976) (22,165,338,382)
Reversal of appropriations – – – – – – (26,000,000,000) 26,000,000,000 –
Appropriation of retained earnings – – – – – – 12,000,000,000 (12,000,000,000) – –
Purchase of treasury stock – – (44,760,663) – – – – – – (44,760,663)
Balance at December 31, 2020 =613,236,550P =8,405,568,120P (P=950,881,502) (P=46,898,025) (P=19,393,734) (P=66,291,759) =12,000,000,000P =2,689,245,206P P=14,689,245,206 P=22,690,876,615

Balance at January 1, 2019 =613,236,550P =8,405,568,120P (P=785,536,714) (P=140,286,079) =P– (P=140,286,079) =22,000,000,000P P=10,009,151,402 P=32,009,151,402 P=40,102,133,279
Net income – – – – – – – 9,122,952,680 9,122,952,680 9,122,952,680
Other comprehensive income (loss) – – – (176,881,171) 179,771,897 2,890,726 – – – 2,890,726
Total comprehensive income (loss) – – – (176,881,171) 179,771,897 2,890,726 – 9,122,952,680 9,122,952,680 9,125,843,406
Reversal of appropriations – – – – – – (22,000,000,000) 22,000,000,000 – –

Appropriation of retained earnings – – – – – – 26,000,000,000 (26,000,000,000) – –

Dividend declaration – – – – – – – (4,206,416,900) (4,206,416,900) (4,206,416,900)
Purchase of treasury stock – – (120,584,125) – – – – – – (120,584,125)
Balance at December 31, 2019 =613,236,550P =8,405,568,120P (P=906,120,839) (P=317,167,250) =179,771,897P (P=137,395,353) =26,000,000,000P P=10,925,687,182 P=36,925,687,182 P=44,900,975,660

Balance at January 1, 2018, as

previously reported =613,236,550P =8,405,568,120P (P=529,319,321) (P=147,193,496) P–= (P=147,193,496) =18,300,000,000P P=13,143,287,513 P=31,443,287,513 P=39,785,579,366
Effect of the adoption of PFRS 15,
Revenue from Contracts with
Customers (Note 3) – – – – – – – (630,090,664) (630,090,664) (630,090,664)
Balance at January 1, 2018, as restated 613,236,550 8,405,568,120 (529,319,321) (147,193,496) – (147,193,496) 18,300,000,000 12,513,196,849 30,813,196,849 39,155,488,702
Net income – – – − – − – 3,922,744,538 3,922,744,538 3,922,744,538
Other comprehensive income – – – 6,907,417 – 6,907,417 − – – 6,907,417
Total comprehensive income – – – 6,907,417 – 6,907,417 – 3,922,744,538 3,922,744,538 3,929,651,955
Reversal of appropriations – – – – – – (18,300,000,000) 18,300,000,000 – –
Appropriation of retained earnings – – – – – – 22,000,000,000 (22,000,000,000) – –
Dividend declaration – – – – – – – (2,726,789,985) (2,726,789,985) (2,726,789,985)
Purchase of treasury stock – – (256,217,393) – – – – – – (256,217,393)
Balance at December 31, 2018 =613,236,550P =8,405,568,120P (P=785,536,714) (P=140,286,079) – (P=140,286,079) =22,000,000,000P P=10,009,151,402 P=32,009,151,402 P=40,102,133,279

See accompanying Notes to Consolidated Financial Statements.

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CEBU AIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31

2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) before income tax (P=22,895,531,825) =10,284,405,549P =3,483,167,307P
Adjustments for:
Depreciation and amortization (Notes 12 and 31) 16,074,455,051 15,399,075,784 7,479,321,315
Interest expense (Notes 18 and 30) 2,203,355,297 3,059,708,885 2,102,581,740
Net changes in fair value of derivatives (Note 8) 2,149,932,480 63,352,472 322,579,940
Provision for asset retirement obligation (Note 19) 3,132,239,751 1,940,084,130 2,106,298,997
Provision for heavy maintenance (Note 19) 345,964,168 − −
Equity in net (income) loss of joint ventures and associates (Note 13) 316,115,081 (66,959,384) (136,264,174)
Loss on disposal of property and equipment (Notes 12 and 13) 259,977,067 225,675,379 46,466,570
Provision for expected credit losses (Note 9) 102,043,756 − −
Loss (gain) on sale of other property and equipment (Note 12) (1,408,161) 866,740 72,190,274
Gain from sale of an investment in joint venture (Note 13) (34,465,240) − −
Gain from re-measurement of investment in joint venture (Note 13) (71,324,225) − −
Redeemed and expired portion of deferred revenue on rewards program
(Note 19) (172,850,095) (643,868,244) (457,845,854)
Interest income (Note 7) (157,917,380) (670,599,817) (401,621,150)
Unrealized foreign exchange losses (gains) - net (1,383,081,305) (562,962,298) 937,361,008
Operating income (loss) before working capital changes (132,495,580) 29,028,779,196 15,554,235,973
Decrease (increase) in:
Receivables 1,908,762,537 (75,906,582) (730,758,984)
Restricted cash (1,096,422,485) − −
Expendable parts, fuel, materials and supplies 101,662,371 35,959,480 (426,407,532)
Other current assets 540,311,176 1,230,765,673 (2,467,564,517)
Increase (decrease) in:
Accounts payable and other accrued liabilities 952,943,230 1,512,339,343 2,106,389,166
Unearned transportation revenue (8,210,131,827) 771,081,559 1,430,075,913
Retirement liability (55,196,953) 179,799,095 (138,597,324)
Amounts of due to related parties 66,196,171 (2,119,549) 2,003,347
Deferred revenue on rewards program − 924,714,078 691,673,528
Other noncurrent liabilities (2,535,689,551) (1,779,069,142) −
Financial liabilities at fair value through profit or loss (3,118,041,861) (425,431,913) 894,805,510
Cash generated from (used in) operations (11,578,102,772) 31,400,911,238 16,915,855,080
Interest paid (1,622,358,037) (2,671,033,108) (1,985,463,851)
Income tax paid with creditable withholding taxes (197,879,264) (153,429,669) (32,760,158)
Interest received 181,735,905 667,605,134 389,801,760
Net cash provided by (used in) operating activities (13,216,604,168) 29,244,053,595 15,287,432,831
CASH FLOWS FROM INVESTING ACTIVITIES
Proceed from sales of:
Property and equipment (Note 12) 7,336,303,774 4,406,643,673 4,642,125,073
Shares of stocks in a joint venture (Note 13) 373,377,600 − −
Acquisitions of property and equipment (Note 12) (4,044,960,019) (25,570,098,817) (26,030,449,395)
Acquisition of a subsidiary (Note 13) (200,877,673) − −
Investments in shares of stocks in joint ventures and an associate (Note 13) (192,000,000) (240,000,000) (46,000,000)
Increase in advances to suppliers and other noncurrent assets 236,362,339 528,105,316 (1,545,099,621)
Dividends received from a joint venture − 62,871,045 72,645,788
Net cash provided by (used in) investing activities 3,508,206,021 (20,812,478,783) (22,906,778,155)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from availment of:
Long-term debt (Note 18) 6,210,960,215 13,539,632,216 32,680,071,705
Short-term debt (Note 18) 4,839,600,000 − −
Payments of long-term debt (Note 18) (8,584,556,361) (9,133,438,560) (21,237,489,536)
Payments for lease liability (Note 31) (6,362,210,157) (6,680,508,048) −
Purchase of treasury stock (Note 21) (44,760,662) (120,584,125) (256,217,393)
Dividends paid (Notes 21 and 32) − (4,206,416,900) (2,726,789,985)
Net cash provided by (used in) financing activities (3,940,966,965) (6,601,315,417) 8,459,574,791
EFFECTS OF EXCHANGE RATE CHANGES
IN CASH AND CASH EQUIVALENTS (221,963,106) (527,534,227) 438,876,572
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (13,871,328,218) 1,302,725,168 1,279,106,039
CASH AND CASH EQUIVALENTS AT JANUARY 1 18,195,375,713 16,892,650,545 15,613,544,506
CASH AND CASH EQUIVALENTS AT DECEMBER 31 (Note 7) =4,324,047,495P =18,195,375,713P =16,892,650,545P

See accompanying Notes to Consolidated Financial Statements.