Since its beginnings in 1988, Cebu Holdings Inc. has helped shape the landscape of the communities it has become part of. Over the past 19 years, we continue to make the best out of the existing landscape, seeing it through the eyes of our stakeholders, our customers, our neighbors, and those of the generations to come.

We continue to innovate, to consciously strive for better ways and become an agent of change for the better. And like our working mantra, "Creating Landmarks, Setting standards, Building Relationships" which the Company lives by, we strive not only to transform raw land, but create communities as well.

Sustainability in real estate entails responsible practices applied to the creation and use of the urban-built fabric. Being in the business of land development, we are conscious of the impact our operations have on the community and the environment where we operate. Being a publicly-listed company with accountability to our shareholders, we make sure that the Company's financial growth remains strong.

Thus, as responsible stakeholders in this shared landscape, we have sought alignment of our management systems, plans, programs and practices towards sustainability and effectively measure our performance.

Cebu Holdings is a major player in the real estate sector of Cebu. The development of the Cebu Business Park, its flagship project, ushered in the present-day positioning of Cebu as an investment destination in the Philippines. The Company's strategy of helping to catalyze development for the 21st century sees its realization in Cebu's emergence as highly-urbanized area with a robust economic outlook that parallels the country's capital region in terms of tourism and ICT. Reports from the Department of Tourism showed increase in foreign tourist arrivals by 29 percent and domestic tourism by 21 percent in 2007. On the other hand, Cebu ranks fourth in the global survey done by Tholons Global Services in terms of attractiveness as a destination for global IT/ITES locators. Cebu City also ranks eighth in the Top 10 Asian Cities of the Future survey undertaken by the Finance Direct Investment (fDi) Magazine of the Financial Times Group.

As a property development company affiliated with Ayala Land, Inc., CHI has a keen understanding of the local market and carries the Ayala brand in helping to create Cebu's future specifically in providing business, commercial and residential infrastructures.

As a market leader in the local real estate sector, we are bullish about strategic landbanking and we maintain market leadership by determining trends and market needs. These are then translated into innovative products in all of the company's business lines, thus delivering what the market needs to the delight of the customers. This is particularly illustrated in the residential front when the Company launched in partnership with Coastal Highpoint Ventures, Inc. its best-seller, Amara, a high-end seaside residential community situated in a 46-hectare property in Liloan, a town in Northern Cebu.

Riding on Cebu's attractiveness as an IT/ITES destination for global players, the year 2007 saw an unprecedented growth at Cebu Property Ventures and Development Corporation's (CPVDC) flagship project, Asiatown IT Park (AITP) which caters to addressing the increasing demand of office space from local and multinational IT and ITES firms. As of end of 2007, various locators at AITP registered combined GLA of over 66,500 square meters, generating 11,637 jobs.

The growth of tourism in Cebu coupled with growth of jobs among young professionals from the IT sector with high disposable income drove the expansion of our retail business line, resulting to increased gross leasable area of Ayala Center Cebu, which to date has a total of over 86,000 square meters. We also continually evaluate our mix of merchants to ensure that we are the preferred shopping and lifestyle destination of the markets we serve.

Internally, we continue to strengthen our organization by optimizing use of human capital, streamlining processes and empowering our people to achieve the goals we have set.

We have consistently applied the Balanced Scorecard (BSC) as a strategic management system, in which the organization sets its goals and measures its performance across four perspectives --- financial, customer, internal business process, and learning and growth. This management tool translates strategy into action, with each member of the organization connecting to the value delivery chain and contributing to the attainment of the Company's corporate goals.

In 2005, we were certified to three international standards on Quality (9001:2000), Environment (14001: 2004) and Occupational Health and Safety (OHSAS 18001:1999) and we successfully passed surveillance audits in 2007. In addition, CPVDC, a 76 percent-owned CHI subsidiary passed the certification audit in 2007. The Quality, Environment, Health and Safety Management Systems (QEHS MS) complement the BSC and allows us to measure our performance against international standards.

Starting in 2007, the Company sought to adopt Triple Bottomline (TBL) Reporting to measure the Company's performance, not only financially, but in terms of its social and environmental relevance. Gauging our performance through TBL reporting ensures the viability of our growth as a company, and imposes accountability as a responsible corporate citizen in our physical and social environs.

The integration of these three management systems allows the organization to set its goals, strategize, strengthen its procedures, and measure its accomplishments against standards and set targets in a more holistic fashion.

Our business processes that conform to global standards have not only strengthened our efforts towards sustainability, but have made our systems more effective and efficient, thus reducing expense and contributing more to the company's bottom line.

This annual report combined with the first sustainability report, accounts for the various practices that we have relevant to TBL Reporting. We are adopting internationally-accepted guidelines in the form of the G3 Global Initiative Reporting (GRI) framework to report our sustainability performance. We further commit to develop an even more intensive integrated report as the next step. In this report, we are proud to share CHI's strong financial growth. We document as well, our sustainability efforts in developing sufficient understanding, expertise and internal capacity for a full integration of management systems.

All these people, process and product innovations, imbibed into our integrated systems, are the tools towards achieving remarkable growth in 2007, through the performance of our various projects in all business lines. Real estate development projects contributed around 50 percent of total real estate revenues, while combined retail and office leasing revenues that provide recurring revenue for the Company's operations account for the other 50 percent.

The Company achieved an all-time high performance with revenue of P 1.282 billion, 24 percent higher than that
of the previous year's. Consolidated income, to include various projects and that of our subsidiary and affiliate,
also exceeded the 2006 figure by 22 percent, reaching P 251.8 million, the highest bottom line since the Company's inception. The Company's financial position continues to grow stronger with its balance sheet as of end of 2007 reflecting total assets of P 5.3 billion, equity level amounting to P 3.7 billion, and bank debt of only P 330 million.

For our stockholders, this growth is translated in a Total Shareholder Return (TSR) of 13.2 percent. The Company also declared a cash dividend of P 0.05 per share, paid in December 18, 2007.

In 2008, we will continue to bring the Company to even greater heights with more projects in the pipeline. We will be launching succeeding phases in seaside residential project, Amara. In retail, Ayala Center Cebu's lagoon redevelopment will be completed and opened by the second semester of 2008. This will add more than 8,800 square meters of gross leasable area to accommodate even more shops which will cater to the evolving lifestyle of the market. A major re-planning is underway focusing on the 9-hectare property where Ayala Center sits on to ensure value optimization of this key strategic area in Cebu Business Park.

For office leasing, CPVDC's eBloc Tower is scheduled to be completed by the third quarter of this year. The horizontal development of phase two of Asiatown IT Park covering five hectares of raw land is expected to start in 2008. This will be a source of future growth in office leasing revenues as CPVDC turns its strategy towards building offices to cater to more IT and IT-enabled services locators while keeping ownership of the land for future value appreciation.

As we strive to continue to improve our processes, we have sought to strike a balance between doing good and doing business well. And as we gradually integrate these processes into the way we do things, there is no longer segregation in meeting these goals. It is simply, doing good business, which permits us to sustain built relationships, to make our physical landscape more habitable and to create a positive contribution to the economies in which we operate.

I would like to thank our shareholders for the support and confidence they have given us, our employees for their consistent hard work, commitment and dedication, our board of directors for their guidance and the rest of the Company's stakeholders who have added value to the Company in its efforts to achieve a well-balanced performance towards sustainable development.