SEC Number 808

File Number

________________________________________________

ISM COMMUNICATIONS CORPORATION (formerly, ITOGON-SUYOC MINES, INC.)

________________________________________________ (Company’s Full Name)

The Penthouse, Alphaland Southgate Tower

2258 Chino Roces Avenue corner EDSA, Makati City _________________________________________________

(Company’s Address)

338-5599 ______________________________________

(Telephone Number)

December 31 2013

(Fiscal Year Ending) (month & day)

SEC Form 17-A (Annual Report) ______________________________________

Form Type

______________________________________ Amendment Designation (if applicable)

December 31, 2013 ______________________________________

Period Ended Date

N/A __________________________________________________

(Secondary License Type and File Number)

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SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141

OF THE CORPORATION CODE OF THE PHILIPPINES 1. For the fiscal year ended December 31, 2013 2. SEC Identification Number 808 3. BIR Tax Identification No. 000-162-935V 4. ISM COMMUNICATIONS CORPORATION (FORMERLY ITOGON-SUYOC MINES, INC.)

Exact name of issuer as specified in its charter

Philippines 5. Province, country or other jurisdiction of incorporation or organization 6. Industry Classification Code: ___________________(SEC Use Only) The Penthouse, Alphaland Southgate Tower, 2258 Chino Roces Avenue corner EDSA, Makati City 7. Address of principal office (632) 338-5599 1232 8. Registrant’s telephone number Zip Code Itogon-Suyoc Mines, Inc., 17th Floor, The Enterprise Center Tower 1, 6766 Ayala Avenue, Makati City 1226 9. Former name, former address, and former fiscal year, if changed since last report 10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA

Title of each Class

Number of shares of

common stock outstanding

Common 1,916,216,149

11. Are any or all of the securities listed on the Philippine Stock Exchange? Yes 12. Indicate whether the issuer:

a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section 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 12 months (or for such shorter period the registrant was required to file such reports)

Yes b) has been subject to such filing requirements for the past 90 days Yes

11. The aggregate market value of the voting stock held by non-affiliates of the registrant. Shares held by Non-affiliates

Market value Per Share as of 31 December 2012

Total Market Value

404,033,992 Php2.59 Php1,046,448,039.28

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Part I – BUSINESS AND GENERAL INFORMATION

Item 1. Business

A. Transformation from a mining company into a telecommunications company

ISM Communications Corporation (“ISM” or the “Company”) was, originally, a mining company incorporated in March 1925, under the name “Itogon-Suyoc Mines, Inc.”.

During meetings held on June 22 and July 25, 2001, the Board of Directors and

stockholders of ISM approved a Memorandum of Agreement (“MOA”) between ISM and PhilWeb Corporation (“WEB” or “PhilWeb”, formerly “PhilWeb.Com, Inc.”). Under the terms of the MOA, WEB shall manage the transformation of ISM from a mining company to a company engaged in information technology, multimedia telecommunications, and other similar industries, including the identification and negotiation with potential investors who will infuse the necessary capital or assets for projects in such industries. In order to implement the MOA, the articles of incorporation of ISM were amended to enable it to undertake its new venture. ISM also divested of all its mining operations, including all its mining-related assets and liabilities. These acts were approved by the stockholders of the Company during a meeting on July 25, 2001.

On April 10, 2002, the stockholders of ISM approved a Restructuring Plan, which

involved, among others, the following: a. Change in corporate name from “Itogon-Suyoc Mines, Inc.” to “ISM

Communications Corporation”; and b. Change the primary purpose from a company engaged in the business of mining to

a company engaged in the business of telecommunications, multimedia and information technology.

The Philippine Securities and Exchange Commission (”SEC”) subsequently

approved such Restructuring Plan on June 7, 2002. Effective October 1, 2002, the activities of ISM have been entirely focused on building

the products and services of its new line of business. In accordance with the Restructuring Plan, ISM ceased its mining operations and

assigned all of its rights over its two mining properties (“Sangilo” and “Suyoc”) located in the Province of Benguet, including all tangible and intangible assets pertaining to the mining operations, to Itogon-Suyoc Resources, Inc. (“ISRI”). As consideration for the aforementioned mining-related assets assigned by ISM, ISRI assumed certain liabilities of ISM.

B. Acquisition of stake in Eastern Telecommunications Philippines, Inc. a. ISM-Aerocom Share Swap (17.7% of ETPI) On July 11, 2005, ISM entered into a memorandum of Agreement with Aerocom

Investors and Management, Inc. (Aerocom) where the latter agreed to transfer and convey to ISM 4,600,557 fully paid common Class “A” shares of Eastern Telecommunications

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Philippines, Inc. (ETPI) in exchange for 6.8 billion newly issued and registered shares of ISM. This was consummated on December 3, 2007 with the listing at Philippine Stock Exchange (PSE) of the 6,816,761,093 newly issued shares of ISM in favor of Aerocom.

b. Acquisition of AGNP (40% of ETPI) On November 11, 2005, ISM entered into a Deed of Sale Agreement with Australian

Gigahertz Network International Pty Ltd. (AGNI), wherein the latter agreed to sell its entire interest in the outstanding capital stock of its wholly owned subsidiary, A. G. N. Philippines, Inc. (AGNP), consisting of the entire issued 100,000 common shares of AGNP. In addition, ISM assumed the loan advances of AGNI to AGNP (AGNP Loan). AGNP is a holding company, which owns 10,400,000 Class “B” shares of ETPI, representing 40% of the latter’s total outstanding shares.

c. Acquisition of Stake of Smart Communications, Inc. (9.8% of ETPI) An additional 2,548,000 Class “A” shares of ETPI, which is equivalent to 9.8% of the

latter’s total outstanding shares, were acquired from Smart Communications, Inc. on October 22, 2007 for P100 million.

As of December 31, 2007, ISM has a total ownership in ETPI of 67.5% (based on total

outstanding shares). d. Acquisition of Stake of the Republic of the Philippines (through the Privatization

Management Office) (10.2% of ETPI) An additional 2,652,000 Class “A” shares of ETPI, which is equivalent to 10.2% of the

latter’s total outstanding shares, were acquired from the Republic of the Philippines (through the Privatization Management Office) on March 6, 2008 for P104.1 million.

As of December 31, 2008, ISM has a total ownership in ETPI of 77.7% (based on total

outstanding shares). C. Increase in authorized capital to P1.8 billion On November 8, 2007, the board of directors and stockholders approved the increase

in ISM’s authorized capital stock from P1.2 Billion divided into 120,000,000,000 shares at a par value of P0.01 per share to P1.8 Billion divided into 180,000,000,000 shares with a par value of P0.01 per share. This was approved by the SEC on August 6, 2008.

Out of the increase in authorized capital stock, Ashmore (through its nominees,

EMDCD and ARF) subscribed to an aggregate of 16,127,737,226 newly issued shares at a subscription price of P0.0274 per share. PSE approved the listing of the afore-mentioned shares on March 20, 2009.

D. Increase in authorized capital to P2.8 billion On June 23, 2008, the board of directors approved the issuance of new shares by way

of rights offering in favor of all stockholders of record as of a record date to be fixed by the President.

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The board of directors and stockholders, in special meetings both held on August 4, 2008, approved the increase in the Company’s authorized capital stock to P2.8 billion divided into 280,000,000,000 shares at P0.01 par value each share and to accept subscriptions to the increase in authorized capital stock by way of rights offering which shall be paid in cash or by conversion of stockholders’ advances to equity. On December 16, 2008, the board of directors, in view of the current global financial crisis approved the revisions on the terms and conditions of the “Rights Offering”.

On January 14, 2009, the PSE approved the listing of additional 65,554,832,528 common

shares, with a par value of P0.01 per share to cover its 1:1.92 stock rights offering to all eligible stockholders of record as of February 4, 2009, at an offer price of P0.01 per share. The offer period for the rights offering ended last February 16, 2009 with the offering fully subscribed. The increase in capital stock of P655.5 million resulted from ISM’s issuance of 65.5 billion rights offer shares at P0.01 per share.

E. Increase in the par value of the common shares of the Company to Php1.00 per share On September 9, 2010, the SEC approved the Company’s application for the

amendment of its Articles of Incorporation to reflect the increase in par value of its common shares from P0.01 per share to P1.00 per share. As a result of the increase in the par value, the following changes in the capital stock of the Company were effected:

Before the increase in par value

After the increase in par value

Number of authorized shares

280 billion shares

2.8 billion shares

Number of shares issued (inclusive of treasury shares)

182,636,865,800 shares

1,826,268,659 shares

Number of shares subscribed

9,000,068,290 shares

90,000,682 shares

Number of treasury shares

5,115,990 shares

53,192 shares

Number of shares outstanding

191,636,934,090 shares

1,916,269,341 shares

No fractional shares were issued to the stockholders of the Company in the conversion

of the number of shares. The Company acquired the resulting fractional shares as additional treasury shares.

F. Sale of 40% interest in ETPI On December 16, 2010, the Executive Committee authorized the Company to sell 100%

of its interest in A.G.N. Philippines, Inc. (“AGNP”) to Vega Telecom, Inc. (“Vega”), under such terms and conditions which Mr. Eric O. Recto, the President of the Company, may deem to be in the best interest of the Company. AGNP was the corporate vehicle through which the Company held 40% interest in ETPI. On December 29, 2010, the Company and Vega executed the sale documents for this transaction. Consequently, as of December 30, 2010, the Company’s interest in ETPI was reduced to 37.7%.

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G. Acquisition of stake in Acentic GmbH ISM and PhilWeb purchased a 65% stake in German information technology firm,

Acentic GmbH (“Acentic”) for about P1.3 billion. The Company used internally-generated funds to funds its share of the acquisition of this equity. Acentic is the product of the 2003 merger of four interactive TV (“Itv”) companies – Prodac, VMS, Ciscom and Granada Business Technology. Following this, PhilWeb and ISM are set to launch Acentic Asia, a subsidiary of Acentic, which is envisioned to serve as Acentic’s gateway to Asia.

The Company is confident that there are strong synergies between PhilWeb and

Acentic. Acentic is one of Europe’s leading providers of in-room entertainment. It offers digital and Internet protocol (IP) converged services to hotels, tourism outfits

and healthcare facilities. Its digital television services and high-speed Internet access are found in many of the world’s leading hotel rooms including Accor, Dorint, Intercontinental Hotel Group, Hilton, Hyatt, Marriott, Movenpick and Starwood, in more than 30 countries across Europe, the Middle East and Africa.

Acentic is the number two operator by room base across Europe, the market leader in

Germany and the second largest in the United Kingdom. The UK, which accounted for 67% of Acentic’s EBITDA in 2009, is by far the most profitable market for hotels in Europe due to its greater number of group-based hotels which have a broader supply of entertainment systems, allowing for more pull-through revenues and related margins.

Acentic has approximately 1,100 hotels and 176,000 hotel rooms under contract across

Europe, the Middle East and Africa, which will serve as an instant platform for PhilWeb’s gaming offerings. Acentic also has operating subsidiaries in 8 European markets – UK, Germany, France, Poland, Italy, Spain, Netherlands and Austria, a good take-off for PhilWeb’s growth plans.

To date, Europe is still the largest geographical market for the hotel industry with 6.6

million rooms, compared to the America’s 6.5 million rooms and the Asia-Pacific region’s 4.5 million rooms. The European pay-TV industry is a fragmented market with no dominant leader.

The Company can look forward to a strong and stable revenue base with Acentic’s

long-term contracts with the world’s leading hotel chains. Currently, 38% of the base operating revenue is guaranteed and for the past year, new businesses contracted had a guaranteed average 55% of operating revenue. Majority of contracts are renewed at maturity, highlighting the strength of Acentic’s commercial relationships. In the year ending 2009, Acentic was on tract to post an EBITDA of €10M, from revenues of €46M.

Through the years, Acentic has demonstrated technological leadership through its

innovative products such as the Acentic Panorama. Over 71% of Acentic’s installed base uses digital systems. The remaining analogue systems will be converted to digital, therefore providing enhanced margins through the superior digital guest offering. This will require significant capital expenditures over the next two years.

Acentic’s growth was also made possible by the proven ability of its executives to

integrate a number of underperforming businesses, reduce costs while maintaining high

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levels of customer service, and develop market-leading technologies to support future growth.

This partnership will definitely enhance the revenues and growth potentials of both

PhilWeb and Acentic, whose combined expertise should lead to more gaming possibilities across Asia and Europe.

H. Acquisition of controlling interest in the Philippine Bank of Communications On June 13, 2011, the Executive Committee authorized the Chairman and/or the

President of the Company, in conjunction with other investors (the “ISM Group”), to participate in the auction conducted by Macquarie Capital Advisers (“Macquarie”) for the sale of approximately 97.28% of the Philippine Bank of Communications (“PBCOM”) under such terms and conditions that management may deem to be in the best interest of the Corporation. On June 22, 2011, Macquarie informed the ISM Group that its bid was the highest one in the auction.

On July 26, 2011, the Company, together with other investors, entered into a

Memorandum of Agreement with the major shareholders of PBCOM to formalize the acquisition, subject to the appropriate regulatory approvals. The ISM Group purchased a total of 47,909473 common shares and 120,000,000 preferred shares or a total of 167,909,473 voting shares of the Bank (the “Sale Shares”) at a purchase price of Php27.88 per share, regardless of class, or for a total purchase price of Php4,681,316,107.24. This includes the Company’s share of approximately 37.11% of the Bank. Thereafter, the ISM Group filed the necessary applications with the regulatory agencies – the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission and the Philippine Deposit Insurance Commission, for their respective approvals of the acquisition. The ISM Group was able to obtain all the said approvals on December 22, 2011. The sale of the Sale Shares was crossed thru the facilities of the Exchange on December 23, 2011.

I. Sale of remaining 37.7% interest in ETPI On June 28, 2011, the Executive Committee authorized the Company to sell its

remaining 37.7% controlling stake in ETPI under such terms and conditions no less favorable than the sale of the earlier 40% interest. On October 22, 2011, the Company sold the said stake in ETPI to San Miguel Equity Securities, Inc. With this sale, the Company has fully divested of its interest in ETPI. Competitive Business Condition and the Registrant’s Competitive Position in the Industry and Methods of Competition

The Company currently has no operations.

Sources and Availability of Raw Materials and Names of Principal Supplier

ISMCC is a holding company that does not require raw materials in its operations. It is not dependent on any principal supplier.

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Dependence on One or a Few Major Customers and Identification of Such ISM, as a holding company, has no sales of its own hence, there are no customers that accounts for 20% or more of its sales.

Patents, Trademarks, Licenses, Franchises, Concessions, and Royalty Agreements ISM’s application for registration of its trademarks with the Intellectual Property Office of the Philippines was approved by the said office last April 13, 2009.

Pending Applications for Registration of Trademarks The Company has no pending trademark application.

Need for Governmental Approval of Principal Products or Services; Effect of Existing or Probable Governmental Regulations on the Business

The Company does not need any governmental approval in its products or services. In the event any of its future operations require government approval, ISMCC intends to comply with such requirement.

Estimate of Amount Spent for Research and Development Activities in the Next Three Years The Company does not expect to make any significant investment or expenditure for research and development.

Costs and Effects of Compliance with Environmental Laws The Company currently has no operations and thus do not require an environmental compliance certificate from the Department of Environment and Natural Resources. In the event that environmental laws and regulations cover any of its future operations, the Company intends to comply with such requirements.

Business Transactions with Related Parties The Company has no material business transactions with related parties.

Labor The Company has no full time employees as of December 31, 2013. There is no union and neither a collective bargaining agreement with its employees. There have been no strikes or threats to strike in the past four years. Supplemental benefits given to qualified employees include stock option plan, among others.

Material Events The significant contracts and commitments entered into by the Company are as follows:

a. Memorandum of Agreement between the Company and PWC whereby the Company appointed PWC to manage the transformation of the Company from

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a mining company to a company engaged in information technology, multi-media, telecommunications, or other similar industries, as well as to identify and negotiate with investors who will infuse the necessary capital or assets for such project.

b. As a member of the ISM Group, the Company, thru the authorized

representative of the ISM Group entered into a Memorandum of Agreement dated July 26, 2011 for the acquisition of the controlling interest in PBCOM. The Company committed to purchase a total of 37.11% of PBCOM. In connection with this acquisition, the Company, together with the other members of the ISM Group, also entered into an Amendment to the 2004 Financial Assistance Agreement with PBCOM and the PDIC wherein it agreed to be bound by the 2004 Financial Assistance Agreement executed by the previous major shareholders of PBCOM for the rehabilitation of the bank.

c. The Company, on December 16, 2010, sold 40% (held thru AGNP) of its stake in

ETPI to Vega Telecom, Inc.

d. The Company, on October 22, 2011, entered into a deed of sale with San Miguel Equity Securities, Inc. wherein it sold its remaining 37.77% stake in ETPI in favor of the latter. By virtue of this sale, the Company has completed the divestment of its entire stake in ETPI.

Item 2. Properties

In accordance with the Restructuring Plan, ISMCC ceased its mining operations and assigned all of its rights over its two mining properties (“Sangilo” and “Suyoc”) located in the Province of Benguet, including all tangible and intangible assets pertaining to the mining operations, to ISRI. As consideration for the aforementioned mining-related assets assigned by ISMCC, ISRI assumed certain liabilities of ISMCC. As of December 31, 2013, the Company reported property and equipment (net of depreciation) of P3.0 million primarily consisting of ISMCC’s computer equipment, furniture and fixture, and other fixed assets, net of accumulated depreciation and impairment losses.. No extraordinary purchase or sale of plant and equipment are expected beyond those in the regular course of operations of the Company. All purchases will be financed through internally generated funds and existing capitalization.

Item 3. Legal Proceedings As of December 31, 2013, there are no material lawsuits or claims against ISMCC.

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Part II – OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market Price, Dividends and Related Stockholder Matters

Market Information

ISMCC’s shares of common stock are listed in the Philippine Stock Exchange. The following table sets forth the high and low closing sales prices per share of the common shares listed on the PSE during the respective periods indicated according to published financial sources.

Price per Share

High Low

2013 First Quarter (ending March 2013) Second Quarter (ending June 2013) Third Quarter (ending September 2013) Fourth Quarter (ending December 2013)

2.10 2.08 1.98 1.91

2.10 2.05 1.84 1.80

2012 First Quarter (ending March 2012) Second Quarter (ending June 2012) Third Quarter (ending September 2012) Fourth Quarter (ending December 2012)

3.15 3.10 2.99 2.69

3.12 2.65 2.99 2.59

2011 First Quarter (ending March 2011) Second Quarter (ending June 2011) Third Quarter (ending September 2011) Fourth Quarter (ending December 2011)

3.08 3.75 3.50 3.38

3.04 3.70 3.01 3.30

The closing price of the Company’s common shares as of March 19, 2014 (the latest practicable trading date) was Php1.62 per share (high of Php1.64 and low of Php1.62).

Dividends ISMCC has not declared any dividends for the last four (4) fiscal years and subsequent quarter.

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There are no restrictions that limits the ability to pay dividends on common equity or that are likely to do so in the future.

Holders There were 4,172 shareholders of record holding the Company’s outstanding capital stock of 1,916,216,149 common shares as of March 31, 2014.

Top 20 Stockholders

ISM has one class of common stock. The top 20 stockholders of record as of March 31,

2014 (based on an outstanding capital stock of 1,916,216,149 net of treasury shares of 53,192 Shares) were:

No. of Shares %

1. PCD Nominee Corporation* 1,251,189,881 65.29%

2. Asset Holder PCC No. 2 Limited Re Ashmore Asian Recovery Fund (British) 196,618,486 10.26%

3. EMDCD Ltd. (British) 196,618,486 10.26%

4. PhilWeb.Com, Inc. 90,000,683 4.70%

5. Araza Resources Corporation 82,164,016 4.29%

6. Aerocom Investors & Managers, Inc. 68,167,610 3.56%

7. The First Resources Management & Sec. Corp. 18,531,250 0.97%

8. Tan, Estate of Luciano H. 997,284 0.05%

9. Ortigas, Ignacio Rafael M. & Xavier Ignacio M 577,606 0.03%

10. Ortigas, Ignacio R. 571,879 0.03%

11. Cham, Allen 544,568 0.03%

12. Young, Bartholomew Dy Buncio 333,062 0.02%

13. Montilla, Jose Luis O. 301,000 0.02%

14. Ortigas, Rafael B. 301,000 0.02%

15. Lim, Amparo C. 221,406 0.01%

16. Winikoff, Arthur FAO OBMVM 167,300 0.01%

17. Dees Securities Corporation 126,509 0.01%

18. Manotok Securities, Inc. 116,021 0.01%

19. Dee, K-Chiong Anthony Jr. 114,078 0.01%

20. Alberto, Zoilo M. &/or Marco Alberto 111,718 0.01% *This includes the shareholdings of Monfortino Holdings, Inc. A total of 780,445,342 common shares of ISM, equivalent to 40.73% of its outstanding capital, are owned by foreigners as of March 31, 2014.

Recent Sales of Unregistered Securities:

There has been no sale in the past three years of any unregistered securities of ISMCC or securities that has not been approved exempt from such registration requirements.

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Item 6. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The current capitalization of the Company, and expected future revenues from its various investment activities are projected to sufficiently meet the Company’s operating cash requirements. The Company intends to utilize internally generated funds to finance the acquisition of computer and other equipment, if any. These acquisitions, and facilities, are not expected to be of material amounts. The Company does not expect to conduct any product research and development in the foreseeable future. No extraordinary purchase or sale of plant and equipment are expected beyond those in the regular course of the Company’s operations. All purchases will be financed through internally-generated funds and existing capitalization. Hiring of employees will be done in the regular course of business, if necessary. There are no known trends, events or uncertainties that are reasonably expected to have a material impact on the Company’s revenues or continuing operations.

Performance for the Year Ended December 31, 2013

Income and Expenses The Company recorded a net income of P122.8 million in 2013. Net Income was substantially contributed by the Company’s equity in net earnings from PBCom of P574.4 million and partially offset by the equity losses from Acentic of P82.5 million. However, this was offset by the dilution loss amounting to P360.1 million as a result of the reduction of the Company’s interest in PBCom from 36.64% to 21.38%. Other Comprehensive Loss This represents share of the Company to the other comprehensive loss of PBCOM. Comprehensive loss in 2013 amounts to P634.8 million. Cash and Cash Equivalents The Company reported total cash and cash equivalents of P642.2 million. The reported balance is P 88.5 million higher than that of 2012. The increased was mainly due to the proceeds from the full payment of subscriptions common stock of P89.9 million. Receivables – net

Net receivables amounted to P1,453.3 million in 2013. It increased by P20.6 million due to foreign currency translation adjustment. Property and Equipment – net As of December 31, 2013, property and equipment, net of depreciation, posted at P3.0 million primarily consisting of ISMCC’s computer equipment, furniture and fixture, and other fixed assets, net of accumulated depreciation and impairment losses.

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Investment in associates and shares of stock The account at December 31 consists of the following: a) Investment in Acentic On December 22, 2009, the Company entered into an agreement relating to the sale and purchase in January 2010 of certain shares of Acentic GmbH with LBC Capital Sarl (LBC Capital), Host Union and Philweb Corporation. On January 11, 2010, the Company completed the acquisition on 32.5% of Acentic GmbH, a Germany based company engaged in hotels and other multi-dwelling establishment thru Host Union in the amount equivalent to P660 million. On November 15, 2012, ISM entered into an Investment Agreement with Wagas Consultants Limited (WCL), a company organized and existing under the laws of the British Virgin Islands, whereby ISM acquired 100% of WCL in exchange for ISMCC’s 50% stake in Host Union. As a result, WCL became the 50% shareholder of Host Union. The carrying value as at December 31, 2013 amounted to P524.3 million. b) Investment in Philippine Bank of Communications (PBCOM) ISMCC acquired 36.64% equity interest in PBCOM in 2011. The transfer of ownership was approved by the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corporation late in 2011 and the transaction was finally done at the facilities of the Philippine Stock Exchange on December 23, 2011. On April 12, 2012, the Company invested additional P22.71 million representing 814,666 new voting shares at P27.88 per share . As at December 31, 2012, the equity interest of the Company remains the same as the application for the increase in the authorized capital stock of PBCOM is still pending approval from the SEC. The increase in the authorized capital stock of PBCOM was approved by the SEC on March 11, 2013. Thus, as a result, the Company’s stake in PBCOM was reduced to 21.38%. The carrying value as at December 31, 2013 amounted to P2,270.5 million. c) Investment in Alpha Force Security Agency Earlier in 2011, ISMCC acquired 10% equity interest in Alpha Force Security Agency, Inc. for a total consideration of P1.00 million. Additional investment in 2013 amounted to P1.0 million. Accounts Payable and Accrued Expenses Trade payables and accrued expenses decreased by P26.3 million mainly due to the payment of outstanding payables and settlement of obligation to a related party of P24.7 million.

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Notes Payable Notes payable amounted to P480.0 million in 2013. It increased by P49.6 million due to foreign currency translation adjustment. Capital stock Capital stock increased by P89.9 million due to full payment of subscribed shares.

Performance for the Year Ended December 31, 2012

Income and Expenses The Company recorded a net income of P265.5 million in 2012. Net Income was substantially contributed by the Company’s equity in net earnings from PBCom and partially offset by the equity losses from Acentic. PBCom made a net income of P968 million in 2012, 22% higher than 2011. The income was driven by the bank’s better performance in trading, investments and lending activities. Cash and Cash Equivalents The Company reported total cash and cash equivalents of P 553.7 million. The reported balance is P 75.2 million lower than that of 2011. The decreased was mainly due to the expenses incurred by the Company and the acquisition of additional investment to PBCom of 22 million. Receivables – net Net receivables decreased by P651.4 million mainly due to the collection from Vega Telecom Inc. of P640 million. This proceed was used to pay off the borrowing from BOC. Property and Equipment – net As of December 31, 2012, property and equipment, net of depreciation, posted at P5.7 million primarily consisting of ISMCC’s computer equipment, Network and Data Equipment, Transportation Equipment and other fixed assets, net of accumulated depreciation and impairment losses. Investment in associates and shares of stock The account at December 31 consists of the following: a) Investment in Acentic GmbH On December 22, 2009, the Company entered into an agreement relating to the sale and purchase in January 2010 of certain shares of Acentic GmbH with LBC Capital Sarl (LBC Capital), Host Union and Philweb Corporation.

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On January 11, 2010, the Company completed the acquisition on 32.5% of Acentic GmbH, a Germany based company engaged in hotels and other multi-dwelling establishment thru Host Union in the amount equivalent to P660 million. On November 15, 2012, ISMCC entered into an Investment Agreement with Wagas Consultants Limited (WCL), a company organized and existing under the laws of the British Virgin Islands, for the acquisition by ISMCC of 100% ownership of WCL in exchange for ISMCC’s investment in Host Union. The carrying value as at December 31, 2012 amounted to P606.8 million. b) Investment in Philippine Bank of Communications (PBCOM) ISMCC acquired 36.64% equity interest in PBCOM in 2011. The transfer of ownership was approved by the Bangko Sentral ng Pilipinas (BSP) on December 23, 2011. On April 12, 2012, the Company invested additional P22.71 million representing 814,666 new voting shares at P27.88 per share . As at December 31, 2012, the equity interest of the Company remains the same as the application for the increase in the authorized capital stock of PBCOM is still pending approval from the SEC. The increase in the authorized capital stock of PBCOM was approved by the SEC on March 11, 2013. Thus, as a result, the Company’s stake in PBCOM was reduced to 21.44%. The carrying value as at December 31, 2012 amounted to P2,691.0 million. c) Investment in Alpha Force Security Agency, Inc. Earlier in 2011, ISMCC acquired 10% equity interest in Alpha Force Security Agency, Inc. for a total consideration of P1.00 million. Other Non-Current Assets Other non-current asset pertains to escrow fund. An escrow agreement was entered to by ISMCC together with the other buyers of PBCOM on July 21, 2011 with PBCOM as the fund agent. Escrow fund includes excess of the contribution, net of settlement of acquisition cost and related expenses, and interest income earned. The fund was distributed to the investors in January 2012. Accounts Payable and Accrued Expenses The 71% (P85.4 million) reduction in trade payables and accrued expenses was mainly due to the payment of outstanding payables and settlement of obligation arising from escrow agreement of P38.9 million. Notes Payable The 59% reduction in notes payable was due to the settlement of the P600 million BOC loan in October 2012. Stock Options All stock options vested have expired but none has been exercised. The total amount was reversed to Additional Paid Capital in accordance with the rules of IFRS.

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Performance for the Year Ended December 31, 2011

The Company made investments in the Philippine Bank of Communications (“PBCom”), Alpha Force Security Agency, Inc. (“Alpha Force”) and RRE Capital Ventures Corporation (“RRE”). The Company’s investment in Acentic GmBh (“Acentic”), which was previously classified as “held for sale”, was equitized based on management’s recommendation and as approved by the Executive Committee of the Board of Directors of the Company to hold the investment on a long-term basis. The remaining 37.7% share in ETPI was sold to San Miguel Equity Securities, Inc. in October 2011. Cash and Cash Equivalents The Company reported total cash and cash equivalents of P 629 million. The reported balance is P 809 million lower than that of 2010. The decreased was mainly due to the acquisition of 36.64% equity interest in PBCom. Receivables – net Net receivables increased by P 311 million mainly from the sale of the remaining 37.7% stake with ETPI. Investment Held for sale The decrease in investment held for sale of P596 million was caused by the reclassification of investment in Acentic into investment in associate as approved by the Executive Committee of the Board of Directors of the Company. Please see note regarding investment in Acentic below. Property and Equipment – net As of December 31, 2011, property and equipment, net of depreciation, posted at P8.8 million primarily consisting of ISMCC’s computer equipment, Network and Data Equipment, Transportation Equipment and other fixed assets, net of accumulated depreciation and impairment losses. Investment in associates and shares of stock The account at December 31 consists of the following: a) Investment in Acentic On December 22, 2009, the Company entered into an agreement relating to the sale and purchase in January 2010 of certain shares of Acentic GmbH with LBC Capital Sarl (LBC Capital), Host Union and Philweb Corporation.

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On January 11, 2010, the Company completed the acquisition on 32.5% of Acentic GmbH, a Germany based company engaged in hotels and other multi-dwelling establishment thru Host Union in the amount equivalent to P660 million. The above investment was presented as “Investment held for sale” in the 2010 financial statements following the commitment of the Company’s management on June 16, 2010, to a plan to sell the assets. Efforts to sell the investment have commenced, and a sale was expected by 2011. However, on November 14, 2011, the BOD approved to keep the above investment and withdrew the previous authorization to sell due to economic slowdown in Europe. As a result, the investment ceases to be classified as held for sale and equity method accounting has been applied and the carrying amount of the investment previously classified as held for sale was remeasured using the equity method of accounting. The difference between the remeasured equity amount and the carrying amount of the investment amounted to P64.41 million and is included in profit or loss. The carrying value as at December 31, 2011 amounted to P654 million. b) Investment in Philippine Bank of Communications (PBCOM) ISMCC acquired 36.64% equity interest in PBCOM in 2011. The transfer of ownership was approved by the Bangko Sentral ng Pilipinas (BSP) on December 23, 2011. The carrying value as at December 31, 2011 amounted to P2.70 billion. c) Investment in RRE Capital Ventures Corporation On June 17, 2011, the Company incorporated RRE Capital Ventures Corporation (RRE), a wholly owned subsidiary. RRE’s total authorized capital subscribed and paid minimum capital of P6.25 million. As at December 31, 2011, RRE has no operations. This has not been consolidated in 2011 on the basis of immateriality. d) Investment in Alpha Force Security Agency Earlier in 2011, ISMCC acquired 10% equity interest in Alpha Force Security Agency, Inc. for a total consideration of P1.00 million. Other Non-Current Assets Other non-current asset pertains to escrow fund. An escrow agreement was entered to by ISMCC together with the other buyers of PBCOM on July 21, 2011 with PBCOM as the fund agent. Escrow fund includes excess of the contribution, net of settlement of acquisition cost and related expenses, and interest income earned. The fund was distributed to the investors in January 2012. Accounts Payable and Accrued Expenses The 51% (P128 million) reduction in trade payables and accrued expenses was mainly due to the payment of capital gains tax amounting to P117.5 million arising from sale of AGNP..

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Stock Options Stock options of P9.9 million represents cost of stock granted to employees. As of 2011 year end, there were no stock options exercised. Income and Expenses The Company recorded a net income of P513.4 million in 2011. Net Income was substantially contributed by the Company’s gain on sale of remaining share in ETPI and equity in net earnings from PBCom and Acentic.

The Company’s Key Performance Indicators for 2013

1. Current Ratio for 2013 was at 4.29:1 which is computed as current assets (P2,097,108,702) divided by current liabilities (P489,267,498). The Group’s substantial assets are in cash and cash equivalent aggregating to P642.2 million.

2. Debt to equity ratio for 2013 was at 0.11:1 computed as total liabilities

(P489,267,498) over total equity (P4,407,691,376). 3. Debt to total asset ratio for 2013 was at 0.10:1 computed as total liabilities

(P489,267,498) over total asset (P4,896,958,874).

4. Asset to equity ratio for 2013 was 1.11:1 computed as total asset (P4,896,958,874) over total equity (P4,407,691,376).

5. Return on asset for 2013 was 3% computed as net income (P122,811,112) over total

assets (P4,896,958,874).

6. Return on equity for 2013 was 3% computed as net income (P122,811,112) over total equity (P4,407,691,376)

7. Interest rate coverage ratio for 2013 was 9.9:1 computed as EBIT (P113,103,428) over

interest expense (P11,468,051).

8. Market to book ratio of ISM’s common share was 1.82:2.30 as of December

31, 2013. Book value per share is computed as equity attributable to holders of the company (P4,407,691,376) divided by total issued shares (1,916,269,341).

The Company’s Key Performance Indicators for 2012

1. Current Ratio for 2012 was at 4.27:1 which is computed as current assets

(P1,991,209,339) divided by current liabilities (P465,977,494). The Group’s substantial assets are in cash and cash equivalent aggregating to P553.7 million.

2. Debt to equity ratio for 2012 was at 0.10:1 computed as total liabilities (P465,977,494) over total equity (P4,829,790,243).

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3. Debt to total asset ratio for 2012 was at 0.09:1 computed as total liabilities (P465,977,494) over total asset (P5,295,767,737).

4. Asset to equity ratio for 2012 was 1.10:1 computed as total asset (P5,295,767,737)

over total equity (P4,829,790,243).

5. Return on asset for 2012 was 5% computed as net income (P265,509,037) over total

assets (P5,295,767,737).

6. Return on equity for 2012 was 6% computed as net income (P265,509,037) over

total equity (P4,829,790,243)

7. Interest rate coverage ratio for 2012 was 5.37:1 computed as EBIT (P288,236,858)

over interest expense (P53,670,211).

8. Market to book ratio of ISM’s common share was 2.59:2.64 as of December 31, 2012.

Book value per share is computed as equity attributable to holders of the company (P4,829,790,243) divided by total issued shares (1,826,268,658).

The Company’s Key Performance Indicators for 2011 1. Current Ratio for 2011 was at 1.38:1 which is computed as current assets

(P1,609,869,775) divided by current liabilities (P1,169,606,543). The Group’s substantial assets are in cash and cash equivalent aggregating to P629 million.

2. Debt to equity ratio for 2011 was at 0.24:1 computed as total liabilities (P1,169,606,543) over total equity (P4,955,940,222).

3. Debt to total asset ratio for 2011 was at 0.19:1 computed as total liabilities

(P1,169,606,543) over total asset (P6,125,546,765).

4. Asset to equity ratio for 2011 was 1.24:1 computed as total asset (P6,125,546,765)

over total equity (P4,955,940,222).

5. Return on asset for 2011 was 10% computed as net income (P610,170,987) over

total assets (P6,125,546,765).

6. Return on equity for 2011 was 12% computed as net income (P610,170,987) over

total equity (P4,955,940,222).

7. Interest rate coverage ratio for 2011 was 6.92:1 computed as EBIT (P610,170,987)

over interest expense (P88,183,020).

8. Market to book ratio of ISM’s common share was 3.3:2.71 as of December 31, 2011.

Book value per share is computed as equity attributable to holders of the company (P4,955,940,222) divided by total issued shares (1,826,268,658).

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Key variable and other qualitative and quantitative factors There are no known trends, demands, commitments events, or uncertainties that will have a material impact on the Company’s liquidity and that of its subsidiary, ETPI. There were no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the company with unconsolidated entities or other persons created during the reporting period. The current capitalization of the Company, and expected future revenues from its various activities are projected to sufficiently meet the Company’s operating cash requirements. The Company intends to utilize proceeds from private placements and internally generated funds to finance the acquisition of computer and other equipment, if any. These acquisitions and facilities are not expected to be of material amounts. The capital expenditures of its subsidiary, ETPI, will be funded by internally generated funds and advances to be provided by the Company. These expenditures are not expected to be material in amounts. No extraordinary purchase of plant and equipment are expected beyond those in the regular course of the Company’s operations. All purchases will be financed through internally-generated funds and existing capitalization. There are no known trends, events or uncertainties that have had or that are reasonably expected to have material impact on the Company’s revenues or continuing operations. There are no significant elements of income that did not arise from the Company and its subsidiary’s continuing operations. There are no seasonal aspects that had a material effect on the Company’s and its subsidiary’s financial conditions or results of operations.

Item 7. Financial Statements See attached.

Item 8. Changes in and Disagreements to Accountants on Accounting and Financial

Disclosure There were neither changes in nor disagreements with accountants on accounting / financial disclosure.

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Part III – CONTROL AND COMPENSATION INFORMATION Item 9. Directors and Executive Officers of the Registrant

Directors and Executive Officers

Currently, ISM’s Board of Directors is composed of 14 members elected by and from among the Company’s stockholders. The Board is responsible for providing overall management and direction to the Company. The directors and executive officers of the Company and their brief business experiences for the past five (5) years are discussed below.

Age Position/Citizenship/Period Served/Term of

Office Eric O. Recto 50 Chairman/CEO/Director/Filipino/3 months/1

yr. President/7 yrs.

Craig E. Ehrlich 57 Vice-Chairman/Director/American/10yrs./1yr. Mario J. Locsin 62 President/Director/Filipino/3 months/ 1 year

Executive Vice President /4 yrs./1 yr.

Gregorio Ma. Araneta III 66 Director/Filipino/9yrs./1 yr. Pablo L. Lobregat 60 Director/Filipino/4 yrs./1 yr. Alberto M. Montilla 78 Director/Filipino/18 yrs./1yr. Rafael B. Ortigas 42 Director/Filipino/10 yrs./1 yr. Ignacio R. Ortigas 73 Director/Filipino/18 yrs./1 yr. Roberto V. San Jose 72 Director/Filipino/9 yrs./1 yr. Victor C. Macalincag 77 Independent Director/Filipino/3 yrs./1 yr. Jose Ernesto C. Villaluna, Jr.

73 Independent Director/Filipino/19 yrs./1 yr.

Colin Keogh 60 Independent Director/British/5 mos./1 yr. Eugene Ellis 63 Independent Director/Australian/5 mos./1 yr. Luis Y. Benitez 66 Independent Director/Filipino/5 mos./1 yr. Jovita D.S. Larrazabal 32 Corporate Secretary/Filipino/3 months/1 yr. Zaldy M. Prieto 39 Chief Finance Officer/Treasurer/Filipino/5

yrs./1 yr.

The number of years indicated after the position and citizenship refers to the period served as a director/officer. Mr. Eric O. Recto was elected as Chairman and CEO of the Company in December 3, 2013. He was first elected Director and President of the Company in March 2005. He is the Chairman and a Director of Philippine Bank of Communications (PBC), the Vice-Chairman and a Director of PCOR, WEB, ALPHA, AB, TCCAMPI, ABICI and AMCI, and a Director of San Miguel Corporation (SMC). He is a Member of the Board of Supervisors of Acentic GmbH. Before that, he was Undersecretary of the Department of Finance of the Republic of the Philippines in charge of handling both the International Finance Group and the Privatization Office. Before his work with the

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government, he was CFO of Alaska Milk Corporation and prior to that, Belle Corporation. Mr. Recto has a degree in Industrial Engineering from the University of the Philippines, as well as an MBA from the Johnson School, Cornell University. Mr. Craig E. Ehrlich has been a Director of the Company since July 2003 and was elected as Vice Chairman in May 2006. He is the former, long-time chairman of the GSM Association (GSMA), the global trade association representing more than 700 2nd and 3rd generation network operators and over 180 manufacturers and suppliers, serving more than 3.5 billion customers across 218 countries and territories. He is a board member of the International Telecommunications Union (ITU), Hutchison Telecommunication Group, Bharti Airtel (India’s largest company by market capitalization), chairman of Kbro, Taiwan’s largest cable TV company, and founding chairman of Novare Technologies Ltd., a Hong Kong software development company. He was former group managing director of Sunday Communications Limited, a Hong Kong mobile operator. Mr. Ehrlich, a Hong Kong resident since 1987, holds a BA degree from the University of California Los Angeles, a master’s degree from Occidental College, and a postgraduate fellowship with the Coro Foundation. Mr. Ehrlich is also a member of UCLA/Peking University Joint Research Institute Advisory Committee and a Founding Chairman of the Centre for Global Management at the UCLA Anderson School. Mr. Mario J. Locsin was elected as President of the Company on December 3, 2013. Before that, he was an Independent Director of the Company in November 2007 and Director and Executive Vice President in October 2008. He is also currently a Vice Chairman and a Director of PBC, and the President of Inpilcom, Inc. He is also a Director of WEB, and an Independent Director of ALPHA, TCCAMPI, ABICI and AMCI. In the past, he served as the President and COO of Eastern Telecommunications Philippines, Inc., a Director of Belle Corporation, APC Group, Southwest Resources, Philippine Long Distance Telephone Co., and PilipinoTelephone Co., as well as a Director, Executive Vice President and COO of Philippine Airlines. Mr. Locsin is also a consultant of Acentic Asia Ltd. He holds a degree in LIA-Honors Math from De La Salle University and a degree of Masters in Business Administration from the University of San Francisco.

Mr. Rafael B. Ortigas was elected a Director of the Company in April 2002. He is a Director of WEB, Executive Vice President of Sagitro, Inc. and Itogon-Suyoc Resources, Inc., Vice President of Leafar Commercial Corporation, Chairman, President and Director of Rising Sons of 3K, Inc., Chairman and Director of CK3K, Inc. and GSC-3KCK, Inc., and Director of Vinmer Realty, Inc., Concrete Aggregates Corporation, Director and Treasurer of Creative Trade Center Services, Inc. and Delegate General Partner of Ortigas and Company, Ltd. Mr. Ignacio R. Ortigas has been a Director of the Company since 1993. He is President of Sagitro, Inc. and a General Partner of Ortigas & Co., Ltd. Mr. Gregorio Ma. Araneta III was elected a Director of the Company in July 2003. He has been Chairman of Gregorio Araneta Incorporated, Carmel Development Corporation, Gregorio Araneta Management Corporation, and Gamma Holdings Corporation and the Vice Chairman and CEO of Araneta Properties, Inc. since 2003.

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Mr. Alberto M. Montilla was formerly President and Chairman of the Company from 1995 to 2001. He has been a Director since 1993. Mr. Montilla is currently a Vice President and Secretary of Sagitro, Inc. Mr. Pablo L. Lobregat was elected a Director of the Company in November 2007. He was a Director of Eastern Telecommunications Philippines, Inc. from 2000 to 2008. He is currently the President of Crystal Sugar Co., Inc, Aerocom Investors & Managers, Inc. and Philippine Sugar Research Institute Foundation, Inc. He received a degree in Business Management from Instituto Catolico de Artes Empresariales in Madrid, Spain. Mr. Roberto V. San Jose was elected a Director of the Company in 2011. He was the Corporate Secretary of the Company from February 2002 to May 2011. He is also the Corporate Secretary of Alsons Consolidated Resources, Inc., Anglo-Philippine Holdings Corporation, Energy Development Corporation, Premiere Entertainment Productions, Inc. and Solid Group, Inc. He is a Director and/or Officer of various companies which are clients of Castillo Laman Tan Pantaleon and San Jose Law Offices where he is name partner and special counsel. He is a member of the Philippine Bar. Mr. Jose Ernesto C. Villaluna, Jr. was elected as Independent Director of the Company in 1993. He is also a Director of Philex Mining Corporation and President of Valle Verde Country Club. Mr. Villaluna was formerly Vice Chairman and President of the Company, President and COO of Philex Mining Corporation, Executive Vice President of Apex Mining and Surigao Consolidated Mining Company, Vice President (Gold Sector) and Director of the Chamber of Mines of the Philippines. Mr. Victor C. Macalincag was elected as Independent Director of the Company in April 2011. He is also currently an Independent Director of AB, Crown Equities, Inc. and a Director of Semirara Mining Corporation, Republic Glass Holdings Corp., SEM Calcaca Power Power Corporation and Finman Rural Bank. He was the President of Trade & Investment Development Corporation of the Philippines which is presently known as PHILEXIM (formerly PhilGuarantee) from 1991 until his resignation in 2001. He was the Deputy Minister of Finance from 1981 to 1986 and Undersecretary of Finance from 1986 to 1991. He also held the position of National Treasurer from 1981 to 1988. Mr. Macalincag is a Certified Public Accountant. He has a Bachelor of Arts in Business Administration from the University of the East. He also earned a Master of Arts in Economics from the same university. He finished a fellowship program conducted by the Economic Development Institute of the World Bank, Washington D.C. U.S.A. in 1971. Mr. Colin Keogh was first elected as an independent director of ISM on December 3, 2013. He is a qualified barrister and spent 24 years working at Close Brothers Group Plc (a London listed merchant bank) including 8 years as Group CEO from 2002 to 2009. He is now pursuing a plural career and is a non-executive director of a number of companies including Virgin Money Holdings (UK) Limited, a retail banking business, Brait SA, a specialist investment company listed in Johannesburg and Luxembourg, and Greenheart Group Limited, a forestry company listed in Hong Kong. He is a law graduate of the University of Oxford.

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Mr. Luis Y. Benitez was first elected as an independent director of ISM on December 3, 2013. Prior to his election in ISM, he was a Senior Vice President of SM Investments Corporation for Internal Audit. Mr. Benitez was a Senior Partner of SyCip Gorres Velayo & Co., where he served as Vice Chairman and Head of the Assurance & Advisory Business Services. He is a member of the Makati Business Club, The Philippine British Business Council, and the Philippine Institute of Certified Public Accountants. Mr. Benitez holds a Master of Business Administration degree from New York University, Stern School of Business. He is a graduate of the Pacific Rim Bankers Program, University of Washington. He holds a Bachelor of Science in Business Administration degree, Major in Accounting from the University of the Philippines.

Mr. Eugene Ellis was first elected as an independent director of ISM on December 3, 2013. He has over 40 years of experience in banking, the last 34 with Standard Chartered Bank. He moved to the Philippines in 2005 where he was Standard Chartered’s Chief Executive Officer and Head of Consumer Banking until he retired in 2009. Prior to the Philippines, he had postings in the Middle East, Asia and Australia. He obtained a Bachelor of Arts degree majoring in Commerce and Economics from the University of Delhi, India. He is a Certified Credit Professional, Certified Trade Finance Professional and a Fellow of the Australian Institute of Banking and Finance. OFFICERS Mr. Zaldy M. Prieto was elected as Chief Finance Officer and Treasurer of the Company in November 2008. He is also CFO of WEB. Mr. Prieto is a certified public accountant and certified financial consultant. His previous work experiences include being a senior tax consultant of SGV & Co. in 1998, assistant vice president for finance in Ford Motor Company in 2007 and plant controller and assistant finance director of James Hardie Philippines in 2008. He is a member of the Philippine Institute of Certified Public Accountants and Institute of Financial Consultants. Ms. Jovita D.S. Larrazabal was elected Corporate Secretary of the Company on December 3, 2013. Before that, she was the Assistant Corporate Secretary of the Company, elected in May 2011 and served as one of the Company's legal counsel. She was also the Assistant Corporate Secretary of ALPHA, AB, PBC, TCCAMPI and ABICI. Before being an in house counsel, she was an associate of Sycip Salazar Hernandez & Gatmaitan and Martinez Vergara Gonzalez & Serrano. She is a member of the Philippine Bar. Ms. Larrazabal holds a Juris Doctor degree from the Ateneo De Manila University-College of Law and a Bachelor of Arts degree major in Management Economics from the College of Arts and Sciences of the same university.

All the foregoing directors will be nominated for re-election to the Board of Directors at the meeting. No director has resigned or declined to stand for re-election to the Board of Directors since the date of the last annual stockholders’ meeting because of a disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. As of the date of this Annual Report, the Company has five (5) incumber independent directors, Messrs. Jose Ernesto C. Villaluna, Jr., Victor C. Macalincag, Colin Keogh, Eugene Ellis and Luis V. Benitez.

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Directorships in Other Reporting Companies

Mr. Recto is also the chairman of Philippine Bank of Communications, and vice chairman of Philweb Corporation, Alphaland Corporation, Atok-Big Wedge Co., Inc., The City Club at Alphaland Makati Place, Inc. Alphaland Balesin Island Club, Inc. and Petron Corporation. He is also a director of San Miguel Corporation.

Mr. Locsin is a director of PhilWeb Corporation, vice chairman and director of

Philippine Bank of Communications, director of Atok-Big Wedge Co., Inc. and independent director of Alphaland Corporation, The City Club at Alphaland Makati Place, Inc. and Alphaland Balesin Island Club, Inc.

Mr. Macalincag is a director of Semirara Mining Corporation and Crown Equities, Inc. and an independent director of Atok-Big Wedge Co., Inc.

Mr. Rafael B. Ortigas is also a director of Philweb Corporation.

Shares of PhilWeb Corporation (WEB), Alphaland Corporation (ALPHA), Atok-Big Wedge Co., Inc. (AB), Philippine Bank of Communications (PBC), Petron Corporation (PCOR and PPREF), San Miguel Corporation (SMC), Semirara Mining Corporation (SCC), and Crown Equities, Inc. (CEI) are all listed in the PSE. Shares of The City Club at Alphaland Makati Place, Inc. and Alphaland Balesin Island Club, Inc. are covered by Registration Statements filed with the SEC.

Significant Employee Except for the foregoing, there are no other significant employees of the Company.

Family Relationships Mr. Alberto M. Montilla is the brother-in-law of Atty. Ignacio Ortigas. Mr. Rafael B. Ortigas is a nephew of Messrs. Ortigas and Montilla. Other than the foregoing, none of the directors and officers is related to each other by consanguinity or affinity.

Involvement in Certain Legal Proceedings None of the current director or senior corporate officer of the Issuer during the past five (5) years has been subject to:

(a) Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

(b) Any conviction by final judgment, including the nature of the offense, in a criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses;

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(c) Any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; or

(d) Being found by a domestic or foreign court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or comparable foreign body, or a domestic or foreign exchange or other organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation and the judgment has not been reversed, suspended, or vacated.

Item 10. Executive Compensation

There were no compensations paid to its directors as a group for fiscal years 2011 2012 and 2013. The Company does not intend to pay its directors for the fiscal year 2014.

Annual Compensation

(a) (b) (c) (d) (e)

Name and Principal Position Year Salary Bonus Other Annual Comp.

1. Roberto V. Ongpin72 Chairman

(elected in July 2001; resigned in December 2013) 2. Craig E. Ehrlich7

Vice Chairman (elected in July 2003) (elected Vice Chairman in May 2006)

3. Eric O. Recto76

Chairman (elected in December 2013) President

(elected in March 2005)

4. Mario J. Locsin7 President (elected in December 2013)

Executive Vice President (elected in October 2008)

5. Ignacio R. Ortigas7 Vice President (resigned in December 2013)

(elected in April 2002)

6. Rafael B. Ortigas7 Vice President (resigned in December 2013)

72

All the above mentioned executives do not receive salaries from the Company.

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(elected in April 2002)

7. Zaldy M. Prieto76 CFO & Treasurer (elected in November 2008)

(a) (b) (c) (d) (e) Name and Principal Position Year Salary Bonus Other Annual Comp.

All Officers and Directors as a Group

Unnamed* 2012 P2,140,027 P302,000 P136,182

2013 P5,349,217 P796,000 P260,284 *Includes payment made directly to officers and through intercompany sharing.

(a) (b) (c) (d) (e) Name and Principal Position Year Salary Bonus Other Annual Comp.

All Officers and Directors as a Group

Unnamed 2014 (estimate) P9,100,000 P2,100,000 P1,400,000

The operations of the company have been handled by the officers and employees of an affiliate, PhilWeb Corporation (“PhilWeb”, formerly “PhilWeb.Com, Inc.”), and ISM shares in the common operating expenses of the former based on a signed agreement between PhilWeb and ISM. However, with the sale of PhilWeb’s shareholdring in November 2013, its cost-sharing arrangement with ISM was terminated. There are no standard arrangements with regard to election, bonus, profit sharing, pension/ retirement plan granting or extension of any option, warrant or right to purchase any securities. There were no material terms of any other arrangement given to officers and directors.

Employment Contracts and Termination of Employment and Change-in-Control Arrangements

No executive officer has an employment contract with the Company.

There have been no terminations of employment and neither have there been any change-in-control arrangements with the present management.

Item 11. Security Ownership of Certain Record Beneficial Owners and Management 1) Security Ownership of Certain Record and Beneficial Owners

As of 28 February 2014, the Company knows of no one who beneficially owns more than 5% of its common stock except as set forth in the table below:

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Title of Class

Name and Address of Record Owner and

Relationship with the Company

Name of Beneficial Owner and Relationship

with Record Owner

Citizenship Amount and Nature of

Record/Beneficial Ownership

(indicate “r” or “b”)

Percent of Class

Common Monfortino Holdings, Inc. 18/F, Liberty Center, 104 H.V. dela Costa St., Salcedo Village,, Makati City (Stockholder)

Mr.Eric O. Recto - controlling shareholder

(See footnote 1)

Filipino 433,930,304 (r)

22.65%

Common EMDCD Ltd. (EMDCD)3 M&C Corporate Services Ltd., PO Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (Stockholder)

Ashmore Investment Management Limited

(see footnote 2)

British 196,618,486 (r)

10.26%

Common Asset Holder PCC No. 2 Ltd. Re: Ashmore Asian Recovery Fund (ARF) 4 New Street, Peter Port, Guernsey (Stockholder)

Ashmore Investment Management Limited

(see footnote 2)

British 376,226,748 (r)

19.63%

Common AISM B.V. (AISM) Ashmore Investment Management Limited

(see footnote 2)

British 180,000,000 (r) 9.39%

1 The shareholdings of Monfortino Holdings, Inc. will be voted by Mr. Eric O. Recto. 2 EMDCD, AISM and ARF are funds held for numerous investors and managed by Ashmore Investment Management Ltd. (“Ashmore”). In previous meetings, the shareholdings have been voted by either Mr. Roberto V. Ongpin or Mr. Eric O. Recto. Except as stated above, the Board of Directors and Management of the Company have no knowledge of any person who, as at Record Date, was indirectly or directly the beneficial owner of more than 5% of the Company’s outstanding shares of common stock or who has voting power or investment power with respect to shares comprising more than five percent of the outstanding shares of common stock. There are no persons holding more than 5% of the Company’s common stocks that are under a voting trust or similar agreement. 2) Security Ownership of Management As of 28 February 2014, the security ownership of the members of the Board of Directors and that of management are as follows:

Title of Class Name of Director/Officer Citizenship Number of Shares and Percent of

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Nature of Beneficial Ownership

Class

Common Eric O. Recto (Chairman /CEO/Director)

Filipino 50 (direct) 433,930,304 (indirect)

22.65%

Common Craig E. Ehrlich (Vice Chairman/Director)

American 21,382,600 (direct)

1.12%

Common Mario J. Locsin (President/Director)

Filipino 100 (direct) 0.00%

Common Rafael B. Ortigas (Director)

Filipino 9,508,064 (direct)

0.50%

Common Ignacio R. Ortigas (Director)

Filipino 20,565,354 (direct) 14,006,524 (indirect)

1.80%

Common Alberto M. Montilla (Director)

Filipino 27,974,120 (direct) 5,065,674 (indirect)

1.72%

Common Gregorio Ma. Araneta III (Director)

Filipino 2 (direct) 82,164,016 (indirect)

4.29%

Common Jose Ernesto C. Villaluna, Jr. (Independent Director)

Filipino 7,581,732(direct) 0.40%

Common Victor C. Macalincag (Independent Director)

Filipino 10,000(direct) 0.00%

Common Pablo L. Lobregat (Director)

Filipino 50 (direct) 0.00%

Common Luis Benitez (Independent Director)

Filipino 100 (direct) 0.00%

Common Eugene Ellis (Independent Director)

Australian 100(direct) 0.00%

Common Colin Keogh (Independent Director)

British 100 (direct) 0.00%

Common Roberto V. San Jose (Director)

Filipino 250 (direct) 0.00%

Common Jovita D.S. Larrazabal (Corporate Secretary)

Filipino 0 (direct) 0.00%

Common Zaldy M. Prieto (Interim Chief Finance Officer/Treasurer)

Filipino 0 (direct ) 0.00%

Aggregate Ownership of Directors and Officers as a Group 204,079,953 9.82%

There are no voting trust agreements or any other similar agreement that may result in a change in control of the Company of which the Company has any knowledge.

Item 12. Certain Relationships and Related Transactions

There has been no transaction outside of the ordinary course of business during the last two years, nor is any transaction presently proposed, to which the Company was or is to be a party in which any director or executive officer of the Company, or owner of more than 10% of the Company’s voting securities or any member of the immediate family of any of the foregoing persons, had or is to have a direct or indirect material interest. In the ordinary and regular course of business, the Company had or may have had transactions with other companies in which some of the foregoing persons may have an interest. No person, natural or juridical, owns more than 50% of the Company’s voting securities.

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Part IV – EXHIBITS AND SCHEDULES Item 1 3. Exhibit and Reports on SEC Form 17-C

a. Exhibit

None

b. Reports on SEC Form 17-C

Date of Report Contents of Report

December 3, 2013 During the special board meeting of the Board of Directors of the Company held on December 3, 2013, the board of directors appointed Messrs. Colin Keogh, Eugene Ellis, Luis Benitez as independent directors of the Bank to replace Messrs. Roberto V. Ongpin, Dennis O. Valdes, Mario A. Oreta and Walter W. Brown, who resigned during the same meeting. Mr. Ongpin also resigned as Chairman and CEO of the Company. Likewise, Messrs. Rafael B. Ortigas and Ignacio R. Ortigas resigned as Vice Presidents; Mr. Rodolfo Ma. A. Ponferrada resigned as Corporate Secretary; and Mr. Ponferrada, Ms. Josephine A. Manalo and Mr. Jonathan T. Altubar resigned as Corporate Information Officers. The following were appointed as the current corporate officers of the Company:

Chairman and CEO: Eric O. Recto Vice Chairman: Craig Ehrlich President: Mario J. Locsin interim CFO and Treasurer: Zaldy M. Prieto Corporate Secretary & Corporate Information Officer: Jovita D.S. Larrazabal