MEGAWIDE CONSTRUCTION CORPORATION

NOTES TO QUARTERLY SUMMARY OF APPLICATION OF PROCEEDS

AS OF AND FOR THE QUARTER ENDED MARCH 31, 2017

1. BACKGROUND

Megawide Construction Corporation (the Company) engages in the general construction

business, including constructing, enlarging, repairing, or engaging in any work upon buildings,

houses and condominiums, roads, plants, bridges, piers, waterworks, railroads and other

structures. It performs general construction works which involve site development,

earthworks, structural and civil works, masonry works, architectural finishes, electrical works,

plumbing, sanitary works, fire protection works and mechanical works.

On September 14, 2014, the Company filed its application with the Philippine Stock

Exchange (PSE) for the listing of the Preferred Shares. The Board of Directors of the PSE

approved the Company’s application for the listing of the Preferred Shares on November 12,

2014.

Also on September 14, 2014, the Company filed a Registrant Statement covering the

Preferred Shares with the Philippine Securities and Exchange Commission, in accordance

with the provisions of the Securities Regulation Code.

On December 3, 2014, the Company issued through public offering the 40,000,000

cumulative, non-voting, non-participating, non-convertible perpetual Preferred Shares,

redeemable at the option of the Company at the sole option of the Board of Directors

(BOD) at the price to be determined by the BOD, generating net proceeds of P3.9 billion

(the Preferred Shares Net Proceeds). The Preferred Shares Net Proceeds will be used for

various Public-Private Partnership (PPP) projects, development of renewable energy projects,

and bid preparation and preliminary works for PPP projects that the Company will bid for.

On September 16, 2016, the BOD approved the revisions on the disbursement allocation

from Modernization of Philippine Orthopedic Center and Bulacan Bulk Water Supply

Projects to Regional Prison Facilities Project and the revision of timelines for all the on-going

projects which are expected to be completed within 2016 to 2019.

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2. RELEVANT INFORMATION

Expenditures from the Preferred Shares Net Proceeds are discussed below.

(a) Nature of Expenditures

The Preferred Shares Net Proceeds shall be used by the Company to finance, among others,

the following requirements:

(i) Regional Prison Facilities

The proposed project involves the design, financing, construction and maintenance of

modern prison facilities, staff housing, administrative buildings, areas for rehabilitation,

and high security systems that can accommodate 26,880 inmates and associated staff.

The Company will use a portion of the Preferred Shares Net Proceeds to fund bid

preparation, project feasibility studies, value engineering services, technical and planning,

engineering analysis and designs as well as fund a portion of the projected initial capital

outlay requirement of the project.

The Company has participated in the pre-qualification process for this project, and on July

13, 2015, the Department of Justice (Project Sponsor) announced that the Company is

qualified to bid for the project. On April 11, 2017, the Project Sponsor issued a bid

bulletin and suspended the submission of bids, which was originally scheduled on

April 24, 2017, and committed to announce the new bid submission date in a subsequent

bid bulletin.

As of March 31, 2017, P24.0 million from the Preferred Share Net Proceeds were released

and used for the bidding processes and materials.

(ii) Mactan-Cebu International Airport (MCIA)

The MCIA Project involves the construction of a new world-class passenger terminal

building (Terminal II) and renovation of the old passenger Terminal I, operation and

maintenance of both terminals, construction and operation of aprons, ground handling,

daily slot management, and bay allocation in MCIA.

The new passenger Terminal II will have 3-levels with double sided pier spread over

43,398 square meters with 6 contact gates to service 90% of international flights through

boarding bridges on T2 Apron, 3-level in line baggage screening system, 4 baggage

carousels, 14 escalators and canopy coverage for airport village, ramps and taxi parking.

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As of March 31, 2017, P759.8 million from the Preferred Share Net Proceeds were

released and used for this purpose.

(iii) Southwest Integrated Transport System (SWITS)

The SWITS Project will be constructed within a site area of 4.59 hectares. It will connect

passengers coming from the Cavite area to other transport systems such as the future

Light Rail Transit Line 1 South Extension, city bus, taxi, and other public utility vehicles

that are serving inner Metro Manila. The project will include passenger terminal buildings,

arrival and departure bays, public information systems, ticketing and baggage handling

facilities, and park-ride facilities.

As of March 31, 2017, P119.5 million from the Preferred Shares Net Proceeds were

released and used for this purpose.

(iv) Privatization of Airports

The proposed project involves the design, financing, construction, operation, and

maintenance of six airports located in Davao, Palawan, Iloilo, Bacolod, Bohol, and

Laguindingan.

The Company will use a portion of the Preferred Shares Net Proceeds to fund the bid

preparation, project feasibility studies, value engineering services, technical and planning,

engineering analysis and designs as well as fund a portion of the projected initial capital

outlay requirement of the project.

Last September 18, 2015, the Consortium of the Company and GMR Infrastructure was

declared as a qualified bidder of the project. The deadline of submission of bids is set

before the end of 2016 but was moved indefinitely. With the change Government

Administration in 2016, the airports were unbundled and the Consortium is considered as

pre-qualified for each airport, having qualified in the previous bid. The submission for bid

proposal is set to be on December 8, 2017.

As of March 31, 2017, P6.5 million from the Preferred Shares Net Proceeds were released

and used for this purpose.

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(v) Public School Infrastructure Project (PSIP) Phase II

The PSIP Phase II involves the design and construction of new public school buildings

totaling 2,440 one-storey, two-storey, three-storey, and four-storey classrooms, including

furniture, fixtures, and toilets in public schools in six different regions of the Philippines.

As of March 31, 2017, P302.4 million from the Preferred Shares Net Proceeds were

released and used for this purpose.

(vi) Project Development of Renewable Energies

The project involves the development of renewable energies (solar and biomass) with

combined capacity of 80 megawatts at various project development stages. Project

development of these renewable energies involves the registration, detailed engineering

designs, financial modeling, procurement of government clearances, consents and permits,

procurement of power purchase agreements, and Department of Energy and Energy

Regulatory Commission approvals.

As of March 31, 2017, P29.0 million from the Preferred Shares Net Proceeds were

released and used for this purpose.

(b) Summary of Accumulated Costs Incurred

Summarized below are the accumulated costs incurred to date and the remaining balance of

the Preferred Shares Net Proceeds.

Application of Preferred Balance of Preferred

Allocation of Shares Net Proceeds Shares Net

Preferred Shares Incurred up to Proceeds as of

Projects Net Proceeds March 31, 2017 March 31, 2017

Regional Prison Facilities P 1,428,830,678.44 P 23,962,320.22 P 1,404,868,358.22 MCIA 984,173,962.50 759,750,397.04 224,423,565.46 SWITS 492,086,981.25 119,526,669.20 372,560,312.05

Privatization of Airports 492,086,981.25 6,531,612.33 485,555,368.92

PSIP Phase II 442,878,283.13 302,405,007.67 140,473,275.46

Project Development of Renewable Energies 98,417,396.25 28,989,694.23 69,427,702.02

P 3,938,474,282.82 P 1,241,165,700.69 P 2,697,308,582.13

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(c) Application of Remaining Balance of the Preferred Shares Net Proceeds

The remaining balance of the Preferred Shares Net Proceeds amounting to P2.7 billion as of

December 31, 2016 is expected to be applied to costs to be incurred in accordance with the

revised planned use and estimated timing as disclosed in the Offering Circular and the PSE.