Araneta Properties, Inc.

Period Ended December 31, 2017

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. For the matter below, our description of how
our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the

Financial Statements section of our report, including in relation to these matters. Accordingly, our
audit included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial statements. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
accompanying financial statements.

Revenue Recognition on Real Estate Sales

The Company presently derives its revenue solely from the sale of real estate arising from a project

agreement which has been substantially completed as discussed in Note 18 to the financial
statements. In 2017, the Company recognized revenue from sale of real estate amounting to P=60.97
million. This matter is significant to our audit because revenue is material to the financial statements
and its calculation and recognition is largely dependent on the completeness and accuracy of
information used by the Company.

Audit Response

We obtained an understanding of the Company’s revenue recognition process with respect to the real

estate project and tested the related controls. We performed inquiries with relevant personnel on the

sales, collection and reporting processes. We obtained sales and collection reports and compared the
data with the information in the Company’s revenue calculation and monitoring schedule, and
reviewed the disposition of differences noted. On a test basis, we traced reported lot sales and actual
collection remittances to corresponding sales invoices and contracts to sell and official receipts and
bank records. We performed cut-off procedures by examining sales and collection reports for the
month subsequent to the cut-off date.