EX-99.2 3 d34523dex992.htm FOURTH QUARTER 2020 RESULTS FOR CEMEX HOLDINGS PHILIPPINES, INC.

Exhibit 2

2020

FOURTH QUARTER RESULTS

• Stock Listing Information

Philippine Stock Exchange

Ticker: CHP

• Investor Relations

+ 632 8849 3600

E-Mail:

chp.ir@cemex.com

Operating and Financial Highlights |  |

|  | January - December |  |  | Fourth Quarter |
|  | 2020 |  |  | 2019 |  |  | % var |  |  | 2020 |  |  | 2019 |  |  | % var |
Net sales |  |  | 19,707 |  |  |  | 23,596 |  |  |  | (16 | %) |  |  | 4,564 |  |  |  | 5,372 |  |  |  | (15 | %)
Gross profit |  |  | 8,092 |  |  |  | 9,683 |  |  |  | (16 | %) |  |  | 1,779 |  |  |  | 2,177 |  |  |  | (18 | %)
as % of net sales |  |  | 41 | % |  |  | 41 | % |  |  | 0pp |  |  |  | 39 | % |  |  | 41 | % |  |  | (2pp | )
Operating earnings before other expenses, net |  |  | 1,808 |  |  |  | 2,342 |  |  |  | (23 | %) |  |  | 315 |  |  |  | 257 |  |  |  | 23 | %
as % of net sales |  |  | 9 | % |  |  | 10 | % |  |  | (1pp | ) |  |  | 7 | % |  |  | 5 | % |  |  | 2pp |
Controlling Interest Net Income (Loss) |  |  | 985 |  |  |  | 1,280 |  |  |  | (23 | %) |  |  | 227 |  |  |  | 405 |  |  |  | (44 | %)
Operating EBITDA |  |  | 4,172 |  |  |  | 4,227 |  |  |  | (1 | %) |  |  | 891 |  |  |  | 781 |  |  |  | 14 | %
as % of net sales |  |  | 21.2 | % |  |  | 17.9 | % |  |  | 3.3pp |  |  |  | 19.5 | % |  |  | 14.5 | % |  |  | 5.0pp |
Free cash flow after maintenance capital expenditures |  |  | 2,814 |  |  |  | 2,481 |  |  |  | 13 | % |  |  | 847 |  |  |  | (411 | ) |  |  | N/A |
Free cash flow |  |  | (437 | ) |  |  | (719 | ) |  |  | 39 | % |  |  | (72 | ) |  |  | (1,570 | ) |  |  | 95 | %
Net debt1 |  |  | 6,714 |  |  |  | 18,664 |  |  |  | (64 | %) |  |  | 6,714 |  |  |  | 18,664 |  |  |  | (64 | %)
Total debt1 |  |  | 12,853 |  |  |  | 20,063 |  |  |  | (36 | %) |  |  | 12,853 |  |  |  | 20,063 |  |  |  | (36 | %)
Earnings per share2 |  |  | 0.08 |  |  |  | 0.25 |  |  |  | (66 | %) |  |  | 0.02 |  |  |  | 0.08 |  |  |  | (78 | %)

In millions of Philippine Pesos, except percentages, and earnings per share

1 | U.S. dollar debt converted using end-of-period exchange rate. See Debt Information on page 4 and Exchange Rates on page 8 for more detail.

2 | In Philippine Pesos

Net sales decreased, year-over-year, by 15% during the fourth quarter and by 16% for 2020, due to lower volumes and prices.

Cost of sales as a percentage of sales, was flat at 59% for 2020. Extraordinary benefit in 2020 shutdown costs due to reduced scope and postponement of APO Cement Plant major kiln shutdown.

Total fuel cost was 7% lower year-over-year, while total power cost declined by 16% year-over-year for 2020 due to production optimization, and lower energy prices.

During the fourth quarter, cost of sales was at 61% of sales due to the execution of kiln shutdown works in our Solid Cement Plant.

Operating expenses, as a percentage of sales, was at 32% for 2020, compared with 31% in 2019.

Distribution expenses, as a percentage of sales, was flat at 18% for 2020. Total distribution expenses decreased by 17% year-over-year for 2020, driven by initiatives to increase operational and cost efficiency.

Selling and administrative expenses, as a percentage of sales, was at 14% for 2020, compared with 13% in 2019. Total selling and administrative expenses were lower by 11% year-over-year for year 2020. Cost control measures were implemented to reduce discretionary expenses.

Operating EBITDA for 2020 was at PHP 4.2 billion, a decrease of 1% year-over-year.

Operating EBITDA margin was at 21% for 2020, as lower volumes and prices were offset by lower costs and our efforts to contain expenses, including maintenance cost deferrals.

Controlling interest net income was at PHP 985 million for 2020, 23% lower on a year-over-year basis, due to the impact of the COVID-19 pandemic on operating earnings.

Income tax for 2020 was higher on a year-over-year basis due to the utilization of deferred tax assets (NOLCO credits) during the second half which reduced cash tax payments.

Financial expenses for 2020 reflected lower outstanding loan balances and declining interest rates. From the Stock Rights Offering proceeds raised during 1Q20, we disbursed around PHP 7.9 billion for the repayment of debt owed to CEMEX ASIA, B. V., most of which had been incurred for our Solid Cement Plant expansion project.

Total debt at the end of December 2020 was at PHP 12,853 million, of which PHP 10,787 million pertained to debt owed to BDO Unibank, Inc.

2020 Fourth Quarter Results |  | Page 2

Operating Results |  |

Domestic Gray Cement |  | January - December |  |  | Fourth Quarter |  |  | Fourth Quarter 2020 |
|  | 2020 vs. 2019 |  |  | 2020 vs. 2019 |  |  | vs. Third Quarter 2020 |
Volume |  |  | (11 | %) |  |  | (9 | %) |  |  | (13 | %)
Price in PHP |  |  | (6 | %) |  |  | (7 | %) |  |  | (5 | %)

Our domestic cement volumes decreased by 9% year-over-year during the fourth quarter due to adverse weather conditions, amidst the ongoing pandemic.

Sequentially, our daily sales volumes were lower by 8%, after adjusting for the impact of holidays.

For 2020, domestic cement volumes decreased by 11% year-over-year mainly due to the COVID-19 pandemic.

Our domestic cement prices were 7% lower year-over-year during the fourth quarter. This movement in our composite price was driven by a higher proportion of pick-up sales, lower demand, and competitive market dynamics.

The sequential and full year change in our prices also reflect the same effects.

2020 Fourth Quarter Results |  | Page 3

Operating EBITDA, Free Cash Flow and Debt Information |  |

Operating EBITDA and Free Cash Flow

|  |  |  |  | January - December |  |  |  |  |  |  |  |  | Fourth Quarter |  |  |  |
|  | 2020 |  |  | 2019 |  |  | % var |  |  | 2020 |  |  | 2019 |  |  | % var |
Operating earnings before other income, net |  |  | 1,808 |  |  |  | 2,342 |  |  |  | (23 | %) |  |  | 315 |  |  |  | 257 |  |  |  | 23 | %
+ Depreciation and operating amortization |  |  | 2,364 |  |  |  | 1,886 |  |  |  |  |  |  |  | 575 |  |  |  | 524 |  |  |  |  |
Operating EBITDA |  |  | 4,172 |  |  |  | 4,227 |  |  |  | (1 | %) |  |  | 891 |  |  |  | 781 |  |  |  | 14 | %
- Net financial expenses |  |  | 626 |  |  |  | 1,305 |  |  |  |  |  |  |  | (81 | ) |  |  | 237 |  |  |  |  |
- Maintenance capital expenditures |  |  | 274 |  |  |  | 659 |  |  |  |  |  |  |  | 108 |  |  |  | 273 |  |  |  |  |
- Change in working capital |  |  | 9 |  |  |  | (785 | ) |  |  |  |  |  |  | (122 | ) |  |  | 473 |  |  |  |  |
- Income taxes paid |  |  | 418 |  |  |  | 575 |  |  |  |  |  |  |  | 112 |  |  |  | 184 |  |  |  |  |
- Other cash items (net) |  |  | 30 |  |  |  | (9 | ) |  |  |  |  |  |  | 26 |  |  |  | 24 |  |  |  |  |
Free cash flow after maintenance capital expenditures |  |  | 2,814 |  |  |  | 2,481 |  |  |  | 13 | % |  |  | 847 |  |  |  | (411 | ) |  |  | N/A |
- Strategic capital expenditures |  |  | 3,251 |  |  |  | 3,199 |  |  |  |  |  |  |  | 919 |  |  |  | 1,159 |  |  |  |  |
Free cash flow |  |  | (437 | ) |  |  | (719 | ) |  |  | 39 | % |  |  | (72 | ) |  |  | (1,570 | ) |  |  | 95 | %

In millions of Philippine Pesos

Debt Information

|  | Fourth Quarter |  |  | Third Quarter |
|  | 2020 |  |  | 2019 |  |  | % var |  |  | 2020 |
Total debt(1)(2) |  |  | 12,853 |  |  |  | 20,063 |  |  |  | (36 | %) |  |  | 13,510 |
Short term |  |  | 6 | % |  |  | 9 | % |  |  |  |  |  |  | 6 | %
Long term |  |  | 94 | % |  |  | 91 | % |  |  |  |  |  |  | 94 | %
Cash and cash equivalents |  |  | 6,139 |  |  |  | 1,399 |  |  |  | 339 | % |  |  | 6,667 |
Net debt |  |  | 6,714 |  |  |  | 18,664 |  |  |  | (64 | %) |  |  | 6,843 |
Leverage Ratio(3) |  |  | 3.08 |  |  |  | 3.47 |  |  |  |  |  |  |  | 3.33 |
Coverage Ratio(3) |  |  | 5.95 |  |  |  | 3.73 |  |  |  |  |  |  |  | 5.21 |

|  | Fourth Quarter |
|  | 2020 |  |  | 2019 |
Currency denomination |  |  |  |  |  |  |  |
U.S. dollar |  |  | 4 | % |  |  | 30 | %
Philippine peso |  |  | 96 | % |  |  | 70 | %
Interest rate |  |  |  |  |  |  |  |
Fixed |  |  | 58 | % |  |  | 43 | %
Variable |  |  | 42 | % |  |  | 57 | %

In millions of Philippine Pesos, except percentages

(1) | U.S. dollar debt converted using end-of-period exchange rate. See Exchange Rates on page 8 for more detail.

(2) | Includes leases, in accordance with Philippine Financial Reporting Standards (PFRS).

(3) | Based on BDO Loan Facility financial covenants which we are required to comply commencing on June 30, 2021.

2020 Fourth Quarter Results |  | Page 4

Financial Results |  |

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of Philippine Pesos in nominal terms, except per share amounts)

|  | January - December |  |  | Fourth Quarter |
INCOME STATEMENT |  | 2020 |  |  | 2019 |  |  | % var |  |  | 2020 |  |  | 2019 |  |  | % var |
Net sales |  |  | 19,706,682 |  |  |  | 23,595,877 |  |  |  | (16 | %) |  |  | 4,564,378 |  |  |  | 5,372,359 |  |  |  | (15 | %)
Cost of sales |  |  | (11,614,953 | ) |  |  | (13,913,316 | ) |  |  | 17 | % |  |  | (2,785,612 | ) |  |  | (3,195,374 | ) |  |  | 13 | %
Gross profit |  |  | 8,091,729 |  |  |  | 9,682,561 |  |  |  | (16 | %) |  |  | 1,778,766 |  |  |  | 2,176,985 |  |  |  | (18 | %)
Selling and Administrative Expenses |  |  | (2,782,058 | ) |  |  | (3,111,531 | ) |  |  | 11 | % |  |  | (650,158 | ) |  |  | (804,531 | ) |  |  | 19 | %
Distribution expenses |  |  | (3,502,053 | ) |  |  | (4,229,410 | ) |  |  | 17 | % |  |  | (813,158 | ) |  |  | (1,115,482 | ) |  |  | 27 | %
Operating earnings before other expenses, net |  |  | 1,807,618 |  |  |  | 2,341,620 |  |  |  | (23 | %) |  |  | 315,450 |  |  |  | 256,972 |  |  |  | 23 | %
Other income (expenses), net |  |  | (30,310 | ) |  |  | 8,544 |  |  |  | N/A |  |  |  | (26,001 | ) |  |  | (23,615 | ) |  |  | (10 | %)
Operating earnings (loss) |  |  | 1,777,308 |  |  |  | 2,350,164 |  |  |  | (24 | %) |  |  | 289,449 |  |  |  | 233,357 |  |  |  | 24 | %
Financial expenses, net |  |  | (626,420 | ) |  |  | (1,304,540 | ) |  |  | 52 | % |  |  | 80,803 |  |  |  | (237,304 | ) |  |  | N/A |
Foreign exchange gain (loss), net |  |  | 170,224 |  |  |  | 453,125 |  |  |  | (62 | %) |  |  | 37,215 |  |  |  | 325,205 |  |  |  | (89 | %)
Net income (loss) before income taxes |  |  | 1,321,112 |  |  |  | 1,498,749 |  |  |  | (12 | %) |  |  | 407,467 |  |  |  | 321,258 |  |  |  | 27 | %
Income tax benefit (expenses) |  |  | (336,018 | ) |  |  | (219,174 | ) |  |  | (53 | %) |  |  | (180,505 | ) |  |  | 83,636 |  |  |  | N/A |
Consolidated net income (loss) |  |  | 985,094 |  |  |  | 1,279,575 |  |  |  | (23 | %) |  |  | 226,962 |  |  |  | 404,894 |  |  |  | (44 | %)
Non-controlling interest net income (loss) |  |  | 20 |  |  |  | 23 |  |  |  | (13 | %) |  |  | 4 |  |  |  | 5 |  |  |  | (20 | %)
Controlling Interest net income (loss) |  |  | 985,114 |  |  |  | 1,279,598 |  |  |  | (23 | %) |  |  | 226,966 |  |  |  | 404,899 |  |  |  | (44 | %)
Operating EBITDA |  |  | 4,171,707 |  |  |  | 4,227,133 |  |  |  | (1 | %) |  |  | 890,553 |  |  |  | 780,927 |  |  |  | 14 | %
Earnings per share |  |  | 0.08 |  |  |  | 0.25 |  |  |  | (66 | %) |  |  | 0.02 |  |  |  | 0.08 |  |  |  | (78 | %)

|  | as of December 31 |
BALANCE SHEET |  | 2020 |  |  | 2019 |  |  | % Var |
Total Assets |  |  | 63,765,564 |  |  |  | 58,806,177 |  |  |  | 8 | %
Cash and Temporary Investments |  |  | 6,139,411 |  |  |  | 1,399,180 |  |  |  | 339 | %
Derivative Asset |  |  | 0 |  |  |  | 0 |  |  |  |  |
Trade Accounts Receivables |  |  | 700,162 |  |  |  | 892,951 |  |  |  | (22 | %)
Other Receivables |  |  | 71,551 |  |  |  | 92,993 |  |  |  | (23 | %)
Insurance Claims and Premium Receivables |  |  | 87,569 |  |  |  | 445,535 |  |  |  | (80 | %)
Inventories |  |  | 2,349,966 |  |  |  | 3,013,444 |  |  |  | (22 | %)
Assets Held for Sale |  |  | 0 |  |  |  | 0 |  |  |  |  |
Other Current Assets |  |  | 1,825,209 |  |  |  | 1,672,392 |  |  |  | 9 | %
Current Assets |  |  | 11,173,868 |  |  |  | 7,516,495 |  |  |  | 49 | %
Fixed Assets |  |  | 21,699,377 |  |  |  | 19,937,723 |  |  |  | 9 | %
Investments in an Associate and Other Investments |  |  | 14,097 |  |  |  | 14,097 |  |  |  | 0 | %
Other Assets and Noncurrent Accounts Receivables |  |  | 782,399 |  |  |  | 837,151 |  |  |  | (7 | %)
Advances to Contractors |  |  | 1,142,685 |  |  |  | 1,606,397 |  |  |  | (29 | %)
Deferred Income Taxes—net |  |  | 1,093,444 |  |  |  | 1,034,620 |  |  |  | 6 | %
Goodwill |  |  | 27,859,694 |  |  |  | 27,859,694 |  |  |  | 0 | %
Other Assets |  |  | 30,892,319 |  |  |  | 31,351,959 |  |  |  | (1 | %)
Total Liabilities |  |  | 20,861,166 |  |  |  | 29,140,690 |  |  |  | (28 | %)
Current Liabilities |  |  | 8,068,494 |  |  |  | 10,136,812 |  |  |  | (20 | %)
Long-Term Liabilities |  |  | 10,566,642 |  |  |  | 16,549,640 |  |  |  | (36 | %)
Deferred Tax Liability |  |  | 853 |  |  |  | 1,587 |  |  |  | (46 | %)
Other Liabilities |  |  | 2,225,177 |  |  |  | 2,452,651 |  |  |  | (9 | %)
Consolidated Stockholders’ Equity |  |  | 42,904,398 |  |  |  | 29,665,487 |  |  |  | 45 | %
Non-controlling Interest |  |  | 150 |  |  |  | 170 |  |  |  | (12 | %)
Stockholders’ Equity Attributable to Controlling Interest |  |  | 42,904,248 |  |  |  | 29,665,317 |  |  |  | 45 | %

2020 Fourth Quarter Results |  | Page 5

Financial Results |  |

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of U.S. Dollars, except per share amounts)

|  | January - December |  |  | Fourth Quarter |
INCOME STATEMENT |  | 2020 |  |  | 2019 |  |  | % var |  |  | 2020 |  |  | 2019 |  |  | % var |
Net sales |  |  | 398,160 |  |  |  | 457,595 |  |  |  | (13 | %) |  |  | 94,773 |  |  |  | 105,905 |  |  |  | (11 | %)
Cost of sales |  |  | (234,672 | ) |  |  | (269,821 | ) |  |  | 13 | % |  |  | (57,840 | ) |  |  | (62,990 | ) |  |  | 8 | %
Gross profit |  |  | 163,488 |  |  |  | 187,774 |  |  |  | (13 | %) |  |  | 36,933 |  |  |  | 42,915 |  |  |  | (14 | %)
Selling and Administrative Expenses |  |  | (56,210 | ) |  |  | (60,343 | ) |  |  | 7 | % |  |  | (13,500 | ) |  |  | (15,861 | ) |  |  | 15 | %
Distribution expenses |  |  | (70,757 | ) |  |  | (82,021 | ) |  |  | 14 | % |  |  | (16,884 | ) |  |  | (21,989 | ) |  |  | 23 | %
Operating earnings before other expenses, net |  |  | 36,521 |  |  |  | 45,410 |  |  |  | (20 | %) |  |  | 6,549 |  |  |  | 5,065 |  |  |  | 29 | %
Other income (expenses), net |  |  | (612 | ) |  |  | 166 |  |  |  | N/A |  |  |  | (540 | ) |  |  | (466 | ) |  |  | (16 | %)
Operating earnings (loss) |  |  | 35,909 |  |  |  | 45,576 |  |  |  | (21 | %) |  |  | 6,009 |  |  |  | 4,599 |  |  |  | 31 | %
Financial expenses, net |  |  | (12,656 | ) |  |  | (25,299 | ) |  |  | 50 | % |  |  | 1,678 |  |  |  | (4,678 | ) |  |  | N/A |
Foreign exchange gain (loss), net |  |  | 3,439 |  |  |  | 8,787 |  |  |  | (61 | %) |  |  | 773 |  |  |  | 6,411 |  |  |  | (88 | %)
Net income (loss) before income taxes |  |  | 26,692 |  |  |  | 29,064 |  |  |  | (8 | %) |  |  | 8,460 |  |  |  | 6,332 |  |  |  | 34 | %
Income tax benefit (expenses) |  |  | (6,789 | ) |  |  | (4,250 | ) |  |  | (60 | %) |  |  | (3,748 | ) |  |  | 1,649 |  |  |  | N/A |
Consolidated net income (loss) |  |  | 19,903 |  |  |  | 24,814 |  |  |  | (20 | %) |  |  | 4,712 |  |  |  | 7,981 |  |  |  | (41 | %)
Non-controlling interest net income (loss) |  |  | 0 |  |  |  | 0 |  |  |  |  |  |  |  | 0 |  |  |  | 0 |  |  |  |  |
Controlling Interest net income (loss) |  |  | 19,903 |  |  |  | 24,814 |  |  |  | (20 | %) |  |  | 4,712 |  |  |  | 7,981 |  |  |  | (41 | %)
Operating EBITDA |  |  | 84,286 |  |  |  | 81,977 |  |  |  | 3 | % |  |  | 18,491 |  |  |  | 15,394 |  |  |  | 20 | %

|  | as of December 31 |  |  |  |
BALANCE SHEET |  | 2020 |  |  | 2019 |  |  | % Var |
Total Assets |  |  | 1,327,813 |  |  |  | 1,161,374 |  |  |  | 14 | %
Cash and Temporary Investments |  |  | 127,843 |  |  |  | 27,633 |  |  |  | 363 | %
Derivative Asset |  |  | 0 |  |  |  | 0 |  |  |  |  |
Trade Accounts Receivables |  |  | 14,580 |  |  |  | 17,635 |  |  |  | (17 | %)
Other Receivables |  |  | 1,490 |  |  |  | 1,837 |  |  |  | (19 | %)
Insurance Claims and Premium Receivables |  |  | 1,823 |  |  |  | 8,799 |  |  |  | (79 | %)
Inventories |  |  | 48,934 |  |  |  | 59,513 |  |  |  | (18 | %)
Assets Held for Sale |  |  | 0 |  |  |  | 0 |  |  |  |  |
Other Current Assets |  |  | 38,007 |  |  |  | 33,028 |  |  |  | 15 | %
Current Assets |  |  | 232,677 |  |  |  | 148,445 |  |  |  | 57 | %
Fixed Assets |  |  | 451,854 |  |  |  | 393,754 |  |  |  | 15 | %
Investments in an Associate and Other Investments |  |  | 294 |  |  |  | 278 |  |  |  | 6 | %
Other Assets and Noncurrent Accounts Receivables |  |  | 16,292 |  |  |  | 16,533 |  |  |  | (1 | %)
Advances to Contractors |  |  | 23,795 |  |  |  | 31,725 |  |  |  | (25 | %)
Deferred Income Taxes - net |  |  | 22,769 |  |  |  | 20,433 |  |  |  | 11 | %
Goodwill |  |  | 580,132 |  |  |  | 550,206 |  |  |  | 5 | %
Other Assets |  |  | 643,282 |  |  |  | 619,175 |  |  |  | 4 | %
Total Liabilities |  |  | 434,399 |  |  |  | 575,504 |  |  |  | (25 | %)
Current Liabilities |  |  | 168,012 |  |  |  | 200,193 |  |  |  | (16 | %)
Long-Term Liabilities |  |  | 220,033 |  |  |  | 326,842 |  |  |  | (33 | %)
Deferred Tax Liability |  |  | 18 |  |  |  | 31 |  |  |  | (42 | %)
Other Liabilities |  |  | 46,336 |  |  |  | 48,438 |  |  |  | (4 | %)
Consolidated Stockholders’ Equity |  |  | 893,414 |  |  |  | 585,869 |  |  |  | 52 | %
Non-controlling Interest |  |  | 3 |  |  |  | 3 |  |  |  | 0 | %
Stockholders’ Equity Attributable to Controlling Interest |  |  | 893,411 |  |  |  | 585,866 |  |  |  | 52 | %

2020 Fourth Quarter Results |  | Page 6

Other Information |  |

Newly issued PFRS effective in 2019

PFRS 16, Leases (“PFRS 16”)

In summary, beginning January 1, 2019, PFRS 16 introduces a single lessee accounting model and requires a lessee to recognize, for all leases, allowing exemptions in case of leases with a term of less than 12 months or when the underlying asset is of low value, assets for the right-of-use of the underlying asset against a corresponding financial liability, representing the net present value of estimated lease payments under the contract, with a single income statement model in which a lessee recognizes amortization of the right-of-use asset and interest on the lease liability. After concluding the inventory and measurement of its leases, CEMEX Holdings Philippines, Inc. and Subsidiaries adopted PFRS 16 using the full retrospective approach by means of which it determined an opening cumulative effect in its statement of financial position as of January 1, 2017 as follows:

(Thousands of Philippine Pesos) |  | As of January 1, 2017 |
Assets for the right-of-use |  |  | 2,187,292 |
Deferred income tax assets |  |  | 33,509 |
Deferred income tax liability |  |  | (3,053 | )
Lease liabilities |  |  | 2,309,165 |
Retained earnings 1 |  |  | (85,311 | )

1 | The initial effect in retained earnings refers to a temporary difference between the straight-line amortization expense of the right-of-use asset and the amortization of the financial liability under the effective interest rate method since origination of the contracts. This difference will reverse over the remaining term of the contracts.

As of December 31, 2020 and 2019, assets for the right-of-use amounted to PHP 1,791 million and PHP 1,962 million, respectively. In addition, financial liabilities related to lease contracts amounted to PHP 2,066 million as of December 31, 2020 and PHP 2,163 million as of December 31, 2019. These amounts of financial liabilities as of December 31, 2020 and 2019 are included in the “Debt Information” section appearing on page 4.

2020 Fourth Quarter Results |  | Page 7

Definitions of Terms and Disclosures |  |

Methodology for translation, consolidation, and presentation of results

CEMEX Holdings Philippines, Inc. (“CHP”) reports its consolidated financial statements under Philippine Financial Reporting Standards

(“PFRS”). When reference is made in 2020 and 2019 to consolidated financial statements, it means CHP financial information together with its subsidiaries.

For the purpose of presenting figures in U.S. dollars, the consolidated balance sheet as of December 31, 2020 has been converted at the end of period exchange rate of 48.02 Philippine pesos per US dollar while the consolidated income statement for the whole year period ended December 31, 2020 has been converted at the January to December 2020 average exchange rate of 49.49 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended December 31, 2020 has been converted at the October to December 2020 average exchange rate of 48.16 Philippine pesos per US dollar.

Definition of terms

PHP refers to Philippine Pesos.

pp equals percentage points.

Prices all references to pricing initiatives, price increases or decreases, refer to our prices for our products.

Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization.

Free cash flow equals operating EBITDA minus net interest expense, maintenance and strategic capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation).

Maintenance capital expenditures investments incurred for the purpose of ensuring the company’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or company policies.

Strategic capital expenditures investments incurred with the purpose of increasing the company’s profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs.

Change in Working capital in the Free cash flow statements only include trade receivables, trade payables, receivables, and payables from and to related parties, other current receivables, inventories, other current assets, and other accounts payable and accrued expense.

Net debt equals total debt minus cash and cash equivalents.

Exchange Rates |  | January - December |  |  | Fourth Quarter |  |  | January - December |
|  | 2020 average |  |  | 2019 average |  |  | 2020 average |  |  | 2019 average |  |  | 2020 End of period |  |  | 2019 End of period |
Philippine peso |  |  | 49.49 |  |  |  | 51.57 |  |  |  | 48.16 |  |  |  | 50.73 |  |  |  | 48.02 |  |  |  | 50.64 |

Amounts provided in units of local currency per US dollar

2020 Fourth Quarter Results |  | Page 8