4 4 0 9

SEC Registration Number

2 G O G R O U P , I N C . [ F o r m e r l y A T S C o n s o l i d a t e d ( A T S C ) , I n c . ]

(Company’s Full Name)

1 2 T H F L O O R T I M E S P L A Z A B U I L D I N G U. N. A V E. C O R N E R T A F T A V E. E R M I T A M A N I L A

(Business Address: No. Street City/Town/Province)

JEREMIAS E. CRUZABRA (02) 528-7412 / (02) 528-7540 (Contract Person) (Company Telephone Number)

1 2 3 1 1 7 - A 0 5 3 1 Month Day (Form Type) Month Day

(Fiscal Year) (Annual Meeting)

DECEMBER 31, 2012 (Secondary License Type, If Applicable)

Corporation Finance Department

Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings

1,965

Total No. of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

File Number LCU

Document ID Cashier

S T A M P S

Remarks: Please use BLACK ink for scanning purposes.

COVER SHEET

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SECURITIES AND EXCHANGE COMMISSION

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, 2012

2. SEC Identification Number 4409 3. BIR Tax Identification No. 000-313-401 4. Exact name of issuer as specified in its charter 2GO Group, Inc. 5. Philippines 6. (SEC Use Only)

Province, Country or other jurisdiction of incorporation or organization

Industry Classification Code:

7. 12th Floor Times Plaza Bldg. United Nations Ave. corner Taft Ave., Ermita, Manila ______1000____

Address of principal office Postal Code 8. (02) 528-7412 / (02) 528-7540 Issuer's telephone number, including area code 9. ATS Consolidated (ATSC), Inc.; Sergio Osmeña Blvd., North Reclamation Area, Cebu City 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 and Amount of Debt Outstanding

Common stock, P 1 par value 2,446,136,400 11. Are any or all of these securities listed on a Stock Exchange. Yes [X] No [ ] Philippine Stock Exchange - Common Stock 12. Check whether the issuer: (a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1 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 twelve (12) months (or for such shorter period that the registrant was required to file such reports);

Yes [X] No [ ] (b) has been subject to such filing requirements for the past ninety (90) days. Yes [X] No [ ] 13. Aggregate market value of the voting stock held by non-affiliates as of March 31, 2013: P 477,587,276.35

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TABLE OF CONTENTS

PAGE NO.

PART I – BUSINESS AND GENERAL INFORMATION Item 1 Business 4 Item 2 Properties 16 Item 3 Legal Proceedings 19 Item 4 Submission of Matters to a Vote of Security Holders 20 PART II – OPERATIONAL AND FINANCIAL INFORMATION Item 5 Market for Registrant’s Common Equity and Related Stockholder Matters 20 Item 6 Management’s Discussion and Analysis of Financial Condition & Results of Operations 21 Item 7 Financial Statements 32 Item 8 Information on Independent Accountant and Other Related Matters 33 PART III – CONTROL AND COMPENSATION INFORMATION Item 9 Directors and Executive Officers of the Registrant 34 Item 10 Executive Compensation 41 Item 11 Security Ownership of Certain Beneficial Owners and Management 42 Item 12 Certain Relationships and Related Transactions 44 PART IV – CORPORATE GOVERNANCE 45 Item 13 Corporate Governance 45 PART V – EXHIBITS AND SCHEDULES Item 14 a. Exhibits 60

b. Reports on SEC Form 17-C 60 SIGNATURES INDEX TO EXHIBITS, FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

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PART I – BUSINESS AND GENERAL INFORMATION

Item 1. Business 2GO GROUP, INC. Business Development 2GO Group, Inc. (the “Registrant”, the “Company”, or “2GO”), formerly ATS Consolidated (ATSC), Inc., was formed and organized in May 26, 1949 under the corporate name William Lines, Inc. Driven by the vision of providing the nation with the best shipping services, on December 21, 1995, William Lines, Inc., Carlos A. Gothong Lines, Inc. and Aboitiz Shipping Corporation consolidated their resources and expertise and marked the birth of William, Gothong & Aboitiz, Inc. (“WG&A”). Thereafter, on February 4, 2004, WG&A changed its corporate name to Aboitiz Transport System (ATSC) Corporation as a result of the buyout that Aboitiz Equity Ventures, Inc. (AEV) made of the respective interests of Chiongbian and Gothong in WG&A in 2002. On August 24, 2011, the Securities and Exchange Commission (SEC) approved the change of corporate name of Aboitiz Transport System (ATSC) Corporation to ATS Consolidated (ATSC), Inc. On March 9, 2012, the SEC approved a subsequent change of the corporate name of ATS Consolidated (ATSC), Inc. to 2GO Group, Inc. During the past three (3) years, 2GO and its subsidiaries have engaged into mergers and significant purchases of shares of stocks. In July 2010, the SEC approved the statutory merger of the Registrant with Zoom in Packages, Inc. (ZIP), a wholly owned subsidiary of the Company. Further, in August 2010, the SEC also approved the statutory merger of the Company with another wholly owned subsidiary – Reefer Van Specialists, Inc (RVSI). The mergers are expected to further improve the effectiveness and efficiency of freight services of 2GO as well as reduce costs as people, processes, systems are integrated. On December 01, 2010, the former major stockholders of 2GO, namely AEV and Aboitiz and Company, Inc. (ACO), sold their shareholdings in 2GO to Negros Navigation Co., Inc. (NENACO), which sale was consummated on December 28, 2010. The equity value included all the logistics and shipping businesses of the Company, except its interest in its joint ventures with the Jebsen Group of Norway. AEV’s and ACO’s shareholdings in 2GO represented 77.24% and 15.96%, respectively, of the total outstanding common shares of 2GO. In February 2011, as a result of the mandatory tender offer requirement, NENACO's ownership in 2GO increased by 4.92%. On December 21, 2012, NENACO sold 240,000,000 common shares of 2GO at P1.65 per share to public shareholders. Thus, decreasing NENACO’s ownership in 2GO from 98.12% to 88.31%. The majority owner of the registrant, NENACO, is one of the oldest domestic shipping companies in the Philippines. It was organized and registered with the SEC on July 26, 1932 for the purpose of transporting passengers and cargoes at various ports of call in the Philippines. Further, its principal office is located at Pier 2, North Harbor, Tondo, Manila. Corporate Structure

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On various dates in 2011, the SEC approved the application of the Company and its subsidiaries to amend their Articles of Incorporation and By-laws, which include, among others, the change in their corporate names to ATS Consolidated (ATSC), Inc. [formerly Aboitiz Transport System (ATSC) Corporation], ATS Express, Inc. (formerly Aboitiz One, Inc.), and ATS Distribution, Inc. (formerly Aboitiz One Distribution, Inc.). Further, to create a unified identity for the Company and its brand structure, in February and March 2012, the Registrant and its subsidiaries amended its Articles of Incorporation and By-Laws to further change its corporate name to 2GO Group, Inc. [formerly ATS Consolidated (ATSC), Inc.], 2GO Express, Inc. (formerly ATS Express, Inc.), and 2GO Logistics, Inc. (formerly ATS Distribution, Inc.). NN-ATS Logistics Management & Holdings Co., Inc. (NALMHCI) was organized and incorporated in November 2011. It is 100%-owned by 2GO. The purpose of NALMHCI is primarily to act as managing agents, local agents or representatives of (i) subsidiaries and affiliates engaged in logistics activities, (ii) corporations, (iii) partnerships, (iv) agencies, (v) associations, (vi) enterprises, (vii) establishments, (viii) institutions, private or governmental, domestic or foreign, except the management of funds, portfolios, or other similar assets of the managed entities; and to undertake, organize, form, promote, develop or establish businesses, and all forms of enterprises, whether here or abroad, as are necessary, suitable, or convenient to be undertaken, organized, formed, promoted, developed or established to carry out, directly or indirectly, the purposes and interests or to enhance the businesses or to render more valuable or profitable any of its rights, properties, interests or enterprises. Further, on March 8, 2012, the SEC approved the registration of Special Container and Value Added Services, Inc. (SCVASI), a 100%-owned company by the registrant as well. It has a primary purpose of engaging in domestic and/or international business of transporting any and all kinds of goods and cargoes, by sea, air and land, functioning as non-vessel operating common carrier, engaging in cargo forwarding including acting as cargo consolidator and break-bulk agent, and courier for mails, letters, pouches, other cargoes and personal effects of any and all kinds, types and nature. Brand Structure The Company is engaged in the movement of people operating under brand names ‘SuperFerry’, ‘SuperCat’, and ‘Cebu Ferries’ and in the movement of cargos operating under the brand name ‘2GO’.

However, with the change in the Company’s corporate name to “2GO Group, Inc.”, the Company and its subsidiaries started the standardization of its brands on the latter part of 2011 and implemented the following brand structure:

The Company adopted the stronger brand “2GO” as its flagship brand for its various businesses. Going forward, the Company will function with three core business units, as follows: 2GO Freight —this unit will continue to handle commercial and personal shipping needs including household goods, auto rolling cargo shipping, containerized shipping, break bulk & LCL consolidation, freight refrigerated vans, and ISO tank shipments.

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2GO Travel — integrating the country’s leading passenger ships and fast ferries, Negros Navigation, SuperFerry, SuperCat, and Cebu Ferries, this unit offers the biggest fleet and the widest choice of route linking Luzon, Visayas, and Mindanao, through land and sea multimodal transport linkages. 2GO Supply Chain —this unit leverages on the Company’s more than 100 years of expertise in Logistics, Distribution, Warehousing, and Inventory Management. With the change in company name and brand structure, the Company further secured the approval of the Maritime Industry and Authority as to the change of names of majority of its vessels in the latter part of 2012, to wit:

OLD Vessel Names NEW Vessel Names MV “Superferry 1” MV “Sta. Rita De Casia” MV “Superferry 2” MV “St. Thomas Aquinas” MV “Superferry 5” MV “St. Joan of Arc” MV “Superferry 12” MV “St. Pope John Paul II” MV “Superferry 20” MV “St. Gregory the Great” MV “Superferry 21” MV “St. Leo the Great” MV “Cebu Ferry 1” MV “St. Augustine of Hippo” MV “Cebu Ferry 2” MV “St. Anthony de Padua” MV “Cebu Ferry 3” MV “St. Ignatius of Loyola” MV “Supercat 22” MV “St. Nuriel” MV “Supercat 23” MV “St. Uriel” MV “Supercat 25” MV “St. Sealthiel” MV “Supercat 30” MV “St. Jhudiel” MV “Supercat 32” MV “St. Braquiel”

All these changes reflect an important redirection for 2GO i.e. towards becoming a world-class transport, logistics, and supply chain company. Vessel Fleet As of December 31, 2012, 2GO and its subsidiaries has a total fleet of 19 operating vessels, of which 13 are company-owned ships. The fleet consists of 6 fast crafts, 10 RoRo/Pax vessels (of which 3 vessels are time chartered from its parent company, NENACO), and 3 freighters (all of which are time chartered from NENACO). The Company’s operating vessel fleet has a combined Gross Registered Tonnage of approximately 122,297 metric tons, total passenger capacity of approximately 16,348 passengers and aggregate cargo capacity of approximately 1,944 twenty-foot equivalent units (TEUs). During the course of the year 2012, 2GO and its subsidiaries sold 2 freighter vessels and laid-up 1 fast craft and 2 RoRo/Pax vessels, as part of management’s cost reduction efforts. Management endeavored to reduce vessel capacity to mitigate inefficient assets that cause enormous expenses in repairs and maintenance. Currently, 2GO operates 7 RoRo/Pax vessels calling on Manila as their homeport. These vessels are larger coastwise vessels that sail from Luzon to Visayas and Mindanao. Further, 2GO operates 3 medium-sized vessels, formerly called the Cebu Ferries, 2 of which have Batangas as their homeport, plying on the Batangas-Caticlan route, while 1 vessel retained its homeport in Cebu. The 6 fast craft passenger vessels, on the other hand, are smaller fast crafts that ply on short distances. The Company also operates 3 purely-cargo vessels to fully complement its freight business. Ports of call The Company’s extensive presence throughout the country is carried out through its branch operations and agency networks. These are located primarily in Bacolod, Batangas, Butuan, Cagayan de Oro, Calapan, Caticlan, Cebu, Cotabato, Davao, Dipolog, Dumaguete, General Santos, Iligan, Iloilo, Jagna, Manila, Ormoc, Ozamis, Puerto Princesa, Surigao, Tagbilaran, and Zamboanga. Market Share As of December 31, 2012, 2GO continues to dominate the Philippine Sea Travel with 96% market share in the passage service, specifically in ports that they serve, owing to the addition of the Batangas-Caticlan route to the market base. Freight market share is estimated at 31%.

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Subsidiaries and Affiliate of 2GO In 2012, 2GO has four (4) direct subsidiaries and one (1) affiliate, 2GO Express, Inc., The Supercat Fast Ferry Corp. (SFFC), NALMHCI, SCVASI and MCC Transport Philippines, Inc. (MCCP). Product Lines and Markets Briefly, the Company’s product lines and solutions are described as follows: 1. PASSAGE In 2011, the NN-2GO group, which operated the passage brands under Negros Navigation, SuperFerry, CebuFerries and Supercat, improved its course as a low-cost operator in the passenger travel market. In January of 2012, the fusion of a more solid passenger brand, now operating under the name “2GO Travel,” is marketed not only as a low-cost alternative but also as seamless and more leisurely way to travel the Philippine islands. As the 2GO Travel brand gains its momentum back in the passenger travel market, albeit tough competition from an increasing number of Low-Cost-Carriers (LLC Airlines), 2GO Travel still maintained its share in the total passenger market. As 2GO Travel in tandem with 2GO Freight further rationalized routes, a new route was created to service the need and to aggressively enter the Roro Passenger traffic in the Batangas Port. Furthermore, a new service route was created, serving Batangas to Caticlan direct. This new route not only made travel from Manila to Panay Island more comfortable and shorter for the RoRo Market (served by competitors by bus route via Mindoro Island), but also attracted the tourist market due to Caticlan Port being in close proximity to the popular beach destination, Boracay. To continue to drive passenger volume and sales, the trademarked “Crazy Sale,” a strong price-centric promotion offered special discounted rates for selected dates of travel. These special promotions were also heavily marketed during special events and festivals in all ports of call. The rapid increase in on-line traffic and on-line booking prompted the improvement and enhancement of the 2GO Travel website. More information, pictures of modernized vessel accommodations and even information regarding key destinations are featured on the website to further drive online sales. Moreover, aggressive Social Media campaigns in popular social media networks such as FaceBook and Twitter has also been utilized to ensure brand exposure in digital media. The 2GO Travel FaceBook page features all destinations served and things to do in the areas. The page also promotes all current price-centric promotions and group travel packages, updated hourly to ensure maximum exposure. This FaceBook page is another channel where customers can also inquire about rates and packages, as an added customer service. 2GO Travel also further enhanced its “TraveLink” service, which is a service that includes bus and/or boat transfers with the Ferry ticket. This provides a hassle-free, seamless transportation service that 2GO Travel is now known. The heavily marketed Boracay Package is always sold complete with TraveLink transfers and has been proven successful. The 2GO TraveLink service also enables 2GO Travel to offer more travel frequencies to its customers, as an example, the once a week Manila to Tagbilaran (Bohol) route can be adequately serviced and promoted as 6 times a week since Manila to Cebu is 5 times a week with a connection from Cebu to Tagbilaran via SuperCat; the 6th is a direct service from Manila to Tagbilaran. When Dumaguete port was closed due to damages it suffered from Typoon Quinta in the last quarter of 2012, Manila to Dumaguete market was served by TraveLink via Banago and Bredco Ports in Bacolod. In addition, TraveLink can also include a variety of hotel accommodation in all destinations served as 2GO Travel has made many partnerships with hotels. 2. FREIGHT In 2012, the company continued with the rationalization of its fleet with the disposal of two freighters which were too big for the domestic market and lay-up of two ropax vessels with limited cargo capacity. This resulted in a reduction of the number of vessels with cargo capability from 17 down to 13 vessels or a reduction in fleet size by 18%. Improved routing with higher frequency of trips particularly for the ropax vessels as well as better vessel capacity utilization (load factor) helped compensate for the reduction in fleet size. We were also able to successfully implement a 5% rate increase by imposing a fuel surcharge to clients for southbound shipments, and adjusting upwardly rates of some clients who were previously given rates that were not commensurate to the type of service provided. The combined 2012 volume of 2GO Freight and MCCP cornered 40% market share, making 2GO still the market leader in the freight business. The Company provides the most comprehensive service network among the shipping lines, covering at least 17 port links from Luzon (Manila and Batangas). 2GO also has the highest frequency of trips from Manila to the major ports, with five (5) trips a week to Cebu, Bacolod, Iloilo, Cagayan de Oro, twice weekly

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sailings to Butuan, and fixed weekly sailings to Zamboanga, Ozamis, Iligan, Tagbilaran, and other ports in the Visayas and Mindanao. This makes 2GO the preferred shipping line of multinational companies as well as large domestically owned manufacturing companies that practice just-in-time (JIT) inventory where lower stock levels are kept in warehouses. 2GO also launched in 2012 the Batangas-Caticlan direct service. This is a major improvement over the RoRo service of other operators where vehicles from Batangas to Caticlan have to take a RoRo from Batangas to Calapan, Mindoro, travel over land for three (3) to four (4) hours, and then take another RoRo from Roxas, Mindoro to Caticlan. Even if we priced ourselves higher than the RoRo operators, truckers tended to patronize our direct service owing to the shorter travel time and lower maintenance cost of their trucks due the direct trip. 2GO serves the Batangas-Caticlan route six (6) times a week. The stable volume of 2GO Express in the consolidation of LCL (Less Container Load) shipments and parcels derived from the domestic as well as those from the international markets together with the steady improvement of the 2GO Logistics in the supply chain market, including the growing market of the special containers, like refrigerated vans (reefers) and Isotanks, also helped provide a solid base for the freight business. As with the dry container market, 2GO is also the dominant player when it comes to reefer vans and Isotanks. On the cost side, 2GO was able to reduce terminal operating expenses by 23% or P388 million. This was the result of reduced hustling expenses by minimizing extra movements of containers thru proper planning and close coordination with consignees to allow direct delivery from port to consignees' door and reduction in leased areas for container yards by more efficient use of space. For 2013, more substantial savings are expected to be generated with the consolidation of operations in Manila from 2 ports - South Harbour and North Harbour, to only one port-- North Harbour. Competition 1. PASSAGE An improved 2012 economy and strong domestic spending resulted in increased of Filipinos travelers in some of the major ports served by 2GO Travel. Competition, however, remained intense with fares and margins under pressure as industry players try to outdo each other in increasing their share of these markets. On the long haul routes, Manila-Visayas and Manila-Mindanao, 2GO Travel competes with the airline sector. Cebu Pacific and Air Philippines deployed bigger crafts further heating up competition on the Manila-Cebu, Cagayan and Davao routes. Smaller crafts were used to open their service in smaller markets like Iloilo-Cagayan and Davao. Asia Region-operator Tiger Airways also opened its service on the Manila-Cebu route. Airlines compete primarily by discounting fares. 2GO Travel on the other hand, continued to drumbeat its bigger baggage allowance and lower shipping fares especially on late ticket purchases (purchases close to travel date). In July 2012, 2GO Travel has bundled the cost of meals in its ticket price. At about this time, the airlines came under heavy criticism from the riding public and Government regulatory offices for their misleading advertisements on their fares – airlines were pressured to explicitly declare the other charges to these discounted fares in their advertisements. On the Cebu-Mindanao routes, 2GO Travel’s major competitors include Cokaliong, GP and TransAsia. Competition relies mainly on departure day sales at the Pier. 2GO Travel offers advance ticket purchases made available through its 1,000++ outlets nationwide and through its website. On the Luzon-Panay route, 2GO Travel can proudly claim its role in increasing the tourism traffic to Boracay. 2GO Travel brought to Boracay a significant number of local tourists who would have taken neither the RORO buses nor the airplane to Caticlan. Competition continued to be challenging in the domestic passage market but we have consistently adjusted our strategies to be able to address the changing and growing demands of a more value-conscious market. 2GO Travel made its services more affordable, easier to access and more relevant to its customers. 2. FREIGHT The other major players in the likes of Phil Span Asia Container Corporation (formerly Sulpicio Lines), Solid Shipping Lines, Oceanic Container Lines, National Marine Corporation, Lorenzo Shipping, and other minor players like Ocean

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Transport, Moreta Lines, Meridian Lines, and Asian Marine Transport in selected routes, brought a healthy degree of competition in the market. With the additional capacities introduced by some major carriers and minor players, some competitors resorted to offering of lower rates. However, the company managed to maintain the patronage and loyalty of major customers with the major clients' recognition of service quality with wider network coverage and better frequency of trips offered by 2GO Freight. Safety, Security and Quality Standards 2GO’s fleet, comprising of the SuperFerries, Cebu Ferries and 2GO freighters, was formerly managed by Aboitiz Jebsen Bulk Transport Corporation (ABOJEB), an international ship management company. On October 15, 2011, the Ship Management Division (SMD) of the registrant’s parent company, NENACO, took over the ship, crewing and purchasing management as well as the ship cost accounting and fuel management of the whole 2GO fleet from ABOJEB. NENACO, as a ship management company is certified and compliant with the International Safety Management Code (ISM) administered by the Maritime Industry Authority (MARINA) and the National Security Programme for Sea Transport and Maritime Infrastructure (NSPSTMI), a National Ship Security (NSS) certification administered by the Office for Transport Security. NENACO maintains the whole fleet to international standards of safety, security and seaworthiness. NENACO ensures that each ship is manned with qualified, certified, medically fit and suitably experienced seafarers and qualified and competent shore-based technical staff to support the reliable and efficient operation of the ships meeting the standards of safety, quality and security. NENACO ensures that the entire 2GO fleet has to undergo a periodic ISM, NSPSTMI/NSS external audits and safety inspections conducted by the authorities to ensure continuous improvement of safety, security and quality on board. The ISM code is an International Maritime Organization (IMO) initiated mandatory requirement for all companies that operate ships. The ISM’s objectives are to prevent maritime accidents, provide competent crews, ensure emergency preparedness, implement a planned maintenance system and protection of the environment. The National Security Programme For Sea Transport and Maritime Infrastructure ensures that security threats are recognized and security breaches are prevented. NENACO believes that appropriate training for the vessel officers, crew and shore-based personnel is vitally important. VIDEOTEL, the world’s leading producer and provider of high quality marine training programs, has been the partner of NENACO for the past 3 years for implementing structured and tailor-made training programs. NENACO added competent shore-based personnel, sent most of the Technical Superintendents to GL (Germanisher Lloyd) Academy to undertake a rigid Superintendents Training Course and reorganized to meet the demands of managing a bigger fleet. NENACO has started to implement in 2012 the BASS Fleet Management System, an integrated software suite-based on modern technology covering all the main areas of maritime operations. Customers The Company has a wide customer base that includes manufacturers of consumer goods and finished products, traders of commercial, industrial and agricultural goods as well as the general public. The Company monitors its top 50 customers. No single customer accounts for 20% or more of the Company’s freight revenue. Purchases of Materials, Parts and Supplies Materials, parts and supplies are obtained mostly from local suppliers at competitive rates. Fuel and lubes, the biggest operating expense of the Company is purchased from a major fuel provider. Selected Major Suppliers of the Registrant: Items/Services Supplied Major Supplier Fuel, diesel and lubricants 1. Petrilliam Blac Corporation 2. Promethium Marketing Co.

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Vessel repair and drydocking 1. Subic Drydock Corporation 2. Keppel Philippines Marine Inc.

Stevedoring and Arrastre 1. Manila North Harbour Port, Inc. 2. Asian Terminal Inc. Insurance 1. Pioneer Insurance and Surety Corp. 2. Philippine Charter Insurance Corporation 3. Steamship Mutual Agreement (Bermuda) Limited Contract for Distribution and Repair and General Services 2GO also contracts with more than 20 major trucking, forwarding and container repair companies in the Philippines, including affiliated companies, to provide door to door, door to pier, pier to door distribution services required by its customers, as well as stevedoring and arrastre services. These contracts are conducted on an arms-length basis. The Company’s passenger ticketing and cargo booking are principally conducted through its network of branches and sales agents, most of which are situated at ports served by the Company. In addition, independent agencies/outlets are also maintained in urbanized areas such as Manila, Cebu, and Cagayan de Oro. These Agencies and Outlets are covered by Agency Contracts renewable annually, subject to certain conditions. Contracts with affiliated companies for agency and general services are conducted on an arms-length basis. General service contracts include contracts with engineering, repair and service companies, independent concessionaires, and janitorial service providers. Patents, Trademarks, Copyrights, Licenses, Franchises, Concessions and Royalty Agreement held 2GO’s vessels are duly registered with MARINA and subjected to regular survey and ISM audit to ascertain its adherence to vessel and manning safety standards. The company is the holder of several Certificates of Public Convenience (CPC), Provisional Authority (PA) and Special Permit (SP) issued by MARINA to service domestic ports of call. Related Party Transactions Related party transactions with both customers and suppliers are discussed in the Note 23 to Consolidated Financial Statements. Employees 2GO has a complement of 880 employees as of December 31, 2012, of which, 741 are regular, 68 are probationary, and 71 are contractual. The Company is not unionized. It has a Labor Management Council (LMC) that is a member of the Philippine Association of Labor Management Council, wherein the labor and the management work hand in hand to accomplish certain goals using mutually acceptable means. With this council, labor and management representatives discuss and decide on issues of equal concern to both parties. They are social partners sharing a common interest in the success and growth of the enterprise and the economy. LMC aims to promote harmony among all the 2GO employees, the officers, staff and other employees of the Company and to establish an equally beneficial relationship. 2GO’s LMC holds a regular yearly convention to bring all chairmen and representatives to a forum with the principals and officers of the Company. The convention seeks to promulgate resolutions most of which are economic demands from the Labor sector and management; address all other concerns and issues; amend the charter; and to hold elections for the officers of the national LMC. The establishment of the LMC in September 23, 1986 has given rise to more benefits and privileges to the employees. More significantly the merging of three of the most prominent and well respected shipping lines in the country has seen a dramatic improvement in terms of employee benefits and privileges far better than any other company in the industry offers. This includes among others, medical allowances, group hospitalization plan, educational assistance for qualified dependents, mortuary assistance and privilege pass for employees and their immediate family members.

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Government Regulations The MARINA through Memorandum Circular No. 79 requires all owners/operators of inter-island vessels engaged in Public Transport Service to secure a certificate of accreditation of domestic shipping enterprise / entities from the Authority before they can provide a water transport service. The Circular is intended to foster standards for domestic shipping operations in order to protect public interest and to generate vital information that will enable MARINA to effectively supervise, regulate and rationalize the organizational movement, ownership and operation of all inter-island water transport utilities, and consequently, to prevent the proliferation of incompetent, inefficient, unreliable and fly-by-night operators. Accreditation serves as a prerequisite to the granting of franchises for individual vessel operations. 2GO vessels have been issued Certificates of Public Convenience/Provisional Authorities to operate in specified routes. Research and Development Activities Research and development (R&D) are the company’s activities to discover and create new lines of services and/or make major improvements on the existing ones. During the year, the Company allocated and spent reasonable amount on R&D activities. This is consistent with the Company's strategy to focus its efforts on developing and maintaining its existing value-added businesses where it believes much of its future will lie. Costs and Effects of Compliance with Environmental Laws With regard to environmental laws, 2GO follows the regulations embodied in the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the protocol of 1978 (MARPOL 73/78). The said Convention includes regulations aimed at preventing and minimizing pollution from ships - both accidental pollution and that from routine operations - and currently includes, among others, Regulations for the Prevention of Pollution by Oil, Prevention of Pollution by Harmful Substances Carried by Sea in Packaged Form, Prevention of Pollution by Garbage from Ships to which the Company observes. During the year, the Company incurred less than a million to comply with these rules and regulations. The existing government regulations are intended to achieve the goal of the government to develop the country’s water transport system. The goal is to provide adequate, safe, efficient, economical and shipping services that are at par with the world’s best that will cater to the transport requirements of a growing national economy and for regional development. Major Risks Involved in the Business of 2GO and its Subsidiaries Major risks involved in the business of 2GO and its subsidiaries will be discussed in its Annual Corporate Governance Report in compliance with SEC Memorandum Circular No. 5, Series of 2013. SIGNIFICANT SUBSIDIARIES OF 2GO 1. 2GO Express, Inc.

Business Development 2GO Express (formerly ATS Express, Inc.; formerly Aboitiz One, Inc.) was incorporated on July 20, 1978. It is 100% owned by 2GO. It is in the business of offering supply chain solutions in accordance with customers’ needs. 2GO Express’ operation is supported by a logistical backbone which comprises delivery vans, motorcycles, trucks and vans, refrigerated trucks and vans, prime movers and trailers. The company has more than 237 retail outlets and agents at various strategic locations nationwide, providing customers easy access and convenience. Through 2GO Express’ subsidiaries, it offers a whole range of 2GO supply chain solutions. Supply chain solutions include warehousing services, transport and logistics, sales and merchandising and trade marketing.

2GO Express’ Subsidiaries

Hapag-Lloyd Philippines, Inc. (HLP) HLP was incorporated on April 23, 1992. It is 85% owned by 2GO Express.

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It is in the business of acting as an agent of Hapag-Lloyd AG, a global shipping container line engaged in global door-to-door container transport. Hapag-Lloyd AG provides global shipping services to major trade lanes such as Europe, Asia, North America, Canada, the Middle East and the South American East Coast. Hansa Meyer-ATS Projects, Inc. (HATS) HATS, formerly Aboitiz Projects TS Corporation, was incorporated on August 5, 1996. It is 50% owned by 2GO Express. It is in the business of project cargo transportation and management, which involves the haulage and transportation of heavy and bulk-sized equipment such as those used in mining, power plants and telecommunication infrastructure. It is a joint venture between 2GO Express and Hansa Meyer Global Transport Pte. Ltd., a transportation company headquartered in Germany specializing in project transport logistics and engineering project management consultancy. 2GO Logistics, Inc.

2GO Logistics (formerly ATS Distribution, Inc.; formerly Aboitiz One Distribution, Inc.) was incorporated on January 10, 2008. It is 100% owned by 2GO Express. It is in business of providing complete supply chain management. As of December 31, 2012, it has three (3) state-of-the-art warehouses, namely -

Edan warehouse – 6,500 pallet positions Elisco 1 warehouse – 30,148 pallet positions Elisco 2 warehouse – 24,000 pallet positions

ScanAsia Overseas Inc. (SOI) SOI was incorporated on September 13, 1985. The 100%-purchase of SOI in June 2008 completes 2GO’s portfolio for a full supply chain solutions provider. It is in the business of sales, marketing, warehousing and transportation of temperature-controlled and ambient food products to its customers in the Philippines. It is the Philippines’ premier chilled distributor carrying approximately 80% of the products in the chiller section in any supermarket today. SOI has nationwide coverage for both retail and foodservice segments. SOI is considered as brand builders vs. regular trading companies. Kerry ATS Logistics Inc. (KALI) KALI was incorporated on March 30, 2009. It is 49% owned by 2GO Express thru KLN Logistics Holdings Philippines, Inc. It is in the business that aims to offer innovative, cost effective and reliable services on international air and sea freight and cargo forwarding, cargo consolidation, as a project cargo and break bulk agent, warehousing and distribution, trucking and door-to-door delivery. With the global clout of KLN and the domestic dominance of 2GO, KALI is poised to provide better service to its clients. WRR Trucking Corporation (WTC) WTC was incorporated on March 25, 2008. It is 100% owned by 2GO Express. It is in the business of providing and engaging in the business of transportation, hauling or forwarding of cargo, freight, merchandise, chassis, goods and other articles within the lawful commerce of men by means of trucks, automobiles, container vans and rail and to do such other acts and things to transact all business directly or indirectly incidental or conducive to the prosecution of such business.

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Participation in Bankruptcy, Receivership or Similar Proceedings Neither 2GO Express nor any of its subsidiaries has ever been the subject of any bankruptcy, receivership or similar proceedings. Merger or Purchase of Significant Amount of Assets Not in the Ordinary Course of Business In December 2004, 2GO Express acquired additional 12.59%, 15.55% and 9.50% ownership interest in shares of stock of Aboitiz Logistics, Inc. (ALI), HLP and APTSC (now Hansa Meyer-ATS Projects, Inc.). Further, in October 2006, 2GO Express acquired additional 809,782 common shares or 5.71% from Mr. Edelino Medina in ALI, thus resulting to a 100% ownership of 2GO Express. In March 2007, the respective Boards of the then Aboitiz One, Inc. and ALI approved the merging of the two entities with the former being the surviving entity. The actual merger was effected mid of 2007. In July 2007, the 2GO Express’ Board approved the acquisition of additional 50% of the outstanding capital stock of each of RVSI and Refrigerated Transport Services, Inc. (RTSI) making 2GO Express the 100% owner of both companies. However, in September 2008, RTSI was sold to Mr. Ed Medina. In June 2008, the 2GO Express Board approved the acquisition of SOI to complement its existing services and provide a full range of supply chain solutions. In August 2009, 2GO Express formed a joint venture with Kerry Logistics Network Limited of Hong Kong (KLN) for the international freight forwarding business. KLN is the leading Asia-based provider of logistics services and supply chain solutions. It operates in over 300 cities globally, 23 countries worldwide and serve over 127 cities throughout Mainland China. Further, in June 2010, SEC approved the declaration of RVSI as property dividend by 2GO Express to 2GO Group, Inc. However, effective September 2010, RVSI was consequently merged by way of a statutory merger to 2GO Group, Inc. Competition As a full supply chain service provider, 2GO Express does not have any competitor that can offer the same breadth of services. However, 2GO Express has different competitors on the various components of its portfolio. And, some of 2GO Express’ competitors are also its customers. Principal Suppliers 2GO Express loads with SuperFerry vessels of 2GO and with Cebu Pacific Air to transport cargoes by sea and air, respectively. Some of its major truckers include Northern Luzon Trucking and Sun-Gold Forwarding Corp. Other suppliers include Shell, Petron, and Zenshin. 2GO Express manages a pool of suppliers, mainly small to medium entrepreneurs: Truckers • Operate-To-Own – a scheme provided to entrepreneur aspirants, where both parties undergo a contract that 2GO

Express will provide the vehicle under certain terms and conditions and the courier will own it after a defined period. • Sub-Contracted Truckers – small to medium truckers are outsourced either on a lock-in scheme or variable trip basis

per day. Agents 2GO Express’ retail outlets are also composed of agents who accept documents, cargo and money for outbound transactions, and deliver the same for inbound transactions. They are paid on commission scheme or fix fee per day depending on the type of product, volume handled, and geographic location. Aside from commission, agents are supported through advertising and promotional activities to direct customers to their outlets. Incentive schemes are also in place to encourage sales and compliance to operating policies and procedures. Outsourced Functions Certain functions are outsourced to third parties and are being paid either per piece, per head, per man-hour or fix fee depending on the type of activity. The objective is to focus on business units’ core competencies.

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Service level agreements are drawn for each supplier. Regular performance reviews or evaluations are conducted in order to ensure compliance and adherence to the contract as well as to all policies and procedures set. 2GO Express looks at its suppliers as partners, with a joint commitment that as it grows its business, it also grows theirs. Customer 2GO Express and its subsidiaries’ primary customers are manufacturers of high-value, fast moving consumer goods, electronics and telecommunication companies who recognize the need to outsource parts of or their entire supply chain. They are open to integrate, collaborate, and share information. Currently, the industries that fall as our secondary customers are pharmaceuticals, branded apparels, automobiles, retailers, distributors and financial institutions. Transactions With and/or Dependence on Related Parties Services to and from related parties consist mostly of cargo freight, handling and hauling, and management services which are made at normal market price.

Effect of Existing or Probable Governmental Regulations The passage of Republic Act 9337 last May 24, 2005 has abolished the franchise tax of 2GO Express. It is now subject to the corporate income tax. 2. The Supercat Fast Ferry Corporation (SFFC) SFFC was incorporated on June 20, 2001. It is 100% owned by 2GO. It is in the business of providing fast craft passenger services under the “Supercat” brand name. At present, SFFC operates eight (8) fast craft vessels with a total gross weight of 1,813 tons and a total passage capacity of 2,305 passengers. Its vessels service the ports of Cebu, Ormoc, Tagbilaran, Bacolod, Iloilo, Batangas and Calapan. 3. NN-ATS Logistics Management & Holding Co., Inc. (NALMHCI) NALMHCI was organized and incorporated on November 22, 2011. It is a wholly-owned subsidiary of 2GO. The purpose of NALMHCI is primarily to act as managing agents, local agents or representatives of (i) subsidiaries and affiliates engaged in logistics activities, (ii) corporations, (iii) partnerships, (iv) agencies, (v) associations, (vi) enterprises, (vii) establishments, (viii) institutions, private or governmental, domestic or foreign, except the management of funds, portfolios, or other similar assets of the managed entities; and to undertake, organize, form, promote, develop or establish businesses, and all forms of enterprises, whether here or abroad, as are necessary, suitable, or convenient to be undertaken, organized, formed, promoted, developed or established to carry out, directly or indirectly, the purposes and interests or to enhance the businesses or to render more valuable or profitable any of its rights, properties, interests or enterprises. NALMHCI is the holding company of the following companies with its percentage ownership:

Company Name

Acronym

% Ownership J & A Services Corporation (1) J&A 80.0 Red.Dot Corporation (1, 2) RDC 80.0 Super Terminal Inc. (3) STI 50.0 Supersail Services Inc. SSI 100.0 North Harbor Tugs Corporation NHTC 58.9 Sungold Forwarding Corporation SFC 51.1 (1) The Company directly owns the remaining 20% ownership in J&A and RDC (2) RDC was incorporated on October 3, 2009 and started its commercial operations on February

1, 2010 (3) NALMHCI has control over STI since it has the power to cast the majority of votes at the BOD’s

meeting and the power to govern the financial and reporting policies of STI

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4. Special Container and Value Added Services, Inc. (SCVASI) SCVASI was formed and organized on March 8, 2012. It is a wholly-owned subsidiary of the registrant. It has a primary purpose of engaging in domestic and/or international business of transporting any and all kinds of goods and cargoes, by sea, air and land, functioning as non-vessel operating common carrier, engaging in cargo forwarding including acting as cargo consolidator and break-bulk agent, and courier for mails, letters, pouches, other cargoes and personal effects of any and all kinds, types and nature. Item 2. Properties 2GO Vessels As of December 31, 2012, 2GO and its subsidiaries has a total fleet of 19 operating vessels, of which 13 are company-owned ships. The fleet consists of 6 fast crafts, 10 RoRo/Pax vessels (of which 3 vessels are time chartered from its parent company, NENACO), and 3 freighters (all of which are time chartered from NENACO). The Company’s operating vessel fleet has a combined Gross Registered Tonnage of approximately 122,297 metric tons, total passenger capacity of approximately 16,348 passengers and aggregate cargo capacity of approximately 1,944 twenty-foot equivalent units (TEUs). During the course of the year 2012, 2GO and its subsidiaries sold 2 freighter vessels and laid-up 1 fast craft and 2 RoRo/Pax vessels, as part of management’s cost reduction efforts. Management endeavored to reduce vessel capacity to mitigate inefficient assets that cause enormous expenses in repairs and maintenance. Currently, 2GO operates 7 RoRo/Pax vessels calling on Manila as their homeport. These vessels are larger coastwise vessels that sail from Luzon to Visayas and Mindanao. Further, 2GO operates 3 medium-sized vessels, formerly called the Cebu Ferries, 2 of which have Batangas as their homeport, plying on the Batangas-Caticlan route, while 1 vessel retained its homeport in Cebu. The 6 fast craft passenger vessels, on the other hand, are smaller fast crafts that ply on short distances. The Company also operates 3 purely-cargo vessels to fully complement its freight business. Land, Buildings and Warehouses The Company owns several pieces of land and a number of buildings and warehouses. These are used in the normal course of business. For details of their locations, please refer to Exhibit III. Insurance Coverage The 2GO vessels are appropriately supported by the top Marine Insurance players throughout the world. The Hull and Machinery insurance, which insures physical damage to the ships, is being underwritten by reputable local and foreign insurers and is fronted by Pioneer Insurance. Likewise, the War & Strikes cover which protects the vessels against war and war-like operations is insured through Pioneer Insurance. The Protection and Indemnity (P&I) Insurance covering the legal liabilities of the shipowners such as but not limited to pollution, wreck removal and damages to fixed and floating objects is placed with The Steamship Mutual Underwriting Association (Bermuda) Ltd. The Marine Cargo insurance covering claims arising from losses and damages to cargoes is placed with Philippine Charter Insurance Corporation and Chartis Insurance Philippines, Inc (formerly Philam Insurance Co., Inc) whilst the insurance cover specifically tailored to protect Bangko Sentral ng Pilipinas (BSP) shipments is fronted by Pioneer Insurance. The Commercial General Liability of all the Company's owned, affiliated and associated offices are fully insured by Oriental Assurance Corporation. Furthermore, all passengers boarding any 2GO vessels are secured against injuries and/or loss of life with Philippine Charter Insurance Corporation. On the other hand, members of the technical crew of the 2GO vessels are insured with Philippine Charter Insurance Corporation.

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The land-based employees, on the other hand, are covered by Chartis Insurance Philippines, Inc. The rest of the Company's properties nationwide, including the containers vans & the container handling equipment are likewise fully covered with insurance policies issued by respectable insurance companies in the country. Container Yard and Warehousing Facilities The Company has one of the most extensive networks of container yards and warehousing facilities nationwide. Most of the Company’s container yards have been cemented, whether in whole or in part, to achieve greater efficiency in terminal operations, allow for shorter turnaround time in port, greater utilization in stacking of containers and lower repair and maintenance costs for the operating equipment used at the container yards. The Company also has sufficient warehouse space. Warehouses are either owned or leased by the Company. The Company’s warehouse network consists of warehouses at Bacolod, Butuan, Cebu, Davao, Dumaguete, General Santos, Iligan, Iloilo, Ozamis, Zamboanga and Manila. Containers and Other Equipment 2GO owns and leases a variety of containers and other equipment of various types and sizes for use in its cargo operations including forklift, top loaders, yard tractors and trailers or chassis. Master lease agreements entitle the Company to use the containers in exchange for a per diem rate for the duration of the lease. Lease purchase agreements allow the Company to use the containers for a specified number of years while it continues to pay the lessor a fixed per diem rate and gives the Company the option to acquire the containers at the end of the lease. Installment purchase agreements allow the Company to pay the full purchase price of the containers by installments in accordance to a fixed schedule. Containers under capital leases as of December 31, 2012 are shown under the “Property and Equipment” account in Note 14 of the consolidated financial statements. Liens and Encumbrances Detailed discussion as regards the mortgage, liens and encumbrance over the properties of the registrant are disclosed under Note 20 of the consolidated financial statements. 2GO EXPRESS Leases Major leases of 2GO Express include rental offices, outlets and warehouses nationwide. The lease contracts for its outlets nationwide are renewable every year. Item 3. Legal Proceedings There are certain legal cases filed against 2GO and its subsidiaries in the normal course of business. Management and its legal counsel believe that they have substantial legal and factual bases for their position and are of the opinion that losses arising from these cases, if any, will not have a material adverse impact on the consolidated financial statements. Item 4. Submission of Matters to a Vote of Security Holders Nothing was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.

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PART II - OPERATIONAL AND FINANCIAL INFORMATION Item 5. Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matter. A. Market Information

The Common Stock of the Corporation is listed at the Philippine Stock Exchange. As of latest market date, March 26, 2013, the market price of the Company’s common stock is P1.67 per share. Below is the range of high and low bid information for the Company’s common equity for each quarter within the last two fiscal years and any subsequent interim period:

2013 First Quarter 2012 First Quarter Second Quarter Third Quarter Fourth Quarter 2011 First Quarter Second Quarter Third Quarter Fourth Quarter

P= 2.00

P= 4.72 2.94 1.96 2.85

P= 1.95 1.94 1.90 1.48

P= 1.67

P= 1.33 1.75 1.69 1.62

P= 1.77 1.61 1.20 1.33

B. Stockholders The number of common shareholders of record as of March 31, 2013 was 1,952. The top 20 common stockholders as of March 31, 2013 are as follows:

Name No. of Shares Held % to total 1. Negros Navigation Co., Inc. 2,160,141,991 88.308% 2. R A L Holdings and Equities Corporation 119,000,000 4.865% 3. BIVI Realty Development Corporation 80,000,000 3.270% 4. East Asian BBB Realty Inc. 41,000,000 1.676% 5. PCD Nominee Corporation (Filipino) 19,509,328 0.798% 6. Union Properties, Inc. 1,578,125 0.065% 7. Abacus Securities Corporation 1,530,000 0.063% 8. Santiago Tanchan III 1,262,500 0.052% 9. Constantine Tanchan 1,262,500 0.052% 10. PCD Nominee Corporation (Foreign) 1,144,426 0.047% 11. Harrison Abella Ong 890,062 0.036% 12. Fast Cargo Transport Corp. 744,875 0.030% 13. Philips Multiemployer Retirement Plan 631,250 0.026% 14. Ramon Rivero 600,000 0.025% 15. Prudential Guarantee & Ass Inc. 458,287 0.019% 16. AMA Rural Bank or Mandaluyong, Inc. 441,875 0.018% 17. Alexander J. Tanchan 430,260 0.018% 18. Quality Investments & Sec Corp 416,625 0.017% 19. Elizabeth Chiu 378,750 0.015% 20. Ramon R. Rivero 320,000 0.013%

As of March 31, 2013, the total number of shares owned by the public is equivalent to 285,296,991 shares or equivalent to 11.66%.

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Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 201013,725 12,971 11,6111,139 1,027 710

(135) (821) (1,535)2.84:1.00 2.67:1.00 2.18:1.000.88:1.00 1.07:1.00 0.57:1.00

IBT (b)Debt-to-Equity Ratio (c)Current Ratio (d)

RevenuesEBITDA (a)

C. Dividends Declaration On December 01, 2010, the Board approved the declaration of a special cash dividend equivalent to P0.15 per share to all 2GO stockholders of record as of December 15, 2010. The special cash dividend represents the sales proceeds of the Aboitiz Jebsen companies net of taxes and other related costs. Dividends were paid on January 12, 2011. Further, there were no dividends declared during the years 2011 and 2012. Item 6. Management’s Discussion and Analysis of Financial Condition and Results of Operations KEY PERFORMANCE INDICATORS (KPI) The following KPI’s are used to evaluate the financial performance of 2GO Group and its subsidiaries. The amounts are in millions of pesos except for the financial ratios. a. Revenues – 2GO Shipping revenues are mainly composed of freight and passage revenues and they are

recognized when the related services are rendered. Total Revenue for the full year ended December 31, 2012 is P13.7 billion.

b. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) - is calculated by adding back

interest expense, amortization and depreciation into income before income tax, excluding extraordinary gains or losses. EBITDA for the full year 2012 is P1.4 billion.

c. Income (Loss) before income tax (IBT) – is the earnings of the company before income (loss) tax expense.

The Loss Before Income Tax for full year 2012 is P135.1 million. d. Debt-to-equity ratio – is determined by dividing total liabilities over stockholders’ equity. 2GO Group debt-to-

equity ratio for the full year 2012 is 2.84:1.00. Total liabilities decreased by P530.1 Million and total equity stood at P2.9 billion or 12% lower compared to 2011 due to net loss incurred for the full year of 2012.

e. Current ratio – is measured by dividing total current assets by total current liabilities. The Company’s current

ratio as of December 31, 2012 is 0.88:1:00. Total current asset is P5.2 billion or 11% lower than 2011 due to reduction in cash & cash equivalents, trade & other receivables and assets held for sale. Total current liabilities are P6.0 billion or 9% increased compared to 2011.

The following table shows comparative figures of the Top Five key performance indicators (KPI) for 2012 versus 2011 (amounts in millions except for the financial ratios) based on the consolidated financial statements of 2GO and its subsidiaries:

Note: The figures above are in P’MM except otherwise indicated. a) Earnings before interest, taxes, depreciation and amortization (calculated by adding back interest expense and

amortization and depreciation into income before income tax, excluding extraordinary gains and losses). b) Income before income tax or loss before income tax c) Total liabilities / total stockholders’ equity. d) Total current assets / total current liabilities.

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CONSOLIDATED INCOME STATEMENT

In P'MM%

REVENUES 2012 2011 2010 '12 vs '11 variance 2012 2011Freight – (Note 23) 6,329 5,678 5,326 651 11% 46% 44%Sale of goods 2,439 3,029 2,566 (589) (19%) 18% 23%Passage - net 2,128 2,384 2,179 (256) (11%) 16% 18%Service fees (Note 23) 1,841 1,251 1,064 590 47% 13% 10%Food and beverages 376 260 160.60 116 45% 3% 2%Others 611 369 316 243 66% 4% 3%

13,725 12,971 11,611 754 6% 100% 100%COSTS AND EXPENSES (Note 25)Operating 9,523 8,192 7,093 1,330 16% 69% 63%Cost of goods sold (Note 8) 1,933 2,602 2,207 (669) (26%) 14% 20%Terminal 1,073 1,495 1,474 (423) (28%) 8% 12%Overhead 1,113 1,034 1,476 79 8% 8% 8%

13,641 13,323 12,250 318 2% 99% 103%OTHER INCOME (CHARGES)Impairment loss on goodwill, property and equipment and

assets held for sale (Notes 10 and 14) 0 (224) (779) 224 (100%) 0% (2%)Equity in net earnings (losses) of associates (Note 12) 35 (15) 40 50 0% 0% (0%)Interest and financing charges (Notes 26) (401) (408) (229) 7 (2%) (3%) (3%)Others - net (Note 26) 147 300 71 (153) (51%) 1% 2%

(219) (346) (897) 127 (37%) (2%) (3%)INCOME (LOSS) BEFORE INTEGRATION COSTS (135) (698) (1,536) 837 (120%) (1%) (5%)INTEGRATION COSTS (Note 27) (123) - 123 100% 0% (1%)INCOME (LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS (135) (821) (1,536) 714 (87%) (1%) (6%)PROVISION FOR (BENEFIT FROM)INCOME TAX (Notes 29) 251 (195) (421) 446 (229%) 2% (2%)NET INCOME (LOSS) FROM CONTINUING OPERATIONS (386) (626) (1,114) 488 (78%) (3%) (5%)NET INCOME FROM DISCONTINUED OPERATIONS (Note 30) - 359 0 0% 0% 0%NET INCOME (LOSS) (386) (626) (755) 239 (38%) (3%) (5%)

ATTRIBUTABLE TO:Equity holders of the Parent Company:

Net income (loss) from continuing operations (397) (634) (1,114) 238Net income from discontinued operations - 305 0

Net income (loss) for the period attributable to equity holders of the parent (397) (634) (809) 238Non-controlling interests:

Net income (loss) from continuing operations 10 9 (0) 2Net income from discontinued operations - 54 0

Net income for the period attributable to non-controll ing interests 10 9 53 2(386) (626) (755) 239

Years Ended December 31 % to Revenue

Two years after the integration with NENACO, the Group has shown significant improvements in its operations. Consolidated net income before integration and financing charges almost turned 360o to P265.7 million from net loss of P290.3 million in 2011. This can be attributed largely to realization of the synergies from the integration of NN and 2GO operations. Consolidated revenues jumped 6% to P13.7 billion in 2012 from P13.0 billion in 2011. The shipping business accounted for 71% of the total revenues, while supply chain contributed 29% of total revenues. The freight revenues swelled 10% or P556.0 million to P6.3 billion from P5.7 billion last year. Passage revenues, including food and beverage, soared 6% to P2.8 billion from P2.6 billion in 2011. This can be attributed largely to vessel and route rationalization implemented by Management. Revenues from the supply chain business decreased by 7% to P4.0 billion from P4.3 billion in 2011 mainly due to the disengagement of some identified principals showing negative profitability. The lost revenues from disengaged principals will eventually be replaced by revenues from new principals showing good profit margins. The costs and expenses likewise increased, but to a lower extent than the revenues. Costs and expenses increased by P318 million, or a 2% increase over the same period last year. This is mainly attributable to increase in fuel prices for the full year mitigated by stringent cost management.

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Earnings per Share Earnings Per Share is computed by dividing Net Income (Loss) Attributable to Equity Holders of the Parent over weighted average number of common shares outstanding for the year. Earnings per share for the full year of 2012 stood at (P0.16)/share compared to (P0.26)/share last year. Other changes (+/-5% or more) in the financial statement not covered in the above discussion FY 2012 vs. FY 2011

Revenue >47% or P590 million increase in service fees >66% or P243 million increase in ’other’ revenues >45% or P116 million increase in food and beverages

Cost & Expenses >8% or P79 million increase in overhead costs >28% or P423 million decrease in Terminal costs >26% or P669 million decrease in Cost of Goods Sold

Other Income / (Charge) >100% or P224 million decrease in Impairment loss and goodwill, property and equipment And assets held for sale >51% or P153 million decrease in Other items BALANCE SHEETS

Amount %2012 2011 '12 vs '11 variance 2012 2011

ASSETSCurrent AssetsCash and cash equivalents (Note 6) 788 906 (118) (13%) 7% 7%Trade and other receivables (Note 7) 2,807 2,898 (91) (3%) 25% 24%Inventories (Note 8) 370 407 (156) (38%) 3% 3%Other current assets (Note 9) 925 996 44 4% 8% 8%

4,890 5,208 (318) (6%) 44% 43%Assets held for sale (Note 10) 359 693 (333) 100% 3% 6%Total Current Assets 5,249 5,901 (652) (11%) 47% 49%Noncurrent AssetsProperty and equipment - net (Notes 14 and 21) 4,576 4,651 (1,545) (33%) 41% 38%Available-for-sale (AFS) investments (Note 11) 9 9 (1) (7%) 0% 0%Investments in associates (Note 12) 120 100 20 20% 1% 1%Investment property (Note 15) 10 10 1.00 10% 0% 0%Software development costs - net (Note 16) 11 14 (3) (22%) 0% 0%Deferred tax assets - net (Note 29) 794 964 (170) (18%) 7% 8%Goodwill (Notes 5) 250 250 - 0% 2% 2%Other noncurrent assets (Note 17) 197 233 (36) (15%) 2% 2%Total Noncurrent Assets 5,966 6,231 (265) (4%) 53% 51%TOTAL ASSETS 11,215 12,132 (917) (8%) 100% 100%

% to Total31-Dec

(Forward)

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LIABILITIES AND EQUITYCurrent LiabilitiesLoans payable (Note 18) 1,384 1,215 169 14% 12% 10%Trade and other payables (Notes 19 and 23) 3,528 3,432 96 3% 31% 28%Income tax payable 7 6 2 100% 0% 0%Redeemable preferred shares (Notes 22 and 24) 7 26 (19) 100% 0% 0%Current portions of:

Long-term debt - net (Note 20) 993 786 208 26% 9% 6%Obligations under finance lease (Notes 14 and 21) 78 30 48 158% 1% 0%

Total Current Liabilities 5,997 5,495 502 9% 53% 45%Noncurrent LiabilitiesLong-term debt-net of current portion (Note 20) 2,185 3,178 (993) 100% 19% 26%Obligations under finance lease - net of current portion (Notes 14 and 21) 45 92 55 60% 0% 1%Accrued retirement benefits (Note 28) 59 52 7 13% 1% 0%Other noncurrent l iabil ities 9 8 1 7% 0% 0%Total Noncurrent Liabilities 2,298 3,331 (1,032) (31%) 20% 27%Total Liabilities 8,296 8,826 (530) (6%) 74% 73%EquityAttributable to the equity holders of the Parent Company:

Share capital (Note 24) 2,485 2,485 0 0% 22% 20%Additional paid-in capital 911 911 0 0% 8% 8%Acquisitions of non-controll ing interests (Note 24) 6 6 0 0% 0% 0%Excess of cost over net asset value of investments (Note 24) (11) (11) 0 0% (0%) (0%)Unrealized gain on sale of available-for-sale investments (Note 11) 0 0 0 42% 0% 0%Share in cumulative translation adjustments of associates (Note 11) 5 5 0 0% 0% 0%Retained earnings (deficit) (Note 23) (446) (50) (397) 798% (4%) (0%)Treasury shares (Note 23) (59) (59) 0 0% (1%) (0%)

2,891 3,288 (396) (12%) 26% 27%Non-controlling Interests 28 19 10 53% 0% 0%Total Equity 2,920 3,306 (387) (12%) 26% 27%TOTAL LIABILITIES AND EQUITY 11,215 12,132 (917) (8%) 100% 100% The Group’s total assets for the full year ending December 31, 2012 was P11.22 billion, 8% lower than P12.13 billion as of December 2011. The bulk of the difference came from current assets, which at the start of the year stood at P5.9 billion, went down to P5.25 billion as of December 2012. Trade and other receivables decreased by 3% or P91 million. Assets held for sale decreased by P333 million due to the sale of two (2) freighter vessels, namely 2GO1 and 2GO2. The sale of vessels is part of management’s cost reduction efforts. Management endeavored to reduce vessel capacity to mitigate inefficient assets that cause enormous expenses in repairs and maintenance. Cash and cash equivalents likewise decreased by P118 million due to various payments made. Inventories also decreased by P156 million or 38% relative to the sale of vessels. Property and equipment decreased by P1.55 billion. During the second quarter of the current year the company sold real property located in Lapuz, Iloilo and two aircraft for cash proceeds of P93.3 million and P3 million, respectively. Total liabilities went down by P530 million from the beginning of the year balance of P8.8 billion to P8.3 billion at the end of December of 2012. The current portion of the long-term debt increased since the loan payable on its second year is higher than the previous year. There was also a decrease of P3.1 billion in the non-current portion of the long-term debt due to payments made during the year. Total equity stood at P2.92 billion at the end of the year, 12% lower compared to the beginning of the year which is at P3.3 billion due to losses incurred by the Group in 2012.

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CASHFLOW STATEMENTS

in P'MM2012 2011 2010

Net cash flows from operating activities 1,382 (524) 600 Net cash flows used in investing activities (432) 286 (3,391)Net cash flows from financing activities (1,070) 340 2,500

EFFECTS OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 2 0 0 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (118) 102 (291)

Years Ended December 31

The Group ended the year with a net decrease in cash of P118 million. The Group received the settlement of notes payable from its parent company, Negros Navigation Co, Inc. The bulk portion of its cash was used to pay off financial obligations. Part of it was also used for capital expenditures related to drydocking and other maintenance costs of its vessels. Other Information Other material events and uncertainties known to management that would address the past and would have an impact on 2GO’s future operations are discussed below.

i. Total fuel/lubes expense is a major component of 2GO’s total cost and expenses. 2GO is constantly looking for ways to reduce fuel consumption to lessen the impact of the increasing fuel prices on the bottom line.

ii. Except as disclosed in the management discussion and notes to the financial statements, there are no other

known events that will trigger direct or contingent financial obligation that is material to 2GO, including any default or acceleration of an obligation. There are also no other known trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on revenues or income from operations.

iii. All significant elements of income or loss from continuing operations are already discussed in the

management discussion and notes to financial statements. Likewise any significant elements of income or loss that did not arise from 2GO continuing operations are disclosed either in the management discussion or notes to financial statements.

iv. There is no material off-balance sheet transaction, arrangement, obligation, and other relationships of 2GO

with unconsolidated entities or other persons created during the reporting period.

v. Seasonal aspects of the business are considered in 2GO’s financial forecast.

vi. 2GO does not expect any liquidity or cash problem within the next twelve months. Capital expenditures are funded through cash generated from operations and additional borrowings.

Company Outlook With NN as parent company they have installed and implementing certain strategies and action plans to achieve positive and healthy operating results for 2GO Group in terms of financial performance, financial condition and cash flows for 2013. Major schemes includes perpetuating fleet and route rationalization for Shipping business and more aggressive sales and marketing strategies for the Supply Chain business. Comprehensive review and implementation of cost saving initiatives which include the One Port project and maximization of the takeover of the ship management. A robust management reporting system ensuring the financial results and operating performance of the business units to optimize revenue and collection targets as well as attaining the savings from containment measures. The restructuring of long-term debt with counter party bank so that available cash in custody of the parent company will be mostly utilized in covering its operating activities so that set objectives will be met as planned. Item 7. Financial Statements The consolidated financial statements and schedules listed in the accompanying Index to Financial Statements and Supplementary Schedules are filed as part of this SEC Form 17-A.

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The management is not aware of any significant or material events or transactions not included nor disclosed in the consolidated financial statements in compliance with the SRC Rule 68. Item 8. Information on Independent Accountant and Other Related Matters The accounting firm of SGV & Co. (SGV) has been 2GO's Independent Public Accountant since year 1977. This is reckoned to be the approximate date based on the available records. Representatives of SGV will be present during the annual meeting and will be given the opportunity to make a statement if they so desire. They are also expected to respond to appropriate questions if needed. In August 2009, the Board of Directors of 2GO approved the consolidation of its Audit Committee to the newly created Audit and Corporate Governance Committee. The incumbent members of the said Committee are: Mr. Francis C. Chua as chairperson, Messrs. Patrick Ip, Mark E. Williams and Geoffrey M. Seeto as members, and Mr. Evan C. McBride as ex-officio member. At its regular board meeting on April 23, 2009, the Board of Directors approved a resolution to delegate to the Board of Directors the authority to appoint the Company’s external auditors. The stockholders ratified the same resolution during its annual stockholders meeting. Further, in compliance with the SEC guidelines on the rotation of external auditors under SRC Rule 68, Paragraph 3(b)(iv), 2GO has already adopted and incorporated the said guidelines in its Code of Corporate Governance. Moreover, the Registrant will also adopt and observe the two-year cooling of period in the re-engagement of the same signing partner or individual auditor in compliance with the provisions under SRC Rule 68, Paragraph 3(b)(ix). Ms. Josephine H. Estomo has been assigned as the signing partner of 2GO starting fiscal year 2011. She replaced Mr. Ladislao Z. Avila Jr., who had been the signing partner since fiscal year 2006, in compliance with the five years rotation requirement under SRC Rule 68, Paragraph 3(b)(iv). (1) External Audit Fees and Services

Estimates for December 31, 2013

Year ended December 31, 2012

Year ended December 31, 2011

Audit Fees Audit-Related Fees P 1,300,000 P 1,300,000 P 1,300,000 All Other Fees TOTAL P 1,300,000 P 1,300,000 P 1,300,000

Audit Fees This represents professional fees for financial assurance services rendered for the Company’s Annual Financial Statements, review and opinion for SEC Annual Report. Audit-Related Fees This represents professional fees for technology and security risk services rendered by the external auditor in connection with the Audit on Company’s Annual Financial Statements. All Other Fees This represents fees for services rendered in reviewing and issuing opinion with regards to the Company’s annual reportorial requirement with Maritime Industry Authority (MARINA). Audit services provided to the Company by external auditor, SGV, have been pre-approved by the Audit and Corporate Governance Committee and recommended to the Board of Directors for approval. The Audit and Corporate Governance Committee has reviewed the magnitude and nature of these services to ensure that they are compatible with maintaining the independence of the external auditor.

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(2) Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There was no event in the past years where SGV and the Registrant had any disagreements with regard to any matter relating to accounting principles or practices, financial statement disclosure or auditing scope or procedure.

PART III - CONTROL AND COMPENSATION INFORMATION Item 9. Directors and Executive Officers of the Registrant The names, ages, citizenship, position and offices held or will hold, and brief description of business experience during the past 5 years (except those years stated otherwise) and other directorships held in reporting companies, including name of each company, of all directors and executive officers are as follows: DIRECTORS Mr. Francis C. Chua, 62 years old, Filipino, has served as Chairman of the Board since July 2011 and as an Independent Director of 2GO since January 2011. He is also the Chairman of the Board Audit and Corporate Governance Committees. Mr. Chua also sits as the Chairman of the Board of NENACO since July 2011. His other current positions include Honorary Consulate General of the Republic of Peru in Manila; President and Eminent Adviser of the Philippine Chamber of Commerce and Industry; Chairman of the Philippine Chamber of Commerce and Industry Foundation, CLMC Group of Companies, and Green Army Philippines Network Foundation; President of DongFeng Automotive, Inc. and Philippine Satellite Corporation; Director of Philippine Stock Exchange, National Grid Corporation of the Philippines, Bank of Commerce, Basic Energy, and Overseas Chinese University; and Trustee of Xavier School Educational Trust Fund, and Adamson University. He graduated with a Bachelor of Science degree in Industrial Engineering from the University of the Philippines. Mr. Sulficio O. Tagud, Jr., 62 years old, Filipino, has served as the President and Chief Executive Officer and a Director of 2GO since December 2010. Mr. Tagud is also the Chairman of the Compensation, Remuneration and Nomination Committee of the Company. Prior to this, he has served as Chairman of the Board of the Company from October 2004 up to July 2011, as Chairman and CEO of C&P Homes, Inc., as President of ML &H Corp., Capital Securities One, Inc. and Bonifacio Land Corporation. He was also a Director of Bonifacio Development Corp. and Public Estates Authority and PEA Tollways. Further, current positions of Mr. Tagud include the following: Chairman and President of KGLI-NM Holdings, Inc. since July 2008; President, Chief Executive Officer and a Director of NENACO since 2004; Chairman & CEO of Negros Holdings & Management Corporation since December 2006; and Chairman of the Philippine Liner Shipping Association. He graduated Class Valedictorian with a Bachelor of Science degree in Business Administration, major in Economics (Magna Cum Laude) at Xavier University, Cagayan De Oro City. He also completed his Masters in Industrial Economics at the Center for Research and Communication in Manila, and Masters in Business Administration at the Ateneo de Manila University. He also completed Real Estate Development Program at the Urban Land Institute at Washington, D.C., U.S.A. Mr. Jeremias E. Cruzabra, 46 years old, Filipino, has served as Director since December 2010, Treasurer and Chief Finance Officer since June 2011, and Corporate Information Officer since December 2011 of 2GO. He has served also as the Chief Finance Officer of NENACO since April 2004; Chief Finance Officer and Board Director of KGLI-NM Holdings, Inc. since July 2008; Vice-President and Chief Finance Officer/Treasurer of Negros Holdings & Management Corporation since December 2006; Court-Appointed Receiver of Selegna Holdings Corporation since November 2006; Chief Finance Officer (and later Trustee) of Sapphire Securities, Inc. (owned by the Brunei Investment Agency) from 1997 to 1999. In 1999, he co-founded Business Sense, Inc. (BSI), a business-consulting firm that specializes in strategy formulation and productivity improvement. BSI is affiliated with INPACT Asia-Pacific, an international network of public accounting firms. He started his career with SGV & Co. (a member company of Ernst & Young) from 1988 to 1992. After SGV, Mr. Cruzabra held managerial/executive positions in several subsidiaries of Metro Pacific Corporation from 1992 to 1997. Mr. Cruzabra, who is a Certified Public Accountant, graduated with a Bachelor of Science degree in Commerce, major in Accounting (Magna Cum Laude). He completed his Masters in Business Administration at Murdoch University in Perth, Western Australia. Mr. Cruzabra is also a Certified Securities Representative in the Philippine Stock Exchange. Amb. Raul Ch. Rabe, 72 years old, Filipino, has been an Independent Director of 2GO since December 2010. He is also the Chairman of the Risk Management Committee. He also served as an Independent Director of NENACO since December 2010; Independent Director of KGLI-NM Holdings, Inc. since July 2008; Director of Bancommerce Investment Corporation since 2007; Director of Vivant Corporation since 2002; Director of Bank of Commerce since 2001; Corporate Secretary of Manila Economic and Cultural Office since 2001, and Of Counsel for Rodrigo,

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Berenguer and Guno Law Offices since 1999. He graduated with a Bachelor of Arts degree at the University of Santo Tomas, and Bachelor of Laws degree from the Ateneo de Manila Law School and a member of the Philippine Bar since 1965. He also completed the Colombo Plan Scholarship on Diplomacy at the Australian Institute of Foreign Service in Canberra, Australia. Atty. Monico V. Jacob, 67 years old, Filipino, has served as an Independent Director of 2GO since December 2011. He also sits on the Board of NENACO as an Independent Member since December 2010. As a partner of the Jacob & Jacob Law Firm, he has been involved in corporate recovery work including rehabilitation receiverships and restructuring advisory in the following firms: The Uniwide Group of Companies, ASB Holdings, Inc., RAMCAR Group of Companies, Atlantic Gulf and Pacific Company of Manila, Inc., Petrochemicals Corporation of Asia-Pacific, All Asia Capital and Trust Corporation (now know as Advent Capital and Finance Corporation), Nasipit Lumber Company, Inc. and NENACO. His current positions include: President and CEO of Systems Technology Institute, Inc. (STI), Information and Communications Technology Academy, Inc., PhilPlans First, Inc., Philhealthcare, Inc., Banclife Insurance Co. Inc., and JTH Davies Holdings, Inc.; Member of the Boards of Jollibee Foods, Inc., Advent Capital and Finance Corp., Asian Life Financial Assurance, Asian Terminals, Inc., Mindanao Energy, Inc., Phoenix Petroleum Philippines, Inc., De los Santos – STI College, De los Santos – STI Medical Center, Philippine Health Educators, Inc., Philippine Women's University, Unlad Resources Development Corporation, and Anvaya Cove Beach and Nature Club; and Chairman of the Boards of Total Consolidated Asset Mgmt, Inc., and Global Resource for Outsourced Workers, Inc. He received his Bachelor of Arts in Liberal Arts from Ateneo de Naga and Bachelor of Laws from the Ateneo de Manila University. Mr. Nelson T. Yap, 54 years old, Filipino, has served as Director of 2GO since December 2011. Mr. Yap has over 30 years of professional experience in public accounting, financial management, treasury, analysis, controls, accounting, budgeting, tax planning and management reporting with a multinational insurance company, a Hong Kong regional headquarter overseeing operations in Netherlands Antilles, U.K., France, Australia, and the U.S., and with a listed BPO company. During the past 5 years, He has served as a Director of NENACO since December 2011; Group Comptroller of Paxys, Inc., a publicly-listed BPO company, from 2006 to September 2011; and as Treasurer/Comptroller of NGL Pacific Limited from 2005 to June 2006. Mr. Yap, a Certified Public Accountant (15th Board placer), graduated with a Bachelor of Science degree in Commerce, major in Accounting (Cum Laude) from the Xavier University, Cagayan De Oro City. He took his Masters in Business Administration from Ateneo Graduate School of Business (no thesis) and further completed the same from Murdoch University in Perth, Western Australia. Mr. Mark E. Williams, 39 years old, American, has served as Director of 2GO since December 2010. He is also a member of the Board Compensation, Remuneration and Nomination, and Board Audit and Corporate Governance Committees. He currently sits as a Director of NENACO since December 2010; Investment Director of KGL Investment Company, Damietta International Port Company, KGLI-NM Holdings, Inc. and Global Gateway Development Corporation. Mr. Williams has extensive experience in the energy and logistics industries and worked with Horizon Propane LLC in the capacity of Director of Financial Planning and Analysis and later as Vice President of Finance and Assistant Treasurer. In 2004, Mr. Williams accepted a position as a Director at Cross Holdings LLC, a privately held investment firm, where he led teams in all aspects of the deal process, from sourcing, to due diligence and post acquisition management and operational restructuring of portfolio companies along with assessing various real estate investment opportunities. Mr. Williams also lead a team charged with the outsourcing of manufacturing of outdoor related products to manufacturers in China and advised a US based materials handling company owned by the principals of Cross Holdings. He is a Certified Public Accountant and obtained his Bachelor of Science degrees in Accounting, Business Administration, and Finance at the University of Akron in Akron, Ohio, U.S.A. He completed his Juris Doctorate degree at Case Western Reserve University, Cleveland, Ohio, U.S.A., and also obtained a Masters degree in Business Administration, concentration in Finance, from Weatherhead School of Management of the same university. Mr. Geoffrey M. Seeto, 43 years old, Australian, has been appointed as a Director of 2GO since October 2011. Mr. Seeto is also a Member of the following Company Board Committees: (i) Compensation, Remuneration and Nomination; (ii) Audit and Corporate Governance; and (iii) Risk Management. He is also a member of the Board of NENACO since December 2010. He is the Head of Asia Infrastructure, Singapore with Babcock and Brown. He led infrastructure investments including PPP transactions throughout Singapore, Thailand and other ASEAN countries. Prior to Babcock and Brown, he spent 10 years with ABN Amro Bank in Singapore, the Netherlands and Canada, also specializing in infrastructure investments, mergers and acquisitions. He received his Bachelor of Economics Degree and Masters of Law from the University of Sydney, Australia. Mr. Patrick Ip, 43 years old, Chinese, was appointed as Director of 2GO since October 2011. He currently sits as a Member of the Board Risk Management and Board Audit and Corporate Governance Committees of 2GO. Mr. Ip is also a Director of NENACO; Member of the Hong Kong Institute of Directors; and Head of Portfolio Supervision

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Management for China-ASEAN Capital Advisory Company, the advisor to the China-ASEAN Investment Cooperation Fund. Prior to this he was the Chief Financial Officer of the private equity arm of the French bank, Natixis. There he was responsible for all private equity activities in Asia (ex India). Throughout his career he gained substantial experience in auditing and financial transaction advisory, legal and compliance, litigation and arbitration as well as hedge fund and alternative investment. Mr. Ip is a Chartered Financial Analyst, a Certified Public Accountant (Hong Kong) and a Chartered Certified Accountant with PwC in London. He took his Bachelor of Laws degree from the London University Law Schools and his Bachelor of Arts degree major in Accounting and Finance from the Leeds University, UK. EXECUTIVE OFFICERS Mr. Fred S. Pajo, 58 years old, Filipino, is the Executive Vice-President and Chief Operating Officer of NENACO. He concurrently handles the same function in 2GO Group, Inc. Further, Mr. Pajo has been with NENACO for more than 30 years, holding various significant positions such as Branch Manager, Officer-in-Charge, Deputy Area Head, Assistant Vice President for Freight Business and Vice President for Operations. He has served as VP Head of Freight Business Division and President for Brisk Nautilus Dock Integrated Services, Inc., a wholly owned subsidiary of the NENACO since 2005. Mr. Pajo also became the President of the NENACO in January 2007 and 2010. Further, he currently serves as Director of Hansa Meyer-ATS Projects, Inc., Hapag-Lloyd Philippines, Inc. Mr. Pajo earned his degree in Bachelor of Science in Business Administration from the Ateneo de Cagayan – Xavier University. Mr. Jose Manuel L. Mapa, 46 years old, Filipino, is the Executive Vice-President – Freight Sales of NENACO and 2GO Group. Mr. Mapa has been with NENACO for more than fourteen (14) years and his career progression has indicated that he has made major contributions in the company’s operations. He started as an Executive Assistant for Marketing and Special Projects, gradually moving up to be the AVP/Deputy Area Head-Negros Occidental Area for NENACO, taking charge of the freight and passage business of the area and on to Vice President / Head – National Freight Business, later on to Executive Vice President/Head – Passage Business. He obtained his Master’s degree in Business Administration at the University of St. La Salle Graduate School, Bacolod City. He also completed his Bachelor of Science degree in Agribusiness Management at the University of the Philippines in Los Banos, Laguna where he received several awards including the University of the Philippines President’s Award (National Award) for Outstanding Student, the UPLB University Council Award for Outstanding Student, UPLB Outstanding Student Leader Award. Mr. Wilmer A. Alfonso, 60 years old, Filipino, has served as Vice President for Ports Services since 2006. He has been with 2GO Group since January 1971. He holds the following positions: Chairman of Attina Security Services Inc., and Vestina Security Services Inc., President of North Harbor Tugs Corp., United South Dockhandlers, Inc., Supersail Services Inc., Astir Engineering Works, Inc., J&A Services Corporation, Red.Dot Corporation, Sun-Gold Forwarding Corporation and NN-ATS Logistics Management & Holdings Co., Inc. Mr. Alfonso is a Certified Public Accountant. He graduated with a Bachelor of Science degree in Accounting from the University of San Carlos. Ms. Zenaida R. Cabral, 51 years old, Filipino, is the Executive Vice-President and Chief Corporate Services Officer of NENACO and the Company. She joined NENACO in 2008, and has worked in all facets of Human Resources and Organization Development field for over 20 years largely in a managerial/executive role with varied experiences in different industries such as service, pharmaceutical, electronics, manufacturing, consultancy services, manning and executive search, allowing her to distinctly excel in her career. One of her most remarkable work stints was with Solid Electronics Corporation of the Solid Group which handles all the branches that carries the “Sony” brand in the Philippines. Her remarkable contribution to the company for 10 years was significantly acknowledged by Sony, Thailand when she was officially invited to share her HR expertise before the 50-member management team of the region. Ms. Cabral graduated with a Bachelor of Arts degree major in Psychology. She earned her masters degree units in Labor Management Relations from the University of the Philippines, School of Labor and Industrial Relations and completed her Organization Development course from the Ateneo de Manila University. Mr. Stephen Rey R. Tagud, 33 years old, Filipino, is the Vice-President – Passage of NENACO and 2GO Group. He has over nine (9) solid years of professional experience in sales, marketing, business operations, international hospitality operations management, hotel sales, operations and destination management from Europe and the USA and has handled several clients such as Hewlett Packard, LG, Unilever, Wells Fargo, Ford, and Carlson Marketing Group. Mr. Tagud introduced significant innovations to the company such as the “Revenue Management” concept where he spearheaded aggressive revenue management strategies that significantly increased both passenger revenue and volume in a highly competitive transportation market. He also launched the “NN Freight” brand to further bring the Freight business to the next level of service and efficiency. He further launched other revenue-generating programs such as the “Suite Sweet Sale” and creative in-house merchandising to boost sales of food & beverage items on-board the passenger vessels. He completed his undergraduate studies from University of Nevada Las Vegas, USA where he graduated Cum Laude. He also earned his post-graduate studies from the Swiss Hotel Management School

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“Les Roches” of Bulche, Switzerland and from the Universidad Europa de Madrid with a degree of Master in Business Administration major in International Hospitality Management, Finance & Marketing. Atty. Amado R. Santiago III, 46 years old, Filipino, has served as the Corporate Secretary of 2GO since December 2010. He is the Managing Partner of the Santiago & Santiago Law Offices and is engaged in the general practice of law. He specializes in corporate litigation, which includes corporate rehabilitation proceedings under the Securities and Exchange Commission Rules on Corporate Recovery, Interim Rules of Procedure on Corporate Rehabilitation and the Rules of Procedure on Corporate Rehabilitation. He is also engaged in the practice of taxation law. He received his Bachelor of Science degree in Management, major in Legal Management (1988) from the Ateneo de Manila University. He graduated from the Ateneo de Manila School of Law in 1992 and is a member of the Philippine Bar. Atty. Manuel Eduardo C. Carlos, 37 years old, Filipino, has served as the Assistant Corporate Secretary since December 2010. He is a Senior Associate Lawyer at the Santiago & Santiago Law Offices. Under this law firm, he specializes in corporate mergers and acquisitions and corporate housekeeping. He is also engaged in the practice of taxation law. He acts as corporate counsel, director and/or corporate secretary/assistant corporate secretary of various corporate clients. He received his Bachelor of Science degree in Management, major in Legal Management (1997) from the Ateneo de Manila University. He graduated from the Ateneo de Manila School of Law in 2002 and is a member of the Philippine Bar. Nomination Committee and Nominees for Election as Members of the Board of Directors In compliance with SEC Guidelines on the Nomination and Election of Independent Directors under SRC Rule 38, the Company Board created on February 26, 2003 a Nomination Committee (which was consolidated with the Compensation/Remuneration Committee in August, 2009.). As of December 31, 2012, the composition of the Board Compensation, Remuneration and Nomination Committee is as follows:

Chairman: Mr. Sulficio O. Tagud Jr. Members: Mr. Mark E. Williams

Mr. Patrick Ip The Compensation, Remuneration and Nomination Committee promulgated the guidelines, which govern the conduct of the nomination of the members of the Company Board. It had pre-screened and short listed all candidates and came up with the following individuals as nominees for independent directors for the ensuing year (2013-2014):

(1) Amb. Raul Ch. Rabe as nominated by Mr. Jeremias E. Cruzabra (2) Mr. Francis C. Chua as nominated by Mr. Nelson T. Yap (3) Atty. Monico V. Jacob as nominated by Mr. Jeremias E. Cruzabra

The nominating persons are not related to the nominees within the fourth degree of consanguinity. Further, the Committee approved on July 20, 2005 the Company’s Amended By-Laws incorporating the procedures for the nomination and election of Independent Directors under Rule 38 of the Securities Regulation Code, as the same may be amended from time to time. Period in Which Directors and Executive Officers Should Serve The directors and executive officers should serve for a period of one (1) year and until the election and qualification of their successors. Terms of Office of a Director The nine (9) directors shall be stockholders and shall be elected annually by the stockholders owning a majority of the outstanding common shares of the Registrant for a term of one (1) year and shall serve until the election and qualification of their successors. Any vacancy in the board of directors other than removal or expiration of term may be filled by a majority vote of the remaining members thereof at a meeting called for that purpose if they still constitute a quorum, and the director or directors so chosen shall serve for the unexpired term.

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Significant Employees The Corporation considers the contribution of every employee important to the fulfillment of its goals. Family Relationships Stephen Rey R. Tagud is the son of Sulficio O. Tagud, Jr. and are, thus, related to each other within the fourth degree of consanguinity. Other than the one disclosed above, there are no other family relationships within the fourth degree of consanguinity known to the Registrant. Involvement in Certain Legal Proceedings To the knowledge and/or information of 2GO, none of its nominees for election as directors, the present members of its Board of Directors or its executive officers, is presently or during the last five (5) years been involved in any legal proceeding in any court or government agency on the Philippines or elsewhere which would put to question their ability and integrity to serve 2GO and its stockholders. With respect to its nominees for election as directors, the present members of its Board of Directors and its executive officers, the Company is not aware that during the past five (5) years up to even date of: (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 of such person in a criminal proceeding, excluding traffic violations and other minor offenses; (c) such person being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, by any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting such person’s involvement in any type of business, securities, commodities or banking activities; and (d) such person being found by a domestic or foreign court of competent jurisdiction (in a civil action), the 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. Resignation or Refusal to Stand for Re-election by Members of the Board of Directors No Director has declined to stand for re-election to the board of directors since the date of the last annual meeting of the Registrant because of a disagreement with the Registrant on matters relating to the Registrant’s operations, policies and practices.

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Item 10. Executive Compensation The following table summarizes certain information regarding compensation paid or accrued during the last three fiscal years and to be paid in the ensuing fiscal year to the Registrant Chief Executive Officer and each of the Registrant four other most highly compensated executive officers:

SUMMARY OF COMPENSATION TABLE

On June 2011, Mr. Ramon G. Villordon Jr. was appointed as the Company’s President until his resignation on December 2011 and on the same date, Mr. Sulficio O. Tagud Jr. was appointed by the Company’s Board of Directors as the new President of 2GO. Further, Ms. Evelyn L. Engel, Ms. Lilian P. Cariaso, Ms. Charity Joyce Marohombsar and Ms. Susan V. Valdez have resigned from the Company effective 30 June, 31 July, 31 August and 10 September 2011, respectively. The Company has no significant or special arrangements of any kind as regard to the compensation of all officers and directors other than the funded, noncontributory tax-qualified retirement plans covering all regular employees. Each director receives a monthly allowance of P80,000 except for the Chairman of the Board who receives P120,000 a month. Further, a per diem of P30,000 is given to each Director and P45,000 for the Chairman for every Board meeting attended. Such allowances and per diems are shared equally with NENACO whenever board meetings of NENACO and the Company are held on the same day. Further, for 2013 estimates the compensation of the company’s officers is shared proportionately with NENACO. The above share of 2GO is equivalent to the 80% compensation of the officers. Except for the regular company retirement plan, which by its very nature will be received by the officers concerned only upon retirement from the Company, the above-mentioned directors and officers do not receive any profit sharing nor any other compensation in the form of warrants, options, bonuses, etc. Likewise, there are no standard arrangements that compensate directors directly or indirectly, for any services provided to the Company either as director or as committee member or both or for any other special assignments.

Amounts in Thousands of Pesos (‘000s) Year Salary Bonus

(13th and 14th Months Pay)

Other Annual Compensation

Top Five (5) Highly Compensated Executives: Sulficio O. Tagud Jr. – President and Chief Executive Officer

(2012 and 2013 only) Jeremias E. Cruzabra – EVP-Chief Finance Officer, Treasurer and Corporate

Information Officer (2012 and 2013 only) Zenaida R. Cabral – VP-Chief Corporate Services (2012 and 2013 only) Stephen R. Tagud – VP-Passage (2012 and 2013 only) Jose Manuel L. Mapa – EVP-Freight Sales (2012 and 2013 only) Fred S. Pajo – EVP-Chief Operating Officer (2012 and 2013 only) Lilian P. Cariaso – Chief Finance Officer, CIO and CRO (2011 only) Evelyn L. Engel – Chief Executive Officer – Passage (2011 only) Susan V. Valdez – Chief Executive Officer – Freight (2011 only) Charity Joyce Marohombsar – VP Customer Care Management (2011 only)

2011 16,366 3,454 - 2012 12,570 1,048 - All above named officers as a group

Projected 2013

12,570 3,531 -

2011 25,213 4,202 - 2012 13,645 1,137 -

All officers and directors as group unnamed Projected

2013 13,645 3,710 -

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Item 11. Security Ownership of Certain Beneficial Owners and Management Security ownership of certain record and beneficial owners of five per centum (5%) or more of the outstanding capital stock of the Registrant as of March 31, 2013:

Title of Class

Name and Address of Record Owner

and Relationship with 2GO

Name of Beneficial Owner and

Relationship with Record Owner

Citizenship

No. of Shares

Held

Percent of Class

Common 0 Negros Navigation Co., Inc.

Pier 2, North Harbor, Manila (PARENT COMPANY)

Negros Navigation Co., Inc. Authorized Representative: Mr. Sulficio O. Tagud Jr. President

Filipino 2,160,141,995 88.31%

NENACO, the parent company of the Registrant, is one of the oldest domestic shipping companies in the Philippines. It is 59.59% owned by KGLI-NM Holdings, Inc. and 39.88% by China-ASEAN Marine B.V. Security Ownership of Management – Record and Beneficial Owners as of March 31, 2013:

Title of Class

Name of Beneficial Owner and Position Citizenship Amount and nature of ownership

(Indicate record and/or beneficial) Percent of Class

Common Francis C. Chua Chairman of the Board, Independent Director

Filipino 1,000 – “direct” 9,000 – “indirect”

Record Owner: PCD Nominee Corporation (Filipino)

0.00%

Common Sulficio O. Tagud, Jr. President and CEO

Filipino 1,000 – “indirect” Record Owner: PCD Nominee Corporation

(Filipino) 0.00%

Common Jeremias E. Cruzabra CFO, Treasurer, CIO

Filipino 1,000 – “indirect” Record Owner: PCD Nominee Corporation

(Filipino) 0.00%

Common Nelson T. Yap Director

Filipino 1 – “direct” 0.00%

Common Mark E. Williams Director

American 1,000 – “indirect” Record Owner: PCD Nominee Corporation

(Non-Filipino) 0.00%

Common Geoffrey M. Seeto Director

Australian 1 – “direct” 0.00%

Common Raul Ch. Rabe Independent Director

Filipino 1,000 – “indirect” Record Owner: PCD Nominee Corporation

(Filipino) 0.00%

Common Patrick Ip Director

Chinese 1 – “direct” 0.00%

Common Monico V. Jacob Independent Director

Filipino 1 – “direct” 0.00%

TOTAL 1,004 ”direct”; 13,000 “indirect”

Security Ownership of the Directors and Officers in the Registrant as a Group: Common is 14,004 shares; Preferred – none. Voting trust holders of 5% or More No person holds more than five per centum (5%) of a class under a voting trust agreement or similar arrangement. Changes in Control In December 28, 2010, NENACO purchased the shareholdings of AEV in 2GO comprising 1,889,489,607 common shares at a purchase price of approximately PhP3.55 billion and the shareholdings of ACO in 2GO comprising 390,322,384 common shares at a purchase price of approximately PhP734 million. In February 2011, as a result of the mandatory Tender Offer, NENACO purchased an additional 120,330,004 common shares in 2GO.

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On December 21, 2012, NENACO caused the sale of 240,000,000 common shares of stock that NENACO holds in 2GO, at a price of P1.65 per share, via regular Block Sale and through the facilities of the Philippine Stock Exchange, to the following unrelated third parties:

1. R A L Holdings and Equities Corporation – 119,000,000 common shares; 2. BIVI Realty Development Corporation – 80,000,000 common shares 3. East Asian BBB Realty, Inc. – 41,000,000 common shares

NENACO now owns 2,160,141,995 common shares of 2GO, equivalent to 88.31% of the total outstanding common shares of the Company. Item 12. Certain Relationships and Related Transactions In the ordinary course of business, the Registrant has transactions with fellow subsidiaries, associates, and other related companies consisting of ship management services, charter hire, management services, courier services, purchases of steward supplies, availment of stevedoring, arrastre, trucking, rental and repair services. The Registrant needs these services to complement its services to the freight and passage customers. The identification of the related parties transacting business with the Registrant and how the transaction prices were determined by the parties are discussed in the Note 24 of the consolidated financial statements. The Registrant will continue to engage the services of these related parties as long as it is economically beneficial to both parties. The Corporation has no transaction during the last two years or proposed transaction to which it was or is to be a party in which any of its directors, officers, or nominees for election as directors or any member of the immediate family of any of the said persons had or is to have a direct or indirect material interest. Moreover, 2GO and its subsidiaries do not have existing or proposed transactions with parties that are considered outside of the definition of “related parties” but have the influence of negotiating the terms of material transactions that may not be available to other, more clearly independent parties on an arm’s length basis.

PART IV – CORPORATE GOVERNANCE

In compliance with SEC Memorandum Circular No. 5, Series of 2013, the Company undertakes to submit its Annual Corporate Governance Report on or before May 30, 2013.

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PART V - EXHIBITS AND SCHEDULES Item 14. Exhibits and Reports on SEC Form 17-C a) Exhibits - See accompanying Index to Exhibits

The exhibits, as indicated in the Index to Exhibits are either not applicable to the Company or require no answer.

b) Reports on SEC Form 17-C During the last six months of CY 2012, the Company filed the SEC 17-C report. The list of the reports submitted to the Commission is as follows:

Date of Report Title of Report Item No. Item Title

Dec 21 Sale of 240 Million Shares of Negros Navigation Co., Inc. in 2GO Group, Inc. 9 Other Events

Oct 25 Board of Directors’ Approval on the Mandatory Redemption of Redeemable Preferred Shares 9 Other Events

Oct 05 Compliance with SEC Memorandum re Guidelines for the Assessment of the Performance of Audit Committees of Companies Listed in the Exchange

9 Other Events

Jun 01 Appointment of Members of the Board Committees, Executive Officers and External Auditor 4

Resignation, Removal or Election of Registrant’s Directors or Officers

33