PSE Circular for Brokers No. 1789-98

July 31, 1998 PSE CIRCULAR FOR BROKERS NO. 1789-98 July 30, 1998 PHILIPPINE STOCK EXCHANGE, INC . Exchange Road, Ortigas Center Pasig, Metro Manila Attention: Ms . Ma . Isabel T . Garcia Head, Listings Group Gentlemen : We are pleased to report the first semester results for Aboitiz Equity Ventures, for the period January 01, 1998 to June 30, 1998. We ended the period with a net income of 1,094 billion pesos representing a 107% increase from last year, inclusive of one time gains and costs associated with the sale of our investments in Republic Cement Corporation and Pilipinas Kao, Inc. On a recurring earnings basis, AEV's net income for the first half of 1998 is 603 million pesos, 20% better than comparable 1997 recurring earnings for the period. For the half year, financial services was our largest operating contribution with 245 million, closely followed by electricity with 239 million, while our portfolio investments added 25 million. Parent company income was 93 million, and the net contribution from gains and costs from our asset sales was 491 million. The second quarter net income of AEV increased 70% to 456 million from 268 million in the same period in 1997. Again, looking only at recurring earnings, there was a 32% earnings improvement to 337 million pesos from last years 255 million. In the second quarter, the electricity group was the largest contributor with 139 million, while financial services added 127 million. Our portfolio investments contributed 49 million. Non-operating parent company net income was 22 million. Gains from the Pilipinas Kao sale and the forex position associated with our asset sales accounted for the balance of 119 million pesos. Revenues for the first half of 1998 improved 34% to 2,324 million from 1,740 million in 1997. As of June 30, 1998, compared to the same date in 1997, investments and advances were up 37% to 8.19 Billion. Total Assets up 3% to 13.4 billion and Stockholders' Equity up 10% to 11.08 billion Pesos. Liabilities decreased 21% to 2.29 billion, reducing the company's leverage ratio to 17%. Attached are summary schedules of the 1998 first half financial results. Very truly yours, ABOITIZ EQUITY VENTURES, INC. By: (SGD.) JUAN ANTONIO E. BERNAD SVP Chief Financial Officer ANNEX A ABOITIZ EQUITY VENTURES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS AT JUNE 30, 1998 AND DECEMBER 31, 1997 (Amounts in Thousands) (UNAUDITED) JUN 1998 DEC 1997 ASSETS Property, Plant, and Equipment net 2,236,653 2,202,885 Investments and Advances 8,193,086 6,957,880 Other Assets 319,204 191,206 Current Assets Cash and cash equivalents 1,099,344 493,965 Short-term cash investments 259,333 Marketable equity securities 17,157 583,622 Funds held in trust 642 115,590 Receivables, net of allowance for doubtful accounts 992,981 1,233,919 Inventories 437,905 418,074 Condominium units for sale 77,301 75,366 Prepayments and other current assets 23,886 60,290 Total Current Assets 2,649,216 3,240,159 13,398,159 12,592,130 ======== ======== STOCKHOLDERS' EQUITY AND LIABILITIES Stockholders' Equity 11,082,500 10,081,144 Minority Interest 22,555 21,622 Long-Term Debt net of current portion 717,786 691,411 Customers' Deposits 501,711 481,457 Current Liabilities Loans Payable 544,007 804,889 Accounts payable and accrued expenses 375,664 368,294 Income tax payable 66,046 38,023 Current portion of long-term debt 48,775 66,871 Estimated liability for property development 39,116 38,419 Total Current Liabilities 1,073,608 1,316,496 13,398,159 12,592,130 ======== ======== ANNEX B ABOITIZ EQUITY VENTURES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE PERIOD ENDED JUNE 30, 1998 AND 1997 (Amounts in Thousands) (UNAUDITED) JAN-JUN/98 JAN-JUN/97 APR-JUN/98 APR-JUN/97 GROSS INCOME FROM OPERATIONS 2,323,705 1,740,123 1,258,396 928,729 COST AND EXPENSES 1,970,365 1,450,442 1,061,024 789,796 INCOME FROM OPERATIONS 353,340 289,681 197,372 138,933 OTHER INCOME EXPENSES Equity in net earnings of investee 335,858 245,299 214,139 136,377 Interest net 16,480 86,527 (10,441) 38,827 Minority interest in earnings of consolidated subsidiaries (1,620) (3,626) (952) (1,709) Others 502,394 12,285 130,471 1,891 853,112 340,485 333,217 175,385 1,206,452 630,166 530,589 314,318 PROVISION FOR INCOME TAX 112,598 102,044 74,977 46,264 NET INCOME 1,093,854 528,122 455,612 268,054 RETAINED EARNINGS AT BEGINNING OF YEAR 3,504,058 2,737,004 RETAINED EARNINGS AT END OF YEAR 4,597,912 3,265,126 EARNINGS PER SHARE 0.20 0.10 ANNEX C ABOITIZ EQUITY VENTURES, INC. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS For the Periods Ended June 30, 1998 and 1997 (Amounts in Thousands) (Unaudited) JAN-JUN/98 JAN-JUN/97 APR-JUN/98 APR-JUN/97 CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period used in operation activities 1,093,854 528,122 455,612 268,054 Depreciation 80,340 53,816 41,180 28,959 Amortization of deferred retirement cost 687 (1,946) Unrealized foreign exchange gain net of losses 2,778 (33,030) Provision for deferred income tax (10,308) 71 2,147 (113) Provision for doubtful accounts Provision for decline in marketable securities 86,880 3,347 Equity in net earnings of affiliates (335,858) (245,299) (214,139) (136,377) Cash Dividends Received 69,206 81,489 60,199 59,819 Income applicable to minority interest 1,620 3,626 952 1,709 Gain on sale of shares of stock (668,272) 31,659 (116,959) 32,499 Changes in: Decrease (increase) in operating current assets 255,576 (350,220) 34,468 (252,099) Increase (decrease) in operating current liabilities 48,556 109,626 18,924 (79,504) Net cash provided by operating activities 624,373 213,778 252,701 (78,998) CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment net (114,108) (211,968) (37,691) (130,167) Additions to investments in shares of stock and advances (968,556) (562,203) 156,739 (204,631) Decrease (increase) in short-term cash investments 259,333 (206,463) (38,469) Disposal (acquisition) of marketable equity securities 1,147,857 3,506 123,998 Decrease (increase) in: Fund held in trust 114,948 720,720 69 338,427 Other assets (127,998) (15,904) (42,969) 1,712 Net cash flows used by investing activities 311,476 (272,312) 200,146 (33,128) CASH FLOWS FROM FINANCIAL ACTIVITIES Proceeds from (payments of) long-term debt 26,375 284,659 26,375 (4,786) Proceeds from (payments of) loans payable (253,533) 945,160 (510,557) 958,932 Increase (decrease) in minority interest (687) 5,852 (40) (508) Purchase of treasury shares (92,499) (130,195) (89,235) (130,195) Net cash provided by financing activities (320,344) 1,105,476 (573,457) 823,441 Effect of foreign exchange rate changes (10,127) 51,427 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 605,379 1,046,941 (69,183) 711,314 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 483,965 569,150 1,169,526 903,077 CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD 1,099,344 1,616,392 1,099,344 1,616,391