Metro Pacific Reports 20 -fold Rise in 1st Half Profits to Pesos 2.5 billion

August 5, 1999 PSE CIRCULAR FOR BROKERS NO. 1938-99 PRESS RELEASE Metro Pacific Reports 20 -fold Rise in 1st Half Profits to Pesos 2 . 5 billion Metro Pacific Corporation (MPC) reported today that net income rose more than 20 -fold to Pesos 2.5 billion in the first half from a year earlier, bolstered by extraordinary gains from the partial divestment of Smart Communications, Inc. to Japan's Nippon Telegraph and Telephone Corporation (NTT), as well as the sale of Metro Bottled Water Corporation to La Tondea Distillers, Inc. The effect of the disposals including the sales last year of packaging group company Starpack Philippines Corp. and Holland Pacific Paper, Inc., a paper-products group led to MPC's revenues increasing by only 1 per cent to Pesos 6.8 billion in the first half, and a 6 per cent decline to Pesos 3.7 billion in the second quarter. Operating profits declined by 9 per cent to Pesos 1.6 billion in the first half, and by 10 per cent to Pesos 880 million in the second quarter primarily because of losses recorded by Negros Navigation Company, Inc., which was acquired in April last year. The disposals, which were supplemented by the issue of Pesos 3.4 billion of new shares, helped reduce MPC's consolidated liabilities by 14 per cent to Pesos 43 billion at the end of the first half from a year earlier. While financing charges increased slightly by 6 per cent to Pesos 664 million in the first half, it fell sharply by 31 per cent to Pesos 330 million in the second quarter as MPC began to benefit from its aggressive debt reduction program. MPC's consolidated debt-to-equity ratio decreased to 0.57 at the end of the half from 0.71 in December 1998 and 0. 73 in June 1998. cdpr In addition to reducing debts, MPC's disposals enabled it to refocus its activities on property development through its landmark Fort Bonifacio project, as well as Landco Pacific Corporation and the Pacific Plaza Towers luxury condominium complex, which is rapidly rising on the Fort Bonifacio site. The Company will further reduce debt through the already announced sale of Metrolab Industries, Inc., which produces Eskinol and other leading skin-care products, to Sara Lee Philippines, Inc. for Pesos 1.02 billion. MPC also plans to exchange its remaining 38 per cent in Smart for approximately 8 per cent of Philippine Long Distance Telephone Company, which is valued at approximately Pesos 14.5 billion by end of the year. Mr. Napoleon Nazareno, MPC's President and CEO, said: "MPC is well on its way to becoming a sharply focused property group, with low debt and high growth potential. We have made exceptional headway over the past year in paying down debts and bringing down our financing costs. It is clear that further progress will be achieved in the second half. I fully expect the year to close with a very strong and competitive MPC." Operational Review In the face of uncertain sentiment toward the property market, Fort Bonifacio Development Corporation (FBDC) which is 55 per cent held by the MPC's 67 per cent owned Bonifacio Land Corporation continued to make good progress. Revenues fell slightly by 4 per cent to Pesos 2.4 billion. The majority of revenues was derived from the sale of land in 1996, which is booked on a percentage of completion basis for the 57-hectare first phase of the project known as the Big Delta. As of end June 1999, Big Delta was 76 per cent complete, with full completion targeted for the end of the first quarter of next year. In May 1999, FBDC launched Bonifacio Ridge, a 25-year leasehold residential condominium project comprising four buildings with a total of 576 units that are being leased over 25 years for Pesos 4.5 million to Pesos 6.5 million each depending on the unit's location and orientation. The three-year project calls for the first two buildings to be built between September this year and early 2001, and the second two buildings to be built between June 2000 and early 2002. Reservations have already been made for approximately 175 units in the first two buildings. Strong business traffic continued to be recorded at The Fort FBDC's restaurant and entertainment complex, which opened in November last year. Construction is to begin in the fourth quarter on an enlarged retail and entertainment center, which will increase the size of the area from the current 3,500 square meters to approximately 100,000 square meters by late 2001. Pacific Plaza Towers, the high-end residential condominium project being developed by MPC in partnership with the Government's Bases Conversion and Development Authority, as of end June was 34 per cent complete. Construction is currently on the 40th floor of the two-tower 53-storey project, and is progressing at a rate of approximately one floor per week. Topping off is expected by end of this year, and full completion by the third quarter of next year. During the first half, a further 26 units were sold at an average price per unit of Pesos 30.5 million (exclusive of VAT), increasing total sales to 203 units. Landco Pacific Corporation, which develops property outside Metro Manila and is 60 per cent owned by MPC, recorded a 30 per cent increase in sales to Pesos 358 million. Nearly half of its revenues was derived from the luxury seaside Punta Fuego project. At end June, the project's villas were fully sold at an average price of Pesos 30 million per unit, its open lots were 85 per sold at an average price of Pesos 10,000 per square meter, and its country club shares were 24 per cent sold at an average price of Pesos 900,000 each. Nearly a quarter of Landco's revenues derived from sales of The PDCP-Landco Corporate Center in Davao, which at end June was 90 per cent complete and 36 per cent sold at an average price of Pesos 53,000 per square meter. prcd Table 1 MPC's Asset Disposals (1998 to 1999) Gross % Held/ Proceeds Date Affiliate % Sold (Pesos m) Buyer 07/98 Holland Pacific Paper 100/100 37 SCA Hygiene 12/98 Starpack Philippines 44 * /44 700 VAW Europack 03/99 Smart Communications Inc. 52 * /14 1,638 ** Nippon Telegraph & Telephone Corp. 06/99 Metro Bottled Water Corp. 100/100 1,200 La Tondea Distillers 08/99 Metrolab Industries, Inc. 100/100 1,020 Sara Lee Phils., Inc. * Effective interest ** Peso equivalent of US$42 million. Table 2 Capital Changes as of end June 1999 New Shares Price Shares Issued per share Proceeds Outstanding Date (million) (Pesos) (Pesos m) (million) 31/12/98 16,875.2 19/01/99 440 2.03 893.2 05/03/99 400 1.80 720.0 14/04/99 200 2.10 420.0 30/01/99 200 2.04 408.0 30/06/99 480 1.97 945.6 1,720.0 Total 1,720 1.97* 3,386.8 18,592.2 * Average issue price For further information, please contact: Ms. Corazon P. Guidote Group VP Corporate Communications and Investor Relations Metro Pacific Corporation Telephone No.: 811-03-67 Mr. Ian Christopher Wilson Chief Financial Officer Metro Pacific Corporation Telephone No.: 810-53-45 METRO PACIFIC CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) As at 30 June 31 December 30 June (in thousands) 1999 1998 1998 ASSETS Current assets Cash and cash equivalents 1,434,425 2,571,590 2,740,975 Receivables 6,317,268 6,016,094 5,497,344 Due from affiliated companies 675,272 831,257 584,708 Inventories 848,254 874,429 1,309,844 Development properties held for sale 2,887,005 2,286,912 4,819,484 Prepayments and other current assets 829,592 1,202,553 2,691,724 Deferred income tax asset 852,774 900,376 133,148 Total current assets 16,844,590 14,683,211 17,777,227 Long-term receivables 5,234,083 6,407,460 9,874,239 Investments in affiliated companies 8,928,616 8,361,160 8,447,322 Development properties 73,277,437 72,732,718 67,727,276 Property, plant and equipment 5,135,073 6,288,273 7,386,150 Goodwill 387,163 467,240 13,176 Other assets 7,334,083 7,257,637 6,204,394 Total assets 117,141,045 116,197,699 117,429,784 LIABILITIES AND EQUITY Current liabilities Loans and notes payable 7,387,264 7,519,977 9,681,335 Current portion of long-term debts 890,092 718,906 708,102 Current portion of long-term liabilities 2,131,812 2,194,571 1,430,420 and provisions Accounts payable and accrued expenses 3,111,196 3,946,142 3,994,725 Income tax payable 20,341 7,167 5,596 Total current liabilities 13,540,705 14,386,763 15,820,178 Long-term debts 13,477,940 16,147,498 13,162,321 Long-term liabilities and provisions 15,740,435 17,777,114 20,462,845 Equity Stockholders' equity Capital stock 17,721,105 16,877,664 4,707,460 Additional paid-in capital 8,834,182 8,318,053 6,653,342 Deposit on stock subscriptions 1,769,410 - 14,000,000 Retained earnings 4,902,761 2,413,387 2,201,843 Outside interests 41,154,507 40,277,220 40,421,795 Total equity 74,381,965 67,886,324 67,984,440 Total liabilities and equity 117,141,045 116,197,699 117,429,784 ** 1996 figures have been restated to be comparable with 1999 data, involving the deconsolidation of Smart Communications, Inc. consistent with the change in policy described in detail in the annual report. Current Ratio 1.24 1.02 1.12 Quick asset Ratio 0.84 0.65 0.56 Debt to Equity Ratio 0.57 0.71 0.73 Gearing Ratio 0.23 0.32 0.31 METRO PACIFIC CORPORATION CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited) For the period ended 30 June Six months Three months (In thousands) 1999 1998 * 1999 1998 * Revenues 6,768,582 6,681,308 3,696,950 3,922,321 Cost of sales 4,091,441 3,991,687 2,321,074 2,400,398 Operating expenses 1,043,509 897,482 95,101 539,339 Operating profit 1,633,632 1,792,139 880,775 982,584 Equity in net earnings of affiliated companies 7,910 168,945 (28,086) 116,393 Financing charges, net (664,477) (627,218) (330,904) (476,892) Profit before other income 977,065 1,333,866 521,785 622,085 Other income/(expense), net 2,345,588 74,302 373,272 (9,919) Profit before taxation 3,322,653 1,408,168 895,057 612,166 Taxation 160,538 159,156 55,179 7,432 Net income before outside interests 3,162,115 1,249,012 839,878 604,734 Outside interests (672.741) (1,131,618) (404,553) (594,173) Net income for the period 2,489,374 117,394 435,325 10,561 Retained earnings Beginning of period 2,413,387 2,084,449 4,467,436 2,191,282 Dividends paid - - - - End of period 4,902,761 2,201,843 4,902,761 2,201,843 Earnings per share (in centavos) Basic 14.19 1.81 2.43 0.13 Fully diluted 13.82 1.40 2.37 0.10 Weighted average number of shares in issue Basic 17,544,193 6,487,212 17,918,269 8,282,203 Fully diluted 18,011,895 8,371,775 18,385,971 10,166,767 * 1998 figures have been restated to be comparable with 1999 data involving the deconsolidation of Smart Communications, Inc. consistent with the change in policy described in detail in the annual report