PSE Circular for Brokers No. 230-98

February 27, 1998 PSE CIRCULAR FOR BROKERS NO. 230-98 PRESS RELEASE KEPPEL PHILIPPINES GROUP REPORTS SLIGHT DROP IN OPERATING PROFIT The Keppel Philippines Group recorded revenue of P790 million in 1997, 8% lower than in 1996. Group operating profit, however, dropped only 5% of P123 million. Pre-tax profit was P206 million. Interest and other income were lower, while contributions from associates improved slightly to P47 million due to better results from KMP Engineering and Emerging Market Capital Holdings. Keppel IVI Investments and Subic Shipyard reported lower earnings. The weakness of the money and capital markets in the country affected the performance of Keppel IVI Investment, while stiff competition in the international shiprepair market affected Subic Shipyard's margins. Contributions from the power barge operations of Keppel Fels Energy and Keppel Fels Energy Manila were maintained. cdlex Domestic shipping was affected by the devaluation of the Peso caused by the economic turmoil in the second half of the year. The introduction of additional tonnage brought about by the deregulation of the shipping industry and competition from the domestic airlines in the inter-island passenger trade also caused many local shipowners to streamline their operations. As a result, a lower level of repair activities was reported at Kepphil Shipyard and Cebu Shipyard. The regional currency crisis is expected to result in weaker growth in the Philippine economy in 1998. However, the devaluation of the Peso will enhance the competitiveness of our yards in the international repair market. In property development, the basement car park structure at Benguet Center is expected to be completed by the third quarter of 1998. A modest contribution from parking fees is expected. In the wake of the current economic uncertainties, the Group shall continue to develop its human resources and implement cost control and productivity improvement programs. Barring unforeseen circumstances, the Group expects profits to be maintained in the current year.