PSE Circular for Brokers No. 2669-99

October 19, 1999 PSE CIRCULAR FOR BROKERS NO. 2669-99 THE SUMMIT ECHO A quarterly summary of results from JG Summit Holdings, Inc. As of June 30,1999 UNIVERSAL ROBINA CORPORATION URC posted consolidated net sales of P10.17 billion for nine months ended June 30, 1999, up by 16.24% over the same period last year. This high revenue growth was due primarily to the continued solid performance of its core branded consumer foods and the sustained recovery of the hog and poultry businesses. Gross margin increased by 7.17% to P2.93 billion, while income from operations grew by 5.71% to P1.23 billion. URC improved its operating expenses as percentage of net sales at 16.70% of sales, a decrease of 1.23% from the same period last year. A net charge of P335.03 million was incurred, largely due to interest and other financing charges. Net income amounted to P665.08 million, a decrease of 26.02% from P899.03 million earned for the same period last year. URC's Branded Consumer Foods registered a high 20.7.% growth in revenues, on the back of a 16.9% increase in volume. This is mainly attributed to the continued strong performance of the Company's snackfood, candy, chocolate and biscuit categories. URC's snackfood currently enjoys 50.1% market share, while URC's biscuits vaulted to number two position with the strong performance of Magic Flakes cracker. The Company expects the branded consumer foods business to maintain its remarkable revenue growth over the medium term in anticipation of its exciting new product launches and solid advertisement and promotion campaign. Categories Est. Market Share (Value) Rank Snacks 50 1 % 1 Biscuits 17.2% 2 Candies 38.7% 1 Chocolates 22.4% 1 Pouch Noodles 13.4% 3 Cup Noodles 33.8% 2 Instant Coffee 8.9% 2 3-in-1 Coffee Mix 56% 1 Canned Beans 63% 1 Tomato Sauce 18% 2 Ice Cream 9% 3 The Agro-Industrial Business was driven by the strong performance of the hog and poultry operations. Robina Farm's revenues grew by 24.0% as compared to the same period last year. Both broiler and layer day-old chicks (DOCs) enjoyed sustained high prices (at P16.00 and P22.50, respectively) due to the continued industry-wide short supply situation. URC currently enjoys 40% and 50% market shares in the broiler and layer DOC categories, respectively Sales of live hogs increased by 5.3% in volume, priced at about P60.00 per kilogram liveweight. The sow population stands at 15,000 heads, the third largest in the industry. URC's feed volume increased by 19.8% mainly due to increased layer and hog feeds sales. However, feed prices decreased industry-wide, across product lines. Robichem posted a 25.1 % improvement in revenue mainly attributed to its new product lines, expanded distribution network and growing business with the integrators. The Commodity Foods Business registered a 13.8% decline in revenues. Flour sales dropped by 15.6%, with very minimal trading of wheat grains during the period. Sugar sales decreased by 11.4%, mainly affected by the delay in sugar harvest, the consequence of last year's El Nino phenomenon. URC is building a new plant in Calamba for P800 million to expand its lines for snackfood, biscuits and confectionery. It is also expanding its pasta manufacturing facility at a cost of P200 million. ROBINSONS LAND CORPORATION RLC earned P1.743 billion revenue for the first nine months of FY 1999. The Company posted a net income of P461.66 million for the period, slightly lower than the P488 million gained last year. The largest income contributor remains to be the Commercial Center Division with continued rental improvements in its existing malls and excellent take-up of new malls. Income from hotel operations is still down but occupancy-rates are within satisfactory level. Demand for residential condominium spaces picked up during the period, benefiting the Robinsons Place Residences project, which has been steadily enjoying good market reception. Earnings from RLC's housing division are expected to improve with the positive performance of the low-cost housing sector this year. RLC is currently working on the 5th floor of the P2.5-billion 38-storey Robinsons Place Residences in Ermita, the 8th floor of the P2.5-billion 37-storey JG Summit Center at Ayala Avenue, and finished the substructure of the P2-billion Galleria Hotel and Residential Condominiums. This hotel project will have 260 rooms topped by 12 floors of high-end residential units. Hotels Total No. of Rooms 1,136 Ave. Occ. Rate (for 9 months) - June 1999 64% - June 1998 60% Ave. Room rate (for 9 month) June 1999 P1,892 - June 1998 P1,622 Ave. Monthly Revenue P70 million (RLC is also set to build seven commercial centers over three years at a total cost of P4 billion:); Robinsons Place-Cebu (currently under renovation); Robinsons Place-Manila expansion (June 2000); Los Baos, Laguna (September 2000); Novaliches along Quirino Highway (December 2001), Cainta, Rizal (December 2001); San Fernando, Pampanga (2001); and, Iloilo City (2001). cdll Commercial Centers Total Number of malls 7 Gross Floor Area (square meters) 540,579 Gross Leasable Area 297,349 Ave. Occ. Rate (as of June '99) 94% Ave. Rent/square meter 253.29 Ave Monthly Revenue P96 million Housing Total Land Area (square meters) 1,427,845 Ave. Lot size 83 No. of Housing Units 9,393 Ave. Selling Price (P) 442,484 Units Sold To-Date (as of June '99) 4,317 Robinsons Galleria Hotel & High-Rise Buildings Robinsons Place JG Summit Residential (as of March 1999) PCIBank Tower Residence Center Condominium Lot Area 2,832 2,560 2,433 2,415 (square meters) Gross Floor Area 81,998 114,500 59,463 59,548 Net Floor Area - Saleable 37,927 43,890 17,058 13,528 - Leasable 12,500 12,000 16,013 Total 50,427 55,890 33,071 13,528 Building Cost P1.43 billion P2.29 billion P1.49 billion P1.49 billion Ave. Net Selling 66,363.61 64,490.00 P81 ,443.90 P70,000.00 Price/square meter DIGITAL TELECOMMUNICATIONS Digitel's operating revenues rose to P1.73 billion for the six months ended June 30, 1999, a 23.8% growth from P1.40 billion for the same period last year. This growth is fueled by the combined effects of continuing subscriber growth and increase in inbound revenues due to activation of direct circuits with foreign administrations. The said increase, however, was partially offset by the impact of the reduction in total accounting rate (TAR) in April 1999. Digitel posted a net income of P81.3 million for the first half this year compared with P329.5 million last year. The substantial decrease of 75.2% was brought about by the increased depreciation charges and higher interest and financing charges. EBITDA however improved by 29.5%, from P940.9 million to P1.22 billion. Digitel is the most aggressive industry player this year in terms of investments and capacity expansion. The Company is investing US$80 million to bring up its total capacity to 600,000 lines. Digitel is also ready to invest US$100 million in a mass-based cellular phone service once it obtains a license from the government. As of June 1999, Digitel has already installed 530,000 lines, with a subscriber base of 222,463. It is now the second largest telecommunications company in terms of installed capacity, and ranked third in the island of Luzon for total number of installed lines. These achievements are attributed to the following successful programs and services: (1) Data Communications & Internet services with DigitelOne as the brand name; (2) "Katok-Kabit" program, where subscribers pay only P2,000 for instant connection; (3) "Circle of Friends" referral program; (4) Bulk Sales Program; and, (5) Premium Subscriber Program. CEBU PACIFIC AIR Cebu Pacific earned a net income of P201:0 million for the first six months of operations in 1999. Passenger volume increased by 83%, as Cebu Pacific currently enjoys a 32% market share in its routes. It is now the second largest domestic airline in terms of passengers carried. On time performance for the period stands at 82%, with 95% of flights departing within 15 minutes of schedule. Cebu Pacific will acquire two more DC-9s to beef up its fleet to 12. It will also build a hangar in Cebu for P70 million, in a strategic move to put its Cebu hub at par with that of Manila. The airline is also investing P54 million in the computerization of its maintenance and parts inventory systems, a fuel farm and a program for frequent flyers. JG SUMMIT TEXTILE GROUP The Textile Group registered an 11% increase in revenue for the first half of the year at P1.36 billion. This positive result is mainly attributed to improving operating efficiencies (operated only one plant for the period), favorable world cotton prices and recovering foreign exchange. Other factors that influenced this accomplishment include: (1) favorable exports condition and expanded businesses with large garment manufacturers (Oshkosh, JC Penney, Old Navy of Gap); (2) improved product quality and development of new products; (3) ISO-90Q1 certification of Litton Mills; and (4) Litton's strategic alliance with Swift-USA. The Savannah Yarn-Plant was re-opened in view of the emerging polyester fabric trend. This required an investment of about P18 million for capacity expansion (additional yarn capacity of 190 tons) and reworks. JG SUMMIT PETROCHEMICAL CORPORATION JGS Petrochem (LGSPC) earned P1.50 billion in revenue for the first six months of FY 1999. The JGSPC plant increased its overall utilization rate to near 50%. In the polyethylene (PE) market, JGSPC competes with imports mostly from Korea, Saudi Arabia, Malaysia, Singapore, and Thailand. The company enjoys leading market shares in both the linear low-density polyethylene (LLDPE) and the high-density polyethylene (HDPE) markets. The polypropylene (PP) market is more crowded, with Petrocorp and imports. During the first half of the fiscal year, major oil companies commenced bulk orders of HDPE blowmoulding grade used for lube oil packaging. Additional volumes were served to existing customer base in the polypropylene film, houseware and sack-making industries. The plant is currently undergoing ISO 9000 certification activities. A major milestone was accomplished during the period, with the plant's first million manhours free of lost time due to accident attained. JG SUMMIT FINANCIAL PERFORMANCE June 30,1999 vs. December 31,1998 As of June 30, 1999, the Company has consolidated assets of 104.8 billion, a decrease of 8.1% from P114.1 billion million at the end of 1998. The accounts of APO Cement and PCIBank were excluded in the balance sheet since the Company's interest in the two companies were disposed of during the first semester. The sale of APO and divestment in PCIBank has greatly improved the liquidity and solvency of the Company. The Company's current ratio as of June 30, 1999 stood at 2.54:1 compared to 1.29:1 as of year-end 1998. Proceeds from the sale were used, among others, to repay the Company's debt. Short-term debt, comprising of borrowings from local banks decreased by as much as 51.0%. Long-term debt, including current portion, decreased by 20.3%. This allowed the Company to have an improved debt-equity ratio of 1.09:1 compared to 1.72:1 as of year-end 1998. Stockholders' equity increased by 19.6% to P38.43 billion as of June 30, 1999 from P32.1 billion at the end of 1998 resulting from the substantial income earned for the period and the issuance of additional capital from the second tranche of the stock rights offering which commenced in July 1998. Book value per share as of June 30, 1999 was at P6.22.