1999 Third Quarter Performance

November 12, 1999 PSE CIRCULAR FOR BROKERS NO. 2878-99 11 November 1999 Securities & Exchange Commission Director Linda A. Daoang Money Market Department S.E.C. Building, EDSA Mandaluyong City Philippine Stock Exhange Disclosure Department Listing and Disclosure Group 4/F PSE Center, Exchange Road Ortigas Center, Pasig City llcd SUBJECT : 1999 Third Quarter Performance Gentlemen: We are pleased to inform you of the unaudited results of the consolidated financial performance of Ayala Corporation for the third quarter of 1999, as follows: Ayala Corporation reported a consolidated net income of P4.36 billion for the nine-month period ended September 30, 1999. Income from recurring operations grew by 12% from the year-ago level of P3.8 billion. Consolidated net income was lower by 18% from last year's third-quarter results of P5.29 billion, which included extraordinary gains of P1.4 billion. The company's traditional core businesses continued to be the major contributors with substantial improvements coming from its food and telecommunications sectors. The performance of the major businesses in the first nine months showed that Ayala Corporation has continued to strengthen its competitiveness in key sectors and as a group. It continues to view the changing economic and industry environment as an opportunity to reposition itself for long term leadership in key sectors. In banking, the Ayala Group, through holding company Ayala Corporation and BPI Capital Corporation, acquired approximately 20% of Far East Bank and Trust Co. from the Gokongwei Group. This acquisition eventually led to a merger agreement forged by BPI and FEBTC which would result in the largest financial services organization in the Philippines with a dominant franchise in all areas of banking. In telecommunications, Ayala entered into an agreement with Singapore Telecom and Duetsche Telekom leading to the planned merger of Globe Telecom and Islacom which would in turn, strengthen their leadership position in the digital cellular industry and position themselves as the leading alternative provider of telecommunications services in the country. A breakdown of net income performance by business segment shows that banking contributed 33%, property 31%, food 14%, telecommunications 6%, and the balance from parent company operations and other sectors. Globe Telecom posted a net income of P651 million, a significant increase from last year's P4.7 million. With a growing subscriber base of more than 700,000, the company recorded revenues of P6.5 billion. Globe captured more than 50% of new mobile subscribers in the first nine months of the year, raising its market share to 78% and making it the dominant company in the digital cellular market. The company's fixed-line service remained flat while its IGF (international gateway facility) operations reflected a 52% growth in net operating revenues. LibLex Pure Foods Corporation posted a consolidated net income of P626 million. Excluding one-time gains arising from the spin-off of its meats division, recurring income amounted to P513 million versus P58.7 million during the same period last year. Sales volume of meats grew by 32% as sales of its Tender Juicy and Beefies hotdogs rose to unprecedented levels. Its other product lines like flour and poultry contributed higher operating income on account of stable selling prices, improved efficiencies and higher consumer demand. LibLex Ayala Land, Inc. posted a consolidated net income of P1.85 billion. Land sales and lease income from commercial centers and office buildings contributed significantly to Ayala Land's consolidated operating revenues which amounted to P3.3 billion. The sale of Davao Insular Hotel and the three floors of Ayala Life-FGU Center to Pfizer helped augment the company's earnings in this generally soft market. LibLex In banking, Bank of the Philippine Islands registered a net income of P3.45 billion, lower by 12% from last year's P3.94 billion. Interest income amounted to P7.12 billion as yields on assets dropped and demand for loans remained soft. The Bank's non-performing loans remained in check at 6.6% and its loan loss reserve cover was maintained at 70% of the total loan portfolio. Along with these strategic moves, Ayala continued to focus on preserving the quality of its financials. The company's healthy balance sheet position has provided flexibility in pursuing opportunities such as the acquisition of Far East Bank share's. The cash outlay amounting P7 billion was fully covered with the company's strong liquidity position. As of September 1999, the company's consolidated balance sheet has grown to P133 billion with current assets accounting for P43 billion of consolidated assets and cash and cash equivalents at P20 billion. For the period ended September 1999, key financial ratios remained healthy at levels of 2.62 and 0.94 for current and debt-to-equity ratio, respectively. The company has capitalized on its traditional strength as platform for taking on emerging opportunities. Backed with sound financials, Ayala will continue to look for other strategic opportunities to redefine itself in key industries. The foregoing is submitted in compliance with the rules of the SEC and the PSE. prcd Very truly yours, (SGD.) RUFINO LUIS T. MANOTOK Managing Director & Head, Strategic Planning Group