PSE Circular for Brokers No. 295-00

February 9, 2000 PSE CIRCULAR FOR BROKERS NO. 295-00 February 8, 2000 La Tondea Doubles Net Income to P1B in 1999 La Tondea finished the year with a net income of P1.01 billion, almost double the P515 million made in 1998. Higher revenues, improved operating efficiencies, lower production costs, and significant reduction in interest expenses resulted in this record performance. llcd Sales revenues from its hard liquor, bottled water and juice businesses reached P10.55 billion, 8% higher than its P9.74 billion record in 1998. Operating income increased by 8% to P2.2 billion. As a result of earlier debt-reduction initiatives and lower financing charges, interest expense was reduced by 45%, from P1.3 billion at the end of 1998 to P721 million. Consequently, debt to equity ratio improved to 1.04, from 2.64 in 1997. In addition to the P1 billion shares issued to parent company San Miguel Corporation a year ago, the Company issued P1 billion worth of convertible preferred shares to BancAmerica Equity Partners and Orchid Asia Holdings. This equity infusion, coupled with strong cash flows from operations, funded the Company's acquisition of the Wilkins distilled water operations. The Company's board approved a cash dividend of 44.2 centavos for common and preferred shareholders as of record date of February 24, payable by March 24. This will bring the total cash dividend to P464 million, or 46% of the Company's 1999 net income. The Company continued to strengthen its leadership in the liquor market, posting a 5% volume growth in north Philippines, where its flagship product Ginebra San Miguel accounts for 70% of the market. La Tondea expects stronger market performance in the south following its successful launch of San Miguel Bravo Rum. This product shows solid growth potential in this rum-dominant region, with initial sales thus far exceeding targets. With improved market penetration and product availability, La Tondea's market share increased from 50% at the end of 1998 to 52% as of November 1999. With the acquisition of the Wilkins brand, the Company increased its bottled water volumes by 11% over that of last year. This was achieved in spite of the bottled water industry's 8% contraction. La Tondea's share of the bottled water market jumped from 20% to 49% after its acquisition of Metro Bottled Water Corp. last July, and grew further to 54% by yearend as distribution synergies began to be realized. The Company's ready to drink juice volumes increased by 5%, led by Magnolia Fruit Drink and FunChum Juice Drink. The recently-launched Magnolia Jr. Juice has further invigorated this segment, appealing strongly to young consumers. La Tondea remains the second largest player in the ready-to-drink segment with an overall market share of 20%. La Tondea expects to sustain its growth momentum as it maintains focus on continually improving production efficiency and strengthening trade distribution. It will continue to capitalize on the strength of its existing brands, even as it seeks to develop new businesses in line with its key strengths and competencies. With its very sound financial position, the Company will be able to take advantage of emerging business opportunities.