Metro Pacific Reports Full Year Profit of PhP329 million

February 22, 1999 PSE CIRCULAR FOR BROKERS NO. 311-99 February 19, 1999 PRESS RELEASE Metro Pacific Reports Full Year Profit of PhP329 million Metro Pacific Corporation ("MPC") announced today that its consolidated net income for the year ended 31 December 1998 reached PhP329 million from PhP/13 million in 1997. Revenues grew 34 per cent to PhP13.1 billion, bolstered mainly by the full-year effects of consolidating its investments in Bonifacio Land Corporation, the vehicle through which MPC participates in Fort Bonifacio Development Corporation ("FBDC"), and Landco Pacific Corporation ("Landco"), which develops properties outside Metro Manila Operating profit increased by 62 per cent to PhP2.8 billion; profit before other income, and after financing charges, decreased from PhP2.1 billion in 1997 to PhP1.8 billion for the current year. The Group reported net other expenses of PhP851 million for the current year, compared with net other income of only PhP4 million in 1997, as MPC exercised prudence by making provisions for possible lot returns or settlements with lot buyers at Fort Bonifacio Management remains confident, however, that accommodations will be reached in the near future to allow these provisions to be in part. Further prudent provisions for restructuring and bad debts were recorded in its shipping, packaging and bottled water businesses, offset by a foreign exchange gain. MPC also made excellent progress in reducing indebtedness over the course of the year as consolidated debt dropped 40 per cent to PhP48.3 billion, with interest-bearing liabilities down 46 per cent to PhP30.5 billion. Debt reduction which of management's major objectives at the start of 1998 was achieved by de-consolidating Smart's balance sheet, in anticipation of MPC selling a portion of its interest in Smart to Japan's Nippon Telegraph and Telephone Company, and following equity issues in 1998 amounting to PhP14 billion. As a result of its debt repayments, the consolidated debt-to-equity ratio improved to 71 per cent from 145 per cent at year-end 1997 while its gearing ratio decreased to 32 per cent from 69 per cent . MPC's President Napoleon Nazareno said, "I am pleased to note that Metro Pacific achieved its two major objectives for 1998: strengthening its balance sheet and re-focusing its resources on Fort Bonifacio and other property projects outside Metro Manila through Landco Pacific. We have big tasks ahead of us that require the financial strength and flexibility that very few property-related have in these times of tight liquidity and lower risk tolerance levels in the financial community. I am confident that we are well positioned to meet these demands." Operational Highlights At the Fort Bonifacio project, FBDC, which is controlled by MPC subsidiary Bonifacio Land Corporation, saw revenues decline 35 per cent to PhP6.0 billion. The company spent approximately PhP1.3 billion during the year on developing The Kalayaan interchange and the 57-hectare Big Delta, which represents the first phase of the centrally planned city. Now 67 per cent complete, the Big Delta should be 87 per cent finished by the end of 1999 and remains fully on track to be computed by 2000. Approximately PhP2 billion is expected to be spent on infrastructure and other developments this year and a further PhP1.7 billion the following year The total receivables collected for the year is Php2.1 billion of which PhP1.3 billion were principal payments. The receivables relate to the lots sold in 1996 for an aggregate of PhP28.4 billion, raising the total amount received thus far to PhP19.1 billion. Management decided to record provisions of PhP1.7 billion for possible lot returns or other settlements with lot buyers, representing approximately 6 per cent of the total price. Management remains confident, however, that acceptable arrangements will be reached with lot buyers, Which may permit the reversal of the provision in part. As of end 1998, the receivables outstanding after provisions were PhP7.6 billion, which are due to be paid primarily over the next three years. LexLib At Landco, weakness in the property market resulted in a decrease in property and club-share sales by 17 per cent to PhP1.8 billion. Substantial steps were taken to consolidate operations with a debt reduction scheme that cut indebtedness by 41 per cent to PhP422 million and a headcount reduction program that cut staff by 53 per cent to 290. Funds were raised in the third quarter by the issue to MPC of PhP800 million in the form of a three-year convertible bond and PhP129.8 million in new shares, increasing MPC's stake in Landco to 60 per cent from 40 per cent. Pacific Plaza Towers reported revenues of PhP117.8 million for 1998 from just PhP22.3 million in 1997 based on the percentage of completion achieved during the year Pacific Plaza Towers remains an attractive project on the strength of its contractors, SAE of France in partnership with EEI of the Philippines, and its designers the world-renowned Arquitectonica and Recio + Casas. The buildings were 17 per cent complete as of end 1998 and are progressing at approximately one floor per week. Topping-out is expected before year-end 1999 and units are to be turned over on full completion by mid 2000. cdll Smart continued to dominate the cellular phone market with a market share of 50 per cent and a subscriber base of 791,000 at year end 1998 up 27 per cent from the previous year's level. Its 458 operating cell sites for its ETACS network still provide the most extensive nationwide coverage of any cellular operator. Smart is expected to launch its GSM digital service in Metro Manila and key provincial cities within the first quarter with 257 GSM-activated cellsites. By the second quarter of the year, the system will be operational nationwide. Smart fixed line growth of 27 per cent to 108,000 subscribers was below target, reflecting the persistent problem in connecting to the PLDT network, prior to First Pacific's investment in that company. Aggregate revenues from all operations increased 67 per cent to PhP8.2 billion. Despite difficult market conditions, Negros Navigation Co., Inc. ("Nenaco") still reported a 20 per cent increase in consolidated revenues of PhP2.1 billion. This resulted from an increase in both cargo and passenger volumes. Cargo volume for conventional vessels increased 10 per cent to 2.2 million tons in 1998; passenger volume grew by 11 per cent to 2 million. In the meantime, Philippine Fast Ferry Corporation ("PFFC"), Nenaco's 50 per cent subsidiary, handled 4 million passengers following the recent merger of the fast ferry businesses of Nenaco's "Sea Angels" and Aboitiz/Parkview's "Supercats". cdt Apart from initiatives to cutback on overhead costs, Nenaco did well in consolidating its resources and embarking on a drive to enhance its national carrier status. This enabled the company to more than double its route network and started serving new ports of call. It also aimed to improved overall vessel utilization by effectively re-routing and re-scheduling its fleet. Nenaco's route network now covers 19 ports of call, from 15 in 1997, including Manila, Bacolod Iloilo, Cebu, Puerto Princesa, Davao, General Santos, Cagayan de Oro, Cotabato, Zamboanga, Iligan, Ozamiz, Nasipit, Surigao, Dumaguit. Estaneia, Roxas, Tagbilaran and Dumaguete. Metrolab, Metro Pacific's skin-care products subsidiary, registered a 17 per cent jump in sales to a record PhP950 million. Eskinol, its principal product line, continued to account for a significant portion on total sales, as it re-launched product lines aimed at young females and at men. The company also introduced new products in the facial care (Skin Reveal), deodorant (Master and Block and White) and hand-sanitizer (Purinse) markets, all of which received strong receptions from the market. cdlex Metro Bottled Water turned in a very strong sales performance in 1998 when revenues grew 60 per cent to PhP530 million. The growth attributable to a series of price increases and improved sales volume, aided by a more efficient distribution system. Its Wilkins Distilled Drinking Water enjoys dominant market position with its market share growing further by 22 per cent in 1997 to 28 per cent in 1998. Steniel Manufacturing Corporation holding MPC's packaging interests, showed a 15 per cent rise in turnover to PhP2.9 billion. The packaging group's performance was helped by the turnaround of its corrugated packaging division, which benefited from both higher revenues, related to higher volume sales and increased pricing, and cost reduction efforts. Meanwhile, steps were taken to reduce paper and manufacturing costs by bringing down wastage levels and improving production efficiencies. aisadc PDCP Bank faced significant challenges reflecting the difficult banking environment, which translated to a moderate net loss due mainly to restructuring Costs and provisions for possible loan losses. The bank, which came under new leadership, implemented an asset restructuring program, a realignment of its branch operations, systems and process flow, as well as a staff reduction program that cut staff by about 20 per cent to 800. Ten branches were closed cutting its network to 61 branches. For further information, please contact: Ms. Corazon P. Guidote Group Vice President, Corporate Communications and Investor Relations Telephone No.: 811-03-67 Mr. Jan Wilson Chief Financial Officer Telephone No.: 810-53-45