1998 First Quarter Performance

May 8, 1998 PSE CIRCULAR FOR BROKERS NO. 976-98 May 7, 1998 Securities & Exchange Commission Director Linda A. Daoang Money Market Department S.E.C. Building, EDSA Mandaluyong City Philippine Stock Exchange Ms. Maria Isabel T. Garcia Head, Listing Department PSE Center, Exchange Road Ortigas Center, Pasig City SUBJECT : 1998 First Quarter Performance Gentlemen : We are pleased to inform you of the highlights of the consolidated financial performance of Ayala Corporation for the first quarter of 1998, to wit: Ayala Corporation posted P3.02 Billion for the first quarter of 1998, for a year-on-year growth of 58%. This includes one-time gains which came from the sale of Ayala Land shares in March. Factoring this out, recurring profits stood at P1.82 Billion, which is the same level as last year. With an established recurring earnings base, the conglomerate's net income performance continues to be stable amid pressures from the economic front. Ayala's real estate subsidiary, Ayala Land, Inc., posted a consolidated net income of P803 Million, 43% lower than the previous year as high interest rates and a weak peso slowed down demand on overall property sector. With equal emphasis on projects on stream, Ayala Land continues to build on its long-term competitiveness by expanding its rental portfolio, which presently accounts for about 25% of the company's consolidated revenues. The Bank of the Philippine Islands registered a net income of P1.5 Billion for an increase of 3% from last year's P1.45 Billion, with a return on equity of 24.7% and return on assets of 3%. Total deposits grew by 22% to P158.6 Billion as the bank's nationwide network of 422 branches continue to provide a stable source of funding for its loan portfolio growing by 3.4% to P105.2 Billion. For the quarter, the Bank set aside additional P731 Million in loss provisions bringing their loan loss reserves level to 3.5% of the total loan portfolio. Globe Telecom recorded a net income of P6.3 Million due to continued growth in the company's subscriber base. Operating revenues increased to P1.02 Billion hefty increase from P513.7 Million revenues generated from the same period last year. With a positive EBITDA of P416.7 Million, Globe remained on track to achieving its second milestone as the company registered a positive EBIT of P107.9 Million and a positive cash flow from operations of P279 Million for the first quarter of 1998. Globe Telecom continues to expand its market share while pursuing its roll out and network expansion projects to achieve its operational targets and long term profitability goals. Integrated Micro-Electronics, Inc. recorded a net income P82 Million, 16% higher than the same period last year. Revenues increased by 28% to P740 Million. IMI's Special Business Group, which is into contract manufacturing of electronic products, contributed 74% of revenues. The balance of 26% came from its subsidiary, Electronic Assemblies, Inc., which specializes in printed circuit board and electronic product assembly with turnkey capability. cdt Ayala Insurance Holdings Corporation's net income of P87.7 Million was 55% lower than the P194.9 Million posted for the same period last year. While premium growth remained stable at 21%, the sluggish performance of the stock market offered few opportunities for capital gains from its investment portfolio. Pure Foods posted losses as operating divisions turned in mixed results during what is normally the company's soft selling period. While sales of its major products remained stable, the company experienced higher cost of raw materials caused by the depreciation of the peso resulting in reduced margins, particularly in flour. The high interest rate environment likewise created pressure on the company's interest expense growing by almost 100%. Ayala Corporation sees 1998 as another challenging year although it continues to see it with much potential and opportunity for the Group. For 1998, Ayala will continue to focus on preserving the soundness of its balance sheet to ensure flexibility to take on opportunities as they arise. On the back of its first quarter results, the Company is confident that it will deliver a stable stream of earnings across its business groups. The foregoing is submitted in compliance with the rules of the SEC and the PSE. Very truly yours, (SGD.) RENATO O. MARZAN Managing Director