First Pacific Company Limited

3^rd March 1997

FIRST PACIFIC’S 1996 PROFIT UP 32 PER CENT TO HK$1.57 BILLION

First Pacific Company Limited reported today that its attributable profit before net exceptional items rose 32 per cent in 1996 to HK$1.57 billion (US$202 million) from the previous year’s HK$1.19 billion (US$153 million), supported by substantial earnings growth in each of its four core business areas.

Turnover increased 34 per cent to HK$54.8 billion (US$7.03 billion) from HK$40.9 billion (US$5.25 billion). Fully diluted earnings per share before net exceptionals rose 20 per cent to 66.22 HK cents (8.49 US cents) from 55.05 HK cents (7.06 US cents). A final dividend of 12 HK cents (1.55 US cents) has been declared, making a full-year dividend payable to shareholders of 21 HK cents (2.71 US cents), up 20 per cent from the previous year.

The Company also announced plans to raise in excess of US$250 million in convertible bonds for general funding purposes. SBC Warburg and ING Barings have been appointed as advisors for the exercise.

Manuel V. Pangilinan, First Pacific’s Managing Director, said: "By any measure, 1996 was a year of significant achievement for us. Despite difficulties in a number of economies where we operate, recurrent earnings rose significantly with improved contributions at each of our four core businesses.

"The Marketing & Distribution business benefited from the strength of both Dutch-based Hagemeyer and ASEAN-based operations. In the Telecommunications business, good progress was achieved at our new initiatives in China, India and Indonesia, as well as at our established activities in Hong Kong and the Philippines. In Property, maiden earnings were booked from the landmark Fort Bonifacio development, while our Banking business achieved growth in Hong Kong that exceeded the rest of the market."

First Pacific’s profit attributable to ordinary shareholders including exceptional items totaled HK$1.59 billion (US$204 million), a decline of 21 per cent from the previous year’s HK$2.00 billion (US$257 million). The 1995 figure was bolstered by a net exceptional gain of HK$815 million (US$105 million), largely from the dilution of interests in Hagemeyer N.V. and Smart Communications, Inc., as well as from the sale of banking interests in the U.S. and pharmaceutical and distribution activities in the Philippines. In 1996, a net exceptional gain of HK$19.5 million (US$2.5 million) was recorded, related in part to gains from the dilution of its shareholding in various subsidiaries and associates, which were largely offset by expenses associated with the reorganization of consumer-electronics activities in North America and packaging businesses in the Philippines.

In Marketing & Distribution, contribution to profit before exceptionals rose 23 per cent to HK$843 million (US$108 million) from HK$685 million (US$87.8 million), as turnover increased 35 per cent to HK$48.7 billion (US$6.25 billion) from HK$36.1 billion (US$4.62 billion). Within the segment:

• Hagemeyer, a Dutch-based international trading company, saw its contribution rise 24 per cent to HK$523 million (US$67.0 million), as turnover increased 45 per cent to HK$36.0 billion (US$4.62 billion). Most divisions performed well, paced by the Electrical Distribution and the Automotive & Technical Products segments. Earnings at the Specialty Foods division were affected by higher operating expenses related to the implementation of new systems. Profit was enhanced by the full-year contribution of Koninklijke Borsumij Wehry N.V., a Dutch trading house acquired in October 1995, and the acquisition in October 1996 of the remaining 50 per cent interest in HCL Limited, a Hong Kong based trading group, that Hagemeyer did not already own.

• Tech Pacific International Ltd., an Australian-based distributor of computer-related products and telecoms services, saw its contribution rise 21 per cent to HK$167 million (US$21.4 million), as turnover increased 44 per cent to HK$7.54 billion (US$967 million). Its Computer Products division was bolstered by the acquisition of Merisel, its largest competitor in Australia, and the expansion of its product range, while operations in Asia were mixed. The Communications Products and Services division was hampered by increased competition in its mobile phone distribution but benefited from strong growth in communications services.

• Metro Pacific Corporation, First Pacific’s flagship in the Philippines, registered a healthy performance, with overall net profit rising 64 per cent to HK$251 million (US$32.2 million), reflecting the strength of its property and telecommunications interests. The contribution of its Marketing & Distribution activities declined 27 per cent to HK$6.2 million (US$0.8 million), as the packaging business was hampered by difficult operating conditions, although improvement is expected over the course of the current year. Other Metro Pacific businesses are dealt with under their respective categories (Smart Communications in Telecommunications; and Fort Bonifacio Development and Landco in Property).

• Berli Jucker Public Company Limited, based in Thailand, saw its contribution increase 12 per cent to HK$98.3 million (US$12.6 million) on a 7 per cent rise in turnover to HK$3.11 billion (US$398 million), reflecting the weakness of the domestic economy. The Glass & Consumer Products segment was affected by modest demand and lower capacity utilization related to its recent expansion. But strong sales were achieved by the tissue paper, snack foods, confectionery, wine and personal-care products areas. Solid growth was recorded by the Technical Products business, led by demand for stationery, pharmaceuticals, hospital supplies and chemicals. The Engineering business suffered from under-utilized production capacity.

• P.T. Darya-Varia Laboratoria, in Indonesia, saw its profit contribution rise 70 per cent to HK$49.1 million (US$6.3 million), as revenue grew 40 per cent to HK$661 million (US$84.7 million), reflecting the successful integration of a series of acquisitions that have made it the country’s second-largest pharmaceuticals concern. In an effort to expand overall market share, the company launched or improved a total of 20 products during 1996. Good progress was made in the consolidation and improvement of its distribution network.

In Telecommunications, contribution to profit before exceptionals rose 40 per cent to HK$498 million (US$63.8 million) from HK$355 million (US$45.5 million), as turnover increased 20 per cent to HK$3.05 billion (US$391 million) from HK2.54 billion (US$325 million). The total number of subscribers increased 75 per cent to some 630,000. Within the segment:

• Pacific Link Communications Ltd., which operates a cellular phone service in Hong Kong, saw its contribution rise 38 per cent to HK$453 million (US$58.1 million), as revenue eased 4 per cent to HK$1.97 billion (US$252 million). Subscriber numbers increased 8 per cent to 240,000 following the previous year’s 150 per cent jump. Average subscriber revenue declined modestly but was offset by lower costs related to attracting new customers.

• Smart Communications, a Metro Pacific business which is evolving into the Philippines’ first integrated telecommunications company, saw its contribution jump 94 per cent to HK$74.1 million (US$9.5 million), on a 126 per cent increase in turnover to HK$1.04 billion (US$133 million). Its cellular subscriber base climbed 173 per cent to 310,000, giving it 39 per cent of the total market. Substantial headway was achieved in developing its local fixed-line network, in building up its international call traffic and in the construction of a microwave backbone to facilitate long-distance cellular calling.

• In Indonesia, P.T. Metro Selular Nusantara (Metrosel), which provides mobile cellular services to 25,000 customers in Indonesia’s Central and East Java, Irian Jaya and Maluku, recorded an operating profit in its first nine months of operation of approximately US$1 million on turnover of US$9.2 million. As First Pacific’s 35 per cent stake was acquired in late November, it had no impact on full year performance. Substantial plans are in place to build its brand name and upgrade systems during 1997. P.T. IndoLink First Pacific, which provides an Indonesia-wide paging service, recorded a modest operating loss, reflecting the cost of building its subscriber base and the entry of three new competitors into an already crowded market. Its subscriber numbers increased 144 per cent during the year to 44,000.

• Escotel Mobile Communications Ltd. established cellular services in late 1996 and early 1997 in the three Indian states of Western Uttar Pradesh, Haryana and Kerala, which have a combined population of 126 million. It finished the year with 5,700 subscribers, a figure expected to show steady growth. As the full commercial launch is expected to take place this year, there was little impact on the Group’s 1996 operating results.

• Shenzhen, Fujian and Taiwan, First Pacific entered the China market by taking a 60 per cent stake in a joint venture that is participating in a mobile phone network in Shenzhen, with further networks to be completed in Dongguan and Huizhou in 1997. A 26 per cent interest was acquired in Fujian Telecom Hong Kong Ltd., which has established GSM networks in Fuzhou and Xiamen and intends to expand Fujian-wide. Directly across the Taiwan Strait, First Pacific has taken a 17 per cent interest in a venture that has licenses to operate cellular networks in Central and Southern Taiwan.

In Property, contribution to profit before exceptionals rose 25 per cent to HK$277 million (US$35.5 million) from HK$222 million (US$28.4 million), as turnover increased 42 per cent to HK$2.09 billion (US$268 million) from HK$1.47 billion (US$189 million). Within the segment:

• Fort Bonifacio Development Corporation., a Metro Pacific business which is developing the former Fort Bonifacio military facility in Metro Manila into a world-class metropolis, reported a maiden contribution of HK$39.8 million (US$5.1 million) from the sale of land within the project’s first phase. Significant headway was achieved during the year, including the approval of a master plan that designates a central business district, and commercial, shopping and residential areas at Fort Bonifacio, and proposes a range of facilities offering culture, entertainment, health and education.

• Landco, Inc., a Metro Pacific business which develops high-end residential and resort properties outside Metro Manila, reported a 212 per cent rise in profit contribution to HK$17.2 million (US$2.2 million). Profitability was supported by a number of residential resort projects, as well as several high-end residential sub-divisions on the island of Luzon.

• First Pacific Davies Ltd., the Hong Kong-based parent of a group of property and integrated services companies, registered a 3 per cent rise in profit contribution to HK$207 million (US$26.5 million), as turnover jumped 43 per cent to HK$2.04 billion (US$261 million). The year-earlier profit figure was supported by property sales. The security business registered strong growth, and the property management business performed well despite tighter margins. The property agency and advisory services segment had a banner year, spurred by the resurgent Hong Kong property market. New businesses entered into during the year include fitness centres, catering and primary healthcare.

In Banking, contribution to profit before exceptionals rose 71 per cent to HK$209 million (US$26.8 million) from HK$122 million (US$15.7 million), as turnover increased 8 per cent to HK$944 million (US$121 million) from HK$874 million (US$112 million). The segment’s main business is Hong Kong-based First Pacific Bank.

• First Pacific Bank, which operates a 27-branch network, had another excellent year, increasing net profit contribution by 49 per cent to HK$162 million (US$20.8 million). Assets increased 18 per cent to HK$26.9 billion, while the cost-to-income ratio fell to 43 per cent from 49 per cent. The introduction of its Visa card, the bank’s first credit card product, was very well received, enabling it to strengthen relationships with existing customer, attract new business and generate further fee income.

Looking ahead, Mr Pangilinan concluded: "First Pacific should move from strength to strength this year. We anticipate improving market conditions for our Marketing & Distribution activities, substantial growth for our Telecommunications business, better contributions from our increasingly diversified Property activities and healthy prospects at our Banking operations. All in all, I remain confident of our prospects for 1997."

For further information, please contact :

Manuel V. Pangilinan Managing Director	Tel: (852) 2842 4337
Paul Wallace Group Financial Controller	Tel: (852) 2842 4225
Robert Sherbin Group Vice President Corporate Communications	Tel: (852) 2842 4380

Company information can also be accessed on:
Internet: irasia.com/listco/hk/firstpac
E-mail: info@firstpac.com.hk

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