First Pacific Company Limited

Press Release

11^th August 1997

FIRST PACIFIC'S PHILIPPINE FLAGSHIP SEES 46% RISE IN FIRST HALF PROFIT

First Pacific Company Limited's Philippine flagship, Metro Pacific Corporation, reported today that net income rose 46 per cent in the year's first six months to Pesos 574 million from Pesos 393 million a year earlier, reflecting the strong performance of affiliates engaged in telecommunications and property development.

Metro Pacific's basic earnings per share grew 37 per cent to 16.79 centavos from 12.26 centavos. Revenue declined 17 per cent to Pesos 2,189 million from Pesos 2,645 million.

Operating profit fell 69 per cent to Pesos 77 million from Pesos 246 million amid downturns in the packaging and consumer products subsidiaries. However, equity in net earnings from affiliates jumped more than four-fold to Pesos 502 million from Pesos 126 million. Total assets increased to Pesos 96.2 billion as at 30^th June from Pesos 21.4 billion as at 31^st December 1996, reflecting Metro's increased stake in Bonifacio Land Corporation to 56 per cent from approximately 40 per cent.

Fort Bonifacio Development Corporation - which is 55 per cent held by Bonifacio Land and 45 per cent held by the Bases Conversion Development Authority, a Government corporation - performed strongly. The company is developing a 214-hectare site at the former Fort Bonifacio military base into the Philippine's first city of the 21^st century. Buyers continued to make payments for lots at Fort Bonifacio either in full or on installment terms. In certain cases, payments were made in advance of due dates reflecting the early commencement of various buildings and the high level of demand experienced by developers. This provided substantial funds for infrastructure development and general working capital purposes.

Pacific Plaza Towers, Metro Pacific's residential development within Fort Bonifacio, achieved significant progress. The License to Sell was received from Government in the year's first quarter, and thus far more than 60 per cent of the development's 393 units have been reserved or contracted by buyers.

Smart Communications, Inc., Metro Pacific's integrated telecommunications affiliate, saw its cellular subscriber base rise to 456,000 as at 30^th June, up 19 per cent on the quarter and up 47 per cent from the beginning of the year, the highest cellular base of any provider in the country. Good progress was also achieved in the build out of its fixed-line service. Smart continues to plan for an Initial Public Offering (IPO) in the third quarter, which will help fund the build out of its fixed-line and cellular activities.

In its consumer products activities, Metro Pacific continued to focus on personal care, packaged water and other beverage products. The new production facilities in Cavite began to generate improved efficiencies and increased capacity to meet market demand. The division performed well, increasing its contribution to the Group's net income from the previous year.

At Metro Pacific's packaging group under Steniel Manufacturing Corporation, the corrugated carton division continued its planned reorganization involving the consolidation in its modern facility in Cavite, which led to improved operating efficiency. As part of this process, operations in Cainta were substantially reduced, and the sale of the related property was announced in July 1997, which will reduce overheads and provide savings in financing charges. This is anticipated to result in an improved performance in the second half.

The group's flexible packaging subsidiary, AR Packaging Corporation addressed technical difficulties encountered in 1996 and reported significantly higher sales. The unit consistently reported profits in the half and has a strong order book for the remainder of the year.

Metro Pacific maintained a prudent approach to financing and its capital structure, and has limited foreign currency exposure, some of which is in the form of instruments that are expected to be converted to equity. As a consequence, the extent of exchange losses for the year associated with the Peso's recent depreciation is anticipated to be limited. In addition, for imported raw materials and expenses denominated in foreign currencies, Metro Pacific's companies generally anticipate being able to adjust prices to absorb any higher costs.

Commenting on the results, Mr Napoleon L. Nazareno, Metro Pacific's President and Chief Executive Officer, said: "The significant growth in recurring net income for the first semester is a reflection of the success of the Group's policy of diversification and seeking to invest in high growth sectors.

"Property development continues to provide excellent returns, and the consolidation of Fort Bonifacio represents another significant milestone in the evolution of the Group. The vision of Fort Bonifacio is increasingly being translated into reality as projects commence development and infrastructure is created. We anticipate continued progress over the next few years, with an increasing trend in net income.

In telecommunications, Smart has firmly established itself as the pre-eminent cellular operator with the largest subscriber base in the Philippines. Dynamic management, a dedicated and enthusiastic workforce, focused marketing and a successful product have all contributed to this success. Metro Pacific's plan to secure an additional interest in Smart, as part of the arrangements for the IPO later this year, are therefore also of great strategic importance. This will further diversify the Group's sources of recurring profits and will enable Metro Pacific to participate to a greater extent in this high-growth sector.

"The consumer products division's new facilities in Cavite will provide increased capacity and are anticipated to provide improvements in efficiencies. Its well-established brands, coupled with experienced marketing, have positioned the division for further growth during the year."

Mr Nazareno concluded: "MPC continues to expand in accordance with a strategy of planned diversification, designed to create a platform for sustainable long-term growth in recurring net income. The Group continues to investigate new opportunities, and the prospects for 1997 and the future are very encouraging."

Metro Pacific is a Manila-based conglomerate with operations in packaging and consumer products, property development and telecommunications. It is part of First Pacific Company Limited, a Hong Kong-based, Asian-oriented conglomerate with activities in the four core areas of Marketing & Distribution, Telecommunications, Property Services and Banking. It has more than 52,000 employees in 50 countries and revenue in excess of US$7 billion, as at 31^st December 1996.

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