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Review of 2007 Goals
| FIRST PACIFIC |
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Goal: Evaluate new investment opportunities in telecoms, consumer food products and infrastructure in the emerging markets in Asia
Achievement: Achieved. First Pacific group invested a total of US$1,566 million for business through acquisition
At head office level
- Completed the acquisition of additional approximately 6.4 per cent interest in PLDT
At operating companies level
- PLDT invested in Springfield and Blue Ocean
- IndoAgri acquired 64.4 per cent interest in Lonsum and other plantations
- MPIC secured an 84 per cent interest in Maynilad together with partners
- MPIC invested in 33 per cent equity in Medical Doctors, Inc.
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Goal: Continue to enhance value in our current operating businesses
Achievement: Achieved.
- Recurring profit increased 29 per cent to US$193.7 million
- First Pacific share price appreciated 50 per cent to close at HK$6.05 per share for
2007 while the Hang Seng Index rose 39 per cent
PLDT
- Profit contribution to the Group increased 28 per cent to US$177.5 million driven by continuous growth in cellular, knowledge processing solutions, customer interaction services businesses, and high demand in cellular and broadband services
- Share price appreciated 25 per cent to close at Pesos 3,175 per share for 2007 while the Philippine Composite Index rose 21 per cent
- Total cash dividends for 2007 is Pesos 184 (US$4.01) per share, representing 100 per cent payout of 2007 core earnings
Indofood
- Profit contribution to the Group increased 32 per cent to US$72.0 million driven by increased performance of the Agribusiness, flour and branded oil products
- Share price appreciated 91 per cent to close at Rupiah 2,575 per share for 2007 while the Jakarta Composite Index rose by 52 per cent
MPIC
- With improved performances at Maynilad, Landco and Makati Medical Center, the turnaround gained momentum with a recurring profit contribution of US$2.3 million verses a recurring loss of US$3.7 million in 2006
- Share price declined 12 per cent to close at Pesos 4.4 per share for 2007 compared with the Philippine Composite Index up by 21 per cent
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Goal: Strengthen balance sheet in support of new investment opportunities
Achievement: Partially achieved.
- At the head office level, short-term bank loans were fully refinanced by long-term loans. Total bank loans of US$650 million will mature between 2011 and 2013
- Net debt level increased 1.2 times to US$532.4 million of which approximately US$510 million was employed to acquire the value-enhancing 6.4 per cent interest in PLDT
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| PLDT |
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Goal: Manage transition to data and next generation services, and maximize the existing mainstream voice and text businesses
Achievement: Achieved. Service revenues of data/broadband and information and communications technology increased 22 per cent in peso terms to Pesos 68.4 billion (US$1,491.5 million). Revenues from traditional voice business down 2 per cent to Pesos 67.0 billion (US$1,461.0 million). Broadband subscribers more than doubled to 579,000 while cellular subscribers increased 5.9 million to over 30 million by the end of 2007. |
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Goal: Accelerate the expansion of knowledge processing solutions and customer interaction services businesses (previously named business process outsourcing and call center, respectively)
Achievement: Achieved. Knowledge processing solutions unit, SPi Group revenues up 122 per cent to Pesos 5.3 billion (US$115.6 million). SPi expanded its healthcare services by acquiring the entire equity interest of Springfield Service Corporation for a consideration of US$35.0 million. SPi's service seats increased to over 4,500 with facilities in the Philippines, India, Vietnam and USA. ePLDT Ventus grew its customer interaction services revenues by 24 per cent to Pesos 3.3 billion (US$72.0 million) and service seats increased 14 per cent to over 6,400. |
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Goal: Expand both domestic and
international m-commerce businesses
Achievement: Ongoing. Domestically, at the end of January 2008, Smart successfully introduced two initiatives under the aegis of Land Bank of the Philippines and the Development Bank of the Philippines. Both services cater to the overseas Filipino workers market. Internationally, in February 2008, the National Commercial Bank of Saudi Arabia, the largest bank in the Gulf region, launched QuickPay, its mobile remittance service powered by Smart Money. |
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Goal: Continue segment specific programs to further increase network efficiency
Achievement: Achieved. Consolidated service revenues increased 8 per cent in peso terms to Pesos 135.5 billion (US$3.0 billion); GSM subscriber base grew by 5.9 million to over 30 million representing approximately 55 per cent of the total cellular market in the Philippines based on subscribers and approximately 59 per cent based on revenues. The broadband subscriber base more than doubled to 579,000 representing a market share of over 70 per cent. Consolidated EBITDA margin stood at 61 per cent. |
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Goal: Raise dividends to common shareholders to 70 per cent of 2007 core earnings
Achievement: Achieved. The sustainable strong performance and robust free cash position enable PLDT to declare a final dividend of Pesos 68 (US$1.48), representing the committed 70 per cent payout of its 2007 core earnings and a special dividend of Pesos 56 (US$1.22) per share. Together with the interim dividend of Pesos 60 (US$1.31) per share, total cash dividends for 2007 is Pesos 184 (US$4.01) per share, representing substantially 100 per cent payout of 2007 core earnings. |
| INDOFOOD |
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Goal: Leverage brand equity and market position to sustain growth and profitability
Achievement: Achieved. All principal business groups maintained their leading market positions, recorded sales growth despite significant increases in raw material and fuel costs. In rupiah terms, Indofood reported a 27.0 per cent improvement in consolidated sales to Rupiah 27,858.3 billion (US$3,040.3 million) (2006: Rupiah 21,941.6 billion; US$2,398.5 million) supported by more effective segment specific marketing programs, an enhanced stock point distribution system and products innovation. |
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Goal: Leverage stock point network to expand products distribution coverage
Achievement: Achieved. Covering of retail outlets increased to approximately 240 thousand. Sales grew 16.9 per cent to Rupiah 3,663.6 billion (US$399.8 million) (2006: Rupiah 3,132.9 billion; US$342.5 million). EBIT margin improved to 1.5 per cent (2006: 0.2 per cent) reflecting volume growth of both group and third party products, and higher prices. |
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Goal: Continue to implement cost control and operational efficiency programs
Achievement: Achieved. Overall selling expenses and general and administration expenses respectively reduced to 8.4 per cent and 4.8 per cent of consolidated sales from previous year's 9.5 per cent and 5.2 per cent. Gross margin remains at 23.6 per cent despite the increases in raw material and fuel costs. |
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Goal: Accelerate plantation expansion organically or through acquisition
Achievement: Achieved. Agribusiness group completed several plantation acquisitions in 2007 which included the acquisition of a 64.4 per cent interest in an Indonesian listed plantation company PT Perusahaan Perkebunan London Sumatra Indonesia Tbk (Lonsum) for a consideration of approximately Rupiah 6.2 trillion (US$673.0 million). Indofood Group's plantation land bank increased to 406,519 hectares from 138,542 hectares. |
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Goal: Strengthen balance sheet and reduce foreign currency exposure
Achievement: Substantially achieved. Part of its foreign currency loans were refinanced by a five-year Rupiah 2.0 trillion (US$212.3 million) rupiah bonds. The acquisition of a 64.4 per cent in Lonsum increased net debt to Rupiah 7,850.6 billion (US$833.3 million) of which approximately US$440 million will be refinanced by August 2008. |
| METRO PACIFIC INVESTMENTS CORPORATION (MPIC) |
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Goal: Develop a comprehensive growth and enhanced profit strategy for Maynilad and Medical Doctors, Inc. (MDI)
Achievement: Achieved. Strategies in place. Both companies exceeded financial targets for 2007.
Maynilad
- Revenue from water, sewerage and other services increased 8 per cent to Pesos 7.4 billion (US$161.4 million)
- Non-revenue water improved to an average of 66 per cent from 68 per cent in 2006
- Total billed water volume increased 9 per cent to 286 million cubic meters
- Total billed water service connections increased 4 per cent to 703,519
MDI
- Net income increased approximately 20 per cent to Pesos 269 million (US$5.9 million)
- Construction of a new 13-level medical building is on schedule to be completed in August 2008
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Goal: Raise new capital to fund potential new investments and to comply with the Philippine Stock Exchange's listing rules regarding free float requirement
Achievement: Achieved. MPIC raised approximately US$78 million convertible/exchangeable notes from First Pacific and the strategic investor, Ashmore, to fund its investments in Maynilad and MDI. Approximately Pesos 144 million (US$3.1 million) was raised through the conversion of MPIC warrants and 144 million new MPIC shares were issued. MPIC complied with the Philippine Stock Exchange's listing requirement concerning its free float. |
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Goal: Manage project developments at Landco to build profitable returns to the shareholders
Achievement: Achieved. Supported by the strong sales of its leisure and resort projects (including Amara en Terrazas and Playa Calatagan), and the completion of these projects ahead of schedule, Landco reported a profit of Pesos 261 million (US$5.7 million), a turnaround from a loss of Pesos 13 million (US$0.3 million) in 2006. |
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Goal: Continue to evaluate potential investment opportunities in various infrastructure sectors
Achievement: Achieved. MPIC completed the acquisition of an 84 per cent interest in Maynilad through its 50 per cent owned joint venture, DMCI-MPIC Water Company Inc. and subscribed for Pesos 750 million (US$18.2 million) subordinated convertible notes issued by MDI which operates and manages Makati Medical Center (MMC). The Pesos 750 million notes were fully converted in January 2008 and represent a 33.45 per cent equity interest in MDI. New infrastructure projects: harbor, toll roads and medical care are being reviewed. |
Goals for 2008
| FIRST PACIFIC |
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Continue to enhance the profitability of operating companies |
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Expand our business portfolio with complementary investments in telecoms, infrastructure, natural resources and consumer products in the emerging markets of Asia |
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Manage capital within our overall investment plans and financial position to enhance shareholder returns |
| PLDT |
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Sustain overall service revenue growth and profitability |
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Accelerate growth in wireless, broadband and ICT, both organically, as well as through acquisitions |
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Leverage combined strengths in product innovation, technology expertise and networks |
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Raise service quality to significantly improve the customer experience across a wide range of services and solutions |
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Continue capital management, maintain dividends to common shareholders at 70 per cent of 2008 core earnings and retain the "look back" approach; implement share buyback program at times when the market price does not reflect management's view of share's value |
| INDOFOOD |
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Enhance brand equity and strengthen market position |
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Principal business groups to continue their specific production and cost efficiency initiatives |
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Integration of IndoAgri and Lonsum's operations |
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Refinance short-term debts to longer term facilities |
| METRO PACIFIC INVESTMENTS CORPORATION (MPIC) |
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Secure new investment opportunities in the infrastructure, health care and hotel development sectors |
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Expand project portfolio of middle- and high-end urban residential and luxury residential resorts |
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Secure funding for business expansion |
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Continue to improve profitability of Maynilad, Landco and MDI |
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