fphc 2008 ar mrv...− stsi was re-certified to the iso 9000 standard last december first philec is...

MOVINGFORWARDTODAYFORTOMORROW

FIRSTPHILIPPINEHOLDINGS

CORPORATION

2008ANNUAL REPORT

BUSINESS MISSIONOur basic purpose is to create new wealth for our stakeholders.

Our business will focus on vital needs for national development in the areas of energy, infrastructure, manufacturing and supporting industries.

In pursuing our objective, we will be guided by the following fundamental and imperishable values and principles: nationalism, entrepreneurship and innovation, teamwork, a strong work ethic and corporate social responsibility.

THE FPHC COMMITMENTSWe at the First Philippine Holdings Corporation commit to the Filipino nation:

Our continuing search for innovative ventures and technology that optimize human −and natural resources bringing out the best from the Filipino mind and skills; andOur thrust towards the development of communities and persons we influence in −our work.

We commit to our suppliers of goods and services:Our adherence to conducting business transactions with integrity, fairness, and −professionalism;Our willingness to assist in their development; and−Our continuous assistance in improving the quality of such services.−

We commit to our stockholders:Our untiring efforts to give competitive returns on their investments while −exercising prudence in our decisions.

We commit to our customers:Our unceasing quest to meet their needs; and −Our uncompromising struggle for excellence in meeting their expectations.−

We commit to all members of the FPHC family:Our institution of better and more comprehensive programs that allow for total −personal development; andOur constant search for more effective ways to foster teamwork and employee −participation to attain higher levels of productivity and quality.

CREDOWe believe in the Filipino’s ability to innovate, to seize development opportunities borne from the real needs of domestic and overseas markets.

We affirm our partnership with the Filipino in their endeavor of ever pushing the social development frontiers beyond currently known limits.

We share the Filipino’s vision of spreading gainful employment to all who are willing to put their talents in the total betterment of the Filipino.


CORPORATION

2008ANNUAL REPORT


CORPORATION

2008ANNUAL REPORT

Business Mission, Credo and Commitments IFC

At A Glance 2

Financial Highlights 4

Investment Summary 5

Message of the Chairman 6

Message of the President 12

Message of the Chief Finance Officer 18

Board of Directors 22

Senior Management 26

Corporate Governance 28

Business Excellence 34

Corporate Social Responsibility 40

Operations Review

Power Generation

First Gen Corporation (First Gen) 42

Energy Development Corporation (EDC) 48

Power Distribution

Manila Electric Company (Meralco) 50

Panay Electric Company (PECO) 53

Infrastructure

First Balfour, Inc. (First Balfour) 54

First Philippine Industrial Corporation (FPIC) 57

Manufacturing

First Philippine Electric Corporation (First Philec) 58

Property

Rockwell Land Corporation (Rockwell Land) 64

First Philippine Industrial Park (FPIP) 67

Others

Securities Transfer Services, Inc. (STSI) 69

Corporate Directory 70

Acknowledgements IBC

2

First Gen Corporation

(First Gen) is the country’s

largest vertically-

integrated power

generation company in

the country today, with a

capacity of 2,582 MW.

First Gen Corporation −

(First Gen)

Energy Development −

Corp. (EDC)

First Gas Holdings −

Corp. (FGHC)

Bauang Private Power −

Corp./First Private

Power Corp. (BPPC/

FPPC)

First Gen Hydro Power −

Corp. (FGHPC)

First Gen Renewables, −

Inc. (FGRI)

First Gen’s consolidated −

revenues increased by 64%

year-on-year, following

the consolidation of the

financials of EDC

Meralco is the country’s

largest power distribution

company with the largest

franchise area comprising

4.57 million customers.

Manila Electric −

Company (Meralco)

Panay Electric −

Company (PECO)

For the first time in 28 −

years, systems loss in

2008 was 9.28%, this is

lower than the 9.5% cap

Interruption frequency −

rate hit a record low of

6.58 times

Year-on-year average −

electricity rates

decreased by 4%

due largely to lower

generation costs

POWER GENERATION POWER DISTRIBUTION

BUSINESS PROFILE

OPERATING COMPANIES

2008 OPERATIONAL HIGHLIGHTS

At-A-Glance


CORPORATION

2008ANNUAL REPORT

3

FPIC is the country’s

largest pipeline operation.

First Balfour is one of the

largest construction and

engineering companies

in the country today

with almost 40 years of

experience.

First Balfour, Inc. (First −

Balfour)

First Philippine −

Industrial Corp. (FPIC)

The LRT-1 North −

Extension Project

was awarded to the

First Balfour-DMCI

consortium in May

First Balfour revenues −

are up by 150%

FPIC registered record −

revenues of P615.7

million

FPIC was awarded the −

prestigious Philippine

Quality Award and the

Oscar M. Lopez Award

Rockwell Land is the

country’s inner-city

development. FPIP is

the country’s leading

industrial park.

Rockwell Land −

Corporation (Rockwell

Land)

First Philippine −

Industrial Park (FPIP)

Securities and Transfer −

Services, Inc. (STSI)

Rockwell Land’s net −

income increased by

27%

The Grove, the first −

development outside

Rockwell Center, was

launched in October

FPIP is the only −

industrial park that

is certified to the

Integrated Management

System

STSI was re-certified −

to the ISO 9000

standard last December

First Philec is the

holding company for all

manufacturing businesses

of First Holdings.

First Philippine Electric −Corp. (First Philec)Philippine Electric −Corp. (Philec)First Electro Dynamics −Corp. (FEDCOR)First Sumiden Circuits, −Inc. (FSCI)First Philec Solar Corp. −(FPSC)First Philec −Manufacturing Technologies Corp. (FPMTC)First Philippine Power −Systems, Inc. (FPPS)

FPSC, the first solar −

wafer-slicing plant in

the Philippines, was

inaugurated in June

Revenues from the −

Electricals sector grew

by 23%, mostly driven

by FPPS and FPMTC

MANUFACTURINGINFRASTRUCTURE PROPERTY AND OTHERS

4

December 31 OPERATING RESULTS (In million Php) 2008 2007Revenues 78,565 54,996 Sale of electricity 65,710 49,115 Sale of steam 4,242 377 Sale of merchandise 2,455 1,510 Contracts and services 2,234 1,682 Share in project revenue of joint ventures 1,527 362 Equity in net earnings of associates 1,405 1,607 Revenue from drilling services 726 52 Sale of real estate 266 291Finance costs (10,903) (5,755)Foreign exchange gain (loss) (8,452) 1,575Provision for income tax 3,409 1,181Gain on sale of a subsidiary 2,762 -Net income for the year 5,454 11,680Net income attributable to equity holders of the parent 1,192 4,475

FINANCIAL POSITION (In million Php)Total Assets 227,007 242,956Investments at equity and deposits 27,394 37,380Total debt 147,154 146,215Total Liabilities 157,860 153,797Total equity attributable to equity holders of the parent 27,851 34,838Total Equity 69,147 89,159

FINANCIAL RATIOSReturn on equity3 (%) 4.28% 12.85%Dividend payout ratio (%)4 0.00% 19.16%Current Ratio (times)5 0.86 1.05Debt to equity (times)6 2.13 1.64

PER SHARE DATA (In Php)Earnings per share7

Basic 1.859 7.642Diluted 1.840 7.542

Book value per share8 39.89 59.11Price earnings ratio9 8.20 9.49Market price 15.25 72.50Cash dividend per share - 2.00Number of shares issued and subscribed 590,340,305 589,394,893Weighted average number of shares Basic 589,482,417 585,591,888

Diluted 595,576,835 593,343,416Number of stockholders 13,131 13,051

1 The results for the years ended December 31, 2008 and 2007 are set out on the consolidated financial statements2 The balance sheets as of December 31, 2008 and 2007 are set out on the consolidated financial statements3 Return on equity = net income for the year attributable to equity holders of the parent/total equity attributable to equity holders of the parent4 Dividend payout ratio = dividends paid by parent/prior year’s net income attributable to equity holders of the parent5 Current ratio = current assets/current liabilities6 Debt to equity ratio = Total debt/total equity. Total equity includes the equity attributable to equity holders of the parent and minority interests. The details of the total debt

are set out on the notes to consolidated financial statements (note 38).7 The EPS computation for the years ended December 31, 2008 and 2007 are set out on the notes to the consolidated financial statements (note 35).8 Book value per share = (total equity attributable to equity holders of the parent - preferred equity)/no. of shares issued and subscribed9 Price-Earnings ratio = market value per share/basic earnings per share

Financial Highlights


CORPORATION

2008ANNUAL REPORT

5

2008 INVESTMENT SUMMARY

(In Thousand Php)

% NET INCOME TOTAL TOTAL TOTAL

OWNERSHIP REVENUES (LOSS)e ASSETS LIABILITIES EQUITY e

POWER GENERATION

First Gas Power Corporation a 39.74 35,288,299 2,392,496 44,613,487 35,531,179 9,082,308

Energy Development Corporation a 26.49 20,526,912 1,308,022 69,345,588 40,610,269 27,251,185

FGP Corp a 39.74 17,963,372 2,693,998 19,553,910 11,361,034 8,192,876

First Gen Hydro Power Corporation b 42.39 1,383,494 93,133 7,034,120 3,323,786 3,710,334

Bauang Private Power Corporation a 24.70 1,195,339 487,802 6,007,449 2,916,487 3,090,962

FG Bukidnon Power Corp. a 66.23 40,638 11,700 135,232 18,799 116,433

First Philippine Industrial Corporation 60.00 615,717 202,708 1,850,168 533,160 1,317,008

POWER DISTRIBUTION

Manila Electric Company c 33.39 191,775,000 2,800,000 178,384,000 122,225,000 52,607,000

Panay Electric Company 30.00 3,497,873 (54,804) 1,765,930 1,053,588 712,342

MANUFACTURING

First Sumiden Circuits, Inc. d 40.00 3,627,919 72,805 1,619,739 1,087,283 532,456

Philippine Electric Corporation d 99.15 1,537,975 58,946 1,660,400 1,065,643 594,758

First Philec Solar Corporation d 68.00 612,965 (48,417) 2,051,106 886,593 1,164,513

First Philec Manufacturing Technologies Corp. d 100.00 304,969 17,188 237,889 148,888 89,000

First Electro Dynamics Corporation d 100.00 213,031 (14,308) 212,586 140,357 72,228

First Philippine Power Systems,Inc. d 100.00 171,310 36,782 176,397 71,211 105,186

OTHER INVESTMENTS

Real Estate Development

Rockwell Land Corporation 24.50 3,513,678 603,194 12,228,444 5,245,935 6,982,510

First Philippine Industrial Park, Inc. 70.00 404,515 61,836 2,497,845 175,637 2,322,208

First Philippine Realty Corporation 100.00 88,787 (12,527) 1,627,683 18,364 1,609,319

First Sumiden Realty, Inc. d 60.00 15,196 8,048 142,255 7,045 135,211

Construction

First Balfour, Inc. 100.00 2,060,019 120,211 1,917,317 1,513,017 404,299

Others

Securities Transfer Services, Inc. 100.00 13,089 (1,555) 26,766 15,197 11,569

a through First Genb through First Gen and EDCc direct and through FPUFId through First Philece Meralco and EDC’s net income and equity pertain to attributable to equity holders of the parent

Investment Summary

6

OSCAR M. LOPEZChairman and Chief Executive Officer

“A few years from now, we will probably look back on the global economic events of 2008 as a hiccup in our universal pursuit of a better life in a better world.”

Message of the Chairman


CORPORATION

2008ANNUAL REPORT

7

Fellow Stockholders:

We entered 2008 with the high hopes and expectations that we would continue to capitalize on the very favorable business climate that we enjoyed in 2007. Instead, what we witnessed in 2008 was a global financial meltdown that came upon us with frightening suddenness, an economic tsunami that devastated the world’s economy during the last quarter of 2008. Even today, experts continue to shake their heads in disbelief, unable to rationally explain what happened and why people and institutions all over the world reacted the way they did. Economic policy makers admit that they do not know precisely what it will take to solve the problem. Heads of the world’s economic powers and power blocs have recently announced a series of actions that they hope will restore the world’s confidence in its financial system. Industrially developed countries have rolled out financial stimulus packages in an effort to revive their economies. Only time will tell if these measures will actually work.

Because it was relatively underdeveloped and because its institutions were not as extensively exposed to the sort of speculative investments whose values have collapsed, the Philippine economy has been spared the worst possible impact of the financial crisis. However, as trade flows slow; as demand for our exports, particularly those for the electronic and automotive sectors, continues to slide; and as the loss of jobs, both at home

and overseas, mounts, we will begin to feel the painful impact of what is going on elsewhere in the world.

For First Philippine Holdings Corporation, 2008 was a year of dangerous living for other reasons. Through the second half of 2007 and into 2008, we had to ward off threats upon our ownership and management control of Manila Electric Company (Meralco) which, we felt, could also metamorphose into a threat to our power generation investments. We did this by acquiring more shares in Meralco so as to establish veto power, but in doing so, we had to incur new debt. The timely implementation of the Performance Based Rate-Setting (PBR) could have mitigated the debt burden. However, as the year progressed, we recognized that PBR would keep getting delayed and we could not carry a heavy debt load into the new and perilous economic reality. Hence, we have had to take a number of painful steps to reduce our debt.

The first such step was the divestment of our interest in the North Luzon Expressway through the sale of our ownership interest in First Philippine Infrastructure, Inc. to the Metro Pacific Group.

A second step was the sale to the PLDT Group of 60 percent of our equity stake in Manila Electric Company, equivalent to a 20 percent ownership interest in the utility. This reduces our equity stake in Meralco to 13.4 percent, approximately the same level of

8

present one will eventually pass and I am confident that we will ultimately overcome the problems and issues that beset us today. With our reduced debt, and with well-run power generation and distribution businesses that continue to provide a basic societal need for clean, reliable and competitively-priced electricity, First Holdings will likewise emerge intact and healthy.

But even as we emerge into a new era of economic growth and prosperity, there will be formidable challenges confronting us. Today, even with our underdeveloped economy, the Visayas and Mindanao power grids are barely able to meet consumer demand for electricity. There just isn’t enough generating capacity and part of what is there is old, inefficient and unreliable. Generating capacity in the Luzon grid is still adequate for now, but there is little new capacity to meet a resurgence of growth in the economy, and there is no new capacity being built in anticipation of future requirements.

Our electricity is also expensive, one of the reasons why, as an economy, we have difficulty competing with our neighboring economies. Not enough investment is going into our generation, transmission and distribution systems. Given our heavily politicized and unenlightened rate-setting mechanisms, there is little incentive for investors to invest, and there is little incentive for capital markets to make investment funds available. An inefficient utility infrastructure and the penal taxation of fuels will never promote cheap electricity to consumers. Providers will never invest in making the utility infrastructure

ownership we held in Meralco fr the post-EDSA years, until 2007.

For us, however, it is more than a matter of sentiment or symbolism; rather, it is about creating and enhancing value at Meralco. While we continue to regard a stake in Meralco as strategically vital to our overall business interests, the only way that we could make Meralco a more profitable investment was by squeezing higher performance efficiency from what was already one of the most efficient utilities in the country. Meralco has already bettered the allowable systems loss cap of 9.5 percent that the regulators had established, and any further reduction below this cap would have to come at greater effort and expense, but without a corresponding financial benefit to Meralco since the benefit would largely be passed on to the consumers. In divesting a 20 percent interest to the PLDT Group, we have forged a strategic alliance that will enable us to continue to participate, both as owners and as business partners, in a Meralco whose potential value will be greatly enhanced by the synergies it shares with PLDT in the broadband world of tomorrow. From being the country’s dominant distributor of electricity, Meralco now has the potential to participate as a distributor of the multi-media products – communications, news, information, education, entertainment – that are becoming as sustaining an element of our everyday lives as water and electricity have been.

Undeniably, we face a rather uncertain future, one that has more storm clouds in the horizon than it has blue skies. But like all crises, the

“But from the perspective of being here and now, looking forward, I am absolutely encouraged by the great potential of First Holdings as a total energy company, leader not just in power generation, but in the development and use of clean and renewable sources of energy, our energy for the future.”


CORPORATION

2008ANNUAL REPORT

9

efficient if the market is not prepared to fairly compensate them for doing so.

Finally, across the globe, we have all come to recognize that we will all have to contribute to the reduction of so-called “greenhouse gasses,” most particularly carbon dioxide, if we are to bequeath a hospitable environment to future generations. This means that our needs, particularly for electricity, but also for fuels that run the myriad machines and engines that we rely on for so many different uses, will have to be provided from cleaner plants burning cleaner fuels, and preferably, from renewable sources of energy that do not need to be burned.

These are challenges that First Holdings and its operating companies are uniquely well-positioned to take on as we endure the present economic crisis and as we emerge from it into a period of renewed economic growth.

As I mentioned earlier, Meralco need not be limited to the supply and distribution of electricity, a business in which it is already dominant and one that has limited potential for growth and enhanced profitability. Meralco has the potential to be an equally strong distributor of other, higher value multi-media services that are becoming staples in every Filipino home. We may own less of Meralco, but it will be a Meralco with significantly greater value potential and with the capability to deliver its services to consumers at better quality and less cost.

Our power-generating gas plants under First Gen are among the newest, the cleanest and

the most efficient fossil fuel-burning plants in the country today. Unlike many other baseload plants, they rely entirely on an indigenous fuel, natural gas, that ultimately need not be taxed or priced as high as imported fuels when there are global spikes in world oil prices such as those we witnessed in early 2008. Over the years, we have developed the expertise and track record of running gas-fired plants to the most exacting global standards of efficiency and reliability. We are well poised to invest in a further 1,600-1,700 megawatts of gas-fired baseload capacity, all that we are currently permitted under the Electric Power Industry Reform Act (EPIRA) of 2001, as and when new reserves of natural gas can be found and developed.

Unlike many other power-generating companies, however, we are not fenced in by the quantitative capacity limitations imposed upon power-generating companies by EPIRA (equivalent to 30 percent of a given grid’s capacity, or 25 percent of the total nation’s capacity). This is because of our acquisition of a controlling interest in Energy Development Corporation (EDC). Where all our generating plants were previously located almost entirely within the Luzon grid, with EDC, we now have capacity in the Visayas and Mindanao grids, and much larger headroom for expansion in both grids. Later this year, we expect to put up a competitive bid for three geothermal power plants with a combined capacity of 455 megawatts that are being privatized by the government. Where our generating plants were largely fossil fuel-based, we now have capacity that is fuelled by geothermal energy, a cleaner and renewable

10

source of power. And where our power generating business used to be defined purely in terms of generation of electricity, we are now also a producer of geothermal steam as a fuel for the generation of electricity, by our own plants as well as by those of others.

Through some 40 years of harnessing geothermal energy for the production of electricity, EDC has amassed a treasure trove of knowledge, experience and expertise in geothermal power. It is one of the few repositories in the world for such knowledge and expertise. And as the world begins to rediscover this forgotten and under-exploited form of energy, EDC’s resources will be in great demand in countries that do not have the know-how to explore for, develop and exploit geothermal resources.

EDC’s commitment to the development and exploitation of renewable, environmentally friendly sources of electrical power does not end with geothermal power. We have also expanded into the generation of power from hydroelectric sources through our acquisition of the Pantabangan-Masiway Hydro Electric Plant, now being uprated by a further 18-24 megawatts. We also anticipate completion of the 86-megawatt Burgos Wind Farm Project in Ilocos Norte, our first foray into wind power, by 2010.

To varying degrees, our manufacturing businesses have been hurt by the global slump, particularly First Sumiden Circuits, Inc., our joint venture with Sumitomo Electric that manufactures components

“Just recently, First Holdings was recognized as one of the top seven publicly-listed companies (that earned a score of 95 percent or above) in the 4th Corporate Governance Scorecard given by the Institute of Corporate Directors. This affirms our strong commitment to good corporate governance.”

for the consumer electronics industry. But we are particularly excited with our new manufacturing collaboration and partnership with SunPower Corporation, the world’s leading manufacturer of high-efficiency silicon solar cells and products. Our joint venture company, First Philec Solar Corporation, has begun providing wafer-slicing services for the solar energy industry and has quickly met the operating and quality standards required by SunPower. We have been invited to extend our collaboration with SunPower to the other new plants that they are developing both here and in Malaysia. This, again, is a demonstration of our commitment to the development of alternative, clean and renewable sources of energy. The upside potential of this manufacturing venture will be constrained only by our ability to keep up with the growth in the solar energy industry.

A few years from now, we will probably look back on the global economic events of 2008 as a hiccup in our universal pursuit of a better life in a better world. Or perhaps, as a necessary correction to the unhealthy and unsustainable expectation for disproportionate financial rewards that had begun to contaminate the conduct of international business and trade. But from the perspective of being here and now, looking forward, I am absolutely encouraged by the great potential of First Holdings as a total energy company, leader not just in power generation, but in the development and use of clean and renewable sources of energy, our energy for the future.


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11

In order to keep our feet on the ground and in touch with reality, we continue to vigorously promote business excellence tools and practices among our companies under the unifying framework that we have borrowed from the U.S. Malcolm Baldrige National Quality Award. Particular emphases and initiatives include ISO 9000, ISO 14000, OHSAS 18000, Environment, Safety, Health and Security (ESHS), Risk Management, Six Sigma and the international Investors in People (IiP) standard for human resource management. These are described in greater detail in the body of this report. Just recently, First Holdings was recognized as one of the top seven publicly-listed companies (that earned a score of 95 percent or above) in the 4th Corporate Governance Scorecard given by the Institute of Corporate Directors. This affirms our strong commitment to good corporate governance.

SYSTEMATIC SUCCESSIONIn 2008, there were two retirements by members of senior management. Mr. Peter D. Garrucho, Jr. opted to retire in early 2008. Mr. Garrucho was instrumental in leading the company’s significant investments in power generation. His contributions began with the development of the Santa Rita and San Lorenzo 1,500-megawatt power plants which provided the anchor load for the Malampaya natural gas discovery. Later he led the efforts to move into renewables with the purchase from the government of the Pantabangan-Masiway hydro plants and the controlling stake in Energy Development Corp., a world leader in geothermal steam and power production.

These assets now form part of First Gen Corp., which was listed in the Philippine Stock Exchange in 2006. He continues to sit in the Board of Directors.

In June, Mr. Benjamin K. Liboro retired from the company after many years of loyal service. He served the First Holdings Group at both the parent and operating company levels. He did work ranging from business/project conceptualization, organization and start-up to managing operating companies. He supported Mr. Steve Psinakis in resolving the group’s contingent liabilities in its Hail, Saudi Arabia project. He was the writer “par excellence” of the group. He continues to serve the group as President of the Asian Eye Institute and by overseeing business development efforts.

I wish to thank Messrs. Garrucho and Liboro for their invaluable contributions and many years of loyal service to the company.

Mr. Federico R. Lopez was appointed as the new Managing Director for Energy of First Holdings. I wish him success in his new assignment.

After the sale of our stake in First Philippine Infrastructure, Inc., Mr. Anthony M. Mabasa, former President of Tollways Management Corporation, was recalled to the head office for new assignments in the group.

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ELPIDIO L. IBAÑEZPresident and Chief Operating Officer

“...We have taken steps to re-align our portfolio and strengthen our balance sheet. We have made difficult but necessary decisions which, we believe, are in the company’s best, long-term interest.”

Message of the President


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2008ANNUAL REPORT

13

To Our Shareholders:

Against the backdrop of the global financial crisis, we have taken steps to re-align our portfolio and strengthen our balance sheet. We have made difficult but necessary decisions which, we believe, are in the company’s best, long-term interest.

In January 2008, we completed the acquisition of Union Fenosa Internacional’s 40 percent ownership in First Philippine Utilities Corporation, which owns 22.7 percent of Manila Electric Company (Meralco). This brought our total ownership in Meralco to 33.4 percent and, with proxies from other stockholders, allowed us to retain a majority of the Meralco board in the 2008 stockholders meeting. But this and the earlier purchase from the Meralco Pension Fund of another 6.6 percent stake in Meralco entailed additional borrowings which needed to be serviced by higher levels of dividends from Meralco. Under the Performance Based Regulation (PBR), Meralco’s earnings were expected to be more robust, predictable and sustainable, thus providing reasonable returns on our additional investments.

In the short term, there was a need to replenish the liquidity used to increase the stake in Meralco. So in April, we issued P4.3 billion of preferred shares. And in November, we divested our interest in First Philippine Infrastructure, Inc., the vehicle housing our tollways business, for P6.2 billion.

However, as the year drew near to a close, Meralco’s PBR continued to be delayed. Likewise, the capital markets remained tight and expensive. It became clear that more drastic action had to be taken to reduce the debt burden. Thus in March 2009, we entered into an Investment and Cooperation Agreement to sell 20 percent of our ownership in Meralco to the Philippine Long Distance Telephone (PLDT) Group.

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2008 OPERATING RESULTSFor the year ended December 31, 2008, net income amounted to P5.5billion, down 53 percent from the P11.7 billion net income in the prior year. Profit attributable to shareholders, at P1.2 billion, is also down by 73 percent compared to last year. Diluted earnings per share weakened by 76 percent to P1.84.

Revenues and operating income continued to grow, but profitability was adversely affected by currency movements, high finance costs and provisions for income taxes. These factors were partially offset by the one-time gain from the sale of the tollways business as well as other income. To summarize:

We posted revenues of − P78.6 billion, another all-time record, compared with P55.0 billion the year before. Operating income amounted to P17.6 billion versus P12.7 billion during the previous year. The main contributor to revenue and operating income growth was the Energy Development Corporation (EDC), which was acquired by First Gen in November 2007. EDC generated P20.5billion in revenues and P11.2 billion in operating income.Finance costs increased significantly by 89 percent to − P10.9 billion as a result of higher average levels of debt, in turn due to the additional 15.7 percent interest in Meralco at the parent level and the 60 percent equity investment in EDC at the First Gen level. At the end of 2008, consolidated debt stood at P123.7 billion, of which P36.0billion are due in 2009. Approximately 79 percent of the Group’s borrowings are subject to fixed interest rates after considering the effect of interest rate swap agreements. Foreign exchange losses totaled − P8.5 billion, principally from the revaluation of foreign currency denominated borrowings and payables, mainly, those of EDC and First Gen Hydro. The losses were due to the depreciation of the peso against the US Dollar and the appreciation of the Japanese Yen against the US Dollar.Other income jumped to − P5.9 billion, due to interest income on service concessions, a favorable arbitral award to EDC and mark-to-market gains on derivative transactions.

“It became clear that more drastic action had to be taken to reduce the debt burden. Thus in March 2009, we entered into an Investment and Cooperation Agreement to sell 20 percent of our ownership in Meralco to the Philippine Long Distance Telephone (PLDT) Group.”


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Provision for income tax increased to − P3.4 billion due mainly to the end of the income tax holiday of First Gas Power Corporation (Sta. Rita Power Plant) and the full year consolidation of the income tax of EDC.Operating results of the tollways business for the period beginning −January 1, 2008 up to November 13, 2008 amounting to P752 million were treated as income from discontinued operations. The tollways’ operating results were lower by 66 percent compared to the full year operating results of 2007, mainly due to depressed traffic volume and foreign exchange losses. Meanwhile, the gain on the sale of this subsidiary amounting to P2.8 billion was recognized following the disposal.

SUBSIDIARIES PERFORMANCEFirst Gen’s net income attributable to parent declined to $14.5 million, 86 percent lower than the $104.7 million recorded in the prior year, due to higher financing costs related to its purchase of EDC, full year income tax payments of the 1,000 MW Santa Rita Power Plant, whose income tax holiday period ended in May 2007, and lower generation output (due to reduced irrigation) in the case of First Gen Hydro. These were partially offset by the full year consolidation of EDC’s income, including the P2.9 billion gain from the arbitral decision related to the Steam Sales Agreements (SSAs) and Power Purchase Agreements (PPAs) of EDC and NPC.

Meralco reported a net income attributable to parent of P2.8 billion, down 26 percent from the P3.8 billion reported in 2007, largely driven by the P6.6 billion in provision for probable losses related to the disallowance by the Energy Regulatory Commission (ERC) of generation and transmission cost reimbursements. Revenues from sale of electricity declined by 5 percent to P187.0 billion in 2008 due to lower generation cost/kwh billed to customers. Overall electricity sales grew by a modest 2.2 percent, while systems loss performance improved exceptionally to 9.3 percent. Meralco’s profitability is expected to improve when PBR is finally implemented.

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First Philec revenues totaled P2.5 billion, recording a growth of 47 percent compared to last year. Net income attributable to parent, however, declined sharply by 70 percent to P30.1 million due to the full recognition of one-time, start-up expenses in its new solar business, the general increase in the cost of materials and the increase in financing and business development costs. In 2008, progress was made on the manufacturing group’s new businesses. In particular, First Philippine Power Systems, Inc. and First Philec Manufacturing Technologies Corporation, reported net incomes of P36.8 million and P17.2 million, respectively. First Philec Solar Corporation, the group’s foray into wafer-slicing services, generated revenues of US$13.9 million on its initial year of operation. It incurred a start-up loss of US$1.1 million, due to the high cost of materials and supplies.

Rockwell Land continued to show both improved overall profit along with increased operating margins. Its profit grew by 27 percent to P603.2 million. Operating profit improved significantly, by 16 percent to P940.1 million, due to lower construction costs. Total revenues were flat at P3.5 billion.

The company’s expanded project portfolio now includes the Rockwell Business Center in Meralco, its first office development, and The Grove, its first residential development outside of the Rockwell Center.

First Philippine Industrial Park (FPIP) recorded revenues of P404.5million and a net income of P61.8 million, a year-on-year decrease of 17 percent and 61 percent, respectively. The sale of land became more difficult during the year, but FPIP was able to maintain its profitability. The sale of Ready-Built-Factories (RBF) alleviated the effect on revenues of the soft industrial lots market. Revenues from the sale of land and RBFs accounted for 66 percent of total revenues.

First Philippine Industrial Corporation, the pipeline company, reported a 7 percent growth in net income at P202.7 million, reflecting the 4 percent growth in revenues. The company’s balance sheet and liquidity remain strong. Opportunities for growing the business are being studied.

“For 2009, the Group will continue to devote efforts on paring down debt and restoring financial strength and flexibility. ”


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First Balfour had a strong year with the 70 percent completion of its joint venture project, the Saint Luke’s Medical Center. Revenues for the year amounted to P2.1 billion, compared with P840.1 million in 2007. Net income grew by 71 percent to P120.2 million. The company’s backlog remained strong at P2.6 billion as of December 31, 2008.

OUTLOOKFor 2009, the Group will continue to devote efforts on paring down debt and restoring financial strength and flexibility. We will also focus on growing our investment in First Gen, through EDC. EDC has a substantial pipeline of development opportunities. We will take advantage of these opportunities in pursuit of our commitment to clean and renewable energy.

In the midst of this challenging environment, we are fully committed to building our portfolio of assets for the longer term. Thank you for your continued interest and confidence in First Holdings.

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FRANCIS GILES B. PUNOSenior Vice President/Treasurer and Chief Finance Officer

“We have demonstrated our ability to access the financial markets even in the most challenging times.”

CFO Report


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The year 2008 was a difficult and challenging year for First Philippine Holdings Corporation (First Holdings) as it was not spared by the financial crisis and the global economic slowdown. Its key focus was to prepare for the worse by ensuring more than sufficient liquidity. We explored new sources of equity-type fundraising, paid-down and/or refinanced maturing debts and considered potential asset sales. It was clear to us that banks tightened its credit standards, raised the cost of borrowings, reduced facilities and put more demanding covenants. In view of these challenges and continuing volatility in the financial markets, a detailed analysis of the risks and execution plan were carefully pursued.

The parent company, First Holdings, reduced debt-to-equity ratio and strengthened financial base through a timely issuance of P4.3 billion Perpetual Preferred Shares in April 2008 to partly repay and refinance the company’s outstanding loan obligations as well as fund other corporate requirements. This Preferred Shares issuance resulted in an improvement in the parent company’s consolidated long-term debt-to-equity ratio to 1.95 from 2.39 in 2007.

The proceeds of the perpetual preferred shares were used to buy back a total of $30.9 million worth of FPH Fund’s floating rate notes (FRNs) in 2008 reducing by about 60 percent the amount of outstanding notes maturing in October 2009 from $52 million to $21.1 million The FRNs that First Holdings bought back in the secondary market pay interest of more than 10 percent. First Holdings took this opportunity to reduce its debt and possibly turn a profit in the process, given the discount the FRNs were trading in the market. The buy back also helped to free up about $7.7 million last year required to be set aside to back the notes to maintain the required debt service coverage ratio. Following the scheduled amortizations in 2008, the $17.9 million FPH Fund loan from Standard Bank Asia Limited was further reduced to $10.8 million (expected to be fully paid by April 2010) while the $35 million balance of FGHC International from AIMCF in 2007 was down to $30 million (expected to be fully paid by 2011). In February 2009, another $5 million FRNs were bought back reducing further the October 2009 FPH Fund maturity to $16.1 million.

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“For 2009, we will be even more focused on debt reduction and normalizing the finances of the power generation business...”

We have demonstrated our Group’s ability to access the financial markets even in the most challenging times. In February 2008, our power generation subsidiary First Gen issued a $260 million 2.5 percent convertible bond, which termed out part of the bridge loans taken on for the acquisition of the controlling stake in Energy Development Corporation (EDC). In November 2008, at the height of the financial crisis, First Gas Power Corporation’s $544.0 million refinancing closed with a group of international commercial banks namely, Bank of Tokyo Mitsubishi UFJ, Calyon, ING, KfW, Maybank, Societe Generale, Standard Chartered Bank and Unicredit NVB. The deal was subsequently voted “Asia Pacific Refinancing Deal of the Year 2008” by Project Finance Magazine (published by Euromoney). This loan allowed First Gen to transfer most of its short-term debt to long-term loans at the operating level, which also enhances the project’s returns.

On the asset sale side, First Gen sold 60 percent of its stake in First Gen Hydro Power Corporation to EDC for a consideration of $104.0 million. This amount supplemented the proceeds used to pay down debt at the First Gen level. By March 2009, First Gen paid down the last of its short-term loans via the fundraising at Unified Holdings Corporation which raised over P5.45 billion.

In November 2008, First Holdings reaped the profits of its investments in its tollroad businesses by selling its shares, together with Benpres, in First Philippine Infrastructure Inc. (FPII) to Metro Pacific Investments Corporation (MPIC) for P12.3 billion. First Holdings realized a gain of about P2.8 billion as a result of the sale on top of the cash dividends it received since 2006. The P6 billion net share of First Holdings would be used primarily for debt liability management. First Holdings scheduled principal loan amortizations and maturities in 2009 are estimated to be about $39 million. The amortizations of the Floating Rate Notes issued in October 2007 will start in 2010.

Despite the gain recognized from the sale of the tollroad business, our financial results went down due to EDC’s large foreign exchange losses on its Miyazawa loan as a result of the appreciation of the yen and depreciation of the peso. To minimize the further impact of foreign exchange exposure, EDC has already fully hedged its Yen 12 billion Miyazawa 1 loan which will be fully paid in June 2009.


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While ERC has mandated the use of PBR for the National Transmission Corp. (Transco) and for private distribution utilities, it ordered the deferment of Meralco’s implementation of Performance Based Regulation (PBR) rates even though thorough discussions of the issues and accordance of due process to all the parties had been done. Transco has been under PBR since 2006 while the other two private distribution utilities that entered PBR with Meralco have started to implement their ERC-approved PBR rates in October 2008. This deferment diminished our dividend and earnings expectations from Meralco.

First Holdings earned cash dividends of about P1.3 billion in 2008, representing a decline of 42 percent from the dividend earnings of around P2.1 billion in 2007. First Gen did not pay any cash dividend in 2008 due to the current refinancing program of its short-term debts. Meralco paid a total of about P1 per share of cash dividend in 2008 while FPII managed to provide about P536.9 million in cash dividend in early 2008 before it was acquired by MPIC. First Holdings distributed a total of P2.22924 per share cash dividends on perpetual preferred shares on July 31, 2008 and P4.36155 on February 2, 2009.

For 2009, we will be even more focused on debt reduction and normalizing the finances of the power generation business and review other possible assets sales, if required, to create further liquidity. We started off the year with EDC funding, a P4.1 billion 15-year-term loan with International Finance Corp. This year, we plan to raise even more funding for EDC as we gear up for the coming privatizations of the geothermal plants owned by NPC.

We thank all our stakeholders for continued confidence and support in First Holdings.

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Board of Directors

OSCAR M.LOPEZChairman and Chief Executive Officer

Mr. Lopez is the Chairman and Chief Executive Officer of the First Philippine Holdings Corporation. He is also Chairman of Lopez, Inc. and Benpres Holdings Corp.

AUGUSTO ALMEDA LOPEZVice Chairman

Atty. Lopez is Vice Chairman of both First Philippine Holdings Corporation and ABS-CBN Broadcasting Corporation and Chairman of ADTEL, Inc.

CESAR B. BAUTISTADirector

Mr. Bautista was Ambassador Extraordinary and Plenipotentiary to the United Kingdom of Great Britain and Northern Ireland, Republic of Ireland and Republic of Iceland. He is likewise an independent director of Asian Terminals, Inc., ABS-CBN and First Philippine Infrastructure, Inc. He is a member of the Risk Management Committee. He is also an independent director.

THELMO Y. CUNANANDirector

Mr. Cunanan is currently the Chairman of the Social Security Commission, the top policy-making body of the Social Security System. He was also President of the Philippine National Oil Company.


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OSCAR J. HILADODirector

Mr. Hilado is Chairman of the Philippine Investment Management, Inc. (PHINMA). He is an independent director.

PETER D. GARRUCHO, JR.Director

Mr. Garrucho was the Managing Director for Energy of First Philippine Holdings Corp. He was also Vice Chairman and Chief Executive Officer of First Gen Corp. He was also a former Executive Secretary and Secretary of the Departments of Trade and Industry and Touris m.

ELPIDIO L. IBAÑEZDirector

Mr. Ibañez is President and Chief Operating Officer of First Philippine Holdings Corporation.

JOSE P. DE JESUSDirector

Mr. De Jesus is President of the Manila Electric Company. He was the President and Chief Executive Officer of the Manila North Tollways Corporation. He also served as Secretary of the Department of Public Works and Highways.

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Board of Directors

FEDERICO R. LOPEZDirector

Mr. Lopez is currently the Managing Director of Energy for First Philippine Holdings Corp. He is also President and Chief Executive Officer of First Gen Corp.

ARTEMIO V. PANGANIBANDirector

Mr. Panganiban was the Chief Justice of the Philippines from 2005-2006. He was a Justice of the Supreme Court from 1995 to 2005. He is an independent director. He is also an independent director of GMA Network, Inc. Chief Justice Panganiban is the Chairman of the Risk Management Committee.

MANUEL M. LOPEZDirector

Mr. Lopez is Chairman and Chief Executive Officer of Meralco.

EUGENIO L. LOPEZ IIIDirector

Mr. Lopez is the Chairman of the Board and Chief Executive Officer of ABS-CBN Broadcasting Corporation.


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VICENTE T. PATERNODirector

Mr. Paterno is a former Senator of the Republic, former Chairman of the Board of Investments and former Secretary of the Department of Public Works and Highways. Mr. Paterno is the founding Chairman of Philippine Seven Corporation. He is an independent director.

ERNESTO B. RUFINO, JR.Director

Mr. Rufino is President of Securities Transfer Services, Inc. He is also the Chairman and Chief Executive Officer of Health Maintenance, Inc.

WASHINGTON Z. SYCIPDirector

Mr. Sycip is founder of the SGV Group and Chairman of the Board of Trustees of the Asian Institute of Management. He is an independent director.

SIMON SHAMBoard Observer

Mr. Sham is Managing Director of Darby Asia Investors (HK) Limited.

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SeniorManagement

FEDERICO R. LOPEZManaging Director for Energy

OSCAR M. LOPEZChairman and Chief Executive Officer

ELPIDIO L. IBAÑEZPresident and Chief Operating Officer

FRANCIS GILES B. PUNOSenior Vice President/Treasurer and Chief Finance Officer

RICARDO B. YATCOVice President

OSCAR R. LOPEZ, JR.Vice President

BENJAMIN R. LOPEZVice President

RODRIGO E. FRANCOVice President


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ARTHUR A. DE GUIAManaging Director for Manufacturing and Investments Group

PERLA R. CATAHANVice President and Comptroller

ELIZABETH M. CANLASVice President

ENRIQUE I. QUIASONCompliance Officer and Corporate Secretary

RODOLFO R. WAGA, JR.Vice President and Assistant Compliance Officer

RAMON T. PAGDAGDAGANVice President/Internal Auditor

ANTHONY M. MABASAVice President

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First Holdings’ corporate governance commitment was formalized with its adoption of a Manual on Corporate Governance (Manual) on January 1, 2003. On April 15, 2008, First Holdings filed an amended Manual with the Securities and Exchange Commission (SEC), enhancing and clarifying its provisions. It has likewise secured approval for its Amended By-Laws on February 5, 2009. The amendments relate to the following: (i) the period for submission of proxies, (ii) a new provision on the general responsibility of the Board of Directors; (iii) additional qualifications/disqualifications are prescribed for directors covering items such as disqualification for violations of the SRC (Securities Regulation Code), Corporation Code and rules administered by the Bangko Sentral ng Pilipinas (or Central Bank of the Philippines) and SEC, insolvency, analogous acts in another jurisdiction, other acts prejudicial, inimical or causing undue injury to the corporation, its subsidiaries or affiliates, and gross negligence or bad faith committed as a director in any other company; and (iv) a new provision to provide that, pursuant to good corporate governance, the Board is governed by the Manual, which shall be suppletory to the By-Laws.

First Holdings has also adopted a Manual on Anti-Money Laundering. To further flesh out its commitment to good governance, the Company instituted a Corporate Code of Conduct (Code) in August 2005. The Code reiterates the values and principles instilled by its founder and carried on by the company, namely: nationalism, integrity,

entrepreneurship, innovation, teamwork, strong work ethic and corporate social responsibility (CSR). The Code embodies the principles and guidelines for the conduct of the business of the company and in dealing with its shareholders, customers, joint venture partners, suppliers/service providers, the government, creditors and employees. The Code also affirms the Company’s commitment to pursue civic, charitable, and social projects and undertakings. The Code, the Business Mission, the Company Credo and its Commitments are made part of the Manual.

First Holdings continues to maintain that corporate governance is an indispensable component of “sound strategic business management to improve the economic and commercial prosperity of the corporation and enhance shareholder value.”

As in the past, its board is composed of individuals with proven competence, probity and integrity. And they are provided with ample support to enable them to fulfill their duties.

THE BOARDMembers of First Holdings’ Board of Directors are: Oscar M. Lopez, Chairman; Augusto Almeda-Lopez, Vice Chairman; Elpidio L. Ibañez, President; Thelmo Y. Cunanan; Peter D. Garrucho, Jr.; Oscar J. Hilado; Jose P. De Jesus; Eugenio L. Lopez III; Manuel M. Lopez; Vicente T. Paterno; Washington Z. Sycip; Federico R. Lopez; Ernesto B. Rufino, Jr.; Cesar B. Bautista; and Artemio V. Panganiban.

First Holdings continues to maintain that corporate governance is an indispensable component of “sound strategic business management to improve the economic and commercial prosperity of the corporation and enhance shareholder value.”

CorporateGovernance


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STANDING COMMITTEESThe Board has constituted standing committees from among its ranks which exercise the duties and functions provided in the Manual for Corporate Governance.

The Nomination and Election Committee passes upon the nomination and election of directors. It is composed of the following: Oscar M. Lopez, Chairman; Oscar J. Hilado, Vicente T. Paterno, Manuel M. Lopez and Washington Z. Sycip. This committee performs a crucial function, as it selects the directors and passes upon their qualifications, seeking to entrust management to those who can “bring prudent judgment to bear on the decision-making process.”

The Compensation and Remuneration Committee oversees the appropriate corporate rewards system. It is composed of the following: Oscar M. Lopez, Chairman; Washington Z. Sycip and Vicente T. Paterno. It seeks to promote a culture that supports enterprise and innovation, with suitable performance-related rewards that help motivate management and the employees to be effective and productive.

A separate committee, composed of Augusto Almeda-Lopez as Chairman and Washington Z. Sycip and Vicente T. Paterno as members, reviews the Chairman’s compensation and remuneration.

The Audit Committee evaluates financial and accounting matters and is composed of the following: Oscar J. Hilado, Chairman; Augusto Almeda-Lopez;

Peter D. Garrucho, Jr.; and Washington Z. Sycip. This committee, among other things, has the duty to ensure transparency and integrity in the financial management system. Both external and internal auditors are available to assist the Audit Committee.

First Holdings has an Internal Audit Group (IAG) composed of Certified Public Accountants and most of whom are Certified Internal Auditors. The IAG reports to the Board through the Audit Committee. The IAG provides assurance and consulting functions for First Holdings and its subsidiaries in the areas of internal control, corporate governance and risk management. Its Internal Audit Activities are all in accordance with the International Standards for Professional Practice of Internal Auditing.

As a company focused on financing and business prospects, First Holdings has a Finance and Investment Committee composed of the following: Oscar M. Lopez, Chairman; Thelmo Y. Cunanan; Peter D. Garrucho, Jr.; Federico R. Lopez; Eugenio L. Lopez III; and Jose P. De Jesus. This committee reviews the investments and financing efforts of the Company, investment objectives and strategies, fund raising, major capital expenditures, investment opportunities as well as divestments, among other things.

On December 13, 2007, the Company constituted a Risk Management Committee headed by former Chief Justice Artemio V. Panganiban as Chairman, with Ernesto B. Rufino, Jr. and Cesar B. Bautista as members. This committee is tasked to (a) oversee

First Holdings implements corporate excellence initiatives both at the parent and subsidiary levels such as ISO certification, environment, safety and health programs, risk management, six sigma and knowledge management, the Oscar M. Lopez award for performance excellence and the Lopez Achievement Award, among others.

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CorporateGovernance

the formulation and establishment of an enterprise-wide risk management system; (b) review, analyze and recommend the policy, framework, strategy, method and/or system of or used by the company to manage risks, threats or liabilities; (c) review with management the corporate performance in the areas of legal risks and crisis management; and (d) review and assess the likelihood and magnitude of the impact of material events on the company and/or to recommend measures, responses or solutions to avoid or reduce risks or exposure.

TRANSPARENCY AND COMPLIANCEFor added transparency, the Company presently has one (1) board observer during board meetings. Complete, prompt and timely disclosures of material information have been made by the Company to the Exchange and to the SEC for the benefit of the investing public.

The law only requires two independent directors for covered companies. First Holdings has five such directors and the requirement for such directors is likewise enshrined in its by-laws. The independent directors are also members of their respective Board committees.

Atty. Enrique I. Quiason has been designated as Compliance Officer and Atty. Rodolfo R. Waga, Jr. as Asst. Compliance Officer, specifically for corporate governance. They are First Holdings’ Corporate Secretary and Assistant Corporate Secretary, respectively.

First Holdings, likewise, implements corporate excellence initiatives both at the parent and subsidiary levels such as ISO certification, Environment, Safety and Health programs, Risk Management, Six Sigma and Knowledge Management, the Oscar M. Lopez Award for Performance Excellence and the Lopez Achievement Award, among others. On February 9, 2009, the company obtained its certifications that its integrated management system, consisting of its quality management system, environmental management system, as well as its health and safety management system, conform to the standards of ISO 9001:2000, ISO 14001:2004 and ISO 18001:2007, respectively.

OTHER OFFICESThe Board of Trustees of the First Holdings Retirement Fund, which administers the retirement fund of the company, is composed of the following: Elpidio L. Ibañez, Chairman; Francis Giles B. Puno; Arthur A. De Guia; Perla R. Catahan; and Elizabeth M. Canlas.

The Employee Stock Purchase Plan Board of Administrators which administers the company’s stock option plan is composed of the following: Elpidio L. Ibañez, Chairman; Francis Giles B. Puno; and Perla R. Catahan.

The law only requires two independent directors for covered companies. First Holdings has five such directors and the requirement for such directors is likewise enshrined in its by-laws. The independent directors are also members of their respective board committees.


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DIRECTORS FEB MAR APR MAY MAY MAY JUN JUN JUL AUG SEP OCT NOV DEC

9 19* 19** 5 25

O.M. Lopez √ √ √ √ √ √ √ √ √ √ √ √ √ √

A.A. Lopez √ √ √ √ √ √ √ √ √ √ √ X √ √

C.B. Bautista √ √ √ √ X X X √ √ √ √ √ √ √

T.Y. Cunanan √ √ √ √ X X √ √ √ √ √ √ X √

P.D. Garrucho Jr. √ √ X √ √ √ √ √ √ √ √ X √ √

O.J. Hilado √ √ √ √ √ √ X √ √ √ √ √ X √

E.L. Ibañez √ √ √ √ √ √ √ √ √ √ √ √ √ √

J.P. De Jesus √ √ √ X √ √ √ √ √ √ √ √ √ √

E.L. Lopez III √ √ √ X X X √ X √ √ X X X X

F.R. Lopez √ √ √ √ X X √ √ √ √ √ X √ √

M.M. Lopez √ √ X X √ √ √ √ X √ √ √ √ X

A.V. Panganiban √ √ √ √ √ √ √ √ √ √ √ √ X √

V.T. Paterno X √ √ √ √ √ X √ √ √ √ √ √ √

E.B. Rufino Jr. √ √ √ X X X X X √ √ √ √ √ √

W.Z. Sycip X X √ √ √ √ √ X X √ √ √ √ √

Legend: √ -Present X –Absent* - Annual Stockholders’ Meeting** - Organizational Board Meeting

The following is a record of attendance in the Board meetings of the Corporation for calendar year 2008 and the Annual Stockholders’ Meeting, to wit:

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BoardCommittee

FPHC INCUMBENT DIRECTORSMr. Oscar M. LopezMr. Augusto Almeda-LopezAmb. Cesar B. BautistaAmb. Thelmo Y. Cunanan Mr. Peter D. Garrucho, Jr.Mr. Oscar J. HiladoMr. Elpidio L. IbañezMr. Jose P. De JesusMr. Eugenio L. Lopez IIIMr. Federico R. LopezMr. Manuel M. Lopez Chief Justice Artemio V. Panganiban Mr. Vicente T. Paterno Mr. Ernesto B. Rufino, Jr.Mr. Washington Z. Sycip

FPHC INCUMBENT OFFICERSMr. Oscar M. Lopez Chairman and CEOMr. Augusto Almeda-Lopez Vice Chairman of the BoardMr. Elpidio L. Ibañez President and COOMr. Francis Giles B. Puno Senior Vice President/Treasurer & CFOMr. Federico R. Lopez Managing Director for EnergyMr. Arthur A. De Guia Managing Director for Mfg. & Portfolio Investments GroupMr. Fiorello R. Estuar Head of Infrastructure Business DevelopmentMr. Danilo C. Lachica Senior Vice PresidentMr. Richard B. Tantoco Senior Vice PresidentMs. Perla R. Catahan Vice President/ComptrollerMr. Ricardo B. Yatco Vice PresidentMr. Anthony M. Mabasa Vice PresidentMr. Hector Y. Dimacali Vice PresidentMr. Leonides U. Garde Vice PresidentMr. Robert C. Chan Vice PresidentMr. Oscar R. Lopez, Jr. Vice PresidentMr. Rodrigo E. Franco Vice PresidentMr. Victor Emmanuel B. Santos, Jr. Vice PresidentMr. Benjamin R. Lopez Vice PresidentMr. Ariel C. Ong Vice PresidentMr. Ramon T. Pagdagdagan Vice President/Internal AuditorMs. Elizabeth M. Canlas Vice PresidentMr. Enrique I. Quiason Corporate Secretary/Compliance OfficerMr. Rodolfo R. Waga, Jr. VP/Asst. Corp. Sec. and Asst. Compliance Officer


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EXECUTIVE COMMITTEEOscar M. Lopez ChairmanAugusto Almeda-Lopez MemberElpidio L. Ibañez Member

AUDIT COMMITTEE Oscar J. Hilado ChairmanAugusto Almeda-Lopez MemberPeter D. Garrucho Jr. MemberWashington Z. Sycip Member

COMPENSATION AND REMUNERATION COMMITTEEOscar M. Lopez ChairmanVicente T. Paterno MemberWashington Z. Sycip Member

CHAIRMAN’S COMPENSATION AND REMUNERATION COMMITTEEAugusto Almeda-Lopez ChairmanVicente T. Paterno MemberWashington Z. Sycip Member

NOMINATION AND ELECTION COMMITTEEOscar M. Lopez ChairmanOscar J. Hilado MemberManuel M. Lopez MemberVicente T. Paterno MemberWashington Z. Sycip Member

FINANCE AND INVESTMENT COMMITTEEOscar M. Lopez ChairmanThelmo Y. Cunanan MemberPeter D. Garrucho Jr. MemberEugenio L. Lopez III MemberFederico R. Lopez MemberJose P. De Jesus Member

RISK MANAGEMENT COMMITTEE Artemio V. Panganiban Chairman Cesar B. Bautista Member Ernesto B. Rufino, Jr. Member

BOARD-APPOINTED COMMITTEES

ESPP BOARD OF ADMINISTRATORSElpidio L. Ibañez Chairman Perla R. Catahan MemberFrancis Giles B. Puno Member

BOARD OF TRUSTEES OF THE FPHC RETIREMENT FUND Elpidio L. Ibañez Chairman Elizabeth M. Canlas Member Perla R. Catahan MemberArthur A. De Guia MemberFrancis Giles B. Puno Member

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A. STANDARDS-BASED SYSTEMS First Philippine Holdings Corporation (First Holdings) continued its journey towards an Integrated Management System (IMS) certification. It formally launched its IMS on August 4. Various IMS-related activities ensued. First Holdings was then awarded its Integrated Management System certificate on February 9, 2009.

In late 2007, BIMS or Baldrige-Integrated Management System was launched to strengthen the integrated management system by determining the level of maturity of the IMS processes, determining the level of integration between IMS and Baldrige, measuring the progress against objectives, reassessing the continuing relevance of those objectives, and improving the internal audit process using the scoring guidelines of Baldrige. First Electro Dynamics Corporation (Fedcor) adopted BIMS and its management systems performance was assessed using the two evaluation factors: (1) Management Processes and (2) Quality, Environment, Safety and Health (QESH) Results.

B. MANAGEMENT TOOLS1. Environment Safety and Health A number of First Holdings Companies achieved milestone million man-hours of operation without disabling or lost time accidents this year.

1 Million Man-Hours: First Philippine −Industrial Corp. and Meralco Dasmariñas Sector3 Million Man-Hours: Bauang Private −

Power Corp. (BPPC), First Gas Power Corp. and Meralco Sta. Rosa Sector 5 Million Man-Hours: Meralco Central, −North and South Business Areas20 Million Man-hours: First Sumiden −Circuits, Inc. (FSCI)

In collaboration with the Klima Climate Change Center of the Manila Observatory (Klima-MO), BPPC continued to be active in the Philippine Greenhouse Gas Accounting and Reporting Program (PhilGARP). BPPC, through the Philippine Business for the Environment (PBE), reported its greenhouse gas (GHG) inventory and reduction target for 2008 to the World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD).

For the sixth year, First Holdings and Rockwell Land Corporation, through PBE, organized the Earth Day Recyclables Event. During this event, other companies, establishments, condominium residents and individuals brought their recyclable wastes such as paper, electronics, car batteries, PET bottles, aluminum cans, ink cartridges and polystyrene packaging to accredited recyclers.

2. Six SigmaTwo managers from Philippine Electric Corporation became certified Six Sigma Black Belts this year and were recognized during the Business Excellence Awards. In June, 13 employees of Fedcor also completed their Green Belt Training.

The Lopez Group was represented during the Six Sigma Leadership Conference

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in Shanghai in February, and at the Asia Six Sigma Summit in Singapore in June. Danilo C. Lachica, First Holdings Senior Vice President and Managing Director for First Philec Electronics Division, also served as panel judge at the Six Sigma event in Orlando, Florida in January.

3. Enterprise Risk Management The Enterprise Risk Management (ERM) Framework, adopted four years ago by the Lopez Group of Companies, tries to link the company objectives to its core, critical and support processes in consideration of both the tangible (physical, financial) and intangible (knowledge, core values, brand) assets of the company.

The Risk Management Committee (RMC), one of the Board committees in First Holdings, is composed of three directors: Artemio V. Panganiban, Chairman; Cesar B. Bautista; and Ernesto B. Rufino, Jr. The first two are independent directors. The RMC seeks to provide an oversight function to the risk management activities of the First Holdings Group. An Executive Risk Management Unit (ERMU), composed of the President and other Senior Level Officers, supports the Committee. The ERMU members, being the ultimate owners of the risks, regularly, review the risk profile of the Group and craft, monitor and implement the risk management strategies of the company.

One of the major actions the RMC conducted last year was to hold one-on-one sessions with the various First Holdings sectors. Among them are the Distribution Sector (Meralco),

Power Generation Sector (First Gen, First Gas, First Philippine Industrial Corporation), Infrastructure Sector (MNTC, First Balfour), Tollway operations (Tollway Management Corporation) and the Manufacturing Sector (Philec, First Sumiden Circuits Inc., First Philippine Solar, First Electro Dynamics Corporation). The one-on-one sessions served as an avenue for the various risk management champions of the companies in the Group to solicit feedback on their adopted mitigation strategies from RMC members who have extensive knowledge from their experiences in both the government and private sectors. The output of this exercise was an enterprise risk map for First Holdings with corresponding assessments, risk definitions and mitigation strategies.

In total, the RMC conducted seven formal meetings throughout 2008, tackling various risk management issues for the Group. All RMC meetings are provided with minutes and all action items are monitored by the Secretariat to ensure completion. A formal report on these accomplishments was submitted to the Board in November 2008.

In addition to the activities of the RMC, the First Holdings board also participated in a half-day session to fine tune the five-year strategic plan of the company. It was held in Rockwell Center in May and was facilitated by First Holdings President and COO Elpidio L. Ibañez.

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Moving forward, the RMC, through the ERMU, is also exploring enhancement of the existing ERM practices by tapping SGV/Ernst and Young to update the processes. SGV had worked with most of the First Holdings companies in setting up their risk management systems four years ago. In addition, the company also plans to imbed enterprise risk management in its auditable IMS process. The company’s IMS already employs the discipline of risk management in its ESH modules. As an expansion of ERM, First Holdings is also looking at globally-accepted standards/systems on Business Continuity and Crisis Management, as part of continuous improvement efforts toward corporate resiliency.

4. KNOWLEDGE MANAGEMENT (KM)The challenges of the knowledge economy demand new strategies and tools for our company. As First Holdings embraces these challenges, it is paramount to create value more by innovation using intellectual capital instead of tangible assets.

As a holding company with significant investments in various industries, First Holdings’ products (its portfolio of investments and the company’s accumulated value) are highly dependent on knowledge and intangible assets (e.g. tacit knowledge, networks, processes and corporate brands).

For a 48-year-old company, the key challenge in implementing knowledge management (KM) in the organization is

an old mindset. The process of learning is difficult but the process of unlearning old practices is equally challenging.

Since First Holdings’ KM approach is organizational, the focus includes people, processes, database and information technology (I.T.) in order to support its Value Creation Framework. First Holdings implements its own KM framework that links corporate strategy, group/department strategy, manpower development, systems/processes and I.T. It uses ISO and now Integrated Management System (IMS) among its tools for documenting critical processes and information. For the people aspect, since value creation requires a combination of new and old competencies, First Holdings has multi-disciplinary/methodology interventions which involve Community of Practice (e.g. Comptrollership Circle, Human Resource Council), mentoring, deployment and other internal and external development training. The KM Team, called the Business Excellence Team under the Management Committee, is initiating business excellence on planning, business processes and policies for the various departments and groups in the organization. For the database and I.T., First Holdings is focusing on information-mapping and the use of technology for digitization of records (which have accumulated for almost 50 years) and the KM portal using Microsoft SharePoint.

Moving forward, First Holdings sees its KM program critical in empowering its


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knowledge workers to create new wealth for its stakeholders.

5. Human Resources ManagementFirst Holdings provides and supports wide-ranging human resource development programs for all employees covering Management/Leadership, Organizational, Functional, and Business Excellence initiatives and programs. These include the Executive Masters in Business Administration, through the Asian Institute of Management, as well as key functional programs such as the Certified Internal Auditor, Certified Information Systems Auditor, Certificate in Human Resource Management, Mandatory Continuing Legal Education, Financial Modeling Program and others.

The company likewise provides learning sessions and fora on the Malcolm Baldrige Criteria (the framework of the Oscar M. Lopez Awards for Performance Excellence), Performance Management System (PMS), Investors in People, Integrated Management System, Risk Management, Six Sigma and Corporate Wellness.

Forming part of its various activities to ensure work-life balance, First Holdings continues to support the Employee Wellness Program which is now on its 11th year. Through this program, the company provides employees with individual assessments and profiles based on established health assessment parameters to include blood chemistry tests, body mass index, body

fat composition, cardio-respiratory endurance, flexibility and family medical history. Every employee is likewise provided with an individualized wellness program prescription to include nutrition, fitness activities and stress interventions that fit the employee’s profile.

In partnership with Watson Wyatt, the company is now in the final stages of the competency-based PMS to ensure the alignment of Human Resources Management Group (HRMG) systems with the company’s overall strategic directions. The project started with the development of a core competency framework for an integrated approach to driving and sustaining growth within the company. Other related activities include the updating of job profiles and the establishment of a new job classification system.

HRMG is also in the process of updating and aligning the salary structure to the new classification system.

Overall, First Holdings is now on the third phase of a roadmap which includes the development of succession management and career development systems. Together with Watson Wyatt, the company now works on the Succession Planning Program Framework that will complement the Career Planning Program. In line with these programs, the company has launched the First Holdings Developmental Assignment Program, which aims to provide work exposure and opportunities to develop the company’s

First Holdings was awarded its Integrated Management System certificate on February 9, 2009.

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human resources to meet the needs of the business, as well as to develop their capabilities. The program involves both internal and external deployment of high potential human resources. These and other related programs and activities are all geared to enhance organizational capacity in addressing the evolving challenges and requirements of the business.

C. PERFORMANCE AWARDS1. Oscar M. Lopez Award for Performance Excellence The Lopez Group’s own version of the U.S. Malcolm Baldrige National Quality Award (MBNQA) or the Philippine Quality Award (PQA) is the Oscar M. Lopez Award for Performance Excellence or the “Oscars.”

For the 2007-2008 Award cycle, two applicant companies from the First Gen Corporation Group received recognition. For demonstrating good performance and establishing sound processes as a foundation for consistent performance, First Gas Power Corp./FGP Corp. received the Level I Recognition for Pursuit of Excellence. It also earned the distinction of being the first company to receive recognition in its first Award application. The other company, First Philippine Industrial Corporation (FPIC), received the Level II Recognition for Commitment to Excellence. FPIC has been continuing the journey to excellence, and already, has demonstrated a high level of performance and has achieved significant progress in building quality values and sound processes as a foundation for consistent performance. Another laurel

validating this level of maturity is FPIC’s conferment of the Level II Recognition for Proficiency in Quality Management in its first application to the PQA. FSCI, on the other hand, was conferred a special Oscar M. Lopez Award for Performance Excellence, for receiving the highest recorded score in the history of the PQA, the 751-875 scoreband.

To continuously learn how other organizations use and benefit from Baldrige, First Holdings has been sending representatives to the Quest for Excellence. In April, Danilo C. Lachica, Managing Director of Electronics Division of First Philec; Ramon T. Pagdagdagan, First Holdings Vice President-Internal Audit; Luigi Bautista, Senior Vice President and Rodrigo Franco, Executive Vice President and COO of Manila North Tollways Corporation; and Maribel Relatado-Rubia of Business Excellence, attended the Quest for Excellence XX in Washington, D.C. They joined the roster of 17 Lopez Group employees, including the Chairman, who have previously participated in this annual best-practice sharing of Baldrige winners.

2. Lopez Achievement Award While the Oscars is bestowed to Lopez Group companies which have demonstrated a level of excellence in all aspects of the business, the Lopez Achievement Award (LAA), on the other hand, is given to outstanding team and individual achievements that have contributed in one or more of the following areas: Customer Focus, Business Management, Operations Management,

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Human Resource, Public Responsibility and Corporate Image-building. These categories are also inspired by the Baldrige Criteria.

In July, seven teams within the Group were conferred the LAA, with two of them under First Holdings, as follows:

Operations and Management Team −of First Gas Power Corp./FGP Corp. for the Santa Rita and San Lorenzo CCPP Capacity Upgrades, Award for Operations Management; and Corporate Image Committee, Branch −Excellence Service Team, Network Corporate Image Working Team for Pursuing Service Excellence Among Frontliners to Enhance Meralco’s Image Among Residential Customers, Award for Customer Focus (Top Awardee)

Since 2002, there have already been 43 LAA recipients of which 22 and two individuals are from First Holdings.

Recipients of both the Oscars and the LAA are required to share their strategies and experiences in various learning sessions. The venue for this was during the InSync Conference, the first-ever Lopez Group conference on Business Excellence and Corporate Social Responsibility. This two-day best practice sharing aimed to promote and propagate the use and reuse of proven effective strategies, open up opportunities for synergy for a more effective use of resources, and provide inspiration to deliver high performance by presenting role models in different areas. A total of 320 participants from 40 companies and foundations populated the three plenary sessions, three panel discussions, and 12 technical tracks. The conference ushered another feasible approach for the faster exchange and transfer of organizational knowledge within a conglomerate.

In order to keep our feet on the ground and in touch with reality, we continue to vigorously promote business excellence tools and practices among our companies under the unifying framework that we have borrowed from the U.S. Malcolm Baldrige National Quality Award.

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The significant undertakings of First Holdings with the various members of the Lopez Group in the different corporate social responsibility (CSR) thematic areas are described below:

EDUCATION−Lopez Group Foundation, Inc (LGFI) with the support of First Holdings and the Lopez Group of Companies established a partnership with the Philippine Military Academy (PMA) to put up the Lopez Hall of Leaders, a multipurpose building in the former’s location in Baguio City. This was the biggest single CSR project of the Lopez Group since the donation of the main building of the Asian Institute of Management some 40 years ago. The Lopez Hall of Leaders was meant to enable the PMA to become the country’s leadership school for future military, business and civic leaders. A sterling example of such a person is none other than the founder of the Lopez Group of Companies, Don Eugenio Lopez, Sr. An exhibition on him was shown in the said venue, conceptualized and curated by a team from the Lopez Memorial Museum (LMM).

First Holdings supports the Eugenio Lopez Foundation Inc. (ELFI). The foundation manages and operates the LMM. The

LMM has been able to make historical materials available and keep them in good condition with its proactive conservation program. The Roberto M. Lopez Conservation Laboratory of the ELFI has been able to provide conservation services, tours upon request, and research based on the staff’s experience in conserving the museum’s collection in the context of a tropical environment. Some of the research studies were made part of the museum’s exhibition “The Sum of Its Parts” in 2008.

BIODIVERSITY −CONSERVATIONFirst Philippine Conservation Inc. (FPCI) implemented two marine conservation projects. These are Project Center of Center and Strengthening the Capacity of Resource Managers to Conserve and Protect Marine Biodiversity. Both projects are implemented along the Verde Island Passage, one of the country’s marine priority areas. It also started work on the Red List Status of the Marine Endemic Fishes of the Philippines, due for publication in 2010. FPCI also actively participated in the various meetings and conferences related to the Coral Triangle Initiative, a multilateral cooperation among six countries (Philippines, Malaysia,

Indonesia, Timor Leste, Papua New Guinea and Solomon Islands). FPCI also hosts the Philippine node of the Global Marine Species Assessment (GMSA) Program. GMSA aims to increase the number of red listed marine species all over the world from merely over a thousand to 20,000 in three years. Red listing is the process of assessing the conservation status, including the risk of extinction, of marine species. It is a global project of IUCN-The World Conservation Union, Conservation International and the Old Dominion University in Norfolk, Virginia. The Philippine node (also referred to as GMSA for the Coral Triangle) being hosted by FPCI is the only GMSA field station outside of the United States.

FPCI had the soft launch of the Restoring our Forests as One Nation (REFO 1) Program at the Bataan Natural Park. FPCI is also eyeing to expand this forest restoration initiative to other sites, with more corporate sponsorships and other partnerships.

FPCI intends to strengthen its programs and partnerships in 2009, and to continue working with the Department of Environment and Natural Resources on existing programs

CorporateSocial Responsibility

We at the First Philippine Holdings Corporation commit to the Filipino nation... Our thrust towards the development of communities and persons we influence in our work.

We at the First Philippine Holdings Corporation commit to the Filipino nation... Our thrust towards the development of communities and persons we influence in our work.


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and possible new undertakings.

ENVIRONMENT −First Philippine Conservation Inc. (FPCI) is developing a forest restoration program at the Bataan Natural Park, one of 16 identified priority areas for reforestation. Together with the Department of Environment and Natural Resources, FPCI worked to develop a program document on forest restoration resulting in a program called Restoring our Forests as One Nation (REFO 1) Program. FPCI is also preparing a major publication about the country’s rich marine biodiversity resources.

POVERTY ALLEVIATION−First Holdings has prepared its exit in the Paliparan III Site Integrated Community Development Program (ICD). This program was implemented with the Philippine Business for Social Progress (PBSP) to sustain the Lopez family’s philanthropy in the 51-hectare relocation area of 7,000 households in Paliparan, Dasmariñas, Cavite. The first phase of assistance resulted in successful engagements with the communities to organize and actively participate in expanding their resources. The second phase helped reduce the pressures of high population growth rate by providing access to reproductive health information and family planning methods. First Holdings also provides continuous support to the other programs of the PBSP.

PHILANTHROPY−LGFI, with the support of First Holdings and the Lopez Group of Companies and member

foundations, complemented a land donation of the Lopez family by developing the Halad sa Guimaras Project. In August 2006, an oil spill in Guimaras adversely affected many fishing communities. The project attracted other partners like AusAid’s Philippine-Australia Community Assistance Program (PACAP) and NGOs (nongovernment organizations). It has enabled a selected community in Barangay La Paz, Nueva Valencia, to organize and manage their cooperative and establish various agro-farm projects to improve their status.

VOLUNTEERISM−First Holdings participated in the activities for the design of a volunteering program that is being developed by LGFI. Volunteer coordinators of the holding companies underwent training with PBSP for reviewing policies and drafting an operations manual. They facilitated the conduct of employee surveys and assessed the various volunteerism opportunities in the target communities and the Lopez Group foundations. As contribution to the Department of Education’s efforts in “Brigada Eskwela” for the school opening, employee volunteers using materials donated by the company joined in painting tasks at the Nagpayong Elementary School, located in one of the poorest communities in Pasig. The volunteers also organized gift-giving and solicitation events for the pediatric patients of the Philippine General Hospital and the scholars of Caritas Manila among the urban poor.

ASIAN EYE INSTITUTEThe Asian Eye Institute (AEI) is an initiative in social investing that provides a reasonable return to investors but dedicates a part of its operations and excess profits to social outreach programs.

AEI continues to provide world-class eye care to the Filipino. Last year, it launched its second satellite clinic at the SM Mall of Asia in Pasay City. It also performed over 140 cataract and other surgeries to charity patients, including those referred by the Ophthalmological Foundation of the Philippines. It also launched two fellowship programs in addition to the Glaucoma fellowship. These are Medical Retina and Uveitis, and Cornea and Refractive Surgery. These fellowship programs produced three graduates. Also, AEI initiated 10 research projects which were either internally funded or funded and sponsored by industry partners, to help further its search for better ways to heal patients.

AEI maintains its IMS certification (ISO 9001:2000, ISO 14001:2004 and OHSAS 18001:1999).

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Leyte Geothermal Production Field


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FIRST GEN CORPORATIONIn 2008, First Gen Corporation (First Gen) continued to focus on its goal of global leadership in clean and renewable energy, even as it worked to strengthen its financial position in the midst of a global economic crisis.

First Gen reported a 64 percent increase in consolidated revenues to $1.8 billion in 2008 from $1.1 billion in 2007. The increase was due to the consolidation of Energy Development Corporation (EDC) financials, following the November 2007 purchase of the geothermal company’s shares from the government.

Net income attributable to the parent company, however, decreased by 86 percent to $14.5 million year-on-year (YoY) from $104.6 million in 2007. The lower profits were largely due to higher

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Sta. Rita and San Lorenzo combined-cycle natural gas power plants.

interest expense and financing charges brought about by the debt incurred for the purchase of a controlling stake in EDC, coupled with unrealized foreign exchange losses resulting from the revaluation of the groups’ various foreign currency-denominated loans and assets.

The full year income tax payments of its subsidiary, First Gas Power Corporation, whose income tax



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Federico R. LopezPresident and Chief Executive OfficerFIRST GEN

Francis Giles B. PunoExecutive Vice President and Chief Finance OfficerFIRST GEN

Richard B. TantocoExecutive Vice President and Chief Operating OfficerFIRST GEN

holiday for the 1000-megawatt (MW) Santa Rita power plant ended in May 2007, also reduced the bottom line. In addition, First Gen Hydro Power Corporation, the owner and operator of the 112-MW Pantabangan-Masiway hydroelectric power plant, reported a lower net income due to reduced irrigation requirements that led to a lower generation output. The lower prices at the Wholesale Electricity Spot Market

and the adverse effect of the peso depreciation against the U.S. Dollar also contributed to the decline in its income.

Consolidated interest expenses and financing charges shot up by 124 percent YoY to $203.7 million from $91 million, due to higher debt levels as well as the full year interest expense for EDC’s existing loans. The financial situation of First Gen is expected to normalize

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Pantabangan-Masiway hydroelectric power plants

in 2009, following the completion of major refinancing activities and the hedging of the final portion of EDC’s Japanese-yen denominated loan due in June 2009.

In February 2008, First Gen issued $260 million convertible bonds at a coupon rate of 2.5 percent, which termed out part of its bridge loans. In March 2009, First Gen’s wholly-owned subsidiary, Unified Holdings Corporation,



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Victor Emmanuel B. Santos, Jr.Vice PresidentFIRST GEN

Jonathan RussellSenior Consultant

Ernesto B. PantangcoPresident and Chief Executive OfficerFPPC/BPPC

successfully closed and drew on a P5.6 billion three-year corporate note from a consortium of local banks. The proceeds of this loan paid down the last of the bridge loans incurred for the purchase of EDC that remained at the First Gen level.

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ENERGY DEVELOPMENT CORPORATIONIn 1976, the PNOC Energy Development Corporation (EDC) was created to explore and develop sustainable, indigenous energy sources in order to lessen the Philippines’ dependence on imported fuel.

Why geothermal energy? Geothermal energy (from the Greek words geo, meaning earth, and thermos, meaning heat) comes from the earth’s heat. The heat in a geothermal system can be harnessed in the form of steam or with water as medium.

Geothermal energy is a reliable source of power since it is almost inexhaustible and not affected by rain or drought. Geothermal power has a present output that already displaces close to 20 million barrels of fuel of oil in a year, which results in savings of over $400 million. Geothermal energy also creates new jobs, stimulates economic activity and pours additional funds for local business and countryside communities to prosper. Communities hosting geothermal facilities also get 40 percent share of geothermal royalty, apart from other taxes. Geothermal energy uses steam that is natural, and doesn’t burn fossil fuel thereby reducing carbon emissions that harm the environment.

Today, EDC has 1,199 MW total steam field capacity and 744 MW of geothermal power generation facilities, thus making it the

Today, EDC has 1,199 MW total steam field capacity and 744 MW of geothermal power generation facilities, thus making it the country’s largest integrated geothermal energy company, producing 60 percent of the Philippines’ geothermal capacity.”

Mindanao Geothermal Production Field

EDC Special


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country’s largest integrated geothermal energy company, producing 60 percent of the Philippines’ geothermal capacity. It is also the world’s second largest geothermal power producer, second to a U.S.-based company. EDC continues to ensure cleaner and green energy to preserve the environment for future generations.

Its steam fields are the Bacman Geothermal Production Field, Leyte Geothermal Production Field, Mindanao Geothermal Production Field, Northern Negros Geothermal Production Field and Southern Negros Geothermal Production Field. In 2006, EDC became a power plant operator when it was handed over the 130 MW Upper Mahiao Power Plant, the first geothermal project built under the Build Operate Transfer (BOT) mechanism. A year after, EDC commissioned the 49 MW Northern Negros Geothermal Power Plant, the country’s first merchant power plant. This was followed by the handover of eight more BOT geothermal power generation plants in the province of Leyte. Leyte is acclaimed to have the world’s largest wet steam field, making EDC a global leader in wet steam technology.

In November 2007, EDC became a subsidiary of Red Vulcan Holdings Corporation (Red Vulcan) after Government sold 60 percent of its controlling stake. Red Vulcan is a wholly-owned subsidiary of First Gen Corporation. In October 2008, EDC purchased 60 percent of First Gen Hydro Power Corporation, the operating company of the 112 MW Pantabangan-Masiway hydroelectric power plants, adding to its renewable energy base.

EDC also boasts of a highly competent leadership team with a proven track record and management expertise. EDC employs about 2,600 people who are deployed in six offices nationwide. EDC adheres to a set of principles written in its code of conduct and business ethics.

For its future prospects, EDC has three expansion strategies: organic growth by developing new geothermal fields estimated at around 280-310 MW, acquisition of geothermal power plants owned

Paul AquinoPresident EDC

by the National Power Corporation, and possible overseas expansion, particularly in Indonesia, where an estimated 20,000 MW of geothermal reserves are waiting to be developed. EDC expects to pay down all its Yen debts in 2009.

EDC recently won the Grand Anvil Award from the Public Relations Society of the Philippines for its project “Harmonizing Environment and Technology: A Communication Plan for the Northern Negros Geothermal Project.” The Anvil Awards are known to be the “Oscars” in public relations. EDC also received the Bull Run Award from the Philippine Stock Exchange for being the “Most Outstanding IPO” in 2006. The company has also received recognition in the fields of corporate governance, environment, finance, labor relations and social work.

In the field of corporate social responsibility, EDC has a branded program called “Balik-Biyaya,” which aims to “give back the bounties and benefits” to the communities that host its production fields. Today, 18,000 households in host communities benefit from Balik-Biyaya’s education, health, livelihood and environmental programs.

In 2008, EDC launched “Binhi: A Greening Legacy,” a P405-million reforestation project for a period of 10 years.

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Meralco’s system and services showed their best performance in 2008.

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MANILA ELECTRIC COMPANYThe Manila Electric Company (Meralco) marked the year 2008 with much improvement in its system and services. System reliability and efficiency levels came out with their best performance yet. Interruption frequency rate (IFR) or the average number of interruptions experienced by a customer, recorded an all-time low of 6.53 times down from the 7.77 times in 2007. The average duration of interruptions experienced by a customer measured in cumulative interruption time (CIT) also fell significantly. The CIT for planned interruptions was only 1.62 hours, improving by 39 percent from the 2007 CIT of 2.65 hours. CIT for unplanned interruptions was reduced to 4.15 hours for a 13 percent improvement from 4.79 hours registered in 2007. Continuous maintenance programs, new facilities and the upgrading of existing ones take credit for these improvements.

System loss level for the year was a remarkable 9.28 percent, the lowest in 28 years. It was also the first time that the level fell below the 9.5 percent cap which

had been in place since 1999.Moreover, this is the first time that Meralco will not be penalized in the form of unrecoverable purchased power cost and would, in fact, be charging lower system loss rates to customers. Institutionalized initiatives under the System Loss Management Program beginning 2005, improvements in pilferage management and partnerships with local government units were among the factors that contributed to this performance.

Overall electricity sales in gigawatthours (GWh) managed a modest growth of 2.2 percent, expanding to 26,799 GWh in 2008. Sales to commercial customers recorded the highest growth at 4.6 percent, followed by the industrial segment which grew by 2.1 percent. Residential sales, however, declined by 0.4 percent. At yearend 2008, the total number of customers was 4.57 million.

FINANCIALSMeralco registered a consolidated net income of P3.1 billion, down by 23 percent from the P4 billion net income posted in 2007. The net income attributable to parent was P2.8billion, down by 26 percent from the P3.8 billion recorded in 2007.

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batch of National Transmission Corporation’s subtransmission assets and the purchase of major equipment for various distribution automation projects contained in Meralco’s Performance Based Regulation CAPEX Program. These capital investments were aimed at addressing customer load growth, improving distribution and customer services, and reducing system loss level.

Meralco recognized a provision for probable losses and refund of P6.6billion and of this amount – P2.5billion was for the disallowed recovery of generation costs while P4.1 billion was for transmission charges refundable to customers. Without the provision for probable loss on the disallowed recovery of generation costs of P2.5 billion, net income would have been P5.65billion or an increase of 40 percent over 2007.

Total revenues on a consolidated basis went down by 4 percent or to P191.8 billion in 2008 from P200.7billion in 2007. Revenues from sale of electricity dipped by 5 percent to P187 billion in 2008 from P196.2billion in 2007.

Capital expenditures (CAPEX) rose by 10.22 percent, or to P7.13 billion in 2008 from P6.47billion in 2007. This was partly due to the purchase of the first

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Year-on-year overall average electricity rates went down by 4 percent, largely due to significantly lower generation costs.

Meralco’s ground-breaking results in 2008 were achieved amidst an environment of price hikes in the cost of fuel and commodities, as well as the global economic pain. These results clearly point to the effectivity of the company’s various programs addressing

different areas of concern, and to their skillful implementation by the men and women of Meralco.

The company expects a tougher year ahead as the effects of the worldwide economic crunch creep into the Philippine setting. But with over a century of experience, the company remains committed to its millions of customers and continues its contribution to nation-building.

PANAY ELECTRIC COMPANYPanay Electric Company (PECO) registered a 21 percent increase in revenues from P2.9 billion in 2007 to P3.5 billion in 2008. Despite the increase, net income fell by 149 percent from P112.1 million to a net loss of P54.8 million.

Sales volume declined 1.76 percent due to several reasons. First, there were several power outages caused by “Typhoon Frank.” Second, the rise in prices of basic goods and services prompted a conscious effort by customers to reduce electricity consumption. However, operating income considerably increased due to the implementation of the P0.1221/kWh increase in distribution, supply and metering charges. The worldwide economic crisis caused a sharp plunge in stock prices which significantly reduced the value of PECO’s money market investments. This led to a large decline in PECO’s Other Income, which further translated to a net loss for the year.

PECO is scheduled to apply for the Performance-Based Rate (PBR) mechanism in the year 2011.

Jose P. De JesusPresident and Chief Operating OfficerMERALCOMr. De Jesus became President and COO on February 1, 2009

Jesus P. FranciscoPresident and Chief Operating OfficerMERALCOMr. Francisco was President and COO up to January 31, 2009

Manuel M. LopezChairman and Chief Executive OfficerMERALCO

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Construction of piers for LRT Line 1 North Extension Project

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FIRST BALFOUR, INC. For the year 2008, First Balfour, Inc. (First Balfour) continued to perform very well with revenues up by 150 percent year-on-year from P840.1 million to P2.1 billion. The company also exceeded its profit target hitting a net income of P120.2 million, 71 percent higher than P70.2 million last year. This performance was achieved despite a very challenging business environment brought about by volatile prices of major inputs like steel, copper and fuel.

Major projects accomplished were the 12 MW Montalban Methane Recovery Power Plant and the Philippine Military Academy’s Lopez Hall of Leaders Auditorium, both of which were on design and build contracts.

The St. Luke’s Medical Center project in Fort Bonifacio, which was awarded to the joint venture of First Balfour and the Makati Development Corporation in February 2007, continued to meet its completion targets and ended the year at about 70 percent progress. This project contributed significantly to this year’s revenues.

The six-kilometer Light Rail Transit (LRT) 1 North Extension project, which will connect the existing LRT 1 to the Metro Rail Transit 3 station at EDSA/North Avenue, was awarded to the joint venture of First Balfour and DMCI in May. The joint venture was tasked to complete three of the four packages tendered

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worth P3.6 million. The scope includes the design and construction of the six-kilometer viaduct, the construction of the stations along Balintawak, Muñoz and EDSA/North Avenue, as well as modifications on the Monumento station. This project is scheduled for completion in May 2010.

Maintaining its focus on the water infrastructure market, the company completed a number of main line pipe-laying and pumping station

projects for Maynilad Water Services worth around P300 million. Also, Manila Water Company awarded First Balfour two contracts – the design and construction of the 25 ML Balara Water Reservoir worth P140 million, and a Sanitation Treatment Plant on Road 5, Project 6, Quezon City worth P115 million.

First Balfour also won the tenders for the Energy Development Corporation’s Leyte Geothermal

Production Field (EDC-LGPF) Steam Augmentation project worth P360 million. The EDC-LGPF is the largest wet steam-producing field in the world. The scope includes five contracts involving various civil, structural, mechanical and pipe installation works for water and steam.

First Balfour maintained its Integrated Management System, ISO 9001:2000, OHSAS 18000:1999, and

St. Luke’s Medical Center, a joint venture project with MDC and First Balfour, located in Bonifacio Global City.

(This page) FPIC pumping station in Batangas.

(Opposite page) The many certifications of FPIC.

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ISO14001:2004 certifications for the seventh straight year, a testament to its commitment and reputation as an industry leader in quality, environment, safety and health.

With an order backlog of about P2.6 billion at the end of 2008, First Balfour is positioned to continue with its growth story. As the company celebrates its 40th year anniversary in 2009, it carries on its rich tradition of building a better tomorrow

through the construction of vital infrastructure in the areas of health facilities, mass transport, water transmission and treatment, power and energy.

FIRST PHILIPPINE INDUSTRIAL CORPORATIONFirst Philippine Industrial Corporation (FPIC) achieved record revenues of P615.7 million in 2008, or 4 percent higher than the previous year. This resulted in net income of P202.7

million which is better by 7 percent year-on-year.

Total assets reached P1.9 billion as of end-2008, 59 percent higher than the end-2007 level, largely due to the increase in the sound value of Property and Equipment based on the latest appraisal.

FPIC received the Commitment to Excellence Award of the Oscar M. Lopez Award for Performance Excellence, and the Recognition for Proficiency in Quality Management of the Philippine Quality Award program of the government.

The company maintained the certification of its management systems to six international standards after audits conducted by global certifying bodies.

FPIC will be on its 40th year of operation by June 2009. The company’s Customer Satisfaction Index of 5.00 (on a 5-point scale) which is rated monthly by its shippers, the favorable perception of its communities to its social responsibility programs based on bi-annual surveys, and the high employee engagement scores vis-á-vis Philippine and Asia-Pacific norms are proof of FPIC’s superior pipeline transport service through the years. The company is looking at opportunities to transport natural gas to Metro Manila and jet fuel directly to NAIA as further contribution to nation-building.

Leonides U. GardePresident and Chief Operating OfficerFPIC

Anthony L. FernandezPresidentFIRST BALFOUR

Dr. Fiorello R. EstuarVice Chairman and Chief Executive OfficerFIRST BALFOUR

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(This page) Printing of solder paste before mounting components.(Inset) Flipchip on flex/surface mount on flex

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FIRST PHILIPPINE ELECTRIC CORPORATIONFirst Philippine Electric Corporation (First Philec) is the intermediate holding company for all the electrical and electronics manufacturing businesses of First Philippine Holdings Corporation (First Holdings). It was established in 2005 with a mandate to grow manufacturing into a core business of First Holdings.

First Holdings believes that national progress is founded on a solid industry base for economic growth and a strong social foundation, and that manufacturing addresses these two areas by: 1) creating true value-added products and 2) keeping Filipino families, the

basic social unit, intact by providing domestic employment.

Therefore, despite strong competition from its neighboring countries and from China, First Holdings, through First Philec, forged ahead and took a long-term, strategic position to grow its manufacturing businesses and expand its market into the region. It believes that breakthrough success in the future can only be achieved by making bold decisions now.And this early, First Philec’s efforts are beginning to show some success:

Since the mandate for growth was given in 2005, it has been able to develop four new business lines (dry-type

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transformers, amorphous cores, substations and solar wafers), put up three manufacturing facilities, and enter into partnerships with global brands (Hitachi Metals, ABB and SunPower). As of end 2008, the total number of employees in the First Philec group numbered about 2,500.

It has also remained competitive against the entry of foreign players into the local market,

dominating the industry with a 66 percent share of the distribution transformer (DT) market in 2008. This has lessened the electrical utilities industry’s dependence on imports and reduced foreign exchange outflows.

The company’s venture into the foreign market resulted in successful shipments to Vietnam, and has received strong interest from Thailand, Australia, and New

State-of-the-art Meyer Burger saws capable of producing the thinnest silicon wafers in the PV industry



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Danilo C. LachicaManaging Director for Electronics DivisionFIRST PHILEC

Arthur A. de GuiaManaging Director for Manufacturing and Investments Group

Zealand. By developing its export market, First Philec contributes to bringing in the much needed foreign currency and adds to the stability of the peso.

ENTERPRISE 2008 FINANCIALSIn 2008, First Philec posted consolidated revenues of P2.5 billion, a 47 percent increase from P1.7 billion in 2007. Growth came mainly from its new businesses in

the transformer core manufacturing and wafer-slicing companies.

Net income attributable to parent, on the other hand, dipped 70 percent to P30.1 million from P99 million in 2007. Full recognition of one-time, start-up expenses and a general increase in the cost of materials eroded the company’s profits.

ELECTRICAL UTILITIES SECTOR OPERATING HIGHLIGHTSThe Electricals Sector of First Philec manufactures and repairs transformers for the electrical transmission and distribution industry. The sector is composed of four operating companies: Philippine Electric Corporation (Philec) and First Philippine Power Systems, Inc. (FPPS) manufacture distribution and power transformers, while First Electro Dynamics Corporation (Fedcor) provides transformer repair and other technical services. The fourth company, First Philec Manufacturing Technologies Corporation (FPMTC), is the incubation company for the Electricals group which aims to develop and enhance both new and existing transformer and transformer-related products.

In 2008, full operations of FPMTC’s amorphous core plant, successful acceptance of its new substation products, and an increase in orders for dry-type transformers were the main drivers of the sector’s revenue growth.

ELECTRONICS FINANCIAL AND OPERATIONAL HIGHLIGHTSFirst Philec’s entry into the electronics business started with First Sumiden Circuits, Inc. (FSCI) – a joint venture with Sumitomo Electric Industries and

Newly-sliced silicon wafers using the most stringent quality requirements in the PV industry.

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Sumitomo Corporation. FSCI is engaged in the manufacture of flexible printed circuits for the electronics industry.

In 2008, First Philec expanded its electronics portfolio into the photovoltaics (PV) industry with the startup of First Philec Solar Corporation (FPSC). The company is a joint venture (JV) with SunPower Philippines Manufacturing, Ltd. (SPML), a

subsidiary of U.S. publicly-listed company SunPower Corporation. The JV provides wafer-slicing services for the solar industry.

Growth primarily came from FPSC, which started operations in June 2008 and contributed about $13.9 million in revenues in its first six months of operations.

(This page) The first Philippine-made 33 MVA mobile substation built by Philec in collaboration with FPMTC.(Inset) FPPS OEM and industrial/commercial application dry-type transformers



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Ariel OngSenior Vice PresidentFIRST PHILEC

Robert C. ChanManaging Director for Electricals DivisionFIRST PHILEC

ORGANIZATIONAL EXCELLENCEOrganizational Excellence continues to be a strategic thrust of First Philec. The company has adopted the Malcolm Baldrige National Quality Program as its overall framework for evaluating and implementing improvements in its business processes leading towards organizational excellence. In 2008, FSCI received the Oscar M. Lopez Award for

Performance Excellence, the Lopez Group’s equivalent of the Baldrige Award in the United States. It is the first among the Lopez Group of companies to have received the award.

First Philec envisions an enterprise of excellence, of continuous innovation not only to remain competitive but to achieve leadership in its focus industries.

First Philec shall continue to seek new businesses, forge new partnerships, and enter into new markets to achieve its goal to be a core business of the group; and for the manufacturing industry to be a major driver of the country’s economic progress now, and for a truly brighter (or sustainable) tomorrow.

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The prestigious towers of Rockwell Center.

Review of Operations:PROPERTY AND OTHERS


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ROCKWELL LAND CORPORATIONIn 2008, Rockwell Land Corporation (Rockwell Land) revenues remained flat at P3.5 billion. Net income, on the other hand, increased by 27 percent to P603.2 million from P476 million in 2007. Residential sales continued to account for 80 percent of total revenues, with the remaining balance from retail operations.

The Grove, its first project outside Rockwell Center, was launched in October, offering the first two towers with more than 500 units. The one-bedroom model unit in the Power Plant Mall was opened in October and the two-bedroom Z-loft model unit in the Glass House in December.

The Grove’s retail cluster broke ground in November and is scheduled to be completed and ready for fit-out by July 2009. This area will also include a sales office and model units. Utilities services diversion along the front of the property began in January 2009 and was to be completed by May. Piling works will commence in July 2009.

Another new project, the Rockwell Business Center, a joint venture with the Manila Electric Company, and located along Ortigas Avenue, topped off in September. Handover of Tower 1 was in March 2009 and Tower 2 in April. The two towers will have a combined gross leasable area of 47,000 square meters. The first signed up tenant is Indra, a leader of business processing outsourcing (BPO) activities in the financial sector with mortgage processing and back office banking services.

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The retail area will commence operations by end-June 2009.

As of end-2008, total sales take up of Joya Lofts and Towers was 98.7 percent. Handover of units started in January for the South Tower and was 90.3 percent complete by yearend. On the other hand, handover of the North Tower started in August and was 63.6 percent complete. Additional tenants in the Joya retail area are

Figaro, Ice Bar, Derma 360 and MedExpress.

Number One Rockwell’s total sales take up as of December 2008 was 98.4 percent. By yearend, construction had reached the 12th floor in the East Tower and the 10th floor in the West Tower.

A new construction technology from Germany has been introduced in One Rockwell. It is

Model Z-loft unit of The Grove.

Artist’s rendition of Rockwell Business Center



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Hector Y. DimacaliPresident and General ManagerFPIP

Ernesto B. Rufino, Jr.PresidentSTSI

Nestor J. PadillaPresidentRockwell Land

called MEVA, an abbreviation of “Metallverarbeitung” which means metal processing. This technology makes the concreting cycle per floor faster because it is light weight, easy to install, reusable and, at the same time, produces a smoother quality.

The Power Plant Mall continues to perform well, with an occupancy rate of 98 percent. Revenues increased by 8.2 percent and sales

grew by 5.4 percent, attributable to the significant sales performance of the anchor tenants like Rustan’s and True Value.

Power Bowl was closed in the early part of 2008 to give way to the re-development of the area into more leasing spaces for all children-related stores located in the R2 level. This gave way to opportunities to bring in more high street fashion stores, namely:

TopShop, Trucco and Giordano Concepts into the R2 level area, offering affordable fashion to students and young executives.

The R3 level opened in the last quarter of 2008, offering activities and entertainment for the whole family. Cibo de Bimbi, Cibo’s second branch, opened in the area, as well as the Tutoring Club, Royce’ Chocolates and Build City. Its opening considerably improved the traffic in the area to 900 people a day on weekdays and to more than a thousand on weekends from only 200 before.

FIRST PHILIPPINE INDUSTRIAL PARKIn 2008, the operating environment plunged the world into economic and financial turmoil. A credit squeeze, record revenue and profits losses, unemployment, and the overall loss of business confidence quickly spiraled into a worldwide recession to pull down economic performance in 2008. Amidst this business operating environment, First Philippine Industrial Park (FPIP), Inc.’s total revenue was P404.5 million, 17 percent lower compared to P490.3million in 2007. Net income was P61.9 million, 61 percent lower compared to P158.2 million in the previous year.

Dampened revenue performance was largely due to the drastic and quick turnaround of the economic

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situation worldwide. Despite an already tough environment due to regional competition, FPIP was on the brink of being chosen for major investments in the region, all of which were set back by the financial crisis that spread worldwide. On the bottomline, the difference was due to the significant 2007 front-end fee of a major water customer. The bright spots in revenue performance were the non-traditional sale of

a ready-built factory (RBF) and the steady increase and better-than-budget performance of the water business. Prudent fiscal management, controlled expenses and improved other income performance helped cushion the relatively weak total revenue performance.

FPIP is steadfast in its strategy to diversify revenues built around the core businesses. Thus, it

FPIP is the 315-hectare premier industrial park in the Philippines that is host to major multinational companies in the manufacturing, solar energy, semiconductors, steel, and plastics engineering industries.



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has started to offer build-to-suit facilities and exploration of non-traditional/non-core businesses related to land, all of which are not vulnerable to economic cycles and downturns due to steadier revenue streams. Water capacity build-up also continued as major customers ramp up to full capacity and expand usage.

The year also saw FPIP receive recognition for its continued stewardship of the environment. It received a Department of Environment and Natural Resources commendation for the care of indigenous trees inside the park. It was also in 2008 when the Laguna Lake Development Authority devolved its regulatory function to economic zones and industrial parks developers/managers, with FPIP pioneering its implementation and successfully improving the compliance of locators. FPIP remains a partner of local host communities, specifically in providing social safety nets to those adversely affected by the economic crisis. Its community advocacies continue with educational, livelihood, employment, environment, health, and security improvement programs.

FPIP remains committed to organizational excellence, retaining its Integrated Management System (IMS)

certifications (ISO 9001, ISO 14001, and OHSAS 18001) and continuing to update to the latest versions to keep its processes current to the standard.

SECURITIES TRANSFER SERVICES, INC.Securities Transfer Services, Inc. (STSI) posted revenues of P13.1million, 35 percent lower than the previous year’s P20.3 million. The decrease in revenues is attributed to the decrease in fees for printing services, dividends processing and transfer fees. Net loss after tax was P1.6 million, much lower than the previous year’s income of P5.3 million.

During the year, STSI was able to acquire two new clients, namely, Philippine Townships, Inc. and Agrinurture, Inc.

STSI successfully maintained its ISO 9001:2000 certification by passing the annual surveillance audit conducted by Certification International. STSI earned a recertification which is good for another three years to end on December 16, 2010.

STSI employees at work during a client’s stockholders’ meeting.

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INVESTOR RELATIONSFirst Philippine Holdings Corporation4th Floor Benpres BuildingExchange Road corner Meralco AvenueOrtigas Center, Pasig City, 1605 PhilippinesTel. Nos. (632) 631-8024, 910-7102 and 910-7103Fax No. (632) 631-4089Website: www.fphc.comEmail: [email protected]

LEGAL COUNSELQuiason, Makalintal, Barot, Torres, Ibarra & Sison Law Firm21st Floor Robinsons Equitable-PCI TowerADB Avenue corner Poveda RoadOrtigas Center, Pasig City, PhilippinesTel. Nos. (632) 631-0981 to 85Fax No. (632) 631-3847

Puno & Puno Law Offices12th Floor East TowerPhilippine Stock Exchange CenterExchange Road, Pasig City, PhilippinesTel. Nos. (632) 631-1261 to 64Fax No. (632) 631-2517

EXTERNAL AUDITORSycip, Gorres, Velayo & Co.6760 Ayala Avenue, Makati City, PhilippinesTel. No. (632) 891-0307Fax No. (632) 819-0872

STOCKHOLDER SERVICES AND ASSISTANCESecurities Transfer Services, Inc.Mr. Antonio R. GalvezGeneral ManagerGround Floor Benpres BuildingExchange Road corner Meralco AvenueOrtigas Center, Pasig City, 1605 PhilippinesP.O. Box 13951Tel. Nos. (632) 490-0060 local 101 or 631-7152

CORPORATE OFFICEFirst Philippine Holdings Corporation4th Floor Benpres BuildingExchange Road corner Meralco AvenueOrtigas Center, Pasig City, 1605 PhilippinesTel. Nos. (632) 631-8024, 910-7102 and 910-7103Fax No. (632) 631-4089Website: www.fphc.comEmail: [email protected]

Schedule of Annual Stockholders’ Meeting - Every Last Monday of May

Corporate Directory

Concept + Designk2 Interactive (Asia) Inc.

Cover by Erik Liongoren

Portraitures by Wig Tysmans

Photos courtesy of First Philec, Meralco Corporate Communications, First Gen Corporation, Rockwell Land, FPIP, First Balfour


CORPORATION

2008ANNUAL REPORT

FIRST PHILIPPINE HOLDINGS CORPORATION4th Floor Benpres Building

Exchange Road corner Meralco AvenueOrtigas Center, Pasig City, 1605 Philippines

Tel. No. (632) 631 8024Fax No. (632) 631 4089

[email protected]

fphc 2008 ar mrv...− stsi was re-certified to the iso 9000 standard last december first philec is...

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