OREANDA-NEWS. March 24, 2011. First Pacific Company Limited (HKSE: 00142) (“First Pacific” or the “Company”) reported its audited financial results for the year ended 31st December 2010 with recurring profit rising 40% to a record high USD 402.1 million from USD 286.6 million a year earlier as all operating companies delivered significantly improved results, reported the press-centre of First Pacific Company.

First Pacific, an investment management and holding company, is a major or controlling shareholder in the Philippines’ biggest telecommunications, infrastructure and mining companies and in Indonesia’s biggest vertically-integrated food company. Reported net profit rose 1% to USD 403.7 million from USD 401.6 million in 2009 as considerably stronger earnings by all operating businesses filled in for the absence of nonrecurring earnings recorded a year earlier. Turnover rose 18% to USD 4.6 billion – the highest level in 13 years – from USD 3.9 billion a year earlier.

“Meeting earlier, the First Pacific Board of Directors under Chairman Anthoni Salim recommended a final dividend making the 2010 payout to shareholders the biggest ever in the three-decade history of the Company and nearly twice the size of last year’s in cash terms,” said Manuel V. Pangilinan, Managing Director and Chief Executive Officer of the Company. Each of First Pacific’s subsidiaries and associated companies reported higher core net income in 2010 than in 2009. They all declared dividends to shareholders, adhering to First Pacific’s philosophy of unlocking value and returning it to shareholders in the form of dividends and growth in share price.

“We were able to make this record payout to shareholders thanks to the strong cash flows at our mature companies and the growing promise of our more recent acquisitions,” Pangilinan said. “Investment decisions and management guidance we have made in the past are preparing the ground for continuing growth in shareholder value.”

First Pacific collected USD 277.5 million in dividend income from its operating companies in 2010, the highest-ever and up from USD 221.5 million received in 2009, itself the second highest recorded in the Company’s history.

The Company’s Board of Directors recommended a final dividend of 12 HK cents (1.54 U.S. cents) per share, up 50% from 8.0 HK cents (1.03 U.S. cents) per share a year earlier and bringing the regular dividend to 18 HK cents (2.31 U.S. cents), up 50% from the 2009 total.

The Board earlier recommended a special dividend in specie or cash of 1.88 HK cents (0.24 U.S. cents) per share in a distribution of the proceeds of an initial public offering earlier in the year by one of the Company’s operating units, PT Indofood Sukses Makmur Tbk (“Indofood”), of Indofood CBP Sukses Makmur TBK PT, its Consumer Branded Products business. Taken together, the special and full-year dividends amount to 25% of 2010 recurring earnings per share of 10.36 U.S. cents (80.8 HK cents).

The dividend payments fulfill a crucial plank of the Company’s capital management program: a policy of returning a minimum of 25% of full-year recurring profit to shareholders in the form of dividends. First Pacific has increased its dividend every year since 2005.

The second plank of the capital management program is a two-year share repurchase program announced on 1st June last year. Since then, the Company has repurchased and canceled 35.7 million shares at an overall cost of USD 30.6 million. In all, the program commits First Pacific to buying from the marketplace as much as USD 130 million of shares in the Company over a two-year period.

Contributions from operations rose 41% to USD 474.0 million from USD 335.2 million as each of the Company’s four operating businesses reported stronger results. Higher contributions from Indofood and Philex Mining Corporation (“Philex”) were the biggest drivers of First Pacific’s 2010 profit increase, followed by smaller contribution increases by Philippines Long Distance Telephone Company (“PLDT”) and Metro Pacific Investments Corporation (“MPIC”).

Indofood produced improved operating margins in all its four main divisions, Consumer Branded Products, Bogasari (flour), Agribusiness and Distribution. Philex’s contribution was lifted by higher ore production and prices for the copper and gold it produces, offset to an extent by lower overall ore quality than a year earlier.

PLDT, the biggest telecommunications company in the country as well as the biggest company listed on the Philippine Stock Exchange, saw its core net income rise 2% to Pesos 42.0 billion as a result of a lower tax charge and higher earnings contributed by its Information and Communications Technology business segment and by Manila Electric Company (“Meralco”), the biggest electricity distributor in the Philippines.

MPIC’s contribution was increased principally by a full year’s share of earnings from its 17.4% effective economic interest in Meralco and a 56% rise in the contribution made by its Maynilad Water Services, Inc. (“Maynilad”) subsidiary, the biggest water distributor in the country.

Non-recurring items in First Pacific’s full-year earnings swung from a net gain of US\\$81.3 million in 2009 to a net loss of USD 8.8 million in 2010, principally reflecting the Group’s share of Meralco’s non-recurring losses, and provision and write-off of certain assets, partly offset by the Group’s gain on disposal of its interest in an associated company. In 2009 the Group benefitted from the gains on dilution of its shareholding in MPIC.

At 31 December 2010, gross debt at the Head Office stood at USD 1.1 billion. In July 2010, FPMH Finance Limited, a wholly-owned subsidiary of the Company, issued USD 300 million of seven-year senior guaranteed secured bonds as part of its refinancing and overall debt management program. In September 2010, FPT Finance Limited, also a wholly-owned subsidiary of the Company, issued USD 400 million of 10-year senior guaranteed secured bonds as part of the same program. These fixed rate bonds enhance First Pacific’s interest rate risk management, reducing the Head Office’s floating-rate borrowings to approximately 4% of the total from approximately 69% and doubled the average maturity of the Head Office’s borrowings.