SEC FORM 17-C - First Philippine Holdings Corporation · SEC FORM 17-C CURRENT REPORT UNDER SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17.2(c) THEREUNDER 1 May 19,

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-C

CURRENT REPORT UNDER SECTION 17OF THE SECURITIES REGULATION CODE

AND SRC RULE 17.2(c) THEREUNDER

1 May 19, 2008Date of Report

2. SEC Identification Number 19073 3. BIR Tax Identification No. 350-000-288-698

FIRST PHILIPPINE HOLDINGS CORPORATIONExact name of issuer as specified in its charter

4.

5. 6. (SEC Use Only)Industry Classification Code:

N/AProvince, country or other jurisdiction ofincorporation

7. 6th Fir., Benpres Bldg., Meralco Ave. cor. Exchange Road, Pasig CityAddress of principal office

1600Postal Code

8. 2-631-8024Issuer's telephone number, including area code

9. N/AFormer name or former address, if changed since last report

10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA

Title of Each Class Number of Shares of Common StockOutstanding and Amount of Debt Outstanding

Total Outstanding Shares 590,033,360 shares(As of April 30, 2008)

11. Indicate the item numbers reoorted herein: Item No.4

Item 4At the annual meeting of the stockholders held on May 19, 2008, the persons named herein were

elected as members of the Board of Directors of First Philippine Holdings Corporation (the "Corporation"):

NationalityFilipino

NameMr. Augusto Almeda-Lopez

Address35 Joaquin Street, San Lorenzo VillageMakati City

*Mr. Cesar B. Bautista Filipino 1914 Kamias St., Dasmarilias Village,Makati City

Mr. Thelma Y. Cunanan Filipino 48 Manila St., Bonifacio VillagePasong Tarno, Quezon City

Mr. Jose P. De Jesus Filipino 30 Mangyan Road, La Vista, Quezon City

Mr. Peter D. Garrucho, Jr. Filipino 44 Roseville St., White Plains,Quezon City

*Mr. Oscar J. Hilado Filipino 112 Mariposa Loop, Cubao, Quezon City

Mr. Elpidio L. Ibanez Filipino 687 Michigan St" Greenhills East

Mandaluyong City

Mr. Eugenio L. Lopez III Filipino Biak na Bato cor. Rizal Street, Ayala HeightsQuezon City

Mr. Federico R. Lopez Filipino 438 Rizal Tower, 31 Residential DriveRockwell Center, Makati City

Mr. Manuel M. Lopez Filipino The Bustle Penthouse, Rizal TowerResidential Drive, Rockwell Center, Makati City

Mr. Oscar M. Lopez Filipino 672 Notre Dame, Wack-Wack Village

Greenhills, Mandaluyong City

*Mr. Artemio V. Panganiban Filipino 1203 Acacia St., Dasmaririas Village,Makati City

*Mr. Vicente T. Paterno Filipino Unit 16A Hidalgo PlacesRockwell Center, Makati City

Mr. Ernesto B. Rufino, Jr. Filipino 29 Banaba Road, South Forbes Park,Makati City

*Mr. Washington Z. Sycip Filipino 60 Cambridge Circle, North Forbes Park,Makati City

*/ndependent Directors

2

At the Organizational Meeting of the Board of Directors held on May 19, 2008, the followingpersons were elected officers as well as Chairman and Members of the Board Committees of the

Corporation:

Oscar M. Lopez

Augusto Almeda-LopezElpidio L. Ibanez

Federico R. Lopez

Francis Giles B. Puna

Arthur A. De Guia

Fiorello R. EstuarBenjamin K. LiboroDanilo C. LachicaRichard B. TantocoPerla R. CatahanRamon T. PagdagdaganAnthony M. MabasaLeonides U. GardeRicardo B. YatcoHector Y. DimacaliVictor Emmanuel B. Santos, Jr.Oscar R. Lopez, Jr.Robert C. ChanRodrigo E. FrancoBenjamin R. LopezAriel C. OngElizabeth M. CanlasEnrique I. QuiasonRodolfo R. Waga, Jr.

Chairman of the Board & Chief Executive OfficerVice ChairmanPresident & Chief Operating OfficerManaging Director for EnergySenior Vice President/Treasurer &

Chief Finance OfficerManaging Director for Manufacturing &

Portfolio Investments GroupHead of Infrastructure Business DevelopmentSenior Vice PresidentSenior Vice PresidentSenior Vice PresidentVice President/ComptrollerVice President/Internal AuditorVice PresidentVice PresidentVice PresidentVice PresidentVice PresidentVice PresidentVice PresidentVice PresidentVice PresidentVice PresidentVice PresidentCorporate Secretary/Compliance OfficerVice President/Asst. Corp. Secretary/

Asst. Compliance Officer

Executive CommitteeMr. Oscar M. Lopez, ChairmanMr. Augusto Almeda-Lopez, MemberMr. Elpidio L. Ibanez, Member

Comoensation and Remuneration CommitteeOscar M. Lopez, ChairmanWashington Z. Sycip, Member'Vicente T. Paterno, Member*

Committee to review/set the Chairman/Chief Executive Officer's comDensation and remunerationAugusto Almeda-Lopez, ChairmanWashington Z. Sycip, Member*Vicente T. Paterno, Member*

Audit CommitteeMr. Oscar J. Hilado, Chairman*

.Independent Director

3

Mr. Washington Z. Sycip, Member*Mr. Peter D. Garrucho, Jr., Member

Nomination and Election CommitteeMr. Oscar M. Lopez, ChairmanMr. Vicente T. Paterno, Member'Mr. Washington Z. Sycip, Member*Mr. Oscar J. Hilado*, MemberMr. Manuel M. Lopez, Member

Finance and Investment CommitteeMr. Oscar M. Lopez, ChairmanMr. Peter D. Garrucho, Jr., MemberMr. Eugenio L. Lopez III, MemberMr. Thelmo Y. Cunanan, MemberMr. Jose P. De Jesus, MemberMr. Federico R. Lopez, Member

Risk Manaaement CommitteeChief Justice Artemio V. Panganiban, Chairman*Amb. Cesar B. Bautista, Member*Mr. Ernesto B. Rufino, Jr., Member

Please find attached herewith a copy each of the speeches of Chairman & CEO Oscar M. Lopezand President & COO Elpidio L. Ibanez.

SIGNATURES

Pursuant to the requirements of the Securities Regulation Code, the issuer has duly caused thisreport to be signed on its behalf by the undersigned hereunto duly authorized.

FIRST PHILIPPINE HOLDINGS CORPORATIONIssuer

~ENRIQUE I. QUIASON

Asst. Information OfficerMay 19, 2008

.Independent Director

4

OPENING REMARKSof

OSCAR M. LOPEZChairman & CEO

on the occasion ofFirst Philippine Holding Corporation's

46th Annual Stockholders' Meeting

held at theMeralco Theater, Ortigas Ave., Fasig City

on May 19,2008

Fellow Stockholders and Staff-Members,

Friends and Other Stakeholders of First Philippine Holdings Corporation,

Ladies and Gentlemen:

annual stockholders' meeting in 2012.

we will also be celebrating the eightiethsometime this year,

FPHC 46dt Stockholders Mee~gMay 19, 20Q8

Page -2

since I stood before you in 1986 after returning to the management

Time

Well, to the business at hand,

As your Chairman and Chief Executive, it is my duty to

continue to take today, as well as on other matters that are of

This, I will do this afternoon. Mr. Ibanez willimportance to us.

management are here with me in full force to assist me in

2

FPHC 46d1 Stockholders MeetingMay 19,2008

Page-3

answermg m tohaveany you may

Corporation's fmancial and operating results, or to the conduct of

I only ask that you hold back on your questions tillits business.

we have formally addressed the various items in our meeting

have not made a secret of their hostility and their intentions, but

Most haveand those that have come under cover of anonymity.

been against Meralco, but some have also been against our other

3

FPHC 46th Stockholders MeetingMay 19,2008

Page -4

Meralco as a diversionaryuse

face, and on which their leaders have failed them utterly.

various degrees of intensity whenever there are things that

It fIrst happened in the years

immediately before martial law, when Meralco was also

We survived the

martial law dictatorship. We will survive this one too.

I have chosen this forum to respond to a couple of these

attacks because our corporations are the ones standing accused, but

4

FPHC 46dt Stockholders MeetingMay 19, 20QS

Page-5

To

Attack Number One.

industrial and electric transformer manufacturer, sells transformers

To them, I say:to Meralco.

Philec dominates the local market for utility and industrial

.

.servIcesvalue-added thatand the best no

manufacturer, domestic or foreign, can match.

ofthan 70%the Aboitiz moregroup

5

FPHC 46& Stockholders MeetingMay 19, 20Q8

Page -fi

Electric and Dagupanlike CEPALCO,utilities

cooperatives,e 1 ectri calElectric, of the propertymost

transformer100% of thePhilec providesHospital.

requirements of American Power Conversion, a manufacturer

apparatus.

purchases some transformers manufactured by Philec and

sells these transformers overseas under the Cooper name.

Does Meralco buy from other transformer manufacturers?

.

General Electric and Asea Brown Boveri, as well as Philec,

to submit sealed bids for Meralco' s distribution transformer

beats theseBut the fact is, Philec often

6


Page-1

than can be found off the shelf and many manufacturers

low-lossbeenMeralco has toFor example, shifting

repaIr andforparts

Global manufacturers cannot maintain such inventories in the

and the entireMeralco,Philec has

.

years when Meralco was under the control of the Marcos

Philec was established ill order to produce

its needs. Provided it sells transformers to Meralco, or to any

7

FPHC 46th Stockholders Meet~gMay 19, 20Q8

Page-~

other utility or industrial user, in a transparent, competitive

manner,

Weare proud of the fact that

We are proud of thePhilec is a competitive manufacturer.

Weare

proud of the fact that our transformers are made by Filipinos.

And we are also proud of the fact that Meralco is able to buy

What do

our detractors want Meralco to do?

Like we depend on imports for our rice and most of our

Our accusers say that First Gas, whichAttack Numb-eJ Two.

owns and operates the Santa Rita and San Lorenzo plants, made

$~t w~~ nqt 4yfiY~fe4~

8

FPHC 46d1 Stockholders Meeting

May 19, 20Q8Page-9

When First Gas charged Meralco for capacity fees for 1,000

.

and there is official documentation to support this. Was First

The answer is no. And why

Yes, five whole years! Was this incompetence on theyears.

.

fault of either Meralco or First Gas?

yes.

between the parties similar to those entered into by NPC with

9


Page -10

were fmanced and constructed. A default by Meralco would

led to a default by First Gas and this, in turn, could also

have led to a default on the set of agreements and covenants

and made commercial.

Most, if not all,

of the independent power producers who have contracted to

difference

IS,

they also enJoy governmenta

guarantee ofN:---apocor's commitment,

something that First Gas cannot have from Meralco. Are

constructed because there is no investor who would be

10


Page -11

As I

I warn

Its sole reward is the truth. And often, the truth does not make for

proper.

2007 provided better defmition to the long-term investment

This isis true of the manner in which our earnings were generated.

true of the manner in which a number of key investment decisions

And this is true of the manner in whichwere made.

11


May 19,2008Page -12

For 2007,

P4.475 Billion, of which P4.43

"natural" to our business and it is the income level that we shall

In contrast, net income

of First Gen

Our P4.475 Billion in net income came from what we can

competencies,consider to be our four core power

12


Page -Ip

Let me say a few words about our strategic intent on each of these

businesses.

Power Generation

andIS the Filipino-owned controlledlargestinterest, now

independent power provider in the Philippines, with a total gross

installed of 2,582.4 743.8megawatts,

megawatts from its most recent acquisition, PNOC-EDC.

The acquisition of a 60% effective interest in PNOC-EDC

generated Meralco. Although we havewent to Napocor as

customer for the Bauang diesel plant, this plant is predominantly

13


Page -14

on standby and is only dispatched when there is a shortfall in the

hydroelectric plants, in 2007, and with the addition of PNOC-

count Napocor,EDC's capacity this year, however, we now

WESM and other distribution utilities among the markets that we

serve,

2007, with the.

mmor ofIn Agusan's 1.6

megawatts, all our capacity was concentrated in Luzon. The

addition of PNOC-EDC's capacity gives us anew, significant

.presence ill the Visayas and Mindanao, but more

plants in those regions around geothermal fields that have been

viable, but that are still untapped. PNOC-EDC alsoproven

provides us the opportunity to participate in the development of

geothermal elsewhere in the regIon, with Indonesiapower

14

FPHC 46d1 Stockholders MeetingMay 19, 2PQ8

Page -15

agreements.

Our BOT

Iffuel sources.

the Clean Air Act is ever strictly enforced, and there is mounting

the cost of

15


Page -16

Within our resource capabilities over time, we intend to

fuels, whereand renewable presentin clean

plants beingeither or onthemselves, on

Power Distribution

have a 33.4% ownership stake, is our major investment in power

In 2007, we doubled our stake in Meralco and thisdistribution.

company.

ofpotentialin thecontinue believeWe to

doneeds, and efficiently-run,to anso as

16

FPHC 46th Stockholders MeetingMay 19, 2008

Page -17

to say a few words about this towards the end of my remarks.

Infrastructure

Infrastructure, which, in turn, houses our investments in both the

The 84-kilometer NLE was, in 2007, widely

recognized to be the most modem, after its reconstruction, and the

You only need to

motoring consumers. An average of approximately 146,600

17

FPHC 46fu Stockholders MeetingMay 19,2008

Page -18

daily revenue for the concession of P 15 Million.

Tarlac Expressway displaced NLEX as the country's most modem

Conversion Authority"BCDA "

, theBases or

SCTEX in linked with the NLEX and provided seamless access,

growth hubs of Subic and Bataan, on the one hand, and Tarlac, on

the other.

been awarded the short-term concession to operate and maintain

Weare confident that, by proving that it is the only

SCTEX.

18


Page -19

Balfour, IS.

majorOur construction Inc.,Firstarm, a

consortium calledin Private Infrastructureparticipant a

Development Corporation that has been awarded the concession to

develop the Tarlac-La Union Toll Expressway Project, subject to

To be implemented

as a build-transfer-operate concession for an initial period of 35

years, this 88.6-kilometer long project will extend the expressway

system north from La Paz, Tarlac, where the combined NLEX and

SCTEX now reaches, all the way to Rosario, La Union, where the

two main roads to Baguio begin.

PI5 Billion initially, and will take a total of five years to build, in

will be the leadFirst Balfour and D.M. Consunji, Inc.stages.

members of the PIDC consortium.

extend LRT 1 from its current northern terminal at Monumento,

19


Page -20

EDSA North Mall station. The joint venture is also confident that

the infrastructure,

NLEX and Tarlac-La Union project, and even the extension of

20


Page -21

Manufacturing

We regard manufacturing to be our fourth core competence,

of older businesses. Philippine Electricone our

of industrial and utilitymanufacturerour

Sumiden Circuits, Inc, our joint venture with Sumitomo Electric of

Japan for the manufacture of flexible printed electronic circuitry,

cannot be competitive in manufacturing. It is true that

the case of shoe manufacture, textiles and garments and consumer

21

FPHC 46th Stockholders MeetingMay 19, 20Q8

Page -22

countries has made it difficult for local manufacturers to compete

on even terms.

the forefront of the development of better infrastructure such as

have ill theplants have also been

I would also admit that it has been difficult to promote

manufacturing as one of our core businesses.

purely localto demand for oftypea

will to .In andmeasure investmentsup our power

infrastructure. We are simply too small a market. Therefore, to

22

FPHC 46th Stockholders MeetingMay 19, 20Q8

Page -23

broadly describe as P5.0 Billion in annual revenues and Pl.O

Lately, we have found one such

manufacture of high-efficiency solar electric panels.

Corporation in joint venture with Sun Power.

silicone wafers for the semiconductor industry, since the processes

are very similar and use the same basic machines. First Philec

23

FPHC 46th Stockholders MeetingMay 19, 200~

Page -24

have the revenue potential of as much as US$150 million annually

in five years' time

It is our stated ambition and goal that in five years' time, our

manufacturing businesses should be able to contribute a combined

P5.0 Billion in annual revenues and PI.O Billion in annual income

to our business portfolio.

reflect and support our four core businesses.

long-term strategy that its businesses will take, and providing core

support and control functions for better governance. Last year, we

established First Philec Corporation as the intermediate holding

for businesses. this role. itIncompany

24

FPHC 46dJ Stockholders MeetiQg

May 19,2008Page -25

replicates what we have done with First Gen Corporation for

and First forpower Infrastructure our

businesses.infrastructure Meralco, sole majorour

investment in power distribution, does not require the intervention

practice of corporate is consideredto whatgovernance best

practice around the world. These are discussed in fair detail in our

over to our President, Elpidio L. Ibanez, for the operating and

25

FPHC 46& Stockholders Meet~gMay 19,2008

Page -26

fmancial summaries, would like to say just a few more words on

already stated in an open letter to the President, published last

Directly and indirectly,Wednesday in our major broadsheets.

power.

Meralco is small compared the portion of theto costvery

Why has the cost of

gasoline gone higher than P50 per liter? For the same exact reason

the global price of oil has increased from an average of about

US$27 per barrel where it stayed for quite a long time up until

26

FPHC 46th Stockholders Meeting

May 19,2008Page -27

about the time of 9/11, to close to US$130 per barrel where it is

now. You can flog Meralco to death -it will not alter the high cost

least philosophically, I would have to accept the argument that it

a time when its consumers are suffering. But Meralco has not been

permitted to generate obscene profits, nor even the level of return

that it is permitted to earn under the law. As it is, Meralco has not

deserves. Contrast Meralco' s earnings over the past ten years to

In

the capitalist system, it is also not the role of private enterprise to

27


Page -28

sector of our society. For if companies are forced to underwrite

Now I ask you, are we ready and able to shift to another system?

And, pray, what system would we shift to?

cost of power, then I submit that it must re-examine the royalties

and taxes that have been imposed on power at every stage of the

process that produces electric power from the source fuel, be that

fuel gas, oil, coal or other. And it must ensure the transparency

and controlled power generators that still account for the large

flog Meralco to death, but it will not reduce the price of gasoline,

LPG and other essential fuels that people rely on for their everyday

28


May 19,2008Page -29

Commission on Audit or "COA ".

and SEC and the

in addition externalto its own

auditors.

you to make your own conclusions.

29

MR. ELPIDIO L. IBAÑEZ

President and COO

First Philippine Holdings Corporation

Annual Stockholders’ Meeting

May 19, 2008, 3:00 P.M.

Meralco Theater

MR. CHAIRMAN,

FELLOW SHAREHOLDERS AND EMPLOYEES,

GOOD AFTERNOON,

The year 2007 brought about mixed results: most of our businesses

demonstrated strong bottom line growth, as measured by our recurring net

income.

However, the Group’s total earnings for the year paled in comparison to the

previous year due to non-recurring income: the listing of First Gen’s shares,

the favorable Supreme Court decision on Meralco’s tariff unbundling, and

the higher returns from the sale of our investment in SiRF Technology

Holdings, Inc. Thus, net income decreased by 25% compared to the P15.6

billion reported in 2006. Net income attributable to equity holders of the

Parent decreased by 49% compared to the P8.8 billion income for the prior

year.

Income from operations increased by 9% to P15.2 billion, driven by the

overall lower costs and expenses. Foreign exchange gains and other income

improved by 132% to P2.6 billion. Our full year results also benefited from

the prepayment of loans during the first quarter, bringing down finance costs

by 8% to P6.7 billion. Our finance income, however, went down by 41% to

P1.9 billion as we deployed our cash to the reduction of debt and significant

investments in our core business.

Our Business Results

Turning to our businesses:

First Gen recorded another year of record profits. Net income attributable

to parent increased 14 % to $104.7 million driven by the continuous growth

of its natural gas-fired plants, the full year impact of the hydro plant

acquired in late 2006, and income from the newly-acquired EDC.

Meralco’s recurring earnings significantly improved. Net income

attributable to parent for 2007 was at P3.8 billion. This was higher by 8%

compared to the P3.5 billion recurring income of 2006. Meralco’s net

income of P13.7 billion in 2006 included the write-back of all provisions for

probable losses booked from 2004 to 2006 amounting to P15.7 billion.

FPII maintained steady growth. Net income attributable to equity holders of

the parent was higher by 12% at P1.5 billion, driven by traffic growth and

foreign exchange gains.

Our other businesses performed better than expected during the year:

- Our property businesses continued to report double digit growth

- Our manufacturing businesses significantly improved their

performance

- Our construction business, FBI, achieved a profitable position after

incurring losses in the past

The Company made significant progress on a number of its strategic

objectives and continued to deliver on its growth strategies. The Group’s

portfolio evolved in 2007 with these three key acquisitions and investments:

- First Gen solidified its leadership position finishing the year with

the acquisition of the controlling stake in PNOC-Energy

Development Corporation (EDC). This achievement propels First

Gen into being the largest vertically-integrated power generation

play in the country.

- First Holdings strengthened its ownership interest in Meralco, with

its acquisitions of the ownership interest of First Philippine Union

Fenosa, Inc. (FPUFI) and Meralco Pension Fund. The acquisition

of the 40% interest of Union Fenosa Internacional, S.A. in FPUFI

was concluded on January 23, 2008. The decision to increase our

stake in Meralco to 33.4% from 17.7% in 2006 stems from our

optimistic view of Meralco’s more predictable financial

performance under a new rate setting mechanism. The

Performance Based Rate (PBR) setting mechanism embodies a

new rate fixing scheme, which sets power distribution tariffs

according to forecasts of operational performance and capital and

operating expenditures. PBR addresses the regulatory lag between

cost incurrence and the corresponding recovery. PBR also

employs a penalty-reward mechanism depending on the utility’s

actual performance.

- The First Holdings consortium was selected by the BCDA as the

interim O&M contractor for Subic-Clark-Tarlac Expressway on

Nov. 6, 2007.

We believe that as a result of these achievements we are better poised to

deliver stable growth in the long term.

For 2008, our focus will be on exploring various financing facilities to

support our growth ambitions. For the first four months of 2008, the Parent

Company and First Gen raised P4.3 billion and $260 million, respectively.

The success of these transactions underscores confidence in our financial

fundamentals and prospects.

I would like to briefly discuss our financial performance for the first quarter

of 2008:

° Unaudited revenues increased by 29% to P19.9 billion, compared to

the P15.5 billion reported for the first quarter of 2007.

° Operating income improved by 62% to P6.0 billion, during the same

period. The higher revenues and operating income reflect the revenue

contribution of First Gen’s newly-acquired subsidiary, EDC, and

revenue growth of Santa Rita and San Lorenzo.

° Net income, however, decreased by 26% to P2.1 billion, from P2.8

billion last year, whilst, net income attributable to equity holders of

the Parent decreased by 79% to P223 million. Income was adversely

affected by the higher finance costs, foreign exchange losses and

income tax provisions. Finance costs increased by 95 % over the first

quarter of last year, as the Group’s debt level increased by 189% to

P123.1 billion. First Holdings and First Gen raised debts to fund their

respective acquisitions. Moreover, the expiration of the income tax

holiday of Santa Rita resulted in higher provision for income taxes.

The overall environment will continue to be challenging with the global

economic recession impacting the local economy. At First Holdings, this

year will be focused on integrating and normalizing the major acquisitions

we made last year.

Thank you for your continued support.

Documents

SEC FORM 17-C - First Philippine Holdings Corporation · SEC FORM 17-C CURRENT REPORT UNDER SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17.2(c) THEREUNDER 1 May 19,