To our Shareholders

It is with great pleasure that I am able to report that your Company delivered record results in 2010 as all our operating units reported considerably stronger earnings and paid out increased dividends.

Recurring profit at First Pacific rose 40% to US$402.1 million as Indofood led contribution increases this years, followed by Philex, PLDT and MPIC. This enabled the Company to pay US$99.4 million in dividend payments to shareholders in respect of 2010 earnings – our highest-ever payout in cash terms and the sound fulfillment of our commitment to deliver a minimum of 25% of recurring profit to shareholders.

Under our two-year, US$130 million share repurchase program, representing the second plank of First Pacific's capital management program, our share price rose 38% from 1 June, the day the repurchases were announced, to the end of the year.

While barely a year old, First Pacific's capital management program is succeeding well in delivering returns to shareholders in the form of rising share price, increased dividends and share repurhase.

This has been made possible by the strong performances delivered in 2010 by our operating companies, beginning with PLDT. Operating in an increasingly competitive environment, PLDT managed to deliver higher core profit and dividends. In preparation for the expected explosion in demand for broadband services, PLDT announced higher capital expenditures for 2011 and 2012. We are confident that these investments will insure a bright future for PLDT, its shareholders and its customers going forward.

MPIC, the premier infrastructure firm in the Philippines, reported record earnings as Meralco delivered its first full-year contribution and each of its businesses except healthcare reported strong earnings growth. Healthcare, in fact, expanded to five hospitals in 2010, solidifying its position as the leading private-sector healthcare provider in the Philippines. Meralco distributed record volumes of electricity and reported a three-decade low in system losses, underpinning its earnings power and technical efficiencies at the same time as it gears up for a move into generation. MPIC's toll roads arm reported more vehicles driving on its highways for longer journeys in 2010 with the opening of Segment 8.1 and ground-breaking for Segment 9 is expected in the fourth quarter of this year. Further expansion ambitions for the toll roads are being evaluated. Maynilad, the biggest water distributor in the Philippines, delivered more water to more customers in 2010 and plans for further growth in 2011. MPIC is also exploring further infrastructure projects and is keen to participate in the Government's Public-Private Partnership initiatives in 2011 and beyond.

Indofood continues to grow strongly. Its contribution to First Pacific nearly doubled as the Consumer Branded Products, Agribusiness and Distribution groups reported higher sales and all three, joined by the flour group Bogasari, reported stronger margins.

Philex, the most profitable mining company in the Philippines, delivered a four-fold increase in its contribution to First Pacific as higher copper and gold prices together with higher production volumes offset lower ore quality in 2010. Its geologists report promising results from exploration activity and its business development team continues to search for suitable acquisitions as Philex drives its expansion plans.

All in all, every one of First Pacific's operating units aims to build on strong 2010 results to maintain the momentum for earnings growth. All our investments are performing well. All are poised for continuing growth in 2011 and beyond. On behalf of First Pacific's Management I would like to thank our Shareholders for their continuing support of emerging Asia's premier investment management and holding company.

Most cordially

Manuel V. Pangilinan
Managing Director and Chief Executive Officer

21 March 2011