Chris Young - Executive Director, Chief Financial Officer Joseph Ng - Associate Director John Ryan - Associate Director Sara Cheung - Vice President, Group Corporate Communications

Thank you. Good day everyone. Thank you for joining us today to discuss First Pacific’s for 2019 First Half Financial and Operating Results. The results presentation is available on First Pacific’s website, www.firstpacific.com and for media on this call. Please note the Q&A session is open for investors and analysts only and if you would like to ask questions, please contact us when the call finished. For today’s conference call we have with us Mr. Chris Young, Executive Director and Chief Financial Officer, Mr. Joseph Ng, Mr. John Ryan our Associate Directors and other Senior Executives. At this point, I would like to turn to Mr. Ryan from for his presentation.

Thank you, Sara. Good afternoon everyone. We’ll be using the investor presentation that we uploaded on the website this afternoon. We won't be going through every page and we will just be hitting the highlight of it, as we’ve tended to do in the past. Now the focus here is our turnover is up quite powerfully, 6%, driven by growth at MPIC and Indofood. Indofood has delivered a truly astonishing performance in the first half of the year. Our three core holdings which you all know is MPIC, PLDT and Indofood’s, so their contribution rise 3%. However the overall contribution from operations as you can see on page seven was down 8% to a bit less than $200 million, recurring profit was down 12% to $142 million. Now as far as the net number goes, we announced in March with the disposal of Goodman Fielder to its other owner Wilmar International, that we’d be taking a non-cash, non-recurring write down in the value of that investment and that's been declared in our P&L statement for the first half of 2019, and that's why we've got a net loss of $148.3 million in the first half of the year. It's the first loss we recorded in almost two decades and reflect we won't be doing it again anytime soon. Now there are further details going on through the statements. We've got - if you're looking at our free cash flow chart, we've got dividend and fee income of about $68.4 million, our opening cash and closing free cash are not terribly far apart from each other, going down by $9 million to $80.5 million. Now the break down on the recurring profit as you can see in the contribution column chart underneath that, Goodman Fielder is the biggest decliner all the way going down and as mentioned. We've got an impressive increasing contribution from Indofood and a slightly smaller one from MPIC which has faced higher interest expenses. Now page eight of this presentation is an extremely useful page packed as it is, so full of data. It shows you first half earnings numbers for I think just about every company in the First Pacific Group, as well as a snapshot of their debt and cash positions. Turning to page nine, we can see that there are no more debt repayments to be made in 2019. You've got in the column chart at the bottom of that page on the left hand side, our most expensive borrowing, a 6.375% bonds maturing September next year. The proceeds from the Goodman Fielder sale which we expect to be about $275 million coming to us before year-end will be devoted towards paying off that bond when it matures, and as we can see the following borrowings going forward are all either unsecured bonds or unsecured bank loans. Our blended interest cost is currently about 4.5%. Once that bond is paid-off in about a year's time, our borrowing cost will be rather lower and I think our maturity might push out more, a little bit too. As you can see with these bonds following our way, we've got a higher proportion of floating rate borrowing now going forward. It’s about 53% to 47% if you're looking at the pie charts on the right hand side of page nine. Now a brief mention of sustainability matters on page 10 please. Over the past, what is it, 10 or 11 months, we’ve managed to push our ISS Governance QualityScore down to four, which is rather better than the average in Hong Kong, from eight which was a pretty rough score late last year. Hopefully going forward we will be gradually able to continue the improvement in those ESG snapshot that these various rating agencies give us. Now let's move to some operating results. Indofood on page 11, 7% increase in revenues and as you can see that is led by Noodles and Bogasari the flour and pasta division and that has trickled down to the bottom line of 22% increase in the core profit to IDR2.42 trillion, a truly wonderful performance. Now you see there's in the change in sales column chart, there is the biggest red line as a decline in distribution and that is simply because we've seen some revenues recorded in the distribution business move over to CBP business with the buying out of the other partner in a joint venture last year. So that’s more of an obstacle rather than a real decline in the revenues. As you can see it moved to Food Seasonings which saw a corresponding, mostly corresponding increase in their sales. Now as you can see also the price of palm oil has hampered sales at the Plantations business, and as you know when you are looking at Indofood, you do have that commodity element in their P&L. Broadly speaking, as we look over the past few years and looking ahead in the short to medium term, Indofood has got terrific prospects going forward. For more details about us operating subsidiaries, CBP and IndoAgri on the next couple of pages, but let's move over to page 14 to the biggest phone company in the Philippines, PLDT, which really is producing some astonishing growth and take-up of data services, particularly in the first half of this year with the individual segment which you can think of as people using their mobile phones. So we've got a strong growth in service revenues, not too different from what Indofood saw. 15% increase in EBITDA, but Telco core was flat at 13.2 billion peso because of higher non-cash expenses and net financing costs and so on. Now the CapEx at PLDT is remaining high this year at around 78 billion pesos and that really is delivering some impressive results. Let's skip a page to page 16 and you can see these bar charts at the bottom of the page showing the source of the improvement of PLDT's earnings in 2019. The Cellular Speed and the Fixed-Line Speed and head and shoulders in front to the competitor, download speeds are much better and same with the upload speeds. PLDT is now confidently predicting a 10% increase in their Telco core in 2019 for the full year to 26.4 billion pesos and I think it's not unreasonable to expect continuing earnings growth at PLDT moving forward. Now, let's have a look at MPIC. Page 17 gives you the familiar schematic of what is made up inside the Metro Pacific Holding Company. No big changes there from the last time we spoke back in March. Let’s have a look at the financial highlights and the outlook. The big change you've got here from the 2018 full year is there is a bigger interest bill, and that’s kept their contribution to First Pacific rather flattish and their core income growth is the same, held at 1%. It’s well know that there is investor interest in its Hospitals business, and if they are able to sell off part of that business to an outside investor, they are very likely to get the sort of enormous valuations of Hospital businesses that we've seen elsewhere in the region. Metro Pacific will use any proceeds from that for mostly paying down its borrowings, as it had to increase its borrowing to finance capital expenditures in its various growing infrastructure projects, particularly in the roads business. Now all in all, volume growth as the main infrastructure businesses at Metro Pacific will continue to be strong for the rest of the year and looking ahead, and by these I mean the roads, the electricity and the water businesses. So that’s a look at those core holdings that we have which we are really focused on driving forward, but I can't end this narrative without a word or two about Philex, which as we all know has been operating the Padcal mine for about half a century and in the past few weeks has finished the definitive feasibility study for the first phase of its Silangan Project, down in Mindanao, the big Southern Island in the Philippines. There's some details about this on page 21 of this presentation. Essentially now the project has started with a search for an equity partner and project finance for the $750 million CapEx program for the first phase of this project, and that will really transform Philex mining from the business it is now, mine that’s been going for a very long time with rather relatively low grade to a new project with very, very rich resources as described in that table in the blue box down below. Now with regards to other companies in the group, we have been working on what to do with PLP, the power plant in Singapore and we announced in March the sale of our half of Goodman Fielder as the other partner, the other owner of that company and we can speak to those details in the Q&A which is about to follow, and I think we're probably ready for that now.

Operator, we are now ready for questions.

Yes, thank you. [Operator Instructions]. We can now take our first question from the Kedar Wagle, Maybank Asset Management. Please go ahead.

Thank you. I had a couple of questions. You mentioned about your plans to sell out of – dispose of PacificLight. Can you just give some update on that? And if I look at the numbers for PLP, they seem to be to remain pretty week. So would we need to inject more equity into the business in this year? And second, your investments in the first half were 42.5 million. This is from the cash flow statement. Can you give us a break up of that between the different businesses? Thank you.

The first part of that question Kedar – hi, it’s John. Nice to hear from you. It will be answered by Stanley Yang who's in charge of our Corporate Development and then on the cash flow, Associate Director, Joseph Ng will answer that.

Good afternoon. On the PacificLight, you know for us this is an asset that does continue to sit in a very difficult market with the power prices, both retail and whole remaining at very low levels. The source of this is the over capacity, there's too much generation capacity which has existed for a number of years now, but also is a result of the over-supply of gas. There were a number of gas contracts, particularly on the LNG side that were signed up to long term contracts, tenured contracts which brought the market demand and supply balance out of sync. And so it was because of that that the losses, not just at PacificLight, but across all the generating companies within the Singapore market continue to struggle. You know we've look at options, both whether a sale, an outright sale would be feasible. I think the reality is in this market that's a difficult one in terms of generating the best value for shareholders, and so the transaction that we're reviewing is the possibility of consolidation in the market, and by combining with one or other generating firms in Singapore, then there could be the take out of old inefficient capacity and that could also help in terms of setting off and improving the balance on the supply side, as well as fixing some of the challenges around the gas supply and so that’s the path that we see. You know we've been in discussions for a number of months now which are progressing. I think beyond just exploratory talks, we are advancing it to a point where the due diligence and reviewing the possible structure of the combination would be reviewed. And so this is something that we're pressing ahead, but at this point there is no announcement yet. This is an opportunity that’s you know in review and in discussions, but still ongoing.

Is there a timeline for own?

I think the objective would be to have if we can a transaction announced within this year. Now there would have to be, due diligence, there would have to be consultation in terms of if it is consolidation with the regulatory approval because EMA, the Singapore power regulator would be looking at market concentration levels and so they would have to be some work around that. There of course would have to be agreements among the lending banks of the participating parties to come up with a refinancing proposal for any merged entity and so these are the elements that will take some time to finalize and flush out, but the objective would be if as a target we would try to have something signed up within this calendar year if possible.

Referring to your questions, its Joseph here, regarding to your question about the investment of 42 million reported into the units, as explained by Stanley earlier, in the early part of this year, I mean the shareholders and PLP’s still need to provide with a kind of funding support to PLP, to ensure that the company could kind of meet all the obligations, as well as the relevant kind of a governance at the PLP level. So all the three shareholders, ourselves [inaudible] are putting a little more money into the PLP and that’s before these kind of – the serious kind of exploration of looking for kind of industry consolidation solution at the PLP level. So in the first half of 2019, I think of the 42 million, roughly 50% of that is actually roughly 21 million and we put down in the PLP to achieve that purpose and we also put in a little bit money into equipment again before we sign up the kind of the find and sell pieces of agreement with Wilmar to dispose of the 50% in Goodman Fielder. So before that, in the first quarter of 2019 we also put in roughly 30% of the $42 million, just over $10 million of US dollar into Wilmar too. So these two items has gained over 80% of the 42 million, basically the bulk of that 42.5 million. It’s kind of the investment in the first half of 2019. Now looking forward in the second half of 2019, one we already signed Goodman Fielder, assigned the kind of buying things and purchase agreement with Goodman Fielder, so it doesn’t matter of cleaning up all the key pieces [ph] so as to close the transaction before the end of the year and collect the $275 million that closes from that transaction. And for PLP again we are getting into the final phase of discussion about some sort of industry consolidation solution. So we would not see that sort of – kind of that level capital injection in the PLP in the second half of 2019.

Okay, thank you.

[Operator Instructions]. We can now take our next question from John Galligan, CLSA. Please go ahead.

Hi guys, thanks for the call. I had a question at the dividends. I know it's just an interim dividend, but it looks like you have reduced the dividend payment quite substantially, which is not something you've done in the interim for quite some time. Can you talk a little bit about the strategy around the payout ratio and whether anything here has changed? I would also note, in the prepared remarks you talk about potentially trying to reduce your borrowings and incorporate a meaningful share repurchase program and just in light of the changes on the dividend policy, are you guys now placing a greater priority on share buybacks over dividends? Thank you.

The short answer to that John is no. We are essentially with that reduction bringing a balance between the twice a year payouts that we are giving to our shareholders. For historical reasons, many years ago there was a special dividend paid at the interim which bumped it up and that would never got rebalanced so that the interim in the final more resemble each other, and that's all we're doing with this exercises. We are making them resemble each other more. We are quite clear in our press release that the intention is to keep going with our 10 years of minimum payout of 25% and I think we also pointed to a payout of $13.5 a share this year as we had last year. Now as far as capital allocation goes, debt reduction and share purchases remain paramount to us. I think however we do need to push our debt down a little bit from this level before we can announce a repurchase program and our intent when doing so would be to have the funds and or cash flow in hands to insure that it could be sustainable for say four years or a bit more. Joseph, anything to add?

No, it’s more a kind of realignment of the committed 25% with the so called recurring profit that we have just reported, the $142 million recurring profit and we key off the 25% payout for that. And as John mentioned, its more the time difference, kind of the align the payout more with the level of recurring profit that we are achieving. Now if you look back, I mean in the past we are paying, John we are paying $0.08 for the interim and $0.055 for the final, a total of $0.135. So it's actually 60% for the interim and 40% for the final. It doesn’t really tie to the pattern of the first half versus the second half profit and in this year I think we just need to kind of realign that a little bit and then stay with the 25% for first half and then the full year while we just heard from John, saying that basically the same payout rate for the full year. So it’s a little bit kind of a timing difference here. So it’s not that we are not committing to the minimum 25% payout, so we are still sticking with it.

Okay, great. Thank you, guys.

[Operator Instructions]. We can now take our next question from Vivek Dhawan from Value Square. Please go ahead.

Hi, good afternoon. Thanks for taking my question. Just a follow-up on the comments for PLP consolidation or proceed. Could you comment a bit on what are your expectations on the sale [inaudible] because on the books it still carries at around 230 million. So just your expectation on the sales receipt, if something has materialized? Thank you.

Sure in terms of the consolidation and the expectation on what value can be created, I think one thing is clear is that at the current market before any consolidation, you know the profits of all the industry players are down and they've been down for sometimes. Certainly since 2014 when additional capacity came into the market. With the planned reduction of capacity, which would take place through the industry consolidation, we think that’s the basis for the margins, what we call the non-field margin or the spark spread to improve and by that you know this would allow the return of improvement in the cash flows and underpin the value. Now in terms of what our share in the merged company would be, and what the equity value of that would be is a function of what the recovery of the merger and the business would entail and you would have to value it off of the future improvements resulting from any consolidation. At this point we can't comment on what the level would be, but what we can say is that it is our view that through the consolidation that would be the best option for returning value to the industry, to the profits and ultimately to the shareholders and you know further details would be provided at the appropriate junction.

Thank you.

[Operator Instructions] Hello speakers, we have no further questions at this time.

Thank you. As there are no more questions, may I invite Mr. Young to give his closing remarks please.

Thank you, Sara. I think in terms of closing remarks, I will just refer you back to page six of the presentation, because I think that is directing us during the second half of this year. So in terms of the core assets, we remain quite positive. John indicated in the field timing strong south of the as we anticipate and continuing into the second half. PLDT, again John sure talked though the numbers, you know this is a continued strong growth and our data business enterprise report continues to do well. So we are actually anticipating quite strong growth in the Telco core in the second half of the year. In terms of Metro Pacific, the underlying businesses all are doing well. The issue again as John highlighted is that growth is being mitigated through quite a large extent by an increase in the interest though, that’s why the Hospitals transaction is important. They are pursuing it and we would expect in terms of timeframe by the end of the year to have a positive announcement there. On the businesses identified as a non-core, GF [ph] I think you know the position. In terms of outstanding CPs, it’s really the approval of various county levels. We have the three that we are concerned about Australia, Ukraine, and New Zealand. We have two in hand already, so there is only one outstanding and we expect that will happen by yearend and the transaction to be conciliated. Stan has descried in some considerable detail what’s happening with PLP. Again with fair wind we would expect that transaction, an announcement a positive announcement there by the end of the year. There’s a line in search for the strategic partner is underway and again, second half is as you would expect to make again, by the end of the year in the second half some positive announcements there. So overall, I think it’s going to be a busy second half with core businesses looking very positive but a lot of work to be done on the non-core side. There were some discussions in the last couple of the evening about some changes at the Board level, the appointment and additional of Independent Directors. I think just to reconfirm for some of those on the line that that process is under way. Search company has been appointed and we would expect again there to be some announcements there towards the end of the year. So I think that’s it, that’s what we would be working on during the second half and we look forward. Well, thank you first of all for attending this call and we look forward for you joining us again early in the next year when we report on the full year results. Thank you.

Operator, please can you provide the replay details?

Yes ma’am. Ladies and gentlemen, this concludes First Pacific 2019 First Half Results Conference Call. If you would like to listen to a replay of today's call, for Hong Kong please dial +852-3008-0334; for Singapore 800-101-2009; for UK 0808-10-111-53 and for the US 888-203-1112. The replay passcode for the recording is 3015876. Thank you.