Company Overview

San Miguel Corporation (SMC) was originally founded in 1890 as a single

brewery in the Philippines. The Company has since then transformed itself from a

beverage, food and packaging business into a diversified conglomerate with businesses

in fuel and oil, energy, infrastructure, and banking industries. The Company's product

portfolio includes beer; spirits; non-alcoholic beverages; poultry; animal feeds; flour;

fresh and processed meats; dairy products; coffee; various packaging products; and a

range of refined petroleum products.

SMC has strategic partnerships with international companies, among them are

Kirin Holdings Company, Limited for beer; Hormel Foods International Corporation for

processed meats; Nihon Yamamura Glass Company, Ltd., Fuso Machine & Mold Mfg.

Co. Ltd. and Can-Pack S.A. for packaging products; and Korea Water Resources

Corporation for its power business.

The Company's subsidiaries include San Miguel Brewery, Inc.; Ginebra San

Miguel, Inc.; San Miguel Food and Beverage, Inc.; SMC Global Power Holdings Corp.;

SEA Refinery Corporation; San Miguel Holdings Corp.; and San Miguel Properties, Inc.

Vision

We are San Miguel.

Guided by a strong sense of social, environmental and economic responsibility,

our businesses will lead efforts to deliver on national goals, setting the pace of progress

in the Philippines.
San Miguel Group Vision

Making Everyday Life A Celebration

San Miguel will be among the largest food, beverage and packaging companies

in the Asia-Pacific. We will carry into new markets our over a century-old tradition of

quality and integrity. Consumers will take pleasure in reaching for our products and

services because they are the best value for money. Our food and beverage brands will

be in every household and every retail outlet. We will meet our consumers’ everyday

needs, delighting their every taste. Through our products and services, every occasion

to drink and eat will bring enjoyment — a celebration.

Mission

To provide goods and vital services well within the reach of every Filipino,

making everyday life a celebration.

San Miguel Corporation Industry

Early History

Don Enrique Ma Barretto de Ycaza established the brewery, southeast Asia's

first, in 1890 as La Fabrica de Cerveza de San Miguel. He named the company after the

section of Manila in which he lived and worked. He was soon joined by Don Pedro

Pablo Roxas, who brought with him a German brewmaster. San Miguel's brew won its

first major award at 1895's Philippines Regional Exposition, and led its imported

competitors by a five-to-one margin by the turn of the 20th century. The company was

incorporated in 1913 following the death of Don Pedro Roxas.

By that time, San Miguel was exporting its namesake brew to Hong Kong,

Shanghai, and Guam. Andrés Soriano y Roxas joined San Miguel in 1918, beginning a

multigeneration (albeit interrupted) reign of Sorianos. In 1990, San Miguel's Beer

Bulletin noted that "Beer was the heart of San Miguel's business, and the soul from

which emanated all its other businesses." Andrés Soriano initiated the company's

diversification, which proceeded rather logically via vertical integration. The experience

cultivating barley naturally evolved into other agricultural businesses, for example. San

Miguel gathered steam in the 1920s, when the company expanded into nonalcoholic

beverages with the creation of the Royal Soft Drinks Plant in 1922. San Miguel entered

the frozen foods market in 1925 with the creation of the Magnolia Ice Cream Plant. By

the early 1990s, Magnolia held four-fifths of the frozen dessert market. Soriano created

the first non-U.S. national Coca-Cola bottling and distribution franchise in 1927. The

Philippine company owned 70 percent of the joint venture, which grew to become
Coke's sixth largest operation. By the early 1990s, San Miguel had captured over two-

thirds of the domestic soft drink market.

Although World War II interrupted San Miguel's brewing business, the company

got back on the growth track in the postwar era, acquiring production facilities in Hong

Kong in 1948. The company also resumed its program of vertical integration, even

building its own power plant so that it would not be dependent on the Philippines'

notoriously poor infrastructure. San Miguel also built a liquid carbon dioxide plant, glass

bottle manufacturing facilities, and a carton plant during the postwar period.

The company shortened its name to San Miguel Corporation in 1963, and Andrés

Soriano, Jr., advanced to the company's presidency upon his father's 1964 death. He

has been credited with instituting modern management theory, including

decentralization along product lines. Soriano, Jr., continued to diversify the food

business during the early 1980s, expanding into poultry production in 1982, building an

ice cream plant in 1983, and adding shrimp processing and freezing in 1984.

Over the decades, San Miguel earned a formidable reputation as a fierce

competitor. The company used all the tools at its disposal. When it could not beat a rival

through traditional means, it acquired and intimidated upstarts into submission. The

Filipino government's complicity did not hurt, either. Long protected by high tariffs, San

Miguel encountered its first major competitor in the beer market in the late 1970s. That

was when Asia Brewery entered the segment. The rivalry between Asia Brewery and

San Miguel came to a head in 1988, when Asia Brewery cannily introduced a bargain-

priced "brand" called, simply, "Beer." The imported product looked and tasted like its
primary competitor, playing upon the fact that in the Philippines, the San Miguel brand

was synonymous with "beer." It was a creative counter to San Miguel's notoriously

aggressive and sometimes cutthroat competitive strategy, which had reportedly

included "attempts to sabotage [Asia Brewery's] sales network and smash its empty

bottles." Asia Brewery, whose owner was reputedly connected to Marcos sympathizers,

even hired away San Miguel's brewmaster.

Although San Miguel enjoyed virtual monopolies in its markets, that status did not

shield it from the political machinations of the Philippines. The dictatorial reign of

Ferdinand Marcos brought this element into sharp focus in the 1980s, when an intra-

familial proxy fight at San Miguel turned political. The dispute was instigated in 1983 by

Enrique Zobel, a wealthy cousin of the Sorianos who owned the Ayala banking and real

estate group and sided with the Marcos government. Unable to execute a takeover on

his own, Zobel sold his 19.5 percent stake to Eduardo Cojuangco, Jr. (known in some

circles as "the coconut king"). Although Cojuangco was a cousin of Marcos opponent

Corazon Aquino, he too sided with Marcos. Cojuangco's Coconut Industry Investment

Fund (a.k.a., United Coconut Planters Bank) accumulated an additional 31 percent of

San Miguel, giving him effective control of the conglomerate and leaving the Soriano

family with a mere 3 percent. Cojuangco scooped up the chairmanship in 1984, when

Andrés Soriano, Jr., died of cancer. However, his reign over San Miguel lasted only two

years. When Marcos lost the 1986 election to Aquino amidst the "people power"

revolution, Cojuangco and many other Marcos backers fled the country. (In fact, Marcos

and Cojuangco left in the same helicopter.) Andrés Soriano III resumed San Miguel's

chairmanship and launched a campaign to reclaim the family legacy that year. But when
the new chairman tried to buy back the abandoned shares, he was blocked by an

unexpected agency; the Aquino administration's Presidential Commission on Good

Government (PCGG) assumed control (but not legal ownership) of the 51.4 percent

stake and refused to relinquish it. The government asserted that the stake had been

illegally obtained. In the 1970s Marcos had imposed a tax on the production of

coconuts, a major Philippine cash crop, with the proceeds supposed to fund that

industry's development. It was alleged, however, that the money was funneled into the

Cojuangco-controlled United Coconut Planters Bank, and that Cojuangco then used

much of the funds to help him purchase his controlling stake in San Miguel. The

controlling interest carried nine of San Miguel's 15 directors seats with it. The PCGG

continued to tend its San Miguel stake into the early 1990s, but it acceded de facto

control of the conglomerate to Andrés Soriano III via a management contract with his A.

Soriano Corp.

Soriano III was characterized by Business Week's Maria Shao as an "introverted,

almost reclusive" leader. Schooled at the University of Pennsylvania's prestigious

Wharton School, Soriano III had dabbled in investment banking in New York City before

returning to the Philippines. Soriano tried everything from legal machinations to joint-

venture buyout schemes to wrest control of San Miguel from the PCGG, but to no avail.

At the same time, Soriano III continued the company's program of expansion,

acquiring majority control of La Tondeña Distillers, Inc., the leading producer of hard

liquor in the Philippines, in 1987 and adding beef and pork production to the company's

food operations in 1988.

In 1990 San Miguel threw a five-month party to celebrate its centenary. President

Corazon Aquino called San Miguel "the best showcase of a Filipino company, a shining

example of creative management and commitment to its public."

TheEconomist contrastingly called San Miguel "a showcase for much that is wrong with

business in the Philippines." The latter assertion was substantiated that same year,

when Cojuangco returned to the Philippines (the Journal of Commerce noted that he

"sneaked back into the country [in 1990] despite a ban on his return") to lay claim to his

holdings. Notwithstanding the circumstances of his repatriation, a November 1992

article in Asian Business noted that "Cojuangco [was] expected to win eventually." All

the same, Soriano III continued to hold the chairmanship. (Cojuangco, meantime,

unsuccessfully ran for the Philippine presidency in 1992.)

International Expansion: 1980s-90s

Soriano III led the company to a new era of dramatic growth based on

internationalization. This move was motivated by a number of factors. First, San Miguel

had developed its core Philippine and Hong Kong markets to maturity and was faced

with relatively slow growth there. Soriano hoped to expand into other countries and

thereby mitigate the effects of the Philippines' unstable economy. Finally, the leader

wanted to head off encroaching competition from the world's biggest breweries, namely

Anheuser-Busch and Miller of the United States, Kirin of Japan, and BSN of France. In

an interview withAsian Business' Michael Selwyn, San Miguel President Francisco C.

Eizmendi, Jr., said that "what we are aiming to do is be a David among the Goliaths of

international business, without losing our grip on the local market."

Having determined that overseas growth was imperative, Soriano allocated $1 billion to

a five-year strategic internationalization program that focused on shaping up domestic

operations, then progressing to licensing and exporting, overseas production, and finally

to distribution of non-beer products. San Miguel's plant modernization plan involved

sweeping improvements, from computerization to quality circles. These efforts laid the

groundwork that would enable the company to compete with the world's food and

beverage multinationals. A subsequent decentralization created a holding company

structure with the 18 non-beer operations positioned as subsidiaries. This corporate

reorganization freed the spun-off businesses from the bureaucratic shackles of a large

conglomerate. In the course of this multifaceted effort to attain optimum efficiency, San

Miguel reduced its workforce by more than 16 percent, from a 1989 high of 39,138 to

32,832 by 1993. Asian Business noted that these programs helped increase profit per

employee by 56 percent in 1991 alone.

With its domestic "ducks in a row," San Miguel turned to the next stage in its

internationalization, beer licensing, and exporting initiative. Although the company had

exported beer for most of its history, this effort was intensified dramatically in the late

1980s. San Miguel's beer exports grew by 150 percent from 1985 to 1989 alone, and

the brand was soon exported to 24 countries, including all of Asia's key markets as well

as the United States, Australia, and the Middle East. Once the core brand was

established in a particular market, San Miguel would begin to create production

facilities, sometimes on an independent basis and sometimes in concert with an

indigenous joint-venture partner. By 1995, San Miguel had manufacturing plants in

Hong Kong, China, Indonesia, Vietnam, Taiwan, and Guam.

 Thus, in spite of the overarching quarrel regarding San Miguel's ownership (not

to mention other problems endemic to operating in the Philippines), the company's sales

quintupled from P 12.23 billion in 1986 to P 68.43 billion by 1994. Net income increased

twice as fast, from P 1.11 billion to P 11.86 billion over the same period, although San

Miguel's overseas operations (as a whole) were not yet profitable.

In 1996 San Miguel purchased full control of its Hong Kong arm, San Miguel

Brewery Hong Kong Limited. In April of the following year, San Miguel's domestic soft-

drink bottling unit, Coca-Cola Bottlers Philippines, Inc., was merged into the Australia-

based Coca-Cola Amatil Limited (CCA). In effect, San Miguel exchanged its 70 percent

interest in a Philippine-only operation for a 25 percent stake in CCA, which had

operations in 17 countries--both in the Asia-Pacific region and in Eastern Europe. CCA

soon demerged the latter operations into a U.K.-based firm called Coca-Cola Beverages

plc (resulting in a reduction of San Miguel's stake in CCA to 22 percent). Seeking to

maintain its focus on the Asia-Pacific region, San Miguel sold its stake in the new U.K.

entity in mid-1998.

From 1995 through 1997, San Miguel suffered from a downturn in its main

domestic businesses, while overseas operations were still in the red. Profits plummeted.

In response, a major restructuring of the company's loss-making food businesses was

undertaken. San Miguel's ice cream and pasteurized milk business was merged with

operations of Nestlé to form Nestlé Philippines, Inc., and late in 1998 San Miguel's stake

in this business was sold off. San Miguel also exited from the ready-to-eat meal sector

and curtailed the operations of its shrimp farming business.

 By late 1997 the company was also beginning to feel the effects of the exploding

Asian economic crisis. In addition, the price of its stock was declining. At this point, a

Hong Kong-based conglomerate, First Pacific, stepped into the picture, acquiring a 2

percent stake in San Miguel and entering into negotiations to pay as much as $1.3

billion for the two government-sequestered stakes that remained the subject of lengthy

litigation. First Pacific abandoned its takeover bid early in 1998, however, when the

negotiations--which required a resolution of the status of the disputed stakes--ran afoul

of Philippine election-year politics.

A New Cojuangco Era: Late 1990s and Early 2000s

In April 1998 the anti-graft court handling the case of the disputed San Miguel

stakes ruled that Cojuangco was entitled to vote 20 percent of the shares, although he

was not given ownership of the shares. This enabled Cojuangco to install three new

directors on the company board. Then in May, Joseph Estrada won the Philippine

presidential election. Cojuangco had been the main financial backer of Estrada, a

former movie actor who had been Cojuangco's vice-presidential running mate during

their unsuccessful 1992 campaign, and Cojuangco also became chairman of Estrada's

political party following Estrada's electoral victory. By early July 1998, Soriano III had

resigned from his position as chairman of San Miguel, and the board of directors, which

included seven government-controlled (and hence Estrada-controlled) seats, voted to

return Cojuangco to the chairmanship. This marked an amazing comeback for the once-

disgraced Cojuangco, and also left many observers worried about a possible return to

the crony capitalism of the Marcos era.

 Cojuangco moved quickly to turn around the fortunes of the foundering company.

Restructuring moves included a flattening of management layers to speed up decision-

making and make the company more responsive to the marketplace. Overseas, the

international headquarters were moved from high-priced Hong Kong to low-priced

Manila as part of a larger cost-cutting initiative. The company also raised its domestic

beer prices to make up for revenue lost from higher taxes on beverages and liquor. San

Miguel increased its share of the domestic bottled water market by acquiring Metro

Bottled Water Corporation, maker of Wilkins Distilled Water, in July 1999. Later in 1999

San Miguel announced that it would sell its minority stake in CCA through a stock

offering, but these plans were soon abandoned when CCA's stock price declined

sharply. Income from operations for San Miguel rose slightly in 1998 before surging 63

percent in 1999. Using a huge hoard of cash built through the recent asset sales,

Cojuangco completed a series of acquisitions from 2000 to early 2002. During 2000,

San Miguel purchased J. Boag & Son Limited, an Australian brewer, for about P 2.4

billion ($56 million), as well as Sugarland Multi-Food Corporation, a Philippine juice

maker, for P 2.9 billion. The latter firm--renamed Sugarland Beverage Corporation--was

jointly acquired by San Miguel and its majority-owned subsidiary, La Tondeña Distillers.

Two major acquisitions of Philippine firms were then completed in 2001. Pure Foods

Corporation was acquired for P 7.02 billion. Renamed San Miguel Pure Foods

Company, Inc., the acquired company was a market leader in both processed meats

and flour. The deal thereby expanded San Miguel's processed meat portfolio and also

marked its first foray into the flour industry. In July 2001 San Miguel joined forces with

the Coca-Cola Company to reacquire Coca-Cola Bottlers Philippines, with San Miguel
taking a 65 percent stake and Coca-Cola the remaining 35 percent. As part of the deal,

San Miguel sold its shares in CCA back to that company. Later in 2001, San Miguel sold

its bottled water and juice businesses, now amalgamated as Philippine Beverage

Partners, Inc., to Coca-Cola Bottlers Philippines. Finally, in February 2002, San Miguel

completed the acquisition of an 83 percent stake in Cosmos Bottling Corporation in a P

15 billion ($282 million) deal completed through Coca-Cola Bottlers Philippines. Cosmos

specialized in low-priced soft drinks and held the number two position in the Philippine

market. The combination of Coca-Cola Bottlers Philippines and Cosmos gave San

Miguel control of more than 90 percent of the Philippine soft-drink industry.

During and following this period of acquisitiveness, the question of who owned

San Miguel remained unresolved. Estrada became embroiled in a corruption scandal

and was then forced from power in January 2001 in a popular uprising backed by the

military. Replacing Estrada as president was Gloria Macapagal-Arroyo, who almost

immediately began maneuvering to oust Cojuangco from the chairmanship of San

Miguel as part of her campaign to rid the country of corruption. Arroyo sought to replace

five directors appointed by Estrada, but a technicality prevented her from doing so prior

to the May 2001 annual meeting. Cojuangco was thus able to retain his position as

chairman. Then in December 2001 the Philippine Supreme Court ruled that Arroyo

could in fact replace the five directors. Simultaneously, however, Cojuangco arranged a

deal with the Japanese brewer Kirin Brewery Company, Limited whereby Kirin would

invest P 27.88 billion ($544 million) for a 15 percent stake in San Miguel. Kirin finalized

its investment in February 2002, gaining two board seats that Cojuangco could now

count on to help him remain in power. By this time, Cojuangco had also gained
popularity among investors for turning around the company and making it one of the

most profitable in the country--despite a prolonged economic downswing; the

government recognized this support by reaching a deal with Cojuangco in early 2002.

Cojuangco could remain in control of the conglomerate until the anti-graft court

determined the true ownership of the disputed shareholdings; in return the government

would gain representation on important management committees and on the boards of

13 company subsidiaries.

San Miguel thus stood in the early 2000s as one of the most respected

corporations in the Philippines, while at the same time facing an uncertain future

because of the long-unresolved ownership dispute. In addition, there was a potential

complication: Cojuangco was reportedly considering another run at the Philippine

presidency for the May 2004 election.

San Miguel Corporation's commitment to bring quality products to each and

every Filipino home has brought together well-loved brands that make everyday life a

celebration. No other company in Philippine history has developed such a rich and

diverse product portfolio covering the beverage, food and packaging industries as San

Miguel.

Best known for its internationally distributed beer, San Miguel Corporation can only be

described in superlatives. It is southeast Asia's oldest and largest brewer. It also ranks

as the Philippines' largest and one of its most consistently profitable companies. San

Miguel's flagship beer utterly dominates the Filipino market, with a 90 percent market

share. A 1988 brief in the Economist noted that Filipinos order "beer" at bars and
restaurants, knowing that they will receive a San Miguel. But San Miguel did not make it

to the top of the regional heap on good beer alone. It also makes agricultural feeds,

processed and fresh meats, dairy products, coconut products, hard liquor, nonalcoholic

beverages, and packaging products such as glass containers, corrugated cartons,

aluminum cans, and metal crowns and caps. Through wholly or majority-owned

subsidiaries, San Miguel holds dominating market shares in several food and beverage

sectors in the Philippines: 90 percent of carbonated beverages, 58 percent of powdered

juice, 56 percent of hard liquor, and more than 80 percent of margarine and butter. By

the early 2000s, beer and other alcoholic beverages constituted only about one-third of

San Miguel's annual turnover. In fact, the conglomerate had, by 2001, grown over the

course of its more than 110 years in business to generate 3.6 percent of its home

country's gross domestic product and 4.5 percent of government tax revenue.

San Miguel grew to its commanding position in the southeast Asian market in

spite of political upheaval, infrastructure glitches, and high taxes. It achieved its status

through aggressive competitive strategies and shrewd long-range planning over the

decades. Having diversified into agribusiness, foods, and packaging in the mid-20th

century, the conglomerate dominated its domestic markets by the early 1980s. At that

time, San Miguel undertook an aggressive program of international expansion that

came to fruition in the mid-to-late 1990s.

Product and Services

Beverages

BEER

San Miguel Brewery Inc. (SMB) is the largest producer of beer in the Philippines,

with nine out of ten beer drinkers preferring its brands. San Miguel Beer was first

produced by La Fabrica de Cerveza de San Miguel, an upstart brewery in the heart of

Manila that began its operations in 1890. It received the Royal Grant from the Spanish

king to brew beer in the Philippines, then a colony of Spain. In 1963, the brewery was

renamed San Miguel Corp. (SMC) to reflect its growing ventures into food and

packaging. As the beer business grew at a steady pace, it provided the foundation from

which SMC expanded its interests from food, beverage and packaging, to power, oil and

infrastructure. Today, SMC is the country's biggest diversified conglomerate.

From a single product produced in a single brewery in 1890, SMB has developed

an array of popular beer products over the past century, catering to the distinct tastes

and preferences of beer drinkers across all segments and markets in the Philippines.

Today, it carries a portfolio of ten strong and popular beer brands: San Mig Light, Red

Horse Beer, Cerveza Negra, Gold Eagle Beer, San Miguel Strong Ice, San Miguel

Super Dry, San Miguel Premium All-Malt Beer, San Miguel Flavored Beer, San Mig

Zero, and its flagship brand, San Miguel Pale Pilsen. These products carry distinct

attributes that cater to all segments of the Philippine beer market and have earned
international recognition for quality, winning in the prestigious Monde International

Selection almost on an annual basis, among other awards and citations.

The Company has six production facilities strategically located across the

Philippines to ensure product availability and freshness,and a highly developed

distribution system serving approximately 471,000 retail outlets.

GINEBRA SAN MIGUEL INC

Ginebra San Miguel, Inc. is the world’s largest gin producer by volume as well as

the market leader in the domestic hard liquor market, with core products such as

Ginebra San Miguel Gin, GSM Blue Gin, Primera Light Brandy and Vino Kulafu. It also

produces and sells distilled spirits in Thailand under a joint venture agreement with Thai

Life Group of Companies. In addition, Ginebra owns one distillery, three liquor bottling

plants, one cassava starch milk plant and five toll bottlers strategically located

throughout Philippines and one bottling plant and one distillery in Thailand.

SAN MIGUEL PURE FOODS COMPANY, INC.

San Miguel Pure Foods Company, Inc. offers a diverse array of food products

spanning across the entire value chain ranging from B-Meg feeds and San Miguel Mills

flour to Purefoods hotdogs, Magnolia chicken or Monterey ready-to-eat meat dishes.

Pure Foods offers an unrivalled breadth of food products that can be consumed during
any time of the day, providing a comprehensive food solution to its customers, thereby

building greater brand loyalty and prestige.

Pure Foods’ portfolio of brands includes some of the most well-known food brands in

the Philippines both across and within product categories. Many of Pure Foods’ brands

enjoy first or second market positions in their respective categories. By catering to a

wide set of customer segments with different needs and preferences, it has been able to

consistently maintain its leadership position in the market.

The Food Group’s operations range from breeding, contract growing, processing and

marketing of basic meats, to the manufacture of refrigerated, canned and ready-to-cook

meat products, butter, cheese, margarine, ice cream, flour and flour-based products as

well as animal and aquatic feeds. Foremost among the Food Group’s partners is

Hormel Foods Corporation.

SAN MIGUEL YAMAMURA PACKAGING CORP.

The San Miguel Yamamura Packaging Corporation provides a wide range of

packaging solutions to various industries including food, pharmaceutical, chemical,

beverages, and personal care across Asia-Pacific, Middle East, Africa and the United

States. It is a major player in the domestic packaging industry with market leadership in

most of its product formats.

The Packaging Group has state-of-the-art manufacturing facilities including the

only food grade polyethylene terephthalate (PET) recycling facility in Asia; a

technologically advanced glass manufacturing facility and the only aluminum beverage

can plant in the Philippines which pioneered the production of two-piece cans for the

beverage market. It has also established technical partnerships with global packaging

players such as Nihon Yamamura Group, Fuso, Kaito and United Resource Recovery

Corporation.

The Packaging Group’s businesses are categorized into glass, metal,

composites or flexible, plastics, PET and paper. Its product offerings include glass

containers, PET bottles and preforms, plastic closures, corrugated paper cartons,

flexible packaging, plastic crates, metal closures and two-piece aluminum cans, plastic

pallets, glass and PET moulds, plastic tubes, plastic pails, plastic bottles, plastic films,

woven products, radiant barriers. Service offerings include graphics designing,

packaging researching and testing, packaging development and consultation, contract

packaging and trading.

SAN MIGUEL PROPERTIES INC.

San Miguel Properties Inc. (SMPI) is the corporate real estate arm of San Miguel

Corporation (SMC). It is the primary property subsidiary of SMC Group, currently 100%

owned by SMC. SMPI is presently engaged in commercial property development, sale

and leasing of real properties, management of strategic real estate ventures and

corporate real estate services.

 Among its completed projects are Bel Aldea and Maravilla in Cavite,

Wedgewoods in Sta. Rosa, Laguna, and Makati Diamond Residences, Dover Hill, One

Dover View, Two Dover View and Emerald 88 in Metro Manila.

OIL REFINING & MARKETING

Petron Corporation is the largest oil refining and marketing company in the

Philippines and is a leading player in the Malaysian market. We have a combined

refining capacity of nearly 270,000 barrels-per-day, fueling the lives of millions of

Malaysians and Filipinos.

Here in the Philippines, we supply about a third of the country’s total fuel

requirements through the operation of our 180,000 barrel-per-day refinery in Bataan.

The Petron Bataan Refinery is the country’s most advanced integrated oil refining and

petrochemicals complex producing a full range of world-class petroleum products

including gasoline, LPG, diesel, jet fuel, kerosene, and petrochemical feedstocks -

benzene, toluene, mixed xylene and propylene. From the refinery, we move our

products mainly by sea to 30 terminals and depots throughout the country.

With about 2,400 service stations – the largest in the country – we retail gasoline,

diesel, and autoLPG to motorists and the transport sector. Our wide range of top-of-the-

line fuels includes Blaze 100 Euro 6, XCS, Xtra Advance, Turbo Diesel and DieselMax.

We also fuel strategic industries such as power-generation, manufacturing, mining, and

agribusiness. Petron also supplies jet fuel at key airports to international and domestic
carriers. We also offer our LPG brands Gasul and Fiesta to households and other

industrial customers through an extensive retail network.

We have partnered with popular food and service locator chains to give our

customers the best one-stop, full service experience. In select stations, we have San

Mig Food Avenue stores that offer a wide variety of food, beverages, and personal

items. We also re-launched our Treats convenience stores for motorists on the go.

Over in Malaysia, we continue to expand our operations which comprise an

integrated refining, distribution, and marketing business. We operate the Port Dickon

Refinery, 11 storage terminals and facilities and over 600 service stations.

We are guided by our vision “to be the leading provider of total customer

solutions in the energy sector and its derivative businesses.”

POWER & ENERGY

In a relatively short period, San Miguel has built a vertically integrated power

company with a full spectrum of power businesses comprising of IPPA contracts

through holding company SMC Global Power Holdings. Being a vertically integrated

power company gives SMC the opportunity to compete and maximize value in key

segments of the value chain by driving and capitalizing on synergies among fuel

sourcing, power generation and power distribution.

Sual Power Plant

The Sual Power Plant is a 2x500 MW coal-fired power plant located in Sual,

Pangasinan on the Lingayen Gulf. This power plant is owned by TeaM Energy, which is

a joint venture between Marubeni Corporation and Tokyo Electric Power Corporation.

The Sual Power Plant is the largest coal-fired power plant in the Philippines [in

terms of installed capacity]. It was built pursuant to an ECA with NPC under a 25-year

Build-Operate-Transfer (BOT) scheme that expires on October 24, 2024. On August 28,

2009, San Miguel Energy Corporation (SMEC) successfully bid for the appointment to

be the IPPA for the Sual Power Plant and received a notice of award on September 1,

2009. SMEC assumed administration of the Sual Power Plant on November 6, 2009 in

accordance with an IPPA agreement entered into with PSALM.

Ilijan Power Plant

The Ilijan Power Plant sits on a 60-acre site at Arenas Point, Barangay Ilijan,

Batangas City and was constructed and is owned by KEPCO (through its local

subsidiary, KEPCO Ilijan Corporation) pursuant to a 20-year ECA with NPC under a

BOT scheme that expires on June 4, 2022.

NPC supplies gas to the Ilijan power plant from the Malampaya field in Palawan.

The Ilijan Power Plant consist of two blocks with a rated capacity of 600 MW each. The

power plant can also run on diesel oil stored on site. On April 2010, SMC successfully

bid for the appointment to be the IPPA for the Ilijan Power Plant and received a notice of
award from PSALM on May 5, 2010. On June 10, 2010, SMC and SPPC (Ilijan) entered

into an Assignment Agreement with Assumption of Obligations whereby SMC assigned,

with the consent and conformity of PSALM, all of its rights and obligations under the

Ilijan IPPA Agreement to SPPC (Ilijan). On June 26, 2010, SPPC (Ilijan) assumed

administration of the Ilijan Power Plant.

San Roque Power Plant

The 345 MW San Roque Hydroelectric Multipurpose Power Project in San

Manuel, Pangasinan is a peaking plant that was constructed by a consortium composed

of Marubeni Corporation, Sithe Philippines Holdings, Inc., and Italian-Thai Development

Public Issuer Limited pursuant to a PPA with NPC under a BOT scheme.

The San Roque Power Plant utilizes the Agno River for power generation and

irrigation and contributes to flood control and water quality improvement for the

surrounding region and comprises three power generation units of 115 MW each. The

San Roque Power Plant provides an annual energy generation of 1,065 GWh from the

345-MW hydroelectric power plant, the irrigation of approximately 34,450 hectares of

agricultural land, storage of water that would otherwise flood the Pangasinan plains, and

improvement of water quality of the Agno River which, otherwise, would pollute the

downstream rivers. On December 15, 2009, SPDC (San Roque) successfully bid for the

appointment to be the IPPA for the San Roque Power Plant and received a notice of

award on December 28, 2009. SPDC (San Roque) assumed administration of the San
Roque Power Plant on January 26, 2010 in accordance with an IPPA agreement with

PSALM.

Greenfield Power Plants

Designed to initially produce up to 900 megawatts of electricity using the most

modern combustion technologies that meet international environment standards, our

new power plants in alita, Davao and Limay, Bataan, will help bring about security in

power supply.

INFRASTRUCTURE

SLEX

The South Luzon Expressway (SLEX) is a 36 kilometer-long toll road that runs

from Alabang to Sto. Tomas, Batangas. SLEX has 13 access points connecting

residential developments, commercial and industrial zones, and tourist spots in Metro

Manila, and the provinces of Laguna, Cavite and Batangas The South Luzon Tollway

Corporation (SLTC) is the concessionaire of SLEX, and is currently operated by Manila

Toll Expressway Systems, Inc. (MATES).

Skyway Stage 1 & 2

Skyway Stage 1 project consists of a 9.3-km elevated road that runs from

Bicutan to the Makati Central Business District; as well as the rehabilitation of the 13.43-

km section (at-grade) of the South Luzon Expressway from Alabang to Magallanes. It

was first opened in 1999. Skyway Stage 2 is the 6.86-km elevated expressway that
consists of six lanes in the Bicutan-to-Sucat section, and four lanes in the Sucat-to-

Alabang section, with ramps leading to the South Luzon Expressway. Phase 1 was

completed in 2010, while Phase 2 began has been in operation since 2011.

Skyway’s current concession-holder is Citra Metro Manila Tollways Corporation

(CMMTC); while operations are handled by Skyway O&M Corporation (SOMCO).

Skyway Stage 3

Another major infrastructure initiative, which broke ground in January 2014, is the

Skyway Stage 3 project—a 14.82-km, six-lane elevated expressway that will extend the

existing elevated skyway from Buendia to Balintawak and will link the South Luzon

Expressway (SLEX) to NLEX. The project aims to decongest major thoroughfares,

including EDSA, while creating new transport routes.

Skyway Stage 3 has four sections: Section 1 will run from Buendia to Plaza

Dilao; Section 2 from Plaza Dilao to Aurora Blvd; Section 3 from Aurora Blvd to Quezon

Avenue; and Section 4 from Quezon Avenue to EDSA/Balintawak. Construction is still

ongoing; with the project expected to be completed by 2019.

STAR

STAR Tollway consists of two stages: Stage 1 involves the operations and

maintenance of the 22.16-km toll road from Sto. Tomas to Lipa City, Batangas; while

Stage 2 involves the financing, design, construction, operation and maintenance of the

19.74-km toll road from Lipa City to Batangas City, Batangas. The expressway has six

interchanges and starts at the intersection of Maharlika Highway and the South Luzon
Expressway in Sto. Tomas, Batangas; and runs south to Batangas City. It connects

directly to the Diversion Road leading to the Batangas International Port. Star

Infrastructure Development Corp. (SIDC) is the concessionaire of STAR Tollway; while

operations and maintenance is handled by Star TollwIay Corp. (STC).

MANILA NORTH HARBOR

Manila North Harbor, a 55-hectare port facility located in Tondo, Manila, is the

country’s busiest port. It has a total quay length of 5,200 meters and 41 berths, which

can accommodate all types of vessels such as containerized and non-container type

vessels. SMC took over its rehabilitation and modernization through concessionaire

Manila North Harbour Port, Inc. (MNHPI); which has the sole and exclusive right to

manage, operate, develop and maintain the port.

Phase 1 includes the development of berth and quay lines, reclamation of the

piers, rehabilitation of container yards and the construction of new passenger terminals,

which began in 2011 and is expected to be completed within 2017. More developments

are already in the pipeline for Phase 2 of Manila North Harbor, which is slated for

completion by 2022.

BULACAN BULK WATER

The Bulacan Bulk Water project covers the planning and design, financing,

construction, and operations management of water treatment and distribution facilities

to provide not only potable water to the 24 water districts in Bulacan Province, but also

supply that is environmentally sustainable and equitably priced to meet the increasing

demand in the area. The water treatment plant occupies an area totaling 5.5 hectares.
 The project consists of two stages: Stage 1 consists of six Water Districts

(Balagtas, Bocaue, Marilao, Meycauayan, Obando, and San Jose del Monte City)

expected to be completed by October 2018; and Stage 2 includes seven Water Districts

(Bulacan, Calumpit, Guiguinto, Malolos, Paombong, Plaridel, and Sta. Maria) slated for

completion by April 2019. The Luzon Clean Water Development Corporation (LCWDC)

and Metropolitan Manila Waterworks and Sewerage System (MWSS) officially signed

the Concession Agreement on January 15, 2016.

3 Month Value in the Market

I choose to buy stock in San Miguel Corporation because they offer a low price to

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choose San Miguel Corporation because they provide a long term chart. I choose San

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many opportunities.
Submitted by: Allyssa Mae P. Mospa

FM 4-4