McDonald’s

In March 2005, the Company entered the quick service restaurant business through the acquisition of 49% of the common shares of Golden Arches Development Corporation (“GADC”), which oversees the operations of McDonald’s restaurants in the Philippines pursuant to a master franchise agreement between GADC and McDonald’s Corporation, USA. McDonald’s is one of the world’s best known global brands. All restaurants bearing the McDonald’s brand name in the Philippines are operated either by GADC, independent third parties under the terms of a sub-franchise agreement with GADC or by GADC’s affiliates under joint venture agreements with third-party investors. As of March 31, 2007, there were 254 McDonald’s restaurants in the Philippines primarily concentrated in Metro Manila and other major cities, of which 153 restaurants were owned and operated by GADC and 106 restaurants were operated by sub-franchisees. GADC plans to open an additional 50 McDonald’s restaurants within the next 5 years.

On a pro forma basis, in 2006 revenue from GADC amounted to P6,623 million and contribution to gross profit was P929, compared to revenue of P6,171 million and contribution to gross profit of P761 million in 2005.