The Enterprise Center, 17th floor, Tower 1, 6766 Ayala Ave., Makati City Tel. nos.: (632) 338.

5599, (632) 814.1818 philweb.com.ph ecasinofilipino.com basketballjackpot.net premyosaresibo.com.ph

2008 Annual Report

about us

PhilWeb Corporation is the first and largest (by market capitalization) listed Internet company in the Philippines. We are the dominant technology-based gaming firm in the country and a principal technology enabler to the Bureau of Internal Revenue, in their efforts to increase tax collections, and to Philippine Amusement and Gaming Corporation (PAGCOR), the regulatory agency for all games of chance. PhilWeb Corporation delivers world-class, innovative, fair, safe, entertaining and legal technology-based gaming products to the Filipino public, and we develop emerging, gaming-based revenue streams for various agencies of the Philippine government. The Company today serves over 50,000 customers a day through our nationwide network of online cafs, sports betting kiosks and mobile games. We are a lean organization, with less than 150 employees at the end of 2008, but a highly productive one. In the five years since your Company entered the gaming business, we have delivered almost a billion pesos in revenues. This is just the beginning.

Annual Report 2008

1 7 15 17 19 23 25 26 28 29 30 31 33 57

Letter to shareholders PAGCOR e-Games Cafs Mobile Gaming Sports Betting Board of directors Executive officers Statement of managements responsibility Report of independent auditors Balance sheets Statements of operations Statements of changes in equity Statements of cash flows Notes to financial statements Corporate information

PhILWEB PRESIdENT Dennis O. ValDes

PhILWEB ChAIRMAN RObeRtO V. Ongpin

letter to shareholders

dear valued shareholders,

The year 2008 marked a seminal point in the history of your Company, PhilWeb Corporation. With three years of solid financial results behind us, we are poised to move to a higher level of corporate performance where dependable profitability generates consistent dividends for investors. prospects it offers. As in any successful franchise, in its infancy, no one would have been aware of their excellent products with only a few stores around. There needs to be a few hundred stores open before consumers become fully aware of the product and what it offers. Once this tipping point is achieved, only then does the product get mainstreamed in the minds of consumers. As profitable as the PEGS model is, we are not yet at this stage, which is why our cafs continue to experience high average revenue growth.

RecessiOn-pROOf ReVenues
Indeed, the past three years of strong growth have shown that we have a remarkable, recession-proof core business, our PAGCOR e-Games Cafs or PEGS. This caf-casino business is only in its early stages of growth and will be a fantastic revenue driver for many years. In 2008, your Companys revenues totaled -P-450 million, 68% higher than the previous year. Majority, but not all, of these revenues were generated by our core PEGS business. We ended 2008 with 121 cafs, 45 more than we had in december 2007. While opening 45 cafs was our fastest caf-opening rate ever, this is only a 59% growth year on year. It is important to note, when comparing the pace of revenue growth to that of caf growth, that the former exceeds the latter. Thus, the average cafs revenue continues to grow even as more cafs open up. This may seem paradoxical since one might expect a certain amount of cannibalization as new cafs are opened. Rather, this speaks of the infancy of the business model. At this stage, we can compare the PEGS Cafs today to other successful franchises when their brands were initially launched. With only a few cafs open, not all consumers are aware of the PEGS product and the entertainment

Some of our other 2008 growth highlights vs. 2007 include: Number of Players per day grew 113%, to 17,574 from 8,239 Total Bet Volume grew 65%, to -P-47.2 billion from -P-28.6 billion Total Casino Win grew 72%, to -P-1.47 billion from -P-857 million Total PhilWeb Revenue from PEGS grew 82%

The financial performance of the PEGS caf network continues to defy the credit crunch that is affecting so much of the world today. As of this writing: January 2009 has beaten december 2008 February beat January day-on-day March 2009 is historically the best month ever. Total Bet Volume for PEGS reached a record -P-5.7 billion, with a record Casino Win of -P-194 million or a win rate of 3.4%. Early April is already showing promise, with the record for daily Casino Win reset with a new total of -P-8.55 million on April 4. As a result, when compared to the same period last year, we are tracking 107% growth in your Companys revenue from PEGS.

2008 gROwth highlights

It is also interesting to note that our strongest performing month in 2008 was december, which is traditionally not a strong performer considering all the holidays and events during the month. Instead, december 2008 turned in not only a spectacular performance, it also set the records for the strongest days of the PEGS caf business. On december 23, we set the record for Gross Bets in one day with a total of -P-239 million wagered in our cafs. Three days later, we set the record for total daily Casino Win, with a total of -P-8.14 million for the day.

We expect this recession-proof revenue performance to continue, if not accelerate, as we continue to open more cafs this year.

cOntRibutORs tO cORe net incOme

As satisfying as it is to note our revenue growth rates, it is even more heartening to see our other business units doing well and contributing to Core Net Income.

letter to shareholders

Basketball Jackpot, our sports-betting game sold in Internet Sports Betting Stations, had another consistent and solid year. Premyo Sa Resibo, our mobile raffle, also delivered modest growth. We continue to invest in our mobile businesses, growing our management team and planning more product launches this year, and are confident that this unit will deliver profits in 2009 and beyond. All these business units contributed to a total consolidated Net Income of - -292 million, a 31% growth P from previous year and a record for your Company. This Net Income figure includes our equity in the net earnings of ISM Communications Corporation, totaling - -61 million in 2008, a drop from the - -102 million that P P was contributed in 2007. Taking into account only the Net Income contributed by our core gaming businesses, our Core Net Income had a growth rate of 92%.

passing Republic Act 9487, known as the PAGCOR Charter, which extended the life of PAGCOR for another period of twenty-five years, renewable for another twenty-five years. With this regulatory foundation in place, PAGCOR can focus on increasing the revenues that it delivers to the Philippine Government. PAGCOR is the third largest contributor of revenues to the government, after the Bureau of Internal Revenue and the Bureau of Customs. We continue to work very closely with PAGCOR to deliver new gaming opportunities to tourists and Filipinos. The PEGS Caf expansion fits in nicely with PAGCORs growth objectives. There are now 13 PAGCOR land-based casinos nationwide. There are not many more areas where a full-blown, land-based casino, with its huge capital outlay and operating costs, makes financial sense. The PEGS Caf model involves comparatively minimal capital and operating costs, and is thus perfect for penetrating many provincial cities. Also among our PAGCOR-related projects for 2009 are plans to double the number of outlets that offer our Basketball Jackpot game, by making this game available in our PEGS Cafs. We also plan to enhance the game by offering NBA games, as well as the current PBA, PBL and UAAP games it covers. As of this writing, PAGCOR has already approved our NBA Ending product and we are rolling it out in time for the NBA playoffs that runs from now until June. We are bullish on the ability of NBA Ending to increase revenues for Basketball Jackpot, as there are over 1,300 NBA games in one year, compared to about 300 for the PBA, PBL and UAAP combined. We also reinvigorated our kiosk network offering Basketball Jackpot last year, offering enhancements
4

stellaR cash flOws

One measure of our financial performance that should not be missed is our stellar cash flow. At yearend, our total cash bank balance was -P-702 million, a growth of -P-206 million or 41% from a year ago. We focus very keenly on cash management in our gaming businesses, never allowing betting on credit and reconciling all accounts on a daily basis. By all measures, all our financial condition is in excellent shape.

paRtneRing with pagcOR

The Philippines has a unique position in the ASEAN region. It is the first country to have established a strong regulatory framework supporting the gaming industry, one that has now been in place for close to thirty years, through the Philippine Amusement and Gaming Corporation or PAGCOR. On July 11, 2008, Congress reaffirmed this regulatory superiority, by

61

102 231 75 41 121

ISM
like a thermal printer, a stand-alone computer and new signage. We got rid of some unprofitable sites and opened new ones, thus strengthening the entire network. Mobile continues to be a growth area for your Company, working hand-in-hand with PAGCOR. The Philippines continues to be the text capital of the world, with 1.3 billion texts sent per day. Most of these are simple SMS messages, of course, but the volume for games and gaming is growing as well, as Filipinos learn to use the phone for entertainment. In 2008, we tripled the headcount of our Mobile group, hiring more managers with telco and VAS experience. This group will be launching several new products this year, as well as tweaking existing ones to enhance their profitability.

PhILWEB

lOOking beyOnD
Unlike many industries that are playing it safe during the current worldwide recession, your Company looks at the near future with great optimism. There are many opportunities in front of us and we are bullish that we can create more shareholder value from these projects. For example, today we are the largest operator of caf- or kiosk-based gaming. As of this writing, we have 138 PEGS Cafs and 155 Basketball Jackpot kiosks, with 50 more cafs in the pipeline. This network model will work in many countries where the population cannot afford to own their own computers and connects to the Internet via cafs. It can also work in countries where there is poor credit card penetration or where people prefer to pay cash for gaming entertainment. We are working

letter to shareholders

on several opportunities where we can export the PEGS model to these countries. By the end of 2009, as a result of our continued strong profitability, we expect to have positive Retained Earnings on our Balance Sheets. This financial situation, when combined with our robust cash position, brings into play the prospect of distributing dividends to stockholders. We also continue to be on the constant lookout for potential acquisitions of companies involved in the gaming industry. Many over-leveraged companies, both local and international, will find themselves in financial distress during this worldwide credit crunch. It is a time when financially strong companies like us can seek further growth. As we look forward to delivering on these opportunities to you, our stockholders, we would also like to thank you for the faith you have shown us over the past years. It is your unwavering support that has enabled us to work hard towards delivering on the great promise and potential of your Company.

30 April 2009

Roberto V. Ongpin Chairman

dennis O. Valdes President

6

The PAGCOR e-Games (PEGS) Caf network broke practically all of its records in 2008. In terms of number of cafs, number of players, total bets and profits, the PEGS team delivered a stellar performance during the year.

caf netwORk
We ended the year with 121 cafs, as our Rollout team achieved its biggest growth to date by opening 45 new PEGS Cafs during the year. This opening rate represents a 59% year-on-year growth vs. the 76 PEGS Cafs we had in the network at the end of 2007. The 45th new PEGS Caf for 2008 opened in Sta. Cruz, Manila, on december 26, establishing a rollout rate of a new caf almost every week. 2008 saw new focus and effort from the PEGS Rollout team to build PEGS Cafs beyond the metropolitan base. The majority of 2008s 45 new cafs opened outside Metro Manila in places such as Ilocos Norte, Masbate, Palawan and Cagayan de Oro. Thus, the PEGS network grew not only in size, but even more dramatically, in reach.

PLAYERS AT PEGS ROxAS BOULEVARd IN PASAY CITY

This is in line with our strategy of shifting focus to opportunities and potential outside the capital region. We believe in following the examples of other successful franchise brands in expanding the PEGS Caf network. As in the cases of these successful franchises, a tipping point must be reached in terms of visibility. When there are only a few cafs in the network, consumers are not yet aware of the product and the exciting gaming and entertainment opportunities we offer. however, as more cafs open all over the country, consumers learn of the games we offer and are attracted to try out our products. In key cities, we also see that overall local demand improves once second and third PEGS Cafs open up. We are now in 50 cities and towns, including 21 new cities in 2008 alone. As there are 1,713 cities and municipalities all over the country, we can see that we have far more work to do in the months ahead in order to get to our tipping point.

(LEFT TO RIGhT) OliVeR R. gO, SVP-PEGS ROLLOUT DaViD JuDe l. sta. ana, SVP-PEGS CAF OPERATIONS

pagcor e-games

In fact, network growth continues in 2009. At the end of the first quarter, we have already reached 130 PEGS Cafs, with over 50 more in the pipeline.

bet VOlumes
Bet Volumes increased from -P-28.6 billion in 2007 to a staggering -P-47.2 billion in 2008, a phenomenal yearon-year growth of 65%. The fact that the growth rate of Bet Volumes is higher than the growth rate of caf openings implies that the average caf continues to do better than in previous years, despite the additional cafs offering the same games. Indeed, this shows that additional cafs are getting their growth from new players rather than cannibalizing existing cafs. We welcomed an average of 17,574 Players per day in our cafs at the end of 2008. This statistic is easily trackable, since our casino games software is able to store all gaming information since we started the business. In 2007, we averaged only 8,239 Players per day.

We also track the average Player Buy-In and Reloads, the total of which represents the average Player Spending during a visit. At end-december 2008, average Player Spending was -P-2,747, again a growth of 70% vs. previous year. For the past few years, your Companys focus in the PAGCOR e-Games business has been on rollout, but in 2008, we also started to expand existing sites by adding more terminals. We started 2008 at 1,496 terminals and grew this by 91% to 2,862 terminals. This strategy has been remarkably successful, especially in the crowded metropolitan Cafs, in terms of increasing Bet Volume. The combination of getting more players, having these players spend more, and increasing PEGS Cafs and terminals has had a synergistic effect in achieving the total Bet Volume growth of 65%. Bet Volumes rose steadily throughout the year, with december achieving the highest Bet Volumes in the history of PhilWeb, a total of -P-5.5 billion for the month, -P-239 million of that on december 23 alone.
8

PEGS OLONGAPO

casinO win
Casinos around the world measure Casino Win as the first figure towards revenue recognition. Winning percentages reflect the games that players choose in the PEGS Cafs. Some games have high payout rates and therefore lower Casino Win rates. The classic high-payout game is Baccarat, with a Casino Win rate just over 1%. Other games, like slot machines and roulette can have win rates of close to 5%. Our PEGS Caf network had a total Casino Win rate of 3.1% in 2008, a slight improvement vs. the 3.0% in 2007. Although seemingly small, a 0.1% percentage point improvement meant an additional -P-5 million to the Casino Win, based on our Bet Volumes. The improvement in the Casino Win rate was largely due to our improved marketing for our slot machine games. Our PEGS Marketing team embarked on a focused in-store campaign with a priority objective of driving players away from baccarat, which has a relatively low Casino Win rate, to slots, which have a higher house advantage.
AS OF 2008, WOMEN COMPRISE NEARLY hALF OF ALL PLAYERS

pagcor e-games
When the PEGS system started, typical baccarat volume was over 50% of Bet Volume, comparable to a land-based casino. In 2008, when we started our campaign, we were able to reduce the annual average baccarat play to 41% of Gross Bets, and as of the time of this writing, it is at an average of 38.5% and falling March 2009 was at 34.2%. Total Casino Win for 2008 totaled -P-1.47 billion, a 72% improvement vs. the -P-857 million the previous year. december was the strongest month, with a record -P-175 million in Casino Win. The single-day Casino Win record was also set in december, -P-8.14 million on december 26. is the Bureau of Internal Revenue (BIR). PAGCOR pays a 5% franchise tax on all its gaming revenues to the BIR and this amount is taken from the Casino Win as well. The next in line is the Caf operator. Most of the operators of the 130 PEGS Cafs are smalland-medium-scale entrepreneurs who run a variety of businesses. Their portion of the Casino Win is 28%. Another 2% of the Casino Win is allocated for marketing funds. The rest is then allocated between PAGCOR and PhilWeb. PhilWebs Revenue from PEGS in 2008 increased by 82% compared to 2007. And our figures from the first quarter of 2009 show that we are doing even better. At the end of March, we were tracking a year-on-year growth rate of 107%.

ReVenue fROm pegs

Casino Win is divided among all the parties involved in running the PEGS Cafs. The first party, of course,

PEGS SUBIC

10

A MALL-BASEd PEGS CAF, MABALACAT, PAMPANGA

cOntinuOus impROVement
The success of the PEGS business is the result of continuous improvement. When the PEGS Caf system started four years ago, it was a virtually unknown product with no brand or market presence. It did not follow any established international business models. Your Company, working with PAGCOR, struggled to develop the business and learned how to make it work. We spent a lot of 2008 improving the product. PEGS Cafs today offer unique advantages. Players enjoy a more private, flexible, relaxed, and fresher environment in the Cafs, with the same levels of excitement and service as traditional land-based casinos. Operators, on the other hand, have found the PEGS to be a unique, low-capital-cost business opportunity, and a pioneer brand in a dynamic field with exciting growth. In 2008, we went deep into the details of the business and developed hundreds of technical and operational improvements, from more attractive and visible standard signage to faster, safer and more efficient cash management.
11

Major technical improvements centered on increasing the capacity of our current gaming architecture. To address the networks rapid growth, we doubled the number of servers and exponentially increased bandwidth ahead of demand, as well as installing backup resources for security and disaster recovery. To date, we have invested over P200 million in the technology behind running the PEGS software as efficiently and effectively as possible. Another major project was the replacement of our existing point-of-sale (POS) system, which had begun to show its age when confronted with the terrific pace of system growth. We were able to develop and implement a new POS quickly and seamlessly, with unanimous approval from our Operators, whose staff needed little or no retraining to use the faster, simpler and more flexible program. Also on the technical side, as our initial, three- and four-year-old in-store terminals began to reach full depreciation and obsolescence, we have begun a system-wide migration to Thin Client systems. The Thin Client is a new type of computer that is stripped down to the very basics. Because it is less complex,

it is more reliable and delivers major savings to operators in the form of lower capital investment, far less electricity consumption (not least because they generate less heat and thus place less load on air conditioning systems), and lower maintenance costs. Other technical improvements in 2008 included new designs for site infrastructure, hardware and software upgrades, and enhanced levels of maintenance and support. In particular, we took a page from classic Japanese quality management philosophy: instead of focusing on solving problems when they happen, we proactively and continuously evaluated and improved systems to prevent problems from happening in the first place.

Operational improvements were led by the release of a PAGCOR E-Games Caf Manual of Operations, which for the first time codifies the process of setting up and successfully managing the PEGS Caf business. This comprehensive document was in part the result of operations surveys to identify both best practices and problem areas. PEGS Operations in 2008 began to hold quarterly PEGS Operators General Assemblies, to help inform and motivate our Operators as well as provide a venue for PhilWeb and PAGCOR to address Operators concerns quickly and effectively.

OUR PLAYERS, NOT ALL OF WhOM ARE COMPUTER-SAVVY, ENJOY PERSONALIzEd hELP FROM OUR GAMING ASSISTANTS

12

biggame
BigGame, Inc. (BGI) serves both as the flagship operator and the development laboratory for the entire PAGCOR e-Games network. The hundreds of improvements we develop for all cafs are tested first in selected BGI Cafs. At the same time, BGI, a wholly owned subsidiary of PhilWeb, has developed from a break-even startup to a major contributor of revenue to your Company. BGI was the first PAGCOR e-Games operator, with four cafs. PhilWeb acquired it in 2005 from the original owners, when they decided to focus on their other businesses. By the end of 2008, BGI owned 17 of the 121 PAGCOR e-Games cafs, making it the secondlargest operator in the business. BGI began 2008 with modest profitability. Originally, it was more of a missionary operation, opening sites where we could not engage an independent operator, or in a few cases, taking over sites where the operators wanted to sell out of the business. PhilWeb decided to change the reactionary business model to a more aggressive one, and increase profitability. By yearend, BGI contributed -P-56 million to topline revenues, a startling improvement over its -P-10 million in revenues the previous year.

FREE dRINkS FUEL PLEASANT GAMING ExPERIENCES

We also conducted dozens of smaller programs aimed at continuous improvement of procedures and processes, and launched a monthly PEGS newsletter, Tech digits, to keep operators informed of the fast-moving changes in our IT infrastructure and operations. We negotiated improved marketing support levels from PAGCOR, in the form of an increased Free drinks subsidy (67% higher than 2007), and an increased Players day subsidy, which was doubled compared to previous year. We improved our online casino software, and now provide quarterly upgrades in the form of new games. In 2008, we added 14 new games, mostly virtual slot machine games, and eliminated unpopular or underperforming ones. Our terminals now offer 145 games in total. Larger volume, wider reach, better value proposition to customers, and high speed and efficiency have made the PEGS Caf network better prepared to keep pushing the envelope on profitability in 2009.
13
feRDimaRk l. maRianO, AVP-BIGGAME OPERATIONS

BigGame

ThE hIGh-ROLLER AREA AT BGIS PEGS ESPAA

This was accomplished by two strategies. First, BGI expanded more aggressively, negotiating to acquire prime locations with its own rollout team. Secondly, it set a goal to be the best managed and marketed operator network. All sites were evaluated for performance, and those determined to have potential were extensively renovated and expanded, in some cases doubling capacity. This was accompanied by a program of better site maintenance, aimed at making BGI cafs the cleanest, most inviting and most efficient in the network. BGI re-imaged all cafs, creating a consistent standard look, with common site design elements, staff uniforms and signage. The new cafs we added in 2008 are larger, with greater room for expansion. They feature new seats, better cubicles, upgraded amenities and better ventilation and energy efficiency. Among our product developments, we introduced, for the first time, the Big Lounge, a high-roller area at PEGS Espaa. Marketing research tells us that over 70% of revenues come from the top 27% of players,

those who typically deposit -P-5,000 or more in a single session, with Gross Bets running into the hundreds of thousands. The Big Lounge, featuring premium furnishings, enhanced privacy and a very high level of amenities, is designed to attract and retain such players. If successful, it will be rolled out throughout the system. Apart from appearances, BGI has also concentrated on improving service and performance. It established benchmarks and targets, and achieved faster service turnarounds and a higher service level. BGI also developed and implemented load-sharing redundant network connections to reduce bandwidth downtime to near zero. Marketing was stepped up as well, with more promotions and tactical advertising, individual site activities and system-wide activities. Your company has found that investing in better management and facilities for BGI has resulted in good returns, and it will continue to leverage this investment to improve these returns even further.
14

started in June 2006. Over -P-120 million worth of prizes have been given away. To date, over a million consumers have joined the program. PSR also remains an important source of data for the Bureau of Internal Revenue (BIR) in identifying tax evaders. The information (Tax Identification Number, or TIN, Official Receipt number and amount) are used to expose receipts that are outright fakes, companies issuing unregistered receipts, and companies actually operating while pretending they are non-operational, among others. Aside from strong partnerships with the mobile telcos, PSR has forged a key strategic partnership with the countrys largest retail group, SM. PhilWeb has installed PSR terminals at all SM malls nationwide, allowing consumers to participate in PSR without using a cellular phone. These terminals are located at all SM

Buoyed by the success of Premyo Sa Resibo (PSR), your Company beefed up its mobile department in 2008, from just three direct staff to eight, in preparation for the rollout of more mobile games. We realized that the gaming sector in mobile is growing fast, and we can take advantage of it with the experience gained in PSR. The last quarter of 2008 was spent on develoment, and 2009 will see several important new products.

pRemyO sa ResibO
PSR continues to solidify its status as the countrys longest running and most successful mobile raffle program. As of december 2008, over 140 million raffle entries were processed since the program

BIR COMMISSIONER SIxTO ESqUIVIAS IV WITh PSR WINNERS

bills payment counters, mall information counters and business service centers. More corporate partnerships will be formalized in 2009 due to the increasing number of companies that have expressed interest in supporting the program. The Mobile group constantly refreshes PSR via marketing efforts including TV and radio commercials and
15

geRaRDO a. balDeRRama, SVP-MOBILE

mobile gaming

FINANCE SEC. GARY TEVES AWARdS P1 MILLION TO A WINNER

newspaper ads. PSR also embarked on a roadshow, and conducted national draws in San Fernando, Pampanga, Baguio City, San Pablo Laguna, Cebu City and Legaspi City. PSR was restructured to get more winners by giving away daily and weekly cash prizes, together with the - -1 million P bi-weekly cash prize. In 2008 alone, there have been 36 winners of - -1 million, 18 winners of - -100,000, 107 P P winners of - -10,000 and 24 winners of - -5,000. A car was P P also given away as a special prize in the december Grand Christmas draw. Raffle entries submitted via the mobile phones and terminals are charged - -2.50 per entry. P

biD waRs
Bid Wars is an SMS-based reverse auction game exclusively for Smart and Talk N Text subscribers. The format is simple: text in a bid for the item representing how much you wish to pay. The lowest unique bid at the end of the week wins the item at the bid price. In this way, a consumer could, for example, win the right to buy a brand new laptop for -P-647.52 or whatever was the lowest unique bid. For daily prizes, the lowest unique bid received in a day wins -P-1,000 cash. To join, a subscriber needs to simply text BId <product code> <space> <bid amount> to 9779 at -P-2.50 per text entry. Bid Wars promises to be an exciting game where lucky players can win and purchase items they desire at the price they want. Each week, three prize categories will be up for auction: mobile phones, high-end appliances and high-tech gadgets. In addition, every month, a highvalue product not falling into one of these categories will be offered as a special item, for example a set of golf clubs or a fashionable handbag. Bid Wars is offered by PhilWeb in partnership with The Philippine Star and SM Appliance Center. In addition to the foregoing games, PhilWeb Mobile group will be launching many more in 2009.

ResibOnanza
An exciting mobile game aimed at supporting the BIRs Ask for Receipt Campaign will be launched in 2009. In RESIBOnanza, the consumer just texts in the TIN of the establishment found on his receipt. This game has an instant prize format, similar to a look under the bottle cap promotion, where the program will immediately text him back to say whether or not he has won. Prizes to be given away include a brand new car every week, - -1,000 cash, consumer electronics like cell phones, P portable players, digital cameras, and cell phone load. More than 6,200 prizes will be given away monthly. Each text entry will be charged - -5.00 and will be available to P subscribers of all mobile telcos. RESIBOnanza marketing efforts will be supported by TV ads, print placements and radio spots. Special events will also be held in areas with high people traffic. This will ensure a wide audience reach that will induce trial and participation. The simplicity of the mechanics plus the excitement of instant prizes is the formula that will ensure another winning mobile product for Philweb.

16

spORts betting
Our Sports Betting operation is primarily composed of the game Basketball Jackpot and is sold through a network of 150 kiosks. BJ, as it is known on the street, involves guessing the correct ending numbers of the scores during a basketball game. Thus, if Team A were to beat Team B by a score of say, 89 83, the winning two-digit combination would be 93 the ending number of the winning teams score paired with the ending number of the losing teams score. Its a frighteningly simple game, with 100 possible two-digit combinations and thus, a 1% chance of guessing the correct outcome. Punters improve their odds by theorizing as to whether a game might be closely fought or a wipeout. When two name teams contest a game, the betting can skyrocket on number combinations that are one or two points apart, like 21, 32, 43 and so forth. And when indeed, the game ends with a down-to-the-wire result, like 92 91, there are many happy winners at Basketball Jackpot. With over 150 kiosks, one challenge of our BJ team is how to keep increasing outlets selling the game. The answer, of course, is to start selling the game within our PEGS Caf network as well. This roll out is being done via the addition of a stand-alone computer exclusively selling Basketball Jackpot. The stand-alone kiosk inside the PEGS will add over 130 new points of sale to the game and the sports betting group is already midway through the roll out process.
17
SENIOR MANAGER eRRick R. gOnzalez

A PROTOTYPE BASkETBALL JACkPOT STANd

sports betting

AdVERTISING MATERIAL FOR NBA ENdING

Another challenge has been to find more basketball games to bet on. BJ is already offered on all PBA, PBL and UAAP games, but in total these represent only about 300 games a year. Thus, our kiosks are only active three days a week, and are actually closed nearly three months a year, during the off-season. PAGCOR has just allowed BJ for the games of the National Basketball Association. There are over 1,300 NBA games a year, so we foresee a great future for our new NBA Ending variant of Basketball Jackpot. Another BJ tactic to increase revenues is to increase the number of betting variations. In addition to the existing variants (Last Two, Last Three and quarter Ending), a new progressive jackpot has been introduced called the Last Two Jackpot Special. Last Two Jackpot Special is essentially the combination of q2, q3 and L2 to make one, six-digit wager. The big difference is that a bettor who guesses the six-digit, Last Two Jackpot Special combination will win a -P- 100,000 jackpot. And if no one guesses the number
AdVERTISING MATERIAL FOR BASkETBALL JACkPOT

correctly, a portion of all bets will be added to the jackpot prize, so that the succeeding games jackpot is increased. With new variants like NBA Ending and Last Two Jackpot Special, plus the continued expansion of the kiosk network, Basketball Jackpot will continue to grow as a revenue driver for PhilWeb.
18

ROBERTO V. ONGPIN was elected chairman of PhilWeb Corporation in January 2000, the year he founded the Company. he is also chairman of ISM Communications Corporation, Eastern Telecommunications Philippines, Inc., Alphaland Corporation and developing Countries Investment Corporation, as well as deputy chairman of the South China Morning Post (hong kong), vicechairman of Philex Mining Corporation, director of Shangri-La Asia (hong kong), Petron Corporation and Araneta Properties, Inc. he was formerly the managing partner of SyCip Gorres Velayo & Co. and served as Minister of Trade and Industry of the Republic of the Philippines from 1979 to 1986. Mr. Ongpin is a certified public accountant and has an MBA from the harvard Business School.

RAY C. ESPINOSA was elected vice-chairman of PhilWeb Corporation in June 2006, when ePLdT acquired 20% of PhilWeb. he is a director of the Philippine Long distance Telephone Company (PLdT), vice-chairman of the PLdT Beneficial Trust Fund, president and CEO of ePLdT, Inc., chairman of the various subsidiaries of ePLdT, Inc., director and corporate secretary of Cyber Bay Corp., and director and chairman of the Audit and Nomination Committee of Lepanto Consolidated Mining Company. he was a partner of SyCip Salazar hernandez & Gatmaitan from 1982 to 2000, a foreign associate at Convington and Burling (Washington, d.C., U.S.A.) from 1987 to 1988, and a law lecturer at the Ateneo de Manila School of Law from 1983 to 1985 and 1989. he is a member of the Integrated Bar of the Philippines and has a Master of Laws degree from the University of Michigan Law School.

ERIC O. RECTO was elected vice-chairman of PhilWeb Corporation in March 2005, and served as its president from 2005 to June 2006. he is vice-chairman of Alphaland Corporation and president of Petron Corporation. he is a director of Eastern Telecommunications Philippines, Inc., Philippine National Bank, PNOC Energy development Corporation, Metro Pacific Investment Corporation and Maynilad Water Services, Inc. he served as Undersecretary of the department of Finance of the Republic of the Philippines, in charge of handling both the International Finance Group and the Privatization Office from 2000 to 2003. Before his work with the government, he was CFO of Alaska Milk Corporation and prior to that, Belle Corporation. Mr. Recto has a degree in Industrial Engineering from the University of the Philippines, as well as an MBA from the Johnson School, Cornell University.

DENNIS O. VALDES was elected president of PhilWeb Corporation in June 2006. he is also a director of ISM Communications Corp. his previous work experience includes ten years with the Inquirer Group of Companies, as a director of the newspaper, and also expanding their Internet, printing and ink-making operations. Prior to that he spent six years with The NutraSweet Company developing their sweetener business in Asia. he is a certified public accountant, graduated magna cum laude in Business Administration and Accountancy from the University of the Philippines and has an MBA from the kellogg School of Management, Northwestern University.

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board of directors

TOMAS I. ALCANTARA was elected a director of PhilWeb Corporation in May 2002. he is chairman and president of Aldevinco, Alsons Consolidated Resources, Inc., Alto Power Management Corp., director of dBP-daiwa Securities Corp., Manila Economic and Cultural Office, Petronas Energy (Phils.) Inc., and the Public Estates Authority, among others. he has also served as an Undersecretary of the department of Trade and Industry of the Republic of the Philippines.

BENITO R. ARANETA was elected a director of PhilWeb Corporation in March 2003. he is chairman and CEO of Araneta Properties, Inc., chairman and president of Boie, Inc., Philippine-American drug Co., chairman of BoieTakeda Chemicals, Inc., and Philcomsat holdings, director of Southeast Asia Cement Corp., honda Philippines, Inc., and The Professional Group, among others.

RAMON S. ANG was elected a director of PhilWeb Corporation in November 2001. he is currently vice-chairman, president and COO of San Miguel Corporation, chairman and CEO of Petron Corporation and vice-chairman of the Manila Electric Company (MERALCO). he holds the positions of chairman, president or director in over 35 companies related to or subsidiaries of San Miguel Corporation, and is also the chairman of Liberty Telecoms holdings, The Purefoods-hormel Company, Inc., Philippine diamond hotel & Resort, Inc., Magnolia, Inc. and Cyber Bay Corporation. he was previously CEO of Paper Industries Corporation of the Philippines (PICOP) and executive managing director of Northern Cement Corporation, among others. he has a BS degree in Mechanical Engineering from Far Eastern University.

RANDALL D. COX was elected a director of PhilWeb Corporation in december 2005. he is chairman of Coxinvest LLC, a consulting company based in California, U.S.A. In the past, he served as managing director of Lombard Asian Private Investment Company, a hong kongbased, private equity fund associated with CALPERS, the Asian development Bank and a hong kong-based, boutique investment bank. he was formerly president of Yes Television Asia and a board and execom member of Good Morning Securities. Mr. Cox has a BA from the University of California at San diego and an MBA from the University of California Marshall School of Business.

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board of directors

CRAIG E. EHRLICH was elected a director of PhilWeb Corporation in May 2002. he is the former, long-time chairman of the GSM Association (GSMA), the global trade association representing more than 700 secondand third-generation network operators and over 180 manufacturers and suppliers, serving more than 3.5 billion customers across 218 countries and territories. he is a board member of the International Telecommunications Union (ITU), hutchison Telecommunication Group, Bharti Airtel, Indias largest (by market capitalization) company, chairman of kbro, Taiwans largest cable TV company, and founding chairman of Novare Technologies Ltd., a hong kong software development company. he was former group managing director of Sunday Communications Limited, a hong kong mobile operator. In the Philippines, he is a director and vicechairman of ISM Communications Corporation. Mr. Ehrlich, a hong kong resident since 1987, holds a BA degree from the University of California Los Angeles, a masters degree from Occidental College, and a postgraduate fellowship with the Coro Foundation.

MARIO J. LOCSIN was elected a director of PhilWeb Corporation in January 2000. he is president and COO of Eastern Telecommunications Philippines, Inc., president of Aeropartners, Inc., and Inpilcom, Inc., and treasurer of hideco Sugar Milling Co., Inc. he is also a director of ISM Communications Corporation. In the past, he served as a director of Belle Corporation, APC Group, Southwest Resources, Philippine Long distance Telephone Co. and Pilipino Telephone Co., as well as director, executive vice-president and COO of Philippine Airlines.

MARIANO L. GALICIA, JR. was elected a director of PhilWeb Corporation in december 2005. he is currently the group vicepresident of ePLdT, Inc. he was formerly a senior vice-president of Fort Bonifacio development Corp., group vice-president for corporate services of Metro Pacific Corp., human resources director of Johnson & Johnson (Phils.) Inc., Jansen Pharmaceuticals and J&J Medical Phils., Inc., and group manager of del Monte Philippines, Inc. / del Monte International Inc. he has a Bachelor of Science degree from the University of the Philippines.

MARIO A. ORETA was elected a director of PhilWeb Corporation in March 2005. he is president of Alphaland Corporation and chairman/founder of Major holdings, Inc., whose interests include low- and middle-income housing as well as resort development. he is also a director of ISM Communications Corporation and Toyota Pasong Tamo, and was the founder and managing partner of the law firm of Tanjuatco, Oreta, Tanjuatco and Factoran. he finished his Bachelor of Laws at the Ateneo de Manila University and is a member of the Integrated Bar of the Philippines.

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executive officers

RAFAEL B. ORTIGAS was elected a director of PhilWeb Corporation in April 2002. he is executive vice-president of Sagitro, Inc. and Itogon-Suyoc Resources, Inc., vice-president of Leafar Commercial Corporation, chairman, president and director of Rising Sons of 3k, Inc., chairman and director of Ck3k, Inc. and GSC-3kCk, Inc., and director of Vinmer Realty, Inc., Concrete Aggregates Corp., director and treasurer of Creative Trade Center Services, Inc., and director of ISM Communications Corporation and delegate general partner of Ortigas and Company, Ltd. Partnership.

GEORGE N. TAN was elected a director of PhilWeb Corporation in June 2006. he is senior vice-president of ePLdT, Inc., and president and CEO of digital Paradise, Inc., operator of Netopia, the largest chain of Internet cafs in the Philippines. he was executive vice-president and CFO of William, Gothong and Aboitiz, Inc. from 1998 to 1999. he was an associate professor and held various key positions in the Asian Institute of Management from 1989 to 1997. he is a certified public accountant and has a Masters degree (with distinction) in Business Management from the Asian Institute of Management.

ROBERTO V. SAN JOSE was elected Corporate Secretary of PhilWeb Corporation in January 2000. he is the Corporate Secretary of ISM Communications Corporation, a director of Mabuhay holdings Corporation, Interport Resources Corporation, and Corporate Secretary of Alsons Consolidated Resources Inc., AngloPhilippine holdings Corporation, Philcomsat holdings Corporation, Premiere Entertainment Productions, Inc. and Solid Group, Inc. he is also either a director or Corporate Secretary of various companies, which are clients of the law firm of Castillo Laman Tan Pantaleon & San Jose (CLTPSJ). he is a member of the Integrated Bar of the Philippines and a Senior Partner of CLTPSJ.

CLIBURN ANTHONY A. ORBE was elected Assistant Corporate Secretary of PhilWeb Corporation in June 2006. he has a Bachelor of Laws (cum laude) from Mindanao State University, where he graduated as the class valedictorian. he was formerly an associate of the Rodrigo Berenguer Guno law firm. he is a member of the Integrated Bar of the Philippines.

DELFIN J. WENCESLAO, JR. was elected a director of PhilWeb Corporation in May 2004. he is presently the chairman and president of d.M. Wenceslao & Associates, Inc. and Fabricom Manufacturing Corporation, chairman of Philippine Ecopanel, Inc. and Mandaue Land Consortium, Inc., president and director of Bay dredging, Inc. and Bay Resources and development Corporation, managing director of R-I Consortium and director of Belle Bay City Corporation.

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executiVe OfficeRs

Roberto V. Ongpin
Chairman

Ray c. espinosa
Vice Chairman Vice Chairman President

eric O. Recto Dennis O. Valdes

business aRea manageRs

Oliver R. go, SVP, PEGS Roll Out David Jude l. sta. ana, SVP, PEGS Caf Operations ferdimark l. mariano, AVP, BigGame Operations errick R. gonzalez, Senior Mgr., Basketball Jackpot gerardo a. balderrama, SVP, Mobile florentino b. mauricio, Senior Consultant, Mobile
suppORt gROup manageRs

Rafael g. Ongpin, SVP, Marketing Josephine a. manalo, VP and Asst. to the Chairman cliburn anthony a. Orbe, VP, Legal zaldy m. prieto, VP and Chief Financial Officer melecio a. santiago Jr., Senior Mgr., Internal Audit scott a. sproule, Chief Technical Adviser
manageRs
standing (l-r): Oliver Go, Errick Gonzalez, Bobby Mauricio, Ferdie Mariano, Ardie Balderrama, Apa Ongpin, Ton Orbe

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seated (l-r): zaldy Prieto, Scott Sproule, dennis Valdes, dJ Sta. Ana

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