Month: May 2011

Five Ayala companies led by parent company Ayala Corporation were ranked Platinum awardees in the Institute of Corporate Directors (ICD)’s 6th Annual Corporate Governance Scorecard for Publicly Listed Companies.

AC, Ayala Land, Globe Telecom, Manila Water Company, and Cebu Property Ventures Development Corporation were all given Platinum awards at the ICD Annual Dinner held on May 25 at the Peninsula Manila. This is the first time that the ICD has bestowed Platinum awards to companies that have garnered Gold awards for at least three consecutive years.

Explained ICD chairman Jesus Estanislao: “Platinum awardees carry the distinction of being the very best companies in terms of corporate governance compliance and which we believe are very well disposed to move beyond compliance and into higher levels of corporate governance standards and practices observed globally.”

All eight listed companies of the Ayala group made it to the Top 20 scorers of the 2010 Corporate Governance Scorecard.

Ranked in the Gold category were Cebu Holdings and Integrated Micro-Electronics, a new entrant to the ICD Scorecard Project after listing by way of introduction in the Philippine Stock Exchange last year. Both companies scored 95% or above in the governance scorecard.

Ranked in the Silver category with the rating of 94.9% was Bank of the Philippine Islands.

A non-stock, non-profit organization, ICD works closely with the Organisation for Economic Co-Operation and Development (OECD), the Global Corporate Governance Forum, and the International Corporate Governance Network on improving actual boardroom practices in the Philippines. ICD is a founding member and permanent secretariat of the Institute of Directors in East Asia Network.

For the last six years, ICD’s Corporate Governance Scorecard has been used by publicly listed companies as a tool to rate and benchmark their corporate governance practices relative to global and regional standards. The project is jointly administered with the Securities and Exchange Commission, PSE, Institute of Internal Auditors of the Philippines, Ateneo Law School, and Center for International Private Enterprise.

The scorecard ranks publicly listed companies in the areas of shareholder rights, equitable treatment of shareholders, role of stakeholders in governance, disclosure and transparency, and board responsibilities—key governance principles used as basis for corporate governance practices globally.

The awards were received by senior officers of the Ayala group led by AC senior counsel Mercedita Nolledo, AC general counsel Solomon Hermosura, presidents Gerardo Ablaza, Jr., Antonino Aquino, and Francis Monera, CFOs Jaime Ysmael, Albert Larrazabal, and Luis Juan Oreta, BPI senior executives Antonio Paner and Myra Sylienteng, and IMI controller Jaime Sanchez.

Ayala Corporation’s net income in the first quarter of 2011 grew by 16% to P2.45 billion. This was driven by the robust revenue and earnings growth of its real estate business, the solid growth of its banking operations, the sustained turnaround of its telecom unit and healthy core earnings of its water business. These business units accounted for the bulk of equity earnings. Total equity earnings during the quarter rose by 16% year-on-year.

“We are pleased with the growth momentum of the majority of our domestic businesses,” said Ayala president and chief operating officer Fernando Zobel de Ayala. “Their continued expansion across new and existing markets across the country will translate to increased market presence, greater exposure across a broader more diverse customer base, and a higher earnings growth trajectory for the group moving forward.”

Ayala Land, Inc.’s earnings in the first quarter of the year reached P1.6 billion, 36% higher than same period last year. Revenues reached P10.6 billion, up 15% year-on-year driven by robust residential and higher commercial leasing revenues. Residential revenues grew by 18% fuelled by the strong take-up and bookings across all residential brands. The company launched a total of 4,511 units during the quarter mostly from Alveo and Avida. Commercial leasing revenues increased by 16% largely from the 11% growth of shopping center revenues and the 25% rise in office leasing. Both posted higher lease rates as well as improving occupancy rates. Revenues from its hotels and resorts portfolio improved by 16% with the consolidation of its acquisition of 60% of El Nido Resorts which added 150 island resort rooms to its current portfolio. New projects are scheduled to come on stream. It recently opened Abreeza Mall, a 53,000-square-meter shopping center at the heart of Davao. It also broke ground on its new hotel, Kukun, in Cagayan de Oro.

Bank of the Philippine Islands registered first quarter net income of P2.9 billion, up 4% year-on-year. Revenues rose by 5% due mainly to higher interest income which rose by 15% to P6.3 billion as average asset base expanded by 12%. Loan growth remained healthy with net loans up 13% due to strong middle market/SME and consumer loans which rose by 22% and 15%, respectively. Corporate loans likewise grew albeit at a milder pace of 6%. Non-interest income, however, contracted by 9% due to lower gains from securities trading and foreign exchange and miscellaneous income. The bank’s total resources increased by 9% to P761 billion as deposits grew by 8% to P604 billion, while assets under management increased by 40% following its acquisition of the trust and investment management business of ING N.V. Manila.

Globe Telecom sustained its turnaround and posted record quarterly revenues of P16.5 billion in the first quarter, 8% higher year-on-year. The growth was driven by the continued uptick in its mobile business as well as the sustained growth momentum of the broadband segment. Mobile revenues rose by 4% driven by a 10% growth in postpaid revenues and a 2% increase in prepaid. Broadband and fixed-line revenues grew by 26% with broadband achieving a 52% increase year-on-year. Globe’s mobile subscriber base further increased to 27.3 million, a 14% expansion year-on-year while broadband subscribers rose by 40% to nearly 1.2 million. Subscriber growth improved with the launch of new and relevant services that allowed subscribers greater flexibility to customize their plans. Globe’s net income of P3 billion was the highest in the past seven quarters and was also 30% higher than the prior quarter.

Manila Water’s net income declined by 3% to P816 million largely as a result of mark-to-market losses realized on its bond. Excluding this, core income was up 14% to P1.2 billion. Revenue growth was healthy, up 5% to P2.7 billion due to an 11% increase in tariff and a 6% increase in household connections. Operating expenses increased mildly by 4% with well-controlled overhead and manpower costs. Non revenue water of 11.9% was better than same period last year of 14.2%. Manila Water continues to invest in the development of sewage and septage treatment facilities and is expanding aggressively outside its concession zone.

Ayala Automotive’s net income fell by 63% due to lower vehicle sales of its Honda dealerships, which declined by 27%. Ayala’s Honda dealerships remained the market leader with a 46% share of network sales. Its Isuzu dealerships recorded a 4% growth in sales and registered a percentage point improvement in market share to 32%.

Ayala’s international businesses showed healthy topline growth. Its electronics business, Integrated Micro-Electronics, Inc. registered a 35% growth in revenues to US$123 million but net income declined by 88% to US$374 thousand. The increase in turnkey operations which now account for 82% of revenues combined with higher direct material cost contributed to the margin pressure and earnings decline. Moreover, a one-time FX gain in 1Q10 contributed to the year-on-year decline in net income.

Its BPO unit LiveIt, also showed improvement. The combined revenues of LiveIt’s investee companies grew by 9% to US$243 million in the first quarter, and their EBITDA grew by 45% to US$22.5 million. LiveIt recorded operating net income of US$0.6 million, versus an operating net loss of US$3.1 million in the same period last year. In April, investee company HRMall, which offers outsourced HR services, acquired Los Angeles-based IQ BackOffice, which delivers finance and accounting BPO services and enables HRMall to offer a full range of highly efficient, market leading back office solutions to medium-sized clients globally.

AG Holdings also reversed losses incurred in the same period last year and reported a net income of P258 million in the first quarter. Its Asian operations posted a net income due mainly from gains realized from the exchange in ownership in Arch Capital and Arch Capital Asian Partners with The Rohatyn Group. Its US operations, however, continued to lose in the absence of any meaningful recovery in real estate markets in the U.S.

Outside of its current portfolio of businesses, Ayala recently made an initial foray in the power sector as it seeks to assemble a portfolio of power assets across various technologies. Following its joint venture with Mitsubishi Corporation for the development of solar energy in the Philippines, it acquired a 50% stake in Northwind Power Corporation, the operator of the first wind farm in Southeast Asia. It also forged a joint venture agreement with Sta. Clara Power Corp. for the development of run-of-the-river hydroelectric projects across the country.

Zobel commented that these investments will ultimately form part of a portfolio that balances renewable and conventional energy sources to meet the country’s need for base load capacity.

Ayala ended the quarter with cash of nearly P28 billion. It also recently successfully issued a P10 billion multiple put bond as it tapped sources of long-term funding in view of potential investments it is eyeing in the power and transport infrastructure sectors.

The above press statement pertains to the disclosure made today, May 13, 2011, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala managing director and head of corporate strategy and development, John Eric T. Francia.

Ayala Corporation today signed the underwriting agreement to issue a P10-billion fixed rate multiple put bond with a rate of 6.80%. Pricing was based on the past 15-day average of the PDST-R2 plus a spread of 30 basis points, consistent with the latest auction results for the 10-year fixed rate treasury notes which had a rate of 6.50%.

Ayala tapped BPI Capital Corporation as the issue coordinator for the deal. The joint underwriters are BDO Capital Corporation, BPI Capital Corporation, Citicorp Capital Philippines, Inc., First Metro Investment Corporation, Hong Kong and Shanghai Banking Corporation Limited, ING Bank, N.V., Manila Branch, RCBC Capital Corporation, and Standard Chartered Bank

Indicative demand for the bonds was strong, at an estimated P23 billion. The 10-year bond will mature in 2021, but will have multiple put options in 2016 and 2019.

Proceeds of the bond will be used to refinance the company’s P5.8-billion Preferred “B” shares whose call option was exercised by Ayala for payment on July 2011. The balance will be used to fund Ayala’s working capital requirements.

The bonds were Rated PRS Aaa by Philratings. The offer period for the bond is set for May 2 to May 6, with issue and listing date set for May 12.

This issue aims to attract retail investors who want to invest long-term funds. The bond structure provides two liquidity features, first through the 20% partial put option on the fifth year and subsequently the 100% full put option on the eighth year. This encourages investors to go beyond the normal five-year tenor. As an incentive for going longer tenor, investors get a better rate compared to the five-year rate of around 1 to 1.25%, and with an option to hold on to the same rate up to 10 years.

“The issue is the first in many aspects—the first multiple put bond in the market and the first corporate issue for 10 years for a P10-billion size. Our bond also has the lowest coupon rate of 6.80%,” according to Ramon G. Opulencia, treasurer of Ayala Corporation.

Integrated Micro-Electronics, Inc. (IMI), a leading provider of electronics manufacturing services (EMS), power semiconductor assembly and test services in the Asian region, today announced that it has entered into an agreement with EPIQ NV (“EPIQ”), for the acquisition by IMI of the EPIQ subsidiaries in Bulgaria, Mexico and the Czech Republic.

The purchase consideration of approximately €43 million will be a combination of cash and 200 million newly-issued IMI shares representing approximately 12% ownership in common shares on a fully diluted basis.

As part of IMI’s strategic initiatives, the acquisition will enable IMI to establish a global geographic footprint in manufacturing as well as in technology development and engineering.

Arthur R. Tan, IMI president and chief executive officer, said, “IMI is pursuing this valueenhancing acquisition to expand its customer base and to support its market specialization strategy in the automotive and industrial segments. As regional manufacturing picks up steam, we are expanding our operations to locations near our global customers in Europe and North America to be of better service to them.”

Following the completion of the acquisition, Gilles Bernard, EPIQ chief executive officer, will join the management team of IMI. Mr. Bernard said, “We are glad to become part of the IMI Group and look forward to providing EPIQ and IMI customers the access to a vastly increased range of facilities and capabilities.”

The acquisition is expected to be completed no later than the fourth quarter of 2011. ING Bank N.V. is acting as financial advisor to IMI in the transaction.

About IMI
Integrated Micro-Electronics Inc. (IMI) is a leading provider of electronics manufacturing services (EMS) and power semiconductor assembly and test services. It serves diversified markets that include those in the automotive, industrial, medical, solar energy, telecommunications infrastructure, storage device, and consumer electronics industries. Committed to cost-effective and top-quality customized solutions, IMI’s comprehensive capabilities and global manufacturing presence allow it to take on specific outsourcing needs. IMI’s flexible solutions encompass design and product development, manufacturing, and order fulfillment. IMI is consistently ranked among the top 30 EMS providers in the world. A subsidiary of Ayala Corporation, IMI is listed in the Philippine Stock Exchange. IMI has manufacturing and engineering facilities in the Philippines, Singapore, China, and the U.S.A. For more information, visit www.global-imi.com.

About EPIQ
EPIQ is an EMS provider that designs, produces, and sells electronic and electro-mechanical systems and sub-systems. These are drive- and/or control elements especially for supply in the automotive and industrial equipment markets, household appliances, and other applications with plastic parts and/or electronic components. EPIQ provides a wide range of integrated services from product development to mass production. Production comprises the design of printed circuits and/or spray casting of plastics up to and including the supply of assembled and tested systems and sub-systems. EPIQ also provides all the required engineering, R&D, and logistics management. EPIQ is headquartered in Europe with manufacturing and engineering facilities in France, Bulgaria, the Czech Republic, and Mexico. The EPIQ subsidiaries subject of the transaction generated a combined turnover of €90 million and net income of approximately €4 million for the financial year ended 31 December 2010.

The above press statement is from the disclosure made today to the Securities and Exchange Commission and the Philippine Stock Exchange by IMI.