Month: May 2014

GNPower Kauswagan Ltd. Co. (GNPK), the joint venture company between AC Energy Holdings, Inc. (AC Energy), the power unit of conglomerate Ayala Corporation, and Power Partners Ltd. Co. (PPLC), engaged Shanghai Electric Power Construction Co. (SEPCC), a subsidiary of Power Construction Corporation of China, for the engineering, procurement and construction (EPC) of a US$1 billion-thermal facility in Kauswagan, Lanao Del Norte.

GNPK recently executed the EPC contract for the 4×138 megawatt thermal facility with construction scheduled to begin by the fourth quarter of this year. The plant will be equipped with cutting-edge equipment, including 4 Siemens steam turbines and generators manufactured in Germany. The project is expected to be completed within 3 years with the first unit operational by early 2017. GNPK has already executed well over 300MW of long term power purchase agreements and has secured its Environmental Compliance Certificate from the Department of Environment and Natural Resources.

“We recognize that Mindanao is in dire need of power and we are keen to provide the needed capacity at very reasonable and affordable terms”, AC Energy President and CEO John Eric Francia said. “We are also excited about this new addition to our growing pipeline of power projects. This puts us on track to achieve our goal of developing over 1000 megawatts of attributable capacity both in conventional and renewable technologies by 2016,” Mr. Francia added.

Earlier this year, AC Energy closed the acquisition of an approximately 17 percent ownership stake in GNPower Mariveles Coal Plant Ltd. Co. (GMCP), the owner and operator of a 600 megawatt coal fired power generating plant in Mariveles, Bataan. GMCP started full commercial operations last April.

*NOTHING FOLLOWS*

Ayala Corporation’s (Ayala) net income in the first quarter of 2014 grew by 22% to P5.5 billion. The strong growth was driven by its real estate, telecom, water and international businesses and was boosted by a P1.8 billion capital gain from the sale of Stream Global Services, Inc., one of its investee companies under its business process outsourcing unit. The strong performance of the business units combined with the capital gain offset the decline in the earnings contribution of its banking unit, Bank of the Philippine Islands (BPI), which reported lower earnings during the quarter as a result of the absence of trading gains compared to the first quarter of 2013. Excluding the capital gains during the period and the impact of BPI’s unusually high trading gains of P5.7 billion and Globe’s accelerated depreciation last year, Ayala’s net income would be up 24% year-on-year.

“We are glad to see the strong momentum continue across our core businesses as well as the improving profitability of our international businesses,” said Fernando Zobel de Ayala, President and Chief Operating Officer of Ayala. “We are confident this momentum will continue for the rest of the year as the fundamental drivers of domestic economy remain firmly in place. This will continue to underpin demand for our real estate products, banking, telecom and water services.”

Most of Ayala’s core businesses reported double-digit earnings growth year-on-year in the first quarter.

Its real estate unit, Ayala Land, reported a 25% growth in net income to P3.5 billion. Higher revenues across its residential, commercial leasing, and property services, combined with stable margins overall resulted in the sustained strong earnings growth.

Its telecom unit, Globe Telecom, reported a four-fold increase in net income to P2.9 billion from only P686 million in the same period last year. This was largely due to healthy top line growth and the tapering of accelerated depreciation charges following its network modernization program.

Ayala’s water unit, Manila Water Co., Inc.’s net income also rose by 9% to P1.4 billion. Revenues continued to grow as a result of higher billed volume, mainly from new business areas in Laguna, Boracay, and Clark as well as in Vietnam.

BPI’s earnings declined by 57% to P3.6 billion as previous year’s results included significant gains from trading securities. Its core banking business, however, remained strong as net interest income grew by 15% year-on-year, and non-interest income, excluding trading gains, also rose by 16% during the period.

Ayala’s international businesses registered continued improvement in earnings. Integrated Microelectronics, Inc.’s (IMI) net income increased twenty times to P226 million versus the first quarter last year as a result of higher sales volumes, better cost savings, and improved margins.

LiveIt also reported significant earnings improvement boosted by the sale of Stream Global Services, Inc. (Stream) and the improved performance of its investee companies. Share of revenues excluding Stream reached US$24.5 million, up 6% year-on-year, while share of earnings before interest, taxes, depreciation and amortization reached US$0.8 million, an improvement of US$0.7 million.

In all, the strong performance of the business units contributed a total of P6.9 billion in equity earnings to Ayala, 20% higher than in the same period last year.

Ayala continues to ramp up investments in its new businesses. For the year 2014, the holding company allotted P49 billion in capital expenditure mainly for its investment in BPI with its participation in the stock rights offering, on-going power projects which include the closing of its acquisition of its stake in GN Power Mariveles, and the transport infrastructure projects it has won thus far. It has also recently made progress in its entry in the education sector with the upcoming opening of nearly a dozen new high schools for secondary education under Affordable Private Education Center or APEC schools located in Quezon City, Caloocan, Marikina, Pasig and Manila.

As of the end of March 2014, parent company cash reached nearly P30 billion putting net debt to equity ratio at 0.43 to 1.

Earlier this month, Ayala successfully completed a US$300-million Exchangeable Bond issue which was 2.5 times oversubscribed. The bonds were subsequently listed at the Singapore Stock Exchange last May 5, 2014.

The above press statement pertains to the disclosure submitted to the SEC, PSE, and PDEx by Ayala CFO Delfin Gonzalez, Jr.