Month: April 2019

Makati, Philippines – April 26, 2019 At Ayala Corporation’s (Ayala) 2019 Annual Stockholders’ Meeting, Ayala Chairman and CEO Jaime Augusto Zobel de Ayala revealed that the group is undergoing a massive transformation to aggressively ramp up the digitalization of its companies. Zobel elaborated on some key components of this digitalization strategy, such as exploring new business models and opportunities, bolder and more deliberate venture capital spending, and leveraging data and analytics, among others.  Today, Ayala has already gained a foothold in fintech, e-commerce, logistics, industrial technologies, and health tech, and plans to invest substantially in tech innovations globally to help bring the country at par with the rest of the digital world.

“We have started to participate in digital businesses that we believe are disruptive. These investments are designed to complement our group’s traditional brick-and-mortar operations, future-proof our existing portfolio, and broaden the digital experience of Filipinos. We spend significant time studying other markets that are in the advanced stages of digital maturity and we have teams constantly looking at emerging trends and technologies. Absorbing and learning from these experiences, we have become more deliberate in our own digital transformation journey and have elevated it into a group-wide strategic agenda,” said Zobel.

In fintech, Ayala is the country’s clear leader today with both GCash and Bank of the Philippine Islands (BPI) providing leading solutions to more Filipinos. GCash, which is recognized as the #1 mobile wallet in the Philippines and #5 in the region (source: App Annie, 2018), is a micropayment service that transforms the mobile phone into a virtual wallet for secure, fast, and convenient money transfers. It is operated by Mynt, a partnership among Globe Telecom (Globe), Ayala Corporation, and Ant Financial that provides innovative and first-in-world fintech solutions to consumers, merchants, and organizations. GCash currently has 20 million users and more than 58,000 QR-enabled merchants in the country. By December 2018, there were 35 GCash-enabled sites, including all 31 Ayala Malls nationwide and other Ayala Land (ALI) retail centers. It has also launched GCredit, GSave, and Invest Money as part of its commitment to provide financial services to its growing, digitally-savvy base.

For its part, BPI’s new Mobile app has 1.6 million downloads and ranks #1 in the Apple App Store and #4 in the Google Play Store (source: Similar Web, March 31, 2019). Total active BPI Online and BPI Mobile users also grew by 16.3% in 2018. In total, BPI serves over 54,000 merchants (including Global Payments merchants). It continues to ramp up its microfinance arm, BanKo, which has provided over ₱4 billion worth of loans over the last three years to nearly 56,000 entrepreneurs. It has over 200 branches nationwide and is set to release a BanKo mobile wallet app soon.

BPI and GCash continue to complement each other to make financial services more convenient and accessible, and are poised to introduce even more technology offerings and services in the coming months. Over the past three years, the Ayala group has invested over ₱18.5 billion to further its fintech capabilities and aspirations.

In e-commerce and logistics, Ayala is quickly becoming a major player. Among Ayala’s earliest digital investments was ZALORA Philippines, an e-commerce fashion retail platform that capped off 2018 with over 100 million page views for the first time in its seven-year history and over seven million mobile app downloads. In October 2018, Ayala spun off ZALORA’s in-house logistics capabilities into Entrego, now the country’s fastest growing Courier, Express and Parcel provider with 54 distribution hubs nationwide.

In health tech, AC Health pioneered the country’s first digital health portfolio to provide Filipinos with seamless and integrated healthcare services. Through Vigos Health Technologies, AC Health developed an in-house Electronic Medical Record and Clinic Information System called Vigos EMR. It also launched a digital corporate health platform called Vigos Care which allows AC Health’s patients to access all their healthcare needs from their phones. In addition, the company has also invested in AIDE, a digital home health platform, and MedGrocer, an online pharmacy that delivers right to the customer’s doorstep. AC Health’s digital portfolio will serve more than one million lives by 2020.

In its biggest commitment to digitalization to date, Ayala and its affiliates have announced plans to launch a new venture capital fund, with at least $150 million, to invest globally in new technologies that can complement their business activities. With this new fund, Ayala seeks to focus on startups in their early growth stage and support tech innovations in data and analytics, machine learning, artificial intelligence, cloud computing, fintech, automation, real estate, retail, transport, energy, water, health and wellness, and food. Ayala, ALI, BPI, Globe, AC Energy and other selected invited investors have committed to raise this fund, which will be managed by Kickstart Ventures Inc. (Kickstart). Kickstart is the corporate venture capital subsidiary of Globe with investment decisions overseen by senior Ayala group executives. It has invested in 39 digital startups in seven different countries since 2012. This fund is the largest effort of its kind in the Philippines, and the first conglomerate-wide strategic venture capital fund in the country.

Through digital transformation, Ayala is harnessing the power of technology as it remains fully committed to reinventing its businesses to help bridge societal gaps, make a lasting and meaningful impact on society, and help improve Filipino lives.

Fellow shareholders,

Let me begin with a review of the macroeconomic environment we faced in 2018 to provide some perspective on the economic forces that defined our business environment in the past year.  The macro-economic setting provides a crucial framework for the delivery of our business results, given our diversity as a multi-business investment house and the many touch points we have across our economy.

On the global front, the world economy was unable to sustain the positive momentum of the previous year, largely fueled by the Federal Reserves’ aggressive interest rate hikes in reaction to an expanding US economy. In addition, the rising trade tension between the US and China, as well as political uncertainties in Europe, dampened global business and investor confidence during the year. These developments trickled down to the ASEAN economies, with most economies in the region experiencing tempered growth as external risks weighed on local demand and exports.

Here at home, the economy expanded 6.2 percent in 2018, slower than the 6.7 percent growth recorded in the previous year, as inflation surged to a 10-year high but still with enough positive momentum to keep our growth initiatives in place. Higher global oil prices, food supply problems, the weaker peso, and the impact of the tax reform law put pressure on local prices at the end of 2018. However, many analysts believe that a recovery is forthcoming as inflation softened at the start of 2019, falling to a one-year low of 3.8 percent this last February.

It is also encouraging to see that, even amidst slower growth, investment spending continues to climb as government ramped up its infrastructure agenda and businesses continued their capacity expansion initiatives. Investment spending as a percentage of GDP improved to 27 percent, the highest since 1996.  This should be seen as a significant contributor to sustainable growth for the country.  Similarly, household consumption growth only slightly decelerated to 5.6 percent, still one of the strongest in the region.

We are happy to report that Ayala has been able to sustain its growth trajectory, within this economic environment. We believe that this continued momentum in our performance validates our long-term strategy of building a more resilient portfolio by investing in a combination of new industries undergoing disruption and expanding on our strong franchises.

As we took advantage of the favorable domestic environment, we invested an unprecedented level of capital across the Ayala group. Over the past 10 years, our group has spent ₱1.4 trillion in capital expenditure to lay the foundation for our ambitious growth aspirations in our core businesses and scale up our emerging businesses.

Throughout the years, we have always prided ourselves in our ability to incubate industry-leading businesses by allocating new capital, setting up the appropriate governance frameworks, using our group corporate infrastructure and assigning committed and effective talent. Our real estate, banking, telecommunications, and water units are distinct examples of our business-building ability – developing them from the ground up and nurturing them to become dominant industry players. 

More recently, we have been directing more of our resources into our new business platforms in energy, industrial technologies, infrastructure, healthcare, and education. Since 2009, we have invested nearly ₱200 billion at the parent level to help these businesses build scale while employing an active portfolio management approach to either realize value or drive the businesses, alone or with partners.

The bulk of our capital expenditure at the parent level was deployed to AC Energy, which has started to be a significant contributor to our portfolio. With its operations now beginning to show predictability and combining this with some opportunities for value creating divestments, we are pleased to see AC Energy starting to provide the necessary revenue and income balance to some of our more cyclical and longer gestation businesses.

AC Energy is now one of the fastest-growing power companies in the region having only started in 2011, with attributable generating capacity of over 1,600 megawatts across renewable and thermal platforms. It has recalibrated its strategy to focus on renewable energy, with a target to assemble five gigawatt hours in capacity across solar, wind, and geothermal technologies by 2025. AC Energy has a pipeline of renewable projects in the Philippines, Vietnam, Australia, and Indonesia, which it has identified as priority markets. 

More importantly, AC Energy has developed financial self-sufficiency and no longer requires capital deployment from Ayala to fund its expansion strategy. A testament to its ability to raise capital independently is its successful issuance of US$410 million in a Green Bond offering, the first publicly syndicated US dollar Green Bond in Southeast Asia, to be certified by the Climate Bonds Initiative. Moreover, it will start upstreaming capital back to Ayala through regular dividend payments beginning in 2019.

Meanwhile, the rest of our emerging businesses are in varying stages of maturity. AC Industrials continues to build its portfolio and now houses platforms in global manufacturing, proprietary enabling technologies, and high value products for end markets. Its automotive retail and distribution segment, AC Motors, now counts Kia Motors in its portfolio of vehicle brands in addition to Honda, Isuzu, Volkswagen, and KTM. Kia is a solid global brand with a wide range of products that built a strong foothold in our local motoring culture over the past two decades.

AC Infrastructure has entered the logistics space, a fast-growing sector boosted by rising consumer demand and growing e-commerce adoption. In 2018, we spun off Zalora’s last-mile delivery services into Entrego, a technology-driven, end-to-end, logistics and fulfillment solutions provider. After its launch in March 2018, it now services the largest e-commerce players in the country as well as clients from various industries.

In education, we are awaiting regulatory approval for the merger of AC Education with iPeople, the Yuchengco group’s education platform that houses the Mapua University portfolio. The merger brings together the seven educational institutions of the two groups, which together will offer quality education to students across all income segments and across their campuses in various parts of the country.

Meanwhile, AC Health continues to ramp up its retail healthcare footprint. We are proud to say that FamilyDoc, our community-based 3-in-1 clinic, laboratory, and diagnostics facility, is now the largest chain of primary care clinics in the country with 54 branches across Greater Metro Manila. AC Health has a target to open 100 clinics by 2020.

Alongside these developments, we are undergoing a transformation journey across the group to build a Digital and Future-Ready Ayala. We recognize that to continue thriving under a rapidly changing environment, we must evolve from traditional analog thinking into incorporating a digital perspective into our strategy and operations.

As you know, we have started to participate in businesses that are part of the current digital wave; particularly in e-commerce, fintech, and healthtech.  These investments are designed to complement our group’s traditional brick-and-mortar operations, future-proof our existing portfolio, and broaden the digital experience of Filipinos.

Our group spent significant time studying other markets last year that are in the advance stages of digital maturity and we have allocated resources to platforms that provide some visibility into emerging trends and technologies. Absorbing and learning from these experiences, we have become more deliberate and unified in mapping out our own digital transformation journey and have elevated it into a group-wide strategic agenda.

Underpinning our transformation framework are five critical components:

·     We will continuously look for ways to disrupt and digitally transform our core businesses to ensure that our companies remain relevant to our partners and stakeholders in this environment that is quickly being redefined by technology.

·     We will look to learn from and invest in emerging technologies and trends at an early stage.  More importantly, we are aiming to build new business models to take advantage of these developments.

·    We will be bolder and more deliberate in our venture capital strategy, seeding new ideas and disruptive businesses, and supporting forward-thinking entrepreneurs with scalable, innovative models.

·     We recognize that data and analytics will be a key strategic discipline and skill set in the future and are thus establishing a center of excellence to participate in and build competence in this space.

·     We are committed to upskilling and empowering our talent base to help them adjust quickly to these changes and to institutionalizing a culture of curiosity, courage, and collaboration, so that we remain ready for the challenges of a digital world.  

We are aware of the long and challenging road ahead in this digital transformation journey. However, with the engagement of our people across all levels, we are confident that the Digital and Future-Ready Ayala that we are aspiring for can be built within the foreseeable future.

As a final word, I want to thank you all for your consistent support to Ayala and our institutional evolution throughout the years. As we celebrate our 185^th anniversary this year, it gives us a great sense of pride to see how we have been able to contribute to the country’s economic and social landscape through our businesses.  These have had a significant multiplier effect on our communities:  from the capital we deploy, from the taxes we pay, to the jobs we provide to thousands of individuals as well as to the reinvention we galvanize across multiple products, services, and entire industries.

Our contribution to the country’s economic, social, and environmental agenda has become part and parcel of the way we do things, and I have always believed that this value proposition will remain to be an important cornerstone of our long-term success as an institution.

JAIME AUGUSTO ZOBEL DE AYALA

Chairman and Chief Executive Officer

Fellow shareholders, colleagues in the Board and management, ladies and gentlemen, good morning to all of you.

Before anything else, I believe it is important to address the recent setback that we experienced at Manila Water and our concession area. The water supply shortage has impaired the high standards of service Manila Water has maintained for over 20 years.  A number of factors led to this unfortunate episode, and our team has worked closely with government to improve the situation.

From a low of almost 70% water availability during the first 2 days after breaching the La Mesa critical level of 69m, we are now at 99% water availability of at least 8 hours at the ground floor level or at 7psi. While we still have some service issues which we are managing, the progress of recovery initiatives has been encouraging and steady. We are monitoring the situation closely, although the prolonged summer will be challenging. As most of you know, a key part of this problem was that no new water sources were developed by past MWSS administrations despite our constant warnings of the emerging shortfalls given the rapid growth of the population in Manila. As agent and contractor of MWSS, our mandate is treatment and distribution while MWSS takes the lead in developing new raw water sources. We thank this current the administration for extending the necessary support and ensuring close collaboration with Manila Water in addressing the water supply shortage and in updating the Water Security roadmap. We will not stop working on this problem until it is fully resolved. Critical to this process will be the development of new sources of water so we can finally achieve adequate water security for the East Zone concession area.

As with all the challenges that we face as an organization, we must learn from these experiences and use them to strengthen our systems and make sure that this does not happen again.

Let me now move on to my report of Ayala’s performance in 2018. Despite some setbacks in the domestic environment, we are pleased to report that Ayala ended the year with a net profit of 31.8 billion pesos, five percent higher from a year ago, boosted by our real estate, telecommunications, and power businesses. It is encouraging to see that our investments in AC Energy have come to fruition as the company starts to provide a significant contribution to our earnings and value creation.

These results keep us on track for our five-year target of doubling our net income to 50 billion pesos by 2020.

Included in our 2020 aspirations is a strategic imperative to diversify our earnings stream outside our four established businesses, Ayala Land, BPI, Globe, and Manila Water by ramping up the contribution of our new growth platforms. At the end of 2018, our emerging businesses accounted for 15 percent of our equity earnings, largely driven by AC Energy.

As our Chairman alluded to, the past 10 years marked Ayala’s aggressive expansion with record-high investments across the group. It was a period where we saw consistent profitability growth, with our net income expanding at a compounded annual rate of 15 percent over the past 10 years.

With this record-high capital expenditure and solid profitability growth, our balance sheet remains healthy with enough capacity to undertake investments and cover our dividend and debt obligations. As of end of 2018, parent level cash was at 8.5 billion pesos, while net debt was at 95.9 billion pesos. Loan-to-value ratio or the ratio of parent net debt to the total value of its assets stood at a comfortable 11.8 percent. On the other hand, the cash flow adequacy ratio is currently at 1.66x.

Our peso-dollar debt split was at 64:36 for 2018. Ayala’s dollar denominated debts are fully covered by foreign currency assets. Our average cost of debt was at 4.6 percent.

As the world demands a more holistic engagement from businesses, with accountability to the broader environment and not just their shareholder group, we constantly strive to deliver a meaningful, lasting impact on society together with our economic aspirations.

As we celebrate Ayala’s 185th anniversary this year, one of the most significant changes in our recent corporate history is the greater focus that we have placed in terms of capital, time, and energy to truly align our business objectives with the development needs of the country. This philosophy has become a key part of our strategy and decision-making process.

To institutionalize this perspective, we designed a long-term sustainability blueprint that lays out actionable and measurable targets that address critical environmental, social, and governance gaps that the country faces today. We identified marginalization, large untapped potential of our human capital, and irresponsible growth leading to long-term environmental damage as the three critical challenges our group can focus on.

The Ayala Sustainability Blueprint, specifically designed to support the achievement of the UN Sustainable Development Goals by 2030, will enable us to be more deliberate in monitoring and evaluating our sustainability targets and will help us allocate resources to these initiatives more appropriately. Moreover, this greater level of transparency imposes greater accountability for us to execute on these aspirations.

Under the blueprint, we will focus on contributing to the achievement of three pillars where we believe our businesses can generate the most significant and lasting impact. These are: access and inclusivity, productivity and competitiveness, and responsible growth and innovation. Let me discuss this in greater detail by citing examples of our initiatives across the Ayala group in support of these three pillars.

Let me start with the first pillar, access and inclusivity. While the country has shown very positive growth over the past decade, we continue to see the challenge of making sure that this progress benefits a much larger percentage of the population. We have always believed that in a developing economy like ours, businesses play an important role in addressing this continuing challenge of closing the income gap and ensuring broad based development. This is not just for the government to do.

You may have noticed that across the Ayala group, we have made a conscious effort to help spread our country’s economic gains across all socio-economic groups. Our real estate, banking, telecommunications, and water businesses have expanded their products and services and have diversified geographically to reach a much wider demographic and help drive economic progress in different parts of the country.

Ayala Land has expanded towards affordable and socialized housing, launching two new residential brands, Amaia and Bella Vita, that cater to much lower price points. 

Globe initially only targeted the top-end post-paid market, but over time has aggressively expanded into the prepaid segment which has allowed the company to give mobile access to a much larger percentage of the population. 

We have always regarded our human capital as one of our strongest competitive advantages as a country. Filipinos are well-regarded internationally for our resilience, flexibility, and creativity. Through our investments in education and healthcare, we hope to be able to harness the full potential of Filipinos’ natural strength by helping nurture their intellectual, mental, and physical well-being. We have seen opportunities for positive disruption, particularly in providing quality and affordable education and healthcare.

[Show on slide: SDG 4: Quality education]

Let me touch on our education business. We all know how the Philippines is entering a demographic window that has the potential to create a highly productive workforce over the next decade. However, we need to equip this young population with the relevant skills to prepare them for the major changes in employment requirements of the future. 

It is disheartening to see that the lack of sufficient access to affordable quality education has led to massive dropout rates and quality issues across all educational levels in the country. At Ayala, we see this as an opportunity for positive disruption, and a chance to contribute to our country’s human capital development.

Through our APEC Schools, now the largest chain of stand-alone private high schools in the country, Filipino students receive the education they need to go on to college, or to find entry level professional employment. We are pleased to report that APEC is able to produce graduates who are IT-literate, possess effective business communication and critical thinking skills, and are equipped with broadly applicable service, sales and support skills, as well as industry and job-specific knowledge. Its learning modules also provide its students with valuable soft skills and work habits such as persistence, reliability, integrity, and curiosity.

It is encouraging to see many of the first cohort of APEC graduates make it to a college of their choice. We saw a high acceptance rate among those who applied to selective colleges such as PUP, UP, PLM, FEU Tech, UST, La Salle and Ateneo. Meanwhile, among those who sought employment after graduation, at least 80 percent were employed within 120 days, with significantly above average starting salaries, comparable to those of college graduates. APEC is still in its early stages and we aim to improve these numbers further in the coming years. 

[Show on slide: SDG 6: Clean water and sanitation]

Manila Water continues to expand its footprint across the Philippines and in the Southeast Asian region. Last year, it won 11 new projects and invested in water companies in Thailand and in Indonesia.

[Show on slide: SDG  3: Good health and well-being]

AC Health is establishing itself as a key player in the Philippine healthcare industry through its rapid expansion in preventive care, the sale of affordable generic medicine, and health technology, with future investments in hospitals and specialty care.

With 54 clinics, FamilyDOC is now the largest chain of primary care clinics in the country. Having served over 250,000 unique patients, it is focusing on preventive care at the primary care level, rather than just curative treatment. Through its program called “Double Check”, FamilyDOC wants to improve Filipinos’ perception on preventive care by increasing the number of doctor visits to twice a year from the average of once every two years.

Similarly, Generika is expanding its wellness products offering health consultations and laboratory packages at affordable price points. 

Through its corporate heath solutions platform VigosCARE, AC Health is empowering patients to take ownership of their health through early risk assessment for various lifestyle diseases. 

The enactment of the Universal Healthcare Law will provide a boost to these initiatives and will allow AC Health to capture new opportunities around the country’s healthcare ecosystem.

The second sustainability pillar I want to highlight is productivity and competitiveness. The Ayala group has always supported the country’s efforts on infrastructure development, aligning our own strategy to support the government’s agenda. Our entry into the water distribution and telecommunications sectors during the privatization and liberalization of industries in the 1990s are clear examples of this philosophy.

More recently, we entered the power and transport sectors to contribute to accelerating the development of much-needed physical infrastructure that supports the connectivity and mobility requirements of a growing economy.

[SDG 11: Sustainable cities and communities]

From three major estates in the 1990s including Makati, Ayala Land now has 26 estates spanning 57 growth centers nationwide. All these estates are sustainably and functionally designed, providing a better quality of life as well as economic progress within and around those areas through employment and entrepreneurial activities. These estates feature Ayala Land’s different product lines—from residential, shopping centers, offices, as well as hotels and resorts.

[SDG 11: Sustainable cities and communities]

One of Ayala Land’s newer business lines is our hotels and resorts portfolio, which is building on the massive potential of tourism as a growth engine for the country. I have always been a strong advocate of tourism development for its natural ability to promote social and economic inclusivity by generating mass employment and integrating local communities into the value chain. 

[SDG 9: Industry, Innovation, and Infrastructure]

Globe’s foresight and aggressive growth strategy has enabled a digital revolution in the Philippines, changing the way Filipinos connect and altering their consumer preferences.. As early as 2010, Globe had already seen the market shift towards smartphones and data.

[SDG 9: Industry, Innovation, and Infrastructure]

It is continuously investing and upgrading its network while ramping up its digital content offerings to connect a greater number of Filipinos to the internet.

[SDG 8: Decent work and economic growth]

Similarly, through mobile technology, Globe is helping address economic inclusivity by making financial services more accessible across a broader demographic.

[SDG 9: Industry, Innovation, and Infrastructure]

AC Infra continues to help augment the increasing infrastructure capacity requirements as a result of a growing digital economy.

[SDG 9: Industry, Innovation, and Infrastructure]

Last year, it set up Entrego, a logistics and fulfillment solutions platform, to capture the strong growth of e-commerce in the Philippines. Entrego is expanding its presence nationwide with its 54 hubs covering 95 percent of the country, serving clients in various industries such as e-commerce, fintech, telco, and financial services.

[SDG 8: Decent work and economic growth]

As our Chairman mentioned earlier, over the past 10 years, the Ayala group collectively deployed 1.4 trillion pesos in capital expenditure and paid 404 billion pesos in taxes to the government.

[SDG 8: Decent work and economic growth]

We are proud to say that the Ayala group is one of the largest employers in the country, providing employment opportunities to over 130,000 individuals.

[SDG 8: Decent work and economic growth]

BPI’s digital transformation is addressing financial inclusion as it facilitates higher engagement with the unserved and underserved segments of the population, particularly the micro, small, and medium enterprises and the lower-income consumer segments. With increased efficiencies and lower cost, digitalization will make financial inclusion truly sustainable.

[SDG 8: Decent work and economic growth]

In addition, BPI continues to ramp up its microfinance arm, BPI Direct BanKo. Since its creation three years ago, BanKo has disbursed loans amounting to over 4 billion pesos to nearly 56,000 entrepreneurs. Its number of branches has grown to 200 at the end of 2018. BanKo is targeting to grow its loan portfolio by six to seven times by 2022.

 The third and final pillar that I want to discuss is around responsible growth and innovation. Part of creating sustainable long-term value is holding ourselves accountable not only to our stakeholder community but to the physical environment where we operate. In recent years, we have increasingly placed high importance on how we can contribute to achieving a low carbon and climate resistant environment.

[SDG 13: Climate action / SDG 12: Responsible consumption and production]

Two years ago, Ayala Land announced a target for its commercial properties to achieve carbon neutrality by 2022. We are happy to report that 62 percent of its emissions are now offset by its 560-hectare carbon forest and its properties’ increased reliance on renewable energy sources.

Manila Water continues to look for more ways to improve its efficiencies, in the way it serves its customers and in developing new products and solutions. We are excited about its new initiatives on solid waste management and its potential to help solve our country’s huge waste disposal problem. Waste management is a sector that is ripe for disruption and presents opportunities which Manila Water can capture in a responsible and sustainable manner.

SDG 7: Affordable and clean energy

Over the past couple of years, AC Energy has deliberately redesigned its strategy to focus on renewable energy. It can be recalled that we entered the sector at a time when the Philippines was faced with a looming power shortage and needed reliable and affordable baseload capacity. Since then, the economics, efficiencies, and the ability to build renewable technology to scale has improved significantly. AC Energy is taking advantage of this opportunity and has since overweighted its investments in this space, particularly in solar, wind, and geothermal. In 2018, it generated 2,800 gigawatts of attributable energy, 48 percent of which came from renewable sources.

SDG 7: Affordable and clean energy

AC Energy is committed to scaling up its renewables portfolio and has set a target of achieving five gigawatt hours in capacity across these renewable technologies by 2025, with renewables contributing at least 50 percent of total energy output.

SDG 7: Affordable and clean energy

The 410 million dollars Green Bond it raised early this year will be used to fund solely renewable energy projects.

[SDG 9: Industry, Innovation, and Infrastructure]

AC Industrials continues to assemble a portfolio of global businesses that are in disruptive technologies and rapidly-transforming industries such as manufacturing and automotive. In 2018, it acquired US-based solar technology firm Merlin Solar, which owns a portfolio of proprietary technology that complements AC Industrials’ core strength of providing manufacturing scale through IMI’s global platform. Moreover, it is broadening its display technology capabilities through a joint venture with Toppan. Headquartered in Japan, Toppan allows AC Industrials to offer new solutions for customers in consumer electronics, automotive, and industrial markets.

Closing

These are just some examples of our initiatives across the Ayala group that we believe lay the foundation for us to undertake this ambitious sustainability journey through 2030. This desire to address social and economic inequity and environmental sustainability and our deep commitment to the development of our country, is embedded in our corporate culture and will continue to define our direction in the coming years.

We are fortunate to have individuals in our institution who share our holistic view that beyond traditional financial metrics, a truly sustainable business is one that considers itself as operating within a broader social fabric. We are aware of the challenges that we will face along the way, but we are confident that we will come out stronger than ever as what we have done over the past 185 years.

As a final word, I thank our Board of Directors for their guidance and foresight, our management and staff for their strong engagement across our many initiatives, and once again, our customers, shareholders, business partners and all our stakeholders for their continued trust and support to the Ayala group.

I now invite you to watch our corporate video which describes our philosophy of constantly seeking ways to be relevant, growing with the communities we serve, and seeing the potential in the challenges we face every day.

Thank you.

Makati, Philippines — April 25, 2019 Ayala is committed to helping 1,000 of Pampanga’s hardest-hit families rebuild their homes which were destroyed by the 6.1-magnitude earthquake last April 22, 2019. Ayala continues to work closely with the local government to assist in rescue operations and in ongoing relief initiatives. It is also jumpstarting its rehabilitation efforts in agreement with the provincial government to deliver and distribute building materials.

Today, Ayala is providing 20,000 GI sheets and 20,000 pieces of plywood through Ayala Foundation (AFI), at the request of House Speaker Gloria Macapagal-Arroyo and Governor Lilia Pineda. As of this morning, Ayala has begun transporting these materials to Guagua, Porac and Lubao and aims to complete delivery and distribution within the next few days.

“We feel that this assistance is most critical. It is absolutely imperative that we provide shelter for these 1,000 families that lost their homes in the earthquake. As in most disasters, it is the poor that is worst affected,” said Ayala Chairman & CEO Jaime Augusto Zobel de Ayala. “Ayala continues to support ongoing relief operations, and our resources are available for anything that Pampanga’s community may need.”

“This earthquake destroyed their homes because they were not built to quality structural standards. It’s important that we help them rebuild their homes now so they can also start rebuilding their lives,” shared Ayala President & COO Fernando Zobel de Ayala.

Immediately after the quake, Ayala Land (ALI) sent its Alviera and Makati Development Corporation (MDC) emergency response and safety teams to assist in rescue efforts in Porac, where the 4-storey Chuzon Supermarket collapsed, trapping and killing many. MDC deployed heavy equipment to assist in the rescue and in road clearing operations.

Since the earthquake, the Ayala group has been providing assistance in relief efforts to meet the needs of the Pampanga community. Manila Water Foundation (MWF), for example, delivered 600 units of 5-gallon water bottles to 600 families yesterday as part of its Agapay Tubig Program’s relief efforts. In partnership with the Municipal Government of Porac, Manila Water Philippine Ventures and Clark Water, MWF aims to provide clean, safe and potable water to families in nine hard-hit barangays: Pio, Babo Pangulo, Diaz, Babo Sacan, Cangatba, Mancatian, Manibaug Libutad, Pulung Santol, and Planas. MWF is set to deliver another 400 bottles today.

Globe Telecom (Globe) has set up a “Cell Site on Wheels” in Porac to boost network strength in the area. On April 23, Globe deployed Libreng Tawag and Libreng Charging stations in three sites and restored mobile and broadband signal in Pampanga.

AFI is already working with partners on-ground, including the Philippine Disaster Resilience Foundation (PDRF), and is looking into relief operations in the mountainous areas of Porac, where Aeta schools and communities are affected. AFI will also reach out to LGUs and NGOs to coordinate relief and rehabilitation efforts.

Meanwhile, Ayala Corporation and Ayala Aviation Corporation have a helicopter on standby and are providing PDRF operations center support.

Makati, Philippines – April 23, 2019 The Ayala group is closely coordinating with local government units in Porac, Pampanga to support evacuation and relief efforts following a 6.1 magnitude earthquake that shook Luzon on April 22, 2019. Several Ayala companies are already assisting in emergency operations. 

Last night, Ayala Land (ALI) managed to evacuate 31,000 residents and tenants from all affected ALI-owned residential and commercial properties, plus 55,580 evacuees from all its affected malls in Metro Manila. It also sent an ambulance and emergency response and safety teams from its Alviera estate and construction firm Makati Development Corporation to Porac’s Chuzon Supermarket, which collapsed during the quake. ALI’s tower lights, tents, and heavy equipment were deployed to assist in road clearing operations in Sapang Uwak. 

Manila Water Foundation sent 500-600 five-gallon water bottles to the victims in Pampanga through the Office of the Mayor of Porac. It is also coordinating closely with Manila Water’s subsidiary, Clark Water, to continuously check on other needs of the community. 

Globe Telecom set up Libreng Tawag and Libreng Charging stations in three sites: Public Market Compound, Brgy. Cangatba in Porac, Capitol Ground in San Fernando, and Clark Airport. Globe mobile and broadband signal are also back up in the Pampanga area.

Meanwhile, Ayala Foundation is reaching out and coordinating with the LGU and NGOs to assist the Aeta community in Porac.

Three Ayala companies have been named among the top Philippine winners in FinanceAsia’s 19th Best Companies Poll, beating about 240 other entrants. Ayala Corporation (AC), Ayala Land (ALI), and Globe Telecom (Globe) have all received top citations in multiple categories.

Ayala Corporation placed first in Best Managed Company with Ayala Chairman & CEO Jaime Augusto Zobel de Ayala as Best CEO, and Ayala Chief Financial Officer Jose Teodoro K. Limcaoco as Best CFO. AC also ranked first in Best Growth Strategy, first in Best ESG (Environment, Social and Governance), and third in Best Investor Relations.

By the end of 2018, AC’s net income grew to ₱31.8 billion, up five percent from the previous year with strong earnings contributions from ALI, Globe, and AC Energy. AC invested ₱43.7 billion in capital expenditure in 2018 and is set to spend ₱22.6 billion in 2019 primarily to grow business in AC Energy, AC Infra, and AC Health. Over all, the Ayala group maintains its capital spending level this year at ₱262 billion, with a bulk allocated to ALI and Globe, which have set aside ₱130 billion and ₱63 billion respectively.

“The aggressive growth strategy that we embarked on over a decade ago has been unprecedented for the Ayala group. Over the past 10 years, we spent close to ₱200 billion in capital expenditure at the parent level alone to support the investment programs of our various business units, including our new growth platforms in power, industrial technologies, infrastructure, education, and healthcare. Our profitability has also improved steadily over the past 10 years, growing at a compounded annual rate of 15 percent,” Ayala President and COO Fernando Zobel de Ayala said.

As Ayala grows its business in 2019, it continues to closely monitor its ESG performance against its 360° Sustainability Reporting Framework, maintain its best practices, and accurately disclose said performance in its Integrated Report. Ayala shall continue to remain highly responsive and accountable to its investors and stakeholders.

“As we celebrated our 30th year in 2018, we remained focused on developing more sustainable communities that enrich the lives of Filipinos. We introduced two new estates to bring our total to 26, registered the highest level of residential sales in our history, and stayed on track to open more commercial developments. These led to strong financial results and positioned our company for continued growth in the coming years,” said ALI President & CEO Bernard Vincent O. Dy.

Last year, robust property development and commercial leasing fueled ALI’s net earnings, which grew 16% to ₱29.2 billion. Of its record ₱110.1 billion in capital expenditures in 2018, ALI spent 41% on residential projects, 23% on commercial projects, 15% on land acquisition, 12% for the development of estates, and 9% for investments.

Since 2014, ALI has been working to reach its “2020-40 plan”, with the goal of achieving ₱40 billion in net income by 2020. It continues to extend beyond its traditional property development while increasing investments in the commercial leasing segment through sustainable means.

ALI continues its strategy of co-creating sustainable communities to help develop sustainable cities and communities, which is one of the United Nations Sustainable Development Goals. To ensure that people can live and work sustainable in all ALI developments, it prioritizes four Sustainability Focus Areas in each of its properties: site resilience, pedestrian-transit connectivity, eco-efficiency, and local economic development.

Additionally, in 2017, ALI kicked off its ambitious plan for all its commercial assets to be carbon-neutral by year 2022. In 2018, ALI offset 64% of its carbon emissions, coming from only 37% in 2017. This was accomplished through ALI’s 560 hectares of carbon forests, the use of passive cooling systems, and renewable energy.

Globe’s 2018 net profits were boosted to ₱18.6 billion in 2018 by the sustained demand for data-related services, which accounted for 61% of total service revenues last year. It invested ₱43.3 billion in capital expenditure in 2018, equivalent to 32% of its service revenues, and is set to spend ₱63.0 billion in capital expenditure in 2019 for continued network expansion. Globe continues to develop new products, services, and partnerships to further enhance the Filipino digital lifestyle.

“We will continue to put Filipinos at the forefront of digitalization by delivering a differentiated level of customer experience as we constantly improve the performance of our network,” said Globe President and CEO Ernest Cu.

Other winners in these categories include SM Investments Corporation, San Miguel Corporation, Metro Pacific investments Corporation, Megawide Construction Corporation, Megaworld, First Gen Corporation, Aboitiz Power Corporation, and D&L Industries.

The full results of the Best Companies in Asia poll will be released in FinanceAsia’s Autumn issue. See more at www.financeasia.com.

Contact Information

Ayala Corporation
May Florentino
Senior Manager, Corporate Communications
Email: florentino.mpp@ayala.com.ph

Ayala Land, Inc.
Suzette P. Naval
Corporate Communications Manager
Email: naval.suzette@ayalaland.com.ph

Globe Telecom, Inc.
Yoly C. Crisanto
SVP, Corporate Communications
Email: gtcorpcomm@globe.com.ph