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Bonifacio Global City, Philippines – The Ayala group onboarded some 120 students from 15 universities nationwide at the 11th Ayala Group Summer Internship Program (AGSIP) last June 3, 2019 at the Globe Tower. AGSIP taps the best and brightest students for its annual 6-week learning program under the different companies in the Ayala group.

This year’s batch was selected among thousands of applicants who underwent a stringent screening process conducted by the Ayala Group’s Talent Network. Student applications were received online and were assessed based on academic performance, skill sets and involvement in non-scholastic programs. Only applicants in the top 15% of their respective schools made the initial cut. Those who qualified then went on to be interviewed to determine their interest in Ayala, their culture fit as well as their aspirations.

“I hope AGSIP will be of greater personal value to you—the opportunity to learn from the network you will establish with mentors and fellow students,” said Renato Jiao, Globe’s Head for Human Resources, who led the opening ceremonies.

During the internship, students are assigned project-based initiatives which have direct impact to business performance. Mentoring is also an essential part of the program where huddles with leaders from their assigned Ayala companies are scheduled for weekly guidance and coaching. Regular interaction sessions are conducted to provide opportunities to integrate learning and to facilitate networking among the participants.

According to 20-year-old Anica Sarmiento, an incoming 4th year student from the Ateneo de Manila University taking up Management Economics, “Coming into this [program], I expect to be challenged… [Ayala has] actual projects for us with specific success indicators that we need to meet. I’m excited about that… and being in a company that I actually really look up to and feel strongly about makes it even better for me.”

This year, AGSIP has set the bar even higher by launching the first Ayala Group Intern’s Innovation League (AGi²Le). It aims to give the interns the opportunity to come up with game changing ideas and pilot their innovation projects. The teams with the best ideas will be in a unique position to pitch their projects to the Ayala group before the end of their internship. Project categories may fall under New Business and Product, Technology/Systems and Processes. The winning AGi²Le team will enjoy a cash prize, an international immersion with an Ayala partner (a global tech company), and potential employment offers from within the group.

“The Ayala of today is very different from the one that existed a decade or two ago. We need to reinvent ourselves to stay relevant among our customers and [the] communities we serve. And who better to look for reinvention than from people your age? This internship gives you a chance to contribute towards our reinvigoration,” said Jaime Augusto Zobel de Ayala, Chairman and CEO of Ayala Corporation, as he welcomed AGSIP Batch 2019.

The participating interns represent UP-Diliman, Ateneo de Manila University, University of Sto. Tomas, De La Salle University, University of Asia and the Pacific Polytechnic University of the Philippines, FEU Institute of Technology, and MAPUA, among others. The very first AGi²Le awarding ceremony is set to happen on July 12, 2019.

“The Ayala of today is very different from the one that existed a decade or two ago. We need to reinvent ourselves to stay relevant among our customers and [the] communities we serve. And who better to look for reinvention than from people your age? This internship gives you a chance to contribute towards our reinvigoration,” Ayala Corporation Chairman and CEO Jaime Augusto Zobel de Ayala said in his welcome remarks to the participants of the 11th Ayala Group Summer Internship Program (AGSIP). AGSIP is Ayala’s internship program that taps the best and brightest students from across 15 universities nationwide for a 6-week learning program under the different companies in the group.

Contact Information
Ayala Corporation
May Florentino
Corporate Communications
Email: florentino.mpp@ayala.com.ph

Makati, Philippines – June 3, 2019 Ayala Chairman & CEO Jaime Augusto Zobel de Ayala shared his thoughts on the future of business, and how companies must continue to evolve amidst disruption. Ayala’s progressive leader discussed the group’s digital transformation journey in response to these changing times, noting that institutions are at risk of falling behind if they are not able to transform.

“Companies that do not innovate are in danger of becoming irrelevant,” said Zobel. “We need to be proactive in finding gaps in our current systems and areas ripe for transformation, and we need to act swiftly, even if it means we have to be the ones disrupting ourselves.”

Recognizing the need for continuous innovation within the group, Zobel noted that the “innovation mindset” is what fuels the Ayala’s ongoing digital transformation. This consists of five key components which would collectively allow Ayala to further improve operational efficiency, make better strategic decisions, and improve the customer experience. These include both digital and non-digital initiatives to transform existing businesses; investments in new business models and technologies to make services more convenient and accessible for Filipinos; a more deliberate effort in venture investing through the establishment of a new US$150m ACTIVE Fund; the launch of AC Analytics as the group’s center of excellence for data and analytics; and various initiatives to upskill and empower the group’s talent base.

On the urgency of innovation, Zobel said, “Here in the Philippines, there seems to be a pervasive mindset that industries may be slower to change or that disruption will hit us gradually… [However] you’ll see these changes are happening here as quickly as they are anywhere else. If one doesn’t accept that, then you really have a good chance of being left behind.”

Such changes are already taking place in Ayala, as its companies gear up to disrupt themselves. Globe Telecom, for example, is forecasting its future business by harnessing the power of big data and mobile technology to better understand its customers and their needs, particularly in the retail space. Secondly, the Bank of the Philippine Islands is transforming its business to make its banking services more insightful, instant, intelligent, informative, and interactive. Lastly, in the logistics space, Entrego, Ayala’s technology-driven logistics solutions provider under AC Infrastructure, aims to stay ahead of the curve by investing in infrastructure, automation, and software to create the capacity to meet its growing consumer demand.

As exhibited by these changes, Ayala remains fully committed to its digital transformation as announced at its Annual Stockholders’ Meeting last April 2019.

“Here in the Philippines, there seems to be a pervasive mindset that industries may be slower to change or that disruption will hit us gradually… [However] you’ll see these changes are happening here as quickly as they are anywhere else. If one doesn’t accept that, then you really have a good chance of being left behind,” Zobel said at the 2019 BusinessWorld Economic Forum.

He was joined at the event by other Ayala executives:
Peter Maquera, Senior Vice-President, Enterprise Group, Globe Telecom, Inc., spoke on “How Big Data & Mobile Technology are Shaping the Future of Retail”
Constantin Robertz, President, Entrego, spoke on “Smart Delivery Solutions and the Future of Logistics”
Noel Santiago, Chief Digital Officer, Bank of the Philippine Islands, spoke on the “Digital Transformation of a Traditional Bank”

Contact Information
Ayala Corporation
May Florentino
Corporate Communications
Email: florentino.mpp@ayala.com.ph

Geneva, 03 June 2019 – Ayala Corporation (Ayala) has today joined nearly 200 forwardthinking companies as the newest member of the World Business Council for Sustainable Development (WBCSD).

Ayala is one of the Philippines’ largest and most diversified conglomerates. Through its leadership in real estate, financial services, water and telecommunications, the company has set the pace for inclusive growth – by building sustainable communities, widening access to financial services, improving connectivity and providing clean water to Filipinos throughout the country.

The group also has emerging enterprises in infrastructure, energy, industrial technologies, healthcare and education, positioning it to play a vital role in crossing geographic, economic and social orders to bring progress to all.

In addition to its sustainability initiatives, Ayala’s commitment to nation-building is reinforced by the social and cultural programs of its Ayala Foundation. The foundation helps improve lives through programs in education, youth leadership, sustainable livelihoods, and arts and culture.

Established in 1834, Ayala has grown to now employ close to 45,000 people across the Philippines.

“We are excited to be part of WBCSD and together with like-minded global institutions, work towards alleviating some of the development challenges our society faces today through sustainable businesses,” Ayala Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala said. “WBSCD’s vision is very much aligned with our own at the Ayala group as we increasingly integrate our country’s most pressing issues such as social and economic inclusivity, innovation and infrastructure development, and climate resiliency into the core of our business strategy and products and services,“ Mr. Zobel noted.

WBCSD is a global, CEO-led organization of over 200 leading businesses working together to accelerate the transition to a sustainable world. Its member companies come from all business sectors and all major economies, representing a combined revenue of more than USD $8.5 trillion and with 19 million employees. WBCSD is uniquely positioned to work with member companies along and across value chains to deliver high-impact business solutions to the most challenging sustainability issues.

“WBCSD is delighted to welcome Ayala as our newest member. Ayala’s leadership in sustainability is a beacon to large conglomerates across the world, showing how financial results can be integrated with wider impacts on people and societies. We look forward to working with Ayala to deepen their impact and help effect transformational change across the systems of our world” said WBCSD President and CEO Peter Bakker.

By connecting with WBCSD’s network of forward-thinking businesses across a variety of sectors, Ayala can make an even wider impact on global corporate sustainability.

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

World Business Council for Sustainable Dev’t.
Felicity Glennie-Holmes
Manager, Communication
Email: glennie-holmes@wbcsd.org

As part of a sustained effort to provide relief and rehabilitation support for families severely affected by the April 22 earthquake, the Ayala group, through Ayala Foundation, conducted relief operations for Aeta families in Porac, Pampanga, on May 4.

Working closely with award-winning journalist Kara David and her personal “Project Malasakit” initiative, Ayala Foundation distributed food and water for at least 300 Aeta families living in Katutubo Village in barangay Planas, Porac, Pampanga.

Ayala Foundation also came with the Manila Water Foundation to the relief operations, with assistance from the Apl.de.Ap Foundation, the Pampanga Social Welfare and Development Office, and the Philippine Air Force stationed at the Cesar Basa Air Base in Floridablanca, Pampanga.

The May 4 relief initiative was the second of several similar activities for Aeta families who lost their homes and livelihood during the 6.1-magnitude Luzon earthquake. The previous week Ayala Foundation and internationally renowned performer Apl.de.Ap distributed sleeping mats and drinking water for 800 families in Floridablanca, Pampanga.

“For any initiative to have an impact, it must be sustained and done in collaboration with the community and other partners,” said Ayala Foundation President Ruel Maranan. “This is why the Ayala group is actively consulting local stakeholders and the community members themselves on their needs after the earthquake, not only in terms of immediate relief but also for reconstruction and rehabilitation.”

The Ayala group has also started the delivery of plywood and galvanized iron sheets to help at least 1,000 Pampanga families who lost their homes to the earthquake.

Aside from helping rebuild shelters, Ayala is also working closely with Pampanga communities and officials in identifying other needs, particularly in the area of reconstruction and rehabilitation.

Ayala Corporation recorded a net income of ₱8 billion in the first quarter of the year, five percent higher from a year ago, lifted by its real estate, banking, and telco units and boosted by net accounting gains from the merger of its education arm with the Yuchengco group.

Ayala’s sustained earnings momentum was a result of healthy equity earnings contribution from its business units, which grew seven percent to reach ₱9.9 billion. Equity earnings contributions of Globe, Ayala Land, and BPI grew 44 percent, 15 percent, and five percent, respectively in the first quarter.

Furthermore, Ayala’s net profits during the period was boosted by net accounting gains from AC Education’s merger with iPeople, which amounted to ₱1 billion. As a result of the merger and the additional shares it purchased, Ayala now owns a 33.5 percent stake in iPeople.

“Our first-quarter results show the advantages of a diversified portfolio. The strong performance of Ayala Land, Globe, and BPI offset the challenges from Manila Water’s water supply issues and the market conditions facing AC Industrials,” Ayala President and COO Fernando Zobel de Ayala said. “In addition, capital generated from the closing of the transactions in AC Education and AC Energy provide a boost for funding new investments and reducing debt at the parent level,” Mr. Zobel noted.

Apart from the gains from the merger of its education business with iPeople, Ayala will receive gross proceeds of US$573 million from the partial sale of AC Energy’s thermal assets to Aboitiz Power following the completion of the transaction last May 2. The transaction involved Aboitiz Power’s acquisition of a 49 percent voting stake and 60 percent economic stake in AA Thermal, AC Energy’s thermal platform in the Philippines. AA Thermal consists of AC Energy’s limited partnership interests in GNPower Mariveles and GNPower Dinginin, which is currently under construction.

Ayala Land

Ayala Land sustained its double-digit growth trajectory in the first three months of the year, with net income expanding 12 percent to ₱7.3 billion, driven by its property development and commercial leasing segments.

Ayala Land’s revenues from property development climbed four percent to ₱26.1 billion, lifted by its office-for-sale and commercial and industrial lot sales segments. Sales reservations expanded 8 percent to ₱34.1 billion driven by the continued strong demand from local and overseas Filipinos, which grew eight percent and 15 percent, respectively. Sales from other nationalities, meanwhile, increased five percent in the first quarter.

Revenues from commercial leasing grew 19 percent to ₱9.2 billion, lifted by higher contribution from newly opened malls, offices, and hotels and resorts. The opening of the retail section of Ayala North Exchange brought Ayala Land’s total mall gross leasable area to 1.9 million square meters in the first quarter, while 719,000 square meters is under construction. Its average mall occupancy rate stood at 89 percent, with stable malls at 95 percent. Same mall rental growth stood at 12 percent during the period. Meanwhile, office GLA stood at 1.1 million square meters, while 424,000 square meters is under construction. Average office occupancy rate was at 92 percent in the first quarter.

Ayala Land continues to diversify its income mix. In the first quarter, new estates contributed 54 percent to its net income, while established estates (Makati, Bonifacio Global City, Nuvali, Alabang, and Cebu) contributed 46 percent. In terms of business line, its recurring income segment accounted for 38 percent, while its development business contributed 62 percent to Ayala Land’s bottomline.

Ayala Land has announced its plans to establish the first real estate investment trust in the Philippines. It has set up AyalaLand REIT Inc. (formerly known as One Dela Rosa Property Development Inc.), which will initially be composed of Ayala Land’s prime, Grade-A, commercial office assets in Makati. Ayala Land believes that a REIT is a viable investment vehicle to access new investors, recycle capital, and promote the development of the Philippine capital market.

Bank of the Philippine Islands

Bank of the Philippine Islands recorded a net income of ₱6.72 billion in the first quarter, up eight percent year-on-year on strong performance of its core banking business.

BPI’s total revenues in the first quarter climbed 23.5 percent to ₱22.78 billion on solid growth from both net interest income and non-interest income. Net interest income jumped 29 percent to ₱16.1 billion resulting from an 8.8 percent increase in average asset base and a 50-basis point expansion in net interest margin to 3.39 percent. Yield on interest-earning assets improved 109 basis points, but this was partially offset by the increase in cost of funds, owing to higher time deposit rates, and an increase in other borrowings.

The bank’s total loans at the end of the first quarter stood at ₱1.35 trillion, up 11.5 percent year-on-year, boosted by strong growth in corporate loans, credit card loans, and housing loans with growth of 11.8 percent, 20.3 percent and 9.9 percent, respectively. Meanwhile, total deposits reached ₱1.61 trillion, an increase of 1.3 percent. The bank’s CASA ratio was at 70.3 percent while the loan-to deposit ratio stood at 83.9 percent.

On the other hand, non-interest income registered a 12.4 percent increase to reach ₱6.73 billion, attributed to increases in transaction-based service charges, credit card and rental businesses, and income from assets sold.

Operating expenses totaled ₱12.1 billion in the first quarter of 2019, 23.8 percent higher year-on year, mainly driven by the bank’s investments in technology, digitalization, and its microfinance branch network. Cost-to-Income ratio was at 53 percent, slightly up from the 52.8 percent registered from a year ago. The provision for losses of ₱1.80 billion was 13.2 percent lower than the fourth quarter of 2018. Non-performing loans ratio stood at 1.85 percent, while the bank’s total loss coverage, including allowances for contingent exposures, was at 95.7 percent in the first quarter.

At the end of March 2019, the bank’s total assets stood at ₱2.08 trillion, up 8.9 percent, and Return on Assets was at 1.34 percent. On account of the stock rights offering conducted in May 2018, BPI’s total capital reached ₱257.11 billion, up 35.6 percent. Return on Equity was at 10.7 percent, which declined 2.9 percentage points, reflecting the impact of the dilution from the SRO. Capital Adequacy and Common Equity Tier 1 ratios were at 16.57 percent and 15.68 percent, respectively.

Globe Telecom

Globe registered robust performance in the first quarter, with a 44 percent surge in net income from its year-ago level to ₱6.7 billion bolstered by strong subscriber usage in data-related services across mobile, corporate data, and home broadband segments.

This was achieved through solid topline gains, which fully offset the higher depreciation expenses from Globe’s continued network expansion and acceleration of its LTE and broadband rollout. Consolidated service revenues climbed 13 percent to ₱36 billion, while EBITDA grew 24 percent to ₱19.9 billion.

The sustained momentum in prepaid brands drove mobile revenues, which grew 11 percent to nearly ₱27 billion. Mobile data continued to be the top contributor to Globe’s total mobile business, accounting for 61 percent of gross service revenues from 47 percent a year ago. Mobile data revenues grew 44 percent to ₱16.5 billion as subscribers avail of promos that provide the best surfing deals.

Similarly, home broadband revenues climbed 21 percent to ₱5.2 billion resulting from a 22 percent increase in subscriber base at 1.7 million. Meanwhile, corporate data revenues grew 16 percent to ₱3.1 billion, from internet and domestic services and higher circuit count.

Overall, data-related services accounted for 69 percent of Globe’s service revenues during the period, with mobile data services alone making up for 46 percent. Globe is now reaping the benefits of its modernized 4G/LTE network that allows more of its customers to experience faster content downloads, smoother music and video streaming, and richer web browsing experiences. It recorded mobile data traffic growth from 180 petabytes a year ago to 370 petabytes in the first quarter.

During the period, Globe spent around ₱8.8 billion in capital expenditures or 24 percent of the topline revenue to support the growing subscriber base and demand for data. Of this amount, 68 percent was deployed to data-related services. Globe has provided a guidance of achieving a high single-digit growth in service revenues and EBITDA margin in the low-50s by the end of 2019.

Manila Water

Manila Water recorded a net income of ₱1.2 billion in the first three months of the year, 27 percent lower from the previous year on higher operating expenses, which reflects the impact of the water shortage in the Manila Concession.

Manila Water’s operating expenses reached ₱2.46 billion, up 39 percent from a year ago, driven by the provision of financial penalty imposed by the Metropolitan Waterworks and Sewerage System to Manila Water amounting to ₱534 million for its inability to meet its service obligations to provide 24/7 water supply to its consumers in accordance with the concession agreement.

Manila Water’s inability to provide its usual 24/7 water supply to some of its consumers stemmed from insufficiency of the water supply from Angat Dam to service the demand of its consumers. This raw water allocation has remained unchanged at 1,600 MLD since the concession started in 1997 when the Manila had a population of only three million people. Today, Manila Water serves a population of almost seven million people whose per capita consumption has significantly increased through over two decades of economic progress in Metro Manila. However, under the concession agreement, the development of new water sources is ultimately the responsibility of MWSS. In collaboration with government, Manila Water continues to implement service recovery efforts, which are now geared towards addressing those residing in the elevated and farthest areas of the concession who are still inconvenienced due to the water supply shortage.

The higher operating expenses eclipsed the improvement in revenues registered during the period, expanding 8 percent to ₱5.08 billion on account of higher tariff in the Manila Concession and improved topline growth of non-Manila Concession businesses which grew 19 percent to ₱1.1 billion. Revenues was also tempered by the implementation of the voluntary one-time bill waiver program made effective in April as relief to its customers who were affected by the water supply shortage.

Net earnings of Manila Water Philippine Ventures, which comprises the company’s domestic businesses outside the Manila Concession, climbed 7 percent to ₱174 million in the first quarter, primarily lifted by revenues from Estate Water, which grew more than twofold to ₱319 million. Meanwhile, net earnings of Manila Water Asia Pacific, which houses Manila Water’s international investments, more than doubled to ₱135 million led by contribution of East Water in Thailand and its operating subsidiaries in Vietnam.

AC Energy

AC Energy recorded a net income of ₱2.5 million in the first quarter, dropping from its year-ago level of ₱593 million, as higher interest expense from a green bond issuance, lower wind regime, and a scheduled outage of a thermal plant weighed on its bottomline.

Equity earnings from AC Energy’s investee companies reached ₱496.9 million, primarily lifted by its international renewable energy platforms. Meanwhile, it booked lower equity earnings contribution from GNPower Mariveles on scheduled outage combined with the impact of its reclassification to an asset held for sale in light of the thermal sell-down to Aboitiz Power. Similarly, its wind farms NorthWind and North Luzon Renewables posted lower equity earnings contribution owing to lower wind regime this El Nino season. Higher interest expense incurred from AC Energy’s issuance of US$410 million in green bonds also contributed to the decline in AC Energy’s net profits in the first quarter.

Last April, AC Energy and the BIM Group inaugurated the 330MW solar farm in Ninh Thuan Province, one of the largest solar farms in Southeast Asia, as well as the 30MW solar plant in Dak Lak, both inVietnam. In addition, AC Energy in partnership with The Blue Circle recently announced the construction of the first 40MW of the Mui Ne Wind Farm located in Binh Thuan Province, Vietnam with an estimated cost of US$92 million. The project has an expansion potential of up to 170MW. AC Energy also recently energized a 50MW solar project in Khan Hoa, which is part of the 80MW solar plant partnership with AMI Renewables of Vietnam. These projects are all in line with AC Energy’s target to assemble five gigawatts in attributable capacity across solar, wind, and geothermal technologies by 2025.

AC Industrials

The ongoing global market slowdown, startup losses from its newly acquired businesses, and weaker sales of its automotive retail distribution segment pulled AC Industrials’ performance in the first quarter to a net loss of ₱332 million.

Its electronics manufacturing services unit, Integrated Micro-Electronics, experienced macro-driven margin constraints due to the continued fallout from the US-China trade war, lingering political uncertainty in the UK, and the ongoing electronic component shortage. Net profits dropped to US$335,000, 94 percent lower from its year-ago level of US$5.6 million. Consolidated revenues stood at US$323 million (₱16.6 billion), relatively flat from the previous year. Gross profit for the first three months of 2019 totaled US$29.1 million, with margins declining to 9 percent compared to the previous year’s 10.6 percent.

IMI continues to grow its target business segments – automotive, industrial, and aerospace – which now comprise 77 percent of total revenues for the period. Revenues from automotive grew 27 percent to US$168 million, while contribution from the industrial segment climbed 10 percent to US$68M. Revenues from aerospace increased six percent to US$13M. However, consumer and telecom revenues declined by 59 percent and 12 percent, respectively, due to delays in new project awards and the aforementioned China economic slowdown.

In domestic vehicle distribution, AC Motors registered a net loss of ₱89 million due to weaker sales of Honda, Isuzu, and Volkswagen, as the Philippine automotive market continues to experience an overhang from last year’s industry-wide decline. KTM and Kia also posted weaker than expected results, due to slower than expected exports and ongoing startup activities, respectively. 

Balance Sheet

Ayala’s balance sheet remains healthy with ample capacity to undertake investments as well as cover its dividend and debt obligations. As of the first quarter of the year, parent level cash stood at ₱5.5 billion, with net debt at ₱99.8 billion. Ayala’s net debt-to-equity ratio stood at 0.79 at the parent level and 0.73 at the consolidated level. The conglomerate’s loan-to-value ratio, the ratio of its parent net debt to the total value of its assets, was at 11.7 percent at the end of the first quarter. Its peso-dollar debt split ended at 66:34 as of end-March. Ayala’s dollar denominated debts are fully covered by foreign currency assets.

In April 2014, Ayala issued US$300 million bonds, which were exchangeable into secondary shares of Ayala Land. Upon the bonds’ maturity last May 2, 100 percent of the bondholders opted to exchange into Ayala Land shares. The exchange led to a 2.6 percent dilution in Ayala’s economic ownership in Ayala Land to 44.4 percent from 47 percent.

Makati City – Ayala Healthcare Holdings, Inc. (AC Health) announced that it intends to build the first dedicated cancer specialty hospital in the Philippines. The stand-alone Cancer Hospital, to be built with an investment of approximately P2Bn, is envisioned to be a fully integrated, 100-bed facility located in Metro Manila. Its goal is to provide comprehensive high-quality cancer care services, but at more affordable prices. On the back of the recently passed Cancer Control Act (RA11225), the Cancer Hospital is expected to complement and support public sector efforts to improve cancer care in the Philippines.

Ayala Corporation President and COO, and AC Health Chairman, Fernando Zobel de Ayala, said that the Cancer Hospital aims to address the prevailing gaps in screening, diagnosis and treatment of cancer in the Philippines. “Cancer is now the third leading cause of death in the Philippines, and unfortunately, we struggle with poor outcomes. A key pillar of our advocacy is screening and early detection so that we can diagnose patients earlier, and provide them with more affordable high-quality cancer care,” he said.

AC Health President and CEO, Paolo F. Borromeo, added that they will be working with leading international cancer care providers to bring world-class operational and clinical expertise, as well as stateof-the art technology for the benefit of patients.

The Cancer Hospital will be a specialized center, equipped with diagnostic equipment (including a PET Scan), chemotherapy facilities, linear accelerators for advanced radiation therapy, and operating rooms
for the specialist surgeons. Apart from offering a comprehensive range of services, the hospital will be led by some of the top local oncologists, working in a dedicated group practice as part of multi-disciplinary
care teams.

“We are working with some of the most respected names in the local oncology field, and we are delighted that they share our vision for this Cancer Hospital. We are also encouraged by the feedback we have
gotten from patients who love the concept. I think having a specialized cancer hospital in the Philippines is long overdue, and our goal is to redefine cancer care by serving a broader segment of Filipinos, while
providing quality of care that matches global standards,” Borromeo said.

Borromeo also said that they plan to offer cancer screening services to identify cases early at AC Health’s FamilyDoc, now the largest retail clinic chain in the country.

The announcement comes after the recent passage of the Cancer Control Act (RA 11215), which, among its provisions, allows for the creation of cancer specialty hospitals and clinics by the private sector. The law also expands cancer education and screening efforts, and PhilHealth benefits for cancer patients.

###

AC Health
Ayala Healthcare Holdings, Inc. (AC Health) is a wholly-owned subsidiary of the Ayala Corporation, and serves as the portfolio company for healthcare businesses. Its vision is to build an ecosystem that links every patient to a seamless healthcare experience. Its portfolio includes Generika Drugstore, the pioneer in generic retail pharmacies, and FamilyDOC, a new chain of community-based primary care clinics. AC Health is also investing in health technology solutions, such as its HealthTech arm, Vigos Health Technologies, MedGrocer, an FDA-licensed online pharmacy, and AIDE, a home health care platform.

For further inquiries, contact:

Gerard Garcia
Strategy and Communications Associate
garcia.gp@achealth.com.ph

May P. Florentino
Corporate Communications
Ayala Corporation
florentino.mpp@ayala.com.ph

• 

• 

Kickstart Ventures, Inc., a wholly-owned subsidiary of Globe Telecom, was chosen by Ayala Corporation (AC)  to manage its new $150 million venture capital fund to support startups pursuing innovations along key technology areas in data and analytics, machine learning, artificial intelligence, cloud computing, fintech, automation, real estate, retail, transport, energy, water, health and wellness, and food.

The Ayala Corporation Technology Innovation Venture (ACTIVE) Fund is looking at a range of investments in Series A to Series C or early- to mid-growth stage across four key investment themes – (1) ‘A Frictionless Future;’ (2) ‘From Automation to Augmentation;’ (3) ‘Innovations in Real Estate;’ and (4) ‘A World of Plenty’.

As sole manager of ACTIVE Fund, Kickstart is responsible for seeking companies that offer innovative, scalable, sustainable solutions for the seamless integration of digital and traditional channels such as On-Demand Services, IoT, FinTech, Blockchain, E-Commerce and Omni-Channel as well as the automation and augmentation applications for Artificial Intelligence, Machine Learning, Robotics, Big Data and Analytics, and Cloud Computing. 

Other target companies are those that provide green and inclusive technologies such as Clean Energy / Energy Storage / Distributed Energy, Environmental Tech / Waste Management; and  smart technologies for homes, buildings, communities, property management, retail tech, and similar use cases.

“While ACTIVE Fund will invest in tech companies not only in the Philippines but also abroad, our focus will be on systems and solutions, rather than pure technology,” said Minette Navarrete, President of Kickstart. “Our investment themes reflect our perspective that technology and innovation are a means to positively influence the future we want to build rather than ends in themselves. By investing in solutions that can scale sustainably, and pairing equity with strategic support, we can put Ayala Corporation’s assets to work in a different way, forging a future that is frictionless, symbiotic, equitable, and boldly efficient,” she explained.

Kickstart was launched in 2012 to support the Philippine startup ecosystem and has so far made 39 investments in digital companies, supporting 83 founders across the Philippines, Indonesia, Singapore, Malaysia, United States, Canada, and Israel. ACTIVE Fund will be its third and largest fund to-date.

Kickstart investments include Toronto-based startup Wattpad, recently in the news for having inked significant content deals with Sony Pictures Television, Singapore’s Mediacorp, and the Philippines’ Anvil Publishing; Indonesia’s C88, which announced a $28M Series C round last year; and the Philippines’ Coins.ph, which was recently acquired by Indonesia’s Go-Jek.

On the other hand, Globe President and CEO Ernest Cu reflects on how venture capital has become a vital part of Globe Telecom’s future. “Globe is animating its digital transformation via a corporate culture that is more entrepreneurial, more customer focused, and executing with speed and precision. We are engineering Globe to be more than a telco; it is now a platform upon which our business partners can grow, and individual consumers can depend on to provide access to the best digital lifestyle options. Corporate venture capital through Kickstart Ventures has been an important part of bringing more startup partnerships to Globe. We’re excited to work with Ayala Corporation to support the Group-wide digital transformation,” he said.

Earlier, AC announced the creation of ACTIVE Fund which leverages the breadth of the Ayala conglomerate – Ayala Corporation and affiliates Globe Telecom, BPI, Ayala Land, AC Industrials, Manila Water, AC Energy, and AC Infrastructure, which are also leaders in their respective fields.

“We offer more firepower, greater access, and the potential for partnerships across multiple industries through this one fund. It is simpler for potential investees to navigate, and more collaborative for ourselves to operate,” said Ayala Corporation CFO Jose Teodoro Limcaoco.

Ayala Corporation Chairman Jaime Augusto Zobel de Ayala indicated the role he wants AC to play with the new business landscape, “The Group continues to thrive and grow, and our business units are serving the needs of more Filipinos than ever before. At the same time, we are well aware that new technologies and business models are disrupting established industries globally: the pace of innovation is astounding. We are determined that Ayala Corporation will play a role in the transformation of industries – not as a bystander, but as an innovation catalyst.”

The fund also builds on the optimism around the Philippines and Southeast Asia: a recent report co-authored by Google and Temasek predicts that the SEA region’s digital economy will triple to reach $240 billion by 2025; and the International Monetary Fund’s World Economic Outlook predicts that Philippine GDP per capita will breach US$4,000 for the first time in 2022, improving discretionary spend at both corporate and consumer levels, and opening opportunities for further investments in infrastructure, services, and products.

In view of global, regional, and national trends, Ayala is being well-positioned with digital capabilities across all its businesses as the Philippines and Southeast Asia economies grow.

# # #

For more information, please contact:

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