Author: administrator

AC Education, Inc. (“AEI”), the wholly-owned education arm of Ayala Corporation, was selected as the winning bidder of the tender process conducted for the sale of shares of National Teachers College (“NTC”). A Share Purchase Agreement for approximately 96% of NTC’s shares has been executed by the parties. The acquisition remains subject to certain closing conditions, including securing the necessary regulatory approvals.

NTC is located on Nepomuceno Street, Quiapo, Manila and was founded in 1928, as the first school in the country to offer General Education leading to a Bachelor of Science in Education. It has a long track record of commitment to excellence in teaching, growth and inclusion, with almost 10,000 students from Basic to Higher education. It is one of the most well-recognized teacher education institutions in the country, with Level III Accreditation from PACUCOA for its Bachelor programs in Elementary and Secondary Education, and over 3,500 Education students in both college and graduate programs. NTC has also established growing Colleges of Accountancy & Business, Arts & Science, Hospitality Management and Information Technology, and a School of Advanced Studies.

Ayala Corporation started investing in the education sector in 2012 through AC Education, with a vision of delivering affordable and quality education that leverages an industry-based, experiential and technology-enabled approach, to significantly improve the employability of its high school and college graduates. AC Education’s Professional Employment Program (PEP) has significantly increased the employability and starting salaries of its college and senior high graduates.

In Basic Education, AEI has built the largest chain of stand-alone, private high schools in the country, APEC (“Affordable Private Education Center”) Schools, with approximately 16,000 students in 23 sites in Metro Manila, Cavite, Rizal and Batangas. In Higher Education, AC Education has invested in the University of Nueva Caceres (“UNC”) located in Naga City, with approximately 8,000 students. It is the oldest and one of the largest private schools in the Bicol region, offering college programs in Engineering and Architecture, Business and Accountancy, Education, Computer Studies, Law, Arts & Sciences, Criminology, Nursing and Graduate Studies. Together with NTC, the combined population of AC Education’s schools is approximately 34,000 students.

“We are very grateful that several groups had expressed their sincere interest in continuing the legacy of National Teachers College as established by our forebears. In selecting the buyer who shall acquire the shares of NTC, it was important to look not only at the capability to expand the school’s horizons, but also at the alignment of values and vision for raising our Filipino youth to be excellent teachers, industry leaders, or capable, competent individuals, in whatever path they may choose. We look forward to working with AC Education in this transition process and in moving NTC closer to becoming the world-class institution it was intended to be. We are honored to pass on the torch to AC Education, which we are confident will remain committed to building on the ideals upon which NTC was founded,” said Atty. Rolando De Castro, Chairman of the Board of The National Teachers College.

“The Ayala Group is committed to investing in the Education sector because we recognize that it is critical to building our nation. We believe that NTC can play an integral role in our efforts to contribute to a better education system in the Philippines, because of NTC’s long and successful track record in producing quality educators who go on to teach in both public and private schools,” said Mr. Jaime Augusto Zobel de Ayala, Chairman and CEO of Ayala Corporation.

“Our goal is to fulfill the vision of NTC’s founders of ‘…quality education for teacher preparation and development of manpower skills, anchored on the ideals of Excellence, Relevance, Access and Effectiveness, geared towards national productivity and world class competitiveness.’ We are committed to investing in further quality at NTC, and building on its traditions of excellence and inclusiveness,” said Mr. Alfredo I. Ayala, CEO of AC Education.

Mr. Ayala added, “We believe that NTC will be a key strategic element in the merger we have proposed between AC Education and iPeople.” Last month, AC Education and iPeople announced that they had executed a Non-Binding Term Sheet for their potential merger. iPeople is the listed education arm of House of Investments Inc., a member of the Yuchengco Group of Companies. Together with APEC Schools and UNC, NTC would be part of the assets that AC Education would contribute to its potential merger with iPeople, the parent of Mapua University, Malayan Colleges Laguna and Malayan Colleges Mindanao.

BPI Capital Corporation acted as the financial advisor of AC Education for the acquisition.

To expand access of reading JAZA’s New Year Message for Ayala group employees, we are publishing the material below.

Dear colleagues and friends,

Welcome to the start of 2018 and I hope you have all had the chance to get some rest in the company of family and friends. A big thank you, upfront, for working to ensure the continued growth and relevance of the Ayala group.

I write this note as part of a new tradition that I wanted to implement this year.  So many events happen in any given year and there is never much time to synthesize and bring some coherence and closure to all these thoughts.  Today is an attempt, on my part, to try to look back at the year that passed and identify some key themes in the hope of both bringing closure to my thoughts and setting some values based goals for the year ahead.  These thoughts will remain broad, macro focused and cover both global and national themes that are relevant to us.  Here goes.

As we reflect on the past twelve months, we see trends that persist – both social and economic – that affect many sectors of society.   We are increasingly globally interconnected and many of these themes cut across nation states.  I believe that it is important for us to take stock of these key trends, and understand how they shape and influence our path forward both as professionals and as stewards of our institutions.

Let me draw attention today to five themes that are the most relevant and that have had a disproportionate impact on our societies in 2017.

First, let me touch on the rise of populism which has been driven, to a large extent, by both perceived and real increasing social and economic inequity. Second, let me expand on the intertwined themes of globalization and technological advancement, two trends that have been at the center of public debate but whose effects have been, in my opinion, misunderstood.  Third, let me emphasize our need to continue to retool and upgrade our workforce in order to successfully navigate the employment challenges brought about by technological advancements and to remain relevant to the changing nature of our industries. Fourth, the need for infrastructure to support our many social and economic requirements remains of unprecedented importance.  Finally, let me highlight the indispensable role that the private sector plays in defining and executing on a more comprehensive economic social contract, where businesses build trust and relevance by being contributors to society and not just contributors to a more limited grouping of stakeholders.

VIEW MORE

Download: JAZA-New-Year-Message-to-the-Ayala-Group.pdf

JAIME AUGUSTO ZOBEL DE AYALA
Fostering CSR in the Philippines: Conference on Responsible Business
Session 1: The Role of Businesses in Achieving the Philippines’ Goals for
Sustainable Development | Opening Statement
January 17, 2017

Good morning, and thank you for the kind invitation to be here today.

The past few years have seen questions raised around the role of business in inclusive growth and sustainable development. Brexit, the rise of populism, the election of unorthodox leaders around the world have all
been traced to a dissatisfaction with the status quo—with societies where progress has not benefited all, and lack of economic opportunity.

Businesses are now being asked to do more, to involve themselves more in combating developmental hurdles, and build a more all-encompassing relationship with society. Ignoring the challenges faced by both global and national communities today threatens our ability to create long-term value and jeopardizes both enterprises and the markets we serve.

On a personal note, the role of business in inclusive growth and society has always been in my thoughts. I remember completing my MBA and thinking that, while the knowledge I gained was valuable, it was not necessarily sufficient to help our country overcome the challenges it faced. In the Philippines, our need to address economic inclusivity and build on sustainable business practices remains of paramount importance. Allow
me to share with you some of our experience at the Ayala group.

The Ayala group has always aligned its business strategies with the country’s development agenda. Throughout our history, we entered critical sectors in dire need of private sector participation. In recent years, we have become much more aware of integrating societal challenges into the core of our business strategy. We reinvented some of our business models and created new ones to broaden our positive impact on the
communities where we operate and the country at large. Through our businesses, we do our best to engage society in a deeper and more meaningful way.

Most of our businesses traditionally catered to the higher end of the market. In recent years, we have expanded our products and services to reach a wider segment of the population. Ayala Land now offers affordable housing for as low as P500,000, while Globe Telecom provides affordable subscription plans for mobile and internet. Meanwhile, BPI has also made it a point to create customized loan products and provide financial guidance to the micro- and small entrepreneur segment. In addition, Manila Water delivers water supply as well as sewerage and sanitation services to more than 6 million customers in the eastern part of Metro Manila. It  as a flagship program called Tubig Para Sa Barangay, which is designed specifically for areas with clusters of low-income communities, including informal settlers.

Moreover, we entered the energy, infrastructure, health, education, and industrial technologies spaces. These are all sectors with critical gaps in quality and affordability, and are crucial in sustaining our country’s growth and development. Through AC Energy and AC Infrastructure, we are helping build our country’s much-needed physical infrastructure. Through AC Health and AC Education, we are able to provide affordable, quality services that supports human capital development.

Human capital development, particularly in skills training and education, is something we have identified to be absolutely necessary today, and it is an endeavor in which the private sector can contribute significantly. Businesses are in an excellent position to identify the disruptive impact on new technologies, as well as the new skills that will be necessary to adapt. We are already taking steps in this direction. Through APEC schools, AC Education uses a specially-designed curriculum to enhance the employability of students with skills needed in the job market. A number of other companies have their own initiatives to ensure the continued learning and development of their employees, keeping them up to industry standard—Globe University, IMI University, and Makati Development Corporation’s partnership with TESDA to upskill its construction workforce.

These are only a few examples of how Ayala is responding to the call of the times—how we remain progressive contributors to the changes needed in the world, and how we are evolving to make sure that we do
our part in national development.

The United Nations Sustainable Development goals were instrumental as we made a deliberate shift in company strategy. We can all agree that the SDGs are the simplest, clearest articulation of the goals we all share: the eradication of poverty, and the flourishing of communities, industry, innovation, and the environment.

The SDGs provided our group with a framework through which we could shape our value creation process—clear outcomes by which we could frame our sustainability goals. Framing our value creation process along the SDGs allows us to align with global initiatives.

Given the diversity of the industries in which Ayala is present, our group of companies contributes to the SDGs in a wide variety of ways.

Social tensions around the world have put at the forefront of our considerations the paramount role that the private sector plays in providing decent livelihood and work. Apart from the millions in capital expenditures that Ayala invests into the domestic economy, the group also contributes to “decent work and economic growth,” through the jobs it generates. The Ayala group provided employment opportunities to over 124,000 individuals in 2016. Moreover, as of November 2017, Ayala Land’s construction arm, Makati Development Corporation, provided close to 70,000 jobs in the lower-income segment, particularly for skilled construction workers. MDC has also partnered with TESDA in response to the industry-wide shortage in skilled labor and provide employment opportunities for more individuals in the construction industry.

In terms of “sustainable cities and communities,” Ayala Land has distinguished itself through its sustainable estates in the country that consider disaster resilience, connectivity, eco-efficiency, and economic development. For “clean water and sanitation,” Manila Water delivers a clean, reliable supply of water, sewerage, and sanitation services to over six million customers.

To complement these efforts, Ayala adopted the Integrated Reporting framework. This allows us to hold ourselves to higher standards of transparency and accountability by discussing not only financial and operational highlights, but also our sustainability and inclusive development initiatives documented through the SDGs. The Ayala Corporation 2016 Integrated Report was the first Integrated Report published by a Filipino company.

Ensuring that our companies can contribute to societal growth, I believe, is both a moral and a practical imperative. This is not mere altruism; rather, it is a deliberate strategy. Businesses cannot survive in societies where
inequity thrives; in markets failing markets; and where the environment is socially and physically degraded. Tremendous value can be realized when we strive to build more inclusive businesses—not only can companies
harness innovation and creativity in going beyond traditional models, we also help to empower the markets that have sustained our businesses.

Thank you, and I look forward to a productive and meaningful discussion.

Download: JAZA – CSR Conference 2017 Opening Statement.pdf

iPeople, inc. (“iPeople”), the listed holding company for the education sector of House of Investments Inc., a member of the Yuchengco Group of Companies, and AC Education, Inc. (“AEI”), the wholly-owned education arm of Ayala Corporation, have executed a Non-Binding term sheet for their potential merger. Under the Non-Binding term sheet, the parties agreed to an exclusivity period to complete due diligence, and to finalize the terms and conditions of the proposed merger within the first quarter of 2018. All terms and conditions of the proposed merger, including the involvement of House of Investments and Ayala Corporation in the management of the surviving entity, iPeople, shall be presented for approval by the parties’ respective boards of directors and merging parties’ stockholders, and the transaction will be subject to the requisite regulatory approvals as well.

The potential merger would bring together the educational institutions of House of Investments and Ayala Corporation (iPeople and AEI respectively). The potential merger would include iPeople and its significant subsidiary, Malayan Education System, Inc. (Operating under the name of Mapua University), a leading private engineering and technical university in the country, a world ranked QS-3 star university and the school with the most CHED Centers of Excellence in Engineering, and its subsidiaries, Malayan Colleges Laguna, the best board exam performing private school in Calabarzon, and Malayan Colleges Mindanao, and AEI and its subsidiaries, the University of Nueva Caceres, one of the oldest and largest universities in Bicol, and APEC Schools, the largest stand-alone chain of private high schools in the country. Together, the combined population would be over 40,000 students.

“We are looking forward to this potential merger. Mapua’s reputation as a leading private engineering and technical university in the country, together with AEI’s ability to provide quality education leading to enhanced employability, at an affordable price, would enable the Yuchengco Group of Companies and Ayala Corporation to jointly contribute to the improvement of the quality of education in the Philippines, for the benefit of all sectors of society,” said Mrs. Helen Y. Dee, Chairperson of House of Investments, Inc.

“We are very pleased about this opportunity to partner with the Yuchengco Group of Companies to help build our nation through education. Our belief is that the potential combination of iPeople and AEI would create significant synergies that would enable us to better equip students for compelling futures.” said Jaime Augusto Zobel de Ayala, Chairman and CEO of Ayala Corporation.

Contact Information

House of Investments, Inc.
Investor Relations Office
Ring F. Joven
Email: rfjoven@hoi.com.ph

iPeople Inc.
Investor Relations Office
Ring F. Joven
Email: rfjoven@hoi.com.ph

Ayala Corporation
Corporate Communications
Yla Patricia G. Alcantara
Email: alcantara.ypg@ayala.com.ph

Aboitiz InfraCapital, Inc., AC Infrastructure Holdings Corporation, Alliance Global Group, Inc., AEDC, Filinvest Development Corporation, JG Summit Holdings, Inc., and Metro Pacific Investments Corporation have all agreed to form a consortium to rehabilitate, operate, and maintain the Ninoy Aquino International Airport (NAIA) through an unsolicited proposal which it plans to submit to the Department of Transportation.

The consortium believes that the NAIA will continue to be a strategic gateway for our country and a key hub of airline operations for many more years. The consortium will work with foreign technical partners with proven world class track records and experiences in airport operations to improve, upgrade, and enhance the operational efficiencies of NAIA covering both landside and airside facilities.

Numerous foreign and local experts have highlighted the advantage of keeping an airport within city limits. Like other major cities in the world, experts recommend an in-city airport and another one outside the metropolis to complement it. Megacities that benefit from a two-airport set-up include Tokyo (Haneda and Narita) and London (Gatwick and Heathrow).

Given proper upgrades and strategic improvements, NAIA can easily accommodate an additional 11 million passengers annually from the current 39.5M passengers, and can increase its hourly aircraft movements (landing and take-off) from 40 movements per hour to 48 movements per hour.

The unsolicited proposal is intended to help accelerate the government’s “Build Build Build” program. Augmenting NAIA’s capacity is the quickest way to address airport congestion whileother airports are being developed outside Metro Manila. The consortium believes that this approach promotes greater economic benefit and sustainability for the whole country.

AC Infrastructure Holdings Corp. is the Ayala group’s wholly owned subsidiary that selectively pursues projects to support the growing infrastructure needs of the public and private sectors. 

For inquiries and additional information, please contact: 

JQ Quesada, AC Infra Corp Comm, Sustainability and Risk Manager
quesada.jam@ayalacorp.onmicrosoft.com
+63917810605

Thomson Reuters’ International Financing Review Asia (IFR Asia) named Ayala Corporation’s US$400-million fixed-for-life perpetual bond as the Philippine Capital Market Deal for 2017. IFR Asia is the leading source of fixed income, capital markets and investment banking news and commentary. In its special report, Review of The Year 2017, IFR Asia cited how the Ayala deal drew strong demand from both offshore investors and domestic institutions flush with dollar liquidity, managing to close multiple times oversubscribed with final orders of over US$2.5Bn.

IFR Asia’s citation lauded Ayala Corporation’s issuance of a US dollar-denominated perpetual bond in September that set a precedent in the Philippines for fixed-for-life bonds.  The report cited that Ayala’s first offshore issue since 2003 attracted heightened demand from investors looking for quality Philippine exposure and how Ayala was primed to respond, upsizing the issue and accelerating launch of the deal in the middle of its investor roadshow.  The Ayala bond was the first ever Asean corporate fixed for life perpetual.

Aside from allocating the proceeds to refinance the issuer’s maturing US dollar obligations and to fund investments, the deal also enables Ayala to pursue new opportunities, expansions and acquisitions in the years to come. This is aligned with Ayala’s integration of its strategy and operations with its sustainability framework, as the group continues to expand its long-standing businesses in real estate, banking, water systems and telecommunications while diversifying into new sectors; particularly, industrials, infrastructure, energy, health and education, which are critical to the Philippines’ socio-economic progress.  

Asset Publishing and Research Ltd, a Hong Kong-based integrated multi-media company serving an elite community of leading corporate and financial decision makers in Asia, awarded Ayala Corporation on November 30, 2017 as The Asset Triple A Country Awards 2017’s Best Corporate Bond in the Philippines for its US$400 million senior unsecured and guaranteed fixed-for-life perpetual Notes, which were issued last September. The award was included in its Best Deals in Southeast Asia category.

The Asset Awards are Asia’s preeminent recognition for those that have excelled in their respective industries. With close to 20 years of experience, the awards programs are built upon a stringent methodology that is combined with a rigorous approach in selecting the best institutions and individuals operating in Asia.

The issuance, a US dollar-denominated fixed-for-life senior perpetual issuance at an aggregate principal amount of US$400 million with an annual coupon of 5.125% for life with no step-up in Southeast Asia and the first fixed-for-life with no step-up (and reset) deal in the Philippines, was commended by The Asset for “setting a precedent in the country for the fixed-for-life bonds”. HSBC was sole was sole global coordinator, with Deutsche Bank, HSBC and JP Morgan as joint lead managers and BPI Capital Corporation and China Bank as domestic lead managers.

The offering was more than five times oversubscribed, with investors’ confidence reflecting the high quality of the Ayala signature. “This successful launch of fixed-for-life Notes provides us with the financial flexibility to manage our balance sheet and diversify our sources of capital. We are grateful for the continued support we have received from investors that is clearly reflected in this issuance,” said Ayala Corporation Chairman and CEO Jaime Augusto Zobel de Ayala.

Now on its 19^th year, The Asset’s annual Triple A recognition represents the industry’s most prestigious awards for banking, finance, treasury and the capital markets.

The Financial Executives Institute of the Philippines and ING Bank NV have named Ayala Corporation Chief Finance Officer Jose Teodoro K. Limcaoco as this year’s CFO of the Year.

As CFO of Ayala, Limcaoco is tasked to manage P900 billion in assets of the Philippines’ oldest and largest conglomerate which has diverse interests in real estate, financial services, telecommunications, water infrastructure, electronics manufacturing, power generation, transport, automotive, healthcare, and education.

“TG plays a very important role in the growth of Ayala Corp. He has a wide lens in which he views things. Our conversations stretch beyond the financials and encompass what we want Ayala to become,” says Ayala Chairman and CEO Jaime Augusto Zobel de Ayala.

JAZA credits Limcaoco for remodeling the capital allocation process at the parent company. This year, Limcaoco spearheaded the issuance of a $400-million “fixed-for-life” perpetual bond offering to help fund the conglomerate’s long-term investments; it was the Philippines’ first international corporate issuance in 2017 and also signaled Ayala’s return to the offshore debt market after a long hiatus. Moreover, in his concurrent roles as Chief Risk Officer and Chief Sustainability Officer of Ayala, Limcaoco has heightened the parent company’s focus on risk management and the group’s alignment to the United Nations Sustainable Development Goals.

Accepting his award on November 20, Limcaoco said: “The role of the CFO is constantly changing, for finance is the lifeblood and tangible measure of corporate success. As corporations and businesses evolve to be more responsible to all their stakeholders, so, too, will the responsibility of a CFO evolve to address and ensure the long-term sustainability of his or her business. This is the challenge we all face and must prepare our successors to address.”

Limcaoco is the fifth Ayala group CFO to receive the organization’s highest distinction, previously won by Ayala Land’s Jaime Ysmael (2011), Manila Water’s Sherisa Nuesa (2008) and Luis Juan Oreta (2015), and Globe’s Delfin Gonzalez Jr. (2007), who was later appointed Ayala CFO.

Ayala’s latest social venture brings the benefits of solar energy to one of the most far-flung islands of the Philippines

TAWI-TAWI – Far from commercial grids and power lines, the island of Tawi-Tawi sits at the southernmost part of the Philippines. In this remote province, only 30% of the population has access to electricity, which is predominantly sourced from diesel generators. Due to the unstable electric supply, the island experiences rolling blackouts that stunt progress and slow down the delivery of essential services, such as health and education. For the Mindanao State University (MSU) in Bongao, Tawi-Tawi—whose vision is to be a center of excellence in Fisheries, Marine and Maritime Science and Engineering, and Oceanography— this means that the quality of their educational program is undermined and that the productivity of their students is often disrupted.

Working with MSU, AC Energy has partnered with Kennedy Renewable + Technology Corp. to address the power shortage and provide the school with solar panels. AC Energy, whose recent focus in the development of renewable energy, provided technical and financial support, with Kennedy acting as the main developer and engineering, procurement, and construction (EPC) contractor for the project. Seven campus buildings were outfitted with solar panels, hybrid inverters and batteries, providing not only 141kW capacity to the university, but also energy storage capability. The system works in tandem with the local power supply, thereby reducing the impact of electrical disruptions and lowering the school’s cost of electricity. 

“The successful launch of this project highlights the reality of conglomerates successfully working with small companies that labor under challenging circumstances to promote sustainable development. This installation is a living, although modest, testament of how organizations like AC Energy and Kennedy Renewable + Technology Corp. solve real problems of power shortages that affect critical institutions in remote areas. Many more projects like this will help advance the cause of energy derived from sources that are replenished by nature,” said Dr. Philip Ella Juico, Chairman of Kennedy Renewable + Technology Corp.

This renewable source of power enhances MSU’s role, as the only university in the province, in providing quality education despite the inefficiencies in the current local power situation. In these far-flung areas, access to electricity is directly linked to access to education. As the island’s sole institution for higher education, MSU Tawi-Tawi is now closer to its goal of producing experts in fisheries and agriculture, which are key drivers of their local industry. AC Energy’s President & CEO, Eric T. Francia added “Our company sees great value in not only providing electricity to far-flung regions of our country, but also to critical institutions of growth like MSU. Partnering with Kennedy Renewable and MSU to stabilize their campus’ power supply directly impacts the quality of education that the school’s students will receive. We are excited about the possibilities energy can provide—especially to the education of our future generation.” 

###

AC Energy is one of the fastest growing businesses of Ayala Corporation with more than US$ 1 billion of invested and committed capital, with investments in renewable energy and conventional power.

AC Energy is positioned to exceed 2,000 MW of attributable generation capacity and scale up its renewable energy portfolio to over 1,000 MW by 2020.

AC Energy is expanding beyond the Philippines and expected to grow its presence in Indonesia and other Southeast Asian markets.  

For inquiries and more information, please contact:

Irene Maranan

Head – Corporate Marketing and Sustainability

AC Energy

Email :  maranan.is@acenergy.com.ph

Contact number:  0917.5298339 or 908.3373

Website:  www.acenergy.com.ph

Ayala Corporation sustained its earnings momentum in the first nine months of the year, with net income reaching ₱23.2 billion, an 18 percent-growth from its year-ago level. This was bolstered by the strong performance of its real estate unit, and boosted by the continued ramp-up of its power business. 

In the third quarter, Ayala’s net income jumped 39 percent year-on-year to ₱8.2 billion, driven by robust earnings from Ayala Land, Bank of the Philippine Islands, and AC Energy. This was lifted by transaction gains realized by Globe Telecom from the investment of Ant Financial in its fintech unit Mynt. Moreover, the income realized by AC Energy from services that enabled the financial close and construction of a power plant lifted Ayala’s net earnings in the third quarter. Isolating these transaction gains, Ayala’s third quarter net income grew 26 percent from a year ago. 

“Most of our business units have continued to achieve solid growth this year,” Ayala President and  Chief Operating Officer Fernando Zobel de Ayala said. “We are pleased to note that even excluding the transaction gains from various strategic initiatives for the period, Ayala’s ninemonth net income still expanded 18 percent from the previous year,” Mr. Zobel said.

Real Estate

The sustained performance of the residential segment, office-for-sale, and commercial leasing businesses drove the 18 percent growth in Ayala Land’s nine-month net income to ₱17.8 billion.

In property development, residential revenues jumped 30 percent from its year-ago level to ₱57.3 billion driven by new bookings and project completions led by the Alveo and Avida brands. Reservation sales in the first nine months amounted to ₱94.2 billion, 12 percent higher year-onyear, with average monthly sales amounting to ₱10.5 billion. Unbooked revenues from reservation sales reached its highest level to date at ₱141 billion from ₱127 billion in end-2016, while net booked sales for the period climbed 16 percent to ₱66.9 billion.

Office-for-sale revenues surged 50 percent year-on-year to ₱6.3 billion bolstered by sales from the High Street South Corporate Plaza 2 project. In the commercial and industrial lots segment, Ayala Land posted ₱4.8 billion revenues in the first nine months, up 8 percent from a year ago, fueled by strong lot sales in Arca South, Vermosa, and Naic, Cavite.

During the period, Ayala Land launched ₱53.9 billion worth of residential and office-for-sale projects.

In commercial leasing, shopping center revenues reached ₱11.8 billion, 11 percent higher than the previous year backed by contributions from new malls. Office leasing revenues grew 11 percent to ₱4.5 billion, lifted by stabilized occupancy of UP Town Center, Ebloc 4, and Alabang Town Center BPO offices. Moreover, hotel and resorts revenues were steady at ₱4.8 billion, up six percent year-on-year, driven by higher occupancy and average room rates of El Nido Resorts. Property management revenues climbed 51 percent to ₱1.6 billion supported by increase in managed properties. These recurring income businesses contributed 35 percent of Ayala Land’s net income during the period.

Banking

In banking, the sustained momentum of Bank of the Philippine Islands’ core banking and feebased businesses cushioned the absence of significant gains from a capital exercise in the previous year. The bank posted ₱17 billion in net income in the first nine months, 1.9 percent lower yearon-year

The bank’s total revenues rose five percent to ₱53 billion as net interest income rose 13.5 percent to ₱35.5 billion driven by higher asset yields and expansion of its average asset base. Non-interest income fell to ₱17.5 billion, down 8.4 percent from a year ago, due to the absence of significant one-off securities trading gains similar to those realized in June 2016. The lower trading gains was partially offset by the bank’s fee-based income, which rose 20.1 percent during the period backed by credit card, investment banking, and trust fees. BPI’s cost-to-income ratio increased to 52.5 percent as the bank continues to invest in new technology to improve operating efficiencies.

BPI’s loan book expanded 21 percent as of end-September 2017 to ₱1.1 trillion compared to the same period a year ago, supported by a 24 percent-growth in corporate loans. The corporate segment accounted for 80 percent, while the consumer segment comprised 20 percent of the bank’s loan portfolio. BPI maintained its asset quality with a 90-day non-performing loans ratio of 1.5 percent and a 126 percent reserve cover. Total deposits in the first nine months of the year stood at ₱1.5 trillion, 14 percent higher than a year ago, with its current and savings account ratio at 71 percent.

Telecom

Continued demand for data-related services, lifted by a ₱1.9 billion gain from the strategic partnership forged by Mynt, drove Globe Telecom’s net income to ₱13 billion, 11 percent higher than a year ago. This one-time gain pared Globe’s share in equity losses and amortization charges related to the acquisition of San Miguel’s telco assets, higher interest expenses, and depreciation.

Globe’s gross service revenues improved six percent to ₱95.1 billion led by a broad-based growth across its mobile, home broadband and corporate data segments. Mobile revenues grew 7 Ayala Corporation | 9M 2017 Earnings Release 3 | P a g e November 10, 2017 percent to ₱73.1 billion, driven by sustained high demand for mobile data. Mobile data revenues increased 20 percent to ₱31.3 billion as mobile data traffic soared 73 percent to 430 petabytes in the first nine months of the year.

Home broadband revenues rose eight percent from its year-ago level to ₱11.7 billion, tracking a nine percent growth in broadband subscribers to 1.3 million. Meanwhile, corporate data revenues ended the period four percent higher to ₱7.6 billion. On a combined basis, Globe’s revenues from data-related services amounted to ₱50.6 billion, up 14 percent year-on-year. Data services accounted for 53 percent of Globe’s gross service revenues in the first nine months compared to 49 percent in the previous year.

Globe posted an earnings before interest, taxes, depreciation and amortization (EBITDA) of ₱40.6 billion, up eight percent from the previous year, backed by strong revenues despite higher operating expenses. Moreover, EBITDA margin improved to 43 percent from its year-ago level of 42 percent.

Without the impact of the gains from the increase in fair value of its retained equity interest in Mynt and the costs related to the acquisition of San Miguel’s telecom assets, Globe’s net earnings dropped 2 percent year-on-year owing to higher depreciation expense and interest and financing charges.

As part of its commitment to improve internet services in the country, Globe is deploying US$100 million in additional capital expenditures for the year to fund the expansion of its mobile data network, bringing Globe’s total capital spending plan to US$850 million for 2017. The additional investment will be used to deploy new cell sites that utilize the 700 and 2600 megahertz frequencies aimed at expanding internet capacity and mobile coverage.

In October, with partners Ant Financial and Ayala, Globe launched its digital payment platform through GCash, which utilizes Quick Response (QR) codes for retail merchants. The system allows customers to pay for goods and services using their smartphones. The system was first launched with Ayala Malls and is targeted to expand to other retail outlets.

Water

Manila Water’s nine-month net earnings ended flat from a year ago at ₱4.9 billion, as higher operating costs and expenses from expansion initiatives weighed down its topline growth.

Manila Water’s revenues rose three percent to ₱13.8 billion, in step with a three percent expansion of total billed volume to 554.4 million cubic meters. In the first nine months of the year, the Manila Concession registered ₱4.5 billion in net income, three percent higher than the previous year, supported by a steady growth in billed volume and lower depreciation expenses. Billed volume stood at 366.6 million cubic meters, two percent higher than its year ago level, on the back of higher demand from domestic and semi-commercial clients. Operating efficiencies remain at a Ayala Corporation | 9M 2017 Earnings Release 4 | P a g e November 10, 2017 comfortable level with non-revenue water at 13.1 percent, while collection efficiency stood at 99 percent in the first nine months.

Revenues from Manila Water’s domestic subsidiaries, Manila Water Philippine Ventures, jumped 26 percent to ₱2.3 billion bolstered by strong growth across all its subsidiaries. This was led by Estate Water and Laguna Water, which posted revenue growth of 42 percent and 32 percent, respectively. All in all, Manila Water’s non-Manila Concession businesses contributed ₱770 million accounting for 16 percent of total consolidated net income.

Operating costs and expenses in the first nine months rose 11 percent to ₱4.9 billion, due to higher direct and personnel costs.

Manila Water remains aggressive in its business-building efforts, with business development costs more than doubling to ₱162 million. In addition, Manila Water continued to invest in service improvements with capital expenditure up 66 percent to ₱8.2 billion, with a bulk allocated to the Manila Concession.

Power Generation

AC Energy sustained its earnings momentum with net income surging 73 percent to ₱2 billion in the first nine months, primarily driven by the fresh contribution of its geothermal asset in Indonesia, boosted by services income derived from the financial close of a new power plant.

Equity earnings from AC Energy’s operating assets expanded 20 percent year-on-year to ₱1.6 billion, bolstered by the robust performance of its renewable energy assets and the contribution of SD Geothermal (formerly Chevron Indonesia). During the period, its renewable platforms contributed 52 percent to AC Energy’s equity earnings from operating assets.

AC Energy’s first greenfield offshore project, the 75-megawatt Sidrap Wind Farm located in South Sulawesi, Indonesia, is expected to be operational by the first quarter of 2018.

Industrial Technologies

AC Industrials registered a net income of ₱1 billion in the first nine months of the year, a five percent increase from a year ago, as the solid performance of its electronics manufacturing business offset weaker contributions from its vehicle retail segment.

In electronics manufacturing, Integrated Micro-Electronics, recorded a 16 percent increase in net earnings to US$24.1 million (₱1.2 billion), driven by its automotive and industrial segments. Revenues surged 29 percent year-on-year to US$795.2 million (₱40.4 billion), lifted by its Europe and Mexico operations, which contributed US$263.4 million (₱13.4 billion) in revenues on increased demand for automotive lighting.

VIA Optronics and Surface Technology International registered a combined US$136.2 million (₱6.9 billion) in revenues, contributing 17 percent of total revenues. VIA and STI supported the 25 percent-improvement in gross profit of US$89.2 million (₱4.5 billion) during the period.

Meanwhile, revenues from AC Industrials’ vehicle retail segment expanded 30 percent to ₱21.2 billion, supported primarily by strong sales of its Honda BR-V, Honda Civic and Isuzu truck models. Despite higher sales during the period, net income declined 10 percent to ₱445 million as a result of lower dividend income from Isuzu Philippines Corporation and lower equity earnings from Honda Cars Philippines Inc.

In motorcycle manufacturing, KTM Philippines has assembled 1,148 units as of September since it began operations in June this year.

Infrastructure

AC Infrastructure continues to strengthen the operations of its three public-private partnership projects. Light Rail Manila Corporation, the operator of LRT-1, served an average daily ridership of over 431,000 in the first nine months of the year. Capacity has improved with 106 light rail vehicles available for operation, a 15 percent increase from its year-ago level, while average weekday daily trips have increased to 554, 10 percent higher year-on-year. LRMC continues to upgrade the facilities of stations along the line to provide a better commuting experience to the public.

The Muntinlupa-Cavite Expressway now serves over 28,300 vehicles a day, 22 percent higher from a year ago. Meanwhile, the Beep ticketing system now has 4.6 million cards in circulation, with ₱8.1 billion in transactions across rail, bus, and retail platforms since its launch in 2015. It recently added Robinsons Movieworld to its non-rail platforms

Social Infrastructure

AC Health continues to ramp up the operations of Generika, its retail network of affordable quality generic medicines, and FamilyDOC, its chain of community-based primary care clinics, to meet the healthcare needs of Filipinos.

Generika’s revenues grew 13 percent to ₱2.3 billion year-on-year, mainly driven by higher network retail sales during the period. The pharmacy chain opened 76 new stores in the first ten months, bringing the total branch footprint to 730 as of October 2017. Meanwhile, FamilyDOC continues to ramp up with 15 clinics in its network as of October 2017 after it opened five new clinics in Cavite, Las Pinas, Paranaque, Pateros and Pasig. FamilyDOC has served over 40,000 unique patients since it launched in 2015. This year, AC Health is expected to launch a new clinic format, which will place a FamilyDOC clinic inside a Generika branch.

In education, after completing enrollment for both its Affordable Private Education Centers (APEC schools) and the University of Nueva Caceres in Naga, AC Education now has a combined student population of 24,275 as of September 2017.

APEC Schools opened the school year 2017-2018 with 16,221 students across 23 sites, a 54 percent increase from the previous year. Meanwhile, UNC’s total student population increased by 5 percent to 8,054, despite the lack of a freshman cohort due to the implementation of the K-12 Law

Balance Sheet

Ayala’s balance sheet continues to be healthy to support its investments as well as meet debt and dividend obligations. Moreover, Ayala’s consolidated assets breached the 1-trillion-peso level as of end-September 2017.

Cash at the parent level stood at ₱29.7 billion, while net debt stood at ₱67.2 billion. Net debt-toequity ratio during the period was 0.68 at the consolidated level and 0.61 at the parent level. Ayala’s loan-to-value ratio or the ratio of its parent net debt to the total value of its investments was 10 percent as of end-September 2017.

In September, Ayala successfully issued US$400 million senior Perpetual bonds with an annual coupon rate of 5.125 percent with no reset nor step-up, a first in the Philippines. The issuance of this fixed-for-life Perpetual was more than five times oversubscribed with 81 percent allocated to foreign institutional investors. The issuance allows Ayala to optimize its average cost of funding and extend its debt maturity profile and diversify its funding source.