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Ayala Corporation’s net income rose 6 percent to P10.4 billion in the first half of the year driven by the double-digit growth in its telecom, real estate, banking, and electronics businesses, and boosted by the positive performance of its power generation unit.

Excluding the previous year’s divestment gains from the sale of Stream Global Services, Ayala’s business process outsourcing unit, Ayala’s net income in the first semester grew 31 percent.

Ayala’s solid performance in the first half of the year was a result of strong equity earnings contribution from its business units, which reached P13.2 billion, up 2 percent from a year ago. Without the divestment gains, equity earnings expanded 20 percent in the first half of the year.

The strong double-digit growth in the equity earnings of Globe Telecom, Ayala Land, Bank of the Philippine Islands, and Integrated Microelectronics combined with the positive contribution from AC Energy Holdings drove Ayala’s equity earnings during the period.

“Our earnings continue to grow at a strong pace in step with the overall performance of our business units. As demand drivers remain upbeat, and as our investments in power come onstream, we believe this strong growth will continue throughout the year,” Ayala president and chief operating officer Fernando Zobel de Ayala said.

“In addition, as our core businesses grow, we continue to seek new areas to invest in. We are developing new platforms in the healthcare and education spaces. We believe these two sectors present excellent opportunities for growth and scale,” Mr. Zobel added.

Real Estate
Ayala Land’s net income expanded 19 percent to P8.4 billion, lifted by the upbeat performance of its property development and commercial leasing operations. In property development, residential revenues grew 11 percent on new bookings and project completion while office sales expanded nearly twofold on the back of new launches from its upscale brand Alveo.

In commercial leasing, shopping center revenues went up 9 percent owing to higher occupancy and average rentals, while office leasing revenues expanded 16 percent due to the contribution of newly opened offices and the stronger performance of its existing offices. Revenues from hotels and resorts improved by 8 percent on higher occupancy.

Ayala Land launched 21 residential projects, the Ayala Triangle Gardens mixed-use development and other leasing projects worth P81 billion in the first semester. In addition, Ayala Land and Puregold Price Club recently opened its first supermarket venture named “Merkado” in UP Town Center.

Banking
As its core banking business continued to drive growth, net earnings of the Bank of the Philippine Islands expanded 16 percent to P9.3 billion. Total revenues improved 12 percent to P29 billion on higher net interest income and non-interest income. Net interest income grew 12 percent to P19 billion owing to a 15 percent-expansion in average assets. Non-interest income was up 12 percent to P10 billion as a result of higher income from securities trading, fees and commissions, and insurance business.

The bank’s operating expenses grew 7.6 percent year-on-year resulting in a cost-to-income ratio of 51.9 percent.

The bank’s total assets stood at P1.4 trillion at the end of the first half, a 9.7 percent-increase from the previous year. Deposit level increased 12 percent to P1.2 trillion while total loan portfolio grew 9 percent year-on-year. Asset quality remains strong, with a gross 90-day non-performing loan ratio of 1.77 percent, lower than last year’s 1.85 percent. Loan loss cover was maintained at 108 percent.

Consolidated CET 1 Capital Adequacy Ratio (CAR) was 14.3 percent while total CAR was 15.2 percent in the first semester.

Telecom
Globe Telecom registered a net income of P8.7 billion, up 27 percent year-on-year, bolstered by increased demand for data connectivity across the mobile, fixed line, and broadband segments.

Service revenues rose 13 percent to P53.8 billion with the highest growth coming from mobile browsing and other data revenues, jumping 53 percent to P9.5 billion. Broadband revenues expanded 30 percent to P7.6 billion, while fixed line data revenues surged 20 percent to P3.1 billion. Combined, all these comprise 38 percent of Globe’s total revenues during the period. Globe’s mobile and fixed line voice likewise improved, growing 10 percent and 7 percent, respectively. Its mobile subscriber base reached 48.4 million, 13 percent higher year-on-year. Similarly, Globe’s broadband subscriber base grew 55 percent to 3.5 million in the first semester of the year.

The solid revenue growth balanced out the higher subscriber and network-driven costs, with earnings before interest taxes depreciation and amortization (EBITDA) expanding 19 percent to P22.7 billion.

Following the approval of the National Telecommunications Commission, Globe converted $115 million of debt in Bayan Telecommunications into equity, effectively securing control of Bayantel. Subsequently, Globe acquired the stake held by the Lopez group in Bayantel, hiking up its stake in the company to over 98 percent.

Water Infrastructure
Manila Water’s net income dipped 4 percent from a year ago to P3 billion owing to higher operating expenses primarily from catch-up rental costs incurred by the East Zone concession during the period. This resulted in a 5 percent decline in the net profits of the East Zone concession to P2.6 billion despite a 2 percent-growth in billed volume. Excluding the extraordinary rental expense, Manila Water’s net income ended flat for the first semester.

Total billed volume grew 2 percent to 340 million cubic meters supported by billed volume growth outside the East Zone. Billed volume from Laguna Water surged 26 percent; Clark Water expanded 19 percent, while Boracay Water and Kenh Dong Water in Vietnam posted single-digit growth rates. Meanwhile, Cebu Manila Water Development started operations in January this year.

Manila Water continues to develop its footprint outside the East Zone concession. It expanded its Laguna Water operations to cover the entire province of Laguna with the addition of used water services in the concession. Moreover, Manila Water was awarded a 15-year bulk water supply contract by the Tagum City Water District.

Electronics Manufacturing
Integrated Micro-Electronics Inc. recorded a net income of $15.2 million, 35 percent higher from the previous year as operational improvements, continued focus on higher-margin products, and cost saving measures increased profitability.

Revenues slightly declined by 3 percent to $416.3 million on the back of a weakness in the euro coupled with a slowdown in demand in the computing sector. Excluding the impact of foreign exchange rates, revenues rose 2.4 percent during the period.

Power Generation and Transport Infrastructure
As its power generating assets come online, AC Energy Holdings Inc. registered a net income in the first half of the year of P198 million. This was driven by the contributions from its two wind farms, North Luzon Renewable Energy Corporation and NorthWind both in Ilocos Norte; and two coal plants, South Luzon Thermal Energy Corporation in Batangas, and GNPower Mariveles Coal Plant in Bataan.

AC Energy has assembled over 700 megawatts of attributable generating capacity across various assets. It continues to work on a pipeline of power projects to meet its goal of building around 1,000 MW in generating capacity over the next few years. Over the past three years, Ayala has committed over US$700 million in equity in developing various power generating projects.

In transport infrastructure, Ayala formally opened the Muntinlupa-Cavite Expressway (MCX) on July 24, 2015. Ayala is the concessionaire of MCX, a 4-kilometer tollroad connecting the Daang Hari Road with the South Luzon Expressway.

AF Payments Inc., a joint venture between the Ayala and First Pacific groups, has begun its roll out of the automated fare collection system through the Beep contactless cards. Implementation has started in LRT line 2, and is expected to be completed across all LRT and MRT lines within the next few months.

Balance Sheet
Ayala maintains a healthy balance sheet. As of June 30, 2015, parent company cash reached P38 billion, putting its net debt to equity ratio at 0.23 to 1 at the parent level, and 0.81 to 1 at the consolidated level.

Ayala Education, Inc., the education investment arm of Ayala Corporation, announced today that it has acquired a 60% stake in University of Nueva Caceres (UNC).

UNC is located in Naga, Camarines Sur, and was founded in 1948 as the first university in Southern Luzon outside Manila. It is one of the leading universities in the Bicol region, and has approximately 7,000 students, with many well-recognized programs, including arts and sciences, business and accountancy, computer studies, criminal justice, education, engineering and architecture, graduate studies, law, nursing and basic education (K-10).

UNC’s Chairman, Mr. Felicito Payumo, stated, “We are delighted that Ayala Education is investing in UNC because we believe that it will help us to further enhance the quality of our education and the employability of our graduates, through industry and technology driven innovations. We welcome Ayala Education as a partner who can strengthen UNC’s leading role in making good education accessible to Bicolanos as envisioned by its founder, former Secretary of Finance, Dr. Jaime Hernandez, Sr., and as nurtured by his children, Dr. Dolores H. Sison (past President), Erlinda H. Ravanera, Jaime J. Hernandez, Jr. and Jesus J. Hernandez, and their families.”

Mr. Jesus J. Hernandez, the son of UNC founder Jaime Hernandez, Sr., said, “We are very happy to have found in Ayala Education, a partner who shares our values and commitment to nation building, and will ensure that my father’s vision and legacy are sustained and strengthened, and that UNC continues to be a key engine of progress and development in Naga and the Bicol region.”

As a result of Ayala Education’s investment of Pesos 450 million, it will hold the majority of UNC’s board seats. In addition, UNC appointed Ayala Education’s CEO, Mr. Alfredo Imperial Ayala, as its President. Mr. Ayala stated, “We are very pleased to have been invited to partner with UNC, given its 67 years of success, leading position in Bicol and vibrant school spirit. UNC will be Ayala Education’s flagship university, and we are committed to working closely with all of UNC’s stakeholders to build upon its traditions of excellence that have served it so well.”

Ayala Corporation started investing in the education sector in 2012 through 100% owned Ayala Education, after recognizing the strong demand for Filipino talent from the IT-BPO and other service industries, such as banking, telecom, retail and tourism. Ayala Education’s vision is to deliver affordable and high quality education at the high school and college levels in order to equip students with real world skills through co-designing programs with prospective employers, and leveraging Ayala Education’s extensive experience in services training.

Jaime Augusto Zobel de Ayala, Ayala Corp.’s Chairman and CEO, said, “We are excited to join forces with UNC. Education is an important priority for Ayala. There is strong global demand for Filipino talent and our vision is to deliver high quality, affordable education that can significantly enhance the employability of graduates, through partnerships with regional leaders such as UNC.”

In Higher Education, Ayala Education has developed a Professional Employment Program (PEP) which delivers a highly differentiated educational experience and significantly improved employment outcomes through the application of learning technologies, constructivist methodologies, English immersion and deep industry partnerships. It has offered PEP since 2012 with its partners, Jose Rizal University, Emilio Aguinaldo College and University of Iloilo, and enabled many college graduates to attain attractive entry-level business employment.

Ayala Education has also been pioneering Senior High School since 2013 through its LINC (Learning with Industry Collaboration) Academy’s partnerships with Emilio Aguinaldo College and Arellano University. When they graduate, LINC students have the skills needed to either succeed in college or enter the professional workforce directly.

Ayala Education has also formed a majority owned joint venture, Affordable Private Education Center (APEC), with Pearson, the world’s leading learning company, to build a chain of low-cost secondary schools that provide quality education with affordable annual school fees. Since it started in 2013, APEC has grown to a total of 23 schools, with 3,400 students across Metro Manila, Rizal, Cavite and Batangas, offering Grades 7 and 8 for less than P70 a day, inclusive of use of books and computers.

You may also visit the following:

Visit UNC’s website: http://www.unc.edu.ph
Visit AEI’s website: http://ayalaeducation.com

Visit AEI’s Facebook pages:

APEC Schools: https://www.facebook.com/APECSchools
LINC Academy: https://www.facebook.com/LINCAcademyPhilippines

Ayala Corporation, the concessionaire of the Muntinlupa-Cavite Expressway (MCX), a 4-kilometer tollway connecting the Daang Hari Road to the South Luzon Expressway, announced it is opening the tollway to motorists on July 24, 2015 beginning 2:00 PM.

The connector road is the first toll road awarded under the Aquino government’s Public-Private Partnership program. Ayala signed the 30-year Concession Agreement in April of 2012. Notwithstanding limitations on delivery of the Road Right of Way to the concessionaire, Ayala began early works on the road in May of 2013. Full road access was not obtained until February of 2014.

John Eric Francia, Ayala Corp. Managing Director said, “We are pleased to be able to open the road to the public. We hope this will relieve traffic congestion in the roads in Muntinlupa, Cavite and Las Pinas areas, and allow motorists coming from the Cavite area quicker and easier access to SLEX.”

It is estimated that MCX can help save travel time for road users since it is 3 kilometers shorter than the Commerce Avenue-Filinvest route and 1.5 kilometers shorter than the Daang Hari-Alabang Zapote route to Makati. It is also expected to help relieve traffic congestion along the Daang Hari Road and Commerce Avenue where build-up of vehicles reach over a kilometer long at peak hours.

Ayala invested around P2.2 billion to build the road, including a 902 million cash payment to government and will operate and maintain it for 30 years. Makati Development Corporation served as the general contractor for the construction while Spanish firm Getinsa, an engineering firm and toll road concessionaire itself, served as Ayala’s technical adviser during construction. Operations and maintenance is in partnership with Egis Philippines, a toll concession operator based in France and who is involved in operations and maintenance of the North Luzon Expressway.

MCX toll rates are set at 17 pesos for Class 1 vehicles, 34 pesos for Class 2 vehicles, and 51 pesos for Class 3.

Ayala Corporation, its 80%-owned subsidiary MCX Tollway Inc. (MCXI), South Luzon Tollway Corporation (SLTC), and Manila Toll Expressway Systems Inc. (MATES) today signed a Memorandum of Agreement on the Interoperability of the Muntinlupa-Cavite Expressway (MCX) (formerly known as the Daang Hari-SLEX Connector Road) and the South Luzon Expressway (SLEX), as well as an accompanying Addendum to the MOA on Interoperability.

The MOA on Interoperability and its Addendum provide the framework that will govern the interface and integration of the technical operations and toll collection systems between MCX and SLEX to ensure seamless travel access into MCX and SLEX for road users. MCX is Ayala’s first toll road project under the Philippine government’s Public Private Partnership Program. It is a vital access road that links the rapidly growing city of Muntinlupa and the province of Cavite to Metro Manila and the rest of Southern Luzon.

MCXI, which is 80% owned by Ayala and 20% by Getinsa Ingeniera SL, is the facility operator of the MCX. SLTC is a subsidiary of San Miguel Corporation and is the grantee of the concession to finance, design and construct the SLEX, while MATES is the grantee of the concession to operate the SLEX.

MATES and MCXI also executed today a Toll Collection Services Agreement, under which MATES was appointed a sub-contractor of MCXI for the provision of toll collection services for the MCX toll plaza.

Ayala Land and Globe tied for the second spot as the Philippines’ Best Company in the 2015 All-Asia Executive Team, an exclusive ranking of the country’s corporate leaders by investment professionals. The annual ranking is presented by Institutional Investor, one of the world’s foremost financial publications.

Globe’s Ernest Cu placed second as Asia’s Best CEO in the Telecoms sector, and Ayala Land’s Bernard Vincent Dy placed third as Asia’s Best CEO in the Property sector, tied with Ming Li of China’s Sino Ocean Land Holdings. Globe’s Albert de Larrazabal was ranked third Asia’s Best CFO in the Telecoms sector, tied with Pankaj Miglani of India’s Bharti Airtel.

Ayala Land earned two more honors: third place for Asia’s Best Investor Relations (Property) and the same ranking for Asia’s Best Analyst Day (Real Estate), tied with Stockland Corp. of Australia. The rankings were obtained from sell-side analyst responses.

“Once again, Ayala group is represented through strong placements for Globe Telecom and Ayala Land,” said Institutional Investor Asia Publisher Prachish Chakravorty. “These are an excellent set of results and proof again of the success of Ayala’s commitment through its various businesses to transparency and open communication with global institutional markets.”

The survey results were based on feedback from 820 buy-side analysts and money managers at nearly 500 firms that collectively manage an estimated $1.09 trillion in Asia (ex-Japan) equities, and from 625 analysts at 94 brokerages. They evaluated a total of 1,568 companies across the region based on eight IR attributes, including accessibility of senior management, quality and depth of answers to inquiries, and transparency of financial reporting and disclosure. Buy- and sell-side responses were tabulated separately to produce distinct rankings. The poll concluded in March and results were published in July.

For more than 45 years, Institutional Investor has served as a premier resource for information on research, sales, trading, investor relations and hedge funds in Asia, Europe, Japan, Latin America, Russia, and the United States.

For more information, visit www.institutionalinvestor.com

The Ayala group is entering the affordable retail healthcare space with the acquisition of a 50 percent stake in the Generika group, one of the pioneers in the retail distribution of quality generic medicines in the country with over 500 stores nationwide.

Ayala Healthcare Holdings Inc., a wholly owned subsidiary of Ayala Corporation, signed agreements today to acquire a 50 percent stake in the Generika group from the family of Mr. Julien Bello. Mr. Teodoro Ferrer and his group, who co-founded Generika with Mr. Bello, will continue to hold the remaining 50 percent ownership in Generika. Mr. Ferrer shall continue to serve as the President and Chief Executive Officer of the group.

“We are excited to be part of Generika and help address the gaps in affordable retail healthcare. We believe this is an excellent platform for Ayala to reinvent the space and serve as foundation for our emerging healthcare portfolio,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said.

“With the combined strengths and management capabilities of Ayala and Generika, we believe we can raise the level of efficiency and accessibility of this platform to better serve Filipino families by providing a wide range of quality medicines at affordable prices,” Mr. Zobel added.

“On behalf of Generika, we wholeheartedly welcome the entry of Ayala Healthcare. We are especially excited by the enhanced capability to have a meaningful impact on the health and lives of many more communities all over the country,” Mr. Ferrer said.

The Ayala group started its footprint in the healthcare sector in 2014 through QualiMed, Ayala Land Inc.’s chain of hospitals and satellite clinics, in partnership with the Mercado medical group.

Mabuhay Capital served as financial advisor to the group of Mr. Bello in its transaction with Ayala Healthcare.

Ayala executives were feted for company and individual achievements at the FinanceAsia Awards held June 4 at Fairmont Makati.

The Ayala group topped nearly all categories in the FinanceAsia poll published in March. Ayala was named Best Managed Company in the Philippines for the second consecutive year. Ayala Land, Globe, and Manila Water also figured prominently in the regional survey which covers investor relations, governance, and dividend payment policies. Ernest Cu was ranked second among Philippine CEOs and Jaime Ysmael and Delfin C. Gonzalez, Jr. were ranked first and third, respectively, among CFOs.

Members of the companies’ management teams also attended the FinanceAsia awards, which was co-presented by Maybank ATR Kim Eng and featured Asianomics Founder and Chief Economist Dr. Jim Walker as guest speaker.

For more information, visit Financeasia.com.

Ayala Corporation posted P5.0 billion in net profits in the first quarter of the year, driven by sustained positive momentum in its real estate, banking, telecom, and electronics manufacturing businesses, while new businesses, particularly in power generation, have moved to execution phase. Without the effect of the P1.8 billion divestment gains from its business process outsourcing unit in 2014, Ayala’s first quarter earnings grew 39 percent. With the divestment gain considered, net profit declined 8 percent. Ayala’s positive earnings momentum in the first quarter is further reflected in the 11 percent sequential growth from the strong fourth quarter results in 2014.

The overall strong performance of Ayala’s business units in the first three months of the year contributed a total of P6.4 billion in equity earnings, 27 percent higher year on year. Compared to net income inclusive of the net divestment gain in the same period last year, equity earnings declined 7 percent in the first quarter of the year.

“We continue to be encouraged by the strong performance of the businesses across the group. We remain optimistic that we can sustain the strong first quarter results throughout the rest of the year, and stay on track to meet our strategic goals and financial targets,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said.

Real Estate
Most of Ayala’s core businesses reported double-digit earnings growth year on year in the first quarter. Its real estate unit, Ayala Land, reported a 19 percent growth in net earnings to P4.1 billion, boosted by a 13 percent growth in real estate revenues. Recurring income for the first quarter comprised 44 percent of net income, driven by the steady performance of its malls, offices, and hotels and resorts.

Banking
In banking, Bank of the Philippine Islands’ net income climbed 36% to P4.9 billion from the same period last year. Net interest income grew by 15% year on year due to an expansion in average asset base. Non-interest income rose by 23% during the period mainly from higher securities trading gains. Core banking business remained strong, with customer loans up by 14%, while deposits grew by 17% year on year.

Telecommunications
In telecommunications, Globe Telecom’s bottomline grew very significantly by 43 percent over the same period last year to P4.2 billion. Gross service revenues increased by 13 percent driven by growth in data revenues across all major service lines. EBITDA margin increased to 42 percent from 38 percent in the previous year.

Electronics Manufacturing Services
In electronics manufacturing services, Integrated Microelectronics Inc.’s earnings increased 27 percent to P288 million vis-à-vis its first quarter last year despite foreign exchange challenges, on the back of better margins on realized cost savings and productivity. Net income margin increased by 94 basis points to 3.4 percent, mainly due to lower direct labor costs and administrative expenses year on year.

Water Infrastructure
The strong performance of these units counterbalanced results from the remaining businesses in the portfolio. In water, Manila Water Company, Inc. reported flat net income at P1.4 billion, with stronger billed volume levels offsetting higher operating expenses. Non-East Zone businesses accounted for 15 percent of total net income for the period.

Power Generation
Ayala’s recent investments in power have come into fruition and started operations. In April, AC Energy Holdings, Inc. secured the Feed-in-Tariff for the 81 megawatt windfarm of the North Luzon Renewable Energy Company and the 19 megawatt expansion of Northwind Power Development Corp. In addition, AC Energy commenced commercial operations for the first 135 megawatt unit of South Luzon Thermal Energy Corp. in April.

Balance Sheet
Ayala’s balance sheet remains healthy. As of March 31, 2015, parent company cash reached nearly P43 billion, putting its net debt-to-equity ratio at 0.23 to 1 at the parent level and 0.76 to 1 at the consolidated level.

Ayala Land, BPI, and Globe came as one in Dubai to better understand and serve the needs of overseas Filipinos in the Middle East.

Under One Ayala, the international marketing synergy program relaunched by Ayala in 2011, the three companies introduced Filipino migrant workers to the group’s quality and affordable telecommunications, housing, remittance, and investment products and services at a special event dubbed “Fiesta Dubai” held on May 8 and 9 at Al Ghurair Mall.

Ayala Land International Sales Inc. President Thomas Mirasol noted that One Ayala is the conglomerate’s way of recognizing the role of overseas Filipinos in the growth of the Philippine economy: “They have worked so hard and make us proud. The income they generate contributes directly to the country’s GDP and foreign exchange reserves. This has enabled our country to move forward and allowed millions of people to live better lives.”

BPI and ALI established representative offices in Dubai in 2011 and 2013, respectively, and Globe announced a new partnership with du, a leading telco in the United Arab Emirates, to provide cheaper calls back home. By coming together as One Ayala, the companies hope to build on synergy to better serve Filipinos based in the UAE, Saudi Arabia, and the rest of the Gulf area.

Said BPI SVP for Remittance Business Roy Emil Yu, “With One Ayala, we hope to offer a wider array to match their needs as well as the needs of their families through a central point of communication and access for customers in this part of the world.”

AC Energy Holdings Inc.’s wind farms in Bangui and Caparispisan, Ilocos Norte recently received their Feed-in-Tariff Certificate of Compliance or FIT COC from the Energy Regulatory Commission (ERC). This entitles both its 19-MW wind farm expansion in Bangui, under Northwind Power Development Corp. (Northwind), and its 81-MW wind farm in Caparispisan, Pagudpud under North Luzon Renewable Energy Corp. (North Luzon Renewables) to a feed-in-tariff (FIT) of Php 8.53 per kilowatt hour for a period of twenty years. The FIT rate covers the period October 10, 2014 to October 9, 2034 for Northwind’s 19MW and November 11, 2014 to November 10, 2034 for North Luzon Renewables’ 81MW.

In 2014, the Department of Energy issued a Certificate of Endorsement for FIT for both wind farm projects after these were commissioned and started commercial operations.

Northwind’s 19-MW expansion was completed last October 2014 and has since been delivering power to the grid. The expansion puts Northwind’s total capacity to 52MW. North Luzon Renewables also completed its 81-MW wind farm and has likewise been operational since November 2014. Combined, Northwind and North Luzon Renewables put Ayala’s total wind power capacity at 133MW, which is one of the largest in the country today.

AC Energy President & CEO, Mr. Eric Francia said, “The completion of these projects is quite timely given the anticipated tightness in power supply this year. We hope to further expand our renewable energy portfolio and help increase the share of renewables in the country’s energy mix. ”

Since 2011, Ayala has committed over US$700 million in equity to develop conventional and renewable energy sources. AC Energy has currently assembled 700+ megawatts of attributable capacity, putting the company closer towards achieving its target of assembling over 1,000 MW of attributable capacity from power plants by 2016.

AC Energy Holdings Inc. is the development arm of the Ayala group in the energy sector. The company is committed to build a portfolio of power generation assets using renewable and conventional technologies. AC Energy shall contribute to the country’s energy requirements to power the nation’s progress.