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Ayala Corporation’s Business Process Outsourcing (BPO) investment company, LiveIt Investments Ltd., announced today that its investee company HRMall, which provides outsourced IT-enabled HR services out of Manila, has entered into a definitive agreement to acquire IQ BackOffice, LLC of Los Angeles, California, which delivers high quality, software-enabled, real-time, SAS70 Type II-certified finance and accounting BPO services to mid-sized companies in the U.S. IQ BackOffice targets companies with annual revenues of $50 million to $1 billion, but its business includes clients with revenues up to $10 billion.

The combined companies are valued at approximately $15 million. The management team of IQ BackOffice LLC, including David Schnitt, its founder and CEO, will purchase a 17.5% ownership interest in HRMall. LiveIt will own the balance of 82.5% of the company and will support the company’s strategy to accelerate its growth in its current markets in the U.S. and Asia.

HRMall will now be able to provide a complete suite of low-cost, best-in-class HR, finance and accounting services to the underserved mid-sized enterprise sector in the US and Asia, through a combination of proven technology, proprietary software and processes, deep domain expertise in multiple industries, and efficient outsourced operations that enable its clients to gain world-class back office capabilities while achieving 30% to 50% annual cost reduction. HRMall’s clients will now include over 30 US companies in the manufacturing and distribution, restaurant, hotel and hospitality, retail, professional services, property management, financial services and other industry sectors, as well as members of the Ayala group of companies (including Ayala Corporation, Ayala Land, Bank of the Philippine Islands, Globe Telecom, Manila Water and IMI). The Company will operate as HRMall in Asia and IQ BackOffice in the US, and will employ a total of over 300 employees out of its centers in Manila, Chennai, Mumbai and Los Angeles.

David Schnitt, who before starting IQ BackOffice had previously co-founded NASDAQ-listed professional services firm Resources Global Professionals, will be appointed Chief Executive Officer of HRMall, while Gilbert Santa Maria, a senior adviser to LiveIt who had previously headed eTelecare Global Solutions’ (now Stream Global Services) Philippines operations and global M&A, will be appointed chief operating officer and chief finance officer. Both will be based in Los Angeles, California. The management team of IQ BackOffice in the U.S. and India will be combining with the Manila-based HRMall leadership team.

IQ BackOffice’s founder and CEO, David Schnitt said: “I believe that HRMall’s existing HR services such as payroll are very complementary to the services we provide to our existing clients in the US, and that the Philippines greatly complements our service delivery capabilities from India and the US. Furthermore, LiveIt’s investment strategy and philosophy are very much in alignment with our operating philosophy, and its leadership team has the knowledge and experience to help us achieve our growth plans. I am very much looking forward to working with HRMall and the Ayala group of companies to create significant long-term value for our clients, associates and shareholders.”

John Philip Orbeta, chairman of HRMall, stated, “The combination with IQ BackOffice will allow us to achieve our vision of offering a full range of highly efficient, market leading back office solutions to medium-sized clients around the world. We warmly welcome the IQBackOffice team into the Ayala family.”

Fred Ayala, CEO of LiveIt, added, “This acquisition by HRMall adds a high growth, high margin and very complementary business to HRMall, with numerous cross selling and operating efficiency opportunities, and is expected to create significant value for LiveIt.”

All of the stockholders of HRMall and IQ BackOffice have approved and signed the sale and purchase documents. The transaction is subject to customary closing conditions, and is expected to close before April 30, 2011.

About HRMall
HRMall, Inc. is a BPO company focused on providing Human Resource related services – including outsourced payroll – to clients in the Asia Pacific region. Its processing and data centers are located in Manila, Philippines. It implements, deploys, hosts and processes technology-enabled HR systems, including Peoplesoft HCM, to its clients. It also provides talent management solutions, allowing human resources professionals to strengthen and personalize employee experiences, resulting in a more motivated and engaged workforce. HRMall provides outsourced services to clients across a wide variety of industry sectors including telecommunications, banking and financial services, utilities, BPO, real estate, retail, construction, property management, resort management, management services, cooperative, and high-tech manufacturing. It currently services clients with employee counts from 100 to 12,000, and has the capability for full-scale ERP implementations or pre-configured SaaS-type requirements. Additional information is available at www.HRMall.com.ph.

About IQ BackOffice
IQ BackOffice is a comprehensive Finance and Accounting BPO provider to the underserved segment of Mid-Sized Enterprises in the US with annual revenues between $50 million and $1 billion. It is headquartered in Los Angeles, CA with operations in Los Angeles, Chennai and Mumbai. Services include accounts payable, accounts receivable, payroll and complete general accounting outsourcing. IQ BackOffice leverages its proprietary software platform to enable IQ BackOffice and its clients to manage processes at world-class levels across the enterprise. IQ BackOffice is SAS70 Type II certified. It has over thirty public and private company clients across multiple industry verticals, including restaurants, manufacturing and distribution, hotels, entertainment, property management, financial services and other industries. IQ BackOffice employs over 200 people in the US and India and has an experienced management team with deep finance and accounting domain expertise. Additional information is available at www.IQBackOffice.com.

The above statement was based on the disclosure made today, April 18, 2011, to the Securities and Exchange Commission and Philippine Stock Exchange, by Ayala general counsel and compliance officer, Solomon M. Hermosura.

Ayala Corporation, through Michigan Power, Inc., a 100%-owned subsidiary, acquired a 50% effective stake in NorthWind Power Development Corporation (NorthWind). NorthWind owns and operates the 33-MW wind farm located in Bangui Bay, Ilocos Norte. The wind farm has 20 wind turbines and is the first commercial wind farm ever established in Southeast Asia. The 50% stake was acquired from existing shareholders of NorthWind.

This is part of Ayala’s initiative to enter the power sector and comes after the company’s recent joint venture with Mitsubishi Corporation on solar power. Ayala Corporation President and COO, Mr. Fernando Zobel de Ayala said, “Our goal over the next five years is to build a portfolio of power generation assets of over 1,000 megawatts, which include both renewable and traditional forms of energy sources. We believe there are opportunities to make early stage investments in the renewable energy space which may have the potential to grow over time given the need to develop alternative sources of energy. In addition to our wind and solar initiatives we are also developing platforms for hydro electric power.”

The above disclosure was made by Ayala managing director for corporate strategy and development Eric T. Francia.

Ayala Corporation’s net income in 2010 grew by 37% to P11.2 billion. Its real estate, banking, water, and auto business all posted record earnings during the year, which cushioned lower earnings of its telecom and electronics manufacturing units. Earnings were boosted by a P3.6 billion net gain. The net gain was due to the revaluation of the company’s stake in Manila Water following its purchase of an additional 11% stake in the water company and in its BPO holding company, LiveIt, after the buy-in of a private equity firm in one of its investee companies. These revaluation gains were in turn partly offset by impairment provisions and restructuring costs at its international real estate unit, AG Holdings.

Ayala Corporation president and chief operating officer Fernando Zobel de Ayala said, “We are pleased with the record performance and strong growth trajectory of most of our domestic businesses. This reflects our ability to take advantage of the strong economic recovery and capture opportunities in this new growth cycle. Our international businesses, however, continued to feel the lingering effects of the global downturn but should be well-positioned for the turn of the global economy.”

Ayala Land achieved record earnings of P5.4 billion on all-time high revenues of P37.8 billion. This was 35% higher than prior year and 13% above the previous record high in 2008. Growth was driven by all business lines. Take-up values of residential units across all brands grew significantly with incremental contribution from its fourth residential brand, Amaia. Its leasing revenues rose by 13%. Revenues from shopping centers grew by 3% while the office segment rose by 21%. Occupied gross leasable area expanded for commercial center and offices by 5% and 35%, respectively, while rental rates increased slightly. In the meantime, revenues from its new foray in hotels and resorts also rose by 33% reflecting the consolidation of the acquisition of 60% of El Nido Resort in Palawan. This year Ayala Land is allotting P33 billion in capital expenditure to increase project launches and further capture the strong demand for its real estate products within and outside Metro Manila.

In banking, Bank of the Philippine Islands had another strong year with net income reaching a record P11.3 billion, up 33% for the second consecutive year. Solid business growth and trading gains both fuelled the rise in earnings. Revenues rose by 13% with net interest income up 10% to P24 billion driven by a 12% increase in its average asset base. Non-interest income was up 18% due to higher gains from securities trading as well as fee-based income. Loan growth was strong across all segments. Gross loans grew by 16% as all market segments sustained double-digit growth. The bank’s total resources reached P877 billion, up 21% while deposits grew by 24% to P720 billion as the bank introduced new deposit products to address the needs of its various customers. Combined with assets held in trust of P486 billion, total funds managed by the bank reached P1.2 trillion. BPI’s performance resulted in a 2.6 percentage point improvement in return on equity which reached 15.3% at year-end.

In telecom, Globe posted consolidated service revenues of P62 billion in 2010, slightly below prior year’s P62.4 billion due to intense competition. Performance in the fourth quarter was strong with quarter-on-quarter service revenues up by 7%. This was led by the surge in postpaid plan subscriptions and the increased usage and top-ups in both the Globe Prepaid and TM brands. Globe ended the year with a total SIM base of 26.5 million, 14% higher than in 2009. Steady gross adds and declining churn led to net SIM adds of 1.1 million in 4Q10, the highest since 2Q08. Postpaid net adds also hit a new 7-year high in the fourth quarter resulting in nearly 1.1 million postpaid customers by year-end. Its broadband and fixed line service business also grew with full year revenues up 32% compared to 2009. Globe net income of P9.7 billion was 22% lower than prior year, but reflects an improvement from prior quarters. Globe’s capital expenditure reached P19.5 billion in 2010 mainly to improve network performance, increase mobile and broadband capacities, and improve customer service capabilities.

Its water business under Manila Water Co. posted net income of P3.99 billion in 2010 as a result of steady growth in water sales volume and a one-time downward adjustment on its depreciation expense. Billed volume grew by 3.5% despite the El Nino condition which impacted the water allocation for Metro Manila’s requirements during the year. The company’s investments in the water network contributed to improving non-revenue water further to 11% in 2010 from 15.8% the prior year. This enabled the company to ensure 24/7 delivery of water service to its customers despite the effects of El Niño. In 2010 Manila Water invested at total of P9.6 billion to further improve the reliability and expand coverage of its water and wastewater networks. Manila Water aims to invest more than P10 billion annually for the next two years for the development of new water sources, network reliability improvements, as well as construction of several sewage treatment plants. Expansion continues beyond the East Zone both within the Philippines and overseas.

Ayala’s automotive dealerships posted revenues of P11.5 billion, up 6% versus prior year. Net income rose by 30% to P299 million. Ayala remains one of the largest vehicle distributors in the country, capturing 50% of Honda network sales and 30% of Isuzu sales nationwide.

Ayala’s overseas businesses continue to be impacted by the lingering effects of the global downturn in Europe and the U.S. Its electronics manufacturing business, Integrated Microelectronics, Inc.’s revenues grew by 4% to US$412 million, driven mainly by the sustained strong performance of its China operations. Net income reached US$4.7 million, a 53% decline versus prior year, partly driven by the global downturn. However, excluding one-off expenses earnings were up by 27%, remaining profitable despite the challenging market environment. Following the acquisition of a 56% stake in PSi Technologies, Inc., IMI continues to look for acquisition opportunities to build on its existing capabilities.

LiveIt, Ayala’s holding company for its business process outsourcing investments , reported a net profit of $4.9 million in 2010, as a revaluation gain realized on one of its companies more than offset an operating net loss of US$15.7 million which was primarily due to Stream and Integreon. LiveIt’s investees recorded a significant improvement in the second half of the year as the improving global economy resulted in higher transaction volumes for their clients. The combined revenues of LiveIt’s companies grew to $473 million in the second half of 2010, up 9% over the first half of the year, and their combined EBITDA grew to $39 million, up 65% over the first half.

Its international real estate investments continue to see strong performance of its Asian portfolio with projects in Macau, Thailand, and India receiving strong market reception. However, its US portfolio remained weak as a result of the credit contraction, persistent high unemployment, and weak consumer spending in the U.S. The Company booked impairment provisions on some of its US investments that contributed to AG Holdings losses during the year.

Ayala maintains a very strong financial condition, ending the year with cash level of P29 billion and net debt-to-equity of 0.12:1. It is eyeing investments in the infrastructure and power sectors. On a group-wide basis, capital expenditures are expected to reach P79 billion this year, 21% higher than capex in 2010, reflecting the group’s optimism on the country’s renewed growth prospects.

The above press statement pertains to the disclosure made today, March 11, 2011, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala chief finance officer Delfin C. Gonzalez, Jr.

Ayala Corporation (“AC”) and Ayala Land, Inc. (“ALI”) announced they exchanged their ownership interests in ARCH Capital Management Company Limited (“ARCH Capital”) and ARCH Capital Asian Partners, G.P., (together “ARCH”) with The Rohatyn Group (“TRG”), resulting in TRG acquiring AC’s and ALI’s combined 50% interest in ARCH.

ARCH Capital and ARCH Capital Asian Partners, G.P. are the investment manager and the general partner, respectively, of ARCH Capital Asian Partners, L.P. (“ARCH Capital Fund” or “the Fund”) – an Asian real estate fund with investments in China, Macau, Singapore, Thailand and India. TRG is an emerging markets-focused private investment firm with approximately $3 billion in assets under management. AC, a cornerstone investor in TRG since its founding in 2003, will further increase its investment in TRG as a result of the share exchange to become one of TRG’s largest outside shareholders.

AC and ALI are sponsors of ARCH and co-founded the ARCH investment management firms in 2006 together with Richard Yue. Mr. Yue is retaining his current 50% interest in ARCH and will continue to serve as CEO and CIO of ARCH. The completed exchange of ownership interests will leave the activities, management, focus and shareholder structure of the ARCH Capital Fund unchanged, with AC and ALI retaining their respective ownership stakes in the Fund.

Commenting on the transaction, AC CEO Jaime Augusto Zobel de Ayala said, “We believe this is a natural progression for ARCH which has been a fruitful and exciting investment for us. At this stage in its next growth cycle, we feel it would be better served and managed within a globally dedicated alternative asset management firm. Given Ayala’s successful experience as an investor in TRG for a significant period of time, we believe TRG would be an ideal partner in ensuring ARCH’s continued success. It would also allow us to consolidate our investments in this particular industry grouping.”

The above statement pertains to the disclosure made on March 7, 2011, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala chief finance officer Delfin C. Gonzalez, Jr.

Ayala Corporation announced that in a special board meeting held today, the company’s board approved the declaration of a 20% stock dividend to holders of its common shares. In view of this, the company also announced it will increase its authorized capital stock from 596 million common shares to 900 million common shares to accommodate the stock dividend pay-out and will create a new series of preferred shares with the same features as the existing Series A and B. Following requisite approvals from shareholders and the Securities and Exchange Commission, the 20% stock dividend will effectively increase the company’s outstanding common shares to approximately 583 million from the current 485 million, with still ample flexibility to accommodate other issuances in the future. The company also approved new rates for its directors’ compensation which was last updated in 2003, following a survey of practices of other companies.

The company last declared a 20% stock dividend in 2008 and has consistently paid regular cash dividends of P4 per share. The declaration of stock dividends combined with regular cash dividends have effectively increased the recurring dividend payout. Ayala Corporation chairman Jaime Augusto Zobel de Ayala commented, “We believe this is a good way of balancing the need to provide our shareholders steady returns and value as we continue to actively explore new investment opportunities.” Ayala is currently eyeing projects in the power sector and is looking to participate in several infrastructure projects. Ayala’s balance sheet has significant capacity to invest in such projects after reporting cash of close to P30 billion and net debt to equity position of 10% as of September 2010.

The above statement pertains to the disclosure made today, February 22, 2011, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala chief finance officer Delfin Gonzalez, Jr.

As the National Ayala Young Leaders Congress (AYLC) enters its 13th year, 81 of the country’s most promising youth leaders will attend the four-day congress to further enhance their leadership skills and build bonds with like-minded peers from all over the country.

With the theme, “Leadership: Serving, Transforming, Sustaining,” the 13th AYLC will be held on February 8 to 11 at the San Miguel Corporation Management Training Center in Alfonso, Cavite. Sec. Jose Rene D. Almendras of the Department of Energy, and former president of Manila Water Company, will keynote the congress.

This year’s theme underscores the need to bring about lasting transformation in the country. “We recognize that nation building is a continuous journey and that responsibility for it does not rest solely on the shoulders of our leaders but on each and every one of us,” explains AYLC program director John Philip Orbeta.

Delegates to the Ayala group’s annual youth leadership program come from a broad range of disciplines and are chosen not only for academic excellence but also for their involvement in school or community development. A total of 722 nominees from colleges and state universities all over the Philippines sent in their applications for AYLC 2011. Paper screening and panel interviews with Ayala group executives yielded 81 delegates from 44 higher education institutions, which include the Philippine Military Academy, the Philippine National Police Academy, the Pamulaan Center for Indigenous Peoples Education, and the Immaculate Conception Major Seminary.

“Leadership is needed in many sectors of society,” says AYLC 2011 congress director Simon Mossesgeld. “By linking up with diverse academic institutions, we ensure a good mix of leadership experiences, advocacies, and backgrounds from which our young participants can learn from and broaden their own perspectives.”

AYLC 2011 delegates will participate in lectures, panel discussions, workshops and outdoor activities designed to hone their leadership potential and inspire them to lead lives of integrity and to work for the good of their community and country. They will be joined by notable figures from government, business, and the socio-civic and arts sectors, which include: Dr. Chelsea Calcado, a rural health physician of the Integrated Provincial Health Office of Negros Oriental who is noted for her work in bringing healthcare services to far flung and conflict areas; Chris Tiu, TV personality and athlete, who is also a businessman and barangay official in Makati City; and Marites Vitug, co-founder and board member of the Philippine Center for Investigative Journalism, whose critically acclaimed book Shadow of Doubt provides insights into the Philippine justice system.

To inspire this year’s crop of young leaders, past participants of the AYLC will also share their continuing passion for service and leadership. Arnel Genzola (AYLC 2002), faculty member of Jilin University-Lambton College in China; Patricia Gallardo (AYLC 2000), director for corporate social responsibility and sustainability of Shangri-La International Hotel Management; and Hon. Emmeline Y. Aglipay (AYLC 2001), Party-List Representative of the Democratic Independent Workers Association, will discuss how they are making a difference in their own spheres of influence, be it in the academe, private sector, or public service.

The AYLC is the flagship program for youth development launched in 1999 by the Ayala group of companies as a concrete expression of its commitment to national development. Now on its 13th year, AYLC continues to fuel the dream of nurturing a corps of servant leaders who will use their leadership to help uplift the lives of Filipinos.

“We have great hope that many young Filipinos today will commit wholeheartedly to the challenging task of sustaining the changes initiated by our nation’s leaders and build on these gains to benefit even more people,” says Ayala Corporation chairman and CEO Jaime Augusto Zobel de Ayala. “With AYLC, we believe that effective leadership does not only bring about positive change, but, more importantly, inspires change in others so that more people work together for the greater good.”

Ayala Corporation reported first nine months’ net income of P6.8 billion, 17% higher than earnings in the same period last year. Its property, banking and water businesses fuelled growth, offsetting the weakness in its telco unit. Nearly all businesses posted double-digit growth in earnings which resulted in a 26% increase in equity earnings to P8.6 billion.

Ayala Corporation president and COO Fernando Zobel de Ayala noted, “We are encouraged by the strong growth trajectory of our core businesses. The favorable economic environment, robust domestic consumption, and low interest rate environment set the condition for rapid growth and expansion. The initiatives we have taken the past few years have clearly positioned our businesses to benefit from this renewed growth cycle.”

Ayala Land’s net income rose by 35% to a nine-month record high of P3.9 billion on strong revenue growth across all business lines. Residential revenues grew by 19% with take-up of projects doubling versus last year. Shopping center revenues also rose by 6% with the expansion of occupied gross leasable area (GLA) and steady occupancy rate across its shopping malls. Office building revenues rose by 12% as occupied GLA and leased-out rate in its BPO portfolio improved significantly while average lease rates remained steady. Higher revenues and better cost control translated to a substantial improvement in overall margins. Ayala Land continues to expand aggressively. This year it has launched 9 retail projects, 8 BPO buildings and around 8,400 residential units with a deep pipeline of project launches secured.

Bank of the Philippine Islands’ net income grew by 24% year-on-year putting nine-month profit at P9.1 billion. The bank’s push to broaden customer base resulted in strong loan and deposit growth. Net loans grew by 14% mainly from middle market/SMEs and consumer loans, while its deposit base increased by 19% year-on-year. Total revenues reached P29 billion, 13% higher than same period last year driven by higher net interest income and non-interest income which rose by 8% and 22%, respectively. Net interest income grew on an 11% increase in average asset base while non-interest income rose due to significant gains from securities trading, fee-based income, and foreign exchange transactions. BPI’s asset quality is among the top. Its non-performing loan ratio declined further to 2.6%. BPI continues to pursue its growth strategy centered on more aggressive customer acquisition, prudent lending, and deeper cross selling penetration.

In its telco business, Globe Telecom’s broadband business sustained its growth momentum in the first nine months of the year as broadband revenues grew by 84%, while its mobile postpaid business registered a 7% revenue growth. These effectively cushioned the impact of lower mobile prepaid revenues and combined put Globe’s consolidated service revenues for the nine-month period at P45.8 billion, 2% lower than the same period last year. While Globe’s mobile subscriber base continued to expand with mobile SIM base at 25.4 million and its SMS and voice traffic on the rise, intense price competition due to unlimited and bulk offers capped growth in the mobile prepaid segment. Its broadband subscribers, however, surpassed the 1 million mark. Globe maintains a healthy financial position with strong cash flows giving it room to sustain dividend flows and pursue initiatives that will sustain the growth momentum in broadband while recovering mobile revenue market share.

Ayala’s water business posted strong revenue and net income growth. Revenues in the first nine months grew by 19% to P8.3 billion driven by a 4% increase in billed volume and a 9% increase in household connections from its expansion areas within in the concession zone. Its water concessions in Laguna and Boracay also improved revenue contribution. This was further boosted by favorable depreciation levels and regulatory costs brought about by the full implementation of the renewal of its concession agreement. Despite increased operating costs, net income jumped by 31% to P2.9 billion in the first nine months of the year. Continued investments in its network resulted in efficiency improvements. Non-revenue water or system losses were reduced further to 12.2% as of September from 15.4%. Its efficiency standards helped sustain service levels to customers, particularly during the height of the El Nino period early this year. While water supply has improved, the company continues to put in place mitigating measures to stem water supply challenges in the future. Manila Water is pursuing development of other water supply sources to augment and diversify its water source. It is also progressing on new business development outside of its concession zone.

Electronics unit Integrated Microelectronics, Inc. (IMI) posted US$293 million in consolidated revenues for the first nine months of the year, a 4% increase due to the sustained strong performance of its China operations. China and Singapore operations posted US$185 million in revenues, 22% higher year-on-year and accounted for 63% of IMI’s total revenues. This compensated for the 17% decline in revenues from its Philippine operations. IMI’s net income reached US$5 million during the period, 36% higher than same period last year. IMI’s diversification strategy has mitigated the impact of isolated business downturns. IMI continues to be in a robust financial position with cash of US$40M and low gearing levels that provide flexibility to support its expansion program. It recently completed the purchase of a 56% stake in PSi Technologies, Inc.

Ayala’s automotive dealerships registered a 10% growth in revenues to P9 billion on account of higher unit sales, benefitting from the robust industry car sales. Ayala is the leading dealer of the Honda and Isuzu network in the Philippines with a 51% share of Honda network sales and 30% of Isuzu sales nationwide. Ayala Auto posted a 47% growth in net income to P245 million in the first nine months.

Ayala’s BPO businesses under LiveIt delivered a net profit of P1.5 billion for the first 9 months of 2010, versus last year’s loss. The positive result was primarily due to the revaluation gain of P2.3 billion recognized in the second quarter as result of a third party investment in Integreon. This gain more than offset the operating net loss of P513 million and net interest expense of P303 million during the period. On a quarter-on-quarter basis, LiveIt’s net loss was lower at P178 million in 3Q10 versus P199 million in 3Q09. The combined revenue of the BPO businesses in the first 9 months was US$656 million, of which LiveIt’s share was US$200 million, reflecting 32% growth over the same period last year. Combined EBITDA was US$45 million, of which LiveIt’s share was US$11 million, reflecting 6% growth over the same period last year. LiveIt’s share of EBITDA in 3Q2010 was $4.7 million, up 122% over 2Q2010.

The strong performance of these business units negated the impact of the P1.8 billion net loss of Ayala’s international real estate unit, AG Holdings, which took impairment provisions in the first half of the year for certain real estate assets in North America. The company’s Asian portfolio, however, yielded positive earnings in the first nine months as projects in Macau, Thailand, India, and China remain on track and continue to receive favorable market response.

Ayala ended the period with P30 billion in cash and net debt of P13 billion, keeping net debt to equity low at 12%. Ayala is exploring opportunities in the infrastructure space, recently announcing an agreement with long-time strategic partner Mitsubishi Corporation to develop and test the technical and commercial feasibility of solar power generation in the Philippines.

The above statement pertains to the disclosure made to the PSE and SEC today, November 15, 2010, by Ayala chief finance officer Delfin C. Gonzalez, Jr.

In a disclosure to the Securities and Exchange Commission, the Philippine Stock Exchange and the Philippine Dealing and Exchange Corporation made by chief finance officer Delfin Gonzalez, Jr., Ayala announced that its Executive Committee has approved the expansion of its share buyback program from P5.0 billion to P10 billion and, for this purpose, the allocation of an additional P5.0 billion for hte program.

As previously disclosed, the amount P2.5 billion was budgeted for the program when it began in September 2007 and another P2.5 billion was appropriated in May 2010. As of yesterday, the company has bought back 14.2 million of its common shares at an average price of P322.81 per share for a total cost of P4.65 billion.

In a disclosure to the Securities and Exchange Commission, the Philippine Stock Exchange and the Philippine Dealing and Exchange Corporation made by general counsel and compliance officer Solomon Hermosura, Ayala announced that its Board of Directors has accepted the resignation of Ms. Mercedita S. Nolledo as director and elected Mr. Antonio Jose U. Periquet as independent director for the remainder of the term of Ms. Nolledo. The Board also elected Mr. Periquet and Mr. John Eric T. Francia, our Group Head of Corporate Strategy, as members of the Finance Committee.

Ms. Nolledo served as director of our Company for a total of nine (9) years, from 1999 to 2002, and from 2004 until today. She will remain as Corporate Secretary, Senior Counsel and Chair of the Proxy Validation Committee. The Board thanked Ms. Nolledo for her exemplary and dedicated leadership and service as director, and also for her passion and commitment to good and effective corporate governance.

Mr. Periquet, 49, is an accomplished fund manager. The Fund Managers Association of the Philippines recognized him as the Best Strategist for seven consecutive years, from 2003 to 2010, and Best Analyst in 2009 and 2010. He was also adjudged the Best Analyst in 2004 by Asiamoney. He was the Chairman of Deutsche Regis Partners from 1999 to August 2010. He is also presently the Chairman of Pacific Main Holdings Inc., an independent director of BPI Capital Corporation, DMCI Holdings Inc. and Philippine Seven Corporation, and a director of Capstone Technologies Inc., The Straits Wine Company Inc. and Development Bank of the Philippines. He obtained his AB Economics degree from Ateneo de Manila University in 1982, MSc Development Economics degree from Oxford University in 1988 and MBA degree from the University of Virginia in 1990.

Ayala Corporation’s net income grew by 21% to P2.3 billion in the second quarter of 2010 versus the same period last year. This was driven by the robust performance of its real estate and banking units Ayala Land and Bank of the Philippine Islands (BPI) as well as Manila Water, Integrated Micro-Electronics, the automotive and business process outsourcing (BPO) units. Altogether this resulted in a 24% growth year-on-year in equity earnings during the quarter.

This pushed Ayala’s consolidated net income in the first half of the year to P4.4 billion, 9% higher year-on-year. Equity earnings in the first semester rose by 15% to P5.7 billion with equity earnings from Ayala Land and BPI up by 31% and 14%, respectively. This cushioned the impact of a 29% decline in equity earnings from Globe Telecom. Equity earnings from AC Capital units also improved significantly reaching P915 million from P77 million in the same period last year fuelled by a significant rise in earnings of Manila Water, IMI, Ayala Auto, and LiveIt. LiveIt realized a revaluation gain of P2.3 billion during the period which helped offset the impact of the P1.7 billion impairment provisions undertaken by AG Holdings for its real estate assets in North America.

Ayala president and COO Fernando Zobel de Ayala noted that “the results in the second quarter reflect a strong rebound from the lows of the recent economic slowdown. Domestic consumption has been robust and benefitted our real estate, banking, and auto businesses. Meanwhile, our water distribution business continues to expand and improve efficiencies, while our telecom business faces significant competitive challenges. The fundamental drivers of the local economy remain in place which we believe will continue to fuel the growth of our key businesses. The improved global economic conditions also favorably impacted our electronics manufacturing and business process outsourcing services.”

REAL ESTATE
Ayala Land’s net income in the second quarter reached a record high and put first half net income at P2.5 billion, 34% higher than the same period last year. Revenue growth was at 28% in the first half of the year to P18.4 billion driven by residential development revenues which rose by 27% on the back of strong growth in bookings from residential brands Ayala Land Premiere, Alveo and Avida. Demand for Ayala Land’s residential projects remained strong leading the company to increase the number of residential launches this year by 25% from its earlier planned launches at the start of this year. Ayala Land’s leasing business meanwhile grew by 7% year-on-year with shopping center, office leasing and hotel operations all contributing to overall revenue growth. Occupancy rates at Ayala Malls remained high while its office occupancy rate continued to improve with the increased absorption of BPO offices in step with the resurgence in the growth of the BPO sector.

BANKING
BPI’s net income in the second quarter grew by 17%, an improvement from the 5% year-on-year decline in the first quarter of this year. This put profits in the first semester to P5.6 billion, 5% higher than the same period last year. The bank’s core businesses remained strong with double-digit growth in loans and deposits. The bank’s total revenues rose by 4% in the first half with net interest income up by the same rate, mainly as a result of a 12% increase in its average asset base. Non-interest income increased marginally on account of lower securities trading gains compared to last year. Loan growth was strong across all segments indicative of the renewed business and consumer confidence. Net loans grew by 13% with large corporates posting a 13% growth, SMEs growing by 14%, and consumer loans up by 16%. The bank recently announced it is offering stock rights to existing eligible shareholders. The offer covers around 307 million common shares which will raise P10 billion. This will further strengthen the bank’s Tier 1 capital position and also enable it to support its growth strategy towards more aggressive customer acquisition, prudent lending, and deeper cross selling penetration.

TELECOM
Globe’s consolidated revenues were down 3% year-on-year in the first semester mainly due to lower mobile revenues. Mobile revenues declined by 9% in the first half consistent with the trends in the over-all industry and reflecting the impact of pricing pressures from an intense competitive environment. Broadband revenues, however, continued to grow with revenues up 89% year-on-year and is gaining market share. Fixed line data and fixed line voice revenues rose by 18% and 8% year-on-year, respectively. This resulted in reported net income of P5.1 billion in the first half of 2010, 30% lower year-on-year. Excluding all forex and mark-to-market charges, as well as one-off gains from last year’s equipment exchange transaction, Globe’s core net income was down 25% to P5.2 billion. Globe ended the period with a SIM base of 24.6 million, 3% higher versus last quarter and a total of 930,000 broadband subscribers, 145% higher than subscriber levels in the same period last year.

WATER DISTRIBUTION
Manila Water’s net income grew by 34% to nearly P2 billion in the first half of the year. The 14% decline in depreciation costs as a result of the renewal of the Concession Agreement partly drove the increase in net income. Revenues in the same period grew to P5.5 billion, 18% higher than the same period last year due to a 5% increase in billed volume, tariff adjustments and improved revenue contribution from the Laguna and Boracay concessions. Operating expenses increased at a much slower rate than revenues, which helped improve operating margins. Operating efficiencies remain high with non-revenue water continuing to decline to 13.5% and increasing the number of household water connections by 8% year-on-year.

ELECTRONICS MANUFACTURING
The electronics industry continues to improve along with the gradual recovery of the global economy. This led to an 11% growth in IMI’s revenues in the first half of the year as larger orders from its major customers in the storage device, telecom, automotive, and consumer electronics picked up driven by a rise in demand for their products. IMI’s net income in the first half of the year amounted to US$4.7 million inclusive of a one-time gain. Excluding gains this year and last year, IMI’s net income for the first semester was at US$2.8 million compared to a US$1.3 million loss in the same period last year.

AUTOMOTIVE
Ayala Automotive continued to benefit from the strong growth of the auto industry in the first half of the year. Ayala Auto’s revenues rose by 15% to P6.2 billion driven by an increase in the share of Ayala dealership network and the improved performance of its collateral business. This resulted in a net income growth of 80% to P172 million as of the end of the first half.

BUSINESS PROCESS OUTSOURCING
Liveit, Ayala’s holding company for its BPO investments delivered a net profit of P1.6B in the first half versus last year’s loss of P449M. This was due to the revaluation gain of P2.3B recognized in the second quarter, following the $50M investment in Integreon by Actis, a UK based leading emerging markets private equity firm, which diluted LiveIt’s ownership from 86% to 56%. The gain more than offset the first half operating net loss of P363M and net interest expense of P183M and validated LiveIt’s potential for value creation. With the proceeds of Actis’s investment, Integreon plans to grow its range of services and technologies, seek strategic acquisitions and launch new delivery centers, including a second site in the Philippines.

INTERNATIONAL REAL ESTATE
AG Holdings, the company’s vehicle for international investments, reported a loss of P1.8 billion due mainly to impairment provisions for certain real estate assets in North America given the sluggish state of real estate recovery in the U.S. This allows AG Holdings to focus more on its Asian portfolio which grew by 3% in terms of net asset value during the period.

Ayala chairman and CEO Jaime Augusto Zobel de Ayala said, “The development trends we see in various areas in the Philippines present opportunities for expansion and growth for each of our businesses. We consider our businesses well placed not only to capture these but also to expand their participation in the broader infrastructure space as we seek to contribute as a group to the country’s development agenda.”

The above statement pertains to the disclosure made to the PSE and SEC today, August 13, 2010, by Ayala chief finance officer Delfin C. Gonzalez, Jr.