Category: News

AC ENERGY ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE FROM THE PRESIDENT JOHN ERIC T. FRANCIA
APRIL 20, 2020

Fellow shareholders, colleagues from board and management, ladies and gentlemen. Good morning.

It has just been under a year since your new board and management assumed leadership roles in your Company, though we spared no time to transform the company with significant corporate decisions and swift outcomes in relation to development, commercial and operational matters. The rapid pace of progress strengthened the Company’s fundamentals, allowing us to be more resilient amidst the current global health and socio economic crisis that we are all confronted with.   

I am pleased to report that there are no known COVID cases among the Company’s 700 employees.

The Company is fully supportive of the government efforts to address the challenges by ensuring the health and safety of our employees and their families, providing support to immediate communities where we operate, and supporting broader efforts such as feeding programs via Project Ugnayan, creation of additional health facilities such as the WTC We Heal as One Center, and the provision of medical supplies and PPEs. While we have seen over 30% of drop in customer demand, all our power plants continue to operate as we maintain skeletal crew to keep the plants running. 

Notwithstanding the current challenges, the company continues to execute against our turnaround plan and establish a sustainable growth path.

I’m very pleased to share the significant progress we have made across three important areas:

• Strengthening the company’s balance sheet
• Expanding generation capacity 
• Increasing long term customer relationships

The company shored up its balance sheet through a series of actions. 

As part of its entry in June 2019, AC Energy infused 2.6 billion pesos of cash in the Company through a subscription of primary shares. 

Soon thereafter, AC Energy infused power generation assets valued at more than 14 billion pesos, through an asset for share swap. [The transaction is currently awaiting regulatory approval.]

The board of directors also approved the issuance of stock rights, where we are targeting to raise over 5 billion pesos in cash from the offering. 

Upon completion of all these initiatives, the company would have increased its balance sheet by well over 20 billion pesos. This represents a tripling of the company’s balance sheet. 

Expanding generation capacity 

With a bigger balance sheet, the company expanded its generation capacity from 416MW to well over 1100MW. 

Around 700MW of new capacity has been added to the company’s portfolio, of which 60% was from renewable sources. 

The 700MW of additional capacity came from a combination of:

(1) infusion of generation assets from AC Energy parent (176MW)

(2) acquisition of brownfield power generation assets (196MW), and 

(3) starting the construction of new power projects (330MW)

Increasing long term customer relationships  

With an expanded generation capacity and diversified portfolio, the company is able to provide compelling offers and build a strong customer base.  

Increasing long term customer relationships  

Last September, the Company won two Meralco contracts worth 310 MW through a competitive selection process, also known as CSP. The contracts were based on a five year and ten year tenor, providing steady and predictable cash flows to the company. 

The groundbreaking CSP required suppliers to offer fixed pricing and 100% guaranteed availability — making this a highly customer centric approach. 

The innovative structure was made possible by allowing generators to supply from multiple power plants and the electricity spot market. 

As a result, AC Energy Philippines was able to leverage its portfolio of power plants and deliver a compelling and winning proposition to the customer. 

2019 Results 

All the positive developments throughout 2019 resulted in an improvement of short term performance, and more importantly, a positive long term outlook. 

From a first half loss of [P550 mn], the company improved its performance in the second half, thereby reducing the full year loss to [P417 mn] by the end of 2019. 

We expect the turnaround initiative to prosper and are aiming for a positive bottom line by 2020. 

Given the positive developments and outlook, the company’s share price has more than doubled in 2019, delivering significant value to our shareholders.

Outlook

While we are facing significant challenges amidst the current crisis, the Company remains solid and steadfast in its commitment to a sustainable future. 

We will continue to expand and diversify our generation capacity and will target to exceed 1500MW of capacity by 2020 and significantly increase our renewables capacity.  

We will also enhance the operating efficiencies especially of our thermal power plants, where we aim to improve availability by over 20%  

We will also continue to add to and nurture our customer base, and develop long term relationships. 

Summary

On behalf of the company’s board and management, I would like to thank the entire AC Energy Philippines team for the full dedication, hard work, and significant results delivered in such a short span of time. 

Thank you to our shareholders and our board for the continuing trust and support. 

We are all highly committed to work towards our aspiration of becoming the leading renewables company in the country. Thank you.

MANILA WATER ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE FROM THE PRESIDENT JOSE RENE GREGORY D. ALMENDRAS
APRIL 17, 2020

Dear Shareholders,

To say that we are in the middle of unusual times may be an understatement. Addressing you in this manner is just one unmistakable proof of the situation. We have worked around all obstacles as it is paramount for us to make this report at this time of the year. It is, after all, our avowed commitment to be of Genuine Service to our customers, partners and stakeholders.  On a personal note I acknowledge the difference of 2007 to 2010, my first stint in Manila Water and what it is when I rejoined in September 2019.

Perhaps we can say that these extraordinary times begun in 2019. Thus, the 2019 Integrated Report of Manila Water is unlike any other we have produced in the past. On top of our compliance to the standard reportorial requirements as with previous years, we feature a Special Reports section which provides you, our shareholders, a direct and objective view into the significant events which transpired in. We have taken this new direction for the Integrated Report because clearly, 2019 was not a normal year, by any measure. Allow me to recount several of these significant events, the details of which will be extensively discussed in the pertinent sections of the Integrated Report, as distributed.

For our East Zone Concession, 2019 will be remembered as the year of the water supply shortage. There was drastic decline of water levels in the raw water dams, namely Angat  and La Mesa Dam.  This caused water service availability to drop drastically in the first half of 2019, thus underscoring the need to develop long-term water sources to ensure water supply sustainability.

Our response was immediate. We had to shift to new network operations regimen to adapt to a markedly reduced water supply allocation regime. We shifted operations protocols like we have never done before, all these aligned squarely towards customer requirements.

Pending new medium- to long-term water sources, we likewise ramped up our development of water supply augmentation projects for the East Zone. The production at our Cardona Plant reached 98 million liters per day (MLD) as of December 2019. Furthermore, our recommissioning and development of new deep wells continues, with a total capacity of 55 MLD as of year-end. These initiatives, along with our continued proactive network management and optimization programs, keep water availability within regulatory levels for our customers despite lower raw water supply allocation.

While we are able to manage our supply challenges, 2019 likewise required us to face considerable challenges on our commitment to provide and expand wastewater services in the East Zone. In September, the Supreme Court ordered each of the MWSS concessionaires, jointly and severally with MWSS, to pay more than Php921 million in fines for non-compliance with the Clean Water Act.  We affirmed that we would exercise all legal options in relation to this case, including the filing of a Motion for Reconsideration which we timely submitted to the Supreme Court on October 2, 2019. We firmly maintain our position that, as Concessionaires of MWSS, we have fully complied with our obligations under the Concession Agreement and the guidelines under the Clean Water Act.

Based on the original Concession Agreement, the wastewater coverage commitment for the East Zone was targeted at 55% by 2022. When the Philippine government approved the extension of the Concession Agreement in 2009,  one of the reasons for the extension is the increase of our obligation to 100% East Zone wastewater coverage by 2037. The extension of the Concession Agreement for an additional 15 years allows us to expand wastewater coverage to more communities but at the same time mitigating the price of services from spiking up too fast. This new coverage target and 2037 deadline was duly acknowledge by a Supreme Court Mandamus promulgated in 2008 for the clean- up and preservation of Manila Bay.

Consistent with our mandate as the MWSS concessionaire for the East Zone, we have invested close to Php43.56 billion in wastewater capital expenditures since the concession began in 1997, and plan to invest over Php38 billion more until 2022. Notably, we have spent more than what we have collected as sewer and environmental charges from the start of the concession until now.  When Manila Water started in 1997, only 45,000 people were connected to a sewer system, today we cover a population of 1.08 million.  At the end of last year we are happy to report 30% sewer coverage well on our way to the 32% target for 2022.

These challenges on water and wastewater provision have opened up queries and assailed the integrity of the current Concession Agreement to the point that such was allegedly laden with onerous provisions. It will be recalled that in 1997, it was government who invited the private sector to help address the looming water crisis in Metro Manila. Manila Water had nothing do with the drafting of the Concession Agreement as terms of the agreement had already been drafted and pre-determined. Manila Water was one of the 70 participants during the 1997 bid pre-qualification who had to accept the draft of the Concession Agreement on a “take-it or leave-it basis.

As the government continues the review of the Concession Agreement, we assure you that we are working closely with them to arrive at a solution that will be beneficial not only our customers but also balance the interest of our shareholders.

Even with these challenges, it is with the same firm resolve that we look forward to further strengthening our foothold on our non-East Zone ventures. While our domestic and regional businesses experienced its own set of obstacles, Manila Water remained resilient. Even in the face of operating and business development setbacks, our domestic subsidiaries under Manila Water Philippine Ventures significantly increased income contribution to the group, with the good performance of the core domestic operating subsidiaries providing a solid foundation. For our international operations under Manila Water Asia Pacific, the performance challenges in our Vietnam investments served to underscore the importance of managing our costs better, as well as in taking a more focused approach in business development.

Looking back at the year that was, the core which held us together and helped us weather the seemingly insurmountable challenges were our people. Manila Water’s strength lies in its unique mix of seasoned pioneers who provide experience and wisdom, coupled with young, dynamic leaders who inject energy, innovation and spirit. I commend the entire Team Manila Water for all their hard work and sacrifices that stem from a genuine desire to serve. Whether young or old, the common thread which runs through every Manila Water employee is our commitment to our service mission. This is what defines us – a heart for Genuine Service which takes precedence above all else.

The Manila Water brand of Genuine Service is not confined to within the company alone. This dedication to service extends outward – from our employees, flowing through to our customers, partners and to government as we support their thrust towards national development. Even with all the challenges we faced in 2019, we helped where ever disaster we were needed.  From Earthquakes and storms to the Taal Volcano eruption, Manila Water was there to help. I am always amazed by the overwhelming number of volunteers from our team members who are willing to help in disaster operations.  Only in working together with our stakeholders can we rise above the obstacles and find better ways to fulfill our service mission.

As Manila Water looks to the future, we draw strength from the challenges we have faced.  We do so because we know this is where we will find the solutions that will make us better equipped to meet the challenges to come. Equally, we draw inspiration from the confidence entrusted to us by our customers, partners and stakeholders. I thank our customers for their continued trust and support for the company. I thank our partners and stakeholders for their continued faith in the  organization, support for the projects and the initiatives that enable us to provide consistent, reliable service to our customers. Finally, I thank my fellow Manila Water employees for their resilience and unwavering dedication to our mission – to render Genuine Service, in all that we do.

Thank you and Good morning.

MANILA WATER ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE FROM THE CHAIRMAN FERNANDO ZOBEL DE AYALA
APRIL 17, 2020

Fellow Shareholders, good morning.

As you know, Manila Water experienced major challenges in 2019. The difficulties we experienced have drastically altered the way we view and operate our business.

The first set of challenges in 2019 were operational, but on a scale and magnitude never seen before in Manila Water’s history. In March last year, we experienced a severe water supply shortage in our East Zone Concession, with raw water volume in our main reservoirs reaching critically low levels. This caused prolonged service interruptions in several communities, significantly impairing the high standards of service which we have maintained for over 20 years. Furthermore, in August the Supreme Court rendered its decision to have Manila Water and MWSS pay more than Php921 million in fines for alleged non-compliance with the Clean Water Act.  Both Manila Water and the MWSS have appealed the decision, and we are hopeful that the Supreme Court will sustain our position that the Clean Water Act did not require MWSS and its concessionaires to provide a centralized sewerage system for the MWSS service area within five years from March 2004.

Towards the end of the year, we faced an unprecedented and even more fundamental set of challenges – the kind which put into question the foundation on which we have built our business and credibility. It began in November 2019, when we received the award rendered by the Arbitral Tribunal in the arbitration proceedings between Manila Water and the Philippine government constituted under the Permanent Court of Arbitration (PCA) in Singapore. The Tribunal ordered the government to indemnify Manila Water in the amount of Php7.39 billion representing the actual losses Manila Water suffered from June 1, 2015 until November 22, 2019 due to the government’s breach of its contractual obligation. The unfavorable reaction of several key government officials to this arbitral award unfortunately resulted in the questioning of key terms in the Concession Agreement. In order to address the mounting regulatory and government pressure, we resolved to no longer collect the arbitral award issued by the PCA. Additionally, we indicated that we would defer the implementation of our Approved Rate Adjustment for 2020, while we continue to work with MWSS on an arrangement as to how and when this deferral will be addressed in the future.

Despite the very difficult political environment, Manila Water continued to provide reliable service to our customers. This dedication and commitment are characteristics which are distinctly Manila Water – the same values and principles which we have maintained since our concession agreement began. 

Back in 1997, we established our commitment to national development by taking on the mandate of rehabilitating and expanding the MWSS water and wastewater system. At the time, systems losses in the East Zone were at a high of 63% and wastewater coverage was only 3%. In the face of great risk and difficulty, we accepted the challenge of improving water and wastewater service for the communities and households in the East Zone of Manila.

The results of that commitment speak for themselves. From 63% in 1997, we have successfully decreased system losses in the East Zone to a world class level of 10.37% at the end of 2019. The water we have recovered from the system enabled us to maintain water availability at near 100% in our Central Distribution System, with potable water flowing to our customers 24 hours a day and water pressure kept steady at regulatory levels.  To ensure the adequacy of raw water supply for East Zone customers, we continuously tried to work with government on its development of medium and long-term new water sources. Unfortunately, there were disagreements on supply projections which prevented us from planning properly for the needs of our concession area.  Last year’s water supply shortage has allowed us to fast track several new projects in collaboration with MWSS. Notably, the first phase of the Wawa-Calawis Bulk Water Supply Project is projected to supply 80 million liters per day to the East Zone by 2022 which can be expanded further to 518 million liters per day.

For wastewater, we now have over 30% wastewater coverage in the East Zone – equivalent to service for 2 million people coming from only 45,000 when we took over the system from MWSS. We continue to remain compliant with environmental standards as we execute our Service Improvement Plan approved by the government. Lastly, we remain open to discussions with the government on the Concession Agreement. The indication that government has engaged the Asian Development Bank for this purpose sends a positive signal that the discussions will be comprehensive and balanced.

The board has also decided to prepare for options to strengthen Manila Water’s balance sheet, which is why we are asking the shareholders to approve the increase of shares without pre-emptive rights to 900 million, so that the Company may issue shares as needed and open up opportunities for the entry of a strategic investor.  

In Manila Water, we have always seen our responsibility to our customers as more than a business to run.  When we committed ourselves to provide quality water and wastewater services to our customers more than 20 years ago, we knew then that it would not be an easy task. True enough, throughout Manila Water’s history we have persevered through many challenges – be it natural, economic or regulatory.  Our experiences in 2019 once again bring this reality front-and-center.

All these difficult challenges brought out the best in all of us. Each one made us stronger, more united and more committed to our service mission. As we weather these challenges, it inspires me to see that the strength and resilience which our company has built through the years, is very much alive in our people, our culture and in our work. What truly sets the Manila Water spirit apart is its heart for genuine service. In spite of the hardship and sacrifices, Manila Water has never hesitated to extend its hand to help and serve others – no matter when, or where it was needed. This commitment to genuine service is what will see us through the challenges we face today and the challenges that are still to come.

I hold on to the firm belief that Manila Water will always emerge stronger in the face of adversity. The company draws strength from its core – built upon resilience and strengthened by its commitment to genuinely serve its customers. I thank you for your continued trust and support, as we continue to champion our mission of providing access to water and sanitation services for the communities we serve.

I would like to thank our Board of Directors for their guidance and support, our management team and employees for their unwavering commitment, and finally our customers, partners and all our stakeholders who continue to inspire us as we fulfill our service mission.

April 15, 2020, Laguna, Philippines — In the light of the current COVID-19 global pandemic, Integrated Micro-Electronics Inc. (IMI), a leading global manufacturing and technology solutions expert held its Annual Stockholders’ Meeting earlier today via live streaming.

“Last year (2019) was an exceptionally challenging year for IMI, as the company experienced many of the same geopolitical headwinds that contributed to the world economy’s slowest year-over-year expansion since the financial crisis a decade ago,” said Jaime Augusto Zobel de Ayala, chairman of the board of directors of IMI in his speech. “In the face of these market conditions, we take comfort in the fact that IMI continues to demonstrate resilience and is able to consistently weather the volatile, rapidly evolving nature of the global manufacturing space,” asserted Zobel de Ayala.

In the web simulcast, Arthur R. Tan, IMI chief executive officer articulated how the company ended 2019 reflecting on the achievements accomplished and the challenges IMI was able to overcome despite several business constraints. “Last year proved to be more volatile than we had anticipated,” Tan said in his message.

Despite the headwinds, Tan remains undaunted saying that “the pipeline remains healthy with the significant new projects we won in 2019 worth $407 million of annual revenue potential. In fact, as we continue to drive the development of next generation platforms, we were even able to grow our automotive segment by 9% from the previous year, completely outpacing the market.”

“Business wins related to the automotive camera continue to rise and provide IMI with leverage in offering more advanced technologies such as mirror replacement and camera-video system level modules. Revenues in this group is seen to double to US$ 124 Million in the next five years,” Tan added.

“Our reputation as a leading intelligent solutions provider in automotive, industrial and aerospace markets continue to reinforce our partnerships with more opportunities in the face of newer and faster technologies. We continue to establish our niche in higher value markets and expanded levels of the standard business models. With our experience and reputation, we get to collaborate with the best in the industry in project management from design concept to manufacturing and delivery. To illustrate, back in 2018, among the products that we built, only about 30% of these were classified as those belonging in emerging technologies. By the end of 2019, that number rose to 44%. All these are consistent with IMI’s trajectory over the past ten years. Over this period, the compounded annual growth rate of IMI registered at 13% resulting in the tripling of the company’s global size,” maintained Tan.

Tan spoke about the current global pandemic outbreak as a very dynamic situation affecting the global market in unprecedented ways. “As a global manufacturing partner, we have systems in place for these kinds of market disruptions currently enforced in our sites today. Our capabilities across all the major markets puts us in a unique position to not only survive but to rebuild and emerge stronger and better. Part of our operations now is to sustain and support most of the essential industrial and medical products that the world desperately needs,” he added.

One of IMI’s subsidiaries, Surface Technology International (STI) Ltd. based in the UK, has joined the #VentilatorChallengeUK consortium in producing critically needed medical ventilators in the fight against COVID-19 in the region. It is a consortium of UK industrial, technology and engineering businesses from across the aerospace, automotive and medical sectors, has come together to produce medical ventilators for the country.

IMI is also currently producing printed circuit board assemblies used for ultrasonic welding equipment commissioned by a medical device manufacturer. It is a critical equipment needed to produce medical textiles and filters for syringes and other medical devices.

“As IMI enters its 40^th year in 2020, and with the digital age at the forefront of global megatrends, our corporate values remain as strong as ever in our more than 17,000 employees worldwide. We believe these are the true drivers of success (…) We shall remain true to our aspirations and our goals as we integrate sustainability, risk management and corporate governance in our global strategies. We share in the commitment our parent company ACI and principal Ayala Corporation, to address long term targets in the UN Sustainability Development Goals,” Tan concluded.

IMI ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE FROM THE PRESIDENT & CEO ARTHUR R. TAN
APRIL 15, 2020

Fellow Shareholders,

We ended 2019 reflecting on the achievements we accomplished and at the same time learning from the challenges we were able to overcome despite the business constraints we faced. Last year proved to be more volatile than we had anticipated as it brought about heightened sense of risk and uncertainty.

Last year, geo-political issues further strained the electronics manufacturing industry which had just begun recovering from a component supply chain imbalance which had peaked the year prior. Along with a confluence of other factors, key business cycle indicators pulled back such as global semiconductor sales and semiconductor manufacturing equipment sales which sank 12% and 10.5% year-over-year, respectively.  

Across the manufacturing end-markets, automotive emerged as the most affected segment reflecting the negative impact of the U.S.-China trade dispute and market adjustments to new emissions standards. This caused production to drop by 4% globally, led by China whose automotive output declined by 8%.  

Against this backdrop of weakened trading conditions, revenues slightly weakened year-on-year by 7 percent to US$1.25 billion following a slowdown in the consumer, telecommunications and industrials segments. The slowdown in global growth, strains on supply chain and significant investments in capacity and technical capabilities into future growth areas that increased company overhead expenditures brought full year performance to a net loss of US$7.8 million.

However, despite the headwinds, the pipeline remains healthy with the significant new projects we won in 2019 worth $407 million of annual revenue potential. In fact, as we continue to drive the development of next generation platforms, we were even able to grow our automotive segment by 9% from the previous year, completely outpacing the market.

Business wins related to the automotive camera continue to rise and provide IMI with leverage in offering more advanced technologies such as mirror replacement and camera-video system level modules. Revenues in this group is seen to double to US$ 124 Million in the next five years.

Beyond sales and profitability, our reputation as a leading intelligent solutions provider in automotive, industrial and aerospace markets continue to reinforce our partnerships with more opportunities in the face of newer and faster technologies. In many ways, IMI is learning and finding its niche in higher value markets and expanded levels of the standard business models in electronics manufacturing. With our experience and reputation, we get to collaborate with the best in the industry in project management from design concept to manufacturing and delivery while investing on our future. To illustrate, back in 2018, among the products that we built, only about 30% of these were classified as those belonging in emerging technologies. By the end of 2019, that number rose to 44%.

These activities and developments are all consistent with IMI’s trajectory over the past ten years. Over this period, the compounded annual growth rate of IMI registered at 13% resulting in the tripling of the company’s global size.

Since 1980, IMI has always adhered to two principles as we continue to strive for growth: that we operate and deliver with the highest level of commitment and service to our current customers; and that we have the right people, skillsets and technologies that will enable us to withstand negative market forces in the foreseeable future. Arguably, the electronics industry is among the most volatile markets in the world.

As we learn and benefit from our experiences in the past and present, IMI, now a global company that started as a domestic Filipino integrated circuit assembler, has become the 17^th largest electronics manufacturing services (EMS) company as of the end of 2018 and the 5^th largest in the automotive EMS space.

Today, in addition to its independent mandate as one of the world’s leading electronics manufacturing services firms, IMI also holds the core manufacturing competencies of AC Industrials, Ayala’s industrial technologies group. IMI’s manufacturing prowess will continue to enable AC Industrials and its portfolio of businesses in automotive engineering & design, vehicle distribution & retail, and smart solar technology.

As a global company, IMI will continue to be a leading technology solutions partner in the mobility, connectivity and smart energy spaces, providing higher value contributions in design, collaboration, manufacturing and delivery to major Brands, Original Equipment Manufacturers and Tier One Suppliers in the global automotive and industrial segments.

As IMI enters its 40^th year in 2020, and with the digital age at the forefront of global megatrends, our corporate values of integrity, customer focus, concern for others and excellence remain as strong as ever in our more than 17,000 employees worldwide. We believe these are the true drivers of success that will continue to push us to stay at the edge of innovation, creativity, collaboration and design. At the same time, we will remain true to our aspirations and our goals as we integrate sustainability, risk management and corporate governance in our global strategies. We share in the commitment our parent company ACI and principal Ayala Corporation, to address long term targets in the UN Sustainability Development Goals.

Today, with our 22 manufacturing sites and in 10 countries, providing services beyond the standard deliverables of electronics manufacturing, we will continue to aggressively press forward in exploring synergies, partnerships and ventures in the areas of new technologies and markets. With the age of intelligence and digitalization reinventing conventional business models and supply chains across global markets, we at IMI have put in place the essential elements needed for us to work with the leading players in the world.

As I speak, the current challenges of the Corona virus pandemic affecting the entire global market in unprecedented ways is upon us. It is a very dynamic situation as all the countries and their respective economies will enter and exit this situation independently. This single event may have hastened a new world order in the way we live our lives and operate businesses.

As a global manufacturing partner, we have had systems in place to prepare for these kinds of market disruptions. These systems are currently enforced in some of our sites today. In addition, our diverse manufacturing capabilities across all the major markets puts IMI in a unique position to not only survive this event but to rebuild and emerge stronger and better. Today, part of our operations sustain and support most of the essential industrial and medical products that the world desperately needs.

To all our stakeholders, thank you for your trust guidance and support that have enabled us to remain a robust and enduring company now and for the decades to come.

Together, we are now ready for more giant leaps into the future.

IMI ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE OF THE CHAIRMAN JAIME AUGUSTO ZOBEL DE AYALA
APRIL 15, 2020

My fellow shareholders, good morning.

2019 was an exceptionally challenging year for IMI, as the company experienced many of the same geopolitical headwinds that contributed to the world economy’s slowest year-over-year expansion since the financial crisis a decade ago. Global economic growth was a modest 2.9 percent amid a general slowdown in more advanced economies. While their individual economies remained relatively stable, the United States and China continued to engage in a trade conflict whose impact was felt profoundly by those of us who do business within these markets.

Meanwhile, European economic momentum decelerated, largely over the prolonged uncertainty of Britain’s exit from the European Union and lingering social unrest in other key markets across the continent.

These macro headwinds, together with the disruptive changes currently sweeping many key industries, have created a challenging environment for worldwide manufacturing and trade. In the electronics space, intensifying competition and increasing demand posed operational challenges to players like IMI and resulted in longer fulfillment times and higher material costs. Meanwhile, global automotive unit sales likewise experienced weakness as the industry’s megatrends of connectivity, autonomy, sharing, and electrification take hold.

In the face of these market conditions, we take comfort in the fact that the company has continued to demonstrate resilience. Its ability to plan and prepare for the future has allowed it to consistently weather the volatile, rapidly evolving nature of the global manufacturing space.

IMI also retains and continues to invest in the specialized technical resources that will keep it competitive as its industry and competitive cycles turn. These include proprietary capabilities in power electronics, camera and vision and connectivity components, to name a few. The company also retains the competencies that have formed the foundation of its manufacturing prowess, such as design and development, advanced manufacturing engineering, automation, and quality systems, which have, in turn, allowed it to selectively expand beyond the electronics space into AC Industrials’ core manufacturing platform. Most of AC Industrials’ key products and technologies, including the export-oriented motorcycle joint venture with KTM AG and its specialty photovoltaics arm Merlin Solar, are supported by IMI. The company’s manufacturing expertise has enabled these strategic investments to not only locate manufacturing in the Philippines, but also to help serve their respective global markets.

The year 2020 also represents a landmark year for IMI. The company celebrates not only its 40^th year in existence, but also its 10^th year as a publicly traded company. It remains well positioned in the electronics manufacturing space, as it ranks among the top 20 in the world in terms of revenue and 5^th in automotive-related business. We will continue to build on these strengths as we leverage key technologies to ensure IMI’s continuity and relevance in an evolving environment. Beyond manufacturing, IMI will continue transforming itself to remain a leading corporate citizen in the coming years as the world digitizes, grows more connected, and more focused on sustainably doing business.

As a final note, I would like to thank our Board of Directors for their guidance and engagement, our management and staff for their untiring dedication and commitment, and our global stakeholder community for their consistent support.

We believe IMI’s best days continue to lie ahead of it, and we look forward to sustainably building shareholder value in the years to come.

As a parting thought, let me end my message with a video that shows how IMI is operating and moving towards a sustainable future.

Thank you.

April 15, 2020 – The Ayala Group of Companies has completed the conversion of portions of the World Trade Center (WTC) in Pasay City into a temporary healthcare facility that will cater to patients affected by COVID-19.

The project, dubbed WTC We Heal as One Center, was made possible through the collective efforts of Ayala Land Inc., Globe Telecom Inc., Manila Water Co. Inc., Integrated Micro-Electronics Inc. (IMI), and AC Energy Inc., together with the ICCP Group and Manila Exhibition Center Inc. (MEC), and with support from the Bases Conversion Development Authority (BCDA) and the National Government. The Ayala Group of Companies was able to pool P46.4 million for this project.

Ayala Land unit Makati Development Corp. (MDC) headed the fit-out construction for 9,700 square meters of space at WTC in a span of 7 days.

Following the layout and design by MDC with guidance from the Department of Health and Architect Daniel Lichauco, the facility features 500 beds enclosed in safe, clean, and controlled isolation cubicles, as well as examination rooms, nurses’ stations, doctors’ work areas, and medical staff quarters.

“When the national government asked for Ayala Land’s support, we immediately mobilized and pooled our resources to assist in the best way we can,” Ayala Land President and CEO Bobby O. Dy said.

“We hope that this facility will help our country get through the COVID-19 pandemic. We are privileged to work with like-minded partners who want to do what’s best for the Filipino people,” Dy added.

Globe Telecom funded a large portion of the facility’s construction cost, as well as unlimited Wi-Fi services.

“Collaboration between the public and private sectors is vital during these times, and we will continue to lend support to the government to help the country recover from this pandemic soon,” Ayala Land Chairman Fernando Zobel de Ayala said.

Meanwhile, MEC provided the spaces in WTC rent-free. It also supplied bathroom toiletries in addition to security and janitorial services.

“Even before MEC, the owner of World Trade Center Metro Manila, was approached through the ICCP Group, we were already thinking about offering the exhibition hall, either as a Command or Testing Center for COVID-19,” WTC Metro Manila President and CEO Pamela D. Pascual recalled.

WTC is among the largest events facilities in the country, having hosted several big gatherings such as the Association of Southeast Asian Nations in 2017 and the Southeast Asian Games in 2019.

“So when this came into fruition, through the partnership with Ayala Group, we are more than happy and proud to be given the chance to make a difference by helping government in its fight to quell COVID-19,” Pascual explained.

The facility was turned over on April 14 to the Armed Forces of the Philippines Health Service Command, who will serve as its medical operator.

For its continued operations, AC Energy donated 500 bedframes and pillows and has committed to cover 50% of the facility’s electricity costs until May 31, 2020. Partner donor Manila Electric Co. has pledged to cover the other half.

Manila Water also built 27 private cubicle shower areas for patients and 10 in a converted container van for medical workers.

For its part, IMI is providing two sanitation booths at the entrance of the facility and another two at the exit.

Other donors include: The Philippine Constructors Association, which contributed cubicles for the facility; Smart Communications Inc., which set up the WiFi internet connectivity; and San Miguel Corp., which is supplying the center’s alcohol requirements. MDC construction partners also contributed supplies and equipment to complete the fit-out of the facility. Collectively, Ayala’s partners in this initiative contributed P29.5 million.

Several companies were tapped to provide security, cleaning and maintenance, and laundry services. Food commissary suppliers and a cafeteria operator have also been recruited.

The cost of medical equipment, supplies, and services will be shouldered by the National Government along with private donors and other financiers.

“We are grateful to all our private partners for setting up a much-needed facility in such a short period of time. In partnership with ICCP Group, Ayala Group, and Meralco, the conversion of the World Trade Center Metro Manila into a COVID-19 quarantine facility is testament to what the public and private sectors can achieve when they work together for the good of our country,” BCDA President Vince Dizon said.

The Ayala Group’s contributions to the conversion of WTC into a quarantine area for COVID-19 patients is its latest in a string of initiatives to help stem the spread of the virus.

Most recently, the Ayala Group took part in Project Ugnayan, a relief effort together with more than 50 private companies and in partnership with the Philippine Disaster Resilience Foundation and Caritas Manila.

Through Project Ugnayan, the country’s leading businesses were able to raise P1.7 billion for the purchase of grocery vouchers that aims to feed 1.5 million urban poor families or 7.6 million individual residents who are most burdened by the enhanced community quarantine in Metro Manila.

CARITAS MANILA (a church-based non-profit organization that serves as the lead social service and development ministry of the Catholic Church in the Archdiocese of Manila) through its “spiritual frontliners” of priests, nuns and lay volunteers in various parishes in mega-manila have distributed a total of 1,367,495,000 pesos worth of Gift Certificates covering 5,445,255 urban poor families (or over 7.6 million individuals) currently affected by the Enhanced Community Quarantine in the entire of Luzon.

Under Project Ugnayan (a fund-raising initiative led by top business groups in cooperation with the Philippine Disaster Resilience Foundation) Caritas Manila was able mobilize its parish-based grassroots structure to provide social assistance to vulnerable communities of the Greater Manila Area.

To date the distribution of Gift Certificates are as follows:

The initiative earned praises from Archdiocese of Manila Apostolic Administrator Bishop Broderick Pabillo, San Pablo Bishop Buenaventura Famadico and other Prelates of the Suffragan Dioceses of Manila. The Prelates thanked the businessmen and private organizations that collectively help to make Project Ugnayan possible. This unprecedented assembly of so many of the country’s corporations and business families coming to the assistance of the most helpless in our society illustrates and speaks of the heart and generosity of the business community.

Special thanks to the donors of Project Ugnayan, which include (in alphabetical order): Aboitiz Group, ABSCBN/First Gen, Alaska Milk Corporation, Alliance Global Group & Megaworld, AY Foundation & RCBC, Ayala Corporation. Bench/Suyen Corp, Bonifacio West Devt Corp. Carmelray Group, Cathay Land, Inc, Cebuana Lhullier, Century Pacific, Coca Cola Philippines, Concepcion Industrial, Consuelo “Chito” Madrigal Foundation, Inc., Daiichi Properties, DMCI Group of Companies, Dowell Container and Packaging Corporation, Far Eastern University, First Life Financial Company, Focus Global, Inc., Global Food Group, Glorious Commercial Exports, Inc., Gokongwei Group of Companies/Robinsons Retail Holdings, ICTSI, JAKA Group 1, Jollibee, Kawit Prime Holdings, Inc., Leonio Group, Mercury Drug Corporation, Metrobank, Mumuso Group, National Grid Corp of the Philippines, New World Hotel, Nutri-Asia, Oishi/Liwayway Marketing Group, One Meralco Foundation, Penshoppe, People R People, PepsiCo/PepsiCo Foundation, Philippine Racing Club, Inc, PLDT/Metro Pacific Investments Corporation, Puregold, Ramon S. Ang & Family, RRK/Lee Jeans, Shang Properties Inc, SM/BDO, Sta. Elena Construction, Sugar Junction Inc.. Sunlife of Canada, Super Prime Holdings, Inc, The Alpha Suites Inc., Unilab, and Wilcon Depot.

Contact Person:

REV. FR. ANTON CT PASCUAL
Executive Director
Caritas Manila
09175660846 / 09189245095

Project Ugnayan, the fund-raising initiative led by top business groups in cooperation with the Philippine Disaster Resilience Foundation (PDRF), reached over 7.6 million people in the vulnerable communities of Greater Metro Manila.

“As we close, we wish to reiterate our wholehearted thanks to all our generous Donors for making this project possible. By coming together in a Bayanihan spirit so quickly, we were able to create a program of this scale and importance. This unprecedented assembly of so many of the country’s corporations and business families coming to the assistance of the most vulnerable in our society illustrates and speaks of the heart and generosity of the business community.

Our special thanks go to the 10 Bishops of the Dioceses in Metro Manila, Rizal, Bulacan, Cavite, and Laguna, as well as to Caritas Manila under the leadership of Father Anton Pascual, and the network of Parish Priests, Volunteers, and Barangay Captains who distributed the gift certificates door-to-door in the lowest-income communities of Greater Metro Manila. We appreciate the swiftness and efficiency of their work under very difficult conditions and over very long hours each day,” said Project Ugnayan Lead, Fernando Zobel de Ayala.

“We are grateful for this opportunity to be part of this business community effort to help people in a time of crisis. This is a movement we should nurture as we prepare to let people return to work and to re-start our economy in the post-quarantine period.” said PDRF Co-Chairman Jaime Augusto Zobel de Ayala.

“The unity in diversity demonstrated by Project Ugnayan reveals the private sector’s serious commitment to help our country recover from the lost economic momentum because of the pandemic. We are proud to be part of this extraordinary collaboration of industries which will prove most valuable in getting the economy back on track,” PDRF Co-Chairman Manuel V. Pangilinan said.

According to Father Anton CT Pascual, Executive Director of Caritas Manila, the initiative earned praises from Archdiocese of Manila Apostolic Administrator Bishop Broderick Pabillo, San Pablo Bishop Buenaventura Famadico and other Prelates of the Suffragan Dioceses of Manila. The Prelates thanked the businessmen and private organization who collectively help to make Project Ugnayan possible.

“The true spirit of Easter is about hope and has special significance in these difficult times. We thank all the generous benefactors of Project Ugnayan for this opportunity to fulfill a great mission of compassion for our vulnerable brothers and sisters. Your gifts have warmed their hearts and uplifted their spirits,” Father Pascual said.

Caritas Manila’s Project Damayan, the project’s main distributor of emergency cash through P1,000 supermarket gift certificates has so far reached 1,070,854 families or 5,354,270 people. It is on target to deliver gift certificates to 1,366,495 families or 6,832,475 people by Wednesday, April 15 (the original end-date of the Enhanced Community Quarantine).

ABS-CBN’s Pantawid ng Pagibig has reached 238,854 families or 1,194,270 people through food packs delivered through Local Government Units. They will reach a total of 631,921 families or 3,151,605 people by the end of their program.

ADB and the Government’s Bayan, Bayanihan has delivered food packages to 13,370 families or 66,850 people through the Philippine Army and DSWD. ADB has provided funding to reach 80,000 families or a total of 400,000 people.

Jollibee’s FoodAID program delivers ready-to-cook chicken to low-income families from its commissary through a network composed of Don Bosco, Caritas Manila, and the Samahan ng Nagkakaisang Pamilya ng Pantawid (SNPP). So far, they have delivered to 199,491 families or 977,455 people. They are targeting to reach 500,000 families or 2,500,000 people by end-April.

“In sum, Project Ugnayan and its Partners have reached 1,522,569 families or 7,612,845 people in just over three weeks. This number will rise as all deliveries have already been programmed by the partners,” said Fernando Zobel de Ayala.

The donors of Project Ugnayan are (in alphabetical order): Aboitiz Group, ABSCBN/First Gen, Alaska Milk Corporation, Alliance Global Group & Megaworld, AY Foundation & RCBC, Ayala Corporation. Bench/Suyen Corp, Bonifacio West Devt Corp. Carmelray Group, Cathay Land, Inc, Cebuana Lhullier, Century Pacific, Coca Cola Philippines, Concepcion Industrial, Consuelo “Chito” Madrigal Foundation, Inc., Daiichi Properties, DMCI Group of Companies, Dowell Container and Packaging Corporation, Far Eastern University, First Life Financial Company, Focus Global, Inc., Global Food Group, Glorious Commercial Exports, Inc., Gokongwei Group of Companies/Robinsons Retail Holdings, ICTSI, JAKA Group 1, Jollibee, J.P. Morgan, Kawit Prime Holdings, Inc., Leonio Group, Mercury Drug Corporation, Metrobank, Mumuso Group, National Grid Corp of the Philippines, New World Hotel, Nutri-Asia, Oishi/Liwayway Marketing Group, One Meralco Foundation, Penshoppe, People R People, PepsiCo/PepsiCo Foundation, Philippine Racing Club, Inc, PLDT/Metro Pacific Investments Corporation, Puregold, Ramon S. Ang & Family, RRK/Lee Jeans, Shang Properties Inc, SM/BDO, Sta. Elena Construction, Sugar Junction Inc.. Sunlife of Canada, Super Prime Holdings, Inc, Supreme Steel Pipe Corp, The Alpha Suites Inc., Unilab, and Wilcon Depot.

“We are fully supportive of the latest pronouncement by President Duterte on extending the enhanced community quarantine to April 30. This is consistent with the research data on past pandemics, evaluation of initiatives in other countries and various statistical analyses that we have been studying to help break the COVID-19 pandemic. While we await for new guidelines from the national government, the Ayala group will continue to take care of its employees as a priority and extend support as much as we could to our partners and communities through collaborative efforts. In partnership with over 30 private conglomerates, the Philippine Disaster Resilience Foundation and Caritas Manila, we are heavily involved in Project Ugnayan, an initiative that seeks to feed 1.5 million urban poor families or 7.5 million individual residents greatly affected by the ECQ in Greater Metro Manila. We are also completing the conversion of some 8,000 sqm of the World Trade Center in Pasay into a 500-bed quarantine facility for COVID positive patients with the ICCP group. This will be turned over to the AFP, as the medical operator next week, “ said Ayala chairman and CEO Jaime Augusto Zobel de Ayala.