Category: News

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.

Ayala companies earned seven of the 11 highest rankings of the Institute of Corporate Directors (ICD)’s Corporate Governance Scorecard Project for 2009.

Ranked in the Gold category were Ayala Corporation and its companies Ayala Land, Inc. (ALI), Bank of the Philippine Islands, Globe Telecom, Manila Water Company and ALI’s listed subsidiaries Cebu Holdings, Inc., and Cebu Property Ventures and Development Corporation, all of which scored 95% or above in the governance scorecard. ICD recognized companies that led its scorecard project on May 27 at Manila Peninsula.

A non-stock, non-profit organization, ICD works closely with the Organisation for Economic Co-Operation and Development (OECD), the Global Corporate Governance Forum, and the International Corporate Governance Network on improving actual boardroom practices in the Philippines. ICD is a founding member and permanent secretariat of the Institute of Directors in East Asia Network composed of representatives from Thailand, Indonesia, Singapore, China, Hong Kong, Philippines, South Korea, Taiwan, and Malaysia.

For the last five years, ICD’s corporate governance scorecard has been used by publicly listed companies as a tool to rate and benchmark their corporate governance practices relative to global and regional standards. The project is jointly administered with the Securities and Exchange Commission, the Philippine Stock Exchange, the Institute of Internal Auditors of the Philippines, the Ateneo Law School, and the Center for International Private Enterprise. In 2009, it developed separate scorecards for banks, government-owned and controlled corporations, government financial institutions, and insurance companies.

Led by the parent company, Ayala group companies assessed their own governance practices using ICD’s scorecard to evaluate their practices in the areas of shareholder rights, equitable treatment of shareholders, role of stakeholders in governance, disclosure and transparency, and board responsibilities—key governance principles used as basis for corporate governance practices globally.

In addition to the Ayala group, other companies cited in the Gold category were Energy Development Corporation, First Gen Corporation, First Philippines Holdings Corporation, and PLDT. Nineteen companies were cited in the Silver category for scoring 90 to 94% in the ICD scorecard, including Aboitiz companies, ABS-CBN Broadcasting, Alaska Milk, Benpres Holdings, Centro Escolar University, Chinabank, GMA Network, Highlands Prime, Panasonic Manufacturing Philippines, Petron, PSBank, Security Bank, Semirara Mining, SM companies, and Unionbank.

“We are very happy with the results as they show continued improvement in compliance and corporate governance practices among our listed companies,” said ICD chairman Dr. Jesus Estanislao. “The challenge is to step up to the plate, go beyond mere compliance and into governance that delivers performance and breakthrough results.” Estanislao said that the ICD is now working with select top-ranked companies on a corporate governance improvement pathway to help cultivate a governance culture in organizations through a performance governance system.

Ayala Corporation chairman and CEO Jaime Augusto Zobel de Ayala received the conglomerate’s Grand Chamber Award of Distinction from the Cebu Chamber of Commerce and Industry (CCCI) for its “exemplary and conscientious adoption of the principles of sustainable development in all its strategies, practices, and activities, as exemplified by its distinction as the first ever group of companies in the Philippines to issue a Global Reporting Initiative-compliant sustainability report in 2009.”

“I share this honor and recognition with the entire Ayala management team who altogether oversee the operations of each of our key businesses,” said Zobel in his acceptance speech. “They have all worked vigorously to realize our commitment to sustainability initiatives while ensuring that we remain competitive and relevant as an enterprise to our stockholders.”

Ayala was among the businesses that were recognized for business excellence at the 15th Grand Chamber Awards Night held on June 25 at Waterfront Cebu City Hotel. Other honorees were Benito Sy Gaisano (Entrepreneur of the Year), Edgar Sia II of Mang Inasal, Rey Calooy of RNC Marketing, Joy Martinez Onazawa of Environment Design, Peter and Susan Holaysan of Sta. Fe Resort, Wesley Chiongbian of Mynimo.com, USC Kapamilya Negosyo Na!, and Rey Merida of Amicha Toledo Multi-Purpose Cooperative.

The event was the highlight of the CCCI’s Visayas Area Business Conference. Cebu Governor Gwendolyn Garcia, PCCI chairman emeritus Miguel Varela, CCCI chairman Consul Samuel Chionson, and conference chairman and Cebu Holdings president Francis Monera led the representatives from the public and private sector in attendance.

In keeping with the theme of the Cebu Business Month 2010, “Get Inspired! Go Green,” Zobel’s remarks focused on the role of business in sustainable development. He enjoined colleagues in the private sector to “take on a broader responsibility to tackle environmental and social development issues with the same discipline and thinking we approach traditional business opportunities and be one in this sustainability journey.”

Ayala Corporation’s consolidated net income in 1Q10 reached P2.1 billion, at par with the P2.2 billion net earnings in the same period in 2009. Equity earnings from its business units rose by 6%, driven by higher equity earnings from its real estate unit Ayala Land, Inc. and a significant turnaround in equity earnings from AC Capital.

Equity earnings from Ayala Land rose by 31% year-on-year driven by the sustained recovery in the real estate sector. Ayala Land attained record-high quarterly net income of P1.2 billion in the first quarter, 32% higher than 1Q09 as it achieved record sales and bookings from its residential project launches. Its leasing portfolio likewise performed steadily with occupancy rate in its malls rising to 94% and occupied business process outsourcing office leasable area expanding by 20% from 4Q09 and by 59% from 1Q09.

All companies under Ayala’s AC Capital unit contributed to the turnaround. Manila Water, IMI, and Ayala Automotive posted substantial growth year-on-year, while AG Holdings and LiveIt recorded lower losses during the period. Combined equity earnings from AC Capital companies improved to P228 million in the first quarter, a turnaround from a P132 million loss in 1Q09.

Equity earnings from Manila Water grew by 78% as its net income rose by 35% to P839 million. Manila Water continued to grow within its concession area as well as in other areas in the Philippines. Revenues rose by 18% to P2.5 billion as a result of higher water sales volume and new service connections in the East Zone. Operating efficiency improved further with better supply and water pressure management and network enhancements. This reduced non-revenue water to 13.7% and kept the company’s service levels unaffected by the El Nino dry spell. The substantial growth in equity earnings was also due to Ayala’s increased ownership stake in the company following its purchase of United Utilities’ 11.6% interest. Manila Water continues to make headway in other parts of the country with operations running in Laguna and Boracay.

A recovery in the global electronics exports sector sustained IMI’s positive momentum. IMI posted earnings of US$3.2 million in 1Q10, reversing the loss in the same period last year. Sales grew by 11% driven by its Philippine and China operations. China operations contributed substantially, making up 58% of revenues. IMI continues to increase its presence in China as it becomes increasingly in the center of the global manufacturing industry. It opened its 6th manufacturing facility in Chengdu last April.

Ayala’s automotive dealerships delivered a 9% growth in unit sales, reflecting the country’s vibrant domestic consumption. This pushed Ayala’s dealership income up by 124% year-on-year as a result of higher vehicle sales, better service income, and improved income from collateral businesses.

Its business process outsourcing investment company, LiveIt, grew its share of investee company revenues to US$67 million in the first quarter, which represents 48% growth over last year, primarily as a result of the eTelecare-Stream merger and Integreon’s acquisitions of Onsite and Grail Research. Revenue growth and enhanced operating efficiencies resulted in a 23% increase in LiveIt’s share of investee company EBITDA to US$3.7 million. LiveIt’s consolidated net loss improved from last year’s Php306 million to this year’s P279 million, which includes acquisition related expenses of P131 million.

Ayala’s other core business units, Globe Telecom and Bank of the Philippine (BPI) Islands reported lower net earnings year-on-year. Globe’s reported net income declined by 26% in 1Q10 vs 1Q09 to P2.9 billion mainly due to the soft performance of the mobile business. Mobile revenues fell by 10% year-on-year and by 3% quarter-on-quarter as the mobile market was weighed down by intense competition and price pressures. Despite this, Globe sustained positive net additions in 1Q10, an improvement from the net reductions last year when the company deliberately recalibrated acquisition efforts. As a result, cumulative mobile subscribers increased by 3% year-to-date to 23.9 million. Recent programs that focused on acquiring new subscribers, stimulating usage, and rewarding loyal Globe customers helped stem the decline in the mobile business. Globe’s broadband business and corporate data business, however, grew at double-digit rate. Its broadband subscriber base nearly tripled from last year’s level driven by wireless broadband, which contributed over 80% of the net adds during the quarter.

Its banking unit, BPI, posted 1Q10 net income of P2.7 billion, 5% lower than same period last year, but remains substantially higher than earnings in the past three successive quarters. The bank’s revenues were steady at P9 billion despite the 54 basis point decline in net interest spreads and weaker trading profits. Compensating for the drop in spreads was an 11% improvement in the bank’s average asset base. Loan growth improved by 8% over the previous year with strong growth registered in the consumer and middle market. Middle market loans were up by 20%, credit card receivables up by 18%, and SME loans were up by 15%. Retail mortgages and auto loans grew by 13%. The bank’s total asset base increased by 8% versus last year with deposits growing by 8% to P558 billion.

Ayala chairman and CEO Jaime Augusto Zobel de Ayala commented, “We are pleased with the trend in earnings performance of the business units, particularly in comparison to the past three quarters. The continued and steady improvement reflects the sustained recovery in the domestic market. We remain confident this trend will continue to improve moving forward in step with the economy and the improving pace of domestic consumption.”

This press statement refers to the disclosure submitted today, May 14, 2010, to the Securities and Exchange Commission and the Philippine Stock Exchange.

FinanceAsia’s 10th annual poll of Asia’s top companies cited Ayala Corporation as the best managed company in the Philippines and Jaime Augusto Zobel de Ayala and Ernest Cu as the country’s best chief executive officers.

In addition to the outstanding overall performance in this year’s survey, Ayala led Philippine companies for “Best Corporate Governance” and “Best Corporate Social Responsibility.” It placed second for “Best Investor Relations” and third in the category “Most Committed to a Strong Dividend Policy.”

Ayala subsidiaries Globe Telecom, Manila Water, and Ayala Land ranked in second, third, and eighth place, respectively, among the Philippines’ best managed companies. Together with Bank of the Philippine Islands, these companies also figured prominently in the four categories. Moreover, Manila Water received the nod for best mid-capitalization company and Cebu Property Ventures and Development Corporation was best small-cap company.

Albert de Larrazabal of Globe and Chito Oreta of Manila Water were named best chief finance officers in the Philippines.

The FinanceAsia poll was conducted among more than 300 investors and analysts across the region. Other companies that made it to the list of best managed companies in the Philippines were PLDT, San Miguel, Aboitiz Power, SM Prime Holdings, SM Investments Corp, Jollibee Foods, and Aboitiz Equity Ventures. Results of the poll were published online on April 29, 2010, at www.financeasia.com.

In a disclosure to the Philippine Stock Exchange, Securities and Exchange Commission, and the Philippine Trading and Exchange Commission (PDex), Ayala Corporation treasurer Ramon G. Opulencia said that Ayala’s application to list its P10 Billion Fixed Rate Putable Bonds (7.20%) Due 2017 for trading on the PDex has been approved effective April 30, 2010.

“The listing of the bonds shall widen the reach of price discovery and transparency for the Ayala issue and enables participation across all markets on PDex. The trading and settlement of the bonds shall be in accordance with the PDex rules,” explained Opulencia.

At its annual stockholders’ meeting held on April 16, 2010, Ayala Corporation chairman and chief executive officer Jaime Augusto Zobel de Ayala announced its group companies is allotting P70 billion in capital expenditure in 2010, the highest on record for the conglomerate. The group’s capital expenditure plan spans investments across the real estate, telecommunications, and water utilities sectors. Mr. Zobel de Ayala said, “We see room for growth moving forward as our businesses expand into new markets and geographies.”

Ayala is increasingly combining its competencies across its core businesses as it seeks to address the needs of a much broader consumer base. The Ayala chief executive stressed, “It is part of our long-term growth strategy to find innovative and creative ways of serving the needs of a much larger segment of our population. We are increasingly aligning our business models across the group to be responsive and relevant to our commitment to provide sustainable growth and development to a broader and more diverse community.”

Ayala recently formed BPI Globe BanKO, a joint venture with its banking unit and telecom unit to develop microfinance services in which Ayala has a 20% stake. The group sees microfinance as a transformational force in society from both a social development perspective and as a profitable enterprise.

Its real estate unit, Ayala Land, Inc. expanded its foray in the economic housing segment to meet the growing demand for housing at much lower price points. The real estate unit also tapped a partnership with the group’s water utilities arm, Manila Water Co., Inc., for the development of water and wastewater facilities of its existing real estate developments.

Ayala is pursuing these new initiatives in tandem with its growth objectives in its traditional markets. Ayala seeks to expand in selective areas overseas and is carrying these out through Manila Water, Integrated Micro electronics, Inc. (IMI), and its business process outsourcing businesses. Manila Water is looking at water and wastewater projects in Vietnam and India, while IMI recently opened its sixth manufacturing facility in China. Its BPO unit continues to participate in acquisition opportunities as the industry continues to consolidate globally.

Ayala president and chief operating officer Fernando Zobel de Ayala, in his report to shareholders, pointed out that most of its business units performed well in 2009 despite a severe slowdown in the global economy, resulting in Ayala’s gains-adjusted earnings rising by 34% in 2009 compared to the prior year. The Ayala President said, “We are optimistic about this year as the economy continues to show positive signs of recovery. Ayala continues to explore new investment opportunities and platforms to enhance value creation for our shareholders.” Earlier this year, Ayala announced its intent to bid for the 246-MW Angat Hydropower plant through a consortium with Metro Pacific Investments and the Lopez group.

At the same meeting the shareholders approved an amendment to Ayala’s Articles of Incorporation creating voting preferred shares which would allow greater foreign ownership of Ayala’s common shares and further enhance liquidity. The amendment included a provision which gives Ayala flexibility to issue shares in exchange for property, such as shares of other companies, and enable the company to act quickly to value-accretive investment opportunities.

Ayala’s share price has risen 14% year-to-date to P342.50 per share, with market capitalization of P172 billion.

Growth Fuelled by Strong Performance of Core Businesses and Turnaround of AC Capital Units

Ayala Corporation’s 2009 unaudited net income reached P8.2 billion at par with prior year’s earnings with substantially lower capital gains from share sales in 2009. Excluding capital gains, net income grew by 34%. The growth was driven by the strong performance of its major business units, even amidst a sluggish economic environment. Ayala’s total equity share in the earnings of its business units rose by 18% to P9.2 billion.

Ayala Corporation president and chief operating officer, Fernando Zobel de Ayala said, “Our efforts the past few years to strengthen our balance sheet prepared us well for the economic downturn. Our healthy cash position and comfortable gearing kept fundamentals intact across the group. This position of financial strength amidst a challenging environment kept our focus on strengthening each of our business units, enhancing our current portfolio, and seeking opportunities for future growth.”

In real estate, Ayala Land’s residential sales recovered beginning the second quarter with take-up rates improving through the fourth quarter. Its leasing revenues from shopping centers and office/BPO spaces grew by 20% with the expansion in gross leasable area and generally steady occupancy rates. Ayala Land posted P4 billion in net income in 2009, 16% lower than prior year which included gains from a lot sale. Excluding the impact of the lot sale, net income was down by only 2%.

The recovery in the residential sector was reaffirmed by two very successful residential project launches in January 2010. Ayala Land is embarking on its most aggressive launch this year as it expands its presence in key cities and areas in the Philippines. The company recently sealed several lease and joint venture agreements with strategic partners for the construction of regional malls in the Subic Bay Freeport Area and Cagayan de Oro. It has opened MarQuee Mall in Pampanga in September last year and will also unveil Abreeza Mall in Davao City by next year.

Its banking unit, Bank of the Philippine Islands (BPI) registered strong business volume, revenue, and earnings growth. Net income was up 33% to P8.5 billion. Net interest income increased by 10% on account of the expansion in asset base and improvement in spreads. Non-interest income grew at an even faster rate of 25%. While corporate lending slowed, challenged by the high level of liquidity and the availability of funding through the capital markets, loans to SME, consumer market, and credit card customers remained robust, expanding at double-digit levels. The bank’s remittance business outpaced industry growth which resulted in BPI capturing over 20% of the overseas Filipino remittance business.

Globe Telecom registered 11% earnings growth to P12.6 billion. While its core mobile business was weighed down by intense competition and subscribers’ increasing preference for value offers on the back of weaker consumption, Globe made significant gains in its broadband business. Globe’s broadband subscribers expanded three-fold to over 715,000, while mobile subscribers reached 23.2 million by year-end following a deliberate churn out of marginal subscribers. Globe continues to invest in its broadband business to augment existing capacity, expand coverage, and improve the availability of 3G, WiMax, and DSL broadband services. Globe recently increased its dividend payout to a range of 75% to 90% of prior year’s earnings as it remains committed to optimizing its capital structure and delivering superior value to its shareholders. In line with this, Globe declared its first semi-annual cash dividend of P40 per common share payable on March 15, 2010.

AC Capital contributed positively in 2009, reversing the loss in 2008. This was driven by the strong earnings growth of water distribution unit, Manila Water Co., Inc., the turnaround of the electronics manufacturing business, Integrated Microelectronics, Inc. (IMI), and the significantly improved performance of Ayala’s holding company for its BPO investments.

Manila Water posted a net income of P3.2 billion, 16% higher than in 2008 as it expanded customer base, increased billed volume, and improved operating efficiency. Manila Water continued to expand its businesses in wastewater management and concessions outside of the east zone. In 2009 the company commissioned the 4–million liter per day Pineda Sewage Treatment Plant, in addition to the five additional sewage treatment facilities currently being constructed in the cities of Makati, Marikina, Quezon, and Taguig. These plants put the company on track to achieve 30% sewerage coverage by 2010. Beyond the east zone, Manila Water commenced the concessions in Laguna and Boracay with plans to improve the system, upgrade the existing network, reduce system losses, and improve reliability of water and wastewater services. Manila Water is also exploring water projects overseas and signed joint venture agreements with REE Corporation in Vietnam and Jindal Water Infrastructure Ltd. of India to explore water and wastewater-related projects in these countries.

IMI posted a turnaround in 2009 with US$10 million in consolidated net income, a reversal of the net loss in 2008. However, with the electronics sector weighed down by the global economic downturn, full year revenues fell by 10% to US$395M. Revenue trends began to improve in the third quarter, with increased volumes for a leading Chinese OEM in the telecom sector, underpinned by 3G network deployments in emerging markets. Philippine revenues were generated mainly from storage device, automotive, and consumer electronics. IMI has a strong balance sheet with consolidated cash of US$54M, strong liquidity, and zero net debt position which gives it sufficient flexibility to support its growth initiatives. IMI is well positioned to capture opportunities as the electronics industry recovers given its solid track record with its OEM customers, global footprint, and robust financial position. It recently completed it listing by way of introduction at the Philippine Stock Exchange in January 2010.

Ayala’s BPO businesses held through LiveIt made considerable gains in achieving both scale and profitability. The merger of eTelecare with Stream in October 2009 created a top 7 global call center company, while Integreon’s acquisitions positioned it as the top global knowledge process outsourcing company. In the fourth quarter of 2009, the BPO companies attained combined annualized run rate revenues of US$911 million and EBITDA of US$77 million, of which LiveIt’s share was US$300 million and US$25 million respectively. LiveIt achieved positive operating net income before deal related charges and interest expense starting in the third quarter, which contributed to a significant reduction in its consolidated net loss to US$12 million in 2009. The loss was largely due to acquisition driven expenses and leverage.

Ayala ended 2009 with cash of P30 billion and parent net debt to equity ratio of 0.04 to 1. It recently announced its intent to bid for the Angat Hydroelectric Plant in early 2010.

Ayala Corporation chairman and CEO, Jaime Augusto Zobel de Ayala, expressed optimism about the strong performance of the Ayala group even amidst a severe global economic slowdown. “We are pleased with the strong performance and resilience of our core businesses and are confident that we are well-positioned to capture opportunities as the economic cycle turns. We are significantly increasing group capital expenditure this year, reinvesting in our existing businesses as well as exploring investments in new sectors where we can lay a platform for a higher growth trajectory moving forward.”

The above statement pertains to the disclosure made to the PSE and SEC by Ayala senior managing director and CFO Rufino Luis T. Manotok on March 8, 2010.

Asiamoney, one of the most widely-read financial magazines in the Asia Pacific region, cited Ayala Corporation as the Overall Best Company in the Philippines for Corporate Governance in its 2009 Corporate Governance Polls.

Ayala also received the highest marks among Philippine companies in two categories, “Best for Responsibilities of Management and Board of Directors” and “Best for Shareholders’ Rights and Equitable Treatment.”

A total of 104 senior executives and research analysts from 96 firms participated in the survey covering more than 250 companies in the region. According to Asiamoney, the latest Corporate Governance Poll was “notable given that the polling period coincided with some of the most pronounced financial volatility in history.”