Category: News

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.”

Never Stop Believing, Ayala’s 175th anniversary program, received the Public Relations Society of the Philippines’ second highest honor, the Bronze Anvil, at the 45th Anvil Awards held on February 26 at EDSA Shangri-La Hotel.

With emphasis on messaging and content, Ayala’s 175th anniversary program made use of multi-media platforms to reach internal and external stakeholders. These include the distinctive “Never Stop Believing” print ad campaign; internal print publications (the Ayala group newsletter Ayala Now and the Ayala at 175 special magazine); an anniversary video featuring chairman emeritus Jaime Zobel de Ayala; a special website and online timeline; animated screensavers; and below-the-line collaterals including banners and exhibits. The 175th anniversary program won an Asian Multimedia Publishing Award in 2009.

Bank of the Philippine Islands’ Herencia, a coffeetable book on its art collection and its supplement teacher’s guide, also received a Bronze Anvil. Ayala at 175, a special publication on Ayala’s history and legacy, was given an Anvil Award of Excellence.

Other Ayala companies figured prominently in the Anvils. Globe Telecom received 4 Excellence and 6 Merit awards for various corporate social responsibility programs. Manila Water received 4 Merit awards for programs in environment and disaster response. Ayala Land’s malls were recognized for unique PR programs: Excellence for Market! Market!‘s Recycliing is in the Bag, and Merit for Cebu Holdings’ Think Pink! health campaign.

Manila Water, Cebu Holdings, and Ayala Foundation also received Merit awards for their annual reports.

PRSP received a total of 292 entries for the 45th Anvil Awards. Winners were selected by an independent board of jurors led by Dr. Cayetano Paderanga, Jr.

Actis, an emerging markets private equity specialist, announced today that it has invested US$50 million to acquire a substantial minority stake in Integreon, the leading global provider of legal support, research and business services to law firms, financial institutions and corporations.

As part of this investment, JM Trivedi, Actis’s Head of South Asia, and Gautham Radhakrishnan, a Director at Actis, will join Integreon’s board of directors.

Actis has invested alongside Ayala Corporation, the oldest and one of the leading conglomerates in the Philippines, which initially invested in Integreon in 2006 through LiveIt Investments, its business process outsourcing holding company. Ayala Corporation will continue to hold a majority stake in Integreon.

Today, professionals at leading organizations including 11 of the top 50 global brands such as Microsoft; 32 of the AmLaw 50 such as Clifford Chance and DLA Piper US LLP; and 9 of the top 10 global investment banks, focus on their ‘highest and best use’ by trusting high-quality research, document, and legal solutions from Integreon.

Integreon revenues have grown at an 83% CAGR since 2006 to an $89 million revenue run rate in Q4 2009.

With Actis’s investment, Integreon plans to grow its range of services and technologies, launch new delivery centers, and seek strategic acquisitions.

Commenting on the transaction, Paul Fletcher, Senior Partner at Actis said, “Outsourced professional services are one of Actis’s core investment strategies and Integreon represents a best in class investment in this sector. Leading international corporations, financial institutions and law firms harness the specialist knowledge capabilities of the emerging markets, and Actis’s investment in Integreon further strengthens this link. We hold the management team of Integreon in high regard and are excited about partnering with Ayala to drive the continued growth, profitability and ambition of the business.”

Fred Ayala, CEO of LiveIt said, “We are very pleased to bring in Actis as a strong new partner whose proven business building skills and deep knowledge of emerging markets will help us to take Integreon to the next level.”

Liam Brown, CEO of Integreon added, “Actis’s long-established understanding of emerging markets, along with their experience investing in business services outsourcing, makes them an ideal partner for Integreon.”

Jefferies India Private Limited acted as financial advisors to Actis. Marks Baughan & Co. served as financial advisors to Integreon.

Actis

Actis is a leading private equity investor in emerging markets with a growing portfolio of investments in Asia, Africa and Latin America; it currently has US$4.8bn funds under management. With over 100 investment professionals on the ground in 9 offices worldwide, Actis identifies investment opportunities in India and the emerging markets by bringing local experts together with specialist sector teams. Actis announced the close of its global emerging markets fund, Actis Emerging Markets 3 on 1 December 2008 with commitments totaling US$2.9bn. Actis announced the close of its global infrastructure fund, Actis Infrastructure 2, on 30 September 2009 with commitments totaling US$750m. www.act.is

Ayala Corporation/LiveIt Investments

Ayala Corporation was founded in 1834 and is the holding company of one of the largest and most diversified business groups in the Philippines, with interests that include real estate, financial services, telecommunications, electronics, water distribution, and information technology. Ayala and its listed subsidiaries and affiliates have a combined market capitalization of approximately US$13 billion. LiveIt is its investment arm in the business process outsourcing (BPO) sector. Its strategy is to acquire or invest in existing global BPO companies that have the potential to become a Global Top 5 leader in their sectors, and can leverage the Philippines; it owns significant shareholdings in Integreon, Stream Global Services (voice BPO), Affinity Express (graphics and creative services) and HRMall (HR and payroll services).

Integreon

Integreon is the premier global provider of outsourced research, legal and business Knowledge Process Outsourcing (KPO) services, and is a trusted partner for demanding professionals at the world’s leading corporations, law firms, and investment banks. Integreon’s nearly 2,000 Associates deliver services from centers in the US, UK, India, China, South Africa and the Philippines. www.integreon.com

The above statement pertains to the Manila press release issued by Integreon on February 16, 2010.

Ayala Corporation and Metro Pacific Investments Corporation (MPIC) have executed a letter-agreement confirming their interest in participating in the privatization of the 246 MW Angat Hydroelectric Power Plant located in Norzagaray, Bulacan, which is subject of the bidding process initiated by the Power Sector Assets and Liabilities Management Corporation (PSALM).

Ayala and MPIC have agreed to participate in the bidding through Michigan Power, Inc. (MPI), a subsidiary of Ayala that submitted a letter of interest to PSALM in relation to the bidding. MPI will be owned by Ayala and MPIC, subject to allocation of required equity to a technical partner in accordance with the bidding procedures.

This initiative is in line with Ayala’s desire to participate in the power sector, especially in the realm of clean and renewable energy.

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

Eighty-one college students from all over the Philippines will gather in Alfonso, Cavite, from February 9 to 12, to take part in the 12th National Ayala Young Leaders Congress (AYLC). The annual summit engages young leaders in three days of dialogues, teambuilding, and vision-setting in the spirit of servant leadership.

With the theme, “Ako: Pagbabago!” this year’s AYLC will formally open on February 10 with a keynote address by CNN Hero of the Year and founder of Dynamic Teen Company, Efren Peñaflorida.

Over the course of AYLC, participants will interact with leaders from the business, government, and socio-civic sectors as well as from the field of the arts and media. Speakers include South Cotabato Governor Daisy Avance-Fuentes, Manila Water Company president Rene Almendras, YouthVotePhilippines convenor Jaime Garchitorena, Probe Productions president Che-Che Lazaro, RockEd Philippines founder Gang Badoy, and AYLC alumni Edward Nino Puyod of Philippine Greenfarm Development Corporation, Coun. Concon Hernandez of Lipa City, and Lesley Cordero of the USAID Energy and Clean Air Project. Facilitators include McCann Erickson Philippines chairman emeritus Emily Abrera, Prof. Solita Monsod, and ABS-CBN host Pia Hontiveros-Pagkalinawan.

Congress participants were chosen for their strong track record of service to their school or community and for demonstrating leadership qualities. Key officers in the Ayala group of companies led by Ayala Corporation chairman emeritus Jaime Zobel de Ayala, chairman and CEO Jaime Augusto Zobel de Ayala, and president and COO Fernando Zobel de Ayala, helped select the young leaders by way of panel interviews. Of the 81 participants, 44 percent are from Luzon, 26 percent from the Visayas, 11 percent from Mindanao, and 19 percent from the National Capital Region. This year’s summit is the first time that a seminary and the Philippine National Police Academy are sending delegates.

“We in the Ayala group of companies believe that leadership—one that is founded on integrity and service—leads to positive change for those whom leaders serve and for society at large. The Ayala Young Leaders Congress aims to highlight the tremendous impact that each of these young Filipinos can make, and more importantly, the change we can all make by working together,” says John Philip Orbeta, Ayala managing director for corporate resources and AYLC program director.

Ayala Land, Inc. (ALI) was awarded the Best Large-Capitalization Corporate in the Philippines for 2009, among companies having a market capitalization of over $2 billion, by Asiamoney magazine. The magazine also named ALI president Antonino T. Aquino as the Best Executive in the Philippines in its recent poll.

“We are honored and very grateful for the recognition given by such a prestigious publication as Asiamoney. We have put great effort into overcoming challenges in 2009 and these awards validate the success of those efforts,” said Aquino.

Asiamoney is a monthly financial magazine that has been an important source of intelligence and information for corporate executives and the investment community in Asia since 1989. It is a division of the Euromoney Institutional Investor Plc, a respected global media group.

In an article published on the magazine’s website, ALI was cited for taking “a strategic change of direction” and expanding into the economic housing segment in order to broaden the company’s market penetration. According to the article: “It is a move that makes sense as the bulk of the country’s real estate demand lies in this segment…”

Asiamoney also recognized Aquino for his work in implementing the strategic changes, after just eight months at the helm, to propel the company’s growth in the coming years. “The president of Ayala Land has wasted no time in changing its strategic focus, making it more effective and sensitive to the market,” said the article.

Aside from venturing into economic housing, the company is entering into new geographies and expanding its base of master-planned and mixed use growth centers. It will complement this with small-format retail developments.

Recent initiatives along these pursuits include its partnership with the National Housing Authority for the development of the 29-hectare North Triangle property in Quezon City. ALI also entered into a letter of agreement with the city government of Olongapo and the Subic Bay Metropolitan Authority to master-plan the seven-hectare Olongapo City Triangle near the Subic Bay Freeport Zone’s main gate. (ALI press statement)