Category: News

Ayala Corporation and its listed companies, Ayala Land, Inc., Bank of the Philippine Islands, and Globe Telecom, earned four of the five highest rankings of the 2007 Corporate Governance Scorecard Project conducted by the Institute of Corporate Directors (ICD).

A total of 138 companies, or more than half of the 249 companies listed in the Philippine Stock Exchange, participated in the ICD study, which was for the first time undertaken jointly with the PSE, Securities and Exchange Commission, and Ateneo Law School, and supported by the Center for International Private Enterprise. The top five rankings, which also included PLDT, were announced at the PSE Awards Night held on January 8 at the InterContinental Manila.

ICD is a professional, non-government organization that conducts training and advocacy for corporate governance and citizenship. It has been at the forefront of promoting corporate governance reforms in the country and has developed a corporate governance scorecard, a tool that public corporations can use to rate and benchmark their corporate governance practices relative to global and regional standards.

The CG Scorecard Project is envisioned to provide empirical data on the state of corporate governance among Philippine companies, help publicly listed companies strengthen their governance structures, and assist the SEC in reviewing principles for possible adoption by publicly listed companies. The scorecard is used to evaluate 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 established by the Organisation for Economic Cooperation and Development and used as basis for corporate governance practices globally.

Led by the parent company, Ayala group companies assessed their own governance practices using ICD’s scorecard and submitted supporting documents including the latest annual report, manual of corporate governance, code of conduct, amended articles and by-laws, as well as information on stockholders’ meeting, public ownership, board attendance, and ethical standards. Accomplished scorecards from all companies were validated and analyzed within or outside the SEC in coordination with ICD. Students from the Ateneo Law School also helped verify the survey results against publicly disclosed information.

Manila Water recently received the International Finance Corporation’s Client Leadership Award in recognition of the company’s comprehensive approach in promoting sustainable development in the East Zone of Metro Manila and in the water and wastewater industry. Manila Water is the first Philippine company to receive this global award which is given annually. The awardee is selected after undergoing a rigorous selection process among IFC’s clients globally.

IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s Client Leadership Award is a significant award as it recognizes highly successful corporate clients that significantly help IFC’s sustainability mission. Manila Water was given the award as the Company demonstrated strong management commitment to environmental and social sustainability and corporate governance while achieving commercial success.

“IFC has been a valuable partner in helping us prove that business objectives and sustainability initiatives are perfectly aligned, which is the core of our business strategy. We are honored to receive this award and proud of our longstanding partnership with IFC. We hope to continue this valuable relationship with IFC as we continue to grow our business,” said Manila Water president Antonino Aquino.

At the award ceremony in Washington, DC, IFC executive vice president and CEO Lars Thunell, said, “Manila Water’s innovative programs to bring water to poor people and its success in supplying the city’s eastern zone are just some of the ways that the company embodies IFC’s ideals in social sustainability and corporate governance.”

Globe Telecom posted a strong net income of P3.5 billion in the first quarter of 2006, flowing from its highest-ever quarterly EBITDA and EBIT of P9.7 billion and P5.7 billion, respectively. These results build on the momentum that started in the second half of 2005 when Globe introduced various compelling value-offers to its subscribers. They also reflect continuing efforts to manage the company’s cost of operations.

Globe’s first-quarter net income of P3.5 billion is up 19 percent from last year, despite the tripling of provisions for income tax year on year to P1.5 billion. The company’s effective income tax rate increased from 15 percent to 31 percent with higher corporate-tax rates and the expiry of the Globe’s tax holiday in March 2005. If the impact of mark-to-market and forex changes were to be excluded, the first quarter net income would be up 40 percent year on year and 19 percent quarter on quarter.

Net service revenues at P14.2 billion are 5 percent higher than the same period last year, but lower by 3 percent quarter on quarter with fourth-quarter 2005 revenues reflecting peak seasonal demand. Quarterly EBITDA and EBIT reached historic high points and grew by 23 percent and 39 percent, respectively, from first-quarter 2005 levels. EBITDA margins improved to 68 percent from 59 percent in the first quarter of 2005 and 64 percent in the fourth quarter of 2005.

In line with its thrust to improve price competitiveness and provide value propositions for specific customer segments, Globe further expanded its roster of innovative offers. Last February, Globe Text NonStop, under the banner offering Globe UNLIMITXT, was made a permanent feature to cater to the needs of heavy SMS users.

Extending its unique and compelling per-second offering for local calls to the IDD service, Globe introduced last March its Globe Tipid IDD Kada-Segundo, which allows per-second charging of US$0.003 to 12 select countries and US$0.007 for other destinations. Globe also made available its Tipid IDD rates of P7.50 per minute for calls to the U.S. and Canada on off-peak hours, and P7.50 per minute for calls to Hong Kong CSL mobile numbers. In addition, under Globe’s Kababayan Program, all Globe and Touch Mobile subscribers were offered reduced rates for calls to Saudi Arabia and Japan, as well as discounted SMS and voice calls to SingTel Mobile of Singapore. Finally, on April 16, Globe introduced another tariff breakthrough, the P0.90 per text to all networks, the lowest inter-network SMS rate in the market today.

This array of value offerings has helped strengthen Globe’s competitiveness and provide impetus for subscriber growth. Globe’s total wireless subscriber base reached 13.2 million at the end of the first quarter of 2006, 6 percent higher than the previous quarter’s 12.4 million and 2 percent better than last year’s 12.9 million. Net additions of about 0.8 million SIM cards reflect a significant turnaround from the previous quarter’s net disconnections of about 6,000.

On the wireline front, Innove Communications, Inc., registered a 2 percent year-on-year growth in service revenues to P1.6 billion by end-March, spurred by growth in the consumer broadband and corporate data businesses. This improvement in revenues was also underpinned by a roster of promotions such as free NDD calls of Globelines postpaid subscribers to any Globelines phone; lower IDD rates; the WorldPass Prepaid service that offered reduced internet browsing rates; and various bundled voice and unlimited dial-up and broadband internet services for Globelines subscribers.

“We are delighted by the market’s response to our initiatives and are encouraged by the results of the first quarter,” said Gerardo C. Ablaza, Jr., president and CEO of Globe. “While we expect competition to remain intense in the succeeding quarters, we will stay on course and strive to further strengthen our market position. We also remain committed to improving our operating efficiency and productivity.”

The above information was submitted on May 8, 2006, by Globe Telecom in compliance with the disclosure requirements of the Securities and Exchange Commission and the Philippine Stock Exchange.

The executive committee of the Board of Directors of Ayala, in the exercise of its authority set forth in the by-laws, has approved today the issuance and offering of Preferred “B” shares of the corporation in the amount of P3 billion with an option to increase the offer size up to P5.8 billion.

The Preferred “B” shares will be offered at its par value of P 100.00 per share with a fixed quarterly dividend rate based on a 5-year Mart. If the shares are not redeemed at the end of the 5th year from date of issue, the Optional Redemption Date, the dividend yield shall be adjusted to the higher of the original dividend yield and the 10-year FXTN benchmark as displayed on Mart1 page. Payment of current dividends shall be cumulative. The Preferred shares shall be non-convertible and shall have no voting and pre-emptive rights.

BPI Capital Corp. and Hongkong and Shanghai Banking Corp., Ltd. will be the Joint Issue Managers and book runners for the Issue. BPI Capital Corp., Hongkong and Shanghai Banking Corp., Ltd. and First Metro Investment Corp. will act as the Joint Lead Underwriters.

The executive committee likewise approved the filing of the Registration Statement covering the shares with the Securities and Exchange Commission and the application for listing of the shares with the Philippine Stock Exchange.

The above information was submitted on May 2, 2006 by Ayala managing director for corporate governance and legal affairs Renato O. Marzan in compliance with the disclosure rules of the Securities and Exchange Commission and the Philippine Stock Exchange.

Ayala has approved an investment of up to US$20 million in The Rohatyn Group Special Opportunity Fund Ltd (SOF). TRG Management LP, a member of The Rohatyn Group (TRG), is the investment manager of the SOF.

The investment will be made by Azalea International Venture Partners, Ltd., a subsidiary of Azalea Technology Investments.

The SOF is a fund whose primary (but not exclusive) investment objective is to generate superior risk adjusted returns and, from time to time, current income by opportunistically acquiring a diversified portfolio of undervalued investments and investments with significant growth potential in emerging market regions, including, without limitation, Latin America, Eastern Europe, Asia and Africa.

Ayala’s placements in investment funds such as the SOF, are part of Ayala’s strategy to work with partners to seek opportunities to expand its equity portfolio and generate returns from medium term investments.

The above information was submitted on April 3, 2006 in compliance with the disclosure requirements of the Securities and Exchange Commission and the Philippine Stock Exchange by Ayala managing director and head of corporate governance and legal affairs Renato O. Marzan.

The Board of Directors of Ayala Corporation approved on February 10 2006, the reclassification of the unissued Preferred shares and redeemed Preferred shares of the Corporation, into 5.8 billion new class of Preferred shares with a par value of P1.00 per share or an aggregate par value of P5,800,000,000.

The new Preferred shares, to be known as Preferred “B shares”, will have the following features :

1. Optional redemption by the Corporation;

2. Issue value, dividend rate and declaration thereof to be determined by the Board of Directors;

3. Cumulative in payment of current dividends as well as any unpaid back dividends, and non-participating in any other further dividends;

4. Non-convertible into common shares;

5. Preference over the holders of common stock in the distribution of corporate assests in the event the dissolution and liquidation of the Corporation and in the payment of the dividend at the rate specified at the time of issuance;

6. Non-voting except in those cases specifically provided by law;

7. No pre-emptive rights to any issue of shares, Common or Preferred; and

8. Reissuable when fully redeemed.

 The Board likewise approved the amendment of Article VII of the Amended Articles of Incorporation of the Corporation to reflect the aforesaid reclassification of preferred shares.

The foregoing acts of the Board will be submitted for the ratification of the stockholders during the annual stockholders’ meeting of the Corporation on 07 April 2006.

The above information was submitted by Ayala managing director for corporate governance and legal affairs Renato O. Marzan in compliance with the disclosure requirements of the Securities and Exchange Commission and the Philippine Stock Exchange.

Ayala Corporation has sold and transferred all its 50,600 outstanding shares of Aon Philippines Inc. (formerly Ayala Aon Risk Services, Inc.) in favor of Aon Holdings B. V. for the aggregate purchase price of P65.7 million. The above information was submitted on January 17, 2006 by Ayala managing director for corporate governance and legal affairs Renato O. Marzan in compliance with the requirements of the Securities and Exchange Commission and the Philippine Stock Exchange.

Businesses can use their core competencies to come up with sustainable corporate social responsibility programs that help uplift the lives of the underprivileged.

This new paradigm of how business can do good was put forward by Globe Telecom president and CEO Gerardo C. Ablaza, Jr. at the recently concluded Corporate Social Responsibility (CSR) Week Expo organized by the 59-strong League of Corporate Foundations.

Ablaza said that by including social issues into the development and execution of core business strategies, companies have the opportunity to contribute to the development of marginalized sectors of society and turn them into consumers and active participants in nation building. This way, CSR efforts go beyond promoting good public relations and become sustainable solutions to social problems.

The Ayala group, for instance, has integrated CSR in its corporate strategy. The parent company actively manages its portfolio to ensure that investments in property, banking, telecommunications, water infrastructure, electronics and information technology deliver innovative and high quality products and services to its stakeholders.

“In the Ayala group, we believe that the daunting task of leading our country to progress does not rest solely on the shoulders of government,” explained Ablaza, “One of the better ways of participating in national development is the effective use of our core products and services to uplift the lives of the Filipino.”

Meanwhile, programs driven by the Ayala Foundation and Ayala subsidiaries and affiliates are focused on education, information technology, livelihood, microfinance, and community development”‚”areas that not only reflect the companies” core values but also form part of their core competencies.

In the case of Manila Water, its flagship program Tubig Para Sa Barangay has not only improved water supply, addressed health and environmental issues, and enhanced the quality of life in underserved communities, it has also reached a substantial market and reduced revenue losses from illegal connections and leaks.

Bank of the Philippine Islands has extended credit of over P60 million to non-profit institutions, cooperatives and micro-entrepreneurs. BPI Foundation also trains small and medium enterprises to help improve viability and profitability.

Ayala Land’s Dagdag Kita sa Pamilya program conducts livelihood training for the unemployed. This also helps ensure that its property developments would continue to have vibrant neighboring communities.

At Globe Telecom, the Bridging Communities, or BridgeCom program is focused on community leadership and development, education, information technology, and livelihood.

Ablaza cited the case of Brgy. Bolton, a farming and fishing community eight hours away from Davao City that has begun to struggle with increasing unemployment and migration of its skilled workers to the city. Globe Telecom, in partnership with ABS-CBN Foundation, created the BridgeCom sa Bayan training program in local governance and business development. As an offshoot of this, three store owners have started a Globe Autoload Max business and community leaders have defined their own micro-enterprise plans.

In another case, G-Cash, a service that allows payments and fund transfers through mobile phones, is now being tapped by the Rural Bank Association of the Philippines to facilitate loan amortizations and deposits for its microfinance borrowers.

According to Ablaza, BridgeCom addresses the needs of two major underserved sectors: the entrepreneurial poor who have the capacity to become successful business people using the Autoload Max platform, and micro-credit institutions and cooperatives through G-Cash. While these cases are unique to the Ayala group, Ablaza said that businesses can follow similar paradigms that deliver returns for its investors as well as society at large. By shifting CSR from charity and ad hoc forms of support to more strategic programs, business can make a real and lasting impact on society.

As Ablaza said: “Nothing brings greater joy and fulfillment than the knowledge that we have offered our talents and efforts in helping others stand on their feet and live their lives with dignity.”

Bridging Communities

Bank of the Philippine Islands (BPI), the financial arm of the Ayala group of companies, has continued to show strong performance after posting a P2.3 billion net profit during the second quarter, bringing its first semester profit to P4.3 billion. The bank’s second quarter profit, up 23 percent from P1.9 billion a year earlier, was driven by higher interest and fee-based incomes. As a result, the bank’s return on equity (ROE) also rose to 15.9 percent from 13.3 percent during the second quarter last year, while return on assets stood at 2 percent compared to 1.8 percent last year. BPI’s total assets amounted to P473.7 billion, of which total deposits comprised P366.9 billion. The bank’s total capital was at P55.9 billion. With a market capitalization of P108.8 billion, BPI is the highest capitalized bank listed in the Philippine Stock Exchange.

After disposing of P8.6 billion worth of non-performing loans (NPLs) last year, BPI again sold P2.4 billion worth of NPLs last July, thus improving considerably its overall financial condition. The recent sale of the NPLs brought down its year-to-date NPL ratio to 4.6 percent from 5.6 percent last year, making BPI one of the strongest banks in the industry.

On the ROPOA side (real and other properties owned or acquired), BPI managed to make a 26 percent increase in retail sales during the first semester compared to the same period last year. As of end-June 2005, BPI had sold over P998 million worth of foreclosed properties vs. P794 last year. To complement this in-house initiative, the bank is also planning to put some properties in south Luzon in the auction block.

As it celebrates its 154th year, BPI is pursuing an expansion strategy based on organic growth (growth from within) and mergers and acquisitions (growth through consolidations) to keep its market leadership. At present, BPI also leads in consumer banking through its thrift bank subsidiary, BPI Family Savings Bank, which holds the largest share of the market.

Last July 27, BPI signed a memorandum of agreement to acquire Prudential Bank, a medium size universal bank. This is BPI’s first acquisition since its merger with Far East Bank and Trust Company in 2000 and DBS Bank Philippines in 2001. Shortly before it signed the agreement to acquire Prudential Bank, BPI also offered to buy the semi-private Philippine National Bank, one of the major banks in the country. In view of its renewed financial strength, BPI has been on the lookout for some good acquisitions in order to bolster its position as a rising regional financial powerhouse.

In June 2005, the College of the Holy Spirit (CHS) of Manila will open its doors to a unique group of students in their freshman high school year.

Sixty-nine bright, young students from poor families, chosen for their potential for academic success and given a special public school learning environment, will soon be among the 200 or so elementary school graduates who will get their secondary education at CHS.

These children were until recently students of the Center of Excellence of Public Elementary Education, or Centex, a groundbreaking program of the Ayala Foundation in cooperation with several private companies and the Department of Education (DepEd). It is a program that stemmed from a desire to provide children from disadvantaged families with quality education and help change the course of their lives and that of their community.

Seven years since the first school was created in Tondo, Manila, Centex has produced its first batch of graduates of 71 confident, talented achievers who not only surpass their counterparts in government-administered tests among public and private schools but also exhibit a consciousness that can only come from their direct experience of poverty.

These results drew the College of the Holy Spirit to forge a partnership with Ayala Foundation that would continue to provide Centex students with a similar kind of learning environment, one that challenges their intellect and fosters their sense of social duty. It was providential, too, that the 92-year old Catholic college began to offer high school education again beginning 2004.

The CHSM-Centex High School is a coeducational institution that vows to provide good, values-based education. For the coming academic year, CHSM-Centex is expeting around 200 students from Centex and from other “feeder schools” and neighboring elementary schools. And like its parent institution, the high school gives equal importance to developing core values as well as academic excellence.

CHS Manila president Sr. Eufracia Marcojos explained, “Our vibrant community celebrates diversity, nurtures spirituality, encourages experessions of divergent thinking, and prepares the next generation for leadership and service towards the promotion of justice.”

Holistic approach
This development harks back to the beginnings of the College of the Holy Spirit, which in 1913 was established by missionary sisters as a primary school and later developed into a college school for women. Sr. Marcojos said that the creation of the secondary school last year was an expression of their belief that basic education plays a critical role in the integral formation of our youth.

At Centex, children are also given a holistic learning enviroment. They are taught under a special curriculum that incorporates the latest educational trends and research and is crafted by DepEd representatives and a team of volunteer educators from local schools as well as the United States.

The two Centex schools in Tondo, Manila and Bauan, Batangas are equipped with various facilities that the children are free to use. Textbooks, uniforms, and transportation subsidies are provided. The young scholars are served lunch every day to supplement their nutritional needs. In addition, parents are offered parenting workshops and livelihood training, extending the benefits of the program to immediate families and the community at large.

“Centex improves the physical, financial, and human resources of an ordinary public elementary school” said Ayala Foundation president Victoria P. Garchitorena. “In so doing, we ultimately give children of poor families quality education otherwise denied this sector of Philippine society.”

 Though within the purview of the Department of Education and the local government, Centex is able to provide these benefits through endowment funds created by private companies and managed by Ayala Foundation. Ayala Land funded the first school in Tondo, and Globe Telecom and Pure Foods Corporation helped create the Centex school in Batangas. Respected artists such as Bencab, Romulo Galicano, Anita Magsaysay-Ho, and Malang have also supported the schools by allowing their artworks to be featured in fundraising merchandise.

Shared mission
Over the years this unique program has shown encouraging results. Centex consistently tops the DepEd’s achievement tests given to all public schools in Manila. Students also lead competitions in math, literacy, and the arts among public and private schools and are constantly exceeding expectations of their parents, teachers, and those who witness the dramatic change in their lives. Two of the recent graduates will soon be studying in the country’s leading science high schools.

The Missionary Congregation of the Servants of the Holy Spirit that manages the College of the Holy Spirit is eager to welcome the 69 Centex students into their community.

Said Sr. Eufracia: “We will provide these students quality education that addresses the strengthening of both Gospel and Filipino values. We want to help create among our youth, servant leaders, discerning persons equipped with excellent skills, who are nurturers of their environment and proud to be Filipino.”

With shared goals for the younger generation, the College of the Holy Spirit and the Ayala Foundation through Centex, believe that their partnership can help make a just, peaceful, and empowered society in the years to come.