AYALA

CORPORATION'S

9-MONTH

PROFITS

RISE

19%

TO

P8.7

BILLION

Date : 11/13/2012 Ayala Corporations consolidated net income in the first nine months of the year reached P8.7 billion, 19% higher than in the same period last year. Core net income, which excludes the impact of the accelerated depreciation from its telecom unit and revaluation gains realized at its international property unit last year, reached P9.3 billion up 31% year-on-year. The conglomerates strong earnings growth was driven by robust equity earnings from its core and non-core businesses, which reached P11.1 billion in the first nine months, a 21% increase year-on-year. This was driven by its property, banking and water businesses which offset the decline in equity earnings from its telecom business. Significant improvement in equity earnings of its international businesses also helped boost equity earnings in the first nine months. The strong earnings momentum over the past quarters has pushed share price up 49% year-to-date, outpacing the markets 28% rise. Shares of its listed business units have likewise increased substantially over the period as they consistently delivered a solid earnings trajectory year-to-date. REAL ESTATE Ayala Lands 9-month net income reached P6.6 billion, 27% higher year-on-year driven by strong revenues across all business lines. Total revenues grew by 20% to P39 billion with its property development business up 27% year-on-year on higher bookings and continued completion of projects. Its commercial leasing business grew by 19% to P6.3 billion with contribution from new malls, higher occupied office gross leasable area, and higher lease rates. Revenues from its construction and property management business surged by 40% to P14.6 billion on the back of brisk residential, office, and mall projects. In the meantime, its hotels and resorts business also rose by 11% year-on-year to P1.8 billion. Ayala Land continues to have a robust pipeline of projects for launch in the fourth quarter which includes 12,000 residential units, 117,000 square meters of shopping centers, and nearly 20,000 square meters of office GLA. It continues to position for strategic land banks within and outside Metro Manila. The company recently acquired the 74-hectare FTI property in Taguig which is strategically located near the countrys two premier business districts, the Makati CBD and Bonifacio Global City. The companys capital expenditure this year is projected to reach a record P70 billion for both land acquisition and project completion. BANKING The Bank of the Philippine Islands (BPI) 9-month net income grew by 37% to P13.2 billion. This was driven by an 18% growth in revenues as net interest income increased by 8% while non-interest income increased by 34% due to higher securities trading gains. Net interest income grew with the expansion in average asset base while net interest spreads remained relatively stable. The banks strong loan growth was sustained in the third quarter. Corporate and consumer loans continued their double-digit expansion, growing by 18% and 16%, respectively. Asset quality remained very healthy with net 30-day NPL ratio at 1.7%. Operating expenses increased at a very manageable rate with much of the increase arising from technology-related costs. BPIs performance in the first nine months of the year translated to a return on equity of 19.2%. TELECOM Globe Telecoms upward momentum was sustained with 9-month core net income up by 7% year-on-year to P8.8 billion. However, considering the increase in operating expenses and subsidy and the impact of the accelerated depreciation from its network modernization program, reported net income declined by 15% to P6.8 billion. Top-line growth, however, remained strong with service revenues reaching an all-time high of P61.3 billion, 6% higher than same period last year. This was driven by strong mobile, fixed line data and broadband growth which offset the decline in fixed line voice revenues. Mobile revenues rose by 6% to P49.9 billion while fixed line data and broad band revenues expanded by 9% and 14%, respectively. Total mobile subscriber base grew by 10% year -onyear breaching the 32 million mark driven by the continuous growth of both postpaid and prepaid segments. Its broadband subscribers also hit a record high of 1.6 million. Globes network modernization program is on track with 62% completion rate in various cell sites all over the country. Globe continues to roll-out in key areas and cover critical business districts such as Metro Davao, Metro Cebu, Quezon City and now moving in Makati City and Rockwell with target completion by November 2012. With very encouraging results, this puts Globe closer to delivering its 2012 capacity plans and network quality improvements for superior customer experience. Modernization of cell sites is accelerating through the fourth quarter of this year and is targeted to be complete by the first quarter of next year. WATER Manila Water Co., Inc. recorded a net income of P3.9 billion in the first nine months of the year, up 26% versus last year. Core net income, which excludes non-recurring expenses, also grew by 26% to P4.2 billion. The growth was driven by a 22% increase in revenues as a result of the steady rise in billed volume plus the timely implementation of the tariff adjustment and the contribution of new businesses outside the east zone. Its operating subsidiaries including Laguna, Boracay, Clark and Thu Duc Water in Vietnam contributed about 5% of total revenues and net income. Manila Water continues to expand operations outside the east zone. Following its recent acquisition of a 47.35% stake in Kenh Dong Water Supply Joint Stock Company in Vietnam, it recently signed a share

purchase agreement to acquire 51% equity stake in Palyja, a water supply concession in Western Jakarta which serves a population of close to 6 million, nearly the size of its east zone concession in Manila. The transaction is still subject to government and regulatory approval and is expected to be closed within 180 days from its signing date last October 18, 2012. INTERNATIONAL BUSINESSES Ayalas international businesses continued to improve despite lingering uncertainties in the global economy. Its electronics business, Integrated Microelectronics, Inc. recorded a three-fold improvement in earnings in the first nine months of the year to US$5 million as revenues rose by 18% despite the weakness in developed economies as well as a slowdown in China. Revenues from its new subsidiaries in Europe and Mexico as well as contribution from another subsidiary, PSi Technologies, Inc., helped lift revenues during the period. Its BPO unit, LiveIt, achieved continued growth and margin improvement. Share of revenues reached US$251 million, up 8% year-onyear, while share of EBITDA reached US$22 million, up 41% due to improved profitability at Stream, Integreon, and Affinity Express. As a result, LiveIt reduced its net loss, which were primarily due to acquisition related charges and other non-operating items. Ayala Corporation Chairman and Chief Executive Officer, Mr. Jaime Augusto Zobel de Ayala, said: We are pleased with the earnings performance of each of our core businesses and the continued improvement in profitability of our international units. Their combined performance to-date keeps us on track with our year-end targets. The positive momentum in the domestic economy continues to present opportunities for us to build on the trajectory of our core businesses and aggressively expand in these sectors. As our core businesses remain a steady source of earnings and cash flow, we also continue to optimize our portfolio to maximize value and actively invest in new sectors such as power and transport infrastructure to build a platform for long-term growth. Ayala parent company ended the period with gross debt of P49 billion and cash of P29 billion. After it issued a 10-billion peso 15-year corporate bond last May and placed P6.45 billion worth of treasury shares in July, the company is set to issue P8-10 billion worth of fixed rate bonds this month in preparation for significant size investments. Last October, the company acquired an additional 10.4% stake in BPI from strategic partner DBS Bank Ltd. On top of this acquisition, Ayala has deployed roughly P4 billion to date in various development projects in power generation and transport infrastructure as well as in other projects of its existing business units.

VOLKSWAGEN APPOINTS AYALA AS PHILIPPINE DISTRIBUTOR

Date : 10/24/2012 Volkswagen AG, Europes largest carmaker, has chosen to partner with one of the Philippines largest and most respected business groups, Ayala Corporation. In a statement issued from its headquarters in Wolfsburg, Germany, Volkswagen announced the appointment of Ayalas wholly owned subsidiary, Ayala Automotive Holdings Corporation, as the Philippine distributor for Volkswagen passenger vehicles. This distributorship agreement brings together two premier corporate names to compete in an industry with high growth potential. Ayala Corporation President & COO Fernando Zobel de Ayala noted, We are very excited to bring Volkswagens technology and engineering expertise to the Philippine market. This partnership will no doubt enhance our current portfolio of auto brands given the dominant position of Volkswagen in the global automotive market. This will allow us to offer a much wider range of passenger vehicles in the local market, which will reinforce further Ayalas strong presence in the local automotive industry. Weiming Soh, President, Commercial Operations, Greater China/ASEAN, Volkswagen AG, commented, We are pleased to announce that Volkswagen has selected the Ayala Group as our future partner to distribute Volkswagen passenger vehicles in the Philippine market. Building on the Ayala Groups excellent reputation and market knowledge, we are excited about offering consumers in the Philippines Volkswagens outstanding line-up of vehicles and providing them with an unparalleled level of sales and service experience. As an important part of Volkswagens ASEAN growth strategy, we, jointly with the Ayala Group, plan to rapidly and robustly establish the brand Volkswagen in the Philippines, contributing to our vision to become the worlds number one car manufacturer by 2018. The Volkswagen Group is the worlds second largest automobile manufacturer as of 2011, with global sales of 8.265 million units accounting for a 12.3% share of the passenger car market. Volkswagen has 99 production plants in 27 countries. As of the end of December 2011, Volkswagen has more than 500,000 employees worldwide and Volkswagen vehicles are sold in 153 countries. Ayala Corporation has diversified business interests in the Philippines and is a leading player in real estate development, banking and financial services, telecommunications, water infrastructure development, electronics manufacturing, and business process outsourcing. It has recently entered new sectors with investments in power generation and transport infrastructure development.

The above statement pertains to the disclosure made on October 24, 2012, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala CFO Delfin Gonzalez, Jr.

Ayala Corp. intl businesses not doing well

Published on 02 November 2012 Hits: 634 Written by MADELAINE B. MIRAFLOR REPORTER

Ayala Corp., one of the biggest conglomerates in the country, has been generating a negative or low income from its international businesses, namely Liveit Investments Ltd. (Liveit) and Integrated Micro Electronic Inc. (IMI), during the past few quarters. John Eric Francia, Ayala Corporate Strategy and Development Managing Director, said in a COL Financial market briefing that while their core business are doing well, their international businesses are relatively failing to excel. As for our international businesses, this is the area where we are experiencing challenges specifically for the electronics business where the margins are very thin, he said. Francia added that one of the reasons why chipmaker IMI is contributing very low to its parent company is that it is somewhat strained by the tough competitive landscape in the sector. In result, IMIs performance is very low and its growth is at a single digit percentage, he added. Francia, however, said that Ayala would still like to make the income of IMI better. Wed like it [IMI] to be better, and make it higher in terms of equity, he said. So the focus for IMI is really to improve its profitability and operation and this could mean better negotiation and better handling of customer base, among others, Francia added.

He said that they have many plans for Ayalas electronics business, but they are focusing more in enhancing the firms efficiency and profitability. For its Business Process Outsourcing business unit Liveit, Ayala is also trying to to make it profitable. This [LiveIt] has been contributing a negative net income in the past few years but our emphasis here is to improve, similar to IMI, Francia said. During the same briefing, he also said that Ayalas capital expenditures have increased by about 88 percent to P124.2 billion, highlighting the major investments made by its subsidiaries such as Ayala Land Inc., which won the bidding for the Food Terminal Inc., and Globe Telecom Inc., which undergone network modernization. The Ayala Group is well-positioned to capture growth opportunities in this economic environment, he said. The group also has the financial strength and strategic partnerships to enable growth, Francia added.

AYALA ENTERS AGREEMENT TO RAISE STAKE IN BANKING UNIT

Date : 10/12/2012 Ayala Corporation (Ayala) announced that it entered into an agreement with DBS Bank Ltd. (DBS) to acquire part of the common shares held by DBS in the Bank of the Philippine Islands (BPI). Under the agreement, Ayala will purchase the BPI shares from DBS for a total of P 25.6 billion. The acquisition will result in a 10.4% increase in Ayalas ownership stake in BPI. DBS has been a strategic investor in BPI since 1999 and is one of the banks major shareholders with a 20.3% effective interest. This partial divestment is in line with DBS disciplined capital management and strengthens its capital position ahead of the introduction in Singapore of Basel III in 2013. The transaction enables DBS to maintain a meaningful exposure in BPI, which it deems to be an attractive investment, in a capital-efficient manner.

Ayala Chairman and CEO Mr. Jaime Augusto Zobel de Ayala noted that DBS has been and will continue to be a valuable strategic partner in the governance and management of BPI. They have been a significant part of many of the banks milestones and achievements for over a decade. We look forward to continuing this partnership with them in succeeding years. Following the acquisition, Ayalas effective ownership in BPI will increase from 33.6% to 44.0%, while DBS will retain a 9.9% effective ownership and will continue to be represented in the BPI board. Ayala President and Chief Operating Officer, Mr. Fernando Zobel de Ayala said, We believe this is a value and earnings accretive acquisition for Ayala given our view on the growth trajectory of the bank over the medium term. This reflects our confidence in the growth potential of BPI particularly amidst the projected expansion of the Philippine economy over the next few years. As a holding company we always look for ways to strengthen our portfolio and take advantage of opportunities that will enhance the value of our holdings while also continuing to ensure the stability of the shareholder base in each of our business units. Ayalas Chief Finance Officer, Mr. Delfin Gonzalez pointed out that Our current financial position and our low gearing level provide more than adequate room for us to invest in new growth areas while also optimizing the value of our existing portfolio. As of the end of the first semester of 2012 Ayala had over P23 billion in cash. Ayala earlier announced that it is planning to invest around US$1 billion over the next five years in green field and acquisition opportunities in the power sector as well as in transport infrastructure projects under the governments public-private partnership program. It also recently declared it is issuing P10 billion worth of bonds. This is the second fund-raising initiative that the company is undertaking this year after the bond offer last May 2012 which raised for the company cash proceeds of P10 billion. As of the first half of this year BPI registered a net income of P9.4 billion, a 52% growth from the same period last year driven by robust growth in net interest income and further boosted by trading gains. The bank is reportedly on track to deliver a sustainable 15% return on equity moving forward. BPI shares last closed at P77.60 per share, up 40% year-to-date, while Ayala Corporation shares ended at P 425.80 per share, registering a gain of 37% year-to-date. Both have outperformed the performance of the Philippine Stock Market Composite Index which has risen 22% year-to-date.

The above statement pertains to the disclosure made on October 12, 2012, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala CFO Delfin Gonzalez, Jr.

AYALA AND ABOITIZ FORGE EXCLUSIVE PARTNERSHIP FOR MACTAN AIRPORT DEVELOPMENT
Date : 09/10/2012 Two of the countrys biggest conglomerates are forming an exclusive strategic partnership to bid for the Mactan-Cebu International Airport (MCIA) Passenger Terminal project. The project is under the governments public-private partnership (PPP) program and is estimated to cost P10 billion. Ayala Corporation and Aboitiz Equity Ventures, Inc. (AEV) have signed a Memorandum of Agreement to form a 50-50 joint venture company that will serve as their vehicle to bid for and develop the countrys second largest international gateway.

The Mactan Airport is currently operating at over capacity with passenger volumes exceeding 5 million annually and is projected to grow even faster with the expected increase in tourist arrivals. The redevelopment of the airport will require the construction of a new international passenger terminal. Ayala Corporation President and Chief Operating Officer, Fernando Zobel de Ayala said, We are excited about this partnership with the Aboitiz Group. Both groups strongly believe in the potential of the Mactan Airport to be a compelling gateway to the country for international passengers and to the Visayas for the growing domestic travelers. We share the vision of creating an airport that provides passengers an efficient and pleasant travel experience. We look forward to leveraging each others strengths in developing and running a modern airport facility that Cebu and our country can be proud of. Mr. Zobel added, We cannot think of a better partner for this project than the Aboitiz group who has not only built a long history and heritage in Cebu but also has a successful track record in undertaking significant size projects in multiple industries. For his part, AEV President and Chief Executive Officer Erramon Aboitiz said, We are equally excited about this partnership with Ayala, especially as it is for a project that gives AEV the opportunity to enter into a strategic new segment that is crucial to developing both the country's transportation infrastructure as well as its tourism potential. It also allows us to harness the Aboitiz Groups competencies in construction, logistics, utilities, and real estate development & management. In our over a century of doing business, AEV has always been keen to play a key role in nation building and, consequently, we are therefore keen today to support the government's thrust to develop the nation's infrastructure gaps. Combined with the Ayala groups strengths and competencies that have also been honed over more than100 years of doing business, we are very optimistic about the success potential of this project. Moreover, the fact that the project is in Cebu, which is home to the Aboitiz Group, gives it more special meaning to us. Ayala, through its property arm, Ayala Land, Inc., has also built a significant presence in the countrys second largest city. It has a total land bank of close to 200 hectares that includes some of the citys landmarks such as the Cebu Business Park, the Ayala Center Cebu, the Asiatown IT Park and high-end residential developments. Ayala Corporation is one of the oldest and most respected conglomerates in the Philippines with a diversified business portfolio that includes real estate development, banking and financial services, telecommunications, water distribution infrastructure, automotive dealerships, electronics manufacturing services, business process outsourcing, and power, among others. Today, together with its joint ventures and foreign alliances, the Aboitiz Group is involved in power generation and distribution, banking, food production, construction, shipbuilding and land development. The government is expected to announce the bidding for the Mactan airport project before the end of the year. Both parties will enter into a definitive agreement once the bid rules or the terms of reference for the project have been finalized and published by the government and will likewise explore partnerships with experienced global airport operators to complete its consortium. The above statement pertains to the disclosure made on September 7, 2012, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala corporate secretary Solomon M. Hermosura.

AYALA GEARS UP AS IT EYES US$1 BILLION OF INVESTMENTS IN INFRASTRUCTURE AND POWER PROJECTS
Date : 07/18/2012 Ayala Corporation, one of the largest business groups in the country, completed today the placement of 15 million common shares held in its treasury. The shares were priced at P430 per share. This raised cash proceeds of P 6.45 billion for Ayala which it intends to use to fund several sizable projects it is eyeing in the infrastructure and power sectors. Ayala is looking to invest up to US$1 billion over the next five years in the transport infrastructure and power generation sectors as it builds a portfolio of power generation assets and as it sets its sights on toll road, rail, and airport projects under the governments public private partnership program (PPP).

On top of the Daang HariSLEX Connector road, which was the first PPP project rolled out and which Ayala won last December 2011, the company expressed interest to participate in other PPP projects expected to be bidded out soon. Projects of interest to the group include the NAIA Expressway, the Cavite-Laguna (CALA) Expressway, and the LRT Line 1 extension and O&M. Ayala recently formed a strategic partnership with Metro Pacific Investment Corp. to jointly pursue light rail projects in the Metro Manila area. Ayala said it is also keen to participate in the development of airports such as the Mactan Cebu International Airport. In the power generation sector, Ayala has established a platform of conventional and renewable technologies and has committed around US$100 million of equity on approximately 180 megawatts of gross generating capacity. It began construction of a 135megawatt CFB thermal plant in Calaca, Batangas in partnership with the Phinma groups Trans Asia Oil and Development Corp. It is also currently working on a possible second phase of expansion of the plant. Recognizing the countrys need for both base load capacity and alternative energy sources, Ayala is also gradually building its portfolio of renewable energy sources in solar, wind and hydro technologies. Investments in these technologies will be shaped in part by the implementation of the feed-in-tariffs which the government is expected to announce in the coming months. Beyond these initiatives the company continues to actively pursue a robust pipeline of greenfield projects and acquisition opportunities in the power sector. Ayala President and Chief Operating Officer, Mr. Fernando Zobel de Ayala, said, The company is in a phase of active investment and is eyeing to build new businesses in power and transport infrastructure. In the same manner Ayala invested in the telecom and water sector in the past, we believe the power and infrastructure sectors are critical for the countrys growth and development. We hope to be able to contribute in some measure to the development of these sectors and at the same time create future sources of earnings and value for the group. While the company remains focused on the Philippines, it also continues to explore opportunities in other markets in the region. It recently acquired a 10% stake in Ho Chi Minh Infrastructure Investment Co. (CII), a leading player in the infrastructure sector in Vietnam. CII holds toll road concession agreements such as the 15.7-kilometer expansion of the existing Ha Noi Highway which connects the northeastern part of Ho Chi Minh City to Bien Hoa, an industrial center located in the southern part of Vietnam. Ayala believes this investment provides strategic access to other infrastructure opportunities which may present opportunities for the Ayala group to establish a presence across several sectors in Vietnam. Ayala Corporations share price has risen by 46% year-to-date with market capitalization of over P260 billion. The above statement pertains to the disclosure made today to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala general counsel Solomon M. Hermosura.

AYALA CORPORATION ISSUES P10-BILLION BOND

Date : 05/02/2012 Ayala Corporation commences today its public offer of P10-billion 15-year corporate bonds due 2027. This would be the first corporate bond in the domestic capital market with a 15-year tenor. Bonds bear an interest rate of 6.875 per cent per annum. Ayala is raising funds for its capital requirements to enable the company to realize opportunities for expansion both through organic growth of its existing business lines as well as value-accretive acquisitions. This includes opportunities presented by various domestic infrastructure projects. The company recently won the bid for the Daang Hari connector road under the governments public private partnership program. It also recently forged an agreement with the Metro Pacific group to jointly pursue and develop light rail transit projects in Metro Manila. Part of the proceeds of the bond offer will also be used to prepay the companys debt.

Ayala Corporation treasurer Ramon Opulencia noted, We always ensure that we maintain a highly flexible funding position at the holding company level that will allow us to invest in sizable projects without impeding other value-enhancing initiatives we are currently undertaking. The low-interest rate environment and the robust liquidity in the system provide an ideal environment for us to be able to stretch our tenors and match the anticipated long gestation period of the investments that Ayala envisions. Ayala has been a consistent and innovative issuer in the domestic capital market over the past few years. It has pioneered investment products in the local market that provided the broader investing public, particularly retail investors, with alternative investment choices. In May 2011 Ayala raised P10 billion through a bond offering that was the first to provide investors with multiple put options. One of its landmark capital market deals, among others, was a local currency denominated hybrid shares launched in 2006 which had a follow-on offer in 2008. Ayala Corporations balance sheet remains strong. It ended 2011 with a very healthy cash position and a low gearing level with net debt to equity ratio of 0.24 to 1. This years P10-billion bond offer will be offered to the public through the mandated underwriters, namely, BPI Capital Corp., BDO Capital & Investment Corp., First Metro Investment Corp., Hongkong and Shanghai Banking Corp., ING Bank Manila, RCBC Capital Corp., SB Capital Investment Corp., and Standard Chartered Bank. The bonds will be listed in the Philippine Dealing and Exchange System (PDEX) on May 11, 2012.

AYALA

AND

METRO

PACIFIC

INVESTMENTS

JOIN

FORCES

FOR

LIGHT

RAIL

PROJECTS

Date : 04/24/2012 Two of the countrys largest conglomerates are joining forces to develop light rail projects in Metro Manila. Ayala Corporation and Metro Pacific Investments Corporation signed today a memorandum of agreement to form an exclusive strategic partnership to jointly pursue and develop light rail projects in the greater Metro Manila area. Under the agreement, each of the parties will own a 50% interest in the light rail projects and related real estate development undertakings. The partnership is initially eyeing to bid for the light rail transit projects identified under the governments Public Private Partnership program (PPP). However, it is also open to work together on other rail-related opportunities. Ayala and MPIC are two of the largest conglomerates in the Philippines with a combined market capitalization of over 300 billion pesos. They each have a solid track record and experience in developing large-scale infrastructure projects. These two companies have proven their respective capabilities in delivering public utilities such as water infrastructure services and toll road operations and

management. The combination of their experiences in these sectors, plus their individual expertise and capabilities in other areas, power distribution and healthcare in the case of MPIC, and large scale mixed-use real estate projects in the case of Ayala, create a unique and powerful alliance that can bring immense value as the country seeks to improve its light rail transit system. According to Ayala Corporation Chairman and Chief Executive Officer, Jaime Augusto Zobel de Ayala, We are glad to be partnering with the Metro Pacific Investments group for this specific purpose. We each have unique strengths and capabilities that, when combined, create a unique value proposition in rail development. We hope to contribute meaningfully in helping raise the standards of our public utilities. This is vital to our nations progress and competitiveness. Developing an efficient mass transit system is a huge endeavor which will be better served by the synergies created by this partnership. For his part, MPIC Chairman, Manuel V. Pangilinan said, We are pleased to share a common ground with Ayala Corporation through the Light Rail Projects. This strategic alliance will create integrated solutions that will improve public transportation through our vision to transform the countrys light rail transit system into a network very much like those in Hong Kong, Singapore, Kuala Lumpur and Osaka. The existing system is over capacity and under invested the need to improve the existing rail systems now cannot be overemphasized. Our initiative to join hands in addressing these concerns, signifies our commitment to help Filipinos become more productive and to contribute to the countrys overall infrastructure development and economic growth. Mr. Pangilinan said in closing. This is not the first time Ayala and MPIC forged an alliance. Both companies also combined forces in the bid for the Angat water project in March 2010.