Ayala Corporation FY 2019 Analysts Briefing 12 March 2020 FY 2019 - - PowerPoint PPT Presentation

Ayala Corporation

FY 2019 Analysts’ Briefing 12 March 2020

3

Strong consumer-driven growth of Ayala Land, BPI, and Globe lifted net earnings, boosted by divestment gains from AC Education and AC Energy

FY 2019 FINANCIAL PERFORMANCE

₱39.4 ₱60.7

FY 2018 FY 2019 +54% ₱23.6 ₱30.3 ₱31.1

• ₱18.1

FY 2018 ₱1.5 FY 2019

• ₱0.7
• ₱0.7

₱31.8 ₱35.3

+11%

Equity Earnings Consolidated NIAT

in billions in billions

Core NIAT One-offs MWC remeasurement loss Provisions for AC Industrials MWC bill waiver & provision for penalty Divestment gains from AC Education and AC Energy

4

Remeasurement loss arising from our investment in Manila Water weighed down our fourth-quarter results

4Q 2019 FINANCIAL PERFORMANCE

₱10.1 ₱8.8

4Q 2018 4Q 2019

• 13%

₱8.0

₱8.0

• ₱18.1

4Q 2018 4Q 2019

• ₱10.9
• ₱0.8

Equity Earnings Consolidated NIAT

in billions in billions

Core NIAT MWC Remeasurement Loss Others

5

Ayala Land, BPI, and Globe continue to boost earnings growth with the addition of AC Energy as a new core value driver

FY 2019 EQUITY EARNINGS BREAKDOWN

₱14.6 ₱13.6 ₱6.8 ₱2.6

• ₱2.4

₱1.0 ₱24.5

Other Units**

*Lower growth in ALI EE vs NIAT due to dilution effect of exchangeable bonds **Includes gains from merger of AC Education and iPeople

⇧ 7% ⇧ 24% ⇧ 20% ⇧ 6x ⇩ 17%

in billions

*

Schedule of Debt Maturities

(in ₱ billions) 6

We have a strong balance sheet with significant debt capacity and a well spread out maturity profile

FY 2019 BALANCE SHEET HIGHLIGHTS End-2018 End-2019

PARENT

Gross debt ₱104.4B ₱105.8B Cash ₱8.5B ₱22.6B Net debt ₱95.9B ₱83.2B Net D/E ratio Total Parent Equity 0.81 0.63 LTV ratio 11.8% 6.5% Cash flow adequacy ratio 1.66x 2.07x

CONSOLIDATED

Net D/E ratio Total Equity 0.74 0.58

End-2018 End-2019

Debt in ₱ 64.3% 61.9% Debt with fixed rates 88.0% 90.6% Blended cost of debt 4.6% 5.4%

• Ave. remaining life

13.3 years 21.2 years

Debt Profile*

*Excludes preferred shares *Preferred Shares B Series 1 Call Date November 15, 2023 20 10 5 15 45

40.5 21.3 ’25 11.0 10.1 ’19 ’20 ’21 ’27 ’26 ’28 P 4.6 10.6 3.6 16.0 8.5 1.0 ’23 ’22 ’24

Preferred PHP USD

7

Capital spending was 33% higher than budget as AC Energy utilized part of its proceeds from the sale of its thermal assets

FY 2019 PARENT CAPITAL EXPENDITURE

₱5.5 ₱1.2 ₱4.7 ₱0.8 ₱3.9 ₱6.5 ₱10.8 ₱7.9 ₱2.4 ₱0.8 ₱1.7 ₱6.5

Total

₱22.6 ₱30.1

FY19 Budget FY19 Spent in billions

and others

8

Our businesses continue to execute on their growth strategy as reflected in our programmed capex for 2020

FY 2020 CAPEX PROGRAM 42% 23% 16% 9% 8% 2%

Ayala Land Globe BPI AC Energy Manila Water AC

33% 28% 15% 12% 8% 5%

AC Industrials AC Health AC Infra AC Ventures Yoma Others

Group-wide CAPEX

₱275.1B

Parent CAPEX

₱20.8B

8

9

Ayala started a ₱10 billion buyback program, reflecting our long-term

• ptimism in the company amid challenging market conditions

AC SHARE BUYBACK PROGRAM ₱545 ₱1,308 ₱763

Dec-19 Feb-20 Jan-20 Total

673 1,689 1,016

Dec-19 Jan-20 Feb-20 Total

In millions

In thousand shares

Shares Purchased Value of Shares Purchased

9

▪ 11% increase in mall leasing revenues ▪ 12% increase in office leasing revenues ▪ 19% increase in hotel and resort revenues

ALI’s robust leasing arm provided support to FY19 revenues while aggressive 4Q project launches augment existing inventory

FY 2019 OPERATIONAL & FINANCIAL HIGHLIGHTS

+13%

₱33.2B

Net Income

+2%

₱168.8B

Total Revenues

• 2%

₱117.6B

Property Dev’t

▪ 8% decline in residential revenues from lower contribution

• f

ALP and ALVEO brands ▪ 12% increase in

• ffice

for sale developments ▪ 46% increase in commercial and industrial lots sales

+13%

₱39.3B

Comm’l Leasing ₱122.0 ₱141.9 ₱145.9 2018 2017 2019 ₱88.8 ₱139.4 ₱158.9 2017 2019 2018 +3% YoY ₱145.9B Sales Reservations ₱158.9B Project Launches

in billions in billions

₱108.7B

FY 2019 CAPEX 2,583 2,973 3,705 2017 2018 2019

1.02 1.11 1.17

2017 2019 2018 1.75 1.90 2.12 2018 2017 2019

GLA in millions

• f sqm

GLA in millions

• f sqm

Room count

Occupancy

• Ave 88%
• Stable 93%

517k sqm GLA under construction Occupancy

• Ave 96%
• Stable 97%

358k sqm GLA under construction 2,311 rooms under construction

Three New Estates in 2019 10 Margin Expansion Across Segments

44% 34% 33% 50% 45% 39% 43% 62% Horizonal Vertical Office for Sale Industrial & Commercial 2018 vs 2019 Gross Profit Margins 66% 91% 29% 9% 66% 90% 32% 10% Shopping Centers Hotels & Resorts Office Const’n & Property Mgt 2018 vs 2019 EBITDA

▪ 12% increase in fee-based income due to robust growth in credit card loans and fees ▪ Cards up 16% ▪ Trading up 215% ▪ Deposits up 27% ▪ Insurance up 8% ▪ Transaction Banking up 53% ▪ Leasing up 7% ▪ Retail Loans up 15% ▪ Digital Channels up 44%

55.50% 53.10%

2018 2019

BPI’s full-year earnings driven by strong results from core businesses and efficient cost management

FY 2019 OPERATIONAL & FINANCIAL HIGHLIGHTS

11

3.99% 4.47% 5.16% 1.18% 1.52% 2.04% 2.91% 3.11% 3.35%

+25%

₱28.8B

Net Income

+20%

₱94.3B

Total Revenues

+18%

₱65.9B

Net Int. Income

+25%

₱28.4B

Non-Int. Income

▪ 69-bp YoY increase in asset yields partially

• ffset by cost of funding

▪ 24-bp YoY net interest margin expansion

₱48.0 ₱55.8 ₱65.9 2017 2018 2019

Net Interest income in billions

Asset Yield NIM

17.6% 14.1% 11.2% 9.9% 8.4% 8.1% 7.3% 7.0% 4.6% 3.8% 3.6% 3.1% 1.6% 1.6% 0.8% Deposit Cards Leasing

• Sec. Trading

Remittance Trust Insurance Transaction Banking FOREX Asset Sales Retail Loans Digital Channels Service Charges Investment Banking Securities Brokerage

% to Total Non-interest Income

₱1.48T

+9%

Loans

₱1.70T

+7%

Deposits

▪ CASA ratio steady at 69.1% ▪ Loan-to-Deposit ratio at 87%

₱43.6 ₱50.1

2018 2019

OPEX in billions

CIR

77% 76% 23%

2018

24%

2019 % to Total Loans

53%

Cost-to- Income Ratio

₱1,057 ₱1,140

2018 2019 Corporate Loans

₱253.8 ₱287.9

2018 2019 Consumer Loans

in billions in billions

Consumer/SME Corporate

+7.9% +13.4%

COF

Globe’s focus on improving customer experience through data- related investments serves as backbone for earnings accretion

FY 2019 OPERATIONAL & FINANCIAL HIGHLIGHTS

+20%

₱22.3B

Net Income

+17%

₱76.0B

EBITDA

+12%

₱149.0B

Total Service Revenues

+200 bps

51%

EBITDA Margin

₱51.0B

FY 2019 CAPEX

▪ Evident growth in data oriented customers in both mobile and home users ▪ Data accounts 71%

• f

total service revenues

36.9 39.6 2018 2019 1.6 2.0 2018 2019

Mobile Data Users Home Broadband Users

+7% +25% 29% 14% 48% 9%

Mobile Data Home Broadband Corp Data Others

▪ 17% growth in EBITDA and 200-bp margin expansion driven by robust revenue growth and subdued costs ▪ Modest 8% OPEX growth driven by -30% drop in interconnect charges

2015 ₱36.7 2017 2016 2018 ₱32.1 2019 ₱42.5 ₱43.3 ₱51.0

Data Others in billions

48% 65% 82% 77% 79% ▪ 18% increase in CAPEX spent to improve service to customers

▪ +139% YoY cell sites ▪ +28% YoY base stations ▪ +16% YoY average LTE download speed ▪ +6% YOY average LTE upload speed ▪ -9% YoY latency

In php billions

2018 2019 YoY Gross Service Revenues 132.9 149.0 12% OPEX & Subsidy (67.7) (73.0) 8% EBITDA 65.1 76.0 17% EBITDA Margin 49% 51% +200bps Depreciation (30.4) (34.1) 12% EBIT 34.7 41.9 21% Non-op Charges (7.1) (9.1) 28% Provision for Tax (9.0) (10.5) 17% Net income 18.6 22.3 20%

12

▪ Attributable capacity augmented by PHEN acquisition and increased stake in SLTEC but offset by sell-down in stake in AA Thermal ▪ 821 MW in additional

• perating

attributable operating capacity from higher stake in SLTEC, PHEN acquisition, and start

• f operations of new Vietnam solar plants.

▪ 50% coming from renewables

AC Energy’s divestment in thermal provided uplift to earnings as well as funding to upcoming renewable assets

FY 2019 OPERATIONAL & FINANCIAL HIGHLIGHTS

6x

₱24.6B

Net Income

1,200 MW

2020 Pipeline

▪ 6x growth on the back of solar projects in Vietnam, recovery of costs, and gains from the partial divestment of its thermal assets. ▪ Vietnam plants started to contribute to earnings ▪ Dak Lak Solar Project (30MW/24MW) ▪ Khanh Solar Project (50MW/40MW) ▪ Ninh Thuan Solar Project (330MW/165MW)

1,804 MW

Total Attributable Capacity

(as of March 2020)

211 445 445 1,148 PH Int’l 1,359

Thermal Renewable

544 684 465 Operating 112 Under Construction 1,228 577

Thermal Renewable

3.5k GWhr

Attributable Energy Output

+25%

In MW In MW

₱4.1 2019 2018 ₱24.6

In PHP billions

Geography Attributable Capacity (MW) Project Philippines 190 Luzon solar project and Luzon wind project Australia 400 New England solar Vietnam 250 Quang Binh wind & solar, Ninh Thuan expansion, TBC wind farms Others 360 India solar farms, Myanmar microgrid/hyb rid power Total 1,200 ▪ 2020 project pipeline inline with AC Energy’s goal of 5,000 MW from renewables by 2025.

Parent Expenses Equity Earnings Net Development Gains *Includes capital gains, electricity trading, liquidated damages, development expenses, fees from services, derivate gains/losses, and various provisions

13

MWC hindered by challenges brought about by the water supply shortage in Metro Manila while other domestic businesses thrive

FY 2019 OPERATIONAL & FINANCIAL HIGHLIGHTS

• 16%

₱5.5B

Net Income

▪

• 16% decline largely from water supply

shortage in the Manila Concession. ▪

• 2% decline in billed volume as a result of

the water supply shortage and lower raw water allocation in the Manila Concession

Manila Concession ₱9,903 Manila Water Philippine Ventures ₱2,729 Clark Water ₱156 Laguna Water ₱529 Boracay Water ₱376 Estate Water ₱1,235 Others ₱433 Manila Water Total Solutions ₱3 Total ₱12,365

in millions

₱12.6B

FY 2019 CAPEX

₱0.3 ₱0.2 ₱0.5

• ₱0.2
• ₱0.3

₱0.0

• ₱0.2

₱5.1 ₱6.5

2019

₱0.2

2018 ₱6.5 ₱5.5

Manila Concession MW PH Ventures MW Asia Pacific MW Total Solutions Adjustments In billions

+8%

₱7.6B

Core Net Income

▪ One offs related to the Metro Manila water crisis– bill waiver and impairment ▪ 22% decline in Metro Manila Concession contributions partially offset by growth in

• ther domestic subsidiaries, which now

account 8% of earnings vs 4% last year.

46 47 47 46 45 42 35 37 40 41 42 43 Aug May Jan Mar Feb Apr Jun Jul Sept Oct Nov Dec

Actual 2019 allocation vs 46 cms normal allocation

• ₱34
• ₱72
• ₱197
• ₱169

₱0 ₱427 2018 ₱711

• ₱21

₱449 2019 ₱196

Core Subs HQ Costs Emerging Subs New Operating Subs In millions

Trident Water comes in MWC as a strategic partner of AC

Manila Water Philippine Ventures

14

▪ Net loss driven by challenges in all units of the business as well as booking

• f

provisions at parent level. ▪ Germany-based MT group was impacted by the general slowdown in the German auto industry, as OEMs and Tier 1s reduced demand for modeling, molding, and engineering services. ▪ Merlin Solar continued to ramp up its production and sales pipelines in its second year. In addition, it strengthened its proprietary grid fabrication process and established a dedicated sales team to identify, educate, and expand its customer base.

AC Industrials’ profitability was hindered significantly by multiple geo- political headwinds as well as operational and startup challenges

FY 2019 OPERATIONAL & FINANCIAL HIGHLIGHTS

• ₱2.4B

AC Industrials Net Loss

• ₱337M

AC Motors Net Loss

• ₱171

₱1,247

• ₱337
• ₱574
• ₱493
• ₱799
• ₱67
• ₱29
• ₱557

2018

₱0

• ₱2,386

2019 ₱579

• ₱191

₱164

Merlin Solar IMI AC Motors MT Parent OPEX Povision

in millions

▪ IMI weathered geopolitical headwinds, primarily the US-China trade war and a general manufacturing slowdown. The company also faced internal growing pains as it strives for growth, as some key plants take on more complex, high-level projects. ▪ STI faced uncertainty over Brexit which lingered throughout 2019. Major customer orders were put on hold as UK weighed its EU departure, which was completed in early 2020. ▪ VIA faced weaker demand from consumer and industrial markets but was otherwise supported by the continuing need

• f

the auto industry for Integrated Display Systems. ▪ Program wins driven by STI in terms of brand and the Philippines geographically.

• US$7.8M

IMI Net Loss

▪ AC Motors net loss on lower sales volume from its Honda, Isuzu, and VW brands due to the highly competitive domestic auto landscape. ▪ The Philippine auto market saw an

• verall modest recovery in 2019,

with sales increasing 4% to 416,000+ units. ▪ Newly acquired Kia more than doubled unit sales YoY, moving from 14th in terms of market share to 10th. ▪ Kia launched 4 new models in 2019: Model Industry Segment Start of Sales Soluto Mini/Sub- compact Sedan February Stinger Executive Sedan April Forte Compact Sedan April Seltos Subcompact SUV November

$49

$28

$10 $124 $181 $230 $62 $210

$314

$84

2017 2018

$62

2019 $320 $406

STI Industrial Auto Others

15

16

Summary

► Ayala’s full-year net earnings grew 11% to ₱35.3 billion, backed by strong

consumer-driven revenue growth of Ayala Land, BPI, and Globe.

► Net earnings include divestments gains of ₱23.6 billion from AC Education and

AC Energy.

► Results, however, were weighed down by the recognition of a remeasurement

loss of ₱18.1 billion arising from a reduced stake in Manila Water and the ₱2.4 billion net loss incurred by AC Industrials.

► As it pivots from thermal energy, AC Energy is building up its renewables

portfolio with current attributable capacity of over 1,800MW, with 50% of total energy output coming from renewable sources.

► 1,200MW of various solar and wind projects in the pipeline expected to

reach financial close this year, on track with 2025 target of 5,000MW of attributable capacity

► We have a strong balance sheet with significant debt capacity and a well

spread out maturity profile.

17

Disclaimer

Statements in this presentation describing the Company’s

• bjectives,

projections, estimates, expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed

• r

implied. Important factors that could make a difference to the Company’s operations include, among others economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax laws, and other statutes and incidental factors. For more information, please contact: Ayala Corporation – Investor Relations

investorrelations@ayala.com.ph http://ayala.com.ph/investor_relations