Ayala Corporation Analysts Briefing First Half of 2018 Financial and Operating Results W a T E R August 13, 2018 Healthcare
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Real Estate F i n a n c i a l Infrastructure S e r v i c e s Power Generation Industrial Telecom Technologies Ayala Corporation Analysts Briefing First Half of 2018 Financial and Operating Results W a t e r August 13, 2018 Healthcare Social Commitment Education Financial Highlights Strong performance of Ayala Land, Globe and AC Energy drove Ayala’s earnings growth 1H 2018 Financial Results (₱ billions) 2Q 2018 Financial Results (₱ billions) ₱16.1 billion + 7% ₱8.4 billion + 3% Net Income Net Income ₱19.5 billion + 12% ₱10.2 billion + 15% Equity in Net Earnings Equity in Net Earnings 2 1H2018 Equity Earnings Ayala Land, Globe, and AC Energy continued to drive Ayala’s equity earnings 1H2018 Equity in Net Earnings by Business Unit (In ₱ billions) +18% -5.7% 6.3 5.3 +25% 2.22x 3.1 +14% 2.1 1.7 +5% 0.8 3 1H2018 Parent Capital Expenditure We deployed 67% of our 2018 capex budget halfway through the year to fund participation in BPI’s and IMI’s SROs Parent-level actual capex spent for 1H 2018 (In ₱ Billion) 51.8 Budgeted Spent 34.9 26.2 26.6 12.2 3.1 3.4 3.1 3.9 3.8 1.3 1.3 1.4 0.5 Strategic Total Opportunities 4 Financial Management We maintain a healthy balance sheet that can support our investments and fulfill our debt and dividend obligations As of Dec 31, As of Jun 30, Schedule of Debt Maturities1* Click to edit2017 Master 2018 Click to edit Master (₱ billions) Audited Audited 20 PHP USD PARENT Gross debt ₱83.3B ₱109.2B 10 Cash ₱18.6B ₱15.7B ₱64.7B ₱93.5B Net debt 0 18 19 20 21 22 23 24 25 26 27 28 Net D/E ratio 0.59 0.85 Total Parent Equity Click to edit Master Debt Profile* LTV ratio 6.4% 11.6% YE2017 1H2018 Cash flow Debt in ₱ 58.5% 66.4% 2.33x 1.62x adequacy ratio Debt with fixed rates 92.6% 84.5% CONSOLIDATED Blended cost of debt 4.2% 4.4% Net D/E ratio Avg. remaining life 15.4 years 13.7 years Total Equity 0.68 0.76 *Excludes preferred shares 1Excludes perpetual bonds 5 Equity Placement Ayala conducted an equity placement exercise to fortify its balance sheet Equity Placement KEY HIGHLIGHTS ▪ In July, Ayala conducted a placement of ▪ The sale was executed through a subscription agreement 8,810,000 common shares of stock at a for 8,810,000 shares with a single long-term institutional price of ₱916 per share raising investor ₱8.07 billion ▪ The placing price reflects a discount of 1.08% to the 30-day volume weighted average closing price of our shares ▪ The placement raised Php8.07 billion with proceeds going to our Company and will increase our public float from 51.6% to 52.3% ▪ We intend to use the proceeds to acquire properties or assets needed for the business of Ayala ▪ The company will, as soon as practicable, apply for the listing in the Philippine Stock Exchange of the shares, which constitutes 1.4% of our increased common stock 6 Summary of Business Unit Performance Substantial growth of property development and sustained performance of commercial leasing drove Ayala Land’s net earnings 1H 2018 Financials KEY HIGHLIGHTS ▪ Property development revenues jumped 27% to ₱58.3 billion* on the back of new bookings and project completions. Ayala Land also recognized revenues of MCT ₱13.5 billion Bhd, ALI’s equity investment in Malaysia, amounting to + 18% ₱4.0 billion Net Income ▪ Reservation sales reached ₱72.0 billion, up 17% ▪ Commercial leasing revenues grew to ₱16.9 billion, up 15% on higher contributions of newly opened malls, offices, and hotels ▪ New estates and growth centers accounted for 55% of net income mix, while established estates accounted for the remaining 45% ▪ Recurring income businesses contributed 32% of net income ▪ Capex spend for 1H2018 reached ₱48.4 billion. ▪ 45% residential; 15% MCT and POPI; 15% land acquisition and estate development; 17% malls; 8% offices and hotels and resorts The Residences at Azuela Cove *Includes accretion income 7 Summary of Business Unit Performance Growth in core banking businesses was offset by lower non-interest income and higher operating expenses 1H 2018 Financials KEY HIGHLIGHTS ▪ Total revenues increased 5.3% to ₱37.2 billion ▪ Net interest income rose 11.5% to ₱26.2 billion on the back of growth in average asset base and NIM expansion. -5.7% However, cost of funds increased for the period partly due ₱11.0 billion to higher documentary stamp tax. Net Income ▪ Non-interest income declined 6.9% to ₱11.0 billion due to lower income from trust and investment management fees, securities trading and asset sales. ▪ Total loans expanded by 15.7% to ₱1.22 trillion. ▪ Total deposits grew 7.2% to ₱1.53 trillion, with CASA ratio at 75.3% and loan-to-deposit ratio at 79.7%%. ▪ Cost-to-income ratio ended higher at 57.0% on higher operating expenses in support of the bank’s digitalization strategy and branch network expansion of BPI Direct BanKo ▪ Total assets stood at ₱1.90 trillion, 10.8% higher. Total capital reached ₱239.70 billion, up 38.2% on account of the bank’s recent SRO. ▪ In light of the recent SRO, capital adequacy ratio and common equity tier 1 improved to 17.29% and 16.40%, respectively. 8 Summary of Business Unit Performance Globe sustained its growth momentum driven by solid demand for data 1H 2018 Financials KEY HIGHLIGHTS ▪ Gross service revenues reached ₱68.3 billion, up 9% on strong demand for data-related services. ▪ Mobile data revenues rose 26% to ₱25.6 billion as ₱10.1 billion* mobile subscriber base grew 9% to 65.1 million. Net Income ▪ Home broadband revenues were at ₱8.7 billion, up 12% on a 22% increase in its subscriber base to 1.5 million subscribers. ▪ Corporate Data revenues grew 9% to ₱5.5 billion. *Post-PFRS net income, ▪ Data-related businesses accounted for 58% of total service revenues., with mobile data users making up for 54% of mobile subscribers ▪ Operating expenses and subsidy remained flat at ₱35.7 billion. ▪ EBITDA grew 19% to ₱32.5 billion ▪ EBITDA margin is at 48% ▪ Capex spend reached ₱22.9 billion with 77% deployed to data-related requirements. ▪ Globe Board approved additional capex of US$100 million, bringing 2018 capex guidance to US$950 million 9 Summary of Business Unit Performance Strong contribution of Manila Concession and overseas investments coupled with lower depreciation expense boosted earnings 1H 2018 Financials KEY HIGHLIGHTS ▪ Revenues up 8% to ₱9.6 billion on additional billed connections in the Manila Concession. ▪ Depreciation expense declined 11% to ₱1.2 billion due ₱3.6 billion + 10% to a shift from a straight line method of depreciation to Net Income units of production beginning May 2017. ▪ Total billed volume growth of 4% to 409.8 mcm led by Manila Concession’s 3% growth to 250 mcm, boosted by a 30% growth in Estate Water to 3 mcm. ▪ Manila Water Asia Pacific earnings contribution increased 58% to ₱187 million. ▪ Manila Water Philippine Ventures received a Notice to Proceed from the local government of Sta. Barbara, Pangasinan for the development and O&M of the municipality’s water supply facilities. ▪ Laguna Water received a Notice of Award from the Pagsanjan Water District for the design, improvement, expansion, and O&M of the water supply and sanitation facilities in the district. 10 Summary of Business Unit Performance Solid performance across wind, geothermal, and thermal platforms, boosted by services income, buoyed AC Energy’s earnings 1H 2018 Financials KEY HIGHLIGHTS ▪ Net earnings expanded more than twofold to ₱2.1 billion, bolstered by solid performance across its ₱2.1 billion 2.2x wind, geothermal, and thermal platforms. This was underpinned by services income derived from the financial Net Income close of a new power plant. ▪ Excluding the services income gained this period, AC Energy’s net earnings jumped 59% yoy. ▪ Equity earnings from AC Energy’s investee companies surged 82 percent, reaching ₱2 billion in the first half, lifted by fresh contribution from the 75MW Sidrap Wind farm which started operations in the first quarter. 11 Summary of Business Unit Performance AC Energy is investing in Australia’s renewables market Project highlights: New Opportunities 9M17 Operating Statistics • AC Energy is investing up to $30M for a 50% ownership in UPC's Australian business and is also providing up to $200M in a revolver facility to fund development works or provide project equity. • UPC Renewables Australia is developing the up to 1,000 MW Robbins Island and Jims Plain projects in North West Tasmania and the up to 600 MW New England Solar Farm located near Uralla in New South Wales. • UPC Renewables Australia also has a further development portfolio of up to another 3,000 MW’s located in NSW, Tasmania and Victoria. 12 Summary of Business Unit Performance AC Energy is expanding its Vietnam solar project from 30MW to 280MW Project update: New Opportunities 9M17 Operating Statistics • AC Energy, in partnership with the BIM Group, is set to increase the solar farm size to 280MW from the initial 30MW. • The joint venture plans to further expand the capacity to well over 300MW. Once completed, the solar farm will become the largest in Southeast Asia. • The project is expected to commence operations in time for the June 2019 solar feed in tariff deadline. • Estimated project cost is around US$240 million, which will be financed by debt and equity.