Ayala Corp 2017 IR - Lowres PDF

INTO THE FUTURE
INTO THE FUTURE a

The transformation of grassland into the Makati Central Business District
was led by Col. Joseph McMicking after World War II.
AYALA CORPORATION IS
MOVING INTO THE FUTURE
To transform our businesses and harness disruptive innovation,

so we can create more shared value.
The faster we keep moving, the sooner we can generate more opportunities,
reach other markets, and help improve lives.
Integrated Report 2017
2017 Integrated Report
INTO THE FUTURE 1

ABOUT THIS
INTEGRATED REPORT
Ayala remains committed to sustainability and integrated thinking with the publication of this Integrated Report.
To further improve the quality of our reporting, we re-evaluated our capitals, value creation, risks, strategy, and
performance for a more cohesive presentation. We provide a more in-depth look at our organization’s strategy,
governance, performance, and outlook, in the context of our external environment. Finally, this report also allows us to
present the alignment and contributions of our businesses to the United Nations Sustainable Development Goals.
The development of this year’s 179. Furthermore, the table on pages Learn more about the IIRC and
Integrated Report was a more 176-177 outlines the companies and integrated reporting at
rigorous process, enabling us to better the scope of data that is included in www.integratedreporting.org and the
understand and apply the principles this report. GRI at www.globalreporting.org.
of materiality towards improving
data collection. We undertook an Our previous integrated report Our approach to external
assessment of how our diverse published in 2017 and additional assurance (102-56)
businesses create and deliver value to references for targeted stakeholders Our Board’s Audit Committee oversees
society, while meeting our financial are all available online at the performance of external and
targets. Financial and non-financial www.ayala.com.ph. internal auditors. It is mandated
performance analysis conducted for to review and approve the audit,
this report allowed us to take better Reporting standards (102-54) audit-related, and non-audit services
stock of our accomplishments, as Ayala Corporation adopted global best rendered by the company’s external
well as identify opportunities for practices in reporting non-financial auditor. Our senior management
scaled impact moving forward. All information. This report has been is involved in the decision and
information presented was reviewed prepared according to the integrated appointment of the independent
by the group’s Investor Relations and reporting <IR> guidelines provided by external assurer.
Sustainability Councils, and approved the International Integrated Reporting
by Ayala’s management and Board Council. We engaged BlackSun Asia On our financial statements
before publication. Pacific, an independent consultant SyCip Gorres Velayo & Co. is the
that assists organizations in corporate external auditor of the company’s
Reporting scope (102-50, 102-51, 102-52) reporting in line with the <IR> financial statements, with Lucy L.
This report details the value framework, to provide guidance on Chan as the partner-in-charge. In
created by the conglomerate for the quality of our integrated report. accordance with regulations issued
our key stakeholders through our We also aligned reporting on our by the Securities and Exchange
consolidated financial, economic, sustainability performance with the Commission, the audit partner
social, and environmental standards of the Global Reporting principally handling the company’s
performance, including both listed Initiative. This report has been account is rotated every five years.
and unlisted subsidiaries and affiliates, prepared in accordance with the GRI More information about our audit
from January 1, 2017 to December Standards: Core option. process is found on pages 166-167,
31, 2017. All necessary notes, while our Management’s Discussion
explanations, and definitions are By preparing our 2017 Integrated and Analysis of Financial Condition
provided in the text or accompanying Report in line with these global and Results of Operation can be found
tables. More metrics have also been standards, we have been able to on pages 172-175.
included from unlisted subsidiaries present our value creation and outlook
and affiliates as they pursued further in a clearer, more cohesive, and more
expansion. A summary of 2016 data transparent manner.
restatements is found on pages 178-
2 2017 Ayala Corporation Integrated Report

A copy of our 2017 Statement From The Board
(102-32)
financial statements The Board acknowledges its The integrated report contains
responsibility in ensuring the certain forward-looking statements
can be accessed at integrity of this report, which which, by their nature, involve risk
www.ayala.com.ph. includes the fair representation of and uncertainty because they relate
performance and impact on key to future events and circumstances
material topics. The Board was that may be beyond Ayala’s control. In
supported by Ayala management, addition, regulations of the Philippine
which convened internal teams with Stock Exchange prohibit making
the relevant skills and experience price sensitive forecasts without
On our sustainability to undertake the reporting process. considerable independent review and
performance Internal parties have devoted process. The directors therefore advise
Senior management appointed significant effort to ensure that the readers to use caution regarding
DNV GL, an independent Ayala story is presented the best interpreting any forward-looking
organization and global provider of way possible. Ayala also engaged statements in this report.
certification, assurance assessment, external parties to validate and
and training services, for the assure financial and non-financial The Board unanimously approved
third consecutive year to validate disclosures to improve accuracy, this report on 9 March 2018, and
the figures and information we objectivity, and overall report quality. authorized its release on 20 April
presented pertaining to our The report was prepared under the 2018.
sustainability performance and supervision of the Chief Finance,
<IR> frameworks presented in Risk, and Sustainability Officer, Jose
this report. The external assurance Teodoro K. Limcaoco.
process was completed in two
weeks, which included interview
sessions between DNV-GL auditors
and senior executives in the
JAIME AUGUSTO ZOBEL DE AYALA FERNANDO ZOBEL DE AYALA
conglomerate.
CHAIRMAN AND CEO PRESIDENT AND COO
The Independent Assurance
Statement found on pages 189-192
outlines the assurer’s findings and
recommendations. JOSE TEODORO K. LIMCAOCO
CHIEF FINANCE, RISK, AND
Feedback (102-53) SUSTAINABILITY OFFICER
We are committed to building
stronger stakeholder relationships
and welcome any inquiries or NOTE ON FORWARD-LOOKING STATEMENTS
comments to help us improve our This report contains statements describing the company’s objectives,
corporate reporting in the years projections, estimates, and expectations, which may be “forward-looking
ahead. Please send your feedback to statements” within the meaning of applicable securities laws and regulations.
investorrelations@ayala.com.ph and Actual results could differ materially from those expressed or implied.
sustainability@ayala.com.ph. Important factors that could make a difference to the company’s operations
include, among others, economic conditions affecting demand or 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.
INTO THE FUTURE 3

VISION
We will be the most relevant, innovative, and
enduring Philippine-based business group,
enabling shared value and prosperity for the
many stakeholders we serve.
MISSION
Anchored on values of integrity, long-term
vision, empowering leadership, and with a
strong commitment to national development,
Ayala fulfills its mission to ensure long-term
profitability and value creation. Ayala creates
synergies as it builds mutually-beneficial
partnerships and alliances with those who
share its philosophy and values.
Ayala continues to develop Makati to enable connectivity and mobility.

TABLE OF CONTENTS
19 OUR LEADERSHIP

37 OUR VALUE CREATION
111 BUSINESS REVIEW

157 OUR CORPORATE GOVERNANCE
171 ANNEXES

INTO THE FUTURE 5

AYALA AT A GLANCE
(102-2, 102-3, 102-6)
Ayala Corporation is one of the largest and most diversified business groups in the Philippines, with
business interests in real estate, banking, telecommunications, water, power, industrial technologies,
infrastructure, healthcare, and education. Its social commitment arm, Ayala Foundation, has programs
that focus on education, youth leadership, sustainable livelihood, and the promotion of arts and culture.
With headquarters in Makati City and operations mainly in the Philippines, it continues to grow its
regional and global footprint, serving millions of customers across all market segments.
NET INCOME
(IN BILLION PESOS)
30.3
26
22.3
18.6
12.8
2013 2014 2015 2016 2017
13.2
12.6
12.2 12.1
9.8
2013 2014 2015 2016 2017

22% 11.5% 22%
Six-year net Six-year average Six-year TSR
income CAGR return on CAGR
common equity
P266.8B P64.3B P1 T
Revenues Cash and cash Total assets
equivalents
P46.67 1.31 23.2%

Current ratio Six-year market
Earnings per capitalization
share (in pesos) CAGR
63.4M 410.3 GWH 139,074

Globe customers Renewable energy Jobs generated
generated across the group
P201.8B 65,102 570M

in loans provided FamilyDOC Cubic meters
for sustainable unique patients water supplied in
development the Philippines
projects
INTO THE FUTURE 7

OUR 2017 MILESTONES
JANUARY Globe becomes the first Philippine Ayala releases its annual report under
BPI Asset Management and Trust telecommunications operator to the Integrated Report Framework–
Group receives from the Bangko commercially deploy LTE-Advanced the first Integrated Report in the
Sentral ng Pilipinas a license to operate 4 component carrier (4cc) spectrum Philippines–which captures in greater
as a standalone trust corporation aggregation using the 2600MHz band detail its alignment with the UN
SDGs, its ESG performance along with
Ayala Foundation signs a Globe launches the Globe Advanced its financial and operational results
memorandum of understanding with Security Operations Center, which against GRI-G4, and its commitment
the Marawi City local government houses the infrastructure that delivers to the 10 Principles of the UN Global
to establish Siyapen, a 70-bed drug cybersecurity and related services for Compact
rehabilitation center its network and customers
MAY
AC Energy signs investment Ayala consolidates electronics Ayala Land launches Evo City, a
agreements with UPC Renewables manufacturing and automotive 200-hectare sustainable estate in
Indonesia for the development, businesses into AC Industrials Cavite
construction, and operation of a wind
farm project in Sidrap, South Sulawesi, AC Energy acquires 100 percent BPI acquires a 10 percent stake in
Indonesia ownership of Bronzeoak’s Rizal Bank of CARD MRI, a leading
development platform, for renewable microfinance institution serving over
FEBRUARY energy development, management, 260,000 customers
Ayala Land announces plan to be and operations
carbon neutral by 2022 JUNE
AC Infrastructure partners with Manila Water increased its stake in
Ayala, Ayala Land, BPI Capital SM Investments for a P25 billion Vietnam-based Saigon Water from 31
Corporation, and Globe’s Kickstart unsolicited proposal for an to 38 percent
Ventures Inc., acquire ownership 8.6-kilometer toll road linking Sta.
stakes in Zalora Philippines Mesa, Manila to the Mall of Asia Ayala Museum launches the first fully
Complex in Pasay City via the Central immersive virtual reality experience of
Ayala and Alibaba’s Ant Financial sign Business District to be named C3X Philippine history
an investment agreement to subscribe
to new shares of Mynt APRIL AC Industrials acquires 94.9 percent
IMI acquires an 80 percent stake in UK- of Germany-based, MT Technologies,
Manila Water launches its pilot based STI Enterprises, which provides a niche Tier 1 supplier that provides
Waste-to-Energy project at the South electronics design and manufacturing tooling, moulding, and specialized
Septage Treatment Plant in Taguig City solutions in both printed circuit parts manufacturing services
board assembly and full box-build
AC Health invests in MedGrocer, an manufacturing for high-reliability AC Industrials begins domestic
FDA-licensed ePharmacy and health industries production of KTM motorcycles in IMI’s
benefits management service facility in Laguna
AC Energy, as part of a consortium,
MARCH completes the acquisition of Salak JULY
Ayala Land launches Clock In, its first and Darajat Geothermal asset in Ayala Land launches The Flats
serviced office and co-working space Indonesia Amorsolo in Makati, its first co-living
development designed for young
professionals

BPI relaunches BPI Direct BanKo, which implement water projects primarily in NOVEMBER
is aimed at serving small business loans Southeast Asia and in Asia-Pacific BPI opens a refurbished flagship
to self-employed micro-entrepreneurs branch in Makati City that features
SEPTEMBER a bright and modern look and
Globe launches MIMO (multiple Jaime Augusto Zobel de Ayala is specialized services for customers
input, multiple output) technology to recognized as one of ten 2017 UN SDG
enhance mobile internet connectivity Pioneers by the UN Global Compact FamilyDOC launches FamilyDoc
for its customers in high-density areas Express, a new store format that
BPI partners with UK-based remittance features a doctor’s clinic inside a
AC Energy enters into a development giant WorldRemit to expand its Generika branch
funding arrangement with UPC international fund transfer service
Renewables for the development offerings Project Kasibulan continues, with this
of small island power projects in year’s first batch of volunteers planting
Indonesia Globe partners with EMQ, a remittance- 750 seedlings in Pagudpud, Ilocos Norte
focused financial technology startup
AUGUST based in Hong Kong DECEMBER
Ayala land launches the 25-hectare Manila Water partners with the Leyte
Azuela Cove in Davao, in partnership Manila Water signs contract for the Metropolitan Water District for the
with the Alcantara group P5.3 billion landmark Novaliches-Balara water supply and sanitation facilities
Aqueduct 4 project and services of the province
Globe’s GCash launches the nation’s
first QR payment via smartphone Generika receives the first ASEAN AC Energy achieves financial close for
Inclusive Business Award, a new the second unit of GNPower Dinginin,
Globe launches a $250-million category introduced during the 10th a 2 x 668MW super-critical coal-fired
submarine fiber cable system in Davao, ASEAN Business Awards power plant in Dinginin, Bataan
which directly links Asia to the US and
allows faster data transmission, more APEC Schools record a student AC Infrastructure announces the
efficient connectivity, and greater population of approximately over formation of a consortium with
network resiliency 16,200 Aboitiz InfraCapital, Alliance Global
Group, AEDC, Filinvest, JG Summit,
Manila Water signs 25-year concession AC Energy enters into a retail electricity and Metro Pacific that will submit an
agreement with the Obando Water supply agreement with Manila Water unsolicited bid for the redevelopment
District for the construction, operation, and upgrading of the Ninoy Aquino
and maintenance of the water and OCTOBER International Airport
sanitation services in Obando, Bulacan Ayala Malls and Globe launch the
GCash scan-to-pay service for the FamilyDOC reaches 65,000 in unique
Manila Water wins the project to benefit of consumers and business patients served
develop the water supply system in owners
Calasiao, Pangasinan for a 25-year Project Kasibulan’s biggest and last
concession period Ayala holds the 3rd annual group- batch of volunteers for the year plants
wide Investor Relations Summit 1,214 seedlings, resulting in a total
Manila Water Asia Pacific signs a of 3,498 trees planted in Pagudpud,
memorandum of understanding with Ayala holds the 7th annual group-wide Ilocos Norte throughout the duration
the International Finance Corporation Sustainability Summit of the project
to identify, evaluate, develop, and
INTO THE FUTURE 9

OUR GEOGRAPHIC PRESENCE
(102-4, 102-6)
Europe Middle East
Norway Israel
United
Kingdom
Kuwait
Germany Bahrain
Czech
Republic
Qatar Dubai (UAE)
France Saudi
Arabia
Switzerland
Serbia Oman
Italy
Bulgaria
Canada
USA
Korea Japan
China
Cyprus
Mexico
India
Guam
Australia
Chile Taiwan
Palau
Hong Kong
Myanmar
New Zealand
Thailand
Cambodia
Vietnam
“This sustained earnings momentum validates

our long-term growth strategy, which is
largely focused on expanding into new Malaysia
markets and customer segments, diversifying Singapore

Brunei
geographically, strengthening our core

markets, and entering new businesses to create
a platform for future growth.” Indonesia
Fernando Zobel de Ayala
Southeast Asia

NCR
Caloocan
Ilocos
Norte
Cagayan
Abra Valenzuela
Kalinga
Quezon
Malabon City
Ilocos Sur Mountain
Province Navotas
Marikina
Isabela
La Union
Benguet San Juan
Nueva Manila
Vizcaya
Quirino Mandaluyong Pasig
Pangasinan
Makati Pateros
Pasay
Aurora
Nueva
Tarlac Ecija
Taguig
Zambales
Parañaque
Pampanga
Bulacan
Bataan Rizal
Las Pinas
Camarines
Cavite Norte
Laguna
Muntinlupa
Quezon
Batangas
Camarines
Sur
Albay
Occidental
Mindoro
Oriental
Mindoro Sorsogon
Masbate Samar
Aklan Biliran
Capiz
Antique Leyte
Iloilo
Negros
Guimaras Occidental
Cebu
Southern
Leyte
Palawan Bohol
Surigao
del Norte
Negros
Oriental
Surigao
Siquijor Agusan del Sur
del Norte
Misamis
Oriental
Misamis
Occidental
Agusan
Zamboanga del Sur
Philippines
del Norte Lanao
del Norte Bukidnon
Zamboanga
del Sur
Zamboanga Lanao
Sibugay del Sur Davao
del Norte
North
Cotabato
Zamboanga Maguindanao
City
Davao
del Sur
Sultan
Kudarat South
Cotabato
Legend Sarangani
Ayala Land MWC AC Energy AC Ventures

BPI AC Industrials AC Health
Globe AC Infrastructure AC Education
INTO THE FUTURE 11

FIVE-YEAR
FINANCIAL HIGHLIGHTS
AYALA CORPORATION AYALA LAND
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
FOR THE YEAR

(IN MILLION PESOS)
Revenues 159,412 184,276 207,667 237,286 266,786 81,523 95,197 107,183 124,629 142,297
Net Income Attributable to 12,778 18,609 22,279 26,011 30,264 11,742 14,803 17,630 20,908 25,305
Equity Holders
Cash Dividends to Common 2,877 2,928 3,569 3,572 4,299 4,067 5,871 6,094 6,999 7,065
Shareholders
Cash Dividends to Equity 529 1,281 1,281 1,285 1,285 62 62 62 62 62
Preferred Shareholders
AT YEAR-END
(IN MILLION PESOS)
Total Assets 599,664 726,048 794,075 911,705 1,021,546 325,474 388,944 442,342 536,433 573,992
Cash and Cash Equivalents 65,655 90,770 82,154 60,223 64,259 40,761 34,586 19,540 20,904 20,998
Short-Term Investments 119 1,103 2,052 1,009 5,400 17 301 164 208 4,740
Total Borrowings 205,681 258,845 263,341 295,854 350,612 101,902 124,666 130,996 159,801 174,386
Equity Attributable to Equity 143,476 185,664 208,657 230,993 256,348 98,470 106,940 133,731 147,705 166,755
Holders
PER SHARE (IN PESOS)
Earnings - Basic 20.53 29.83 33.89 39.88 46.67 0.84 1.05 1.20 1.43 1.71
Earnings - Diluted 20.39 29.35 33.38 39.31 45.99 0.83 1.05 1.20 1.43 1.71
Book Value of Common 230.68 261.63 298.80 334.40 374.75 6.86 7.44 9.01 11.70 12.97
Shareholders
Cash Dividend to Common 4.80 4.80 5.76 5.76 6.92 0.29 0.41 0.42 0.48 0.48
Shareholders
FINANCIAL RATIOS
Current Ratio 1.46 1.50 1.28 1.22 1.31 1.45 1.23 1.14 1.12 1.18
Debt-to-Attributable Equity 1.43 1.39 1.26 1.28 1.37 0.91 1.02 0.87 0.93 0.91
Ratio

BANK OF THE PHILIPPINE ISLANDS GLOBE TELECOM MANILA WATER
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
52,498 55,787 59,359 66,551 71,020 90,500 99,025 113,679 119,990 127,906 15,926 16,357 16,936 17,712 18,516
18,811 18,039 18,234 22,050 22,416 4,960 13,372 16,484 15,888 15,084 5,752 5,813 5,958 6,065 6,147
6,401 7,077 7,078 7,086 7,091 8,877 9,953 11,017 11,682 12,092 1,560 1,611 1,669 1,712 1,744
- - - - - 24 286 553 552 554 346 323 326 333 339
1,195,364 1,450,197 1,516,356 1,725,696 1,903,905 159,079 179,507 195,680 249,863 277,766 72,858 74,860 80,608 85,479 102,482
270,179 250,373 250,641 275,206 291,081 7,421 16,757 11,814 8,633 11,222 6,780 6,052 6,850 4,066 9,021
92,153 67,171 50,371 38,904 28,645 - - - - - 94 400 - - -
28,230 33,680 21,372 62,643 84,735 69,301 65,276 72,229 105,729 131,529 26,252 25,471 26,220 27,619 39,724
104,535 144,063 150,284 165,134 180,689 41,639 54,542 59,392 63,440 66,515 30,477 34,508 38,825 43,384 47,555
5.19 4.62 4.64 5.60 5.69 37.25 98.64 120.11 115.45 109.22 2.34 2.36 2.41 2.45 2.49
5.19 4.62 4.64 5.60 5.69 37.22 98.41 119.92 115.27 109.01 2.34 2.36 2.41 2.44 2.49
29.37 36.64 38.22 41.94 45.87 308.05 330.03 366.62 397.30 420.01 14.92 16.66 18.96 20.93 22.96
1.80 1.80 1.80 1.80 1.80 67.00 75.00 83.00 88.00 91.00 0.76 0.81 0.82 0.83 0.85
- - - - - 0.65 0.77 0.72 0.64 0.72 1.12 1.16 0.80 1.10 1.20
- - - - - 1.66 1.20 1.22 1.67 1.98 0.86 0.74 0.68 0.64 0.84
INTO THE FUTURE 13

“Ignoring the challenges faced by both global and national
communities today threatens our ability to create long-
term value and jeopardizes enterprises, markets, and entire
societies. In the Philippines, our need to address economic
inclusivity and build on sustainable business practices
remains of paramount importance.” - Jaime Augusto Zobel de Ayala in his
New Year letter to the Ayala group
Beginning in 2016, the United Nations From hundreds of nominations received Ayala’s commitment to shared value,
Global Compact embarked on an around the world, Ayala Chairman and businesses across the entire group have
initiative designed to both raise CEO Jaime Augusto Zobel de Ayala sought to reach a wider segment of the
awareness on the Sustainable was chosen as a 2017 SDG Pioneer market—entering sectors with critical
Development Goals, and to for Sustainable Business Strategy and gaps in affordability, access, and scale,
identify SDG Pioneers— Operations. He is the first Pioneer from and that are crucial to the development
individuals who are doing an Southeast Asia, and the first Filipino to of the country. This includes our
exceptional job of acting on be given this distinction. investments in energy, industrial
sustainable development technologies, infrastructure, healthcare,
issues within their own His leadership drove Ayala’s group- and education.
companies, or by wide efforts to adopt a more
mobilizing other inclusive approach to capitalism, Adopting a mindset that prioritizes long-
businesses. by implementing strategies and term sustainability has changed how
business models that help to address Ayala works. Recognizing the breadth
the Philippines’ economic and and depth of the impact that our group
development challenges. As part of of businesses has on the Philippine
landscape, we are determined to work
even harder to build better businesses
and have a stronger, positive impact on
the lives of more Filipinos.
Ayala Corporation is a founding member

of the UN Global Compact Network
Philippines.
INTO THE FUTURE 15

OUR CONTRIBUTION
TO THE UNITED NATIONS
BPI Direct BanKo provided Ayala companies distributed
P445.5 P422.5 MILLION

in community investments
MILLION for various poverty alleviation
and social welfare projects
of microfinance loans for
self-employed micro- in livelihood, education, and
entrepreneurs healthcare among others
FamilyDoc provided affordable primary care services to more

than 65,000 unique patients through its 21 community-based
clinics in Luzon BPI provided
Generika had
P156 BILLION
worth of agribusiness loans
41.7 MILLION to support agriculture and
sales transactions, 32.8 million of which were generic medicine food security
sales, through its 750 drugstores nationwide
Ayala Foundation
and Globe provided
ICT education
facilities to 11
public schools
Manila Water delivered
through Global
Filipino Schools
Program, benefitting
570 MILLION
cubic meters of water to over 1
10,896 students million billed connections in its
nationwide service areas
APEC provides affordable
quality secondary University of Nueva 1:1.33 Manila Water treated
education to OVER Caceres produced male : female
56.4 MILLION
647
16,000 students, 60
employee ratio for cubic meters of used water
percent of which are from
the D & E market, across the Ayala group from more than 147,000 sewer
23 schools college graduates connections in its service areas
With over 37,000 base stations, Globe served
AC Energy through its operating

companies generated
63.4 MILLION
customers and enabled the exchange of
6,552.1 GWh
of power
Ayala companies spent
P173.5 BILLION
600 petabytes of information
IMI manufactured more than
31 MILLION
in capital expenditures
AC Energy’s renewable energy
generation assets generated Ayala companies generated a total of
410.3 GWh 139,074 JOBS

units of automotive, connectivity, and
smart energy technology components
of power

Muntinlupa-Cavite Expressway served
Ayala group provides equal
opportunities and fosters 29,000 vehicles per day, generating
non-discrimination savings of P519 million in fuel consumption
in the workplace. and man-hours
Ayala Land has developed a total of
25 masterplanned
IMI and Globe diverted 98 estates that are resilient, pedestrian-friendly,
percent and 9 percent of waste public-transport connected, and eco-efficient
from landfill, respectively
Globe through Project 1 Phone Light Rail Manila Corporation served

hauled
157 million
216,816 kg passengers in LRT 1 with 99.39 percent train
punctuality
of e-waste
Manila Water generates Ayala Malls provide space for terminals for
1.3kWh of electricity per 9 Point-to-Point
day from 0.67 cubic meters of bus routes to encourage commuters to use
septage through its waste-to- public transportation
energy facility
Ayala Land maintains

Manila Water removed
450 hectares
of carbon forest
9,087 tonnes
of organic pollutants from used water
Ayala companies planted Light Rail Manila Corporation planted
3,498 seedlings 2,000 mangrove
through Project Kasibulan
propagules in Lobo, Batangas
AC Energy’s renewable energy assets Ayala Land protects 9 threatened aquatic
avoided 196,224 tonnes of CO2e emissions animals in El Nido Resorts, Lio Estate, and
Anvaya Cove
Ayala Land protects 5 threatened plants

and 20 threathened land animals in El Nido
Resorts and Lio Estate
North Luzon Renewables’ biodiversity

study yielded
29 to 60 bird species, BPI disbursed
14 to 21 of which are endemic, year-round
in Pagudpud, Ilocos Norte P201.8 BILLION
Ayala continues worth of loans for sustainable
Manila Water planted to uphold good development projects in food and
agriculture, sustainable energy,
15,800 seedlings governance and
respects human
education, nutrition, and other sectors
in 79 hectares of land in La Mesa
Watershed and 1,700 trees in 4.3 hectares rights Ayala sustained its partnership with
of land in Ipo Watershed the UN Global Compact Network
Philippines
INTO THE FUTURE 17

Ayala Corporation is headquartered in Tower
One, Ayala Triangle, Makati.

O UR L EAD ER S H I P
INTO THE FUTURE 19

MESSAGE FROM THE CHAIRMAN
(102-14)
Fellow shareholders,
Let me start with a broad overview of the external economic
environment to put our review of the past year into perspective.
The improving trajectory for the global economy continued in

2017, with a recovery in trade, investment, and manufacturing
recorded in a majority of economies across the world. However,
economists cited the need for productivity-enhancing structural
reforms in both advanced and developing economies to
sustain this level of growth. Aging populations, most evident in
advanced economies, are expected to depress the expansion
of employment. In the case of developing economies, the
challenge lies in improving physical infrastructure and human
capital, aggravated by the fast pace at which disruptive
technologies are changing the business landscape.
INTO THE FUTURE 21

Strong domestic consumption, continued investor confidence, and the government’s aggressive
infrastructure plan have created significant potential for sustained growth.
In ASEAN, despite worries of a have emerged as a result of rising

slowdown brought about by commodity prices arising from higher
protectionist initiatives in the US and global energy prices and a weaker
geopolitical tensions in the Asia- peso.
Pacific and the Middle East nations,
the region continued to perform Ayala has been a beneficiary of
strongly in 2017, bolstered by strong the country’s significant economic
“ In recent years, we private consumption and exports. growth. This has served as a catalyst
have made it a strategic for us to unlock many opportunities
Here at home, we continue to be and push us to develop new ideas
imperative to search for optimistic about the Philippine to incubate new businesses, and
opportunities beyond our economic environment. Even with the to explore prospects for disruptive
absence of election-driven economic innovation. We took advantage of this
shores, particularly across growth from the previous year, our encouraging domestic environment
Southeast Asia. In our economy continued to perform to create a portfolio that creates
country, our businesses are strongly, recording a 6.7 percent some hedges against specific
expansion in 2017. The Philippines macroeconomic and socio-political
recognized leaders that remains a top performer in ASEAN, trends and balances our two major
have established important trailing Vietnam, which registered 6.8 pillars—our publicly-listed industry
percent economic growth. leaders in real estate, banking,
presence in their respective telecom, and water; and our wholly-
industries with advanced Many anticipate the momentum owned emerging businesses in power,
skills and capabilities that to continue this year as the industrial technologies, infrastructure,
government’s aggressive healthcare, and education.
can be deployed globally.” infrastructure spending plans move
to an execution phase and disposable We are happy to report that our
incomes rise as a result of tax reforms. portfolio has sustained its robust
However, concerns around inflation growth trajectory in the last six years

despite some economic volatility and driver of our earnings stream and addition to their existing operations
political changes. Our profitability has value creation. in China, Singapore, the US, Mexico,
seen consistent double-digit growth Bulgaria, and Czech Republic. Since
since 2012, with compounded annual Furthermore, across the Ayala group, its formation in 2016, the team has
growth rate and total shareholder we have made significant progress made progress in taking advantage
return both at 22 percent. In parallel, in expanding our international of opportunities around disruptive
our market capitalization reached presence in new economies where trends in global manufacturing
P630.5 billion at the end of 2017, we have the ability to bring our by assembling a portfolio of
reflecting a compounded annual expertise and capital to address complementary assets in emerging
growth rate of 23 percent. opportunities. In recent years, we technologies to deepen its presence
have made it a strategic imperative to in the automotive industry.
Overall, the steady improvement search for opportunities beyond our
in our financial performance puts shores, particularly across Southeast Already the largest foreign investor in
us on track to achieve our strategic Asia. In our country, our businesses Vietnam’s water sector, Manila Water
aspirations for 2020 of improving are recognized leaders that have now services half of the consumer
our profitability and shareholder established important presence and industrial demand in Ho Chi
return while diversifying our earnings in their respective industries with Minh and has expanded to other
stream. As you know, in 2016, we set advanced skills and capabilities parts of the country. As part of its
out a target to double our net income that can be deployed globally. AC ongoing expansion in Southeast Asia,
to P50 billion by 2020 with a return on Industrials, Manila Water, AC Energy, Manila Water has entered the Thai
common equity of 15 percent, as well and Ayala Land are natural players market with the acquisition of an 18
as generate earnings contribution on this front and have all started percent stake in East Water, a publicly-
of 20 percent from our emerging to develop regional and global listed water supply and distribution
businesses and 10 percent from our businesses. company. Moreover, it is establishing
international portfolio. a footprint in Indonesia with the
AC Industrials is our most global purchase of a 20 percent stake in PT
We are pleased to report the business in the Ayala group and now Sarana Tirta Ungaran, a bulk water
significant progress we have made counts Germany, the UK, Serbia, supply company.
in our diversification strategy by and Thailand as new markets in
establishing new pillars of growth
and moving into new geographies. In
particular, the investments we made
to develop a significant presence
in the energy sector have started
to bear fruit. Over the past five
years, AC Energy has grown rapidly
---starting with only 80 megawatts of
attributable generating capacity from
its inception in 2011 and achieving
1,600 megawatts in its pipeline in
2017. With its sizeable portfolio of
reliable and affordable thermal and
renewable energy platforms, AC
Energy is becoming a meaningful
KTM’s facility in IMI Laguna

started production in June 2017.
INTO THE FUTURE 23

BPI BanKo helps to bring underserved and unbanked Filipinos into the formal economy, through access to critical services.
In support of its diversification Moving forward, we remain optimistic

strategy, AC Energy is laying the about our growth trajectory as we
foundation to be a regional player adjust to monitor major global,
following its first overseas investment domestic, and industry trends that
in acquiring a stake in Salak and affect our businesses and open new
Darajat Geothermal, which was part of opportunities.
Chevron’s energy assets in Indonesia.
Since then, AC Energy has been More importantly, beyond our
exploring other opportunities in the financial metrics and aspirations,
region, and is currently developing we measure ourselves against the
a wind farm also in Indonesia and a broader progressive contributions
solar project in Vietnam. that we make to society through
our businesses. In the Philippines,
Finally, Ayala Land is leveraging its economic inclusivity remains a
6 YEAR CAPITAL EXPENDITURES widely recognized leadership in challenge. We have made great
(IN BILLION PESOS)
large-scale, masterplanned estate improvements on this front and have,
development in Malaysia through over time, readjusted our business
MCT Berhad, a real estate company it models to cater to underserved
173.5
164.3 acquired in 2015. Ayala Land has over Filipinos.
152.2
149.3 time increased its stake in MCT and in
127.9 130.4
early 2018, raised its interest to hold a Our business lines in real estate,
majority ownership of the company. banking, telecom, water, power,
This investment allows Ayala Land to industrial technologies, infrastructure,
participate in the growth prospects healthcare, and education have all
for Malaysia’s real estate market and developed new, innovative ways
affirm its role as a growing investor in to provide products and services
Southeast Asia. that bridge gaps in capacity, quality,
2012 2013 2014 2015 2016 2017 accessibility, and affordability.

As an example, both our banking to harness our sustainable our communities in progressive and
and telecom businesses have business practices and find new sustainable ways. Finally, I thank
made financial inclusion a priority and improved ways to broaden our business partners, shareholders,
in business plans. Bank of the economic inclusivity and remain and all our stakeholders for their
Philippine Islands and Globe Telecom relevant to our specific markets. continued trust and support to the
have created ancillary businesses Ayala group.
focused on servicing unbanked I want to thank you all for sharing
Filipinos, which today account for this commitment we have to align
50 percent of our adult population. our business strategies to broader
Our bank runs BPI Direct BanKo, sustainability imperatives as defined
focused on delivering affordable by the United Nations Sustainable
financing solutions to self-employed Development Goals framework.
microentrepreneurs. Meanwhile,
Globe operates Mynt, a financial As a final note, I thank our Board
technology joint venture with Ant of Directors for providing active JAIME AUGUSTO ZOBEL DE AYALA
Financial, that leverages mobile management oversight and CHAIRMAN AND CHIEF
technology to provide payments and engagement as we address EXECUTIVE OFFICER
lending solutions to the underserved. challenges and market opportunities.
With diversity in thinking and a useful
The investments we have made combination of knowledge, business
across our group are all in support of experience, and expertise, our
the country’s development agenda. Board encourages a culture of trust,
We have deployed P898 billion in openness, and constructive dissent.
combined capital expenditure over In particular, with their breadth of
the last six years, which is equivalent business experience and focus on
to approximately 50 percent of the our long term interests, they have all
Philippines’ foreign direct investments provided guidance to many of our
over the same period. major strategic decisions.
We will continue to put the resources, I also thank our management team
knowledge, expertise, and talent and staff for their spirit of corporate
that we have across our group engagement and creativity to serve
In October 2017,
Jack Ma joined the Ayala group
in launching GCash’s scan-to-pay
system in the Ayala Malls.
INTO THE FUTURE 25

REPORT OF THE PRESIDENT
Fellow shareholders,
Underpinned by the strong fundamental drivers of our economy

that continued to be in place, we are pleased to report that 2017
was another year of strong earnings growth. The aggressive
growth agenda we embarked on several years ago bolstered the
sixth year of Ayala’s strong performance.
Our net profit climbed 16 percent to P30.3 billion, boosted

by the solid performance of our real estate and power units.
This sustained earnings momentum validates our long-term
growth strategy, which is largely focused on expanding into new
markets and customer segments, diversifying geographically,
strengthening our core markets, and entering new businesses to
create a platform for future growth.
This brings us closer to our strategic aspirations for 2020. On our

profitability targets, we ended the year with a return on common
equity of 13.2 percent against our target of 15 percent for 2020.
Our diversification strategy is also increasingly coming to fruition.
Our emerging businesses, primarily AC Energy and AC Industrials,
contributed 16 percent to our equity earnings in 2017, versus
our target of 20 percent at the end of the decade. Meanwhile,
international platforms contributed 7 percent to our equity
earnings during the year, against our goal of 10 percent in 2020.

INTO THE FUTURE 27
percent of its service revenues in
2017, which reached P127.9 billion,
six percent higher from a year ago.
Globe continued to expand its data

network nationwide to meet the
growing customer preference for
content-rich offerings. It deployed
P42.5 billion in capital expenditure
in 2017 for network infrastructure
enhancement in support of its
vision to deliver first world internet
connectivity in the country.
This increased investment in network

infrastructure resulted in higher
operating and non-operating
expenses and depreciation charges,
which weighed down on Globe’s
In April 2017, as part of a consortium, AC Energy completed its acquisition of Chevron’s
assets in Indonesia, including the Salak and Darajat geothermal fields in West Java. profitability. Its net earnings dropped
five percent to P15.1 billion in 2017.
Our businesses continue to make Bank of the Philippine Islands Globe is ramping up its financial
significant progress in support of our continues to strengthen its market- technology platform, Mynt, to
strategic aspirations. leading businesses and core accelerate financial inclusion and
franchises through the expansion upgrade the electronic payment
Ayala Land continued to work of lending activities, particularly in systems in the country. Together
towards achieving a more resilient the consumer, small and medium with Ayala, Globe partnered with
portfolio by rebalancing its income enterprises, and microfinance Ant Financial through Ant’s equity
mix across geographies and segments. investment in Mynt. Leveraging
business lines. on Ant’s experience and expertise
It has created a business banking in digital financial services will
In terms of location, established segment, a new client group focused enable Mynt to ramp up its vision of
estates such as Makati, Nuvali, on the needs of small and medium becoming a world-class online and
Bonifacio Global City, Alabang, and scale enterprises. To help augment offline payment provider, scale its
Cebu accounted for 54 percent, financial inclusion in the country, the mobile wallet services, and provide
while new estates and growth bank expanded the footprint of its a wider range of digital financial
centers made up for 46 percent of microfinance unit, BPI Direct BanKo, services to its customers.
Ayala Land’s net earnings in 2017. from nine to 103 branches and
In terms of business line, Ayala microbanking offices. This platform Manila Water continued to make
Land’s recurring income, namely provides small business loans to self- progress in establishing a significant
mall and office leasing, hotels and employed microentrepreneurs. presence in various parts of the
resorts, and property management Philippines and in ASEAN. In the
segments accounted for 35 BPI’s net income in 2017 was Philippines, it was given Notices of
percent. Meanwhile, development tempered by the absence of one-off Award by the Leyte Metropolitan
income such as property sales and gains realized in the previous year. It Water District and the City of Ilagan
construction contributed 65 percent recorded net profits of P22.4 billion, in Isabela for the construction and
of Ayala Land’s net income during up 1.7 percent from a year ago. operation of water supply and
the year. Excluding one-off gains from the sale sanitation facilities and services in
of securities in 2016, its net income those areas. This is in addition to its
All in all, the resurgence of property actually grew 30 percent in 2017. operations in Clark, Laguna, Cebu,
sales combined with a solid leasing Boracay, Bulacan, Zamboanga,
business drove Ayala Land’s net Globe Telecom continued to benefit and Tagum.
earnings during the year, jumping 21 from the high demand for data-
percent to P25.3 billion. related services. It accounted for 54

Furthermore, Manila Water is
deepening its footprint in the “The past years have seen Ayala building businesses that
region. In early 2018, it successfully meet some of the most basic needs of the Filipino people, as
entered the Thailand market with
the acquisition of an 18.7 percent well as critical requirements to national development.”
stake in East Water, a publicly-listed
water supply and distribution
company. East Water operations AC Energy sustained its positive Similarly, AC Energy is boosting
are strategically located along the momentum as it scales up its its conventional energy portfolio.
Eastern Economic Corridor, which is portfolio of renewable and thermal In December 2017, the project
targeted to be a leading economic energy platforms and executes on its financing for the second unit of its
zone in the region. diversification strategy. 2 x 668 MW super-critical coal fired
power plant in Bataan, GNPower
Shortly after, Manila Water acquired In particular, its acquisition of a stake Dinginin, achieved financial close. AC
a 20 percent stake in PT Sarana in Indonesia-based Salak and Darajat Energy has a stake of approximately
Tirta Ungaran, a bulk water supply Geothermal, the asset previously 50 percent in the project. This will
company in Indonesia. Sarana has owned by Chevron, has started to support the increasing electricity
a capacity of 21.5 million liters boost AC Energy’s earnings capacity. demand of Luzon and Visayas.
per day, servicing the water utility Its net income jumped 31 percent to
PDAM Kabupaten Semarang in the P3.5 billion in 2017, primarily driven Finally, AC Energy is transitioning
Regency of Semarang and industrial by fresh equity earnings contribution into a full-fledged energy platform
customers in Central Java Province. from SD Geothermal. This was further with development, operation, and
lifted by solid contributions from its retail capabilities. It acquired the
Manila Water’s active business wind energy assets as well as services Bronzeoak development platform,
development initiatives resulted income derived from the financial which has a strong track record in
in higher operating expenses, close of a new power plant. renewable development.
moderating its earnings growth in
2017. It recorded a net income of Following the acquisition of SD In the area of industrial technologies,
P6.2 billion, a modest improvement Geothermal, AC Energy continues AC Industrials is building a portfolio
of one percent despite higher billed to pursue investments overseas as of businesses to capture the
volume across all its business lines. it establishes itself as an emerging disruptions taking place in the global
player in the region. manufacturing space.
With automotive as its key business

line, it has anchored its strategy
around key megatrends in the sector,
such as the increasing percentage of
electronic components in the car, the
advent of autonomous vehicles, and
the accelerating adoption of cleaner
forms of alternative power, such as
electricity.
In anticipation of these megatrends,

AC Industrials has made a series
of strategic acquisitions in various
platforms since its formation in 2016.
First, it partnered with KTM AG, the
largest motorcycle manufacturer
in Europe. The partnership covers
the full motorcycle value chain –
from parts manufacturing, vehicle
assembly, local and international
Globe’s Iconic store offers customers a dynamic and interactive retail experience.
distribution, and dealership.
INTO THE FUTURE 29

Second, it acquired 76 percent of
VIA Optronics, a display solutions
provider headquartered in Germany
with production facilities in China.
Third, it acquired 95 percent of
German-based MT Technologies, a 139,000 P239.4B
niche Tier 1 supplier which provides
tooling, moulding, and specialized
parts manufacturing services to
leading European car manufacturers. JOBS PROVIDED TAXES PAID TO THE
Most recently, it acquired a IN THE AYALA GOVERNMENT OVER
controlling stake in Merlin Solar, an GROUP SIX YEARS
emerging company that develops
differentiated solar solutions applied Ninoy Aquino International Airport. In primary care, FamilyDOC, our
in transportation and infrastructure. The consortium is prepared to chain of community-based clinics,
spend P102 billion over the next served over 65,000 unique patients
While these platforms are still five years to improve and expand from its 21 locations in Cavite,
in their early stages, our long- the airport’s capacity to serve Laguna, Las Piñas, Parañaque, Taguig,
held businesses in electronics passenger traffic, which has grown Pateros, Pasig, and Quezon City.
manufacturing and vehicle significantly and will continue to AC Health targets to open 50 new
dealership serve as the foundation grow in the coming years. FamilyDOC clinics in 2018.
for AC Industrials’ growth. In 2017,
it registered a net income of P1.2 Finally, in partnership with the Meanwhile, AC Education is ramping
billion, up four percent from its year- Global Fashion Group, our partners up its investments in the education
ago level, on better performance of in Zalora Philippines, AC Infra is space. In January 2018, it announced
both business segments. entering the logistics space with the signing of a non-binding term
the acquisition of up to 60 percent sheet for a potential merger with
AC Infrastructure continues to in a fulfillment solutions services iPeople, the listed holding company
execute on the three public-private company. This investment forms for the education sector of the
partnership projects in its portfolio. part of Ayala’s strategy to develop Yuchengco-led House of Investments.
Similarly, it is pursuing opportunities infrastructure that will result in iPeople’s education portfolio
to expand its presence in the better efficiencies and improve includes Mapua University, Malayan
transport and infrastructure the fulfillment processes of its Colleges Laguna, and Malayan
network space. existing businesses in real estate, Colleges Mindanao, with a combined
banking, telecommunications, and population of approximately 17,000
In partnership with SM Investments, e-commerce. students. Mapua is one of the leading
AC Infra submitted an unsolicited private engineering and technical
proposal to the Department of AC Health and AC Education universities in the country. We are
Public Works and Highways for the continue to scale up their platforms targeting to close this merger in 2018.
construction and operation of an to provide quality and affordable
8.6-kilometer elevated toll road that basic services to a broader segment Also in early 2018, AC Education
would link Sta. Mesa, Manila to the of Filipinos. signed a share purchase agreement
Mall of Asia Complex in Pasay City to acquire National Teachers
via the Central Business District. The Generika, AC Health’s retail College, which has a 90-year track
proposal is currently under review pharmacy network for affordable record in teacher education with
by the Department of Public Works quality generic medicines, recorded approximately 10,000 students.
and Highways. P3.3 billion in revenues, up 15
percent from a year ago on higher Our value creation model
Moreover, as part of a consortium retail sales and store expansion. It Recognizing the impact that our
with Aboitiz InfraCapital, Alliance opened 100 stores in 2017, bringing businesses have across the country,
Global Group, Asia’s Emerging total store count to 750. AC Health we strive to create value beyond
Dragon, Filinvest, JG Summit is targeting to ramp up Generika’s success in financial and operating
Holdings, and Metro Pacific, AC Infra total store count to 850 by the end metrics. A commitment to national
submitted an unsolicited proposal of 2018. development has always been a
to rehabilitate and operate the defining pillar of the Ayala group.

In 2017, our Chairman and CEO was improve the operating efficiencies communities in the Philippines and
recognized by the United Nations of the LRT-1, Muntinlupa-Cavite in the region.
Global Compact for steering Ayala’s Expressway, and the beep™ card
deep commitment to bringing in order to provide a safer, more Beyond the operational success of
sustainability at the forefront of our efficient commuting experience to our companies, Ayala helps to drive
business strategy and operations. hundreds of thousands of Filipinos equitable and inclusive economic
Anchoring our shared value creation daily. AC Education and AC Health growth by creating employment
process and sustainability framework have likewise ramped-up their opportunities for over 139,000
on the United Nations Sustainable operations, for the benefit of over people and remitting P239.4 billion
Development Goals has allowed 24,000 students and 65,000 patients. in taxes to the national government
us to clearly define, measure, and over the past six years. A shared
report the different ways by which Our core businesses continue to drive for excellence ensures that
we contribute to the development provide best-in-class products and we build critical infrastructure to
of the Philippines. The SDGs will services that empower Filipinos. support our operations, innovate in
also guide us in designing a set of Ayala Land has 25 masterplanned, various sectors, and do our part in
concrete sustainability targets, which sustainable estates around the building word-class industries for the
will formally become part of our country, and has put in place a Philippines.
companies’ and management’s key target of net-zero carbon emissions
result areas. by 2022. The success we have had in creating
shared value is due to the hard work
In addition, Ayala remains committed As a pillar of the banking community, of our board, management, and
to the UN Global Compact and its 10 BPI continues to support employees, all of whom work to
principles, as these reflect our drive economic growth by providing optimize our value creation through
to institutionalize sustainability in our critical financial services to the sound strategies and responsible
group of companies. underserved. Globe caters to operations. This has long been a
the telecommunications and hallmark of Ayala’s culture, and we
The past years have seen Ayala lifestyle needs of over 63.4 million are fortunate that our employees
building businesses that meet customers, while harnessing share our determination to have a
some of the most basic needs digital and mobile technologies positive impact on the Philippines.
of the Filipino people, as well as to empower startups and small
critical requirements to national businesses. Moreover, Manila Water In closing, we thank all our
development. In 2017, AC Energy supplies water to 6.3 million people stakeholders for their strong
generated approximately over in the eastern part of Metro Manila engagement. We invite you to
6,500 GWh for the national grid. and has widened its reach to bring continue investing in us as we set
Our infrastructure arm continued to world-class water services to more new tracks for Ayala.
FERNANDO ZOBEL DE AYALA

PRESIDENT AND CHIEF
OPERATING OFFICER
Through LRMC, AC Infrastructure has improved the operations of the LRT-1, the oldest rail line in the Philippines .
INTO THE FUTURE 31

XAVIER P. FERNANDO DELFIN L.
LOINAZ ZOBEL DE AYALA LAZARO
RAMON R. KEIICHI
DEL ROSARIO, JR. MATSUNAGA
JAIME AUGUSTO ANTONIO JOSE U.
ZOBEL DE AYALA PERIQUET

BOARD OF DIRECTORS
JAIME AUGUSTO ZOBEL DE AYALA Eton Property Development Corporation, Aurora Director of BPI Family Savings Bank, Inc., and BPI/
Filipino, 58, Director of Ayala Corporation since Properties Incorporated, Vesta Property Holdings, MS Insurance Corporation; Trustee of E. Zobel
May 1987. He has been the Chairman and CEO of Inc., Ceci Realty Inc., Fort Bonifacio Development Foundation; Chairman of Alay Kapwa Kilusan
Ayala Corporation since April 2006. He holds the Corporation, Bonifacio Land Corporation, Pangkalusugan and XPL Manitou Properties, Inc.;
following positions in publicly-listed companies: Emerging City Holdings, Inc., Columbus Holdings, and Vice Chairman of XPL MTJL Properties, Inc.
Chairman of Globe Telecom, Inc., Integrated Micro- Inc., Berkshires Holdings, Inc., and Bonifacio Art He was formerly the President of the Bank of the
Electronics, Inc. and Bank of the Philippine Islands; Foundation, Inc.; Director of LiveIt Investments, Philippine Islands from 1982 to 2004. He was
and Vice Chairman of Ayala Land, Inc. and Manila Ltd., AG Holdings Ltd., AC Infrastructure Holdings also the President of Bankers Association of the
Water Company, Inc. He is also the Chairman of AC Corporation, Asiacom Philippines, Inc., Ayala Philippines from 1989 to 1991. He graduated with
Education, Inc., Ayala Retirement Fund Holdings, Retirement Fund Holdings, Inc., AC Education, an AB Economics degree at Ateneo de Manila
Inc., AC Industrial Technology Holdings, Inc., AC Inc., and AC Ventures Holding Corp., Honda Cars University in 1963 and took his MBA-Finance at
Ventures Holding Corp., AC Infrastructure Holdings Philippines, Inc., Isuzu Philippines Corporation, Wharton School, University of Pennsylvania in
Corporation, and Asiacom Philippines, Inc.; Co- and Manila Peninsula; Member of the Philippine- 1965.
Chairman of Ayala Foundation, Inc. and Ayala Singapore Business Council, INSEAD East Asia
Group Club, Inc.; Director of Alabang Commercial Council, World Presidents’ Organization, and Chief RAMON R. DEL ROSARIO, JR.
Corporation, Ayala International Pte. Ltd., AC Executives Organization; Chairman of Habitat for Filipino, 73, Independent Director of Ayala since
Energy, Inc., Ayala Healthcare Holdings, Inc., Humanity’s Asia-Pacific Capital Campaign Steering April 2010. He holds the following positions
Light Rail Manila Holdings, Inc., and AG Holdings Committee; and Member of the Board of Trustees in publicly-listed companies: President and
Limited; Chairman of Harvard Business School Asia- of Caritas Manila, Pilipinas Shell Foundation, and Chief Executive Officer of Phinma Corporation;
Pacific Advisory Board and Endeavor Philippines; the National Museum. He graduated with a B.A. in and Chairman of PHINMA Energy Corp. and
and member of the Harvard Global Advisory Liberal Arts at Harvard College in 1982 and holds a PHINMA Petroleum and Geothermal, Inc. He
Council, Mitsubishi Corporation International CIM from INSEAD, France. is the President and Chief Executive Officer
Advisory Committee, JP Morgan International of Philippine Investment Management, Inc.;
Council, Global Board of Advisors of the Council DELFIN L. LAZARO Chairman of Araullo University, University of Iloilo,
on Foreign Relations, Asia Society International Filipino, 71, Non-Executive Director of Ayala University of Pangasinan, Cagayan de Oro College,
Council, University of Tokyo Global Advisory Corporation since January 2007. He holds the Southwestern University, United Pulp and Paper
Board, Singapore Management University Board following positions in publicly-listed companies: Co., Inc., PHINMA Power Generation Corporation,
of Trustees, and Eisenhower Fellowships Board of Director of Ayala Land, Inc., Integrated Micro- PHINMA Renewable Energy Corp., One Subic Power
Trustees. He was the Philippine Representative to Electronics, Inc., Manila Water Company, Inc., Generation Corp., PHINMA Microtel Hotels, Inc.
the Asia Pacific Economic Cooperation Business and Globe Telecom, Inc. His other significant and PHINMA Hospitality, Inc. He is Vice-Chairman
Advisory Council from 2010 to December 2015. positions include: Chairman of Atlas Fertilizer of Phinma Foundation, Inc. and Phinma Property
In 2007, he received the Harvard Business School & Chemicals Inc., Chairman and President of Holdings Corp., Director of Union Galvasteel Corp.
Alumni Achievement Award, the school’s highest A.C.S.T. Business Holdings, Inc.; Vice Chairman and and other PHINMA managed companies; Chairman
recognition. He was a recipient of the Presidential President of Asiacom Philippines, Inc.; Director of the National Museum of the Philippines and
Medal of Merit in 2009 for enhancing the prestige of AC Industrial Technology Holdings, Inc., AYC Philippine Business for Education; and Vice-
and honor of the Philippines both at home and Holdings, Ltd., Purefoods International Limited, Chairman of Caritas Manila and Philippine Business
abroad. In 2010, he was bestowed the Philippine and Probe Productions, Inc. He graduated with a for Social Progress. He is a former chairman of the
Legion of Honor, with rank of Grand Commander, BS in Metallurgical Engineering at the University Ramon Magsaysay Award Foundation and Makati
by the President of the Philippines in recognition of of the Philippines in 1967 and took his MBA (with Business Club, where he remains a Trustee. Mr.
his outstanding public service. In 2015, he received Distinction) at Harvard Graduate School of Business del Rosario graduated from De La Salle College
the Order of Mabini, with rank of Commander, in 1971. in 1967 with degrees in BSC-Accounting and AB
for his vital contributions during the Philippines’ Social Sciences (Magna cum Laude) and from
hosting of the APEC Summit. In 2017, he was KEIICHI MATSUNAGA Harvard Business School in 1969 with a Master in
recognized as a United Nations SDG Pioneer for Japanese, 53, has been a Director of Ayala Business Administration degree. He has managed
his work in sustainable business strategy and Corporation since April 2017. He is the General Phinma since 2002 and brings with him a wealth of
operations. He graduated with a B.A. in Economics Manager of Mitsubishi Corporation Manila Branch. experience in leading a diversified conglomerate.
(Cum Laude) at Harvard College in 1981 and Currently, he is also the Chairman of International
obtained an MBA at the Harvard Graduate School Elevator & Equipment Inc.; President of MC ANTONIO JOSE U. PERIQUET
of Business Administration in 1987. Diamond Realty Investment Phils., MC Oranbo Filipino, 56, Independent Director of Ayala
Investment, MC Cavite Holdings, Inc., FMT Kalayaan, Corporation since September 2010. He is Chairman
FERNANDO ZOBEL DE AYALA Inc.; and Director of Century City Development II of BPI Asset Management and Trust Corporation,
Filipino, 57, Director of Ayala Corporation since Corporation, Isuzu Philippines Corporation, Kepco the Campden Hill Group, and Campden Hill
May 1994. He has been the President and Chief Ilijan Corporation, Trans World Agro-Products Advisors, Inc. He also sits as an independent
Operating Officer of Ayala Corporation since April Corp., Japanese Chamber of Commerce & Industry director of the Bank of the Philippine Islands, ABS-
2006. He holds the following positions in publicly- of the Philippines, and the Japanese Association CBN Corporation, DMCI Holdings, The Max’s Group
listed companies: Chairman of Ayala Land, Inc. and Manila, Inc. He is not a director of any publicly- of Companies, The Philippine Seven Corporation,
Manila Water Company, Inc.; and Director of Bank listed company in the Philippines other than Ayala and the Albizia ASEAN Tenggara Fund. Mr. Periquet
of the Philippine Islands, Globe Telecom, Inc., and Corporation. He entered Mitsubishi Corporation is a trustee of Lyceum of the Philippines University
Integrated Micro-Electronics, Inc.; and Independent after graduating from the Faculty of Law at Waseda and a member of the Dean’s Global Advisory
Director of Pilipinas Shell Petroleum Corporation. University in 1988 and has since held various Council at the University of Virginia’s Darden School
He is the Chairman of AC International Finance leadership positions. of Business. He graduated with an AB Economics
Ltd., Liontide Holdings, Inc., AC Energy, Inc., Ayala degree from the Ateneo de Manila University in
Healthcare Holdings, Inc., Automobile Central XAVIER P. LOINAZ 1982 and took his Masters of Science in Economics
Enterprise, Inc., Alabang Commercial Corporation, Filipino, 74, Independent Director since April 2009. at the Oxford University, UK in 1988 and Masters in
Accendo Commercial Corp., and Hero Foundation, He is also an Independent Director of the Bank of Business Administration at University of Virginia,
Inc.; Co-Chairman of Ayala Foundation, Inc. and the Philippine Islands, a publicly-listed company. USA in 1990.
Ayala Group Club, Inc.; Vice-Chairman of ALI He also holds the following positions: Independent
INTO THE FUTURE 33

BOARD OF DIRECTORS
MANAGEMENT COMMITTEE
ALFREDO I. JOHN PHILIP S. RUEL T.

AYALA ORBETA MARANAN
JOSE TEODORO K. ARTHUR R. TAN
President and CEO, LIMCAOCO Chief Human Resource President,
President and CEO,
AC Education Chief Finance Officer, Officer and Group Head, Ayala Foundation
AC Industrials , and
Chief Risk Officer, Chief Corporate Resources CEZAR P.
CEO, Integrated Micro-
Sustainability Officer, CONSING
Electronics, Inc.
and Group Head, President and CEO,
Finance (102-20) Bank of the
ERNEST JAIME AUGUSTO Philippine Islands
LAWRENCE L. CU ZOBEL DE AYALA
President and CEO, Chairman and
Globe Telecom Chief Executive Officer

JOSE RENE GREGORY D. ALMENDRAS
President and CEO, AC Infrastructure, and JOHN ERIC T. FRANCIA BERNARD
President and CEO, VINCENT O. DY
Group Head, Public Affairs
AC Energy President and CEO,
FERNANDO ZOBEL Ayala Land
SOLOMON M. HERMOSURA DE AYALA
FERDINAND M. Chief Legal Officer, Chief PAOLO MAXIMO F. President and
DELA CRUZ Compliance Officer, Corporate BORROMEO Chief Operating Officer
President and CEO, Secretary, Data Protection President and CEO,
Manila Water Officer, and Group AC Health, and Group
Head, Corporate Governance Head, Corporate Strategy
and Development
INTO THE FUTURE 35

AC Energy has two wind farms in Ilocos Norte—the 81MW
North Luzon Renewables and the 52MW NorthWind Power.

VALUE CREATION
INTO THE FUTURE 37

OUR PORTFOLIO
47.1%* 48.2%* 31%* 51.6%*
Leading and most Pioneering financial Purveyor of the Filipino Regional player in water
diversified property institution and one of the digital lifestyle, supported infrastructure services and
developer in the country most profitable banks in by a robust telecom development
with the largest landbank the country infrastructure
(approx. $12B market cap) (approx. $8B market cap) (approx. $6B market cap) (approx. $1.3B market cap)
100%* 100%* 100%* 100%*
A fast-growing regional Industrial technologies Growing portfolio of key Developing an integrated

energy platform with investments focused on infrastructure projects ecosystem focused on
investments in renewable electronics manufacturing, and businesses to affordable medicine
and conventional power vehicle retail, and enabling support the growing and access to
assets and development, technologies needs of the Philippines healthcare services
operations and retail
supply capabilities
100%* 100%*
Investing in educational Holding company for The conglomerate’s social

institutions to deliver Ayala’s investments in development arm, with
affordable high quality international real estate, key program areas in
education that improves as well as opportunities education, youth leadership,
employability of students in disruptive sectors and sustainable livelihood, and
emerging business models the promotion of arts and ACCELERATING
culture
THE FUTURE
*Economic stake

OUR FINANCIAL
MANAGEMENT STRATEGY
Ayala sees itself as a steward of our

core businesses and a builder of new
enterprises. Our core businesses are
those we have developed over the
past decades, which have grown to
be market leaders. These businesses
provide us a steady stream of
earnings and dividends that fund our
Ayala’s Board of Directors and senior management participate in a thorough gating process when evaluating potential
operating expenses, allow us to meet investments.
our interest and dividend obligations,
and enable us to raise capital to fund Evaluating Opportunities scenarios. While the Corporate
our new endeavors. As a company we are always open Strategy and Corporate Finance
to new areas of investment. When teams are responsible for building
Ayala prides itself on being a builder presented with opportunities or as the business case and financial
of businesses. We seek to grow investment ideas are developed, the model, the Comptrollership and
sustainable businesses of scale Corporate Strategy group is tasked Treasury teams model the proposed
that meet the needs of society, or with evaluating these. We examine businesses effect on Ayala’s overall
that conform to our view of the whether Ayala can bring its unique performance – balance sheet,
future. We look for areas where we advantages to these opportunities income statement and cash flows.
can innovate, disrupt traditional and disrupt or innovate existing This dual review ensures not only
business models, or build on business models. We study the business viability but also an
opportunities where capital has industry carefully, mapping out understanding of the potential risks
been scarce. Moreover, we pursue its structure, major players, and to Ayala’s strong and conservative
opportunities where we can make a potential competition in the areas balance sheet.
difference through our experience we are contemplating. Assessments
and existing businesses, and where are conducted to determine if the Gating Process
we may have a strategic advantage proposed business can fill a need and All investment proposals that
through our partners and our ability if the business model conforms with progress beyond the Corporate
to raise capital. our view of the future. For example, Strategy and Finance groups
in 2015, we decided to develop are presented to the Investment
As a company, we allocate capital AC Industrials largely due to IMI’s Committee. The Investment
to investments that we believe can position among the 10 largest auto Committee is made up of Ayala’s key
deliver significant value over time. EMS companies in the world, which senior officers and may invite other
We follow a process that evaluates gave us a unique vantage point senior group executives to provide
opportunities; tests for business for the automotive manufacturing insight. The Investment Committee
and financial viability; identifies landscape—which we believe will then reviews the business plan and
risk; designates business owners change dramatically, as electric strategy for execution. A thorough
and a responsible management vehicles and self-driving cars become discussion on risks is carried out and
team; provides capital over a period the norm, rather than the exception. responsible persons are identified
of time, allowing management to to execute the business plan. If the
execute a defined plan; and reviews Testing for Viability Investment Committee approves
performance regularly. Our gating Following the evaluation, Corporate the proposed investment, it is then
process involves many groups within Strategy and Finance work together endorsed to the Finance Committee
the company, including Corporate to build a business plan and test for of the Board.
Strategy and Development; Finance; viability. Assumptions are tested
the Board’s Investment Committee and challenged and financial models Capital Allocation
and Finance Committee; and the are built and stressed. Economic The Finance Committee of the
Board of Directors. returns are measured under different Board is currently composed of
INTO THE FUTURE 39

the CEO, the COO, and two non- necessary as we did in November flow adequacy ratio, which ensures
executive directors, one of whom 2014 when we raised $275 million that the cash we receive at Ayala
is an independent director. The of equity capital through the sale of is sufficient to meet all our cash
Finance Committee is responsible 18.78 million common shares. We obligations arising from expenses,
for all finance matters of Ayala, also raised a total of P23.5 billion in interest and dividends.
including allocating capital to preferred shares in 2013 and 2014.
our different business ventures. 2. Maintaining a maximum loan
The Finance Committee reviews Capital Raising to value ratio, which measures the
investment proposals as endorsed Our strategy as regards debt is ratio of our net debt to the total
by the Investment Committee and if to raise debt opportunistically in value of our assets. Tracking this
it sees fit, will determine an amount the public markets and rely on ratio daily provides management
of capital to assign to the proposed strong and transparent banking and the Board a measure as to how
business. Capital is allocated and relationships in the loan markets. In much of our value was funded by
committed over a set time frame October 2016 we raised P10 billion debt. It also acts as a tool to use in a
(usually 3-5 years), which ensures through a seven year peso bond market downturn, as it helps frame
that management has the funds to that bears a coupon of 3.92 percent a decision as to whether we should
execute their proposed business and followed this in January 2017 sell assets to prune our debt levels
plan. The Finance Committee with another P10 billion eight year or take on additional debt to buy
endorses the recommended capital peso bond with a coupon of 4.82 undervalued assets.
allocation to the Board of Directors percent. Both bonds set record
which has final approval over all lows for coupons for those tenors. 3. Maintaining a maximum amount
investments. In September 2017, we raised $400 of debt due each year. We spread out
million through a groundbreaking debt maturities across many years
Performance Review perpetual bond with a fixed for and avoid concentrating maturities
The Investment and Finance life coupon of 5.125 percent. This in a single year. This ensure that
Committees review the performance perpetual, which as it name implies, an external event that might affect
of each business unit at least twice a has no maturity, was the first bond refinancing in any given year does
year: a general review, which covers of its kind to be issued by an ASEAN not cause significant problems.
Ayala’s portfolio of businesses; and corporation. We maintain lines and
a specific business unit review. committed lines from both local and 4. That foreign currency
In the latter, the business unit’s foreign banks that ensure we have denominated debt is used to finance
performance is measured against sources of funds available when foreign currency denominated
several metrics including the current opportunities arise. investments or that if non-peso debt
budget (How are we doing this year?), is used to fund peso investments,
the latest medium-term plan (Is In February of 2017, we went back that such debt be hedged.
execution in line with our goals?), and to the local capital markets to raise
often, against competitors (How P10 billion, eight year bond with a 5. We maintain a minimum ratio
do we measure against others?). coupon of 4.82 percent, which also for fixed rate loans to floating rate
The objective of the review is to achieved the tightest spread versus loans. This ensures that our cost of
refine capital allocation depending benchmark. The proceeds were used capital carries a similar characteristic
on performance, and if needed, to pay off our P10 billion, 7.2 percent to the investments we make as our
suggest changes to business plans or bond maturing in April 2017, which investments are long term in nature.
strategies. resulted in lower interest expenses
for the company and smoothened Balance Sheet
Funding Strategy our maturity profile. Our balance sheet continues to be
Since 2011, the parent has invested strong with significant debt capacity
over P119.6 billion in our different Debt Policies and a well spread out maturity
business units. While we have relied Our debt policies ensure that we can profile. This is also augmented by
on debt to fund much of these comfortably service our interest and an optimal foreign exchange and
investments, we have maintained operating expenses; meet maturing interest rate mix and a healthy cash
our policy of ensuring that we obligations; and have the confidence flow adequacy ratio.
have a strong balance sheet and a to face or take advantage of market
conservative stance towards our debt downturns. These policies include:
levels. We raise equity capital when 1. Maintaining a pre-defined cash

Loan to Value Ratio
LOAN-TO-VALUE
(in million pesos) 2015 2016 2017
Parent Debt 94,797 76,002 83,313
Parent Cash 47,284 16,422 18,644
Net Debt 47,513 59,580 64,669
Gross Asset Value 539,962 538,288 702,480
Parent Net Debt to Equity 0.44 0.56 0.59
Ratio
Loan to Value 8.8% 11.1% 6.4%
Cost of Debt 4.10% 4.31% 4.23%
Ayala’s loan to value ratio, which of Ayala Land.

compares our net debt to the market 2015 2016 2017
value of our investments, is a good Our fixed to floating rate mix of 93/7
measure of our relative indebtedness last year puts Ayala in a favorable
and our capacity to take on, or position in a rising interest rate
service these obligations. At the environment. Peso obligations
end of 2017, our loan to value ratio decreased to 58 percent of our
decreased to 6.4 percent from 11.1 total obligations, resulting from the
percent in 2016. The LTV does not issuance of US dollar-denominated
include the impact of the fixed-for- fixed-for-life senior perpetual
life perpetual bonds, as these are notes in September. Our US dollar-
perpetual securities and do not have denominated obligations are
to be repaid. Gross debt increased to more than offset by US dollar cash
P83.3 billion, offset by a higher end- and long term foreign currency
2017 cash balance, which brought investments.
net debt to P64.7 billion. At the
parent level, net debt to equity ratio
stood at 0.59 to 1. Share Price Performance
2017 was an overall positive
We continue to manage our year for the Philippine equities
obligations to ensure that we are not market, despite some headwinds
overly exposed to market liquidity, 2015 2016 2017
foreign exchange, and interest
rate risks. Our average cost of debt
dropped slightly to 4.23 percent
per annum during the year as a
consequence of expensive fixed 15,042
rate obligations that have already
matured.
At the end of 2017, our debt 10,030 10,000 10,000 10,000

maturities are well-spread out and in
compliance with our internal policy
of not having maturities exceeding
20 percent of total debt on a yearly 4,368
basis. The 2019 maturity tower 2,880
1,873
is accounted for by our US$300
million exchangeable bond, which
is currently in-the-money with US$7
million already converted into shares 17 18 19 20 21 22 23 24 25 26 27 28
INTO THE FUTURE 41

OUTSTANDING LISTED BONDS AND PREFERRED SHARES
Issuer Type Amount Coupon Issuance Maturity Details
Ayala Preferred shares P13.5 billion 5.575% November 5, Perpetual 5th year repricing: 5-year PDST R2 +
Pref B Series 2 (ACPB 2) 2014 175bps 10th year repricing: 10-year
PDST R2 + 300bps
Preferred shares P10 billion 5.250% November 15, Perpetual 10th year repricing: 5-year PDST R2 +
Pref B Series 1 (ACPB 1) 2013 150bps 15th year repricing: 10-year
PDST R2 + 300bps
Voting preferred P200 million 3.695% May 20, 2010 Perpetual Every 3rd year repricing: 3-year PDST
shares (non-listed) R2
10-year multiple P10 billion 6.800% May 12, 2011 May 12, 2021 First put option: May 12, 2016
putable bond, fixed (up to 20% of outstanding)
coupon Second put option: May 12, 2019
(up to 100% of outstanding)
15-year callable bond, P10 billion 6.875% May 11, 2012 May 11, 2027 May 11, 2022 (at 101.000%)
fixed coupon May 11, 2023 (at 100.750%)
May 11, 2024 (at 100.500%)
May 11, 2025 (at 100.375%)
May 11, 2026 (at 100.250%)
AYCFL Exchangeable bond to US$300 0.500% May 2, 2014 May 2, 2019 Put option on May 2, 2017
(Guaranteed ALI shares million Call option by issuer anytime after
by Ayala) May 2, 2017 if ALI price exceeds 130%
of prevailing exchange price
Ayala 7-year callable bond, P10 billion 3.920% July 7, 2016 July 7, 2023 January 7, 2022 (at 100.250%)
fixed coupon
8-year callable bond, P10 billion 4.820% February 10, February 10, August 10, 2023 (at 100.250%)
fixed coupon 2017 2025
AYCFL Perpetual bond, fixed US$400 5.125% September 13, Perpetual Callable on September 13, 2022 (at
(Guaranteed coupon million 2027 100.000%)
by Ayala)
brought by global and domestic announcement of China A shares performance, closing at 7,843.16 at
geopolitical concerns. The local inclusion in the MSCI’s Emerging the end of the second quarter—14.7
stock barometer began 2017 in Markets index beginning June 2018, percent higher than its year-ago
high spirits, riding on a global which will have the effect of China level. Ayala’s year-to-date gain
share price recovery following shares displacing other emerging reached 16.4 percent in the same
the sell-off late in 2016. At the market shares. Despite this, the period, still outperforming the PSEi.
end of the first quarter, the PSEi PSEi managed to extend its strong
gained 6.89 percent year-to-date,
while Ayala surged 15.7 percent, Share Price Performance
outperforming the bellwether
index by a wide margin.
In the second quarter, the Marawi

crisis erupted, prompting the
declaration of Martial Law in
Mindanao. However, investors
seemed to focus on positive
developments, such as Congress’
approval of the landmark tax
reform program of the Duterte
administration. The PSEi breached
the 8,000 level in early June, but
gains were tempered following the

The group nurtures its relationships with its banking partners, recognizing their contributions to our growth.
The index’s gains were briefly source of both income and capital
derailed by geopolitical concerns returns, and strive to maintain
from rising tension between North consistent distributions from
Korea and the US in the second half. year to year. Moving forward, we
The local market eventually regained will continue to revisit potential
its trajectory, reaching new highs sustainable increases in the regular
as investors gained in optimism dividend rate, with the continued
the implementation of tax reform capacity to make new or additional
by 2018. President Duterte signed investments as the primary
into law the first tax reform package consideration.
in mid-December of 2017, further
boosting investor confidence. The
PSEi ended the year on a high note,
snapping two consecutive years of
losses to close at a high of 8,558.42.
Ayala tracked the market’s trajectory,
but posted a solid outperformance in
2017, gaining 38.9 percent versus the Dividends from Subsidiaries/ 2015 2016 2017
PSEi’s 25.1 percent. Associates (in million pesos)
ALI 2,935 3,358 3,385
DIVIDENDS
Ayala’s policy is to provide a regular BPI 5,128 3,418 3,419
fixed semi-annual cash dividend Globe 3,349 3,575 3,745
to common shares. For voting MWC 1,005 1,096 1,113
preferred shares, the dividend rate
IMI/ACI 167 209 215
is 1.875 percent per annum. For
non-voting Preferred B Series 1 and Others 76 241 201
Series 2 shares, the dividends are Total 12,660 11,897 12,078
given at 5.25 percent and 5.575
percent per annum, respectively.
Dividends Payout Ratio 19% 16% 17%
It is the company’s policy to treat
all shareholders equally, ensuring Cash dividends to common 3,568 3,572 4,299
payment of dividends in an equitable Net income for prior year 18,609 22,279 26,011
and timely manner—within 30 days Dividend Yield - Common 0.80% 0.80% 1.00%
after being declared and finally
cleared. Cash dividend per share P5.76 P5.76 P6.92
Market price per share, start of year P694 P756 P727
In 2017, we declared total dividends
per common share of P6.92. We
understand that our shareholders
view our dividends as a regular
INTO THE FUTURE 43

OUR BUSINESS MODEL
OUR PURPOSE OUR INPUTS
A singular purpose drives us at Ayala: making Financial Capital
people’s lives better. Through our businesses Strong financial position (reliable cash
and investments, we harness today’s disruptive
flow and affordable access to debt),
trends to generate far-reaching impact in
the markets where we operate. This drives supported by a robust capital allocation
everything we do as a company – from strategic process
development, financial management, talent
management, and deployment of synergies.
We live out this purpose by building and Human Capital

managing a portfolio of long-term strategic High-performing employees and
holdings in key industries. We select sectors management, who share the
ripe for disruption and where our resources,
company’s values and vision
expertise, and reputation can help unlock
stakeholder value in a sustainable and risk-
adjusted manner. By deploying and converting
our various forms of capital into businesses and
investments that are not only profitable but
resilient, we believe we can consistently deliver Intellectual Capital
returns above our cost of capital. Established brands,
industry-specific expertise,
OUR VALUES and sustainability
Integrity
Long-term vision
Social and Relationship Capital
Empowering leadership Strong stakeholder relationships
bolstered by consistent engagement,
Commitment to good governance, sustainability, and
national development innovation
OUR
PORTFOLIO

OUR VALUE CREATION AS
A HOLDING COMPANY
Our major listed businesses:

As mature businesses, Ayala Land, BPI, Globe, and Manila
Water no longer require constant operational attention and
resources from the parent company. However, we continue to
provide senior management talent and/or technical expertise.
As of end-2017, for example, 24 Ayala employees in senior
executive roles, have been seconded to our business units.
Other advantages include access to growth platforms and
networks housed at the conglomerate level. These include, for
example, academic studies and key relationships with other
business groups that can be leveraged into market entry and
Chairman and CEO Jaime Augusto Zobel de Ayala keynotes
the creation of new products and services. the government-organized Manufacturing Summit in
November 2017.
Our wholly-owned emerging businesses:

Our wholly-owned companies which include our investments OUR STAKEHOLDERS
into energy, industrial technologies, infrastructure, healthcare,
education, and other emerging sectors also receive the above
• Investors and other
benefits. However, as they are in various stages of starting capital market
up, they receive greater attention and resources from the participants
parent. We actively influence their strategic direction, allocate • Creditors and suppliers
new capital, implement proper governance, and help them • Business partners and
operationalize by lending our corporate infrastructure. affiliates
The Ayala brand is also usually of immense help as these • Government agencies
startups attempt to secure key partnerships and complete and regulators
crucial transactions. Finally, key talents are assigned to these • Employees
business units early in their operating history, ensuring that • Customers
the companies are infused from the beginning with Ayala’s
• Industry associations
corporate culture and values.
and other stakeholders
Refer to pages 59-61 for more details.
INTO THE FUTURE 45

ENABLING ACCESS TO HEALTHCARE
Value creation case study
Investing in human capital savings on primary care, with

development is necessary discounted rates for FamilyDOC
to achieve inclusive growth. members.
Healthcare is an important part of
the Philippine national agenda. One of these patients is Nina,
However, the sector has a number an 86-year-old from Taguig. She
of critical issues. For example, visited a FamilyDOC clinic near her
it is estimated that six out of 10 home because her blood pressure
Filipinos die without ever seeing a had shot up to dangerous
doctor. London-based Economist levels and could no longer be
Intelligence Unit likewise ranked managed by her usual medicine.
the Philippines 78th out of 80 FamilyDOC physicians assessed
countries in its Quality of Death her condition, and prescribed
index, which measures the quality her the appropriate medication
of palliative care given to patients.
AC Health was established in

2015, as Ayala’s way of disrupting
the sector to meet Filipinos’ basic
need for quality and affordable
healthcare. After conducting medicine they
industry research, focus group need, and that they
discussions, and consumer studies, are well-informed
AC Health found persistent gaps in regarding its use.
affordability and access, including
in medicines. The studies AC
Health conducted
While generic medicine had also revealed that
become more widely available around 45 percent
in the Philippines, branded of middle-income Filipinos often to alleviate her symptoms.
pharmaceutical products are go a year without visiting a primary Her doctor also took the time
in some cases 30 times more care doctor. Those that do avail of to conduct a comprehensive
expensive than in other developing health services often go to barangay assessment, which revealed an
countries. AC Health acquired a health centers that are not well- underlying Urinary Tract Infection
50 percent stake in Generika, a equipped to treat patients properly. as a trigger to her increased blood
nationwide leader in affordable Other patients, meanwhile, have to pressure. She now visits the clinic
medicines with the third-largest travel long distances to visit a public regularly to monitor her blood
footprint in the pharmacy industry. hospital. pressure.
Generika offers quality, affordable
generic medicines that allow AC Health launched FamilyDOC— Nina’s case highlights the impact
patients as much as 85 percent community-based clinics with a that FamilyDOC strives to have:
savings on medicines. Apart from three-in-one model that combines efficient and affordable medical
this, it also offers value-added primary care consultation, laboratory care that ensures the well-being
services. One example is a Gamot services, and a pharmacy. Clinics are of patients, while heightening
(Medicine) Guide: a print-out located in high-density, residential their awarenes of the importance
that provides information about communities, and are staffed of primary healthcare.
the dosage, administration, and by Primary Care Physicians with
side effects of the medicine they specialists in Internal Medicine,
take. Generika helps to ensure Pediatrics, and Obstetrics on call
that Filipinos can purchase the for referrals. It offers 10-40 percent

HOW WE MANAGE
OUR CAPITALS
Ayala has maintained its strong position in the market in large part due to proactive and strategic management of its
financial, intellectual, human, and relationship capital. Moving forward, the company shall continue to monitor these
capitals, to ensure they are harnessed in a way that creates the best possible value for all our stakeholders.
Indicators 2017 2016 How we manage our capitals
Financial Capital P16.1 billion P10.3 billion Our main sources of funding are through
expenditures regular cash dividends from our operating units,
Capital (at parent) strategic divestments, and value realization
opportunities, issuances of high-quality
Average cost of 4.23% 4.31% corporate debt, and equity that has historically
debt met with keen demand from long-term
shareholders. Using quantitative and qualitative
criteria and a multi-step management
approach, we allocate financial resources to
those we believe provide the best risk-adjusted
stakeholder returns over the long term.
Intellectual Industry awards

*Not comprehensive
Ayala Land is Most BPI is Best Bank in The strong and trusted Ayala brand, our deep
Socially Responsible the Philippines (The expertise in key industries, as well as Philippine
Capital Company of the Corporate Treasurer) business experience borne out of 184 years
Year (Asia Corporate of existence, allow us to create and grow
Excellence and Globe Telecom is businesses positioned for leadership in their
Sustainability Awards) Mobile Service Provider sectors both locally and globally. We also apply
of the Year (Frost and a transformative approach to any sector we
Manila Water is No. 1 Sullivan) enter and empower synergies across our group
Best Managed Utilities of businesses.
Companies in Asia AC Energy named the
(FinanceAsia) fastest growing energy
platform (International
Finance Magazine)
Human Ayala employee 88%, two points We recruit, develop, and deploy high
engagement above the global high performing, motivated employees and leaders
Capital score performing norm who not only have global mindsets, but also
*conducted every possess deep knowledge of regional and local
two years markets. The diversity of this experience is
further strengthened by regular training and
focus on safety and health. In recent years, we
have also begun to transform our talent base
to not only ensure that we can compete in the
industries of the future, but also take advantage
of ongoing shifts in the nature of work—such
as flexible working arrangements and the
growing prevalence of freelancing.
Our businesses maintain strong

Relationship Strategic
partnerships with over 40 leading
We maintain close linkages and strive to
partnerships balance the individual needs of our many
Capital companies in the Philippines and from
across the globe
stakeholders – investors, partners, suppliers,
customers, employees, and the public
sector. We aspire to build mutually beneficial
Group-wide P50.5 billion P44.5 billion strategic relationships that remain strong over
taxes paid to generations, geographies, and through the
government economic cycle. We enhance and protect our
collective interests and maintain transparency
by adhering to the highest standards of
corporate governance and risk management;
this grants us the license to operate continually.
INTO THE FUTURE 47

OUR OUTLOOK
Ayala defines its strategy in the context of key global, regional, and local trends that we believe will
impact the markets, sectors, and businesses in which we choose to invest and operate. We monitor the
evolving macro-political environment and adapt our strategic posture and investment decisions to
ensure we remain in the best position to leverage and mitigate the impact of these forces.
Description How our strategy addresses this
Rising The Philippines is currently in the midst of

a demographic dividend as the country’s
We continue to prioritize the Philippines
with most of our businesses and
Consumer young and growing population gradually

enters the workforce. This has resulted in
investments in sectors that are well-
positioned and aligned with the country’s
Class an expanding base of urbanized, middle-

income consumers with discretionary income
growth. Across the group, we have created
many products and services that benefit the
that continues to unlock demand for not country’s expanding middle class: Globe
only fast-moving items like food, clothes, Telecom, for example, has over 63 million
and personal technology, but also for large mobile subscribers. Catering to growing
purchases like homes and vehicles. Following motorization in the country, AC Industrials’
global trends, this consumer base is also more automotive retail arm sold over 28,000
empowered and informed than any in history, vehicles in 2017.
owing largely to the transparency and access
enabled by the Internet and social media.

Our businesses, at varying degrees, are We regularly adapt our portfolio, which
exposed to risks associated with political includes managing our exposure to
Challenging transitions, shifts in laws and regulations, prevailing macro-political winds. While we
remain supportive and continue to deploy
and populist views. Some of our businesses
Regulatory that support the country’s physical resources to these sectors, we manage
this potential risk by expanding outside
infrastructure development, such as water,
Environment transport infrastructure, telecommunications, highly-regulated spaces as in the examples
of Manila Water and AC Infrastructure. In
and power, operate in highly-regulated
environments. 2015, we created a Regulatory Council as a
platform to collaborate, exchange insights,
and be more proactive in tackling regulatory
issues and enhancing our government
relations mechanisms.

Southeast Asia, which has exhibited While the Philippines remains our primary
relatively stable growth over the last decade, base of operations, our current five-year
continues to retain untapped economic strategic plan includes an emphasis on
potential. Aggregate GDP as of 2016 stood expanding our presence outside the home
Regional at $2.6 trillion, making ASEAN the world’s market. We have targeted growing the
fifth-largest economic bloc. The Philippines’s contribution of overseas operations to
Economic demographic advantages remain reflective Ayala’s equity earnings to 10 percent by
of the region as well. ASEAN’s 630 million- 2020. Progress has been solid to date with
Growth strong population could result in as many international businesses now accounting
as 230 million additional workers – and by for seven percent of total equity earnings
extension, consumers – in Southeast Asia by in 2017, primarily from Ayala Land,
2030. Longer-term projections continue to Manila Water, AC Energy, AC Industrials,
be positive, with studies projecting that the and selected investments by the parent
region could be the world’s fourth largest company.
economy by 2050.

Many sectors and industries in the world We have made disruptive innovation a
Exponential are facing disruption. Freer flows of capital, guiding principle across the group. Our
technology, and information have enabled Innovation unit constantly searches for
Pace of bold, entrepreneurial endeavors, hastened trends and operating models that may
the development of transformative business benefit or threaten our business units.
Disruption models, and resulted in the market leaders
disappearing in the span of just a few Our acquisitions of stakes in Zalora
years. Traditionally stable sectors such Philippines and Mynt have exposed us
as manufacturing and financial services to the growing sectors of e-commerce
have been challenged by unconventional and fintech—creating opportunities for
competitors and business models making synergies across our group of businesses.
the most of technological advancement—for
example, artificial intelligence, automation, In support of our strategic initiatives, we
and fintech. Incumbents will increasingly be have institutionalized several platforms
forced to reinvent their business models to to reinforce innovation in our corporate
remain relevant, much less retain leadership, culture, such as our annual Spark
in their respective spaces. conference.

The pace, breadth, and depth of disruption in In 2016, we brought together our
Disruptive the automotive sector has been particularly
profound. Driven by shifts in technology,
automotive and manufacturing assets under
AC Industrials, forming a platform for Ayala’s
Trends in policy, and customer preferences, the vehicles
of the future are rapidly moving toward
entry into the industrial technology space as
a strategic new sector and source of growth
Automotive alternative powertrains, autonomous driving,
and shared mobility. Sales of electric vehicles,
for the group. Since then, AC Industrials has
committed or deployed a total of nearly
for example, are expected to surpass their $100 million in capital to build its portfolio in
internal combustion engine counterparts automotive and other industrial sectors.
by 2038, enabled by rapidly declining
component prices (a battery costing $1000
today is projected to fall to $73 by 2030)
and an average assembly time of 40 percent
less. The evolution of the automotive sector
is not only expected to generate robust
employment multiplier effects (4-7x), and also
impact relatively unrelated sectors such as
retail, media, and healthcare.

Disruption has also come in the form of We have adapted our offerings over the
Growing rising social tension globally. Recent years last five to seven years to cater to a broader
have seen shifts in political landscapes, as a base of the Filipino population. For example,
Social result of public dissatisfaction with inequity, Ayala Land has expanded its offerings to
corruption, and the failure of established include different price points, including
Tension institutions to spur equitable growth. socialized housing. BPI continues to drive
Unconventional leaders have been elected financial inclusion, while our entry into the
across the world—from the United States, health and education sectors allows our
to the Philippines. In addition, the rise of businesses to provide quality healthcare and
populism and anti-globalization sentiment, education at affordable price points.
most seen for now in advanced economies,
reflects the acute need for more inclusive
business models that create jobs.
INTO THE FUTURE 49

OUR STRATEGY
FIVE VISION PILLARS
STRATEGIC 2017 KEY PERFORMANCE
OBJECTIVES PERFORMANCE INDICATORS
Build a strong, growing, and • Increased earnings capacity • Net income grew 16% to
diversified portfolio that can and quality exponentially for P30.3 billion
withstand and take advantage of the 6th straight year • ROCE improved from 12.6%
economic cycles • Increasingly diversified returns to 13.2%
through exposure in varied • Total shareholder return of
industries 39.9%
Positively disrupt, transform, and Rising earnings contribution of • Equity earnings

impact the markets we serve emerging businesses as we scale contribution from emerging
up AC Energy and AC Industrials businesses grew to 15.9%
from 12.4%
• Invested P16.1 billion in new
growth platforms versus
P10.3 billion in 2016
Strategically expand our • Unlocked new markets in • Equity earnings

presence and relevance globally, Thailand and Indonesia and contribution from overseas
with focus on Southeast Asia deepened foothold in Vietnam operations grew to 7%
• Expanded foothold in the US from 5.4%
and in Europe through UK, • Group-wide international
Germany, and Serbia revenues reached P61.6
billion from P43.1 billion in
2016
• Align our strategy to national • Recognized efforts on • Our Chairman and CEO
development integrating sustainability with was recognized as a UN SDG
• Partner with respected local strategy Pioneer (refer to pages 14-15)
and global institutions • Built a culture that attracts the • Ranked 18th best employer
• Attract the best possible best employees in the world by Forbes
talents magazine
• Robust stakeholder
engagement (refer to pages
59-61)
Create and support clear • Listed businesses are leaders • Awarded CFO of the Year
industry-leading businesses in their industries • Ayala Corporation, Ayala
that show sustainable growth • Recognized as among the Land, Globe Telecom, and
potential best in the Philippines for Manila Water ranked in
management excellence, the Top 50 Publicly Listed
corporate governance, Companies in ASEAN (ACGR
sustainability, and investor 2016)
relations • Recognized as best Risk
Management Program in the
region

AYALA BEYOND THE PHILIPPINES:
EXPORTING HOMEGROWN EXPERTISE
The expansion of Ayala’s
footprint outside our shores
is driven largely through our
business units, several of
whom have mature, exportable
strengths that allow them to
add meaningful value in other
geographies. Once a subsidiary
has accessed a new market
via their individual industry
networks, we gradually bring to
bear Ayala’s resources, synergies,
good governance, and broad
array of complex technical skills.
MCT Berhad’s 417-acre Cybersouth township in the Cyberjaya-Putrajaya-Kuala Lumpur International
2017 saw significant progress Airport Corridor in Malaysia.
towards achieving our group- Since then, Ayala Land has raised took its first steps outside the
wide goal of increasing the its stake in MCT multiple times, and Philippines via a management
equity earnings contribution today holds 72.3 percent of the contract with Vietnam’s Saigon
of overseas operations to 10 company. Water Company for a leakage
percent. At year-end, equity reduction project. Today, Manila
earnings sourced from outside Taking advantage of strategic Water is one of the largest foreign
the Philippines stood at seven opportunities: AC Energy direct investors in Vietnam,
percent of the total amount. When the rare window to acquire supplying almost 50 percent of
Strategic investments made already-operating assets in the Ho Chi Minh City’s treated water
over the last few years began power generation space – made requirements via multiple entities.
to bear fruit, while additional possible by the exit of a global Manila Water continues to explore
pieces were added for the future. leader in exploration & production opportunities actively within
While we faced the challenges – became available, AC Energy and Southeast Asia, entering Indonesia
that naturally arise with going its partners seized the opportunity. and Thailand in early 2018.
beyond Philippine borders, last The acquisition at the end of 2016 of
year’s successes followed four a 19.8 percent stake in the Salak and Leveraging sector trends: AC
major themes. Dajarat geothermal plants – totaling Industrials
637MW – in West Java, Indonesia, As it continues to work toward
Riding favorable macro- was immediately accretive, adding its aspiration of becoming a
political environments: over P500 million in earnings in 2017 globally competitive industrial
Ayala Land and representing nine months of group, AC Industrials rode the
Malaysia’s stable political attributable income. emerging trend of “nearshoring”,
environment and strong or locating close to one’s market,
economic growth – averaging Playing to business unit strengths: to lower costs, enable faster
five percent over the last five Manila Water transfer of information, and
years – provided a positive As one of the most successful unlock synergies. VIA Optronics,
backdrop for Ayala Land’s public-private partnerships in the a company it acquired in 2016,
decision to take a 9.2 percent Philippines, Manila Water Company posted record revenues in 2017
stake in then-publicly listed spent two decades optimizing the to help IMI cross $1 billion in
property developer MCT Berhad water supply and distribution system topline for the first time in 2017.
in April 2015. Management in the eastern part of Metro Manila. The additions of STI Enterprises,
believed that MCT, with a Since it took over the concession in which further strengthens IMI,
mixed-use development 1997, Manila Water reduced non- and MT Technologies, a platform
strategy comparable to Ayala revenue water to 11 percent from 63 for directly participating in
Land’s, would be a platform to percent and enabled a 24/7 supply Europe’s automotive industry,
bring its industry leadership in of water for its customers. It has position AC Industrials well for
large-scale estate developments developed a track record of deep continued growth. In early 2018,
and expand its exposure and operational expertise deployable in AC Industrials acquired a solar
knowledge into one of Southeast other emerging markets. In 2008, technology company based in
Asia’s most vibrant economies. Ayala’s water infrastructure arm California.
INTO THE FUTURE 51

RISK MANAGEMENT AT AYALA:
FROM MITIGATION AND AVOIDANCE
TO VALUE CREATION (102-11, 102-15)
Risks and Opportunities have a framework that has the right and the implementation of suitable
Risk management is an increasingly architecture, strategy, and protocols responses are at the core of risk
important business driver and that support the risk management management. When done correctly,
part of successful corporate process. The risk architecture sets the maximum sustainable value
governance. Ayala believes that out the roles and responsibilities from all the organization’s activities
effective corporate governance of concerned individuals and can be achieved and delivered to all
entails risk intelligence: a philosophy committees, as well as the structure stakeholders. Furthermore, with the
that does not discourage risk- for communicating and reporting right approach, risks can be turned
taking, and embeds appropriate on risks and opportunities. into opportunities.
risk management into the whole The risk strategy specifies the
organization. This way, risk-taking objectives of the risk management Risk Architecture (102-19,102-30)
for reward and growth becomes activities in the organization, For this reporting period and under
as significant as risk mitigation for while the risk protocol describes the supervision of the Chief Risk
protecting value. the methodologies, tools, and Officer, the Group Risk Management
techniques by which the strategy will & Sustainability Unit continued to
To realize the value proposition of be implemented and risks managed. align Ayala’s risk governance with
risk management, it is essential to The assessment of significant risks that of global risk consultant Deloitte,
RISK INTELLIGENT ENTERPRISE* VS. AYALA CORPORATION’S

RISK GOVERNANCE FRAMEWORK
NINE FUNDAMENTAL PRINCIPLES OF A AYALA CORPORATION’S RISK GOVERNANCE FRAMEWORK

RISK INTELLIGENT ENTERPRISE
1. Common risk definition RISK

2. Common risk framework GOVERNANCE Board of Directors
3. Key roles, responsibilities, and Risk Management and Related Party
authority Mandate & Transactions Committee
N
4. Governing bodies’ oversight commitment of

TIO
Top management
CU
XE
&E
CO
5. Common risk management COMMON RISK Management Committees

NT
NT
infrastructure INFRASTRUCTURE AND Ayala Corporation Management Committee

ME
IN
6. Executive management MANAGEMENT Investment Committee

P
LO
UO
responsibility
Chief Risk Officer
VE
7. Objective assurance and

US
DE
People Process Technology Group Risk Management & Sustainability Unit

monitoring
GY
Ayala Group ERM CouncilTop Risk Reporting by Business Units

PR
TE
OC
RA
ST
ES
RISK OWNERSHIP Business Functions –

S
8. Business units Transactional Risk Management

responsibility Analyze & Design, Corporate Strategy and Development
9. Support of Identify Integrate Respond Monitor & Corporate Resources
Evaluate Implement &
pervasive Risks Risks to Risks Escalate Public Affairs
Risks Test Controls
functions Corporate Governance
Strategy & Operations/ Finance
Governance Compliance Reporting
Planning Infrastructure
Internal Audit
Assurance on the adequacy, effectiveness and efficiency of the system
*Deloitte’s Risk Intelligent Enterprise model
which espouses a best practice that As risk owners, the business unit From 2013 to 2016, Ayala moved
goes beyond risk avoidance and leaders are responsible for managing from mere compliance in Phase
mitigation, to utilize calculated risk- the risks they face in the day-to-day 1, to integration in Phase 2. This
taking as a means to create value. operations within the established involves a shift from the old view
risk framework. They have the of risks as distinct and separate,
Similar to a risk intelligent enterprise, responsibility to identify, measure, towards a mindset that understands
Ayala’s risk governance is at the monitor, control, and report on risks the interconnectedness of risk,
apex of the system. The Board of to management. Finally, the Internal which can be directly linked to
Directors is provided appropriate Audit Unit provides independent strategy and profitability. This was
transparency and visibility into the assurance of the adequacy, achieved by redefining Ayala’s ERM
organization’s and the group’s risk effectiveness, and efficiency of the policy, particularly to strengthen
management practices. Through risk management process. the oversight role of the Board on
the Risk Management and Related risk management. Through a more
Party Transactions Committee, the Risk Management Strategy vigilant Board, and the sharing
Board ensures the company has an Our risk management practices of best practices and resources,
effective risk management process are now among the most mature the Group Risk Management and
and its risk appetite remains relevant and extensive in the Philippines. Sustainability Unit cascaded key risk
to achieve its goals. Ayala has designed an enterprise strategies from the holding company
risk management roadmap, which down to all business units, where a
As the advocate for the company highlights milestones in the linking comprehensive understanding of risk
and the group, the CRO has the of risk management to strategy, and is needed most as the business units
primary responsibility of designing, integration of risk management serve on the frontlines.
implementing, and maintaining an into sustainability. Ayala has
effective risk program. The Group successfully completed the first Beginning in 2016, Ayala has pursued
Risk Management & Sustainability major phase of the roadmap and is the most number of risk-related
Unit supports the CRO by designing currently aligning risk management activities compared to previous
activities that enhance the with business strategy and daily years in linking risk management to
organization and the group’s risk operations. strategy. In 2017, Ayala picked up the
intelligent culture, formulating risk
management strategies, evaluating
tools and techniques for risk
assessment, and monitoring and
2020 ENTERPRISE RISK MANAGEMENT ROADMAP
reporting on key principal risks. It 2013 - 2015 2016 - 2018 2019 - 2020
also convenes the ERM Council, a
group comprising the risk officers
of all Ayala’s business units, for risk Risk Link to
Refresh
framework alignment, continuous Interdependence Strategy
risk process improvement, and Financial

other group-wide projects. On Strength
a semi-annual basis, the ERM Reinvention

Council provides the top risks of & Growth
their respective organizations to Geographic

the Group Risk Management & Expansion
Business
Sustainability Unit, for reporting Stakeholder Strategy
to both the CRO and the Risk Empowerment
Management and RPT Committee. Business

Management committees also Leadership
provide support to the CRO by

ensuring the existence of a structure
at the operating level that will
communicate and monitor key 1 2 3
principal and emerging risks. They
also ensure that risks are discussed Linking risk Refreshing
during project and investment management to
corporate strategy
key risk
activities
meetings.
INTO THE FUTURE 53

pace by mounting more intensive wider coverage, as well as enhanced As an example, management set
activities to further strengthen policy wording, administration, and their risk appetite for workplace
and embed the practice of risk employee benefits. The program is safety and ethics--one of the three
management at all levels of the believed to be the first of its kind in key drivers of people impact--at risk-
organization. These activities helped the country with all terms combined averse. Following this, the crafted
us streamline our opportunities and in one policy. It will also help risk appetite statement affirmed
positive impact, and prioritize our facilitate data analytics that will help that Ayala is risk-averse towards
material factors. Our material factors us establish preventive initiatives in risks related to workplace safety and
and their positive impact may be the long run. ethical standards and any incident
found in our Materiality Section, related to it will not be tolerated.
pages 62-69. Negotiations with the insurer for
the other insurance lines, such as Risk officers of different business
Optimizing the Ayala Group’s property damage and business units then underwent training on the
risk transfer strategy interruption, general liability, political same subject to ensure consistency
To better understand the group’s violence, and directors and officers in the process of setting risk appetite
current risk transfer strategy, the liability, are currently ongoing and within the group. They are expected
Ayala group embarked on an placements are expected to be to have their own risk appetite limits
insurance optimization study in 2016. completed by the end of April 2018. and statements in 2018, which will
The results showed that there is a be consolidated at the group level.
decentralized purchasing strategy Establishing Ayala’s risk appetite
and mixed purchasing practice across Recognizing that risk appetite is a Increasing Risk Awareness
the group, resulting in duplicate and relevant driver for strategic decision- Ayala held its 3rd ERM Summit with
varied covers. Significant uncovered making, the Group Risk Management the theme “Building a Stronger Ayala
exposures were noted despite high and Sustainability unit organized amidst Emerging Risks”. Regional
insurance premium spend. a Risk Appetite Establishment experts and practitioners shared
workshop for the company. During their knowledge on the top risks
Insurance optimization was the workshop, management in the Asia Pacific region, status of
implemented in 2017 to consolidate identified non-negotiable risks and emerging risks such as cyber, talent,
and centralize procurement, which is provided their risk appetite limit innovation and technology, and
expected to deliver better coverage for each of the business strategies. political and regulatory risks, and
and wordings, as well as cost savings. They set the risk limits for each of risk management strategy to protect
As of the reporting period, the group the drivers of four impact areas companies from such. The 2017
has placed its first optimized motor (financial, people, compliance, and summit was well-attended by more
car insurance program. This program reputational), and used these limits than 160 senior and mid-level officers
generates an average premium as the basis for crafting risk appetite across the group, an increase of 25
savings of 20 percent per entity in statements. percent in number of attendees.
the conglomerate, and allows for
Ayala’s senior leadership participate in the Risk Appetite Establishment workshop. Ayala Chairman and CEO Jaime Augusto Zobel de Ayala speaks at a panel on the future
of risk management in the Philippine landscape.
Unit heads and senior management are involved in the group’s risk management processes. Ayala President and COO Fernando Zobel de Ayala speaks at
the 2017 Ayala ERM Summit.
With its commitment to becoming and monitor emerging risks to the As we go through the process,
a risk intelligent conglomerate, organization’s business model, long- communication among different
Ayala will continue to advocate term viability, and ability to create levels of the organization is
and implement a robust risk value. This approach was chosen to encouraged. These interactions can
management program, and share emphasize that events currently not form the basis of a continual process
its findings and experiences across perceived as risks may pose a threat of alignment that allows people at all
the group. Ayala’s goal by 2020 is to to the organization later on. With the levels to understand the risks of any
fully maximize the value-creating introduction of this methodology, activity they undertake, and how this
proposition of risk management— top management is now starting to might affect the risks being managed
one that is able to find opportunities be cognizant of emerging risks and by others. Correspondingly, each
in risks to create greater shared value how the fast-moving risk landscape step undergoes monitoring and
for Ayala and its diverse stakeholders. can possibly affect their businesses. review for continuous improvement.
This is an area that we want to
Risk Management Protocol further develop in the years to come. Principal Risks and Uncertainties
The Group Risk Management & facing the Group
Sustainability Unit continues to Risk Management Process Enabled by a comprehensive
be innovative in the tools and Following the provisions of ISO Enterprise Risk Management
methodologies it uses. In 2014, 31000, the risk management process program, Ayala continues to refine
Ayala used the black swan at Ayala starts with establishing the its appreciation of the complex array
approach to identify its value drivers context by identifying external and of risks that affects its businesses. For
and risks. In 2015, we deepened internal factors that may impact this year, aside from giving us a better
our understanding of risks and value creation and value protection understanding of the various external
opportunities using the bow-tie objectives. We conduct research on factors affecting our operations, our
methodology and risk interaction current and emerging risk trends, annual risk assessment once again
matrix. In 2016, principal risks were engage risk management experts challenged our internal assumptions.
mapped against the five vision and collaborate with internal As we pursued scientific approaches
pillars. In addition, risk management stakeholders to ensure that the to realize opportunities, we also
was incorporated as a key result area right perspective is in place for relied on our management’s foresight
in the performance evaluation of the risk assessment – an activity and creativity, as not all risks can
employees. where senior officers are gathered be quantified through a model. As
to identify and analyze risks, a result of this discussion and in
For 2017, the risk sensing evaluate and prioritize risks, allocate collaboration with the ERM Council,
methodology was introduced to resources, and plan risk mitigation three risk categories were added in
management in identifying and strategy accordingly. The results of the risk register and included in the
assessing risks. It employs human this activity are used to update the risk prioritization exercise.
insights and advanced analytic risk register.
capabilities to identify, analyze,
INTO THE FUTURE 55

AYALA CORPORATION’S 2017 HEATMAP
1 Political and Regulatory
2 Information Security and Cyber

5
3 Brand and Reputation
4 Competition
4 5 Portfolio Management
LIKELIHOOD
1 6 Market
4 2
7 Business Resiliency
3 3
8 7 6 5 8 Innovation and Technology
14 11
1 10
0 9 9 Governance and Controls
2 13
3 1
12
10 Talent
11 Operational
1 12 Partnerships and Alliances
13 Funding
1 2 3 4 5 14 Synergy
IMPACT
Risk description Potential impact Current key risks, issues or Risk exposure Management and mitigation
areas of uncertainty
Political and Regulatory • Reduced income and • New national and local Higher by 1 • Strengthen relationships with the government
margin government officials point from through Public Policy Unit
• Inability to anticipate with different mindsets previous year
changes in the political • Greater variability of and priorities • Periodically discuss new regulations that
and regulatory returns may affect business operations at the Ayala
landscapes
• Higher cost of
• New tax rulings
 Regulatory Council
compliance • Advocacy groups with • Review regulatory risk framework previously

opposing causes developed for Ayala and its investee companies
• Delayed projects
• New laws and
• Difficulty in regulations without
management and implementing
administration guidelines, which are
subject to varying
• Weaker brand value interpretations
Information Security • Data loss • Rise of social Higher by 5 • Strengthen layers of control on both hardware
and Cyber networking, mobile, points from and software assets
• Higher cost of cloud, and analytics previous year
• Failure to ensure operations and • Perform vulnerability tests prior to first use of
strong and adequate compliance • Increasing malware hardware, software, and web hosts
information security
controls to safeguard
confidentiality,
• Eroded brand and
reputation •
and viruses
Threat from Bring-your-

 • Establish centralized 24/7 security operation
center
integrity, and own-device practice
availability of critical • Constantly improve knowledge of cyber attacks
information • Increasing cyber
attacks • Regular cascade of IT policies and standards
across the organization
• Benchmark with international companies on

mitigating cyber risks
Brand and Reputation • Difficulty managing • Sway of social media Same ranking as • Regularly engage in meaningful discussion with
Ayala’s growing last year investors and analysts
• Inability to maintain our portfolio • Increase in internet-
stature as a company based systems and • Analyze local and global news and trends
of choice • Increased cost of capital communications
• Regularly refresh Ayala’s branding position
• Fewer top candidates
for vacant positions
• Superior products
and services of
competitions
 • Continue to actively identify opportunities for
collaboration with partners
• Higher employee
attrition rate • Good governance
issues
• Difficulty in maximizing
value for stakeholders • Shift in customer
behavior
• Campaigns against
Ayala and its business
units by competitors

Competition • Eroded market share • Superior products New risk • Cultivate market intelligence (local, regional,
and services of category for and global) and compare key metrics with
• Inability to meet the • Actual cash losses and competitions 2017 competition using an internal team
desired market position volatility in profitability
• Shift in customer • Analyze annual innovation trends and new
• Difficulty managing behavior sectors
Ayala’s growing
portfolio • Inability to • Partner with competitors in some industries
competitively price
• Difficulty in maximizing products and services • Leverage on the brand and reputation of Ayala
value for stakeholders
• Campaigns against
Ayala and business
units by competitors
Portfolio Management • Inability to create value • Aggressive Lower by 1 • Analyze portfolio twice a year (capital
for stakeholders competition point from management, valuation, investment and/or
• Inability to align previous year divestment)
portfolio management • Eroded brand and • Technological
strategy with business
objectives
•
reputation
Expensive funding •
disruptions
Changes in regulatory
 • Cultivate market intelligence (local, regional,
and global) and compare key metrics with
competition using an internal team
mechanisms policies and
frameworks • Conduct deep-dive analysis of portfolio and
business unit performance
• Market saturation
• Analyze annual innovation trends and new
• ASEAN integration sectors
• Talent shortage • Strengthen Ayala’s gating process where all

possible business ventures are discussed and
• Weak partnerships or monitored
collaborations
• Strengthen relationships and establish networks
• Shift in customer with potential business partners and advisers
behavior
Market • Unstable funding • Capital market dry-up Same ranking as • Operationalize approved FX risk management
requirements and last year policy
• Inability to manage destabilized liquidity • Political or social
adverse impact of position instability • Manage fixed/floating mix in anticipation of
market factors such
as foreign exchange,
interest rates, among
• Increased cost of doing
business
• Changes in global
politics
 •
rising interest rates
Apply hedging policies as approved by the Board

others
• Delayed investment • Maintain FX position within approved limits
strategy execution
• Monitor FX and interest rate risk exposure of
• Actual cash losses and publicly-listed business units
volatility in profitability
• Guide wholly-owned subsidiaries in managing
their FX and interest rate risk exposure
Business Resiliency • Loss of lives • Climate change (i.e. Lower by 6 • Establish a business continuity management
higher temperature, points from system that includes an IT Disaster Recovery Plan,
• Inability to restore • Damage to properties rising sea levels, previous year Crisis Management Plan, and Business Continuity
normal operations flooding, stronger Plan
following natural or • Delayed business typhoons)
man-made disasters
and/or failure of
business contingency •
recovery
Weaker public
• Vulnerability in the
areas near the fault
 •
•
Regularly review adequacy of insurance coverage
Run training programs on crisis communication

processes and systems confidence segments, particularly and disaster management, among others
in West Valley Fault
• Collaborate with subsidiaries and government
• Quick spread of agencies towards shared resources and mutual
pandemic diseases like assistance
SARs, Ebola
• Heightened terrorism
activities, whether
local, regional, or
global
Innovation and Technology • Loss of market share • Fast-paced Higher by 1 • Regularly perform disruptive change assessments
technological point from for subsidiaries and industries
• Failure to remain • Lower margins advancements previous year
relevant and cope with • Publish annual trends with sector-specific input
rapid changes • Higher cost of • Presence of data from each business unit
•
operations
Limited business
analytics and cloud
services  • Run group-wide Innovation Summit to increase
awareness of possible disruptive trends
viability • Increasing presence
of mobile applications
• Eroded brand and and OTT players
reputation
• Shift in customer
• Disrupted business behavior
model
INTO THE FUTURE 57

Governance and Controls • Penalties and other • A more complex Lower by 1 • Strengthen implementation of Code of Ethics
possible fines operating environment point from and Conduct, Anti-Corruption Policy, Whistle
• Ineffective and previous year Blowing Policy, among others
inadequate governance • Delayed investment • New regulations
and internal controls strategy execution without clear • Regularly review internal controls through the
• Lower profits
implementing
guidelines  •
Internal Audit Group
Ensure that policies and manuals are in place

• Weaker brand and
reputation • Form Board-level Committees to review critical
transactions such as RPTs, mergers, acquisitions,
among others
Talent • Prolonged investment • New generation of Same ranking as • Approach talent management comprehensively
strategy execution incoming employees last year at all stages
• Failure to ensure that with differing mindsets
we have the right • Waning confidence in and needs • Engage employees in continuing opportunities
people at all times
•
brand
Difficulty in achieving
• ASEAN integration  •
for development
Perform annual benchmarking of compensation

business objectives • Brain drain and benefits
phenomenon
• Continuously review and update programs for
• Competitors offering leadership development based on participant
superior compensation feedback, current issues, and future trends
and benefits package
• Annual discussion of succession planning by
• Inadequacy of senior leaders
the academe to
address the needs of
businesses
Operational • Delayed or ineffective • Fast-paced New risk • Operational and financial audits conducted
execution of business technological category for by Internal Audit Unit and external auditor,
• Failure of and/or transactions advancements 2017 respectively
inefficient operational
processes, people and • Difficulty in achieving • Changes in business
systems business objectives and operating models
• Non-compliance to local • Increased dependence

laws and international on technology
standards
• Mistrust by employees
and customers
Partnerships and Alliances • Inability to create value • Aggressive New risk • Strengthen relationships with current partners
for stakeholders competition category for and establish networks with potential business
• Inability to form 2017 partners and advisers
and retain external • Eroded brand and • ASEAN integration
partnerships and reputation • Due diligence of potential business partners and
alliances that help • Weak partnerships or third-party assessment for suppliers and vendors
us achieve business • Expensive funding collaborations
objectives mechanisms • Engage in regular communication with external
• Changes in business partners
• Delayed investment models
strategy execution
• Difficulty in achieving
business objectives
Funding • Increased cost of doing • Capital market dry-up Lower by 8 • Align funding strategy with budgeted capital
business points from expenditure, operating expenses, and dividend
• Insufficient funding • Political instability previous year payout
strategy to meet its • Delay in investment
obligations strategy execution • Business units’ failure • Control mix of currencies (Peso and USD), interest
• Weaker brand and

reputation
to deliver dividends or
income targets  rates (fixed and floating), and types of financing
(bank loan, capital market)
• Possible impact from • Establish contingency funds, both short-term

Brexit and Trump and long-term lines
presidency
• Monitor major changes in funding requirements
• Evaluate funding opportunities as necessary
• Engage in regular banker/lender communication

Synergy • Loss of additional • Strong cross-selling of Lower by 3 • Strengthen group focus to identify possible
revenue streams services and products points from synergy opportunities
• Failure to collaborate in by competitors previous year
support of the group’s • Disrupted business • A senior director was assigned to spearhead
competitiveness processes • Ayala business units analytics on possible synergy activities
• Higher cost of doing

business
partnering with direct
competitors of other
Ayala business units
 • Include synergy in the agenda of the Innovation
Council

reputation
• Lost opportunities

STAKEHOLDER ENGAGEMENT
(102-21, 102-40, 102-42, 102-43, 102- 44)
We uphold integrity, transparency, and accountability in all our dealings with our stakeholders. We continue to develop
mechanisms for actively engaging and partnering with them as we create shared value across the group. Their feedback
on our practices is as valuable as their contributions to our growth. As such, we ensure open communication with them
through different engagement channels, as appropriate and applicable.
Our stakeholders Investors and Shareholders Creditors and Suppliers Business Partners and Affiliates
How we engage them • Annual stockholders’ meeting • Regular company updates • Dialogues
• Integrated Annual Report • Meetings • Partnerships
• Four analysts’ briefings in 2017 to discuss • Roadshows, particularly for • Due Diligence
FY1016, 1Q2017, 1H2017, and 9M2017 results bondholders
• Meetings (Board and Executive
• 12 institutional investor conferences and non- • Formal correspondence Committee Level)
deal roadshows in Asia, Europe, the United
States, and the Philippines • Phone and e-mail communication • Business organizations and/or
clubs (e.g. World Economic Forum,
• 150 one-on-one and group meetings, and • Accreditation Asia Business Council, ASEAN
conference calls with institutional investors Business Club)
and analysts • Trainings
• Site visits • Focus Group Discussions
• Corporate disclosures
• Website
• Investor relations mobile app

What are their concerns • Macroeconomic and socio-political • Timeliness and accuracy of • Management team
environment payments
• Governance
• Business outlook, viability, and growth • Financial performance
• Financial performance
• Execution of Ayala’s strategy and its business • Compliance to covenants
units • Business outlook
• Minimum accreditation
• Financial management requirements and schedules • Commercial viability
• Project pipelines • Network and relationships
• New procurement policies • Value that Ayala brings to the

partnership
• Investments in coal/thermal
energy (expressed by some banks)
Relevant material factors • Economic performance • Energy as a business • Economic performance
• Foreign and domestic investments • Jobs supported in the supply • Foreign and domestic investments
chain
• Business resilience to climate change • Business resilience to climate
change
How we respond • Regular engagement with institutional • Timely and accurate payments • Transparency and timeliness of
investors, analysts, corporate regulators, and disclosures and reporting
the investing public through various channels • Compliance to covenants
• Risk management and other
• Risk management, governance, and • Regular engagement with bankers governance processes
sustainability processes and suppliers to maintain and
nurture relationships • Regular engagement with
• Transparency and timeliness of disclosures business partners and affiliates
and reporting • Forums for vendors and on safety through various channels
INTO THE FUTURE 59

(102-21, 102-40, 102-42, 102-43, 102- 44)
Our stakeholders Government agencies and regulators Employees Customers

How we engage them • Policy dialogues and consultations • Online portals • Customer touch points
(branches, personnel,
• Learning events • Meetings phone, email, website,
social media channels)
• Invited lectures • Performance appraisals
• Annual and periodic
• Annual audits • Engagement surveys satisfaction surveys
• Official correspondence • Summer outings and Christmas party • Regular visits to existing
clients including area
• Reports (financial statements and • Quarterly activities briefings
other disclosure requirements) and
publications • Sports activities (JZA Cup, Ayala Olympics)
• Regular briefings and updates • Special wellness events
• Formal proceedings • Planning/training and learning sessions
• Townhall meetings
• Roadshows (rolling out of new policies)
• Email blasts / bulletins / online publications
• Social media
• Focus group discussions

What are their concerns • Compliance with laws and regulations • Strategy and direction • Quality of service
• Completeness and accuracy of data • Employee salaries and benefits • Convenient, affordable,
reliable, and efficient delivery
• Transparency and accountability • Financial assistance of products and services
• Policy alignment with areas of national • Career development programs / succession plans • Sales process
interest (e.g., inclusive growth; healthy
competition) • Safe working environment • Billing concerns (where
applicable)
• Public confidence • Work relationship
• Potential areas for the public and private • Work-life balance

sectors to collaborate
• Opportunity for external trainings, conventions, seminars,
etc.
Relevant material factors • Economic performance • Employee engagement • Customer management
• Foreign and domestic investments • Workplace Conditions
• Training and Development
• Diversity, equal opportunity, and anti-discrimination
How we respond • Regular engagement with government • Innovations in processes and company practices • Timely resolution of customer
agencies and regulators through various complaints
channels • Structured communication approach such as town hall
and roundtable sessions • Timely and regular feedback
• Transparency and timeliness of disclosures
and reporting • Career development programs • Constant monitoring and
upgrade of systems
• Employee engagement programs
• Personnel capacity building
through product briefings,
seminars and training
1 2

(102-21, 102-40, 102-42, 102-43, 102- 44)
Our stakeholders Industry Association/s Other stakeholders1

How we engage them • Membership • Press briefings and conferences
• Conferences, dialogues, forums and industry workshops • Events/ social gatherings and meetings
• Sponsorships of special events • Regular company updates through corporate

websites, emails, phone calls, social media, etc.
• Industry meetings and working committee meetings
• Industry surveys and studies

What are their concerns • Continuing support and long-term membership • New business operations, developments, and
strategies
• Business developments and strategy
• New products and services
• Financial performance
• Product availability and reliability
• Adoption of new rules and regulations
• Sustainability practices, including sustainable
• Setting of industry standards and market practice development programs
• Building of collaborative networks • Disaster preparedness and response programs
• Economic/ financial performance

Relevant material factors • Economic performance • Customer management
• Foreign and domestic investments • Economic performance
• Community relationship
How we respond • Sharing information on market trends • Regular engagement through various channels
• Participation in industry surveys and reports • Transparency and timeliness of disclosures and
reporting
• Participation in meetings, exhibits, conferences, seminars,
symposia, and fellowship activities
1
Includes media, communities, NGOs and civil society
2 3
3 4 5
1 Ayala holds quarterly and annual analysts’ briefings on its financial and operating results.
2 Chairman and CEO Jaime Augusto Zobel de Ayala joins CFOs, senior executives, and Investor Relations teams at an Ayala group investor day in Singapore.
3 President and COO Fernando Zobel de Ayala and Ayala group CEOs share their insights with investors at an Ayala group investors night.
4 Press briefings ensure the media are apprised of developments in the group.
5 An annual summit brings together Investor Relations practitioners to learn from thought leaders, global peers, and other resource speakers.
INTO THE FUTURE 61

MATERIALITY
(102-29)
Ayala has a varied range of material factors for each of its businesses. Guided by the GRI framework on defining material
topics and processes, we undertook a collaborative review with the different business units to determine their material
factors, taking into consideration the various stakeholders of the group and local and global sustainable development
challenges. Further identification of external factors that affect Ayala’s operations allowed us to identify the possible risks
and opportunities per material factor.
The following table depicts our materiality process based on the GRI Standards: Core Option.
DEFINING OUR MATERIAL FACTORS AND BOUNDARIES

Steps and Governing Principles Our Process
Identification As Ayala supports the country’s growth through its core businesses and
Sustainability Context contributes to the progress of emerging industries, we reviewed local and
global sustainability topics relevant to the group and in alignment with the
UN SDGs.
We worked with each company to align and identify the material factors
related to their respective businesses, ensuring that the aspect boundaries
are defined.
We used our existing stakeholder engagement channels to understand our

Stakeholder Inclusiveness stakeholders’ areas of concern.
Prioritization We prioritized key material factors based on the extent that these affect our
Materiality and Stakeholder Inclusiveness businesses, stakeholders, and the sustainable development of the country.
Validation We considered stakeholder interests and concerns vis-à-vis our list of material
Completeness and Stakeholder Inclusiveness aspects and identified topics.
Review We analyzed three-year data to determine our businesses’ performance in
Sustainability Context and Stakeholder Inclusiveness identified factors and qualified areas for improvement and the respective
management approaches employed.
We also reviewed their relevance to our overall sustainability performance, to

help improve our list of material factors for the next reporting cycle.
Materiality roadshows were conducted across business units to help them identify their material factors.

IDENTIFYING OUR MATERIAL FACTORS
Ayala conducts its businesses in an ethical manner and contributes to the SDGs through our shared value creation
process. Part of this is the commitment to continue managing our key economic, social and environmental impacts.
We established our materiality matrix in 2013, and since then, periodically review and assess our material factors. In 2017,
we took a deeper look at our sustainability indicators. Acknowledging that economic, environmental and social aspects of
our businesses have varying metrics and level of impact, we used fundamental questions to further identify our material
factors.
Economic
We look at our economic performance based on how much value our companies contribute to society. Our direct
contributions are material because they come from the economic value we generate and distribute to our stakeholders,
as well as the foreign and domestic investments we have enabled. To further understand the breadth and depth of our
economic efforts and performance, we also looked into our indirect contributions.
DIRECT CONTRIBUTIONS INDIRECT CONTRIBUTIONS

Impact of Use of Products and Services
Our products and services help promote the growth of
SMEs.
Economic Performance
Jobs supported in the supply chain
We distribute the economic value we generate to our
We contribute to the growth of our partners in the supply
capital providers, our suppliers, our employees, the
chain.
government, and communities.
ECONOMIC VALUE WE HAVE
Impact to the vulnerable sector
CONTRIBUTED TO PHILIPPINE In addition, we disclose our economic value retained.
We develop quality products and services, including those
SOCIETY
Foreign and Domestic Investments Enabled accessible to the underserved.
We grow our businesses through strategic
Business resilience to climate change
acquisitions, investing both locally and globally, and
We explore opportunities and address risks that will allow
deployment of capital expenditures.
us and our customers to be more resilient to the effects of
climate change.
Environmental Risk that the

issue poses /
Our environmental dependency
ENERGY
impacts vary in nature of business WATER

to the issue
and scale across our HIGH GREENHOUSE GAS
businesses. We clustered CLIMATE ACTION EMISSIONS
and assessed our

EFFLUENTS
material factors based RESOURCE EFFICIENCY WASTES
on the similarity of MATERIALS
companies’ metrics. BIODIVERSITY
ECOSYSTEM AND
We further developed MEDIUM OTHER AIR EMISSIONS BIODIVERSITY
WATERSHEDS
a group-wide matrix
considering the
business risks associated
with material topics
and the magnitude
LOW
of their impact to the
environment.
LOW MEDIUM HIGH
Impact of the issue to the environment / inﬂuence to sustainable development
*
Refers to air pollutants
INTO THE FUTURE 63

Social
As we develop and promote shared value in our businesses, it is important that we fulfill our responsibilities to our key
stakeholders. As such, we examine the fundamental topics and metrics that measure how we positively impact our
employees, customers, and the communities that we serve.
Social Aspect Fundamental Question What topics / metrics / practices answer the question?
Employee Engagement Assessment
We measure our ability to keep our employees sustainably
engaged through regular surveys. We provide channels to
promote open communication.
Training and Development

We allot sufficient training hours for our employees’
professional development.
Hiring and Attrition

How do we ensure the well-
EMPLOYEE ENGAGEMENT We measure our hiring statistics and understand the drivers of
being of our employees?
employee turnover.
Occupational Health and Safety

We ensure that our health and safety management practices
positively affect our employees’ productivity and well-being.
Labor Management Relations

We ensure that our employees exercise their right to freedom
of association, and take part in important management
decisions or organizational changes.
We ensure that our workplaces are guided by policies or
standards on:
Forced / Child Labor
How effective are we
in upholding human Anti-corruption
WORKPLACE CONDITIONS rights principles and Diversity, Equal Opportunity & Anti-Discrimination
good governance in our
workplace? Supplier Assessment
We ensure that our dealings with our suppliers and business
partners remain professional and ethical through due diligence
and assessment practices.
Indigenous Rights
We ensure that we consider indigenous rights in our dealings
with the communities where we operate.
How well have we included
Local Community Engagement including
COMMUNITY RELATIONSHIPS our communities in our value
CSR, Education, Youth, and Culture
proposition?
We constantly engage with local communities through
programs on education, youth leadership and culture. We look
at the beneficiaries of our community work and assess our
impact on them.
Customer Satisfaction
We measure how our customers perceive our products and
services through customer satisfaction surveys. We also gather
feedback and address complaints accordingly.
How well do we take care of Product Quality

CUSTOMER MANAGEMENT
our customers? We offer quality products and services.
Customer Data Privacy

We adhere to the protection of our customer and businesses’
digital records. We track risks related to potential breaches of
privacy and implement mitigating measures to address them.

Material Factors
Positive Impact Negative Impact
(What kind of outcomes (What kind of outcomes Performance

Material Factor Link to Principal Risks Management Approach
can be expected if the can be expected if the scorecard indicator
material factor is well material factor is not well
addressed?) addressed?)
Economic • Overall positive • Inability to execute • Portfolio • Conduct deep-dive • Economic Value
Performance investment climate strategic agenda Management analysis of macro- Generated,
that supports the economic and socio- Distributed and
group’s health • Business units failing • Capital Market
agenda political indicators Retained
to deliver dividends
or income targets • Funding and business units’
• Sustained domestic performance.
consumption • Increased cost of • Partnerships and
growth that benefits doing business Alliances • Align funding
businesses strategy with
• Competition budgeted capital
• Positive financial
trajectory for the expenditure,
• Brand and reputation operating expenses,
Ayala group
and dividend payout.
Foreign and • Strong contribution • Delay in investment • Portfolio • Strengthen • Spending on
Domestic to national strategy execution Management relationships with acquisitions of
Investments infrastructure current partners and local and foreign
spending • Delay in project • Capital Market establish networks companies
execution
• Job creation • Funding with potential
• Increased cost of business partners and • Capital
doing business • Partnerships and advisers. expenditures
Alliances including
• Loss of potential • Diversifying and investments
revenues • Competition expanding portfolio for local
through strategic infrastructure
• Business partners’
failure to synergize acquisitions
with group ideals
Jobs supported in • Local sourcing as • Increased cost of • Political and • Due diligence of • Indirect hires or
the supply chain strategy doing business Regulatory potential partners support staff
through internal
• Higher cost of • Operational team or third-party • Spending on
supplier goods due to
new tax rulings assessments local suppliers
• Partnerships and
Alliances
• Implementation of • Operating costs
• Brand & Reputation vendor accreditation
systems in some
companies
Impact to the • Creation of targeted • Limited access to the • Portfolio • Investments in • Student
vulnerable sectors inclusive business vulnerable Management affordable quality enrollees from
models for the education and low-income
vulnerable • Limited market • Funding healthcare segment
reach for emerging
businesses • Innovation and
Technology • Delivery of affordable • Number of
water to marginalized students covered
• Synergy communities by government
subsidies
Alliances • Number of
transactions
• Brand and Reputation
of generic
medicines sold
• Number of
unique patients
• Number of
households
connected
through Tubig
Para Sa Barangay
Program
INTO THE FUTURE 65


Impact of use • Positive consumer • Negative consumer • Brand and Reputation • Continuous • Number of SMEs
of products and outlook outlook innovation to and start-ups
services • Innovation and
develop relevant financed and
• Improved • Decreased customer Technology
products and services supported
productivity of loyalty
organizations • Partnerships and
• Volume of bank
involved Alliances
corporate loans
• Operational
• Number
• Competition of GCash
subscribers
• Portfolio and monthly
management transaction
• Synergy amount
• Volume of
fintech-enabled
loans
• Customer
satisfaction
ratings and net
promoter scores
• Total number of
LRT-1 Passengers
• Total man-hours
and fuel savings
due to MCX
• Total number
of contactless
payments via
beepTM
Business resilience to • More businesses • Physical damage to • Business resiliency • Business continuity • Energy efficiency
climate change resilient to climate infrastructure management initiatives
change • Operational
systems include crisis
• Loss of lives
• Brand and Reputation management plan,
• New business models
• Prolonged business continuity
and investments
interruption or plan, and IT disaster
that address climate
inability to restore recovery plan
change issues
operations
• Insurance solutions
• Increased demand for
products and services
that address climate
change
Energy as a business • Robust contribution • Lower revenue due to • Portfolio • Diversify portfolio • Total power
of energy business a highly competitive Management of thermal and generated
to group equity energy market renewable energy
earnings • Funding • Total renewable
businesses
• Negative energy
• Improved efficiency environmental • Capital Market
generated
of conventional and consequences • Political and
renewable plants Regulatory
• Innovation and
Technology
Alliances
• Competition
• Brand & Reputatiion
• Operational
Energy as • Lower energy • Increased group-wide • Operational • Continuous • Energy
consumption consumption of energy consumption monitoring of energy consumed
• Brand and reputation
companies consumption
• Energy intensity
• Energy efficiency
initiatives by some of
our companies


Water as a business • Improved water • Disruptions in water • Portfolio • Expansion in areas • Water abstracted
distribution in more supply Management outside of Manila
homes, including • Billed volume
Concession
those in vulnerable • Higher cost of • Funding
operations • Used water
areas • Capital Market treated
• Termination of water
concession • Political and • Non-revenue
Regulatory water reduction
• Innovation and
Technology
Alliances
• Competition
• Operational
Water as • Lower water • Increased group-wide • Operational • Continuous • Water consumed

consumption consumption of water consumption monitoring of water
• Brand & Reputation • Water intensity
companies consumption
• Improve water
treatment operations
in our industrial
plants
Resource Efficiency • Optimized purchases • Higher cost of • Operational • Integrate resource • Volume of
and use of materials compliance to efficiency within the materials used
environmental • Brand and Reputation
supply chain
• Proper control of • Waste generated
standards • Business Resiliency
waste • Waste management by type
• Higher cost of • Political and disposal system,
operations i.e. accredited • Percent of waste
Regulatory
third-party waste diverted from
• Partnerships and disposal, storage, and landfill
alliances treatment facility
Ecosystems & • Potential increase • Continued decline • Operational • Group-wide • Hectares of land
Biodiversity in the population of vulnerable fauna reforestation and watersheds
of endemic fauna and flora in owned • Brand & Reputation activities through protected
and flora present or leased sites, Project Kasibulan
in companies’ protected areas, and • Number of trees
operational sites and external areas of high • Biodiversity studies planted
adjacent biodiversity biodiversity value and watershed
protection programs • Number of IUCN
areas Red List Species
across operational
sites of some monitored
companies
Greenhouse gas • Reduced emissions • Higher greenhouse • Operational • GHG Emission • GHG Emissions
emissions according to gas emissions mitigation efforts
acceptable global • Brand and Reputation • GHG Intensity
through Project
• Regulatory fines and
standards • Partnerships and Kasibulan
penalties
Alliances
• Energy efficiency
• Stakeholder
initiatives
complaints
Employee • Strong reputation • Inadequate mix of • Talent • Approach talent • Direct employee
Engagement and ability to attract skills and expertise management headcount
diverse and qualified for the workforce • Political and
comprehensively at
talent Regulatory • Employee
all stages
• Higher recruitment engagement
• Strong employee expenses • Operational
• Conduct of employee score
engagement score • Competition engagement surveys
• Prevalence of labor • Employee
disputes • Brand and Reputation • Annual discussion of turnover
succession planning
by senior leaders
• Regular dialogue and
communication with
labor groups
• Annual
benchmarking of
compensation and
benefits
INTO THE FUTURE 67


Workplace • Improved well-being • Dissatisfied • Operational • Due diligence of • Employee
Conditions of employees and employees and potential partners Engagement
partners across the partners across the • Political and
through internal Score
supply chain supply chain Regulatory
team or third-party
• Brand and Reputation assessments
• Enhanced brand and • Regulatory fines and
reputation penalties • Talent • Policies related to
human rights and
• Increased complaints • Governance and child/forced labor
• Eroded brand and Control
reputation
Diversity, Equal • Engaged workforce • Possibility of • Operational • Group-wide policies • Employee

Opportunity, and discrimination in the on equal opportunity headcount by
• Enhanced brand and • Political and
Anti-Discrimination workplace employment and gender, by age
reputation Regulatory
diversity group, and by
• Brand and Reputation rank
reputation
• Talent • Employee
engagement
• Governance and score
Controls
Community • Continued license to • Adverse impact on • Political and • Development and • Community
Relationships operate within the vulnerable groups Regulatory implementation of investments
community sustainable programs
• Eroded brand and • Funding • Total number
for youth, culture,
• Well-managed social reputation of Mangyan
• Synergy education, and
impact weavers, and
• Limited license of livelihood
• Partnerships and sales of Mangyan
operations
Alliances products
• Operational • Monthly income
of farmers in
• Brand and Reputation the MDC Greens
farms
Training & • Highly capable • Lack of future- • Talent • Employee • Total number of
Development workforce proofing skills among engagement training hours
• Political and
employees
• Established career Regulatory • Leadership • Average training
path for employees development hours per
• Operational
program employee
Occupational Health • Engaged workforce • Dissatisfied workforce • Talent • Employee health and • Number of
and Safety wellness programs health and
• Political and
wellness
Regulatory • Continous
programs
monitoring of
• Operational
incidences and • Number and
• Brand and Reputation injuries types of injuries
• Governance and
Controls
Customer • Enhanced brand and • Eroded brand and • Operational • Quality management • Customer
Management reputation reputation system satisfaction
• Competition
ratings and net
• Increased customer • Customer complaints • Customer satisfaction
• Brand and Reputation promoter scores
loyalty surveys
• Customer
• Customer feedback
complaints
and grievance
resolved
mechanisms


Security Practices • Stronger customer • Eroded brand and • Information Security • Policies on data • Security
and Privacy confidence in reputation and Cyber privacy and IT practices and
products and services security Data Privacy
• Regulatory fines and • Innovation and
Policy
penalties Technology • Centralized 24/7
security operations
• Higher cost of • Operational
operations
• Governance and
Controls
• Business Resiliency
Investor Relations, Corporate Communications, Sustainability, and other teams from across the Ayala group underwent a workshop on the Integrated Reporting framework in 2017.
INTO THE FUTURE 69

SUSTAINABILITY PHILOSOPHY
AND FRAMEWORK
(102-31)
The Ayala Sustainability Philosophy

Ayala is committed to contributing to the UN Sustainable Development Goals and we view our businesses as
opportunities to create shared value. In 2012, our group management committee approved our sustainability philosophy.
In 2013, the Ayala group underwent into a materiality process which resulted in its 360° Sustainability Framework. This was
enhanced further through our alignment with the UN SDGs, which was declared in the 2014 Sustainability Report—even
before the SDGs were formally launched in 2015. To ensure our framework is in line with the growth of our businesses, we
conducted workshops in 2017 to improve and update our 360° Sustainability Framework. This updated model continues
to prioritize three focus areas: Economic, Environmental, and Social. As part of our commitment to, and as a founding
member of the UN Global Compact Network Philippines, we also incorporated its10 Principles, resulting in a more holistic
framework.
Management Approach regulatory compliance, apply best work in the safest and healthiest
In line with our commitment, we practices, and adopt global voluntary possible environment. We provide
continue to improve the economic standards on environmental and work that encourages professional
value we deliver as we responsibly social responsibility. and personal growth, and we ensure
manage our impact on the they have avenues to develop
environment and society. The inputs Products and Services their interests. We encourage
and expectations of our stakeholders Improving quality of life is a main our employees to be proactive in
are important to us, and in response, driver in the development of our contributing to sustainable business
we practice good governance and products and services. We pursue practices.
remain proactive in our engagement excellence to empower more
with them. We continue to pursue customers and enhance their Community Involvement
opportunities that will help us experience. We keep the needs of We value education, cultural
improve and be more effective. marginalized communities in mind, development, gainful
and seek innovative ways to reach microenterprise, and health and
Business Sustainability them and increase our support for wellness. We ensure that these are
Long-term, sustainable growth is a nationbuilding. The design of our cultivated and promoted in the
key priority, and we strive to expand products and services also takes into communities with whom we interact.
our businesses in both the local consideration our environmental
and global arena. Guided by the UN footprint.
SDGs, we look at how we can further
improve our bottomline while being Supply Chain
transformational to society and the We observe sustainability practices
environment. We also continue to in dealing with our suppliers,
explore possibilities in underserved and prioritize those that adopt
sectors. sustainability principles. In line with
the principles of good governance,
Operations we choose suppliers based on
We are committed to the efficient their adherence to human rights.
use of our natural capitals, while We welcome community-based
ensuring the proper control of our entrepreneurs and cooperatives.
waste and greenhouse gas emissions.
We integrate environmental Human Resources
parameters into business operations We recognize that our employees are
and establish green practices in the our first customers. Their well-being
workplace. We aim to go beyond is our priority and we ensure they
Ernest Cu speaks about Globe’s experience in integrating
sustainability in its products and services.

THE AYALA 360° SUSTAINABILITY FRAMEWORK
This 360° Sustainability Framework is the result of the materiality process across the Ayala group. It gives a
comprehensive look at the factors, indicators, and metrics that we focus on. This framework is aligned with the 10
Principles of the UN Global Compact. We contribute to the UN SDGs through our various programs that drive positive
economic, social, and environmental outcomes. Due to the nature of our businesses, we have a direct impact on 11 of
the SDGs. Consequently, our activities also have an indirect impact on the remaining six SDGs.
INTO THE FUTURE 71

PERFORMANCE HIGHLIGHTS
VALUE CREATION
Economic
Redistributing Economic Values back to Society
Ayala companies 17 percent increase in economic value distributed, from P321 billion to P377 billion by Ayala companies to its
key stakeholders
Multiplying Gains by Supporting Other Businesses

Globe Supported 35 start-ups in 5 countries in the fields of Enterprise Solutions/Software-as-a-Service (SaaS), Health-
Tech, FinTech, Digital Lifestyle, eCommerce & Marketplace, and Edutech
Disbursed P332 million for 66,000 fintech-enabled loans for personal and business uses
BPI Provided P445.5 million of micro-finance loans for self-employed micro-entrepreneurs through
BPI Direct BanKo
(indirect contribution)
15.5 percent increase in total banks loans disbursed, from P1 trillion to P1.2 trillion
ALI 22 percent increase in gross leasable area of offices, from 836,000 to 1.02 million sqm with the opening of six
buildings
11 percent increase in malls’ gross leasable area, from 1.62 million to 1.8 million sqm with the opening of five
malls
Reviving the Philippine’s position as a manufacturing hub: AC Industrials
IMI Manufactured more than 31 million units of automotive, connectivity and smart energy technology
components
Addressing Pain points in Mobility

AC Infra 6 percent increase in LRT 1 passengers, from 148 million to 157 million due to improved train punctuality
Improved train quality, from 98.33 to 99.39 percent due to restoration of 9 non-working trains and extension of
operating hours
21 percent increase in vehicles accommodated per day, from 24,000 to 29,000 by MCX, with potential savings of
P519 million in fuel consumption and man-hours
241 million contactless payment transactions amounting to P4.6 billion for train, bus rides, retail and tollways
through beep ™
ALI 8 Ayala malls serve as loading and unloading terminals for 9 Point-to-Point (P2P) bus routes
Managing Risks and Opportunities of Climate Change
GLOBE 347 percent increase in green solutions, from 750 to 3,350 ranging from fuel cells, lithium ion batteries, FCS,
DC-HPU and DC generator sets
BPI 8 percent increase in total amount insured for catastrophies and natural hazards

Social
Ensuring Community Health and Safety
AC Health 3.5 percent increase in total sales transaction count, from 40.3 to 41.7 million at Generika drugstores
4.5 percent increase in sales transaction count, from 31.4 to 32.8 million generic medicines
Three times more unique patients served, from 14,769 to 65,102 through FamilyDOC clinics
Engaged 100 corporate clients covering 60,000 employees for an improved health benefits management
system and cheaper medicine through MedGrocer
MWC Total of 212,000 connections since the inception of Tubig Para Sa Barangay, affordable water program for the
marginalized
IMI Two times more automotive cameras assembled, from 1.96 to 4.3 million to improve road safety
Education and Youth Leadership

AC Education 16,219 students enrolled in 23 APEC Schools in Metro Manila and Cavite for SY 2017-2018, 60 percent comes
from D and E income segments
AFI Total of 1,449 Ayala Young Leaders Congress alumni since the program started in 1999
Fostering Financial Wellness

BPI 24 percent increase in Jumpstart accounts to promote saving to the youth
Building Sustainable Livelihood

AFI 21 percent increase in average monthly income, from P6,200 to P7,000, of farmers in a livelihood project in
Calauan
Provided livelihood to 242 Mangyan weavers in Talipanan, Puerto Galera
14.2 percent increase in Mangyan product sales from P5.2 million to P5.94 million
Environmental
Smarter Energy Measures
AC Energy 1,349MW and 268MW attributable capacities for thermal and renewable energy assets, respectively
9 percent increase in power generated, from 5,992.6 to 6,552.1GWh. 1,774GWh of which is attributable to AC
Energy
20 percent increase in power generated, from 342.1 to 410.3 GWh from renewable energy sources
This led to a 22 percent increase in greenhouse gas avoidance, from 160,476.0 to196,224.2 tonnes CO2e
MWC Generates 1.3kWh of electricity per day from 0.67 cubic meters of septage through its waste-to-energy facility
Advocating Climate Change Action

Ayala companies Total of 3,498 seedlings planted in 2.19 hectares of land in Pagudpud, Ilocos Norte for Project Kasibulan
ALI Established and protects 450 hectares of carbon forests
BPI 36 percent increase, from P84.7 to P115.1 billion in loans disbursed for energy projects
Water and Sanitation for All

MWC 4 percent increase in volume of water supplied, from 550.2 to 570.0 million cubic meters
7 percent increase in water abstracted, from 653.2 to 682.3 million cubic meters
6 percent increase in sewers, from 139,482 to 147,431 that are connected to sewage treatment plants
10 percent increase in volume of used water treated, from 51.5 to 56.4 million cubic meters avoiding 57,248
tonnes of carbon dioxide emissions
Our Natural Capital: Ecosystems and Biodiversity

ALI Protects 34 IUCN species and 14 threatened species as classified by DENR
MWC Planted 15,800 seedlings in La Mesa watershed and 1,700 seedlings in Ipo watershed, covering 79 and 4.3
hectares respectively
INTO THE FUTURE 73

PERFORMANCE HIGHLIGHTS
ECONOMIC, ENVIRONMENTAL AND SOCIAL
2017 Percent change Relevant SDGs
Performance from 2016
Economic
Economic Value Generated (Ayala Corporation) Billion peso 259.66 19%
Consolidated Revenues (Group-wide)* Billion peso 463.84 15%
Economic Value Distributed to Stakeholders (Group-wide)* Billion peso 377.19 17%
Capital Investments (Group-wide) Billion peso 173.50 5%
Social
Direct Jobs Generated Head count 55,264 13%
Other Jobs Generated Head count 83,810 11%
Group-wide Turnover Percent 7.5% (69%)
Male: Female ratio 1:1.33 1:1.37
Employee Engagement Score Percent 88% 0 **
Total Employee Training Hours Million hours 1,288,875 52%

Average Employee Training Hours hours per employee 23.3 34%
Environment
Total Energy Generated Gigawatt-hours 6,552.1 9%
Total Energy Generated from Renewable Sources Gigawatt-hours 410.3 20%
Total Energy Consumed Million gigajoules 27.9 28%

Energy Intensity Gigajoules per million peso 54.0 6%
GHG Emissions (Scope 1 and 2) Million tonnes of CO2e 3.0 23%

GHG Intensity Tonnes of CO2e per million peso 5.7 1%
Total Water Delivered (m3) Million cubic meters 570.0 4%
Total Water Consumed (m3) Million cubic meters 14.5 28%

Water Consumption Intensity Cubic meter per million peso 28.1 (5%)
Hazardous Waste Generated Tonnes 1,788.7 48%

Non-hazardous Waste Generated Tonnes 36,167.1 (9%)
Construction Waste (Ayala Land) Cubic meters 838,519.6 52%
Consumed Cement and Steel (Ayala Land) Tonnes 521,501.0 (5%)
*Excludes Ayala Corporation since portions of the individual companies’ revenue are reflected in the parent company’s economic value generated
**The employee engagement survey of the Ayala group is done only every two years

Economic Section
EXTENDING ECONOMIC
PROGRESS
Ayala is committed to driving broad-based economic gains for more Filipinos. As one of the oldest and largest
conglomerates in the country, we have played a key role, and shall continue to use our leading position, in working for
inclusive economic growth.
We expand our business network and pursue strategic acquisitions in a bid to enlarge the value we generate and
redistribute back to the economy. We also pursue innovative business strategies to support other businesses and increase
the potential gains of entrepreneurship for start-ups and new players.
We develop large-scale infrastructure and growth centers that continue to attract top investors and spur economic growth
for more people. We have also started to invest more in industrial manufacturing to revive the country’s position as a
manufacturing hub and exporter of quality industrial products.
By using our businesses as platforms for economic sustainability, we are able to generate greater economic values for
society, fill gaps in developmental services, and forge wider pathways to inclusive growth across our supply chain.
REDISTRIBUTING group increased by 15 percent from alone, our subsidiaries paid about
ECONOMIC VALUES BACK P402.3 billion to P463.8 billion in 51 percent of revenues to suppliers
TO SOCIETY 2017. This growth was primarily to cover operating costs, eight
Ayala’s businesses are engines for driven by significant revenue percent to government, 13 percent
economic growth as we continue increases recorded by Ayala Land, to providers of capital, 10 percent
to redistribute significant portions IMI, and Globe. to employees, and invested 0.04
of our profits back to the national Consolidated Economic Value Generated percent into communities. To sustain
economy. by Ayala Companies the operations of our respective
companies, we retained and
Our five-year cumulative group-wide reinvested 19 percent of the total
15%
capital expenditures are now at PhP 463.84 economic value we generated.
P748.3 billion. This includes our 11%
PhP 402.34
investments in shared-value business PhP 362.12
models, such as our new ventures
in energy, industrial technologies,
infrastructure, healthcare, and
education.
19% 0.08% 20% 0.06% 19% 0.04%
9% 9% 8%
THE AYALA GROUP SUPPORTS
14% 14% 13%
THE NATIONAL ECONOMY (201-1)
10% 10% 10%
Our economic impact comes mainly 2015 2016 2017
from our subsidiaries. They directly
conduct business with suppliers, Total in billion pesos
Percent increase
create employment opportunities,
generate shareholder returns, pay Breakdown of Consolidated 47% 48% 51%
loan providers, remit taxes, and Economic Value Distributed and 2015 2016 2017
enable and empower communities. Retained by Ayala Companies
Over the past three years, our
Consolidated Economic Value companies have distributed about
Generated by Ayala Companies 81 percent of their revenues to
Consolidated revenues of the Ayala their key stakeholders. In 2017
INTO THE FUTURE 75

At the Parent Company Level (201-1) and financing charges. About P255 Integrated Micro-electronics, Inc.,
million went to local community through its subsidiary Integrated
Economic Value Generated by investments, through Ayala Micro-electronics UK Limited,
Ayala Corporation Foundation and other partners. acquired an 80 percent stake in
Our total economic value generated Surface Technology International, a
in 2017 increased by 19 percent from private company based in the United
P217.6 billion to P259.7 billion. This Kingdom, which provides electronics
growth was driven by an increase 2% 0.10%
design and manufacturing solutions
0.31%
in equity earnings contributions 0.19% for high-reliability industries (i.e.
from our companies, led by Ayala 23% 20% 19%
8%
medical, automotive, aerospace,
Land and AC Energy. We distributed 9% 9%
8% and defense) that have production
8%
this economic value generated 10% standards of low to zero defects per
to our various stakeholders, million. STI has two factories in Hook
supporting the productivity of the and Poynton and a design center
country’s economy and extending in London in the UK, as well as, one
opportunities to more Filipinos. 58% 61% 65%
factory in Cebu, Philippines.
(1%) (0.16%)
2015 2016 2017 AC Ventures now owns a stake in
Economic Value Generated by
Ayala Corporation
Fintech Innovations, Inc. (Mynt) in a
bid to help drive, and capitalize on
the growth of the online financial
services market. It also ventured
into e-commerce by acquiring
19%
12% PhP 259.66 43.2 percent of BF Jade E-Service
PhP 193.76
PhP 217.61 Philippines, the company that owns
STRATEGIC ACQUISITIONS FOR and operates Zalora Philippines.
CONTINUED GROWTH (102-10) Ayala Land, BPI Capital Corporation,
In order to create more shared value and Kickstart Ventures also bought
and better support overall economic minority shares in Zalora.
2015 2016 2017 growth, we continue to seize
opportunities to scale our operations AC Industrials acquired a controlling
and further diversify our income stake in Misslbeck Technologies
Total in billion pesos streams. GmBH, a German-based automotive
Percent increase
supplier of models, tools and
Over the past years, we have plastic parts to automotive original
vigorously expanded our portfolio equipment manufacturers and
Breakdown of Consolidated by investing in industries that have automobile tier 1 suppliers.
Economic Value Distributed and the potential to deliver greater
Retained by Ayala Corporation social value and financial returns. AC Health recently invested in
In 2017, Ayala Corporation We are also looking into strategies, Wellbridge Health, Inc., which
distributed about 100 percent of innovations, and emerging operates MedGrocer, an ePharmacy
its generated economic value as business models and sectors that business that provides quality
payments to its key stakeholders, a are disrupting the way goods and services at lower costs.
21 percent increase from 2016. services are delivered.
Of the total economic value AC Energy took over Bronzeoak
generated, 65 percent was paid to Through its Singaporean unit Manila Philippines, Inc. in early 2017, and
local and foreign suppliers. About 19 Water South Asia Holdings Pte. rebranded the company to AC
percent was paid to the government Ltd, Manila Water now owns 37.99 Energy DevCo, Inc. It acquired 100
in the form of taxes and licenses. percent of the outstanding capital percent ownership of Bronzeoak
Eight percent was distributed to stock of Saigon Water Infrastructure Clean Energy and San Carlos Clean
employees to cover wages and Corporation in Vietnam and Energy. Additionally, it acquired a
benefits, while another eight is expanding its reach across 19.8 percent stake in the Indonesian
percent was distributed to capital Southeast Asia. geothermal assets of Chevron.
providers as dividends, and interest Moreover, AC Energy through its

affiliate, AC Energy International MULTIPLYING GAINS BY
Holdings Pte Ltd., a Singapore private SUPPORTING OTHER
limited company, invested in a 75
MW wind farm project in South
BUSINESSES (203-2)
Ayala’s innovative spirit, significant
Sulawesi, Indonesia. The project
market reach, and strong
will be developed through PT UPC
commitment to overall national
Sidrap Bayu Energi, a special purpose
development inspire our companies
company based in Indonesia.
to pursue strategies that enrich and
empower other businesses. Through
AC Infrastructure Holdings, BPI Card
innovative business models, we
Finance Corporation, and Globe
are able to deliver more products
have a total stake of 26 percent in AF
and services that help more groups
Payments, Inc. which is a consortium
to find entrepreneurial solutions
with First Pacific group. AFPI provides
to economic and developmental
contactless payments solutions for
challenges.
Once completed, the Sidrap project will be the Filipino public.
Indonesia’s first utility scale wind farm.
PROVIDING TOOLS TO BOOST
BUSINESS PRODUCTIVITY: GLOBE
Moving beyond calls, text, and
Ayala Company Companies Acquired Current Asset Description
data promos, Globe provides an
Ownership enabling environment for businesses
Manila Water Saigon Water 37.99% Provider of water and wastewater management through digital technologies. Globe
Infrastructure services to municipal entities, businesses, and myBusiness provides customizable
Corporation manufacturers in Vietnam
and affordable business solutions
Integrated Micro- Surface Technology 80% Contract electronics manufacturer based in
electronics, Inc. International the UK which provides electronics design and
to micro, small, and medium
manufacturing solutions for high-reliability enterprises. Globe’s goal is to give
industries, such as aerospace and defense, that small businesses a competitive
has production standards of low to zero defect
per million. advantage by improving their
AC Ventures Globe Fintech 10% Financial technology unit of Globe providing a efficiency and productivity, and
Innovations, Inc. (Mynt) one-stop shop of financial technology services reducing their operating costs.
for consumers, merchants, and organizations
through GCash, a micropayment service
These products and services
provider, and Fuse, a technology-based lending include Cloud Solutions, Digital
company Payments and Website Development
BF Jade E-Services 43.2% Owns and operates Zalora Philippines, an online and Management, Sales Force
Philippines fashion retail platform
Automation, and Security and Asset
AC Industrials Misslbeck Technologies 94.9% German-based automotive supplier of models,
GmBH (MT) tools, and plastic parts to automotive original
Tracking, among others. For 2017,
equipment manufacturers and automobile tier Globe myBusiness engaged MSMEs
1 suppliers in tourism (hotels, restaurants, cafés),
AC Health Wellbridge Health Inc. 17% Domestic start-up that operates MedGrocer, retail, manufacturing, financial, and
which provides affordable medicines and
healthcare management solutions using education sectors.
technology
AC Energy San Carlos Clean Energy 100% Operates and provides management support On the other hand, Globe
(rebranded to AC Energy services to San Carlos Solar Energy Inc. and Business provides end-to-end
DevCo, Inc.) Negros Island Solar Energy Inc. with a total
capacity of 143 MW mobile and fixed line solutions
Bronzeoak Philippines, that serve large enterprises. They
Inc. (rebranded to Visayas
Renewables Corp.) also provide IT-enabled services
Star Energy Geothermal 19.8% Indonesian consortium that owns and operates
through their ICT unit. These
(Salak-Darajat) B.V. Darajat and Salak geothermal fields in West include Connectivity Solutions,
Java, Indonesia, with a combined capacity of Mobility Solutions, Business Voice
637MW of steam and power
Solutions, Collaboration Solutions,
AC Infrastructure, AF Payments, Inc. 26% Consortium between Ayala group and First
BPI Card Finance Pacific group serving as a contactless electronic Machine-to-Machine Solutions, and
Corporation, payment system provider, beepTM as the main IT-enabled services. In 2017, Globe
Globe product
Business engaged several Top 5000
Philippine companies in the financial,
INTO THE FUTURE 77

healthcare, IT-BPO, logistics and adult population — gain access to safe that it provides the right products,
transportation, manufacturing, retail, and more convenient payment and whether business or personal
and public sectors. lending platforms. Currently, Mynt has loans. Loan sizes range from P300
two innovative products, which help to P300,000. FUSE communicates
INSPIRING MORE drive financial inclusion: GCash and updates and approvals to clients
ENTREPRENEURS: Fuse. through their mobile phones.
KICKSTART VENTURES Disbursements are flexible as they
Another Globe subsidiary, venture Globe subscribers enrolled in can be done through GCash, bank
capital firm Kickstart Ventures, has GCash can use basic services, such deposit, or check. In 2017, FUSE
been supporting startups develop as sending money and paying released a total of 66,000 loans
new products and services through bills, using their mobile phones. amounting to P332 million.
collaborative digital platforms. GCash users may also shop online
To date, Kickstart has invested in worldwide through American ENABLING BUSINESS
35 startups in five countries: the Express Virtual Pay, a virtual card GROWTH: BPI
Philippines, Indonesia, Israel, Canada, linked to their GCash accounts. By BPI continues to help more
and the US. Kickstart supports start- the end of 2017, a total of 5.1 million entrepreneurs to pursue their
ups from the fields of enterprise Globe subscribers already use GCash dreams through its various loan
solutions/software-as-a-service, with an average of P6 billion worth of programs. These lending channels
healthtech, fintech, digital lifestyle, transactions per month. have benefited not only large
ecommerce & marketplace, and companies, but also small and
edutech. In 2017, GCash also launched Scan medium enterprises. In 2017, almost
to Pay, a new payment option that 81 percent of BPI’s total loan portfolio
To address poverty-related issues allows customers to pay for goods was availed by these segments. The
in the country through the use and services by simply using their remaining 19 percent composed of
of technology, Globe, together smartphones to scan QR codes. retail loans.
with Kickstart, Globe Labs, and This innovation also helps business
Ashoka Philippines, mounted the owners as they can now charge BPI’s comprehensive range of
Globe Telecom Future Makers customers simply through QR code lending products includes short-
Program where 135 startups and stickers, diminishing the need term inventory and trade financing,
individuals from various parts of to purchase expensive payment term facilities for the financing of
the country displayed their unique terminals and systems. capital expenditures or acquisitions,
and innovative ideas. Out of the and project financing. These loans
five startups who won the GFM Fuse Lending, Inc., meanwhile, is are aimed to drive both urban
competition, Globe chose iVolunteer a licensed lending institution that and countryside growth. As a
and Virtualahan as Philippine caters to the underserved and financial advisor, BPI ensures that
representatives to the “SingTel Group unbanked population of the country. loan packages are flexible to cater
Regional Future Makers 2017” in It seeks first to understand the loan to different business needs. The
Australia. iVolunteer is a platform needs of its customers to ensure total outstanding loans availed
linking individuals to small non-
governmental organizations. On the
other hand, Virtualahan is another
platform for learning and capacity
building for people with disabilities
and medical conditions.
EXPANDING OPPORTUNITIES FOR

THE UNBANKED: MYNT
Ayala Corporation and Globe Fintech
Innovations, Inc. (Mynt) partnered with
the Ant Financial Services Group.
This partnership with one of the
world’s leading digital financial
services provider aims to help more
Filipinos — especially the unbanked,
Mobile platforms create opportunities to expand products and services.
which comprise over 50 percent of the

by corporate clients grew by 15.5 allowing them to move away from new offices in 2017, namely, Circuit
percent from P1 trillion in 2016 to unlicensed money lenders. BPO Tower 1 and 2 in Makati, The
P1.2 trillion in 2017. 30th Corporate Center in Pasig, One
By the end of 2017, a total of 103 Bonifacio High Street in BGC, Tech
In 2017, real estate and Direct BanKo branches and micro- Tower Cebu and Vertis North BPO 2
manufacturing were the top banking offices were opened, from in Quezon City. This expanded the
sectors in BPI’s loan portfolio. On a only 10 in 2016. Its micro-finance total gross leasable area of Ayala
macroeconomic level, these sectors loan portfolio has reached P445.5 Land’s office leasing portfolio from
were also two of the main drivers of million covering 8,291 micro-finance 836,000 square meters in 2016 to
GDP growth in 2017. Another sector clients. 1.02 million square meters at the end
with a highly significant proportion of 2017.
of corporate loans is wholesale and As a vehicle for financial inclusion,
retail trade. BanKo disbursed 94 percent of its
loans to areas outside Metro Manila.
BPI also grants loans to firms For its efforts towards promoting
engaged in agriculture and related financial inclusion, BanKo was named
industries such as piggeries, poultry, The Microfinance Initiative of the Year
livestock, milling, agri-trading by The Asian Banker in its Philippines
and food processing. These loans Country Awards 2017 .
contribute to the modernization
of farming operations, ensuring CREATING CENTERS OF
improved quality and continuous ECONOMIC GROWTH: AYALA
productivity. As of 2017, the LAND
bank disbursed P156 billion in Ayala Land continues to lead the
agribusiness loans. way in developing large-scale,
mixed-use estates that become
leading economic hubs and growth
centers across the country. As of
2017, the company has created and
is now managing 25 estates in key Vertis North is in a 30-hectare masterplanned estate in
cities across all major regions of the Quezon City.
Philippines. All these developments

continue to attract both global and
national locators and investors. REVIVING THE PHILIPPINE’S
They also enhance local economies POSITION AS A
through the growth of commerce MANUFACTURING HUB (203-2)
and trade and the provision of Through AC Industrials, Ayala is
infrastructure that inspire new taking advantage of the ongoing
entrepreneurial ventures. disruption in the manufacturing
space, particularly in the
In 2017, the company also turned- automotive sector. By maximizing
over 12,673 residential units, and our investments in industrial
completed new hotels and resorts technology, we strive to contribute
with a total of 556 rooms. Ayala to the renaissance of the Philippine
FOSTERING FINANCIAL Land opened five new malls in 2017, manufacturing sector, which we
INCLUSION: BPI DIRECT BANKO namely, The 30th in Pasig, Ayala Malls believe can contribute significantly to
As part of its thrust to provide Vertis North, Ayala Malls Cloverleaf economic growth and employment
financial services to all Filipinos, in Quezon City, Ayala Malls Marikina generation.
BPI established Direct BanKo, Inc. and Ayala Malls Feliz, Marikina. This
which provides financial solutions to brought the total gross leasable area Our global manufacturing arm,
self-employed micro-entrepreneurs. of shopping centers from 1.62 million IMI has expanded its capabilities
BanKo allows the unbanked to get square meters in 2016 to 1.80 million to move beyond traditional
easier access to loans with simple square meters at the end of 2017. electronics manufacturing services.
administrative requirements, The company also completed six The company works with partners
INTO THE FUTURE 79

and customers in co-designing ADDRESSING PAIN POINTS
and co-engineering a wide array IN MOBILITY (203-1)
of manufacturing solutions. As the economy grows, the need for
IMI has increased its markets to efficient mobility rises and transport
include aerospace and defense, challenges become more difficult
on top of automotive, industrial, to manage. In partnership with the
telecommunications, consumer, government and other companies,
medical, renewable energy, and Ayala supports major efforts to
power semiconductors. achieve sustainable transport
solutions and address worsening
One of the areas with growing traffic congestion in our cities.
potential is the manufacturing Through AC Infrastructure, Ayala
and supply of sensing cameras, supports national efforts to expand
night vision, and rearview cameras, and strengthen our transport
as demand for advanced driver infrastructure. With toll road and rail
assistance systems rises. In 2017, projects under the government’s
IMI Philippines produced 4.3 million public-private partnership program,
automotive cameras. IMI is also LRMC works to ensure that
AC Infrastructure aims to improve
involved in the development of passengers need not wait in long
the transport of people, goods, and
mirror replacement technologies queues by optimizing interval time
services for more communities.
that will enable cameras to replace between running trains. Train interval
side mirrors, allowing clearer, more during peak hours decreased from
IMPROVING EXISTING
accurate displays for drivers. five minutes in 2016 to 3.4 minutes in
INFRASTRUCTURE: LRMC
With growing demand for electric 2017. Likewise, train interval during
In Metro Manila, the train system is
vehicles, there is an equal need for off-peak hours declined from six
one of the most widely used public
accessible charging infrastructure. minutes in 2016 to 4.3 minutes in
transport systems. At present, there
One of IMI’s major customers in 2017. Train punctuality also improved
are three operational lines in the
Chengdu, China, is a top service from 98.3 percent in 2016 to 99.39
capital’s railway system, with the LRT
provider of charging solutions for percent in 2017.
Line 1 as the oldest. AC Infrastructure
electric vehicles, capturing about 43 engaged in a joint venture with
percent of total market share. IMI’s The time it takes for a train to
Metro Pacific Rail Corporation and
involvement in this segment will complete a journey from a terminal
Philippine Investment Alliance for
pave the way for the company to station and back, also called average
Infrastructure Fund to form Light
capture more opportunities in the cycle time, is at one hour and 42
Rail Manila Corporation which
evolution of cars. minutes in 2017. This is lower by
now operates LRT-1, which spans
seven minutes compared to 2016.
Roosevelt in Quezon City to Baclaran
In 2017, IMI won several power These resulted in a 15 percent
in Pasay City.
module projects for high power increase in daily passenger capacity
applications from a French-Italian from 560,580 in 2016 to 644,108
No new light rail vehicles were
multinational electronics and in 2017. The annual number of
purchased since the turnover of
semiconductor manufacturer, for passengers increased by six percent
LRT-1 operations to LRMC in 2015.
both industrial and automotive from 148 million in 2016 to 157
However, the company spent P124.3
products. The need for more cost- million in 2017. On a daily basis,
million and P408 million in 2016 and
effective energy management average passengers increased from
2017, respectively, for the restoration
systems will continue to rise due 409,785 in 2016 to 434,657 in 2017.
and rehabilitation of existing LRVs. A
to the increasing demand for high significant number of trains were fixed
power applications in cars, motor Incidents of total stoppage, late
and there are now 109 operating LRVs
drives, charging and heating systems, arrival, and late departure of trains
from 77 units in 2015.
inverters, welding tools, climate substantially declined compared to
control systems, uninterrupted 2016. This is attributed to various
LRMC also implemented extended
power supplies, and other high- management efforts. Instead of
operating hours to better serve the
power applications. In all, IMI relying solely on high-speed line
commuting public: 4:30 AM to 10:15
manufactured 31 million units of technicians, train drivers are enabled
PM for southbound trains and 4:30 AM
various technological components. to assess immediate train concerns,
to 10:00 PM for northbound trains.
thus reducing response time.

Also, LRMC staff strictly adheres AFPI’s current product, beepTM , is and observed properly. Buses are
to the Safety Code system, which an electronic wallet which can be equipped with wider seats, WiFi,
guides them in implementing used to pay for train and bus rides, CCTV, and Euro 5 gas engines which
the appropriate series of actions toll fees, and even retail purchases. reduce emissions.
during train delays or stoppages. beepTM cards can be purchased and
The company further provides reloaded primarily through ticket As a partner company, Ayala
employees with periodic training and vending machines and teller booths Land primarily provides terminal
refresher courses, and acquires new at LRT and MRT stations, at select and parking space, and assists in
technologies to improve train traffic partner establishments, and through housekeeping, traffic management,
management. Coins.ph. AFPI had a loading partner and marketing efforts for the P2P
network of approximately 400 at the bus service. By the end of 2017,
Train failures caused by faulty end of 2017. Ayala Malls that serve as loading and
parts typically require the overseas unloading points include Trinoma,
procurement of spare parts, which In 2017, the total number of card Glorietta, Alabang Town Center,
is a lengthy process. Through its transactions reached 241 million with Greenbelt, SouthPark, Market!
Laboratory Repair Section, LRMC a total value of P4.6 billion. Of this Market!, UP Town Center, and
is already capable of repairing amount, 95 percent were for train Solenad, supporting a total of nine
defective electronic modules, cards, rides, 4.6 percent for bus, and the rest routes.
and control equipment. This allows were from retail and toll fees.
LRMC to conduct its maintenance MANAGING THE RISKS
and repair activities in a timely SUPPORTING PUBLIC AND OPPORTUNITIES OF
manner, resulting in fewer failure TRANSPORTATION: AYALA LAND
incidents and considerable financial To reduce congestion in Metro CLIMATE CHANGE (201-2)
savings. Manila and encourage car owners At the Ayala group, we are cognizant
to shift to public transportation, that our economic advances will
DEVELOPING STRATEGIC the Department of Transportation be reversed if we fail to address
INFRASTRUCTURE: MCX launched the Premium Point-to-Point climate-related challenges today.
In 2015, Ayala Corporation bus service in certain areas. This We support efforts to increase
launched the Muntinlupa-Cavite was done in collaboration with local awareness of the dangers of climate
Expressway, its first toll road under government units, bus operators, change while developing business
the government’s public-private and real estate developers. solutions to mitigate its harmful
partnership program. This four- effects. In partnership with various
kilometer, four-lane road connects P2P buses offer express services environmental and civil society
Daang Hari in Las Piñas to SLEX to and from designated locations, groups, we continue to highlight
through Susana Heights, easing with no stops to pick up passengers. the critical role businesses play in
traffic and providing an alternative Departure times are scheduled preventing further global warming.
route to motorists.
Dedicated personnel monitor train operations.
Average daily traffic recorded by

MCX increased to 29,000 in 2017.
This also helped motorists potentially
save P165 million in man-hours, and
P354 million in fuel consumption
otherwise lost to traffic in 2017.
EASING PAYMENTS IN PUBLIC

TRANSPORT: AF PAYMENTS
To ensure greater convenience
in the purchase of bus and train
tickets, the Ayala Group has formed
a consortium, AF Payments, Inc., with
the First Pacific group to develop a
more efficient contactless payment
system.
INTO THE FUTURE 81

REDUCING CLIMATE
CHANGE IMPACT THROUGH
INFRASTRUCTURE
From 750 in 2016, Globe now has
3,350 green solutions, ranging from
fuel cells, lithium ion batteries, FCS,
DC-HPU and DC Generator sets. With
its fuel cell partner, Serenergy, Globe
is undertaking an effort to make all
its cell sites in the country greener.
Serenergy supplies methanol fuel cell
solutions to replace diesel generators
and provide green power supply.
Globe site operators underwent
Zalora has developed an efficient fulfillment solutions system.
training to properly operate fuel
cell systems as part of its integrated
network. Globe suppliers undergo a profile, financial soundness, and
comprehensive accreditation process technical capabilities. IMI’s Supplier
The DC Genset consumes less fuel which includes the assessment of Quality Engineering group conducts
due to its load-following ability their technical and financial capability, qualification assessments based on the
compared to an equivalent AC business continuity, safety, health, and company’s Supplier’s Quality manual,
genset and has a longer service environmental policies. Apart from the quality management system and
interval of approximately 500 screening process, Globe fosters strong other customer-specific requirements.
hours. It is also a more cost-efficient business relations with its partners Environmental, Health and Safety
solution compared to fuel cells for through its supply chain programs. The Standards, and Code of Conduct are
open field sites. The quiet-type DC company opens learning opportunities integral parts of the screening criteria
genset produces low noise at 48dBa to vendors through plant visits and of IMI for its suppliers.
allowing its use even in residential technology briefings as well as vendor
areas during power loss. clinics for selected suppliers to help Manila Water also ensures the
improve their performance and compliance of vendors to financial
PROTECTING ASSETS FROM RISK competitiveness. and technical requirements by
OF DISASTERS implementing robust accreditation
With more assets exposed to higher Ayala Land has institutionalized and pre-qualification processes. The
climate risk, BPI’s insurance business a Vendors’ Code of Ethics which compliance of these vendors and
continues to deliver insurance is anchored on the principles suppliers with environmental laws and
solutions to protect its clients. In and standards of Ethical Supply other relevant standards are checked
2017, total amount insured for Management Conduct set by the extensively through these processes
catastrophes or natural hazards grew Institute for Supply Management. The and is consistently monitored
by eight percent. Total premiums Code is being updated to enhance throughout the period of engagement
generated increased by 5.6 percent sustainable development provisions, with the company.
from P5.62 billion to P5.94 billion. and to conform to the International
Organization for Standardization We are working to further
EXTENDING as specified in the guidelines for institutionalize our best practices
Sustainable Procurement 20400:2017. in supply chain management and
SUSTAINABILITY TO OUR supplier assessment by developing
Ayala Land’s suppliers undergo
SUPPLY CHAIN (102-9, 204-1) third-party screening to assess and strengthening related policies
Our extensive supply chain across environmental performance and especially for our emerging
operating companies presents ensure that they do not employ businesses.
opportunities to improve the underage workers in their operations.
economic resilience of businesses Audits are regularly done in project Ayala companies also engage local
and individuals. By managing sites to ensure subcontractors and suppliers as much as possible. Globe,
our supply chain through better vendors adhere to the General Manila Water and some AC Energy
procurement processes, we improve Labor Standards. Ayala Land also companies spent P35 billion, P16.7
our business continuity while advocates for decent work practices billion, and P6.5 billion for local
ensuring that we always do business in its supply chain to safeguard the suppliers, respectively.
ethically and fairly. company from risks of forced, bonded,
and indentured labor, child labor,
Ayala’s major subsidiaries, such as discrimination, and harsh or inhumane
Globe, Ayala Land, Manila Water, treatment.
and IMI have comprehensive,
publicly-disclosed policies on IMI conducts management
supplier assessment and vendor assessments on potential suppliers
accreditation. based on the suppliers’ company

Social Section
UNITING BUSINESS STRATEGY

WITH SOCIAL IMPACT
At Ayala, we believe that serving the common good and working for social development are integral components of a
profitable business strategy. We therefore strive to develop business models that unite profit with human development and
social impact, creating both social and economic benefits for our communities.
The success of our businesses, moreover, is a direct function of human development and the well-being of our key
stakeholder groups—our employees, our customers, and the communities around us. Their overall health and well-being, as
well as their active participation in meaningful forms of social engagement, is therefore in our best interest.
In this section, we review our key programs that have directly contributed to improving the welfare of our communities,
particularly those related to gainful employment, healthcare, education, and sustainable livelihood.
PROVIDING MEANINGFUL are formed, while sharing resources, In 2017, we continued our
AND GAINFUL EMPLOYMENT maximizing opportunities, and partnership with leading professional
At the heart of Ayala’s drive for finding pathways to new shared- services firm Willis Towers Watson.
inclusive growth is a talented value approaches. We have adopted their framework
workforce that executes our on Sustainable Engagement, which
strategies and enables us to realize Over the years we continue to grow measures engagement in three
our vision. The diverse interests of the and support more employees, as areas – Energy, Enablement, and
Ayala group support about 139,000 evidenced by our high employment Engagement.
jobs through our companies, directly rate of seven percent, which is higher
employing more than 55,000. than the country’s average of We concluded our survey with a
1.1 percent1. 96 percent (30,271) participation
We strive to provide meaningful and rate which is significantly higher
gainful employment—the kind that Our approach to employee than the 81 percent Global Average
also ensures continuing education engagement was affirmed in 2017 as Response Rate and two points
and personal development. This Forbes Global 2000— higher compared to our 2015 overall
commitment is proven by our high an annual ranking of the top participation rate.
engagement scores and low turnover companies in the world by Forbes
rate across the group. Magazine—named Ayala 18th This year, our SE score across the
in its first-ever list of World’s Best Ayala group is at 88 percent, which is
The diverse mix of expertise and Employers. one point above the Philippine norm
interests among Ayala employees
enable us to pursue a wide variety ENGAGING EMPLOYEES, THE
Ayala’s 2017 Sustainable Engagement Index
of shared-value business models. AYALA WAY (102-43)
Our employees excel in their core We assess our performance as an
97%
functions and also serve as our brand employer by our ability to keep our
87%
ambassadors in and outside the employees sustainably engaged. 83%
conglomerate to promote Ayala’s A deeper understanding of what

values and its spirit of innovation keeps our employees motivated and
through collaboration. involved allows us to design policies
and programs that create a better
Every day, our employees ensure that work environment. We measure
synergies and creative partnerships this through third-party surveys
administered every two years.
1
This indicates that about 70 employees (net of turnover) are added to the company for every 1,000 employed, which is a lot higher compared
to the national average of 11 new hires per 1,000 employees during the third quarter of 2017, as indicated by the Philippine Statistics Authority’s
report on Labor Turnover.
INTO THE FUTURE 83

and two points above the Global Sustainable Engagement score further. teams more effective and energized.
High Performing Norm. The SE score A healthy exchange of ideas is
is the simple average of scores across Trust in Leadership crucial for achievement of the
the areas of Energy, Enablement, and High levels of confidence in team’s deliverables. Fundamental
Engagement. management decisions keep to maintaining good working
employees highly engaged. Ayala relations is how each employee feels
A key finding indicates that our actively works to reach such levels respected. A good 88 percent of our
employees possess a strong affinity of trust, with 83 percent of Ayala employees say they are treated with
with our respective company brands employees saying that they consider respect regardless of their role.
and goals. management decisions to be
consistent with the values of the Balancing Work and Leisure at
About 87 percent of our employees organization. Ayala
consider themselves energized, Acknowledging the importance
meaning they derive a sense of In this respect, the Ayala group scored of work-life balance, the company
personal accomplishment in their six percentage points higher than provides opportunities for
work and in working with their the Philippine norm due to a number employees to engage in sports
peers. As a result, they tend to have of factors. 85 percent are convinced or leisure activities. The company
a good individual, interpersonal, and that their management is interested holds an annual foundation day, a
emotional outlook at work. in the well-being of the employees. yearly summer outing, and special
In addition, our employees have celebrations for holidays such as
Enabled employees believe that a high regard for the standards of Halloween and Christmas. There are
resources and tools are available for integrity across the organization. 92 quarterly activities ranging from fun
them to do their job effectively with percent believe that their respective runs, health and wellness events, and
fewer obstacles. Around 82 percent companies operate with integrity in movie nights. Most of these events
of our workforce find themselves external dealings with customers and are open to the dependents of our
enabled. suppliers, among others. A majority employees.
are willing to report instances of
Moreover, 96 percent of our dishonest or unethical practices To further promote healthy
employees find themselves engaged. to appropriate authorities without living, Ayala supports the gym
Engaged employees work beyond fear of reprisal. In fact, 80 percent of memberships of Ayala Corporation
what is required to ensure our employees say internal processes are employees and encourages them
success. They have a strong belief geared toward providing the best to engage in sports through the
in our goals and objectives and possible service to our external clients. JZA Cup, named after our chairman
manifest pride in being associated emeritus Jaime Zobel de Ayala. This
with Ayala. Employees also appreciate the Cup is a year-long tournament in
way we provide feedback and golf, bowling, badminton, volleyball,
Key Engagement Drivers recognition. About 79 percent and street dance. Every four years,
Across the Ayala group, the following says they get regular feedback the group also holds the Ayala
categories are the strongest on their performance from their Olympics where employees from
influencers on our Sustainable supervisors and 81 percent says their across the group unite through
Engagement score: Empowerment, supervisor gives due recognition for sports tournaments like track-and-
Operating Efficiency, and Stress, outstanding work. field, cheerdance, and more.
Balance, and Workload.
Continued efforts in these areas Healthy Working Relationships ENSURING OUR EMPLOYEES’
will help drive and improve our Good working relationships make HEALTH AND WELL-BEING (403-2)
Ayala ensures that our employees
Key Drivers Our Definition 2017 2015
and dependents enjoy continuous
Empowerment Relates to whether employees believe that 90% 89% medical and dental care and undergo
they have sufficient authority and decision
making to do their job well and that
annual and executive checkups.
their work contributes to achievement of Our vaccination program is held
company’s business objectives annually to combat flu, hepatitis B,
Operating Efficiency Measures our effort to make our operations 87% 85% cervical cancer, and pneumonia. The
more streamlined and cost-effective company also maintains an on-site
through use of appropriate technology and medical clinic managed by doctors
continual process improvement
and nurses; it is supervised by one of
Stress, Balance, and Provides information on how the employees 70% 64% the top hospitals in the country. First-
Workload feel the support provided by the company
in terms of sufficient number of employees aid support and over-the-counter
handling the workload as well as how their medicines are given in this clinic.
schedule allows sufficient flexibility to meet On a group-wide basis, we track our
their personal/family needs employee’s health and instances

of illnesses, and review our records development and lifelong learning.
periodically to create safer and
MDC TTAC: Developing
healthier working environments2. Ayala University: Catalyst for
Developing Leaders in Ayala Builders that Build the Nation
Embracing wellness, Ayala started Ayala Corporation is on the frontlines
the “Ayala Goes Healthy” program, of employee development through Ayala Land, through its
which brings together interest clubs its strong support of continued construction arm Makati
across the group to collaborate and learning. This is embodied by Ayala Development Corporation,
create wellness programs, such as University, which now serves as a established the MDC Technical
sports events, blood-donation drives, catalyst for innovative learning and Training Assessment Center,
and health-and-safety lectures. development programs for Ayala which provides construction
employees. The program forms skills to workers deployed
Caring for the health and safety of linkages with Ayala leaders and in MDC’s construction sites.
our workforce is key in ensuring centers of excellence across the Ayala Land initially invested
that our employees perform at group and develops training sessions P3 milllion for the school’s
maximum potential, and that we based on developmental needs of operations. Starting with a
fulfill our responsibilities to them. individuals and business units. single training center and five
As an example, Ayala Land provides mentors in 2016, the school
yearly physical examinations, health In 2018, Ayala University will pilot grew to have eight technical
risk assessments, and an extensive test the Alternative Work Spaces centers and 41 active trainers at
health insurance coverage for project that aims to promote remote the end of 2017.
employees. These privileges extend working platforms.
to family members of employees. The skills trainings offered
There are also nurses and doctors Globe University: Preparing in TTAC include: Masonry,
stationed at Ayala Land’s head Employees for the Digital Age Carpentry, Electrical Installation
office. For field personnel, stricter Globe’s flagship employee and Maintenance, Shield
health and safety prevention development platform, Globe Metal Arc Welding, Scaffold
practices have been set such as University, offers courses based on Erection, Truck-Mounted Crane
designating safety and pollution the specific needs of each Globe Operation, and Kitchen Cabinet
control officers, enforcing use of employee. Installation. The center also
safety equipment, and establishing provides skills assessment
emergency response plans. The program has reached 2,900 services and trainings for
employees, 40 percent of Globe’s foremanship. Aside from
Manila Water commits to ensuring workforce, and offers the following the technical sessions, the
safety, preservation of life and health courses: Digital Marketing, Cloud center also aims to develop
of its employees and stakeholders Technology, Agile Methodology, soft skills for workers such as:
through its Safety, Health and Network Function Virtualization, understanding and adherence
Welfare Policy. With an occupational Software Defined Network, to safety and quality programs,
health and safety management Business Intelligence and Analytics, values enhancement and
system in place, the company Information Security and Data Center application to daily activities
continuously assesses its processes Training. of workers (i.e. concern and
and improves its operations in order courteousness), among others.
to manage its health and safety risks. To support the soft skills needed
for holistic development, Globe As of 2017, the project had
Likewise, Globe implements an OHS University, under the Leadership graduated 5,267 workers over
Policy and adheres to the OHSAS Academy, also provides training 41,974 training hours. There
18001 standards for its occupational on Everyday Leadership, People are 7,927 active trainees, all
health and safety management Management, and Fundamentals of of whom are also deployed in
system. Leadership. New programs are set MDC projects.
to be launched in the first quarter
PEOPLE DEVELOPMENT IN AYALA of 2018, including: Leading with This initiative significantly
(404-2) Emotional Intelligence, Collaborative improved the quality of
The sustainability of Ayala’s Leadership, and Leading in the workmanship among MDC
business is directly related to Digital Age. workers. Notably, their sense
the knowledge and skills of our of self-worth also increased,
employees. We therefore provide A Digital Learning Team also designs while the trainers are better
ample opportunities for professional and creates digital learning tools. able to grasp their purpose
in enriching the skills of their
peers.
2
The list of occupational health and safety incidents across the group can be found on page 187
INTO THE FUTURE 85

Some of the tools that the team
developed include the e-learning Average Training Hours Per Rank
development system, e-books library,

and GU Online Learning Digest.
IMI ETEEAP: Providing

Opportunities for Higher
14.09
Education
IMI-Philippines partnered with
the University of Batangas for
the Expanded Tertiary Education
Equivalency and Accreditation
Program. Through this scheme,
IMI employees who are still
undergraduates and have been
employed for at least five years,
can obtain an academic degree or Average training hours per Employment Figures (102-7, 102-8)
complete their tertiary education, employee stands at 23.33 man- In 2017, around 10 percent of the
based on their knowledge, skills, hours, a 34 percent increase from economic value generated by Ayala
and prior learning achieved through 2016, reflecting Ayala’s commitment was distributed to its employees. Our
actual working experience. In 2017, to people development. employee headcount increased by
there were 18 graduates, two of 13 percent from 48,753 in 2016 to
which were promoted to the next NEW HIRES AND TURNOVER 55,264 in 2017, as the group ramped
employment rank after graduation. (401-1) up its operations.
Ayala hired 7,991 new employees in
Employee Training Hours (404-1) 2017, a hiring rate of 14.5 percent.
In 2017, the Ayala group provided This is higher than the Philippine
more than 1.2 million training hours average of 8.91 percent. Employee
for employees. turnover this year totaled 4,148
which represents a reduction
in labor turnover rate from 24.5
Group-wide Total Training Hours percent in 2016 to only 7.5 percent
in 2017. This is lower than the
1,288,875
Philippine average of 7.81 in 20173.
809,614 849,929 CELEBRATING DIVERSITY

AMONG THE WORKFORCE (405-1)
The Ayala group provides equal
employment opportunities
regardless of gender, race, ethnicity,
color, religion, marital status,
2015 2016 2017
disability, economic status, and
Ayala Corp IMI AC Energy political affiliation.
Ayala Land AC Auto AC Infra
BPI Live It AC Education
Globe AC Healthcare
Manila Water HCX AFI
Total Generika conducts
medical missions and
other community
Group-wide Average Training Hours activities.
23.33
16.47 17.43
2015 2016 2017

Based on Philippine Statistics Authority
3
survey in 2017

Total Headcount of Direct Employees
55,264
49,155 48,753
BPI has dedicated teams and units to provide the best possible financial advice to its clients.
2015 2016 2017
Ayala Corp IMI AC Energy Total

Globe AC Healthcare
IMI’s expanded manufacturing
operations led to an 18 percent
increase in employees. The
Direct Employees by Gender expansion of our land development
and water services projects increased
28,630 28,297
30,672 Ayala Land’s and Manila Water’s
23,116
headcount by 15 and 14 percent,
20,525 20,456 respectively. BPI’s operations rose to
942 branches and micro-financing
offices this year, with a 12 percent
increase in employee count, as the
company continued to reach out to
the unbanked.
Female Female Female
Group-wide demographics remain

2015 2016 2017
dynamic with approximately 43
Ayala Corp IMI AC Energy Total percent below 30 years of age and 51
BPI Live It AC Education percent within 31 to 50 years of age.
Globe AC Healthcare Seven percent of our employees are
over 50 years old.
Male-to-female ratio in 2017 was

Direct Employees by Age Group
1:1.33.
25,720 27,234
25,701
22,957
19,931 19,650
In 2017, around 66 percent of direct
employees were rank and file, 31
percent were middle managers, and
3,523 3,383 3,597 three percent represented senior
management.
Below 30, years old
30-50 years old
Over 50 years old
Below 30, years old
30-50 years old
Over 50 years old
Below 30, years old
30-50 years old
Over 50 years old
2015 2016 2017

Ayala Corp IMI AC Energy Total
Globe AC Healthcare
INTO THE FUTURE 87

Extending Employment to
Support Staff Direct Employees by Rank
35,058
The group’s operations also provide 31,114 32,646
meaningful employment to indirect
hires. These employees may not 16,251
perform core business functions, but 13,769 13,615
they nonetheless serve vital tasks
1,481 1,397 1,477
that are crucial to the smooth flow of
daily operations. In 2017, the group
supported almost 84,000 indirect
Senior Management
Senior Management
Middle Management
Middle Management
Middle Management
Senior Management
Rank and File
Rank and File
Rank and File

employees4.
COLLECTIVE BARGAINING
AGREEMENTS (102-41)
We uphold our employees’ right
to exercise freedom of association.
2015 2016 2017
Across the group, collective
bargaining agreements provide Ayala Corp IMI AC Energy Total
venues for employee groups to Ayala Land AC Auto AC Infra
negotiate and settle labor disputes BPI Live It AC Education
Globe AC Healthcare
and voice out concerns regarding
employee development and
remuneration5.
ENSURING COMMUNITY
HEALTH AND SAFETY FamilyDOC provides quality primary care services to high-density communities in Mega Manila.
Beyond ensuring the personal
development and well-being of our
employees and workers, we also take
concrete steps to extend the social
value we create to our communities
at large. In order to create wider
impact and better address
development issues, we pursue
innovative social enterprise models in
key industries that can deliver social
solutions at scale, such as healthcare
and education.
BUILDING AN INCLUSIVE
HEALTHCARE ECOSYSTEM: AC
HEALTH
Improving Philippine health
outcomes is the core business
strategy of AC Health. The company Providing Affordable Quality Generika started an electronic
aims to build an inclusive healthcare Medicine through Generika gift certificate program called
ecosystem with synergies across its All Generika drugstores are MedPadala. This allows Filipinos
multiple assets. It seeks to improve compliant with the standards of the working abroad to ensure that a
access to affordable healthcare Food and Drug Administration and specific portion of their remittances
services for underserved Filipinos, ensure optimum levels of inventory can go towards meeting their family’s
particularly the growing middle class. for stable availability of supplies. In medicine needs. Local residents can
It currently has three subsidiaries: 2017, the company recorded a total also send medicine gift checks to
Generika, FamilyDoc, and MedGrocer. of 41.7 million sales transactions, their loved ones living far from them.
a 3.5 percent increase from 2016. This year, 3,110 transactions were
Of these, 32.8 million are sales recorded for MedPadala.
transactions for generic medicines.
4
The group-wide headcount for support staff can be found on page 187
5
The percentage of employees covered by collective bargaining agreements can be found on page 185

Aside from providing affordable Clinics use customized electronic MedGrocer’s digital platform enables
quality medicine, Generika also medical records system, developed better service levels at reduced
offers PLUS services which includes by AC Health, to keep patient data costs. The company had a total of
medicine guide, free consultations secured and centralized, accessible 593 unique customers and 1,221
and mobile laboratory services. only to authorized physicians across individual customer transactions
all FamilyDOC branches. An average in 2017. MedGrocer also engaged
Customers may request a medicine in-patient visit is around 43 minutes, 100 corporate clients for its services
guide from Generika pharmacists including waiting time. In 2017, covering about 60,000 employees.
when purchasing medicine to ensure FamilyDOC served an additional
compliance with proper intake and 50,333 unique patients, pushing the DELIVERING AFFORDABLE WATER
dosages. cumulative customer base to 65,102. Manila Water works to provide
universal access to safe and potable
They also offer free medical To further improve the skills of its water.
consultations to customers. Mobile healthcare professionals, AC Health
Laboratory services which includes now offers Family and Community The company fully complies with the
Fasting Blood Sugar, Uric Acid, Serum Medicine, as an alternative residency Philippine National Standards for
Glutamic Pyruvic Transaminase, program, for its licensed medical Drinking Water by safely managing
Complete Blood Count, Cholesterol, doctors under FamilyDOC. The its water systems and ensuring that
Blood Urea Nitrogen, Urinalysis, and program is accredited by the the water it provides meets the
Electrocardiogram tests are offered Philippine Academy of Family health-based targets established
at affordable prices. Schedules of free Physicians. Its curriculum and by the Department of Health.
consultations and mobile laboratory training activities revolve around Manila Water observes operational
are in the Generika website. the foundation courses prescribed excellence to be able to deliver
by the PAFP which includes clinical clean, potable water to its customers,
These programs and improvements and non-clinical courses. At the including underserved and unserved
in customer service led to an 89.9 end of training, graduates will have communities.
percent customer satisfaction rating, achieved terminal competencies
up by 3.8 percent from 2016. congruent to the PAFP’s mandate Reaching Marginalized
to provide patient-centered, family- Communities
Providing Affordable Quality focused, and community-oriented Manila Water’s Tubig Para sa
Primary Healthcare through care. Unique to the program is Barangay or Water for the
FamilyDOC the inclusion of technology and Community Program continues
FamilyDOC is a chain of community- exposure to specialized areas. to bring quality water services to
based primary care clinics, offering low-income communities. TPSB
the combined services of a clinic, a Deploying Technology for Better addresses pilferage and water loss by
diagnostic facility, and a pharmacy. Access to Healthcare Products: providing water service connections
By end of 2017, FamilyDOC had a MedGrocer to marginalized households at a
total of 21 clinics: 15 branches in To increase accessibility and subsidized rate. From the Manila
Metro Manila and six in Cavite. To affordability of healthcare services, Concession, TPSB has been replicated
serve more people, FamilyDOC is Ayala invested in MedGrocer, a local in Boracay Water and Laguna Water.
now open from 7:00 AM to 9:00 PM, start-up online pharmacy.
Monday to Saturday. Since its inception in 1998, about
MedGrocer offers an integrated 212,000 households have been
FamilyDOC offers affordable doctor ePharmacy and health benefits connected to Manila Water’s services.
consultations with a free follow-up management services for individual In 2017 alone, 355 households were
within seven days after consultation. consumers and companies. It allows reached by the Manila Concession
It provides ultrasound, x-ray services, customers to purchase medicines and Laguna Water.
annual physical examination, and medical supplies online and have
executive check-up, pre-natal care, these delivered to their homes.
chronic disease maintenance, wound For corporate clients, MedGrocer
care, minor surgery, and laboratory offers a health benefits management
tests. It offers various medical system that administers, augments,
packages to cater to different needs and analyzes in-patient and
of its customers. outpatient health benefits to improve
employee wellbeing and reduce costs.
INTO THE FUTURE 89

Providing High Quality
Drinking Water
Manila Water ensures that the
water it delivers is safe and potable.
However, there are people that
are still wary of the residual levels
of chlorine in tap water. There are UNC has a track record of excellence in board examination performance.
also communities and households
with rusty or old pipes that might
contaminate their tap water supply. education or pursue employment
after graduation.
In response to this, Manila Water
developed the Healthy Family brand APEC schools is aligned with
of high-quality drinking water global best practices and uses a
that can be directly delivered to unique curriculum that is designed
customers. Healthy Family eliminates to enhance the employability of
human intervention in the process students. In addition to core subjects,
through full automation of “closed- the APEC curriculum has a strong
loop” production systems. In 2017, service reminders to about 58,000 focus on English competency, self-
they sold 5.5 million five-gallon customers, a 49 percent increase confidence building, and values
bottles and 945,000 mini bottles from 2016. The percentage formation. The school also follows
through 344 distributor partners of customers pursuing actual a student-centered collaborative
across the nation. maintenance checks as a result of learning track, with non-traditional
these reminders have also been learning facilitators and an immersive
FOSTERING ROAD SAFETY increasing from 59 percent in 2015 learning environment.
IMI has been developing innovative to 66 percent in 2016 and 68 percent
after-market solutions to develop in 2017. Junior High School tuition fees for
advanced driver assistance the whole year can go as low as
systems, of which cameras are key EDUCATION AND P20,000 per year. And Senior High
components to ensure road safety. YOUTH LEADERSHIP School is offered free at voucher
IMI manufactures automotive Ayala supports national educational value for students from public school
cameras in its Philippine sites. These outcomes through AC Education while those from private school pay
devices prevent road accidents and various educational initiatives of as low as P15,000 for the year6.
by assisting drivers through lane Ayala Foundation.
departure warnings, road signage For school year 2017-2018, APEC’s
recognition, and collision avoidance. AC EDUCATION total enrollment count is 16,219
In 2017, IMI’s output increased by 119 AC Education is committed to among 23 schools in Metro Manila
percent, from 1.96 million units in improving the quality of education and Cavite. The first set of graduates
2016 to 4.3 million units in 2017 due in the country and ensuring that of the K-12 Basic Education Program
to higher order volume. students are equipped with the will come from this batch. About 60
knowledge and skills needed to percent of students come from D and
AC Automotive also advocates road secure gainful employment. E income segments.
safety. The company’s customer-
care programs on defensive driving, Affordable Quality Secondary APEC Schools are highly accessible to
traffic rules and regulations, basic Education the communities they strive to reach.
car care, troubleshooting and fuel APEC schools is a pioneering chain Almost 57 percent of APEC students
efficiency seek to prevent accidents of stand-alone private high schools are within close proximity (around
and promote courtesy and discipline in the Greater Metro Manila area. three kilometers), and 34 percent live
on the road. APEC Schools provide students within a kilometer radius, from the
access to world-class education school7.
AC Automotive dealership at an affordable price, with the
companies Volkswagen and goal of ensuring that students are APEC Schools use technology
Honda sent periodic maintenance empowered to continue on to higher devices during class discussion and
6
Based on SY 2017-2018 tuition fee for Grade 7 in Lipa and Grade 11 in NCR
7
Geomapping was used to analyze 7,700 student addresses from the 16,274 enrollment count

activities, to boost students’ comfort Collaboration Projects
in using technology. Classrooms are UNC also accommodated students with Academe
equipped with wireless networks with government vouchers. For SY
that allow Senior High School 2017-2018, 1,439 students in junior IMI regards the academe as
students to use chromebooks high school and 1,478 students in a key partner in developing
and tablets depending on subject senior high school are covered by technological innovations. Last
requirements. By having two shifts government subsidies totaling P34.7 May 2017, IMI took part in the
and using block class scheduling, million. Academic Grants for Industry-
the schools were able to maintain Led Applications program of
a tablet to student ratio of 1:1 and Learning with Industry the United States Agency for
chromebook student ratio of 1:4 for Collaboration International Development’s
each section. LINC is the senior high school Science, Technology,
academic program at the University Research and Innovation for
Some subjects in Junior High School of Nueva Caceres to prepare students Development program.
also use chromebooks at a ratio of for professional employment. The
one chromebook per four students. LINC programs are K-12 compliant Under a program duration
APEC Schools plan to further increase and have a strong focus on English of one year, IMI is co-funding
the number of chromebooks in the mastery and technology-powered two projects with De La
coming school years. learning. This program is available to Salle University. First is the
three academic strands of the senior development of an electronic
APEC continues to accommodate high school curriculum: ABM, STEM, gas-sensing device that can
students receiving assistance from and GAS. quickly detect lung diseases
the government for their education. without the use of expensive
In SY 2017-2018, a total government LINC also works closely with its medical tests and equipment
subsidy of P118 million is expected employer partners for curriculum and second is the development
to cover the tuition and fees of 5,700 development, work immersion of an electronic resonance
senior high school students, 35 programs, and linkage of students device that can be used as non-
percent of total current enrollment. to potential employment with invasive therapy for muscular
companies within and outside of the problems.
University of Nueva Caceres Ayala group.
The University of Nueva Caceres
in Naga City, Camarines Sur, is the Professional Employment Program Meanwhile, PEP graduates from UNC
oldest and one of the most reputable In collaboration with companies received salaries that are 140 percent
learning institutions in Southern such as Globe, Accenture and higher than Bicol minimum wage.
Luzon. It implements the K-12 Convergys, AC Education designed
curriculum and offers programs a platform called PEP to increase the
from kindergarten to graduate potential of its graduating students
studies. It has a strong academic for immediate employment. This
standing in the fields of Business program aims to develop strong
and Accountancy, Engineering and English skills, enhance critical
Architecture, and Education. thinking, and improve technological
application skills of college students.
UNC consistently surpassed the In 2017, PEP was offered at UNC, in
national overall board passing rates, Naga City and Jose Rizal University in
on average, four percent higher Mandaluyong City .
than the national average, with two
national board placers in 20178. For school year 2016-2017, about 90
percent of PEP graduates were hired
The school maintains a manageable within 90 days from graduation. This
class size to effectively engage is notably higher compared to the
students. The average number of average 53 percent hiring rate for
students per class is 40, 46, 45, and 30 regular graduates9. PEP graduates
for grade school, junior high school, from JRU received salaries that
senior high school and college, are 66.7 percent higher than NCR
respectively. minimum wage.
UNC considered passing rates of first time takers only

8
This is the hiring rate of JRU and UNC graduates for SY2012-2013 before PEP was introduced
9
INTO THE FUTURE 91

GOING BEYOND INVESTMENTS IN education to elementary schools in meet UNESCO standards. These
EDUCATION El Nido, Palawan and Puerto Galera, include sustainable ICT-proficiency
Ayala Foundation is committed to Oriental Mindoro. In 2017, ProFuturo training for teachers, an ICT-equipped
contribute in improving the quality of reached a total of 31 schools and school environment, and committed
education in the country, particularly started a training program for 195 education stakeholders. In 2017, two
among our public schools. At present, teachers. laboratories were set up, 69 teachers
programs focus on primary education were trained on ICT integration in the
to enhance learning at the early A collaboration by Ayala Foundation classroom, and 1,394 students gained
stages. In 2017, Ayala Foundation and Globe, the Global Filipino access and improved skills in using
supported 123 financially-challenged Schools program empowers schools ICT in learning. Since 2015, a total of
students through scholarships. to become 21st-century-ready 10,896 students benefitted from the
It also collaborated with various educational institutions by providing program.
communities and sectors to develop them with support systems that
complementary modes of learning.
Center of Excellence in Public Appreciating Culture and Arts

Elementary Education
The Center of Excellence in Public Inspiring pride in being
Elementary Education provides Filipino and fostering a greater
holistic, quality education for appreciation of our history,
bright children from economically arts, and culture have long
disadvantaged families. This pilot been among Ayala’s advocacies
laboratory school hones the and legacies. As such, Ayala
confidence and competencies of Foundation aims to make
its students, not just inside the Philippine history, culture and
classroom but also through after- art accessible and inspirational
hours learning sessions in the through various means.
performing arts and other skill-
building activities. CENTEX schools Ayala Museum Contrapuntos, which featured
improved and sustained their Ayala Museum houses artwork, paintings embodying a synthesis
performance in national learning archaeological artifacts, antiques, and harmony of Asian and Western
indicators by achieving 98 percent and traditional crafts. It also installs painting techniques was also
cohort survival and 100 percent exhibitions and conducts cultural showcased at the 55th Venice
promotion to next grade level. For programs using both traditional Biennale.
SY 2017-2018, CENTEX has 1,050 and non-traditional platforms. In
enrollees. 2017, the museum mounted 15 Filipinas Heritage Library
unique exhibitions featuring local Established in 1996, Filipinas
CENTEX Training Institute and international artists. These Heritage Library is the other half of
Ayala Foundation also established a attracted more than 163,000 Ayala Foundation’s Arts and Culture
training institute on critical thinking viewers for the year. Division. As a one-stop digital research
and methodologies in teaching for Through travelling exhibitions center on Philippine Studies, its
public school teachers. A total of 362 across the Philippines, Ayala mission is to spark and stoke interest
teachers from 16 schools enhanced Museum is able to expand its in the visual, aural, and printed story
their teaching proficiency through reach to increase awareness of the Filipino.
sustained coaching and mentoring. and appreciation of our history,
These teachers in turn had an impact culture and art. In 2017, the The library collaborates with
on the educational outcomes of Botong Francisco: A Nation individuals and institutions in
12,678 students in public schools. Imagined Travelling Exhibition, preserving documentary heritage
which gathered large-scale with a focus on the formative period
Digital Education: paintings by the renowned artist, of Philippine nationhood (1930s –
ProFuturo and GFS was showcased at the Lyceum 1950s). Its Filipiniana collections are
Ayala Foundation partnered with of the Philippines University in shared with the public onsite (on
ProFuturo, a program which aims Cavite. Meanwhile, the Pioneers the sixth floor of the Ayala Museum
to bridge the education gap for of Philippine Art exhibit, featuring complex), virtually (through its online
young children in vulnerable areas the paintings of Juan Luna, public access catalogue), and through
through innovative digital platforms. Fernando Amorsolo, and Fernando public programs (exhibitions, lectures,
The partnership brought digital Zobel, was shown at Lyceum of the and educational activities).
Philippines University in Manila.

Youth Leadership: AYLC, options, to build a new generation of CARING FOR OUR
LeadCom and FLYPro financially literate clients. CUSTOMERS
Ayala Foundation continues to run The health and safety of our
major youth programs to develop Jumpstart is a deposit account customers is a top priority across
value-oriented servant leaders who specifically for customers aged 10 to all Ayala companies. As we deploy
are empowered to effect positive 17. It aims to instill the discipline of our various products and services at
change for the country. saving at an early age, and protects a scale to more markets, we recognize
portion of the funds from unplanned the extent to which our market
The Ayala Young Leaders Congress withdrawals. Total number of presence can impact the well-being
is an intensive camp for top college accounts increased by 24 percent of a larger number of people. For this
and university student leaders in 2017, while total savings volume reason, we ensure that our products
across the Philippines. AYLC aims grew by 11 percent. and services do not pose threats to
to build a network of value-based human health or undermine the well-
and principled leaders, encouraging ENCOURAGING FINANCIAL being and safety of our communities.
stewardship of their communities FREEDOM: UNIT INVESTMENT
and the country’s future. As of 2017, TRUST FUNDS VALUING CUSTOMER
there were already 1,449 Ayala BPI also has products to meet the HEALTH AND SAFETY
Young Leaders from 19 batches. varying investment objectives At Ayala Land, safety is a paramount
of customers through its Asset consideration of project developers
On the other hand, the Leadership Management and Trust Corporation. in every step of the process from site
Communities program taps AMTC provides Unit Investment assessment to delivery. Once the
young community leaders from Trust Funds which spread across two project is set to operate, the project
ARMM, Lanao del Norte, and Iloilo. brands, BPI Investment Funds and lead goes through a sustainability
The young leaders develop and Odyssey Funds. checklist that includes design
implement targeted projects. In specifications and operational
2017, a total of 265 youth leaders The BPI Investment Funds seek to procedures.
from 53 youth groups were trained. offer attractive risk-adjusted returns
with focus on undervalued and lower In 2017, Globe conducted Radio
AYLC and LeadCom alumni have beta names, shorter durations, and Frequency Radiation Measurement
established projects that address diversification principles consistent at eight cell sites. All sites passed
their communities’ needs through with capital preservation. These the required standard set by the
outreach and livelihood programs. are best suited to investors who Department of Health and have
are generally conservative, looking been issued radiation-safety
Ayala Foundation is also a founding for stability, minimal volatility, and certificates. This attests that radio
partner of FYLPRO, a program for certainty of income. frequency signals coming from such
outstanding young professionals in facilities do not pose any adverse
Filipino communities in the United Odyssey Funds are actively-managed health impact. The radiation-safety
States. This immersion program funds that represent BPI AMTC’s certificates issued by DOH are
aims to cultivate and promote the specialist or opportunistic strategies based on guidelines issued by the
best in Filipino culture among the that express the fund manager’s International Commission on Non-
participants. best ideas to derive higher total Ionizing Radiation Protection and the
returns consistent with clients’ more Institute of Electrical and Electronics
FOSTERING FINANCIAL aggressive risk profiles. These are Engineers on maximum human
WELLNESS best suited for the more aggressive exposures to radio frequency fields.
Income inequity and the exclusion investors, who prefer specific sectors,
of some communities from the and want to expand their asset bases. AC Health extends its advocacy of
formal economy diminish business good health even to groups outside
prospects. To address these, BPI also BPI AMTC continuously updates its its drugstores and clinics. The
pursues innovations to empower products and services to remain company frequently holds events
the young and to cater to investors relevant in a changing environment, that raise the general public’s health
with varying investment targets and providing its clients domestic and awareness. For 2017, FamilyDOC and
risk appetites. international investment alternatives. Generika held a total of 58 health
Its innovative investment products awareness missions. Furthermore,
ENABLING THE YOUTH: have attracted younger investors. FamilyDoc convened 18 initiatives
JUMPSTART DEPOSITS In 2017, 42 percent of its customers focusing on disease spread control.
BPI has new platforms, ranging from were in their 30’s or younger.
savings and credit, to investment
INTO THE FUTURE 93

DELIVERING QUALITY PRODUCTS IMI, meanwhile, values the needs SECURITY PRACTICES
RESPONSIBLY (102-43) and requirements of its customers. AND DATA PRIVACY
In AC Automotive, commercial The company has developed a
success goes hand-in-hand with comprehensive procedure on Safeguarding Our People and
customer satisfaction. Its dealership customer satisfaction. A database Operations
sites ensure that all customer queries is created to capture all customer Ayala maintains a high level of safety
are addressed within five days ratings from different IMI sites. in our operations by engaging
through systematized complaint A scoring guideline, covering security agencies and employing
management systems. specific customer requirements, appropriate security practices.
such as quality, cost, delivery
Its Honda brand received more and responsiveness, is defined Ayala Land’s property management
than 2,600 complaints in 2017, all and agreed with customers. An team ensures that security personnel
of which were resolved in a timely escalation process is applied if are properly briefed in human rights
manner. The company assigns an defined improvement plans are not and the rule of law. Additional
audit team to review its customer implemented and standardized. training is conducted to orient
processes, overall look, and image Regular review of results is personnel on the company’s values
of branches to further enhance the conducted during quarterly business and way of doing things.
impression of clients and promote review meetings.
excellent customer care. Meanwhile, Given the sensitivity of the
its Volkswagen brand received 61 Across the group, we measure our information it handles, BPI
complaints for the year and achieved customers’ satisfaction with our makes significant investments in
a resolution rate of 94 percent. products and services and track them improving its branches’ security.
Remaining concerns were due to yearly. In 2017, it allotted P350 million for
delays in vehicle parts arrival and the enhancement of the bank’s
prolonged client feedback. To better threat identification and response
manage these concerns, Volkswagen mechanism. Furthermore, BPI’s
strengthened its complaint handling security guards are well-trained
process and created a customer on various programs such as Gun
satisfaction committee that shall Safety and Proficiency Firing, Bomb
address similar concerns. Identification and Detection, and
Robbery or Hold-up Procedures, to
name a few.
AYALA COMPANIES’ CUSTOMER SATISFACTION PERFORMANCE

Company Metric Description 2017 2016 2015
Ayala Land CSAT (APMC) Percent of tenants satisfied with APMC’s property management 92.0% 93.0% 92.7%
services
Globe Net Promoter Score A measure of how likely customers recommend its services to 27.0% 22.0% 17.0%
others (-100% means everybody are detractors while +100%
means everybody are promoters)
Manila Water C1 (service-related 96.0% 98.0% 99.1%
Percent of service-related complaints resolved
complaints)
C2 (billing related 95.0% 96.0% 98.4%
Percent of billing-related complaints resolved
complaints)
IMI (Philippines) CSAT Scoring guideline that covers specific customer’s CTQ require- 4.66 4.61 4.36
ments such as Quality, Cost, Delivery and Responsiveness that
are defined and agreed with customers
AC Automotive CSAT (sales) Percent of customers who are satisfied with new vehicles sales 92.0% 94.0% 94.1%
CSAT (services) Percent of customers who are satisfied with vehicle service 85.0% 93.0% 93.9%
provided
HCX CSAT Percent of customers who are satisfied with services provided 59% NA N/A
Generika CSAT (internal) 62.5% 55.0% N/A
Percent of customers who are satisfied with sales/services
CSAT (external) 90.4% 89.3% N/A
provided
Med Grocer CSAT 89.9% 86.1% N/A
FamilyDoc Net Promoter Score A measure of how likely customers recommend its services to 80.0% NA N/A
others (-100% means everybody are detractors while +100%
means everybody are promoters)

Makati Development Corporation
and Ayala Foundation’s partnership
through the MDC Ornamental Greens
Farm provides livelihood opportunities
to 30 farmers.
MCX’s security practices go beyond

safeguarding its tollway operations.
The company engages local
communities in the vicinity of the
expressway to augment security and
act as Barangay Patrol Volunteers.
They aid in guarding against acts
income reached P2.9 million. This
that endanger lives, such as stone- BUILDING SUSTAINABLE
throwing at passing vehicles and expansion increased the number of
LIVELIHOODS: AYALA farmers to 30. Average monthly income
loitering along the expressway.
FOUNDATION (413-1) per farmer also increased by 21 percent
Protecting Digital Information and While we continue to develop from P6,200 in 2016 to P7,500 in 2017.
Intellectual Property (418-1) business models that directly address
Our companies comply with the societal challenges, we realize that Project Lio 2.0 is a program with
Data Privacy Act. We ensure that our there are obstacles that will require women weavers of barangay Sibaltan,
businesses’ intellectual property and a non-profit approach to solve. For El Nido, Palawan to produce buri10 bags
our customer’s personal information these circumstances, we allocate a and other buri products. The goal is
are held within lawful bounds of portion of our revenue for projects to improve and increase production
confidentiality. that directly help build the capability and connect the weavers to various
of communities to create value for markets.
Globe implements a Corporate themselves.
Information Security Policy and Moreover, in 2017, market research
Privacy Policy. The company also Our social development arm, Ayala identified four activities with high
upholds the provisions of fair use of its Foundation, is one of the local economic potential—vegetable
products and services through its Fair pioneers in this developmental area, production, laundry service, on-call
Use Policy for Mobile and Broadband as it has designed and implemented manpower service, and choco-
Service Data Privacy Policy. sustainable livelihood programs from cashew production. The project
a non-profit lens since the 1970s. also revived the Pasadeña Farmers
BPI has designed and deployed a Today, the foundation aims to Association, Lamoro-Pasadeña People’s
data privacy program that covers provide households with access to Organization (fisherfolk) and Pasadeña
its entire operations. At the core of skills training programs, employment Women’s Association to engage in
this program is a robust awareness opportunities, financial services, long-term initiatives. Groundwork for
campaign that includes nationwide and connections to markets, so choco-cashew livelihood project was
roadshows and the launch of online they may have gainful employment implemented. This involved training
courses on data privacy. Completion or diversified income sources. The 12 workers, procuring materials and
of these courses by all personnel group currently works through three equipment for the project, and testing
that handle personal information is project sites: Caluan, El Nido, and production.
mandatory. Talipanan.
The last project site in Talipanan, Puerto
Ayala Foundation, meanwhile, The project site in Calauan, Laguna is Galera, is a development program
has established a Data Privacy located at Southville 7, a 107-hectare for the Iraya-Mangyans, which aims
Management Group, and created relocation site for families displaced to revive the indigenous group’s
a Data Privacy Manual covering by Typhoon Ondoy (Ketsana) in tradition of weaving particularly in the
policies on data processing, security 2011, and those relocated under the creation of beautiful and functional
measures and guidelines, website Pasig River rehabilitation program. nito11 products. With the help of
privacy policy, and conduct of The foundation partnered with local Ayala donors and partners, Ayala
privacy impact assessment. A data government units and other groups Foundation also provides training in
breach management procedure to implement livelihood projects, dressmaking, electrical skills, masonry,
was also established to ensure that mainly the MDC Greens farm. From and agriculture, among others. The
cases of data leakage will be properly 2016 to 2017, the farm doubled its project now involves 242 Mangyan
handled. size to two hectares due to increased weavers and one store established in
demand for its ornamental plants. 2017. Product sales increased by 14.2
Purchase orders increased by 81.8 percent from P5.2 million in 2016 to
percent, while the farm’s total annual P5.94 million the following year.
Hand-woven products made from leaves of the Buri palm tree

10
Hand-woven products made from the stems of the Nito plant, as type of climbing fern
11
INTO THE FUTURE 95

Environment Section
ALIGNING BUSINESS GROWTH

WITH ENVIRONMENTAL
PROTECTION
Environmental stewardship has always been and will always be a cornerstone of Ayala’s growth strategy.
From establishing one of the world’s most successful private-public partnerships in water services, to funding new business
concepts that directly address climate change, Ayala is always on the lookout for innovative business solutions that benefit
the planet.
In this section, we detail our most successful environmental programs in 2017. These programs brought in significant
business values through scalable green initiatives that reach underserved communities.
SMARTER ENERGY Net

Capacity in
%
Ownership
Attributable
Capacity in
Operational
Status
Operational
Control
MEASURES MW MW
Ayala’s commitment to promoting Conventional
affordable and clean energy is GMCP 632 20% 126.4 Operational No
embodied by AC Energy, a core
SLTEC 244 35% 85.4 Operational No
business line that now holds an
attributable capacity of 1,349MW GNPK 552 85% 469.2 Under Yes
construction
and 86MW in thermal and renewable
energy assets, respectively, in the GNPD 1,336 50% 668 Under Joint Control
construction
Philippines. It has an approximate
attributable capacity of 1,617.3MW, Total Thermal 1,349
inclusive of its regional power Renewable
generating assets. NLR 81 36% 29.2 Operational Joint Control
NorthWind 52 68% 35.4 Operational Yes
The company explores opportunities Montesol 18 100% 18 Operational Yes
to expand its thermal and renewable
Islasol 80 2% 1.6 Operational No
portfolio through the acquisition of
brownfield projects and development Sacasol 45 4% 1.8 Operational No
of greenfield energy projects. Total Domestic Renewable 85.9
Foreign Investments
Apart from its wind and geothermal Salak-Darajat 637 19.8% 126.1 Operational No
projects in Indonesia, AC Energy also Sidrap 75 75% 56.3 Under Joint Control
took over Bronzeoak Philippines, construction
Inc. in early 2017, and rebranded Total Foreign Renewable 182.4
the company to AC Energy DevCo,
Inc. The acquisition provides AC
Energy with a renewable energy San Carlos Solar Energy Inc., Negros unit of its 1,336MW super-critical
development, management and Island Solar Energy Inc., Monte Solar coal fired power plant, in Dinginin,
operations platform that has a Energy, Inc., San Carlos BioPower Bataan.
track record of successful project Inc., South Negros BioPower Inc., and
development. The platform North Negros BioPower Inc. The GNPD Project will support the
currently provides operations and increasing electricity demand of
management support services to GNPower Dinginin Ltd. Co. also Luzon and Visayas. Construction of
a number of renewable energy achieved financial close for the the first unit is well underway, and is
generation companies that include project financing of the second

technology significantly reduces expected to produce more electricity
Total Power Generation sulfur dioxide emissions. than the plant requires and
(in million kWh)
potentially translates to P17 million
GN Power Mariveles Coal Plant, annual savings per year.
meanwhile, reported a total power
6,552.1
5,992.6 generation of 4,287.5 million kWh Manila Water also plans to go full
in 2017, a five percent increase scale on waste-to-energy with three
4,357.6 compared to 2016. AC Energy, more projects lined up for 2018.
however, has no operational control These renewable energy initiatives
over, and a limited stake in GMCP. will aid the company in reducing
dependency to grid power.
Overall, the power generated by
AC Energy through its operational ENERGY EFFICIENCY ACROSS THE
plants increased by nine percent AYALA GROUP (302-4, 305-5)
2015 2016 2017
from 5,992.6 million kWh in 2016 to Ayala promotes various energy
GMCP (Thermal) Northwind (Wind)
6,552.1 million kWh in 2017. efficiency programs within its group.
SLTEC (Thermal) Montesol (Solar)
NLR (Wind) Total
RENEWABLE ENERGY INITIATIVES Ayala Land utilizes energy
ACROSS THE GROUP (302-4, 305-5) conservation equipment such as
targeted for commercial operations Outside of AC Energy, we enable motion sensors and LED lights in
by 2019, with the second unit our companies to mitigate their common areas of new buildings.
scheduled for completion by 2020. climate change impact by reducing Other practices include the use
their dependence on fossil fuels and of control pumps and motors
With these achievements, AC adopting clean energy sources in to monitor efficiency level per
Energy moves towards its goal of their operations. appliance, and the inclusion of
an additional 1,000MW renewable energy consumption metrics to
capacity and a 2,000MW combined Ayala Land pledges to reduce its evaluate property managers.
thermal and renewable portfolio by carbon footprint down to three
2020. percent by 2020. The company Through its two energy-related
had started to purchase power subsidiaries (DirectPower and
Altogether, AC Energy’s renewable from renewable sources, such as PhilEnergy), Ayala Land also delves
energy imprint in 2017 reached geothermal energy, through retail into the provision of electricity
410 million kWh, 20 percent higher electricity supply contracts, for supply and services related to
than 2016. This increase was driven several of its properties. This led to cooling systems. These subsidiaries
by higher wind generation from a reduction of 641.2 million kWh further look for ways to come up
Northwind and NLR. Both wind farms of electricity consumption from with energy savings methods that
capitalized on a better wind regime conventional sources in 2017. This serve not only Ayala Land and its
and boosted plant availability. is equivalent to a GHG reduction of properties, but other entities as well.
24,101 tonnes CO2e.
The company’s thermal plants BPI also strives to use energy-
also remain active in meeting the Manila Water started operating efficient equipment in its facilities.
country’s energy demand. Both its first waste-to-energy facility, In 2017, the company converted the
units of the South Luzon Thermal aptly named Operations Zero lighting system of 263 branches into
Energy Corporation’s circulating Project, which generates biogas LED lights. LED lamps provides the
fluidized bed boiler system ran in from septage coming from the same amount of light as fluorescent
full operation in 2017 and generated households served by its South lamps but at lower electricity
1,854.4 million kWh of electricity. Septage Treatment Plant in Taguig consumption. Additionally, 380 BPI
This led to an 18 percent increase City. Collected biogas is converted to branches installed inverter type air
in generation compared to 2016. electricity that is then used to power conditioners that consume about
The CFB technology also allows the facility. The pilot plant is capable 30 percent less electricity than
for higher efficiency in electricity of generating 1.3 kWh of electricity non-inverter types. These efforts
generation. Hence, less fuel is out of 0.67 cubic meter of household allow BPI to limit its environmental
needed to generate power. This new wastewater daily. Operations Zero is impact, while providing a
INTO THE FUTURE 97

comfortable and convenient percent from 51.1 to 54 GJ / million to limiting our consumption. For
banking experience for its clients. pesos revenue, indicating that more 2017, electricity intensity increased
fuel was consumed per revenue by nine percent from 0.0023 GWh
Similarly, MCX supports and earned by the group. per million pesos revenue in 2016
incorporates energy conservation to 0.0025 GWh per million pesos
in its tollway operations. It installed Our total electricity consumption revenue in 2017. This indicates that
energy-efficient street lighting increased by 30 percent considering the electricity we consumed per
and air-conditioning units that are our active spending on infrastructure million peso of revenue is higher as
optimally set to operate during and widening our businesses’ reach a result of a more robust monitoring
specific hours. in 2017. This change mainly came and reporting scheme.
from the expanded operations of
APEC Schools also practices energy Ayala Land, additional reporting from
efficiency through the 398 split- IMI’s Philippine and global sites1,
type air conditioning units installed and improved train operations of
in 2017. This enables the schools LRMC. Nonetheless, energy efficiency
to provide cooling to offices and efforts across the group contributed
classrooms with lower electricity
consumption compared to
window-type units. The schools has
Direct Energy Consumption
also replaced 818 fluorescent lights (in million GJ)
since 2016.
IMI optimizes the operating hours of

various energy intensive equipment,
such as exhaust blowers and dry-air
equipment. The company has also
reduced the operating hours of
its cooling tower, through regular
cleaning and removal of scales from
its filter. In addition, IMI installed
ducting links on air-conditioning
units and further rolled out the use of
its energy-efficient lighting system.
ENERGY CONSUMPTION Group-wide Electricity Consumption

(in million kWh)
(302-1, 302-3)
Our climate change impact is
primarily a function of the way we
source and consume energy. We
track and optimize our consumption.
Given the continued growth of our

business, our energy consumption
will also inevitably increase.
Remaining cognizant of this, we
will strive to remain responsible in
effectively and efficiently consuming
energy.
Our group-wide energy consumption

increased by 28 percent in 2017.
Sub-bituminous coal accounts for
the largest chunk among our energy
sources amounting to 80 percent by
heat. This increase is attributed to
stronger operations of SLTEC. Energy
intensity also increased by about five 1
This is the first year of reporting for IMI global sites.

Direct (Scope 1) Energy Emissions
(in ‘000 tonnes CO2e)
ADVOCATING CLIMATE
CHANGE ACTION
Our energy efficiency initiatives
are all geared toward minimizing
greenhouse gas emissions in our
businesses’ operations.
DIRECT (SCOPE 1) EMISSIONS

(305-1, 305-4)
Direct greenhouse gas emissions
come from the combustion of fuel,
whether from a stationary power Total
generation unit or vehicle. In 2017,

our Scope 1 emissions increased by Indirect Energy (Scope 2) Emissions
26 percent as SLTEC fully utilized (in tonnes C02e)
both of its power generation units. 753,660.1
675,593.3
767,551.5
With this, AC Energy comprises about 1.98
97 percent of the group’s Scope 1

emissions. Likewise, Scope 1 intensity 1.60
1.49
increased from 4.05 to 4.28 tonnes
CO2e per million pesos revenue.
Nonetheless, the output of our
renewable energy generation plants
helped avoid 196,224 tonnes CO2e
potential GHG emissions.
INDIRECT ENERGY (SCOPE 2)

EMISSIONS (305-2, 305-4)
Indirect energy emissions come
mainly from the consumption of Total
electricity that is purchased from the
national grid. In 2017, our Scope 2 Indirect Energy (Scope 3) Emissions
emissions increased by 14 percent, (in tonnes C02e) 258,273.3 274,674.2
indicating that more greenhouse
gases are released from increased
usage of electricity among our
operating companies.
Nonetheless, our Scope 2 intensity

improved from 1.60 in 2016 to 1.49 14,384.8
tonnes CO2e per million pesos

revenue in 2017, indicating that we 2015 2016 2017
emitted less carbon per revenue BPI (armored cars)
generated by the group. AC Energy Ayala Land (from LPG use by tenants in malls)
IMI
Ayala Land (from sold residential properties)
Manila Water
Total
In 2016, Ayala Land segregated
emission data from common areas in
its malls and offices which comprised
outsourced vehicles, including jet
majority of its Scope 2 emissions. Leased
fuel estimates from employees’
areas are now classified under Scope 3.
business flights. Our properties’
tenants also contributed to Scope 3
OTHER INDIRECT (SCOPE 3)
with their cooking fuel and electricity
EMISSIONS (305-3)
consumption.
In 2017, our Scope 3 emissions
increased by six percent. These
originated from fuel used by
INTO THE FUTURE 99

FARTHER AS ONE: HELPING comprised of 140 volunteers have The complexity of Ayala Land’s
SAVE THE PHILIPPINE FOREST planted 3,498 seedlings, covering businesses and the influence it has
THROUGH PROJECT KASIBULAN 2.19 hectares of land. on the many areas where it is present
A key touchstone of Ayala’s overall drive the company to continuously
work toward sustainability is its Ayala aims to widen the scale of look for ways to maximize the
reforestation and forest protection Project Kasibulan in the coming intersections between its business,
program called Project Kasibulan. years. As it expands, the protection of the community, and the surrounding
The program was launched in 2016 in critically endangered species are also environment.
NLR to help mitigate Ayala’s carbon being considered, like the Tamaraw,
footprint, and serve as a testament also known as the Mindoro Dwarf Notably, LRMC also contributes by
of the group’s commitment to Buffalo (IUCN, 2016), and a highly planting 2000 propagules to help
nurturing the environment. The distinctive Philippine bird, called the rebuild the mangroves in Lobo,
program also aims to inspire the Luzon Bleeding Heart (IUCN, 2016), Batangas. This is a vital activity
employees to have a change in both located in Mindoro. because fish and other marine life
mindset towards sustainable living take shelter and reproduce in such
and provides opportunities for NEW WAYS OF CREATING VALUE habitats. Any loss in mangroves
volunteerism. To contribute to the reduction of the directly translates to a decrease in
Philippines’ overall greenhouse gas fish supply.
Ayala employee volunteers were emissions, Ayala Land announced
given the opportunity to fully its plans to embark on a progressive BPI: GREENING THE BUSINESS
appreciate the importance of forests program to become carbon neutral LANDSCAPE
and how they can yield various by 2022. Its three strategies are: (1) BPI leads the banking industry
creative concepts for sustainable the shift to renewable energy, (2) in promoting green projects and
livelihood. They were then trained the integration of passive-cooling ensuring that these have been
on the proper and complete cycle of design in its developments, and (3) screened for technical feasibility and
planting seedlings, giving emphasis the establishment and protection of financial viability.
on the importance of planting carbon forests.
endemic species. The volunteers also The Structured Financing Division
interacted with partner communities Ayala Land goes beyond the of BPI provides competitive long-
to better appreciate the shared value traditional means of creating value term local currency financing
created by the program. for land by protecting and enhancing support to large-scale renewable
450 hectares of land as carbon energy generation projects, such as
More importantly, the partner forest sites for at least 25 years. large hydros, run-of-river projects,
communities were given the chance While remaining aware of financial geothermal, and wind projects.
to appreciate both the economic and business considerations, the
value and the importance of taking company believes that there is great On the other hand, BPI’s Sustainable
care of the environment. value in dedicating these parcels of Energy Financing offers CAPEX
land as carbon forests, which results financing for green building or plant
Since the beginning of Project in benefits for the environment, the construction; modernization of
Kasibulan, a total of five batches community, and other stakeholders. lighting, ventilation and production
facilities; working capital for raw
Project Kasibulan brings Ayala employees together under the group’s drive to protect the environment.
material or equipment inventory;
as well as leasing of more efficient
machineries. Under this program,
SMEs and mid-size companies are
assisted in increasing operational
efficiencies and reducing electricity
consumption; producing clean and
inexpensive energy; and decreasing
vulnerability to climate risks.
In 2017, total combined SFD and

SEF disbursed loans amounted
to P30.5 billion, of which, SFD
accounted for P25.3 billion loans to
support renewable energy projects
with aggregate capacity of about
900 MW. On the other hand, BPI
disbursed SEF loans to SMEs and
mid-sized companies amounting
to P5.1 billion, covering energy
efficiency, renewable energy, and

climate resilience projects. As a result,
the accumulated sustainable loans
disbursed through SFD and SEF
from inception have reached P115.1
billion.
Increase of combined SFD and SEF loans
from 2015 to 2017
+13
+54
+35 43.1B
+251
28.1B
13.3B 72.1B
As of % increase % increase As of Ayala Land’s mixed-use estates are notable for their abundance of green space.
2015 in 2016 in 2017 2017
SEF
SFD
Water Distribution 2015 2016 2017
Pipes (in km)
WATER AND SANITATION Manila Concession 5,049 5,094 5,111.9
FOR ALL Clark Water 12.90 58.11 61.8
Through Manila Water, Ayala Laguna Water 666 932 999.9
continues to promote clean Boracay Water 5.50 30.66 46.8
water and sanitation as a key
Estate Water 85.41 145
developmental goal and as a viable
and profitable business strategy. Total 5,733.40 6,114.77 6,220.4
Since the establishment of Manila Water 2015 2016 2017

Water in 1997, it has brought clean Connections2
potable water to over 10 million Manila Concession 976,321 1,008,918 961,663
Filipinos, many of whom previously
Clark Water 6,379 6,501 6,267
had to make do with inadequate
supply and inefficient services. Laguna Water 1,978 1,994 2,050
Boracay Water 107,263 128,734 99,081
Manila Water continuously invests in Estate Water 10,153
water and wastewater infrastructure Total 1,091,941 1,146,147 1,079,214
both as a strategy for expansion
and a way to address pressing
environmental needs. Billed Volume
(In million cubic meters)
In 2017, Manila Water laid a total of 550.2

570.0
105.6 kilometers of pipes across the 522.8
Manila (East Zone), Clark, Laguna and

Boracay concessions. Additionally,
the Estate Water division also laid
59.6 kilometers of pipes in the estates
that the company serve. Manila
Water also taps its vertical expansion
arm, Manila Water Total Solutions, 2015 2016 2017
to install water supply pipes in its
service areas. MWTS had laid 50.6 Manila Concession Boracay Water
kilometers of new pipes. (East Zone)
Clark Water
Laguna Water
Estate Water
Cebu Water Total (Philippine
As a result of these advances, the Operations)
company increased its billed volume

by four percent in 2017 as compared
to 2016.
2
2015 and 2016 numbers are based on Water Service Connections. Starting 2017, MWC is monitoring billed connections based on the number
of connections that generate actual revenues and is net of permanent disconnections.
INTO THE FUTURE 101

Manila Water protects its
watersheds to ensure the
sustainability of water supply.
Percentage Non-Revenue Water Used Water Treated

MINIMIZING WATER LOSS (in million cubic meters)
The reduction of non-revenue
47.0%
water remains a critical aspect of 56.4
Manila Water’s work amid a growing 51.5
population with limited fresh water 34.0% 42.4

resources. Minimizing wasted water 22.5%
21.5%
due to faulty infrastructure or illegal
connections also benefits both 11.5%
12.6% 18.2%
consumers and the water utility. 11.2% 10.8%

11.6%
4.5% 3.9%
4.6%
Clark Water, reduced its NRW from
4.6 percent in 2016 to 3.9 percent
2015 2016 2017 2015 2016 2017
in 2017. Similarly, the Estate Water
division improved its NRW from 47
percent in 2016 to 34 percent in Manila Concession Clark Water Manila Concession Boracay Water
(East Zone) Laguna Water (East Zone) Laguna Water
2017. Estate Water targets to reduce Boracay Water Estate Water Clark Water Total
it NRW to 14 percent by 2020. These Estate Water (Philippine Operations)
improvements may be attributed to

pipe and meter replacement, water threaten life under water.
facilities rehabilitation, and proactive
leakage management. Laguna In 2017, Manila Water increased Tonnes Organic Pollutants Removed
Water’s NRW also improved from 19.9 its number of sewers connected
percent in 2016 to 18.2 percent in to sewage treatment plants from
2017, as a result of continuous efforts 139,482 in 2016 to 147,431 in 2017. 9,003 9,087
8,329
of active leak detection, pressure The Used Water Services division also
management, and pipe refurbishing. desludged 104,170 and 3,824 septic
tanks in the East Zone and Boracay
Meanwhile, Boracay Water and the concessions, respectively.
Manila Concession increased their
NRW percentages to 22.5 percent These efforts translate to 56.42
and 11.6 percent, respectively, in million cubic meters of used water
2017. Both concessions are set to treated in 2017, which is 10 percent
intensify their NRW programs. higher than in 2016. The company 2015 2016 2017
also prevented a total of 9,087
USED WATER SERVICES (306-1) tonnes of organic pollutants from Manila Concession Boracay Water
Used water treatment helps in the entering waterways, a one percent (East Zone) Laguna Water
Clark Water Total
preservation and rehabilitation of increase from 2016. Additionally, the Estate Water (PhilippineOperations)
waterways by treating used water removal of this amount of pollutants
prior to its discharge to receiving reduced the unwanted methane
bodies. If left untreated, wastewater formed from septage, thus avoiding
will contaminate bodies of water carbon dioxide emissions by 57,248
with organic pollutants that could tonnes.

NEW WATER BUSINESS MODELS Group-wide Water Consumption for wastewater discharges and
(in ‘000 cubic meters)
In response to a niche demand for identified water sources onsite. It
used water management services, pays all discharge dues and conducts
Manila Water’s Integrated Used Water 36.60 regular water quality testing to
Solutions has started catering to 29.58 14,526
ensure compliance with prescribed
commercial and industrial clients 12,554 28.12 standards. Through these programs,
11,359
looking for the latest used water Globe has consistently lowered
treatment technologies to comply to its water consumption over the
regulatory standards. IUS developed last three years. In 2017, Globe’s
seven used water treatment plants as water consumption amounted to
of 2016 and continued to construct 104,130 cubic meters, which is lower
new facilities and improve its existing compared to 125,341 cubic meters
processes in 2017. 2015 2016 2017 in 2016.
AC Energy (SLTEC) IMI (Philippines)
Meanwhile, Manila Water’s Estate Globe Ayala Land These efforts allowed us to reduce
BPI AC Health
Water division has been providing Water Intensity AC Automotive our water usage intensity from 29.6
water and used water solutions to (cubic meters/ AC Education
Total
to 28.12 cubic meters per millon
million pesos
aid Ayala Land in the development revenue) pesos revenue in 2016 and 2017,
of sustainable spaces. In 2017, Estate respectively. This indicates that
IMI balances its water usage streams
Water added 358 residential and we consumed less water for every
by optimizing the operation of
47 commercial and industrial water million pesos of revenue the group
its deionized water system and
service connections. made, as compared with previous
by improving its maintenance
year.
processes. These efforts resulted in
All these enabled Manila Water to
higher quality water and reduced
increase its estate billed volume to
water losses. The company reuses
4.6 million cubic meters.
treated and excess water, and
harvests rainwater to be used for
WATER MANAGEMENT WITHIN
domestic applications.
THE AYALA GROUP (303-1, 303-2, 306-1)
The total water use of the
SLTEC draws its water from Balayan
conglomerate increased by 28
Bay for use as cooling and process
percent in 2017. This is largely due to
water. 100 percent of cooling water is
a marked increase in properties and
returned to the bay, along with water
estates developed by Ayala Land.
left over from the demineralization
About 89 percent of the group-wide
process. Water that is used for the
water consumption comes from
process itself undergoes a closed-
Ayala Land’s construction activities.
loop cycle of evaporation and
We also started reporting on AC
condensation, with minimal losses
Education, AC Automotive and AC
due to evaporation.
Health’s water consumption.
Less than one percent of SLTEC’s
In order to achieve water efficiency,
water consumption is from
Ayala Land’s property managers
groundwater, supplied by the
monitor water consumption per Manila Water provides crucial water and used water
industrial park. This is used for services to communities.
property as part of their operations.
domestic purposes, with an
For areas without water coverage,
estimated 60 percent of the domestic
Ayala Land partners with qualified
water going to the wastewater
suppliers to limit the use of deep
treatment facility to be treated and
wells and groundwater primarily for
reused. The remaining 40 percent is
health and sanitary purposes. The
used for watering plants and similar
company also designs and operates
uses.
onsite water and wastewater
treatment plants.
Our telecom business, Globe,
meanwhile, uses on-site treatment
Other Ayala businesses also
technologies and has a drainage
continued to explore best practices
system in place. The company
in water management.
regularly files all necessary permits
INTO THE FUTURE 103

OUR NATURAL CAPITAL:
Balay Kogon: Sowing the Seeds of Sustainability
ECOSYSTEMS AND
As Ayala Land commits to of species – native, endemic, and BIODIVERSITY
achieving its carbon neutrality invasive, (2) Propagation of native Whenever needed or feasible, Ayala
target, the company constantly and endemic species, (3) Nursery subsidiaries integrate ecosystems
finds ways to make its estates creation and maintenance, (4) and biodiversity protection programs
and nearby communities more Proper handling in balling out into their operations.
sustainable. of trees, and (5) Assisted Natural
Regeneration. Manila Water, for instance, has an
One good example of how extensive watershed management
the company is able to link At the end of the training, program. Other companies, such
biodiversity protection with participants are then employed as Ayala Land and AC Energy, have
livelihood provision is in Balay to propagate 13,000 saplings of ongoing biodiversity studies and
Kogon, an Ayala Land boutique various native species of trees, monitoring programs that are
bed and breakfast situated in shrubs, palms, and mangroves. intrinsically linked to their operations
the rich forest island of Sicogon, They are also expected to and brand propositions.
Iloilo. strengthen the island’s resiliency
against natural disasters, while WATERSHED MANAGEMENT
To preserve Sicogon’s also protecting Ayala Land’s (303-1, 303-2, 304-3)
natural beauty and wealth investments and business goals in Manila Water needs sustainable
of biodiversity, Ayala Land the island. sources of good quality raw water to
allocated P2 million to develop serve its customers.
and implement a training Since the start of the program,
curriculum for members of 19 trainees have already The company abstracted 87.12
the island’s local community. been employed by a partner percent of its raw water from surface
Participants were trained on manpower agency for the project. water sources, mainly from the
the following: (1) Identification La Mesa and Ipo watersheds. The
remaining 12.88 percent came from
groundwater and river infiltration.
The company withdrew 683 million
cubic meters in 2017, a seven percent
increase compared to its total
abstraction in 2016.
Increasing demand for water denotes

higher utilization of watersheds.
Hence, Manila Water is dedicated
to managing its catchment areas
through forest protection and
rehabilitation efforts. The company
works closely with government and
civic organizations in implementing
forest and wetland restoration
activities at the La Mesa and Ipo
watersheds.
Like the rest of Ayala Land’s developments, Balay Kogon strives to protect the integrity of its natural environment. For 2017, Manila Water planted
15,800 seedlings in 79 hectares of
La Mesa and 1,700 seedlings in 4.3
hectares of the Ipo Watershed.
Boracay Water has also initiated its

watershed management plan. It
targets to plant 10,000 trees in 20
hectares of the Nabaoy Watershed in
Aklan in 2018.
Aside from planting saplings, the

company ensures that previously
planted seedlings are regularly
maintained and that the area is
The La Mesa Dam supplies the majority of Metro Manila’s water supply.
cleared of illegal human activities. An

oversight committee monitors and Natural factors and human activity plans. Ayala Land identifies endemic
evaluates the outputs of the program influence species distribution species of flora and fauna in its
in accordance with the targets set in and diversity, including climate, estates and integrates all findings
the approved Integrated Watershed geographic ranges and vegetation in design and development. The
Management Plan of Manila Water, types. Data collected from field company’s latest biodiversity
as well as the corresponding annual surveys also showed that species study focused on the 34 identified
work plans for each watershed area. could tolerate some degree of sightings of species under the
disturbance provided that vegetation IUCN’s Red List of Threatened
BIODIVERSITY STUDIES is protected and left out to re- Species in its estate in Palawan. The
(304-1, 304-4) generate, or enhanced through latest study also acknowledged
Some of our operational sites reforestation. 14 additional flora on the list of
are situated near areas rich in threatened species under the
biodiversity. It is therefore important With these data onboard, NLR Department of Environment and
for us to characterize and quantify commits to further improve Natural Resources’ radar.
the species inhabiting these areas, their forest rehabilitation and
so we may better understand and management initiatives, and to Among these species are the
mitigate our operations’ impact on establish a biodiversity monitoring critically endangered Starburst
these rich natural sites. system that shall measure their (Clerodendrum quadriloculare)
reforestation outcomes. and five other endangered species
Our AC Energy affiliate, North namely the Palawan Schefflera
Luzon Renewables operates Ayala Land and its business units, (Schefflera palawanensis), the Pitcher
its windfarm adjacent to a vast meanwhile, recognize that its Plant (Nepenthes philippinensis),
forestland within the Ilocos region. development and construction Manila Palm (Adonidia merrillii),
In 2017, the company performed a activities leave significant impact and the Philippine Mussaenda
comprehensive biodiversity study on the environment. For this (Mussaenda philippinensis). Ayala
within the area. reason, the company undertakes Land preserves and protects these
biodiversity assessments and other species by ensuring that no major
environmental studies before disturbances occur within their
crafting its design and execution respective habitats.
BIRD SPECIES
Wet season:
29 BIRD SPECIES NLR employees help maintain and nurture the environment through tree-planting and other activities.
14 ENDEMIC
Dry season:
60 BIRD SPECIES
21 ENDEMIC
02 VULNERABLE
• Philippine Duck
(Anas luzonica)
• Philippine Dwarf Kingfisher
(Ceyx melanurus)
MAMMAL SPECIES
05 VOLANT (flying and gliding)
03 NON-VOLANT
(land-based, non-flying)
• Philippine Long-tailed Macaque
(Macaca fascicularis ssp.
philippensis)
*near threatened according to IUCN Red List
REPTILE SPECIES
03 SPECIES OF SNAKE
• 1 vine snake
• 2 rat snake
INTO THE FUTURE 105

RESOURCE MANAGEMENT is recyclable, while 23 percent is As the combustion of coal yields a
As we seek to innovate and residual. Outside MDC, Ayala Land’s sizeable amount of fly ash as by-
develop new products and other business units collectively product, AC Energy’s affiliate SLTEC
services that present solutions generated 4,899.2 metric tons of seeks ways to better manage its
to environmental challenges, we recyclable waste and 16,867 metric disposal. In 2017, SLTEC generated
must also advocate sustainable tons of residual waste in 2017. On 74,763.2 tonnes of fly ash. About
production and consumption within the other hand, compostable and 59 percent was sold to cement
our conglomerate and respective food waste from Ayala Land’s estates manufacturing companies for co-
supply chains. Over the past years, and residential and commercial processing into cement clinker. The
we have laid down the groundwork properties decreased by 13 percent remaining 41 percent was disposed
for monitoring and improving our in 2017, as only 14,229.6 metric in the company’s ash management
efficiencies in the use of key natural tons were generated compared to facility, where the ash is dumped into
resources, waste management, and 16,354 in 2016. To further minimize a DENR-approved pit with a synthetic
green supply chain management. the generation of waste, Ayala Land lining. Once full, the pit is then
implemented a ban on plastic use in covered by soil.
ECO-RESOURCE EFFICIENCY IN their Palawan resorts beginning in
CONSTRUCTION (301-1) 2017. Recycling and Landfill Diversion
Ayala Land is committed to the (306-2)
prudent use of resources, especially Globe’s intensive campaign to IMI strictly implements segregation
during the construction of its estates. reduce the use of paper led to of waste at the source and the
This is evident in the systems and a higher subscription rate to its reclaiming of other reusable materials
practices of Makati Development paperless billing program. As of through its 3R (Reduce, Reuse,
Corporation. 2017, around 95 percent of Globe Recycle) program. The company also
postpaid subscribers or 3.3 million requires its haulers to provide material
In 2017, Ayala Land used 35 percent users had shifted to electronic billing. recovery facilities and to segregate
less reinforced steel than in 2016 This marks a 26 percent increase the recoverable materials, thereby
despite having more projects under compared to 2016 and led to savings avoiding the dumping of residual
development. Cement consumption of 286,294 reams of paper in 2017, or waste to municipal landfills. In 2017,
was 20 percent higher as Ayala about 13,742 trees saved per ton of IMI diverted 98 percent of its waste
Land completed 174 projects in paper recycled. from landfill.
2017 compared to 130 in 2016. The
company, however, minimizes use AC Education had also started to Globe also takes significant steps
of virgin materials as it requires its monitor its paper consumption while to reduce waste produced from
cement providers to adhere to a 10 inculcating in its students a stronger products and operations to further
to 15 percent fly-ash substitution in awareness of waste management. lower its impact on the environment.
cement, while maintaining concrete APEC Schools consumed only 2,224 Waste management efforts remain
strength at above industry standards. reams of paper across their branches in full implementation on all Globe
Additionally, MDC’s concrete batching in 2017. Meanwhile, the University sites. The solid waste, e-waste, and
plants and pre-fabrication sites allow of Nueva Caceres had implemented a hazardous waste the company
Ayala Land to minimize material paperless office transaction program generates are tracked throughout
delivery time, fuel consumption, and which resulted in a 56 percent the year. In 2017, Globe had diverted
greenhouse gas emissions. reduction of paper consumption for nine percent of its waste from
SY 2016-2017. landfills through waste segregation
MANAGING NON-HAZARDOUS and recycling.
WASTE (306-2)
Ayala’s efforts to reduce wastage Its flagship recycling program,
is evident in its 2017 group-wide Project 1 Phone, is a mobile recycling
performance. The amount of non- program focused on recovering
hazardous waste generated by and recycling electronic waste,
Ayala companies decreased by nine specifically mobile phones and
percent this year, as our businesses portable devices such as tablets.
actively monitored waste generation E-waste typically contains hazardous
and implemented mitigation elements such as lead, cadmium,
approaches. and arsenic. If disposed in landfills,
these chemicals could potentially
Similarly, the group monitors its contaminate the soil and water table.
waste generation and explores Additionally, high value metals such
ways to minimize its environmental as gold, palladium and platinum can
impact vis-à-vis its increasing project still be recovered from discarded
portfolio. In 2017, about 77 percent phones and reused commercially.
of Ayala Land’s construction waste In 2017, Globe through Project 1

Group-wide Hazardous Waste
Phone had collected 216,816 kg of by Company (in tonnes)
e-waste. All devices and accessories
1,788.7
that Globe gathered were turned-
over to an electronics waste recycler. 1,207.8
The proceeds of which helped build
classrooms in schools in Aklan that
were damaged by Typhoon Haiyan 572.1
in 2013.
MANAGING HAZARDOUS WASTE

(306-2, 306-4)
Hazardous waste comes in different 2015 2016 2017
forms and usually includes organic
solvent, e-waste, lead-acid batteries, Manila Water Ayala Auto Globe
Ayala Land IMI (Global Sites) Total
and used oil. Each pose their own AC Infra (LRMC) IMI (Philippines)
peril to human health and local
economies if handled poorly. Our
companies that produce hazardous
waste follow all pertinent laws and
regulations related to their storage,
1,788.7
transport, and treatment.
1,207.8
Monitoring per type of waste has

become more accurate as the group 572.1
enhances its waste management

efforts. Total hazardous waste
reported increased by 48 percent in 2015 2016 2017
2017 with additional reporting from
Ayala Land, Manila Water, and IMI’s Batteries E-waste Organic Solvent
Used Oil Grease-waste Total
Philippines and global sites.3 Other Hazardous Asbestos-containing
Wastes products
Used oil from vehicles and industrial

equipment also increased as AC
Automotive had serviced more Used Oil by Company
(in liters)
clients requesting vehicle demos and
had outsourced more fleet trucks for 594,704.8
delivery of vehicles sold.
394,000.4
Our companies undertake further
efforts to minimize the impact of the 235,544.5
hazardous by-products we generate.
Some of our companies partner

with non-profit groups for recycling,
treatment, and disposal of used oil 2015 2016 2017
and batteries. IMI, for example, turns
over its hazardous waste to ABS- Manila Water AC Infra (LRMC) IMI (Philippines)
CBN Foundation’s Bantay Kalikasan, Ayala Auto Globe Total
Ayala Land
which in turn surrenders the waste
to their partner recycling agents.
The monetary value of these waste
is used to support communities and treatment and recycling. Other company also implements a waste
livelihood projects. hazardous waste are transported and turn-over system for hazardous
treated by DENR-accredited service waste for easier tracking. A third
Manila Water, meanwhile, donates providers. party, DENR accredited treatment,
used lead-acid batteries and used storage and disposal facility is
oil to ABS-CBN Foundation’s Bantay LRMC follows waste segregation at engaged to ensure proper waste
Baterya and Bantay Langis for both its depot and train stations. The disposal and treatment of hazardous
Additional reporting from IMI Philippines for Cavite and PSI sites.
3
INTO THE FUTURE 107

waste. A hazardous waste storage
facility is also designated within the
depot to serve as temporary storage
of the generated hazardous waste.
Used oil and used lead batteries
are also being donated to ABS-CBN
Foundation.
Aside from following all government

regulations, NLR has established
secondary containment/bunds to
prevent or reduce the potential
impact of hazardous waste on the
soil and groundwater. The company
is now assessing all its waste streams
to determine other potential
hazardous waste that require proper
handling and management.
In the case of NorthWind, aside

from generating electricity from
renewable sources, some of the
plant’s inputs, such as oil are recycled
Apart from providing clean and potable water, Manila Water also provides sewage and
to minimize waste. The company has sanitation services.
also invested in a recycling facility for
oil used in the gearbox, generators,
and other moving turbine parts.
Restriction of Hazardous Substances
GREENING THE SUPPLY CHAIN in Electrical and Electronic
(308-2) Products; Registration, Evaluation,
IMI is monitoring its compliance Authorization, and Restriction of
with Conflict Mineral Reporting. Chemicals; Automotive industries’
The company supports responsible compliance requirement on
sourcing of minerals to ensure that International Material Data System;
tantalum, tin, tungsten and gold and Chinese Automotive Material
in the products it manufactures do Data System.
not directly or indirectly finance
or benefit armed groups that At Ayala Land, suppliers undergo
perpetrate human rights abuses. third-party screening, which requires
IMI exercises due diligence in the vendors to fill up “Green Metrics”
source, and chain of custody of these in addition to legal and financial
minerals and makes information compliance documents. The
available to customers upon request. company launched its Sustainable
Procurement Roadmap in 2017 to
IMI has also developed a influence its top material suppliers
comprehensive policy on green to comply with OHSAS, ISO, or EMS
manufacturing and procurement. It certifications, as well as to engage
has adopted a system on Hazardous them in appropriate sustainability
Substances Process Management. programs by 2022.
The policy is designed to manage
hazardous substances and adhere At Manila Water, compliance
to all applicable laws, regulations, of vendors and suppliers with
and other customer-specific environmental laws and other
requirements on the prohibition or relevant standards is checked
restriction of specific substances extensively and is consistently
in products and in manufacturing. monitored throughout their period
These include compliance with the of engagement with the company.

1 2
3
6
4 5 7
1 Ayala employees volunteer to clean and repaint public schools during Brigada Eskwela.
2 Generika holds Gabay Kalusugan events in various communities to highlight the importance of taking care of one’s health.
3 Ayala group sustainability practitioners gather with colleagues and friends from the private sector at the Sustainability Summit.
4 IMI employees participate in blood donation drives.
5 AC Health conducts a medical mission to benefit underserved communities.
6 LRMC employee volunteers clean rivers.
7 Students visit MCX on a field trip.
INTO THE FUTURE 109

Vehicle traffic along MCX has grown
steadily since it began operations.

B U S I N ES S R EV I EW
INTO THE FUTURE 111

AYALA LAND
“Making a positive impact on communities and the environment provides greater meaning
to our success. We implement sustainability practices, focused on site resilience, pedestrian
and transit connectivity, local employment, and eco-efficiency.”
- Bernard Vincent O. Dy, President and CEO, Ayala Land
Who we are Focused on its vision of “enhancing and the revitalization of its existing
Ayala Land is the largest property land and enriching lives for more estates.
developer in the Philippines with people,” it empowers its employees to
a solid track record in developing deliver quality products and services In November 2017, Ayala Land
large-scale, integrated, mixed-use, and build long-term value for our launched Seagrove in Mactan,
sustainable estates that are now shareholders. Cebu in partnership with Cebu
thriving economic centers in their Holdings and Taft Property Venture
respective regions. Outlook Development Corporation. The
Ayala Land continues to make estate is designed as an “eco-fun”
Following the success of the Makati progress on its 2020-40 plan, lifted by destination.
Central Business District (Makati a positive macroeconomic outlook
CBD), Ayala Alabang, Cebu Park that will benefit the whole property NET INCOME
District, Bonifacio Global City (BGC), development sector. It believes that (IN BILLION PESOS) 25.3
and Nuvali, it continues to increase the stable contributions of the BPO
its footprint by building estates that sector, overseas Filipino remittances,
20.9
reach and benefit more people. a growing tourism sector, and strong
household consumption will spur the 17.6
With 10,285 hectares in its landbank, continued growth of the property 14.8
24 estates, and a presence in 55 sector. 11.7
growth centers across the country,
Ayala Land offers a balanced and Looking ahead to 2018, the company
complementary mix of residential will continue to execute its strategies.
developments, shopping centers, It will endeavor to reach a wider
offices, hotels and resorts, and market and provide growth not only
other businesses. Construction and for its shareholders but also for the 2013 2014 2015 2016 2017
property management services communities it serves.
are led by subsidiaries, Makati
Development Corporation and Ayala Business Review RETURN ON EQUITY
Property Management Corporation, Ayala Land made headway in 2017, (%)
respectively. 16.2
halfway into its 2020-40 plan, with net 14.7 14.9
14.4
income reaching P25.3 billion, up 21 13
It pioneers standards and practices percent backed by the strong topline
that reflect the value the company delivered by its property development
places on sustainability in all its and commercial leasing businesses.
developments. As a responsible
corporate citizen, Ayala Land acts with Estate Development
integrity, foresight and prudence. The company expanded its reach with
the introduction of three new estates
2013 2014 2015 2016 2017

Ayala Land plans its estates to allow sufficient green space for recreation and leisure.
Property Development
Lifted by increased bookings and
project completions, its property
development segment delivered
robust results, with revenues growing
24 percent to P96.4 billion. The
development business grew with
reservation sales increasing 13 percent
from its year-ago level to P122 billion.
Commercial Leasing
Ayala Land’s commercial leasing
business delivered P30.9 billion in
revenues, 10 percent higher from the
previous year, as the company rolled
out a record number of malls, offices,
and hotels and resorts.
Revenues from malls grew 10 percent

to P17.7 billion in 2017 on the back
of steady contributions of existing
shopping malls and the improved
performance of newly-established
malls. Average occupancy rate
Shoppers fill Ayala Land’s Glorietta malls. remained healthy for all malls at 92
percent, while stable malls recorded a
In August 2017, the company Cavite. Located just five kilometers 97 percent average occupancy rate.
launched Azuela Cove, a 25-hectare away from CAVITEX, the estate will
estate in Lanang, Davao City, which feature 19 hectares of sprawling parks Revenues from Ayala Land Offices
features verdant open spaces and and open spaces. reached P6.7 billion, 12 percent
spectacular views of the Davao higher than the P5.9 billion recorded
gulf. The project is developed in To further promote walking and in the previous year. Stable offices
partnership with the Alcantara Group healthy lifestyles in its estates, Ayala maintained an occupancy rate of 97
of Companies. Land reserves certain roads for percent, while average occupancy,
pedestrians and joggers in the Makati including new buildings that opened
In early 2017, Ayala Land launched CBD and BGC at specific times and in the last quarter of 2017, registered
Evo City, a 236-hectare estate in Kawit, days of the week.
INTO THE FUTURE 113

an 86 percent occupancy rate. Six
new offices were opened in the year,
adding 185,000 sqm of gross leasable
space. This brought the total office
portfolio to 1.02 million sqm.
Hotels and resorts recorded P6.6

billion in revenues, 10 percent higher
than the previous year. In 2017,
six new hotels and resorts were
opened, with a total number of 556
rooms. This increased the company’s
portfolio to 2,583 rooms at year-end.
In 2017, the company introduced

The Flats, a dormitory product to
support the housing needs of
the growing population of young
professionals and those working in the
BPO sector. It also launched Clock In, a
co-working space, that aims to capture
start-up ventures and SMEs that need
flexible office space. Clock In targets to
reach over 1,450 seats in 2018.
Services Pedestrian connectivity is a key feature of the company’s developments.
Total revenues from construction and

property management amounted
to P71.8 billion, five percent higher
than the P68.5 billion posted in the Strategy
previous year. Strategy Description Performance in Priorities in 2018
2017
Its construction arm, Makati Increase Target to triple the Recurring income Deliver on target
Development Corporation, contribution of GLA of shopping businesses pipeline by
maintained steady growth with commercial leasing centers, offices, and contributed 35 completing GLA
revenues of P68 billion, four percent assets to achieve hotel and resort percent of net under construction:
higher than 2016 due to an increased a more balanced rooms from their income:
order book and the higher completion portfolio 2013 operating levels Malls: 823k sqm
of projects. Meanwhile, Ayala • Malls: opened five
new malls and Offices: 499k sqm
Property Management Corporation
added 189k sqm of
registered revenues of P1.8 billion, GLA for a total of Hotels and resorts:
an eight percent growth from the 1.80 million sqm 3,522 rooms
previous year. As part of improving
service quality, APMC introduced new • Offices: opened six
technologies and best practices to new offices and
increase operational efficiencies and added 185k sqm of
reduce costs. GLA for a total of
1.02 million sqm
As part of its strategy to diversify
• Hotels and resorts:
revenue streams, Ayala Land increased opened six new
its ownership in Malaysian real estate facilities adding
developer, MCT Berhad. In January 556 rooms totaling
2018, the company announced it 2,583 rooms
was acquiring an additional 17.24
percent stake in MCT, which increased Balance residential Improve the mix Launched 28 Launch products
Ayala Land’s total ownership to 50.19 product launches between horizontal residential and office attuned to market
percent. This was further increased to between horizontal and vertical projects for sale projects in demand, and
72.31 percent in February, as a result of and vertical projects to maximize margin 2017 of which, 10 aspire to achieve
a mandatory take-over offer made by gains were horizontal a healthy mix
the company, in connection with the while 18 were between horizontal
vertical and vertical
prior transaction in January.
developments

OUR HOW WE THE VALUE
CAPITALS CREATE WE
VALUE CREATE
Natural Estate Development Environment • 10,285 hectares landbank

Its landbank is strategically Ayala Land develops estates Ayala Land upholds • 450 hectares carbon forests
located in key growth centers that host its property Philippine biodiversity and • 34 IUCN species protected
for immediate and long-term development and commercial ecosystems within and
development. leasing products. adjacent to our landbank.
Intellectual Property Development Communities • 132.4 hectares of permeable

Ayala Land’s unique master It offers and builds residential, It provides spaces that are site green space
planning process integrates office for sale, and commercial -resilient, pedestrian-friendly, • Three estates added in 2017
product lines to create products that address various public transport-connected, • 25 total estates
sustainable and vibrant market segments represented and eco-efficient, uplifting • Nine P2P transport routes in
communities and foster urban through five brands: Ayala living standards for Filipinos. Ayala developments
development. Land Premier, Alveo, Avida,
Amaia, and BellaVita. Property Buyers, Residents, • 12,763 completed and
Manufactured Shoppers, Mall Locators, turned-over residential units
It has a wide range of products Commercial Leasing Office Tenants, Tourists, • Five malls opened in 2017,
that caters to all markets and It develops and operates General Public adding 180,000 sqm GLA
segments of the property malls, offices, and hotels and It provides homes and venues • Six offices opened, adding
sector. resorts across the Philippines for business and leisure that 185,000 sqm GLA
represented by Ayala Malls, support the community and • 556 hotels and resorts keys
Social Ayala Land Offices, branded spur economic growth. added
It ensures the quality of its hotel formats, SEDA hotels,
products and services and and El Nido, Lio, and Sicogon General Public, Media, • Recognized by
upholds strict sustainability Resorts. Property Buyers, Academe, RobecoSAM as one of
and corporate governance Government, NGOs the most sustainable
practices for its customers and Construction and Property With sustainable practices companies
stakeholders. Management and strict corporate • Property Company of the
Ayala Land develops its governance standards, Ayala Year by Frost and Sullivan
Human projects through its own Land protects the interest of Asia Corporate Excellence
A decentralized structure construction company, all stakeholders and ensures and Sustainability Awards
empowers its people, and Makati Development Corp., the value of their investment. • Best Corporate Brand
provides the flexibility to and manages completed in the Philippines by
execute its strategy in a fast and properties through its own Workers, Suppliers Asiamoney
efficient manner. property management and Service Providers, • Don Emilio Abello DOE
company, Ayala Property Consultants awards
Financial Management Corp., to ensure The company contributes • 4th Best Managed
Ayala Land has a strong quality throughout the entire to local employment, skills Public Company in the
balance sheet to support project life. development and career Philippines - FinanceAsia
growth plans and a prudent growth.
fiscal policy to maintain Other Busineses • 90% OCS Score in 2017
the strength of its financial It holds investments in • 5,040 total workforce
position. selected companies that • 7,603 total support staff
complements core businesses • 132,337.3 total training
like Cebu Holdings, Ortigas hours
and Company, Prime Orion Investors, Analysts,
Philippines, MCT Bhd, and Creditors • 21% net income growth
other ventures in healthcare It provides consistent growth • 16% ROE
and retail. in shareholder returns, • 0.77 net D/E ratio
ensures long-term value for • 4.6% average cost of debt
investors, and fulfills credit
obligations.
OUR CONTRIBUTIONS TO THE SDGs
INTO THE FUTURE 115

BANK OF THE
PHILIPPINE ISLANDS
“We have come out of 2017 stronger than ever. While the bank has grown significantly in the past several
years, we will continue to invest in people, technology, and branches to support and benefit from a
surging Philippine economy. Inclusive, profitable growth will be our focus.”
- Cezar P. Consing, President and CEO, Bank of the Philippine Islands
Who we are www.bpiexpressonline.com, crucial for this key segment of society

The Bank of the Philippine Islands its online and mobile banking as they look to partake in the robust
is one of the top banks in the facilities for retail customers, growth of the Philippines. Rising
Philippines, providing a wide range and ELink/BizLink, its electronic income levels are seen to increase
of financial products and services cash management platform for the demand for credit as individuals,
to meet the diverse needs of its 8.5 businesses. BPI has banking locations entrepreneurs, and corporates all
million customers. and representative offices in Hong look to prepare the groundwork
Kong and London, and maintains for sustained growth in the near to
BPI nurtures the trust it has gained over 140 remittance tie-ups and medium-term. Additional liquidity
from its customers through products correspondent banking relationships brought about by the Bangko Sentral
and services tailored to the needs of with over 50 partner banks and ng Pilipinas’ reserve ratio requirement
a broad base of retail and corporate financial institutions globally. cut is expected to meet this demand.
clients, including self-employed
microentrepreneurs, overseas Market outlook Mirrored in the growth of capital
Filipinos and their beneficiaries, Philippine economic growth is goods importation since 2015,
small and medium enterprises, expected to remain resilient with investments have begun to pick
domestic conglomerates, and household consumption seen up, with the promise of the current
multinational corporations. The to be the main driver of growth, administration’s Build, Build, Build
bank serves its clients through one further boosted by the recently- infrastructure program. Foreign direct
of the most extensive physical and implemented personal income tax investments in 2017 were the largest
digital distribution network in the cuts on select individuals. Overseas in Philippine history thus far. It should
industry with 945 branches, and 3,105 remittances will continue to support be noted that higher government
ATMs and Cash Accept Machines consumer spending as recipients debt due to its infrastructure program
nationwide. Its physical distribution enjoy more income due to the may provide upward pressure on local
network is complemented by digital manageable depreciation of the interest rates. Moreover, inflation may
platforms, namely peso. Access to credit will remain touch the upper limit of the BSP’s
target range in 2018 due to higher
oil prices. However, the central bank
expects inflation to return to its target
in 2019 given the transitory effects of
the tax adjustments.
The BSP’s recent change in leadership

has led to a new focus on market-
driven bias and financial technology
liberalization. Its flagship project,
the National Retail Payment System,
intends to create a safe, efficient, and
BEA allows the fast-tracking of transactions by allowing clients to reserve timeslots at BPI branches. reliable electronic retail payment

In 2017, BPI launched a new look for its branches.
system that is interconnected and expansion in the bank’s core NET INCOME
interoperable. The NRPS is viewed to intermediation business. (IN BILLION PESOS)
create opportunities for increased
commerce, as the BSP looks to balance Net interest income increased by
access with security. 13.4 percent to P48 billion, the result 22.1 22.4
of an 11.3 percent expansion in the
18.8
Business Review bank’s average asset base and a slight 18 18.2
In 2017, the Bank of the Philippine improvement in net interest margin.
Islands realized net profits of P22.4
billion, 1.7 percent higher than the In the absence of one-off trading
previous year. This increase was gains recorded in 2016, non-interest
achieved through a P4.5 billion increase income decreased 4.9 percent to
in total revenues, partly offset by higher end at P23 billion. The 15.6 percent
operating expenses and provision for increase in fee-based income offset
income taxes which grew P3.6 billion the decline in trading gains, primarily
and P1.4 billion, respectively. Total driven by higher credit card fees,
2013 2014 2015 2016 2017
comprehensive income ended at the trust and investment management
same level as net income at P22.4 billion, fees, insurance fees, commission and
an increase of 3.1 percent over 2016. service charge.
RETURN ON EQUITY
The bank continues to deliver Given moderate loan growth relative (%)
consistent value to its investors, to 2016, provision for loan losses taken
posting a return on equity of 12.8 in 2017 amounted to P3.8 billion.
percent and return on assets of 1.3
18.1
percent, though these were lower Total operating expenses ended at
than the previous year’s 13.8 percent P38.5 billion, 10.3 percent higher as
and 1.4 percent, respectively. Cost-to- spending on technology, operations, 13.8 13.8
income ratio stood at 54.3 percent, and marketing increased to sustain 12.3 12.8
slightly higher than the previous year’s growth initiatives, and as asset growth
52.5 percent, and continues to be was accompanied by an increase in
one of the lowest in the industry. The regulatory costs. Other operating
bank paid regular cash dividends of expenses likewise increased 17.4
P1.80 per share. As of the end of 2017, percent on higher product-related
book value per share was P45.87, and insurance premiums, third-party fees
earnings per share was P5.69. and commissions, litigation expenses
2013 2014 2015 2016 2017
and other transaction-related
Total revenues for the year were at expenses.
P71 billion, a 6.7 percent increase,
primarily brought about by continued With its pre-eminent brand, BPI has
INTO THE FUTURE 117

BPI BanKo meets the needs of SEMEs.
continued to grow its broad base platform. Recognizing the need

of retail and corporate clients to 8.5 to provide credit facilities to an
million, thereby expanding its asset underserved market, self-employed
base by 10.3 percent to P1.9 trillion. microentrepreneurs, the bank through
its microfinance arm BPI Direct BanKo
Loans, net of allowance for loan losses, expanded its network from nine pilot
amounted to P1.2 trillion, 15.5 percent branches in 2016 to 103 branches and
higher than last year’s P1 trillion microbanking offices in 2017.
as the bank continued to finance
corporate clients’ requirements In February 2017, the BPI Asset
for project financing, acquisition Management and Trust Corporation
financing, and capital expenditure commenced operations as a stand-
loans. With its disciplined approach alone trust entity.
to risk management, the bank’s asset
quality continues to improve with In November 2017, the bank raised a
gross 90-day non-performing loans record P12.2 billion offering of Long
ratio declining from end-2016 level of Term Negotiable Certificate of Time
1.5 percent to 1.3 percent and reserve Deposits, the largest issuance by far in
cover ratio increasing year-on-year the industry.
from 118.7 percent to 129.2 percent.
Deposits increased by P130.9 billion Strategy
or 9.1 percent, ending at P1.6 trillion Strategy Description Performance in Priorities in 2018
in 2017, with the current and savings 2017
account ratio at 71.2 percent. Loans to Achieve asset Focus on SME, Retail growth rate SME
deposit ratio stood at 77 percent. growth in high- retail (specifically • Housing: 4%
growth, high-margin housing, auto, and • Auto: 2% Retail
BPI’s investment securities were stable businesses credit cards), and • Credit cards: 19% • Housing
at P306.12 billion, over 90 percent microfinance • Auto
Microfinance: 2.6x • Credit cards
of which were in held-to-maturity
Create business
assets, and as such are less exposed to bank segment *SME business bank Microfinance
interest rate risk. focused on SMEs organization was
completed in 2017
BPI’s capital funds increased by Grow current and Grow deposits and • Deposit growth • Deposit growth
9.4 percent to P180.7 billion. The savings accounts improve CASA ratio rate: 9% rate: 12%
improvement in capital came from
higher profits from operations, net • CASA ratio: 71.2% • CASA ratio: 72%
of dividends paid in 2017. At year-
end, the bank’s capital adequacy Moderate branch Strategically expand • New bank • Continue to
ratio and common equity tier 1 expansion branch network branches: 18 expand branch
ratio ended at 12.7 percent and 11.8 footprint across BPI,
percent, respectively, both well above • New BanKo BPI Family Bank, and
branches: 93 BanKo
regulatory minimum. BPI’s market
capitalization remained one of the
largest in the industry at P425.9
Increase digital Increase users of • Online banking: • 15% increase in
billion. As of December 31, 2017, the
platform users online banking 1.456 million users clients who access
bank’s share price closed at P108.10, platforms for retail the bank’s digital
representing a multiple of 2.4x book and business • Mobile banking: platforms
value. customers 1.450 million users
The bank continues to enhance • Online platform for

its extensive physical and digital business:
distribution network. It opened 18 24,400 users
BPI and BPI Family Bank branches
and relaunched ELink/BizLink,
its electronic cash management

CAPITALS CREATE WE
VALUE CREATE
Financial Capital Raising, Advisory, Employees

The bank maintains a strong and Financing BPI invests in its employees, • P13.7 billion in total
balance sheet, and continues BPI addresses capital provides a workplace that fosters payments to employees
to grow and optimize its needs across all client learning and development,
deposit franchise and loan segments by providing career advancement, and
book. various forms of financing, sustainable engagement.
from working capital loans, Engaged employees give clients
Manufactured and capital expenditure loan, better service.
Intellectual acquisition financing,
BPI has a reliable, secure, supply chain and trade Clients and Communities
and expanding network of financing, project finance, Financial inclusion
delivery infrastructure in small business loans, and wellness • 2,985 trainings on
both traditional and digital and microfinance. It also BPI reached underserved financial management
platforms. provides financial advisory segments and helped them
and helps clients raise grow and protect their
Human debt and equity from the assets. • 8.5 million total clients
BPI is driven by energized, capital market. from corporate and retail
enabled, and engaged Enterprise growth segments
employees with diverse Growing Assets The bank helped enterprises
talents. The bank grows its assets raise capital through loans • 64,370 total customer
through its treasury syndication, and debt and availments of life insurance
Social and Relationship portfolio management equity issuances.
BPI is a beacon of stability and and participation in
credibility upon which trust Philippine trading Implemented Sustainable • P201.8 billion in total
is built and sustained among markets. It also grows its Development Projects funding for projects
its clients and global banking clients’ assets through It also financed investments identified to directly
partners. deposit and investment that directly contribute to contribute to SDGs
in fixed income securities, sustainable development
Natural capital equity securities, unit
• P13.6 billion in payments
BPI’s environmental investment trust fund, and Government and Regulators
to government
management systems ensure mutual funds. BPI contributed to government in
that it uses resources capital raising through securities
efficiently and minimizes its Insuring Life and Assets distribution, in facilitating
impact to the environment. The bank helps protect the inflow of overseas remittances,
value of its client’s assets and ensuring compliance with
through its life and non- regulations, transparency, and
life insurance products. prudent risk management.
Other Financial Services Investors and Shareholders

• 6.7% revenue growth
BPI provides its clients With engaged employees,
efficient means to make satisfied clients, and good
financial transactions government relations, the • P22.2 billion payments to
through card payments, bank optimizes its financial providers of capital
remittance services, performance and value creation,
and cash management ensuring delivery of superior
facilities. shareholder returns in a manner
that is transparent and equitable.
INTO THE FUTURE 119

GLOBE TELECOM
“We continue to create wonderful experiences through connectivity, content, and service, and by
“Commodo nulla facilisi nullam vehicula ipsum a arcu cursus.
providing opportunities for Filipinos to be part of the digital economy and community. This is how Globe
Ligula ullamcorper
can truly malesuada
say it is leading prointransformation.”
a purpose-led libero nunc consequat
interdum varius sit. Aliquam faucibus purus in massa.” - Ernest L. Cu, President and CEO, Globe Telecom

Who we are a nation that is admired all over the NET INCOME
Globe Telecom is the number one world. (IN BILLION PESOS)
mobile company in the Philippines.
It provides cellular, broadband and The company’s principal
mobile data services, and has forged shareholders are Ayala Corporation
partnerships with leading content and Singtel, both industry leaders 16.4 15.8
creators to enhance its products. in their respective countries and in 15.1
This is in recognition of the growing the region. It is a member of Bridge 13.3
preference of customers for content- Alliance, a strong alliance of premier
rich offerings and multimedia mobile operators serving over 800
applications that enrich the Filipino million customers from 34 countries
digital lifestyle. in Asia Pacific, Middle East, and Africa 5
along with strategic partners in
Supported by over 7,200 employees, Europe and the Americas. Globe has
and over 1.1 million retailers, 756 roaming partners in 236 calling
distributors, suppliers and business destinations worldwide. 2013 2014 2015 2016 2017
partners nationwide, Globe serves
more than 63.4 million individual Market Outlook
customers, small and medium-sized The Philippines has always rated high
businesses, as well as corporate and in adoption of mobile and digital
enterprise clients. It operates one technologies. Mobile penetration RETURN ON EQUITY
of the largest, most technologically stands at 120 percent, and internet (%)
advanced and robust mobile, fixed penetration is growing. With the
line, and broadband networks. prevalence of affordable prepaid
Through first-world internet and postpaid data plans, demand for 28.9
connectivity, Globe can help create data continues to increase, driving 27.8
25.9
23.2
11.4
2013 2014 2015 2016 2017
Globe continues to improve its customer service through different channels.

The ICONIC
store allows
customers to
experience
Globe’s
products and
services in an
interactive
and dynamic
format.
heavy use among Filipinos. Moreover, revenue, and safeguard vital business continued mobile data revenue
with digital devices becoming more information. growth. Globe Prepaid and TM, the
affordable, everyday experiences company’s mass-market brand, posted
are increasingly enriched by digital On the regulatory front, the annual revenue growths of 11 percent
interactions. As a result, today’s government is focused on bringing and eight percent, respectively, while
customer can also be creators - able a third player into the telecom sector Globe Postpaid also recorded a one
to create and curate content that can with the view that this will improve percent increase. Globe’s mobile
easily be shared with others. telecommunications services for subscriber base reached 60.7 million
all Filipinos. This is an initiative as of end-December 2017, down three
Beyond social networking, video and incumbent players support. Related percent from 62.8 million subscribers
music streaming, and gaming, more to this, Globe has announced it in 2016. The decline in the cumulative
Filipinos are using the internet to avail is in preliminary discussions with mobile subscriber base was due to
of transport network vehicle services, third parties for the creation of the change in reporting of prepaid
order food, or use navigation apps an independent tower company. subscribers beginning in 2017.
using their smartphones. At home, However, regulatory headwinds still
smart televisions are enabling the remain as the government continues From a product perspective, mobile
consumption of bandwidth-intensive to review existing laws and policies data is the biggest contributor to
multimedia content such as network and align these to international norms. total mobile revenues, increasing to
gaming. More customers are now 44 percent against 38 percent a year
taking advantage of free content and Business Review ago, with revenues of P43.1 billion
paid streaming services which are Globe Telecom recorded strong in 2017, 23 percent higher than the
encroaching on cable TV service. consolidated service revenues for previous year. Mobile SMS revenues
2017, ending the year with P127.9 were flat while mobile voice declined
The prevalence of mobile use has billion, six percent higher than 2016. by five percent year-on-year. However,
created an opportunity for alternative This also represents the company’s on a normalized basis, mobile data
service providers. Since a majority of highest full-year revenues. The revenues would have grown by 30
Filipinos remain unbanked, fintech sustained revenue momentum was percent, while mobile SMS and voice
companies are looking to disrupt driven by the solid growth in data- would have declined by seven percent
mainstream financial services via related products brought about by the and four percent respectively, as both
mobile technology services to serve increasing popularity of streaming and products continue to be challenged
millions of financially unserved and on demand video content. This was due to the shift to internet-based
underserved Filipinos. likewise enabled by the promotion applications, consistent with global
of the digital lifestyle and content trends.
Beyond connectivity, corporate partnerships, underpinned by a robust
and enterprise clients are looking 3G and 4G network. Globe’s home broadband business
to service providers, including telco likewise sustained its growth
partners, to provide solutions to help Mobile revenues grew seven percent momentum at P15.6 billion in 2017,
businesses grow, generate more to P98.5 billion in 2017, driven by increasing revenues by seven percent
INTO THE FUTURE 121

year-on-year, with total subscriber Globe ended the year with gross debt
base now reaching 1.3 million or 15 to equity ratio on a consolidated
percent growth from a year ago. Solid basis at 1.98:1 from 1.67:1 in 2016,
growth in revenues was driven by while net debt to equity ratio was at
the continued subscriber expansion 1.81:1 as of end December 2017 from
in fixed wireless solutions, given 1.53:1 in 2016.
favorable customer response to the
latest Globe home broadband plans. Total cash capital expenditures stood
at about P42.5 billion (approximately
Globe’s corporate data business also $844 million), 16 percent higher than
grew four percent year-on-year at last year’s level of P36.7 billion.
P10.3 billion in 2017 from P9.9 billion
in 2016, due to the strong demand for Globe paid out P12 billion in
data-driven solutions by corporates. common cash dividends in 2017,
These resulted in more customers, representing 75 percent of 2016
circuit count, and usage. Traditional core net income. This was in line
fixed line voice revenues on the other with Globe’s dividend policy of
hand, declined by eight percent to distributing 75 percent to 90 percent
end at P3.5 billion from a year ago. of the prior year’s core net income.
Globe posted consolidated EBITDA of

P53.3 billion, up seven percent from In 2017, Globe and 9Works Theatrical staged the first local
production of Disney’s Newsies.
2016. Total operating expenses and
subsidy grew in step with revenues,
Strategy
increasing by six percent year-on-year
to P74.6 billion, as Globe reinvested Strategy Description Performance in Priorities in 2018
gains to support its growing 2017
subscriber base and the aggressive Build the network of Provide mobile 37,517 base stations Fulfill NTC
expansion of its data network. EBITDA choice coverage to about 95 with 24,700 for 4G commitment to
margin was at 42 percent, higher than percent of cities and provide mobile
last year’s 41 percent. municipalities in the coverage to 95%
Philippines within of cities and
Despite the increase in EBITDA, the three years, thus municipalities in
ensuring first world the Philippines by
increased investments in its data
connectivity end-2018
network resulted in higher non-
operating expenses and depreciation
Empower Filipino Be the purveyor of Introduced Continue to forge
charges, leading to a five percent
consumers the digital lifestyle GoWATCH, its partnerships and
decline in net income, which stood at by providing promos for mobile create innovative,
P15.1 billion in 2017. The two percent affordable world- video streaming, content-driven
increase in non-operating expenses class entertainment to address rising experiences for
was largely due to the higher available to all demand for data consumers
interest expenses and spectrum Focus on the Create the best 85 million foot traffic Continue to enhance
amortization related to the SMC telco customer experiences for in 240 Globe stores the customer
asset acquisition. This however, was every digital nationwide experience through
partly offset by the one-time gain in Filipino through a traditional and new
September from the increase in fair technology-driven channels
value of the retained equity interest in and customer-
Mynt following the investment of Ant centric approach
Financial and Ayala. Bring wonderful Improve Connected 1.3 Provide ultra-fast
experiences to connectivity at million homes by internet in two
Globe’s core net income, which homes home by connecting end of 2017 million households
excludes the impact of non-recurring two million homes in 20,000 barangays
in 20,000 barangays by 2020
charges, and foreign exchange and
by 2020 through
mark-to-market charges, likewise high-speed internet
declined 15 percent to stand at P13.5
Put people f-irst Create a high- 7,206 regular Continue to
billion, with the full year impact of the
performing employees (54% foster a culture of
SMC transaction. organization male and 46% nurturing employee
through a purpose- female) well-being and
Globe’s balance sheet and cash flows driven workforce growth to deliver
remain strong with ample liquidity with a culture of wonderful customer
and gearing below bank covenants. empowerment, experiences
collaboration and
innovation

CAPITALS CREATE WE
VALUE CREATE
Financial Build The Network Of Choice Shareholders

Driven by continued mobile To be an admired nation by providing Globe continues to ensure a
data revenue growth and strong mobile services to about 95 percent of sustainable, consistent, and
consolidated service revenues; cities and municipalities in the Philippines competitive dividends distribution.
continued investment in network by end of 2018.
expansion to monetize rising data traffic Employees
Empower Consumers Its employees are empowered to
Manufactured To be the purveyor of the digital lifestyle champion the company’s purpose to
Fast-tracking telco infrastructure build by providing affordable world-class create a Globe of Good.
and diversifying the customers’ multiple entertainment available to all
touchpoints Customers
Focus On The Customer Customers are enabled with the power
Intellectual To create the best experiences for every of choice as they embrace a digital
Best-in class content is continually digital Filipino through a technology- lifestyle. Globe also enables micro,
enriched through local and global driven and customer-centric approach small, medium and large enterprises
partners. on customer service, education, with relevant business solutions.
engagement, and rewards
Human Business Partners and Suppliers
Developing a people-centered Bring Wonderful Experiences To Homes It provides opportunities to suppliers
organization To connect two million homes in 20,000 and business partners within its supply
barangays by the end of 2020 with chain.
Social And Relationship leading-edge network technology
Putting customer-centricity and nation-
building at the core of partnerships in Put People First
the supply chain. To create a high-performing organization
through a purpose-driven workforce with
a culture of empowerment, collaboration,
and innovation
Globe partners with different products, service, and content providers that cater to Filipino’s digital and lifestyle needs.
INTO THE FUTURE 123

MANILA WATER
“Manila Water continued to deliver solid results on sound fundamentals, and generate a robust pipeline of prospects
“Commodo nulla
in the Philippines andfacilisi
in the nullam vehicula
ASEAN region. ipsum atoarcu
Our aspiration doublecursus.
our net income by 2020 continues to drive
Ligula ullamcorper malesuada proin libero nunc consequat as a partner of choice of the many
our strategy to build a strong portfolio of businesses, and sustain our position
stakeholders we serve.”
interdum
varius sit. Aliquam faucibus purus -Ferdinandin massa. ”
M. dela Cruz, President and CEO, Manila Water
Who we are in Vietnam and a mandate to seek NET INCOME

Manila Water is a portfolio of water new acquisitions and partnerships (IN BILLION PESOS)
infrastructure businesses and assets in ASEAN; and Manila Water Total
across the Philippines and Southeast Solutions, its platform for vertical
Asia. By delivering water, used water, expansion through innovative
and environmental services, it aims products and services. 6.2
5.8 6.0 6.1
to empower people, protect the 5.8
environment, and drive sustainable With over 20 years of solid
development. Manila Water strives experience in the water and
to ensure consistent, reliable access sanitation space, Manila Water’s
to affordable water and sanitation competitive advantage lies in its
services to all its customers. access to human and financial capital
and strong spirit of innovation to
Manila Water’s portfolio includes: support expansion. As a multi-
the Manila Concession, the exclusive service, multi-national, and multi-
provider of water and used water cultural enterprise, the company’s
services to approximately 6.8 million policies and procedures ensure its 2013 2014 2015 2016 2017
people in the eastern part of Metro brand of service remains best-in-

Manila; Manila Water Philippine class. Manila Water will continue to
Ventures, its vehicle for expansion expand its portfolio to achieve its
in the country while leveraging growth aspirations, which remain RETURN ON EQUITY
the track record of its businesses in aligned with regional development (%)
Clark, Laguna, Cebu, and Boracay; and sustainability goals.
Manila Water Asia Pacific, its
holding company for international Market Outlook
investments with a leading presence Since the adoption of the United 20.2
17.9
16.2
14.4 13
2013 2014 2015 2016 2017
Employees undergo an average of 30 training hours each.

Available in two sizes, Healthy Family Drinking Water meets the drinking water preferences of Filipinos.
Nations Sustainable Development participate in untapped sectors and Manila Concession carried out five
Goals in 2015, the importance of underserved markets. An example is major projects which strengthened its
providing safe and equitable access to its diversification into industrial water mission of providing water and used
water and sanitation services to more through Estate Water, which provides water services, including the Rizal
communities has steadily increased. water system solutions for mixed-use Province Water Supply Improvement
SDG targets include access to drinking real estate developments. Management, which will abstract
water, sanitation services, and overall and treat water from Laguna de Bay
reduction of pollution to water bodies, Southeast Asia represents significant to benefit 400,000 homes. Its used
all of which should be achieved by opportunities for international water facilities, the Pasig North and
2030. These imperatives can best be expansion, with the region South Sewage System, Marikina North
achieved through the collaboration characterized by a growing consumer Sewage System, and Taguig North
of all concerned stakeholders, both class and rapid urbanization. A Sewage System, have a combined
public and private. company like Manila Water, which has treatment capacity of 275 million liters
developed best-in-class operational per day, serving about 690,000 homes.
In the Philippines, access to safe capabilities in water and used
drinking water and sanitation services water services, can maximize this Manila Water Philippine Ventures
still needs significant improvement. potential, and meet the needs of other In 2017, the company marked several
At the national level, only 43.5 percent populations. wins through new partnerships across
of the population has access to piped the country. Consolidated core income
water. For sanitation, an alarmingly Business Review reached P640 million, a 13 percent
low 2.4 percent has access to piped Manila Water’s net income grew one increase from the previous year.
sewer service. The majority is served percent to P6.2 billion in 2017. Revenues This was largely due to a 14 percent
by way of septic tanks, while the increased five percent to P18.5 billion, growth in billed volume across all
remainder is still without coverage. on the back of Laguna Water’s and domestic subsidiaries, coupled with a
To address this gap, both the Boracay Water’s contributions, as well as 31 percent increase in the supervision
government and the private sector higher supervision fees recognized by fees of estate water.
must provide infrastructure to fast- Estate Water.
track coverage expansion and improve Boracay Water’s billed volume grew
service delivery. Manila Concession 13 percent to 5.5 mcm driven by
The Manila Concession’s net income growth in tourist arrivals and the
Manila Water aims to augment this grew six percent to P5.9 billion. Billed sale of bulk water to the Malay Water
massive gap in water and used volume grew two percent to 488.4 District beginning in the second
water services by expanding its mcm on the back of a three percent quarter of 2017. Meanwhile, Laguna
presence nationwide. In addition, increase in billed connections from Water achieved a 12 percent increase
evolving industry dynamics and the expansion areas of Marikina, driven by an around 1,500 increase
consumer preferences have pushed Pasig, Rizal, and Taguig. It recorded its in billed connections. Laguna Water’s
Manila Water to develop innovative highest capital expenditures in two concession was likewise expanded
products and services and create new decades at P10.6 billion, a 64 percent to cover all cities and municipalities
business models that allowed it to jump from the previous year. The in the province, including the
INTO THE FUTURE 125

provision of used water services and Manila Water Total Solutions management services primarily to
the establishment of an integrated Manila Water Total Solutions is the land developers, commercial and
sewage and septage system. Cebu company’s vehicle for vertical growth. industrial customers, and utilities.
Water’s and Clark Water’s billed In 2017, strong bottle sales of Healthy
volume also grew during the year. Family, its bottled water offering, were In April 2017, MWTS launched Healthy
offset by a slowdown in construction Family Mini, a 500-ml bottle that retails
Estate Water posted a billed volume of contracts of its Corporate Accounts in packs or cases of 24 bottles. As of
4.5 mcm, a 117 percent increase from Management division, which lays end-2017, Healthy Family has five
the previous year. This was attributed pipes in horizontal development and plants with a total production capacity
to a 50 percent growth in billed townships, and provides used water of 71,400 containers per day.
connections, which reached 10,153
from the 63 brownfield Ayala Land Strategy
developments it has taken over since Strategy Description Performance in Priorities in 2018
last year. 2017
Improve water Ensure the Construction of Operationalize
In 2017, Manila Water also signed a services in the completion of the the 100 mld water Rizal Province
25-year concession agreement with Province of Rizal Rizal Province Water supply facility is in Water Supply
the Obando Water District in Bulacan, Supply Improvement its final stages. The Improvement
which includes the construction, Project facility is designed Project to serve
operations, and maintenance of water to utilize filtration Taytay, Angono,
and reverse osmosis, and Binangonan
and sanitation services. It also signed
a cost-efficient municipalities in the
a 25-year concession agreement to technology, in Province of Rizal
develop the water supply system abstracting water
in Calasiao, Pangasinan. In the first from Laguna Lake.
quarter of 2018, it received notices of Increase used water Offer used water Clark Water ensured Offer used water
award from the City of Ilagan Water services in Clark services to key real compliance with key services to all real
District, and the Leyte Metropolitan Water estate and industrial regulators estate and industrial
Water District, to establish joint locators locators in the Clark
ventures for a bulk water supply and Special Economic
septage management company, and a Zone
concession company, respectively. Expand water Increase water Laguna Water is Serve the entire
service connections service coverage serving a population three million
Manila Water Asia Pacific in the province of and include the 19 of one million across population of
Manila Water remains the largest Laguna municipalities other the municipalities Province of Laguna
foreign investor in Vietnam’s water than the five being of Biñan, Sta. Rosa,
served Cabuyao, Victoria,
sector. Thu Duc Water, Kenh Dong
and Calauan
Water, and Saigon Water, contributed
P457 million in net income, a 24 Engage local Provide Established Close deals and
government units environmental footholds in concessions
percent increase from the previous
and businesses in and sustainable targeted LGUs and with LGUs and
year. Capacity in Ho Chi Minh City now providing waste to solutions in solid businesses businesses as a
stands at 820 mld, equivalent to 50 energy services waste management waste-to-energy
percent of the city’s demand. technology and
operations provider
Manila Water extended its geographic Expansion of Enable new business Saigon Water’s Acquisition of
reach, penetrating new markets in engagement in development to acquisition of a key projects
Southeast Asia. In the first quarter ASEAN focus on expanding 43% stake in Tan and exploration
of 2018, the company acquired an its portfolio of Hiep Water that will of greenfield
18.72 percent stake in Thailand’s businesses supply water in Hoc opportunities in
Eastern Water Resources Development Mon, Ho Chi Minh strategic locations
and Management Public Company city; and a 51% stake
Limited, a publicly-listed water supply in Gia Lai Water
servicing the central
and distribution company. Expansion
highlands of Gia Lai
continued with the acquisition of a 20 Province
percent stake in Indonesian bulk water
supplier PT Sarana Tirta Ungaran. STU
serves PDAM Kabupaten Semarang, a
regency in Central Java, and industrial
customers in its Bawen District which
includes PT APAC Inti Corpora, a
100-hectare textile and garment
manufacturing company.

CAPITALS CREATE WE
VALUE CREATE
Financial Water Utility Operation Investors and Shareholders • Total revenue of P18.5 billion
Manila Water has a strong Through PPPs, joint venture Profitability and growth • Net income of P6.2 billion
financial position and has projects with water districts through water and • P13 billion in capital
the ability to mobilize capital and agreements with estate environmental investments expenditures disbursed
through financing to support and property developers,
its expanding business. it provides water and used Customers, Communities, • 738.7 million cubic meters of
water services to more and Businesses water supplied to customers
Manufactured than 17.3 million customers Access to clean and affordable • 5.5 million five-gallon
It has well-maintained dams, in the Philippines and water and sanitation services bottles of purified water sold
impounding reservoirs, Vietnam, and continues • About one million 500-ml
deepwells, water treatment to explore opportunities Safeguarding community bottles of purified water sold
facilities, pumping stations in ASEAN. It ensures health, and enabling • 56.42 million cubic meters of
and reservoirs, water and potable water is delivered productivity and growth for used water treated
sewer distribution networks, 24/7 and used water and individuals and enterprises
and used water treatment septage are treated to meet
facilities. effluent standards before
discharging back to water
Human bodies.
The company delivers its Employees • Above average engaged
products and services through Total Solutions Opportunities for career growth employees (compared to
its 2,022 competent, skilled, It develops innovative and development Philippine norm)
and passionate employees. products and services • Average of 30 training hours
It also partnered with to address the needs of per employee
232 material suppliers, 70 customers. These include
contractors, 17 consulting pipelaying, Integrated Environment • Protection of 9,300 hectares
firms, and 88 service Used Water Solutions, and Protection of watersheds and of watersheds
providers. Healthy Family Purified water sources • 79 hectares enrichment
Water. planting in La Mesa
Natural Restoration of quality of water Watershed; tree nurturing in
Manila Water responsibly NRW Reduction bodies 4.3 hectares in Ipo Watershed
abstracts raw water from It improves water • Diverted 9,087 tons of BOD
rivers, dams, and aquifers. It distribution efficiency organic pollution load from
efficiently uses fuel, electricity, through a non-revenue water bodies
and chemicals to optimize the water reduction program. • 57,249 tons of carbon
use of these resources. It also partners with water dioxide avoided due to used
service providers in the water treatment
Social and relationship Philippines and abroad
It nurtures good relationships to reduce NRW through
while creating shared value leak repair, and pipes and
for stakeholders. meter replacement.
Bulk Water Supply

Manila Water provides
bulk water to Metropolitan
Cebu Water District in the
Philippines and Saigon
Water in Vietnam. It has
an on-going bulk water
project in Tagum City,
Philippines.
INTO THE FUTURE 127

AC ENERGY
“AC Energy is at a critical period of transformation—from a Philippine-focused energy investment holding company,
it is transitioning into a regional player with investment, development, and operation capabilities.”
Ligula
ullamcorper malesuada proin libero nunc consequat - John Eric T. Francia, President and CEO, AC Energy
interdum varius sit. Aliquam faucibus purus in massa.”
Who we are Market Outlook

AC Energy was established in 2011 The Philippine power demand-
as Ayala’s platform to participate in supply situation is stable at present,
the energy sector and contribute with a healthy reserve margin across 20X
to addressing the country’s need Luzon, Visayas, and Mindanao. This
for reliable and affordable energy has led to decreases in energy prices,
sources. Since then, the company which can be observed in the retail
GROWTH FROM
has assembled a robust portfolio of competition market, thus benefiting 2011-2017
power generation assets in thermal consumers. However, some
and renewable technologies. uncertainty remains on the demand-
supply situation in the medium
AC Energy has achieved significant term, given the expected decline of
growth over the past six years: from Malampaya, the Philippines’ largest 1,300
only 80 megawatts of attributable source of natural gas, as well as
capacity in 2011 to over 1,600 in pending regulatory approvals for MW
2017. It was named by London-based power projects.
International Finance Magazine as
the “fastest growing energy platform” The Philippine government ATTRIBUTABLE THERMAL CAPACITY
in 2017. continues to push for increasing
renewables’ share in the energy mix.
With its strong growth and the In December 2017, the Department
capabilities it has built over time, AC of Energy’s Renewable Portfolio
Energy is gearing up to be a regional Standards On-Grid Rules took 300
player and has successfully entered effect. This requires distribution
the Indonesia and Vietnam markets. utilities, electricity suppliers, and MW
ATTRIBUTABLE RENEWABLE
CAPACITY
P3.5B
AC Energy
and the BIM
group broke
ground on their
300MW solar
project in Ninh
Thuan Province,
Vietnam. NET INCOME

The Salak and Darajat geothermal plants in Indonesia contributed to AC Energy’s equity earnings beginning in April 2017.
other mandated energy participants improvement in energy produced critical thermal power plant achieved
to source or produce a share of from NorthWind and North Luzon financial close in December 2017.
their energy mix from renewable Renewables. Availability of Montesol, a Construction has started, with Unit 2
sources. We view this as a positive solar asset, also improved. expected to come online in 2020, a
development, as it will pave the way year after Unit 1 begins operations.
for more renewable investments. Effective in April, the operations GNPower Dinginin will support the
of Salak and Darajat Geothermal electricity demand of Luzon and
The prices and efficiencies of in Indonesia gave a significant Visayas.
renewable technology continue to boost to equity earnings in 2017.
improve, including solar and wind. SD Geothermal was part of the AC Energy also scaled up its retail
The next crucial development lies acquisition of Chevron’s Indonesia electricity supply operations, with
in the affordability and efficiency of assets, with total capacity at 637MW approximately 100MW of customer
storage, which will enable the scale-up and attributable capacity at 126MW. contracts signed.
and reliability of renewable energy Following the Chevron acquisition,
sources. AC Energy is building a portfolio of Transformation
renewable energy assets in Indonesia. In 2017, AC Energy started its
AC Energy believes that there remains Undertaken in partnership with UPC transformation into a full-fledged
potential to invest in the Philippine Renewables, the 75MW Sidrap wind energy company, with development,
energy sector, especially with the farm project is expected to come operation, and retail capabilities. It
medium-term supply uncertainties online in early 2018. A 30-year power acquired the development platform
facing the sector. Meanwhile, ASEAN purchase agreement has been signed previously owned by Bronzeoak
holds potential for renewable energy with Indonesian state electricity Philippines, which has a strong
developers, with countries like company PLN. track record in renewables, having
Vietnam having favorable policies developed over 250MW of solar and
supporting renewables. The availabilities of AC Energy’s biomass projects. The development
thermal power plants improved platform is being integrated into the
Business Review across the board, for a total weighted company, which will allow it to scale
In 2017, AC Energy made substantial average capacity of approximately 83 up its renewable energy investments.
progress in attaining its 2020 goal percent.
of reaching 2,000MW of attributable AC Energy is exploring opportunities
capacity. The company’s attributable Construction of GNPower Kauswagan in the region. In 2017, it successfully
capacity grew to approximately is nearing completion, with entered Indonesia with investments
1,600MW after securing financing for commercial operations expected in in geothermal and wind assets.
the second unit of GNPower Dinginin 2018. Over 450MW of contracts have Subsequently, in the first quarter of
in Bataan. Net income was P3.5 billion, been signed for this facility, which 2018, it forged a partnership with
up 31 percent from 2016. is one of the lowest cost producers Vietnam’s BIM group to develop over
and the most competitively priced 300MW of solar projects in the Ninh
Renewable and Thermal Assets in Mindanao. Meanwhile, Unit 2 of Thuan province. The first 30MW is
A strong wind regime drove an GNPower Dinginin’s 2 x 668MW super- expected to come online in 2018.
INTO THE FUTURE 129

Sustainability
In September, AC Energy’s affiliate
North Luzon Renewables completed
its reforestation project. NLR planted
209,874 seedlings within the vicinity
of its 81MW wind farm in Pagudpud,
Ilocos Norte. The reforestation
program has a survival rate of 94
percent, and exceeds the required
205,000 goal set by the Department of
Environment and Natural Resources.
The company develops and protects
the 625-hectare forest area covered by
its wind farm, under the Forest Land
Use Agreement with DENR. It plans to
continue this environmental effort and
livelihood program which benefits
surrounding communities.
In November, AC Energy and

Kennedy Renewable energized the
Mindanao State University in Tawi-
Tawi through the use of solar panels.
AC Energy provided technical
and financial support, while
Kennedy Renewable acted as the
main developer and engineering,
procurement, and construction
contractor for the project.
The Sidrap 75MW wind farm is expected to begin operations in 2018.

Strategy
Strategy Description Performance in Priorities in 2018
2017
International Invest in overseas Successfully entered Solidify footprint
expansion markets with Indonesia, and in Vietnam by
favorable investment deployed $200 participating in solar
opportunities and million of equity and wind projects
policy support in geothermal and
wind
Ramp-up Leverage capabilities Acquired Bronzeoak • Establish a pipeline
development in development of development of greenfield
capabilities and power plants platform projects in the
roll out greenfield medium to long-
projects term
• Achieve financial
close for 1-2 projects
in the Philippines
The San Carlos Solar farm is one of AC Energy’s three solar

farms in the Visayas.

CAPITALS CREATE WE
VALUE CREATE
Financial Participation in the greenfield Investors and Shareholders

AC Energy has a strong balance sheet, development of power plants The company secures capital efficiency
backed by significant capital allocation For greenfield development, the with 12% return on equity.
from its parent company, Ayala, to company ensures due diligence,
support its fast-paced growth and permitting, supplier agreements and Customers
regional expansion. The company also on-time construction. The company It contributes to the country’s energy
capitalizes on project financing by determines viable energy mix and also requirements through affordable
lenders and banks. explores expansion of renewable energy electricity affordable electricity. In
platforms. 2017, AC Energy generated a total net
Manufactured of 6,552.1 GWh, higher by 6% from the
AC Energy uses wind turbines, solar Mergers and Acquisitions previous year.
panels, and boilers which are regularly AC Energy continues to explore
maintained for efficient operations. The possibilities for brownfield growth by The Environment
company also engages Engineering, either acquiring plants with expansion It has also increased renewable energy
Procurement, and Construction potential, and are either operational or plant output. In 2017, it produced 410
contractors for the construction of its under construction. GWh, a 20% increase from 2016.
power plants.
Commercial generation Employees
Natural AC Energy generates power and transmits AC Energy gives meaningful jobs to
Its business, which utilizes wind, solar to the National Grid Corporation of its employees, contributing to their
and thermal energy sources, operates the Philippines for distribution. It also professional development and career
in a responsible manner to minimize its transmits to distribution utilities, Retail growth. Through its employees’
impact to the environment. Electricity Suppliers, the spot market, and favorable ratings, the company
Feed-in-Tariff. achieved an employee engagement
Human score of 96% in the recently conducted
The company’s operations are driven Retail Electricity Employee Engagement Survey of the
by competent employees equipped The company also sells directly to end Ayala group. Its results are higher than
with diversified skills that it continually customers from its own plants or other the Philippine national norm.
supports for their professional power plants.
development and for them to cope with Communities
the fast-evolving business environment. The company considers the
communities in which it operates as
Social and relationship partners in its growth and engages
New linkages with different local and with them through various activities
regional stakeholders allow AC Energy to and CSR efforts in support of their
expand its operations in the Southeast livelihood, and to further educate them
Asian region, while it continues to in responsible energy generation.
maintain good relationships with the
communities where it operates.
AC Energy’s thermal
assets contribute to
the Philippines’ need
for reliable baseload
capacity.
INTO THE FUTURE 131

AC INDUSTRIALS
“In AC Industrials’ first full year of operations, we strengthened and reinvented existing businesses while planting the
“Commodo nulla
seeds for future growth facilisi
with nullam vehicula
key acquisitions andipsum a arcu
initiatives. cursus.
The coming years will be exciting ones, as we deploy the
Ligula ullamcorper malesuada proin libero nunc consequat benefit the markets and customers we
disruptive technologies of the future into leading products and services that
serve.”
interdum
varius sit. Aliquam faucibus purus in massa.” - Arthur R. Tan, President and CEO, AC Industrials
Who we are to tap markets in North America,

Established in 2016, AC Industrial Europe, and Asia.
Technology Holdings is the Ayala
group’s emerging industrial
technology arm. AC Industrials is
It is Ayala’s platform to boost its
presence in the global and domestic
12
currently building an integrated and industrial technologies spaces by
synergistic portfolio of operating capitalizing on opportunities brought
units composed of platforms in global about by disruptive technological COUNTRIES
manufacturing solutions, emerging shifts, changing industry landscapes, WHERE IT
technologies, and vehicle assembly, and increasing demand from end- OPERATES
distribution, and retail. users.
The company is founded on the Market Outlook

strengths of Integrated Micro- The global pace of innovation has ~$1.1 B
Electronics Inc., which traces its been accelerating over the past two
roots as one of the Philippines’ decades, allowing the emergence of
electronics manufacturing services new business models, disruption of
pioneers and is now a globally incumbent companies, and creation
leading manufacturing and of opportunities for new entrants REVENUE CONTRIBUTION
technology solutions partner, and to capture value in previously FROM IMI
AC Automotive, the country’s largest inaccessible areas. The diverse
multi-brand dealership group. AC industrials space has seen especially
Industrials operates in nine countries disruptive change.
around the world, with the capacity 28,701
VEHICLE UNITS SOLD
1,800
IMI has operations and the capacity to tap markets around the world. KTM MOTORCYCLE
UNITS PRODUCED

KTM motorcycles are assembled in IMI’s facility in Laguna for the domestic market, and eventually, for export.
For example, AC Industrials’ key space, automotive industry associations in revenue in its first seven months
automotive, is undergoing transitions project flat sales in the year ahead, in the group. The entry into these two
such as the moves from fossil fuels while retaining optimism for the new spaces underscores the continuing
to cleaner power, and from a focus medium and long-term as the impact diversification of IMI’s revenue base.
on the driver to one of autonomous, of tax reform stabilizes. Contribution of the automotive
shared mobility. These have resulted segment – still the largest and most
in changes to the vehicle itself. For Business Review important – closed at 41 percent, while
example, the electronic component of In its first full year, AC Industrials the other priority segment, industrial,
cars has been steadily increasing over focused on its twin priorities of grew 21 percent.
the years. From only 10 percent of the delivering solid operational results
total cost of a vehicle a decade ago, while continuing to assemble a The global manufacturing group
it now stands at 40 percent. This ratio synergistic portfolio of businesses and continues to capture emerging
is expected to reach 50 percent by investments. Net income grew four opportunities in the automotive
2025. Moreover, the number of electric percent year over year to P1.2 billion, and industrial sectors. IMI’s factory
vehicles in use is expected to grow driven primarily by robust results from in Chengdu, China now provides
from two million units in 2016 to over both IMI and AC Automotive. charging solutions to support the
20 million units by 2020. Advanced ongoing transition to electric vehicles.
driver assistance systems are expected Driving Operational Growth from
to evolve into a critical component of Major Businesses As industry demand and regulations
every vehicle, creating opportunities IMI reached a milestone in 2017 as it that require advanced driver
to deepen participation at both ends crossed $1 billion in revenues for the assistance systems have intensified,
of the industry’s value chain. first time. Topline grew to $1.1 billion, a IMI has partnered with Tier 1
29 percent increase over the previous automotive suppliers to co-design
Regulatory forces have also helped year, boosted by recent acquisitions and engineer several related
push automotive disruption forward. and continuing advancement into applications such as sensors and
China, the world’s largest electric the globally competitive automotive sensing camera systems, with VIA
vehicles market, has enacted policy and industrial markets. Net income, doing the same for display solutions.
expected to accelerate domestic meanwhile, reached $34 million, up STI, meanwhile, is well-positioned
production and consumption of 21 percent over 2016. to serve the advancement of next-
electric vehicles. The UK and France generation satellite communication
also announced that sales of gasoline Operations in Europe and Mexico led systems, which enable asset-light
and diesel cars will end by 2040. the way with revenues growing 14 telecommunications access into far-
and 29 percent respectively. Germany- flung locations, and unlock benefits
The demand side will also see based VIA Optronics, acquired in 2016, for the connected automotive,
disruption. Tax reform enacted by the posted $148.4 million in revenues, aerospace, and logistics sectors.
Philippines in 2017 is poised to change the highest in its history. Meanwhile, IMI is also ramping up its capabilities
buying behavior and preferences, since its addition in May 2017 to to be a major player in power
as higher take-home pay is offset boost IMI’s exposure to the aerospace modules, a key component in
by raised excise taxes for certain and defense markets, UK-based STI electric vehicles and other industrial
automotive price brackets. As a result, Enterprises contributed $45.5 million applications. Electric and hybrid
INTO THE FUTURE 133

vehicles, which both face rising needs in IMI’s Laguna campus, which began for automotive original equipment
for higher power requirements, are production of the all-new 390 Duke. manufacturers. This new platform
expected to represent about 40 will advance AC Industrials’ abilities
percent of the overall power module AC Automotive continues to progress in the segment and is expected to
market by 2022. toward its goal of becoming the eventually complement both IMI and
Philippines’s largest automotive group AC Automotive.
IMI spent $65.3 million in capital – by aiming for a leading presence
expenditures, primarily to advance in terms of industry market share MT, along with other additions in
the group’s strategic position as an and building an emerging domestic recent years – Volkswagen, KTM, Via,
enabler of disruptive technology for assembly base in concert with sister and STI – forms part of Ayala and AC
both its customers and its parent business unit IMI. Industrials’ strategy of assembling
company. Investments into future an industrial portfolio that owns,
growth platforms, automation, and Building, Managing, and Consolidating develops, and commercializes
high capacity equipment will position Ayala’s Industrial Arm disruptive technologies in rapidly
the business unit to serve emerging At the holding company level, AC transforming sectors. By consolidating
technologies key to AC Industrials’ Industrials continued to operationalize operations and unlocking synergies
strategy, and will advance productivity itself and make key acquisitions. This among existing and new businesses,
and enable sustained market share was highlighted by the acquisition of a AC Industrials will be in position
growth as a leading manufacturing 94.9 percent stake in MT Technologies to capitalize on opportunities in
solutions providers. GmbH, a Tier 1 supplier and designer the globally competitive industrial
of models, tools, and plastic parts technology space.
On the domestic front, the Philippine
automotive market continued its Strategy
strong year-on-year growth with
industry sales increasing 18 percent to Strategy Description Performance in Priorities in 2018
473,000 units. Motorization remained 2017
in full swing as models preferred Maintain industry Strengthen and • IMI grew revenues • Assist organic
by Filipino buyers – midsize SUVs, leadership of support growth of to over $1B for the expansion of IMI
compact multipurpose vehicles, established IMI, and Honda and first time via stock rights
subcompact sedans, and subcompact businesses Isuzu businesses • Honda and Isuzu offering and other
SUVs – continued to experience rising increased network initiatives
share • Support Honda and
demand. The aforementioned passage
Isuzu expansion
of new excise taxes, which took effect both operationally
in January 2018, also propelled a and financially
significant volume surge in the last
Build on capabilities Scale existing • Deployed P2 billion • Scale up and
quarter of 2017. of emerging businesses acquired strengthen MT, STI,
in capital to acquire
businesses in recent years; MT Technologies and Via
These industry tailwinds helped AC add key pieces that and launch entry • Operationalize
Automotive attain P671M in net pioneer or deepen into solar solar business
income in 2017, a 36 percent increase AC Industrials’ • Launched • Activate new
over the previous year and with presence in priority key models in model sourcing for
all brands in the portfolio posting sectors Volkswagen and Volkswagen
significant growth. Honda Cars Makati activated KTM • Ramp up exports
factory in IMI for KTM
gained four percentage points in
• Continue
network share to 43.5 percent on the
integrating STI and
back of improved unit sales, while Via Optronics
Isuzu Automotive Dealership added
one percentage point in network
Holding company Operationalize AC • Activated AC • Nurture synergies
Industrials as a Industrials and and joint areas
share to 39.2 percent, supported holding company, of cooperation
began strategic
by strong fleet sales. Volkswagen adding value to its across IMI, AC Auto,
and financial
Philippines distributed 29 percent subsidiaries and integration of new and other new,
more vehicles as new models – the driving synergies/ and existing units emerging pieces
Golf GTS and new Jetta lines – helped integration among • Launched ongoing • Progress on data
the German marque maintain businesses overhaul and and digitization
its market growth. Finally, KTM transformation efforts
Philippines closed its first full year of of automotive • Continue
distribution strengthening
operations with a threefold escalation
business holding company
in sales to 1,725 motorcycles, marked
as well by the opening of its factory

CAPITALS CREATE WE CREATE
VALUE
Financial Portfolio Management Investors and Shareholders

A healthy balance sheet with a capital It actively grows its portfolio, and It provides growing shareholder returns
base that can be readily deployed to constantly searches for synergy that are diversified by the sectoral and
address growth opportunities and opportunities among the group. From geographic scope of its portfolio.
respond to customer needs a management perspective, it provides • 2017 group net income of P1.2 billion
a broad range of corporate functions • 2017 IMI revenues of $1.1 billion, net
Manufactured such as strategic planning, governance, income of $34 million
Facilities located around the world allow resource allocation, and financial • 2017 AC Auto revenues of P31.2B, net
AC Industrials to create and distribute management. income of P671 million
products, services, and solutions to its
customers. IMI has 19 plants around Global Manufacturing Services Employees
the world with 132 surface-mount It delivers full manufacturing solutions for Its employees are able to build
technology production lines and its customers and partners, and across its meaningful, long-term careers that
287,000 sqm of manufacturing space. own portfolio of companies. develop their skills and allow them to
AC Industrials directly holds a majority support their families.
stake in the KTM motorcycle production Emerging Technologies Development
plant in Laguna, Philippines, as well as a It constantly seeks out, acquires, and Partners
nationwide network of 24 automotive commercializes key technologies that Its long-term strategic partners are
dealerships covering four vehicle brands. enhance and protect its competitive treated fairly, and these ventures
position. generate growing, consistent returns
Intellectual that equitably accrue to all sides.
It deploys an emerging suite of Vehicle Sourcing
proprietary technologies and intellectual It partners with multiple OEM brands Customers
property for the benefit of customers to competitively source a broad, It offers products, services, solutions,
and partners. complementary, and integrated selection and ownership experiences that exceed
of vehicles for its customers. customer requirements and global
Human quality standards.
It has a strong base of over 18,500 Vehicle Retail
employees and executives that deliver It offers a wide array of vehicles from • 4,338,107 units of automotive
operational excellence, customer leading brands. cameras
satisfaction, and value-adding technical • 7,049,203 units for smart energy
expertise. applications
• 20,027,803 units for connectivity
Social and Relationship applications
It treats partners and customers • 28,348 vehicles sold, with majority
fairly, and view them as long-term share within the automotive brands it
relationships that stand the test of distributes
time. Its operations adhere to Ayala’s
standards of sustainability and good Government and policymakers
governance. It champions the development of quality
manufacturing in the Philippines in
support of the government’s thrust
to promote and revive the sector as a
pillar of national development. It lives
this out by investing and locating in its
home country, utilizing key frameworks
and programs like the Motor Vehicle
Development Program, the Investment
Priorities Plan, and the Philippine
Economic Zone Authority.
INTO THE FUTURE 135

AC INFRASTRUCTURE
“AC Infra continues to develop public-private partnership projects to address urgent transportation infrastructure
“Commodo nulla
needs, while our facilisicompanies
operating nullam vehicula
improve on ipsum a arcu cursus.
their efficiencies. Outside PPPs, we are investing in innovative
Ligula ullamcorper malesuada proin libero nunc consequat
infrastructure platforms to support new and disruptive business models.”

interdum varius sit. Aliquam faucibus purus
- Jose Renein massa.
Gregory D.”Almendras, President and CEO, AC Infrastructure
Who we are Its current projects, all of which

AC Infrastructure invests in operate under a concession
infrastructure needed for the agreement with the government, P11.7 B
Philippines’ sustained and inclusive serve the commuting and motoring
development. AC Infra intends public who live and work in Metro
to meet the country’s urgent Manila and nearby provinces.
need for efficient, reliable, safe, IN TRANSACTION VALUE
and sustainable modes of mass The company’s ability to steward and FOR BEEP™ SINCE
ROLLOUT
transportation and transport services lead projects from its development,
to move people, goods, and services implementation, operations and
by investing in strategic solutions maintenance is its key advantage.
using new or existing technologies AC Infra builds on Ayala’s reputation
and platforms. It develops businesses
and infrastructure projects to
and track record of excellence
in developing and sustainably
430 M
support the growing needs of managing large scale projects.
the public and private sectors in
the areas of mass transportation, Market Outlook
mobility, and fulfilment solutions In the Transport Infrastructure BEEP™ TRANSACTIONS
services. Roadmap Study for Mega Manila SINCE ROLLOUT
29,000
MCX AVERAGE DAILY TRAFFIC
435,000
LRT-1 AVERAGE DAILY RIDERSHIP

LRMC continues to upgrade stations along the LRT-1 to provide a better commuting experience to Filipinos.

MCX helps alleviate traffic congestion along Daang Hari, Cavite, and Commerce Avenue, Muntinlupa.
released by the Japan International Apart from hard infrastructure, 2017. Apart from its recent partnership
Cooperation Agency, it is estimated opportunities also exist in adjacent with coins.ph to enable loading of
that the Philippines now loses some and related sectors. For example, beep™ cards through smartphones,
P3.5 billion daily due to the traffic with the increasing adoption of there are now more than 400 top-
situation in Metro Manila. JICA e-commerce, there is growing demand up stations in strategic locations to
also predicts that Mega Manila will for efficient logistics and fulfilment ensure convenience for cardholders.
become one of the largest megacities solutions services. Increasing digital
in the world by 2035, but will also be and mobile penetration, as well as the For the Muntinlupa-Cavite Expressway,
among the most congested. The loss public’s growing familiarity with new average annual daily traffic stood at
of efficiency and potential due to poor platforms to purchase products and 29,000 vehicles in 2017, a 19.5 percent
infrastructure underscores the need services, also creates opportunities— increase from 2016. This is in line
to invest in solutions to improve mass for example, the payments platform with projected growth in vehicular
transportation. Inclusive infrastructure that AC Infrastructure is operating can traffic and is expected grow steadily
is key in enabling the Philippines to be leveraged for a wider variety of in the coming years. As a result, total
build on its economic gains and to applications across different platforms. revenues from MCX, including non-toll
improve its competitiveness globally revenues, in 2017 hit P205 million,
and in Southeast Asia. Business Review while EBITDA reached P96 million, a 92
In 2017, AC Infrastructure continued to percent increase from 2016.
The Philippine government is currently build on the efficiencies and gains of
implementing its Build, Build, Build its existing projects. Since taking over operations and
initiative—an ambitious plan to maintenance in September 2015,
construct over 70 priority infrastructure Its payment platform, AF Payments, Light Rail Manila Corporation has
projects worth P8 trillion over the or the beep™ card, grew, with over invested over P2 billion to upgrade
next five years, with several projects four million in circulation at the end the system and ensure a more
aimed at improving mobility and mass of the year, from 2.8 million in the comfortable riding experience.
transportation across the country. The previous year. Annual transaction Functioning light rail vehicles have
government intends to do this through count increased six percent to 430 increased to 109, resulting in shorter
different means, including budgeted million in 2017, with total value of headways averaging 3.35 minutes in
infrastructure allocations, official transactions processed during the December 2017 as compared to 3.61
development assistance, government- year at P11.7 billion, an increase of 7 minutes for the same period in 2016.
to-government agreements, and percent from 2016. Initially developed This has improved the commute of
both solicited and unsolicited public- for all three Metro Manila rail lines, the 435,000 passengers who use the
private partnership projects. Different beep™ is steadily expanding as a LRT-1 daily.
Philippine companies have formed payment mode in city and point-
consortiums among themselves, as well to-point buses, toll roads, and retail Various technical improvements
as with foreign partners, to participate chains. beep™ entered the quick serve have reduced the occurrence of
in the infrastructure buildout. restaurant segment with a partnership air-conditioning faults by 92 percent,
with Wendy’s that started last October brake faults by 67 percent, and
INTO THE FUTURE 137

signaling faults by 81 percent leading support facilities to meet the current
to improved train reliability, fewer and projected passenger traffic. The
trip cancellations, and significantly company also committed P1.1 billion
improved passenger comfort. for its new venture in the fulfillment
Replacement of the 32-year old solutions industry.
rails of the LRT-1 was completed in
September 2017. With the new rails,
trains can increase speed from 40kph
to 60kph, further reducing passenger Strategy
waiting time. Strategy Description Performance in Priorities in 2018
2017
Customer satisfaction is up by 200 Ensure high levels Deliver consistent • MCX average • Increase annual
percent as commuters have taken of efficiency level of service and annual daily traffic average daily traffic
notice of the improved state and for operating continue to exceed increased 19% from to 32,000
cleanliness of the stations, a project companies key performance 2016
also undertaken by LRMC. Since indicators for • Further reduce
inaugurating the newly-renovated operating toll, • Increase number headway and
Doroteo Jose station last February rail, and payment of light rail vehicles cycle time, and
companies to 109, resulting in complete station
2017, refurbishment has been
shorter headways improvements
completed in six stations, while
the rest are in various stages of • Over four million • Begin
completion. Station improvements beep™ cards in preconstruction
shall be completed in 2019. circulation; non-rail work on Cavite
network expanded extension
In May 2017, LRMC broke ground to 281 bus units and
for the LRT-1 Extension project that 493 retail partners • Expand beep™’s
will extend the line by 11.5km from non-rail network
to 420 Buses and
Baclaran to Cavite. LRMC has secured
1,800 retail outlets,
the financing and the engineering, and roll-out to 200
procurement, and construction jeepney/PUV units
contract for the extension and expects
to begin preconstruction works in
Propose new Propose projects With partners, Secure Original
2018. Construction shall commence projects for PPP to address the submitted Proponent status
soon after the right of way is delivered. country’s urgent unsolicited and requisite
transportation proposals for the C3 approvals from
A ground-breaking ceremony infrastructure needs Expressway and the government.
for the common station project NAIA rehabilitation
was held in September 2017, and upgrade
following agreements among
various stakeholders involved in the Develop non- Outside Signed investment Set-up organization
development of the project, which will regulated PPPs, identify agreement with and commence
serve as a transfer point for passengers infrastructure opportunities and ZALORA affiliate to commercial
using LRT 1, MRT 3, and MRT 7. business propose innovative jointly invest in a operations
infrastructure fulfilment solutions
solutions to support company
AC Infrastructure has continued to new and disruptive
seek opportunities to expand its business models
portfolio of projects in the public
and private sectors. In the first
quarter of 2017, AC Infrastructure
and SM Investments Corporation
submitted an unsolicited proposal
to the Department of Public Works
and Highways to design, build,
operate, and maintain the C3
Expressway. In February 2018, as
part of a consortium, it submitted
a proposal to the Department of
Transportation to transform the Ninoy
Aquino International Airport into a
regional airport hub, and upgrade its
airside, landside, and air navigation beepTM is increasingly growing its non-rail partner network to benefit more customers.

CAPITALS CREATE WE
VALUE CREATE
Financial Project Develepment Customers

A strong balance sheet and strategic AC Infra pursues investment Travel time is reduced for motorists and
capex investments funded by Ayala opportunities that address infrastructure train passengers.
needs of the public and private sectors.
Manufactured Together with highly competent partners, In 2017, MCX served 29,000 motorists
Continued improvement in the it stewards the project development daily, saving 8-10 minutes of their
operating efficiencies of LRT-1, MCX, and process to develop innovative and travel time. LRT 1 accommodated
beepTM sustainable infrastructure solutions. over nine million more passengers,
due to extended operating hours
Intellectual Implementation and Start-up and improved headways. Cashless
Experience and track record in putting It has assembled a competent team and faster transactions are promoted
together PPP project proposals for toll that will steward the implementation of through beepTM card.
road, rail, and airport infrastructure. projects and execute plans in a timely,
cost-efficient, and socially sustainable Grantors and Government
Human manner. The company employs best Infrastructure targets and needs of
A team with a diverse and practices to meet industry standards and the country are supported through
complementary set of skills that can ensures compliance with all regulatory the projects developed. Continued
steward projects from inception to processes. improvements in operations and
development to operations. maintenance are translated into
Business Operations benefits in the form of better public
Social and Relationship It consistently meets the Key Performance image and service to citizens.
Wide spectrum of local and foreign Indicators in its concession agreements
project partners with complementary through teams that deliver smooth Employees
knowledge and expertise. Supportive and efficient operations. Staff have Employees under the previous
partnerships with public sector improved capabilities to ensure proper administration were transitioned from
stakeholders maintenance to minimize disruptions, contractual to regular employees,
while management continually seeks giving them job security. The
improvement across all operations. employees, under various programs,
continue to increase their capabilities
and improve their skills.
MCX enables motorists to

save time and cut down
on the cost of gas.
INTO THE FUTURE 139

AC HEALTH
“AC Health’s focus has always been to improve healthcare for Filipinos. In 2017, we increased our retail health footprint
“Commodo
through ournulla facilisi
Generika nullamand
pharmacies, vehicula ipsum
FamilyDOC a arcu
primary cursus.
care clinics. In 2018, we hope to expand our portfolio
further through strategic partnerships in hospitals, specialty care, and health technology. Most importantly, we keep
Ligula ullamcorper
our patients malesuada
at the heart proin
of everything libero
that we do.” nunc consequat
interdum varius sit. Aliquam faucibus purus in massa.
- Paolo” Maximo F. Borromeo, President and CEO, AC Health
Who we are AC Health has a growing retail

AC Health is the portfolio company footprint, which enables it to provide
for Ayala’s healthcare businesses. AC
Health aims to address the need for
last-mile access to consumers. It
utilizes innovative products, services,
100
accessible, affordable, and quality and business models, including
healthcare by building an integrated health technology solutions, to
healthcare ecosystem, providing address the needs of its patients and TARGET
products and services across the customers. FAMILYDOC
continuum of care. CLINICS BY 2020
As a portfolio company, it aims to
At present, its portfolio includes build strong business partnerships,
Generika Drugstore, the pioneer and to work in collaboration with
in generic retail pharmacies,
FamilyDOC, a chain of primary
different sectors of the healthcare
industry, including the private sector, 1,000
care clinics, and various health the public sector, and the academe.
technology solutions, such as These will allow the company to
MedGrocer, an FDA-licensed improve its healthcare products and
e-Pharmacy. Generika Drugstores services for patients and customers. TARGET GENERIKA STORES BY
has over 750 branches nationwide, 2020
while FamilyDOC has 28 clinics in
the Greater Metro Manila area as of
March 2018.
Extended opening hours allow FamilyDOC to serve more patients.

65,000
UNIQUE PATIENTS SERVED

BY FAMILYDOC
~60,000
PATIENTS SERVED BY MEDGROCER

FamilyDOC’s Family Medicine Training Program is the largest in the Philippines.
MedGrocer enables the convenient purchase of medicine. Market Outlook Emerging consumer trends point to
The healthcare industry continues to a greater desire for patient centered-
show high single-digit growth, with care, and an openness to new
increasing demand of healthcare technology in health. Globally and
products and services driven by the in the region, healthcare technology
growth of the middle-class. In the face is a burgeoning field, although it
of growing demand, there continues is still in its very early stages in the
to be an unmet need for accessible Philippines. Additional regulatory
and affordable quality products frameworks are needed to encourage
and services, including affordable health technology solutions such as
medicines, primary care, hospitals, and electronic medical records, Telehealth,
specialty care. and e-Prescriptions.
There are several challenges in AC Business Review

Health’s expansion of services. First, AC Health continues its rapid
the supply of medical professionals expansion in the healthcare space,
will continue to be a limiting factor in pursuit of its vision to build an
to scale – recruitment and retention integrated healthcare ecosystem that
of quality medical professionals will provides patients with a seamless
be critical to meet expansion targets. healthcare experience.
Second, there is a need to balance
regulatory compliance with speed in In the pharmacy space, Generika
expansion. Drugstore grew its network to 750
stores nationwide, after opening
100 new stores in 2017. Revenues
for the year were P3.3 billion, up 15
percent from the previous year. This
also outpaced industry growth of
8.4 percent. Generika also grew its
Actimed Housebrand line to a total
of 112 products, including 36 new
products in the past year. In 2017,
Generika became the first recipient of
the ASEAN Inclusive Business Award
in recognition of its business model,
which pioneered the retail of quality
generic medicines in the country.
In primary care, FamilyDOC opened 15
Both Generika and FamilyDOC conduct community engagement activities.
INTO THE FUTURE 141

new branches in 2017, reaching a total existing operations, targeting to end In parallel, it continues to pursue
of 21 clinics at the end of the year. the year with a total of 850 Generika expansion into hospitals, and specialty
It has expanded into new locations stores nationwide, and over 50 care, in line with its vision of offering
in the Metro to include clinics in FamilyDOC clinics in the Greater Metro services across the continuum of
Parañaque, Taguig, Pateros, and Pasig Manila Area. It also plans to introduce care. With its solid footprint in retail
in addition to Cavite and Las Pinas. new health technology solutions, health, it is well-positioned to serve
Since its establishment in December such as its electronic medical records more Filipinos, and to offer innovative
2015, FamilyDOC has served over system, to more healthcare providers. products and services towards
65,000 unique patients as of end-2017. improving healthcare for all.
It now employs 79 doctors, under
its duly-accredited Family Medicine Strategy
training program, the largest in the
Strategy Description Performance in Priorities in 2018
country, and over 120 allied health 2017
professionals.
Expand footprint of Expand Generika 100 new stores, for a Total of 850 stores
Generika stores footprint to 1,000 total of 750 stores
AC Health added health technology
pharmacies
to its portfolio in 2017 by investing nationwide by 2020
in MedGrocer. Medgrocer is an
FDA-licensed ePharmacy, serving
Build FamilyDOC Build the largest Total of 21 clinics Over 50 clinics
over 60,000 customers across 100 clinic network network of primary
corporate clinics. care clinics
The company also launched Vigos Invest in health Invest in healthcare • Invested in Expand portfolio of
EMR, an electronic medical records technology technology MedGrocer, health technology
and clinic information system utilized solutions solutions to • Launched Vigos solutions
in all FamilyDOC clinics. The system improve efficiency, EMR
improves efficiency and enables integration, and
integration across the clinic network, reach
in addition to performing extensive Portfolio-building Build a healthcare Established retail Complement retail
data analytics for population health. ecosystem across health footprint health with hospitals
AC Health will focus on ramping up the continuum of and specialty care
care
Generika offers additional services, such as a medicine guide and scheduled free consultations.

CAPITALS CREATE WE
VALUE CREATE
Financial Asset Performance Business Partners

Strategic capital allocation from the AC Health aims to expand its network Through AC Health’s integrated and
parent company, Ayala, to support its of Generika drugstores, and FamilyDOC innovative network, partners can leverage
expansion plan and 2020 vision. clinics. It is also developing its own shared resources and collectively make
health technology solutions, such as an quality healthcare more accessible to
Manufactured electronic medical records and clinic more patients. Partners benefit from an
exchange of knowledge, people, and
Continued expansion of its network of information system
technology across the ecosystem.
Generika pharmacies, with 750 branches
nationwide, and growth of FamilyDOC Portfolio Building and Business
Healthcare Industry
to 21 clinics, by end of 2017. Development AC Health promotes a multi-sectoral and
AC Health’s goal is to build an integrated collaborative approach to addressing
Intellectual healthcare ecosystem across the healthcare challenges so that the
Various intellectual capitals grouped in continuum of care shared vision of improving everyone’s
three categories: health will be more attainable. Through
1. Products and services: Certificates Synergies its subsidiaries, AC Health provides
of Product Registration for medicines, AC Health drives synergies within its opportunities for healthcare professionals.
and medical service and training healthcare businesses, and across the
protocol Ayala group to improve efficiency, and Customers and Patients
2. Brands: AC Health, FamilyDOC, and ensure integration Generika Drugstore has been providing
Generika B greater access to affordable, quality
3. Technology and analytics: Priorities: Invest and Integrate Key Pillars generic medicines to more Filipinos.
MedGrocer, in-house electronic 1. Pharmacies and pharmaceuticals Aside from providing affordable, quality
medical record and clinic information 2 Clinics generic medicines, which delivers up to
85% savings as compared to branded
system (Vigos EMR) 3. Hospitals and specialty clinics
counterparts, Generika is also active in
4. Healthcare financing
promoting health and wellness at the
Human 5. HealthTech
community level and offers additional
Pool of medical, non-medical, and services like free blood pressure check,
health IT professionals, which includes Build a strong retail health component a medicine guide, and scheduled free
13 employees from AC Health, 825 (Generika and FamilyDOC) consultations.
employees from Generika, 194
employees from FamilyDOC, and 23 FamilyDOC has served a cumulative total
employees from MedGrocer of 65,102 unique patients as of end-2017.
It is also active in promoting preventive
Social and Relationship health and wellness through its community
Affiliation with Ayala brand, franchisees, events, such as the Kalusugan Caravan
business partners, and external partners, and the Ministry of Moms. FamilyDOC also
which include the government and offers packages and promotions targeted
regulatory agencies (i.e. the Department to the profile of its patients, including a
of Health and the Food and Drugs diabetes and hypertension club, and a
Administration), and healthcare kiddie club.
professionals
MedGrocer continues to provide
convenience through its medicine delivery
platform. Patients can now order their
medicines online and have them delivered
within the day through MedGrocer.
The website has an easy upload feature
for medications that require doctor’s
prescription. As of 2017, MedGrocer has
served 1,221 clients via medicine delivery.
On the other hand, MedGrocer is also
serving corporate clients through clinic
management. To date, it has already served
60,000 people through its network of 100
corporate clinics.
INTO THE FUTURE 143

AC EDUCATION
“AC Education continues to deliver quality, affordable education that leverages an industry-based, experiential, and
technology-enabled approach to significantly improve the employability of our high school and college graduates. We
aim to transform more lives by expanding our platform through both mergers and acquisitions and organic growth.”
- Alfredo I. Ayala, President and CEO, AC Education
Who we are Batangas, and approximately 16,000

AC Education is the holding students. APEC offers junior high
company for Ayala’s investments in
education. Its vision is to empower
school and senior high school with an
innovative and progressive approach
~16,000
Filipino parents and their children to both learning and employability, in
by delivering affordable, quality a fully airconditioned environment, at
education that enables significantly an affordable price point.
STUDENT POPULATION IN
improved employability for its high
APEC SCHOOLS
school and college graduates. The AC Education also has a majority stake
company achieves this through in the University of Nueva Caceres, the
proprietary student value-add oldest university in the Bicol region,
programs, systematic teacher training, offering basic, high school, and higher
professional management operations, education with approximately 8,000
and a strong industry network. students in its campus in Naga City, ~8,000
Camarines Sur.
The Affordable Private Education
Center Schools began in 2013 with Market Outlook
one school site and 130 students. The Philippine education industry is STUDENT POPULATION IN UNC
Since then, it has scaled up to become highly regulated and fragmented. In
the largest chain of affordable, private school year 2016-2017, there were
high schools with 23 branches across 2,396 higher education institutions in
Metro Manila, Cavite, Rizal, and operation.
89%
EMPLOYMENT WITHIN THREE MONTHS
POST GRADUATION (UNC PEP COHORT)
54%
AVERAGE SALARY PREMIUM OF
UNC PEP COHORT
The University of Nueva Caceres is one of the most respected universities in the Bicol region.

APEC encourages a collaborative learning environment.
In recent years, the government has chain of low-cost, private high Engineering and Architecture, Graduate
made significant progress in passing schools with branches across Metro Studies, Law, and Nursing. Last school
critical legislature. This includes the K-12 Manila, Cavite, Rizal, and Lipa in year, UNC introduced Industrial
Law, which aligns the country’s basic Batangas, and a student population of Management Engineering to further
education system with the rest of the approximately 16,000 from Grades 7 to enhance the programs being offered by
world by introducing Grades 11 and 12 in school year 2017-2018. Through the College of Engineering and fortify
12 as well as the Universal Access to the government’s senior high school UNC’s position in the region as a leader
Quality Tertiary Education Act of 2017, vouchers, APEC provided access to its in engineering. UNC also established a
which provides equal opportunity to innovative and progressive learning partnership with San Beda University to
quality tertiary education in both public curriculum to low-income learners. offer a Masters of Law program, making
and private educational institutions, Students who graduated from public UNC the only university in the Bicol
and gives priority to the poor, as well junior high schools can attend APEC’s region that offers the LLM program.
as academically able and motivated senior high school without paying
students. additional tuition on top of the UNC also expanded its student
government voucher. value added programs, by delivering
School year 2018-2019 is a critical compelling results through its
year for the education industry as it APEC expects to graduate its first cohort Professional Employment Program,
marks the return of college freshmen of approximately 2,000 students in June which is designed to place graduating
following the full implementation of 2018. After only two years in APEC, students in a working professional
K-12 in 2016. The previous two years out of 700 students who took college environment to enhance their potential
saw a drought for all universities, due entrance exams in selective schools, for immediate employment. In school
to the additional two years of senior 41 percent passed the exams with a 29 year 2017-2018, UNC’s PEP cohort
high school required of all students, percent passing rate in the Ateneo de achieved 89 percent employment
effectively reducing college enrollment Manila university, 60 percent in De La within 90 days post-graduation, with
of many higher education institutions Salle University Manila, and 53 percent average salaries 54 percent higher than
by half. in the University of Santo Tomas. the control group. PEP graduates went
on to work in BPI, Sutherland Global
Competition is expected to In higher education, despite the lack Services, Ford Philippines, iBEX manila,
intensify because of the first year of of college freshmen and sophomore Telus Manila, among others.
implementation for the Universal cohorts due to K-12, the University
Access to Quality Tertiary Education Act, of Nueva Caceres, one of the largest Also in school year 2017-18, UNC
which offers completely free education private schools in the Bicol region, also piloted the Culminating “x”
in state-run universities and colleges increased its student population to Project for seniors in Business, HRM,
and publicly-run technical-vocational approximately 8,000 in school year Accountancy, Computer Studies and
institutions. 2017-2018. Arts and Sciences. CxP is similar to PEP
in that it provides a simulation of the
Business Review UNC offers degrees in Arts and Sciences, real-world employment environment
In basic education, APEC Schools Business and Accountancy, Computer and boosts employability. UNC also
secured its position as the largest Studies, Criminology, Education, started doing the groundwork for
INTO THE FUTURE 145

the full implementation of its English UNC students enjoy a variety of extracurricular programs.
Immersion Environment.
UNC has sustained its excellence in

board examination performance,
consistently surpassing the national
board passing norms, both in overall
and first timer passing rates. In school
year 2017-2018, UNC had two top ten
placers from its College of Education
and College of Engineering. Its students
also received distinctions in other
national and local awards, including
the Ten Outstanding Students of the
Philippines, Top 10 Jose Rizal Model Strategy
Students of the Philippines, Ten Strategy Description Performance in Priorities in 2018
Outstanding Students of Bicol, and 2017
Naga City Mayoral Awards. Enrollment Increase student • APEC: 16,232 Continue student
population through students (55% population growth
As a testament to the quality of strong academic growth) in both APEC and
its academic programs, UNC was and employment UNC, as well as
recognized by the Philippine outcomes, and • UNC: 8,053 through mergers and
Association of Colleges and Universities mergers and students (5% acquisitions
Commission On Accreditation with acquisitions growth)
Level III Reaccreditation Status for two
of its graduate programs – Master of Employability Improve • APEC Sustained
Arts in Education and Master in Business employability of *First cohort will improvement of
graduates through graduate in 2018 speed of hiring and
Administration – the first among higher
student value add salary premiums
education institutions in the entire Bicol • UNC: 89% of PEP
programs and
region. This adds up to a total of three employer partner graduates were
Level III programs, with Bachelor of network employed within
Science in Business Administration as 90 days post-
the first program in UNC to be granted graduation, with
Level III status in 2016. an average salary
premium of 54%
AC Education has made significant over control group
progress in expanding its educational
platform through mergers and Academic efficacy Improve learning • APEC: Significant • APEC: Improve
acquisitions. In December 2017, it outcomes as improvements in average scores
signed a non-binding term sheet for a measured by English and Math for for English, Math,
performance in current Grade 7 and and Science for
potential merger with iPeople, the listed
standard diagnostic, Grade 11 students, junior high school
holding company for the education entrance, and and in English as a and senior high
sector of House of Investments. The licensure exams Second Language school pre/post
potential merger would include iPeople from August 2016 diagnostics, and
and its significant subsidiary, Malayan to April 2017; 41% ensure takers pass
Education System, or Mapua University, college entrance selective college/
a leading private engineering and passing rate in program entrance
technical university in the country, selective schools exams
and its subsidiaries, Malayan Colleges
• UNC: Consistently • UNC: Continue
Laguna and Malayan Colleges
surpassed the its track record of
Mindanao. Moreover, in January national overall surpassing national
2018, AC Education signed a share board passing rates. overall board
purchase agreement to acquire the UNC’s passing rate passing rates
National Teachers College, which has was 9% higher
an established track record in teacher than the national
education, and close to 10,000 students norm for overall
in its University Belt campus in Manila. performance, and
4% higher than
the national form
for first-timer
performance

CAPITALS CREATE WE
VALUE CREATE
Financial Marketing, sales and expansion Students and Parents

Capital infusions from Ayala and from its Increase student population by: Students from low to middle income
partners to support increase in capacity, • Leveraging strong brand in Mega segments are given the opportunity
transform facilities, integrate technology, Manila and Bicol to access quality private education
and strengthen human capital. • Delivering quality outcomes: board and with good linkages to potential
college entrance examination scores, employment, through affordable
Manufactured graduate speed of hire and starting pricing and open admission. In 2017,
Facilities, technology and classrooms salaries, compelling careers, academic APEC had 16,232 high school students
that are aligned with the vision of and leadership awards, efficacy in of which 60% came from the D and
providing quality, affordable education. English and Math, industry-aligned E income segments, while UNC had
skills and values 8,053 students from basic to higher
APEC: 23 sites across Mega Manila • Improving student retention through education. In school year 2017-2018,
UNC: Five-hectare campus in Naga City, remediation program, student financial UNC had 857 graduates, a record
Camarines Sur aid, catch basin programs, and number. Meanwhile, APEC will have its
engagement first ever cohort of senior high school
Intellectual • Partnering with like-minded, graduates, numbering over 2,200
• Curriculum (for K-6, JHS & SHS, established institutions students.
college, graduate studies) that is
progressive, constructivist, learner- Content and Curriculum Development Teachers and Employees
centered, collaborative, outcomes- • Brand promise: aligned curriculum Continuous learning and development
based, integrated with technology, that is progressive, learner-centered, are fundamental programs given to
with strong elements of English outcomes-based, integrated with teachers and employees through
and employability, and aligned with technology and aligned with both coaching, mentoring, and technical
regulatory requirements regulatory and industry requirements training including continuing
• In-house developed student value- • Integrates Experiential Education for professional development, as well
add programs: LINC Senior High Employment (E3) Model as opportunities to pursue graduate
School, CRED or College Readiness, studies.
ACE or Accelerated Career Experience, Career Placement Services
PEP or Professional Employment • Forging meaningful employer Companies
Program, CxP or Culminating “x” partnerships, i.e. scholarships or Enables various organizations to tap
Project, and EIE or English Immersion internships with a path to employability a rich pool of human capital talent
Environment • Intensive engagement: career who are skilled, trained, and with
education through career portal & job-ready habits and values. About
Human social media, job fairs, career talks and 90% of AC Education’s PEP graduates
Faculty and staff who are competent, job immersion, coaching on interview were employed within 90-days after
nurturing, forward-thinking, constantly and college application, employment graduation with starting salaries at a
learning, engaged, and motivated. monitoring significant premium over the general
labor market.
Number of employees and average Talent Development
training hours: • Faculty retooling aligned with new
APEC: 738 employees; 42 hours each curriculum
UNC: 529 employees; 24 hours each • Continuing Leadership Development
AEI: 30 employees; 8 hours each Program as well as differentiated, needs-
based employee training, extensive
Social and Relationship pre-service training, coaching and
Strengthened relationships and mentoring
reputation with partner schools, • Leveraging Ayala group learning
employees, NGOs, private school and development: innovation, risk
associations, public schools, management, sustainability, disaster risk
communities around AC Education management
schools, and other stakeholders • Partnering with San Beda College for
Master of Laws (LLM) program
INTO THE FUTURE 147

AC VENTURES
“Fintech and payments, e-commerce with brick and mortar, data flow processors for artificial intelligence, and
“Commodo
innovative realnulla
estate facilisi nullamare
redevelopments vehicula
some ofipsum a arcu
the themes cursus.focused on in 2017. Our mission is to
AC Ventures
Ligula ullamcorper
make more malesuada
of these types proin
of investments thatlibero nunc consequat
complement our existing businesses.”
- Jose Teodoro K. Limcaoco, President and CEO, AC Ventures
interdum varius sit. Aliquam faucibus purus in massa.”
Who we are Mynt, a fintech venture, with Globe growth. It is expected to grow further
AC Ventures was formed in 2017 to and Ant Financial. following the implementation of the
house Ayala’s strategic investments. It first package of the government’s tax
aims to fulfill two roles as an enabler Market Outlook reform program, which has lowered
by investing in adjacent businesses The world is experiencing tremendous personal income taxes for the majority
complementary to Ayala’s existing digital transformation, with emerging of the population. This, together with
business units; and as a pathfinder by business models creating new ways to high adoption rates across mobile and
investing in new sectors, emerging make better, differentiated products digital platforms, has helped spur the
trends, and innovative businesses. and services more accessible to a rise of e-commerce. The Philippine
AC Ventures hopes to provide a broader consumer market. Big data, e-commerce market is expected to
window into new technologies artificial intelligence, edge computing, grow exponentially, from 0.5 percent
and business models and invest in and the internet of things are some of of the total retail market to 4.7 percent
disruptive platforms in sectors that the trends already disrupting existing by 2025–equivalent to a market size of
are relevant to Ayala. Among the industries. Some of these disruptions $9.7 billion. Related to this, the fashion
disruptive sectors that AC Ventures has are in industries where Ayala is a major and lifestyle retail market—which
entered are e-commerce and financial player in the Philippines. counts among the most popular
technology. e-commerce categories—is seen to
Strong domestic consumption reach $21 billion by 2019 accounting
In addition, AC Ventures makes has consistently contributed to for approximately a quarter of the
offshore investments through AG the Philippines’ robust economic overall Philippine retail market
Holdings. Over the past years,
Globe’s and Ayala’s partnership with Ant Financial, a leading digital financial services provider, can drive fintech
AG Holdings has served as Ayala’s development in the Philippines.
platform for its investments in real
estate in the US and Asia. Following
the establishment of AC Ventures,
AG Holdings’ mandate has evolved
into being the vehicle for the former’s
international investments.
AC Ventures also makes direct

strategic investments in local
opportunities. In 2017, AC Ventures
acquired a 43.3 percent stake in Zalora
Philippines, the Philippines’ largest
fashion and lifestyle e-commerce
platform, and a 10 percent stake in

AG Holdings has investments in international real estate
including in the US, Macau, Thailand and Singapore.
On the fintech front, huge In 2015, AINA, AG Holdings’ North

market opportunities persist with American subsidiary, committed to
approximately 120 percent mobile invest $20 million in a multifamily
penetration, more than 87 million value-add fund sponsored by the
Filipinos owning a digital device,
and 41 million being active mobile
Sares Regis Group, a real estate
management company with 18,750 ~100M
social users. In contrast, only 21 apartment units under management
percent of Filipinos have access to across the US west coast. The
the services offered by banks and multifamily fund’s main strategy is
VISITS TO ZALORA WEBSITE
insurance companies, while only 10 to acquire and renovate residential
IN 2017
percent have credit scores. Apart developments in high-growth, supply-
from the geographic makeup of the constrained markets in the US. As of
country, this reflects the potentially end-December 2017, the multifamily
strong demand for fintech-enabled fund has acquired 12 assets. In June
innovations in the Philippines. 2017, AINA co-invested $5 million
with the multifamily fund for the
Business Review
AG Holdings
acquisition of AMLI Victoria Arbours,
a 319-unit apartment community in
$50M
In Asia, AG Holdings continues to Rancho Cucamonga, California.
maintain its investments in ARCH
Funds. In 2017, AG Holdings’ In line with its new mandate, AG
investment in ARCH realized valuation Holdings also invested in varied funds IN CAPITAL COMMITMENT TO ARCH
gains of $7.5 million. It has committed that serve as windows into disruptive FUND III
$50 million of capital into ARCH Fund technologies, evolving trends, and
III, which shall deploy its capital to new markets. In 2017, AG Holdings
residential and commercial projects invested in Arbor II, a fintech fund
in China, Hong Kong, the Philippines, focused on opportunities in Asia;
Taiwan and Thailand. Maloekoe Ventures, an Indonesian-
AG Holdings’ direct residential

based venture capital fund focused
on new technologies; and the New 1.6X
investment in Macau, where it co- Retail Strategic Opportunities Fund
invested with ARCH Fund I, continues managed by Alibaba focused on
to generate profits on the back of investing in retail brick-and-mortar
strong economic growth and unit businesses in China. GROWTH IN MYNT’S
sales. In 2017, distributions to AG CUSTOMER BASE
Holdings from the Macau investment Moreover, in keeping with AG
amounted to $1.96 million. Holdings’ new thrust, AINA, through
INTO THE FUTURE 149

services. To further scale its active
users, in the third quarter of the
year, GCash ramped up its merchant
acquiring business with the launch of
QR payments, a new and convenient
way for traditional retailers to accept
payments using e-money. By forging
key partnerships with the likes of Ayala
Malls, SM Supermalls, SSI Group, Max’s
Group, and Suyen Corporation, the
service is now widely offered in several
locations nationwide.
Filipinos can access loans using only their cellphones through Fuse’s services.
Strategy
PFIL North America, invested in Wave
Computing, a Silicon Valley startup Strategy Description Performance in 2017 Priorities for 2018
that develops innovative computing Enable new Invest in adjacent Acquired stakes in Look out for
systems that accelerate machine opportunities for the businesses Zalora and Mynt disruptive trends
learning, co-founded by Filipino Ayala group complementary to as well as explore
entrepreneur Dado Banatao. the Ayala group new business
opportunities and
relationships
Zalora
Zalora is riding the wave of the Strengthen AG Manage offshore Existing investments Strengthen existing
e-commerce boom as the leading Holdings’ offshore investments to generated value and relationships
online fashion platform in the investments maximize gains for returns, while the with partners and
Ayala company made new continue looking
Philippines with close to 100 million
investments in funds for pockets of
visits in 2017. Zalora is engaging the and companies with opportunities within
young and tech-savvy market by disruptive strategies the real estate sector
providing them access to over 1,000
local and international brands and
reaching them through omni-channel
initiatives. Zalora is also expanding
its reach, serving areas beyond the
greater Metro Manila area, to include
far flung areas in the Philippines.
As a result of these efforts, net
merchandise value transacted through
Zalora grew at a healthy rate of 29
percent in 2017.
Mynt
In 2017, Mynt grew its customer base
by 1.6x, while doubling monthly
active users through its operating
subsidiaries, GCash and Fuse Lending.
GCash, Mynt’s mobile wallet platform,
allows users to buy load, send
money, pay bills, and purchase items,
among other conveniences. Fuse,
which serves as Mynt’s lending and
Zalora is one of the fastest growing online shopping platforms in the country.
microfinancing arm, complements
GCash’s suite of mobile money

CAPITALS CREATE WE
VALUE CREATE
Financial Pathfinder Ayala group

It infuses capital as needed to support It explores new trends, businesses, and • Explore innovative trends and
its various ventures, and when strategic relationships and invests in businesses business models that could transform
opportunities arise. that provide innovative and disruptive the Ayala group’s various businesses
solutions in evolving markets outside its
Manufactured cornerstones. Through the financial and • Invest in new ventures and business
Its e-commerce business uses intellectual capital it provides, it aims to partnerships that can complement
fulfillment infrastructure (i.e. scale up the impact of these businesses. existing businesses
warehousing facilities) in its operations.
Meanwhile, its fintech business uses Enabler
payment infrastructure. With its investments, it synchronizes Customers
innovative technologies and practices • Provide convenient access to
In Asia and the US, it has direct into the value chains of companies products and services through the
investments in real estate projects. across the Ayala group. The disruptive use of technology (Zalora and Mynt)
business models of companies it invests
Intellectual in can provide alternative solutions
Strong retail brands, e.g., GCash and to Ayala’s traditional brick and mortar
Zalora, and proprietary software operations.
systems enhance its position in
business.
An innovative mindset allows it to

spot disruptive opportunities, and
its knowledge of the market allows
management of investments.
Human
It has a diverse pool of talents who
seek out innovative ways of building
businesses
Zalora: ~300 employees
Mynt: ~400 employees
Social and Relationship

Strong partnerships with global and
local companies, including retailers
and suppliers, investors, and other
professional networks also serve as
vehicles for growth.
Its affiliation with the Ayala brand

bolsters its credibility.
INTO THE FUTURE 151

AYALA FOUNDATION
“Ayala Foundation remains true to its “AFI–3Cs—2Ps” strategy—alignment, focus, and impact, for the
benefit of our conglomerate, communities, and country, supported by competent people and processes. We
Ligula ullamcorper
continue malesuada
to make significant proin
headway libero nunc
in improving consequat
more lives through our programs.”
interdum
varius sit. Aliquam faucibus purus in massa. ” T. Maranan, President, Ayala Foundation
- Ruel
Who we are community aspirations. By serving

Ayala Foundation is the social as an advocate for community
development arm of the Ayala group. development, it helps improve
It develops, implements, and sustains
programs in education, youth
lives by creating and providing
opportunities for growth and P30M
leadership, sustainable livelihood, progress.
and arts and culture, and periodically
manages special projects, including It adheres to the highest standards
IN INVESTMENTS FOR MARAWI
initiatives in disaster recovery and of transparency and accountability. AND SIYAPEN INITIATIVES
rehabilitation, and other projects for It is certified by the Philippine
community development. Council for NGO Certification,
a self-regulating body which
Its headquarters are located in Makati certifies nonprofit organizations
City, with regional offices in Cebu City that meet established minimum
and Cagayan de Oro City. In 2017, its criteria for financial management 12,678
programs are directly implemented and accountability in service to
in 26 provinces and Metro Manila, but underprivileged Filipinos. Ayala
its program beneficiaries are present Foundation is an active member of
in other parts of the country and the civil society organizations such as the STUDENTS WHO BENEFITTED FROM
world. Association of Foundations and the THE CENTEX TRAINING INSTITUTE
League of Corporate Foundations.
Founded in 1961, Ayala Foundation The foundation has a mechanism
acts as a catalyst for inclusion that measures the impact and tracks
in bridging business needs and the outcomes of its initiatives.
175
FILIPINO YOUTH TRAINED BY THE
BANGSAMORO YOUNG LEADERS PROGRAM
10,896
Handcrafted products by the Iraya-Mangyan community in Puerto Galera are available for purchase in select STUDENTS REACHED BY GLOBAL
Ayala Malls. FILIPINO SCHOOLS

30 farmers are given
sustainable livelihoods
through MDC Farms in
Calauan, Laguna.
Market Outlook Business Review The first run of GNPower Kauswagan-

As the Filipinas Foundation when As it continues its journey to become LeadCom in Lanao del Norte trained 40
it was founded in 1961, the Ayala a bastion of community development, young leaders from eight youth groups
Foundation was the first corporate Ayala Foundation contributes to society and implemented eight youth-led
foundation in the country. Today, through its programs in education, community projects.
corporate foundations are numerous, youth leadership, sustainable
and work hand-in-hand with livelihood, and arts and culture. The Ayala Young Leaders Congress held
businesses to undertake community its 19th congress with 80 participating
outreach and other corporate social Ayala Foundation undertook a number youth leaders and continues to
responsibility activities. of initiatives in education for 2017. It be a venue for the Ayala group to
piloted ProFuturo, which uses digital strategically invest in the leadership
The civil society sector in the technology to provide access to skills of the youth.
Philippines has frequently been cited quality education, in Southeast Asia.
as one of the most well-developed Ayala Foundation, Spain’s ProFuturo The Community Engagement Plan
and institutionalized in the world. Foundation, and the Department of developed for Ayala Land’s Project
CSOs are cited for their role in Education signed an agreement to Lio identified enterprises with the
championing improvements in the bring the program to 31 schools in highest economic potential for Lio’s
delivery of social services, as well Palawan and Oriental Mindoro. surrounding communities. The market
as advocating greater social and study identified vegetable production,
economic participation among the The CENTEX Training Institute trained laundry service, on-call manpower
poor and underserved. 190 teachers in 17 sites, benefitting service, and choco-cashew production.
12,678 students. The two CENTEX
Based on recent estimates, there schools, meanwhile, registered a 98 The four-hectare ornamental farm
are about 60,000 registered percent cohort survival rate, 100 percent established in the Ayala property in
nongovernmental organizations in the promotion rate, and zero drop-outs. Calauan, Laguna, in partnership with
country today. However, only between the Makati Development Corporation,
200 and 300 of these organizations Global Filipino Schools was turned continued to provide sustainable
have passed the certification process over to Globe after reaching 11 income for 30 farmers.
of the PCNC. schools, 297 teachers, and 10,896
students. The Iraya Mangyan Development
The Pork Barrel Scam of 2013 and the Program served 280 families from an
NGOs that were used as channels to In youth leadership, the Bangsamoro indigenous community in Puerto Galera.
steal government funds negatively Young Leaders Program–Leadership
affected the civil society sector and put Communities provided training for Under its arts and culture initiatives,
it under great scrutiny. CSOs responded 175 young leaders from 35 youth Ayala Foundation partnered with
to the scandal by emphasizing greater groups in ARMM. Twenty-seven the Bank of the Philippine Islands
transparency and accountability, youth-led community projects were to manage the BPI Art Collection.
particularly in matters of corporate implemented by participants, despite This partnership will oversee the
governance and financial disclosure. the Marawi situation. cataloguing and assessment of almost
INTO THE FUTURE 153

400 significant artworks.
Through the Mañara art installation,

which was first opened at the Ayala
Museum Plaza in May, the works of
artists Toym Imao and Liliana Manahan
celebrated the richness, and sought
to foster a greater understanding
of Moro culture. Mañara was later
exhibited in Abreeza Davao, Ayala
Center Cebu, and Cotabato City.
The museum introduced its first fully

immersive Virtual Reality Experience of
Philippine History, bringing to life the Students are empowered through digital education, with AFI’s partnership with ProFuturo.
execution of National Hero Jose Rizal Strategy
for museumgoers to experience. Strategy Description Performance in 2017 Priorities in 2018
Align with the Strengthening Worked with Ayala Further enhance
Ayala Foundation also made a splash in conglomerate’s relationships with the group companies collaboration, synergy,
the international art scene, as the Ayala sustainability Ayala group through for community and partnership with
Museum became the first Philippine framework program partnerships engagement programs, Ayala group
including the pilot
museum to stage a collateral event at implementation of
the Venice Biennale. Highlighting the four new community
works of artist Fernando Zóbel, Zóbel enterprises for
Contrapuntos focused on the artist’s communities
surrounding Lio, a
Saetas and Serie Negra. partnership to assess
over 400 pieces from
Working with the city government BPI’s art collection,
of Marawi and Autonomous and an FHL-Manila
Water partnership
Region of Muslim Mindanao, the for document
Ayala Foundation completed the management
construction of the Siyapen Center, a Focus on community Implementing Sustained gains of Build on 2017 gains
facility envisioned to provide holistic programs development existing programs: for flagship programs
inpatient and outpatient care for programs relevant in education, youth
drug dependents. Following the to the needs of • CENTEX Training leadership, sustainable
communities Institute trained 190 livelihood, and arts and
Marawi siege, Siyapen also became a teachers culture
hub of economic activity for Marawi • LeadCom trained
residents, especially those in need of 215 young leaders,
short-term employment. The Ayala who implemented 35
community projects
group has invested as much as P30
million in Marawi- and Siyapen–
Have an impact on the Implementing • First Philippine Scale up programs to
related initiatives. country’s development programs and special museum to stage a reach a national scale,
goals and the projects that are collateral event at the and further promote
Ayala Foundation connected Ayala promotion of national aligned with the Venice Biennale Filipino pride both here
pride nation’s development • Worked closely with and abroad
companies to the Department of
goals, as well as government partners
Agriculture’s Corporate Rice Farming promote Filipino like the Department
Program, which links large institutional culture and identity of Agriculture and
buyers directly to rice farmers. This the Marawi City
governnment
was supported by the Ayala Multi-
• Piloted the ProFuturo
Purpose Cooperative and Ayala Land, education project in
and was launched in Iloilo (with Seda) Southeast Asia
and El Nido (with Ten Knots).
Strengthen people and Investing in the • Rolled out a training Strengthen Ayala
internal processes training and and development Foundation citizens
development of Ayala program under as advocates
Foundation talents, a community of community
supported by stronger development development, in
and more efficient framework support of expanded
internal processes • Instituted reforms programs
and controls in the
second year of a three-
year enterprise risk
management roadmap

CAPITALS CREATE WE
VALUE CREATE
Financial Education Programs Teachers and Students

Ayala Foundation has an adequate Providing access to high quality education Ayala Foundation increases the
endowment fund, building on strong for the poor through teacher training in proficiency of our teachers through
partnerships with private and public ICT; classroom management and critical coaching and mentoring, benefitting
donors to sustain flagship projects and thinking; scholarships; and center-based 12,678 students in 17 public schools.
new programs and initiatives. modelling of strategies. The foundation equipped schools with
ICT facilities to improve learning of
Manufactured Sustainable Livelihood 1,394 students from 33 public schools.
Ayala Museum offers a variety of art Providing access to capacity, capital, It also supported 123 scholars.
and library collections, permanent and technology and market link to low
travelling exhibitions on the rich history income families. Balanced early childhood care and
and artistic heritage of the nation, values formation supported the
cultivating pride in being Filipino. Youth Leadership early childhood formation of 80
Investing in potential leaders of the economically disadvantaged children.
Intellectual country and communities through youth
The foundation possesses expertise in leadership training. Communities
community development, program Livelihood projects implemented
management, education, research and Arts and Culture across the country helped the
publication, art curation, and impact Making Philippine history, culture, and communities improve economic
assessment using social return on art accessible and inspirational through productivity and cultural preservation.
investment as a framework. art exhibitions, and increasing brand and
advocacy awareness and reach through Through Ayala Museum, the
Human traveling exhibitions. foundation also helped widen
Its pool of committed talents has the cultural appreciation, both locally and
capacity to link the shared value created Employee Engagement internationally.
by Ayala business units to the needs of Providing opportunities for the Ayala
people with less capacity and access to group to exercise corporate citizenship Young Leaders
resources. and help the foundation’s partner schools It supported the development of
through Brigadang Ayala. young leaders and contributed to
Social and Relationship: their capacity building. These young
Good relationships and linkages leaders were able to ideate and
with local government units, local implement community-based projects
government agencies, non-government that improve livelihood and support
organizations, and community groups community development
Natural Employees
The Calauan property is utilized by Employees from across the Ayala
farmers to produce ornamental plants group are given opportunities for
for the requirements of MDC Greens volunteerism in communities that it
serves
INTO THE FUTURE 155

The Bonifacio Global City is an excellent example of Ayala Land’s
skill in developing mixed-use estates.

O U R G OV ER N AN CE
INTO THE FUTURE 157

GOVERNANCE:
THE BUSINESS OF BUSINESS
“We realized very early on that we needed to have a sharp focus on quantitative results and metrics for the
business to succeed. The business could not be compromised by unreasonable family needs or interests. It
had to be run in a highly professional manner with clear business objectives that were defined by the industry
environment.”
- Jaime Augusto Zobel de Ayala at the SharePhil Summit 2017
Governance has always been a of good governance; sought to include a combination of internal
hallmark of Ayala. Since becoming elevate the level of transparency; and and external mechanisms such as the
a publicly-listed company in 1976, ensured that integrity, accountability, structure, role, and responsibilities
Ayala has never wavered in its and fairness are hallmarks of of the board of directors, its
belief that good governance plays its dealings with shareholders, committees, and management; and
a paramount role in the success of customers, investors, and other sound policies and controls.
its businesses. Then or today, Ayala stakeholders. The basic elements of
has always adhered to the principles Ayala’s corporate governance system
KEY COMPONENTS OF AYALA’S GOVERNANCE SYSTEM (102-18)
BOARD OF DIRECTORS Corporate Secretary
CEO
President and COO BOARD COMMITTEES

Risk
Corporate Management Inspectors
Personnel
of Proxies
Executive Finance Governance Audit and Related and
MANAGEMENT and
and Party Compensation
COMMITTEES Ballots
Nomination Transactions
• Ayala Group
• Investment
• Ayala Corporation
SUPPORT FUNCTIONS
MANAGEMENT
TEAMS
Human
• Corporate Strategy and Finance Resources Internal Risk Management Human
Compliance
Development Audit and Sustainability Resources
Strategic Planning Internal
• Finance Office of
Audit
the Data
• Corporate Resources Protection
• Public Affairs Officer
• Corporate Governance
Office of the Corporate Secretary and Office of the Chief Legal Officer

Our governance framework is high standards allows us to retain the The Board also reviews and affirms
constantly evolving in line with the trust and confidence of our partners the true and fair representation of
expectations of regulators, investors, and stakeholders. We raise the bar the annual financial statements, as
and other stakeholders, which higher for ourselves by inculcating a it did for the financial statements for
have shifted over the years towards strong sense of commitment across fiscal year 2017.
greater board involvement and all levels of our organization and
more active oversight by the board upholding a corporate tradition BOARD COMPOSITION
and its committees. By continuously deeply rooted in integrity and trust, The structure, size, and composition
evaluating and improving our as well as an organizational culture of the Board are regularly reviewed
governance structures, systems, and that reinforces a well-rounded ethic and monitored by the Corporate
procedures, we are able to create in all that we do. Governance and Nomination
a balance between performance Committee.
and conformance, as well as remain BOARD STRUCTURE AND
relevant to the changing needs of PROCESS There is sufficient diversity in
society and the communities we thinking across our board of
serve. Having adequate controls KEY ROLES AND RESPONSIBILITIES directors, characterized by a
while complying with regulatory Leading Ayala’s governance combination of knowledge,
requirements and international system is its Board of Directors, experience, and expertise to guide
standards allows us to create a who provides active management management as it addresses issues
sustainable enterprise for the long- oversight; encourages a culture of facing the company, new challenges
term. Ayala is in full compliance with trust, openness, and constructive and market opportunities. There
the Code of Corporate Governance dissent; and ensures individual is also an appropriate mix of non-
for Publicly-Listed Companies set accountability. As mandated by its executive and executive directors.
forth by the Securities and Exchange Charter, its roles and responsibilities
Commission, supported by an include establishing the vision, as • Ayala’s Board of Directors is
attestation from the company’s CEO, well as the strategies, key company composed of seven directors from
Compliance Officer, and Chief Audit policies, and mechanisms to monitor, a wide variety of backgrounds,
Executive for 2017. evaluate and improve management’s all of whom possess expertise in
performance. In exercising its powers a range of disciplines, including
Ayala’s corporate governance and duties, the Board considers the economics, finance, accounting,
practices have been consistently best interest of the company, its business, and contract,
recognized in various awards, polls, shareholders, and other stakeholders. commercial, and international law.
and publications in the Philippines • Each director is elected by the
and in the region. In 2017, for The Board oversees the business affairs shareholders annually and serve
the fourth consecutive year in of the company. It meets regularly and for a term of one year
FinanceAsia’s annual poll, Ayala allots time to discuss strategic issues • 71 percent of the Board is
Corporation was ranked second with the Ayala Group Management composed of non-executive and
in the “Best Managed Companies Committee to gain insights into independent directors
in the Philippines” category. Ayala each specific business area. It leads • None of the independent directors
was also recognized in the same the review of the company’s vision own more than two percent of the
poll as the “Most Committed to and mission every year, revisits and outstanding capital stock
Corporate Governance,”“Best at approves the group’s corporate • The profile of each director can
Corporate Social Responsibility,” and strategy and performance objectives, be found in the Board of Directors
ranked fifth for “Investor Relations.” and monitors its implementation. section of this report on page 33.
Its Chairman and Chief Executive In 2017, the Board reviewed and
Officer, Jaime Augusto Zobel de affirmed the appropriateness of We ensure an independent minority
Ayala, was ranked third for “Best the Ayala Corporation’s vision and representation in the Board and the
CEO.” Ayala also ranked 18th in the mission statement. The Board reviews exercise by minority shareholders
list of Forbes Magazine’s “Global and ensures the adequacy of the of their rights, including the right to
2000: World’s Best Employers,” the only company’s internal control mechanisms cumulative voting in the election of
Philippine company in the top 20. and risk management process for directors and appraisal right.
good governance, and the proper
Good governance is an important implementation of the Code of Conduct INDEPENDENT DIRECTORS
pillar of our operations. Adhering to and Ethics. The Board is currently composed
INTO THE FUTURE 159

of seven members, including three CHAIRMAN AND VICE CHAIRMAN meeting, enabling them to make
independent directors who make (102-23) informed decisions. In addition to the
up more than 40 percent of the The Chairman of the Board is company’s and group’s performance,
Board’s membership: Xavier P. Loinaz, Jaime Augusto Zobel de Ayala, the Board agenda includes reports
Antonio Jose U. Periquet, and Ramon who assumed the position in 2006. on emerging risks; updates on
R. Del Rosario, Jr. Fernando Zobel de Ayala has held sustainability, business, and the
the position of Co-Vice Chairman regulatory environment; and reports
Aside from their fees and since 1994, and has been the sole of the different Board Committees.
shareholdings, independent directors Vice Chairman since 2006. This provides the Board with critical
have no interest or relationship with information on key issues; current
the company that may hinder their The positions of Chairman of the trends, challenges and opportunities
independence from the company Board and CEO are held by the same in the industries in which the Ayala
or management, or that could person. The company’s corporate group is present; and developments
reasonably be perceived to interfere governance principles, which include that may have a significant impact on
with their exercise of independent clear and well-understood roles and the group.
judgment in carrying out their responsibilities, as well as a culture of
responsibilities as directors. open communication with the CEO Discussions during Board meetings
and senior management, enables are open, with independent
Ayala has set a term limit of nine the Board to maintain independent views given due consideration. In
years for its independent directors reviews and quality discussions at accordance with company policy,
in accordance with the rules set meetings. Board members are required
by the SEC. As of 2017, none of to abstain from participating in
the independent directors have LEAD INDEPENDENT DIRECTOR discussions on an agenda item in
served the company for more than Xavier P. Loinaz was appointed Lead which they may have a conflict of
nine years, reckoning from 2012, in Independent Director by the Board interest.
compliance with SEC Memorandum at its organizational meeting held on
Circular No. 9, series of 2011. April 21, 2017. His role includes, among Each fiscal year, the Board meets at
others, acting as an intermediate least six times, with the schedule of
Moreover, none of the directors or between the Chairman of the Board Board meetings determined before
senior management have worked and the other Directors, if and when the start of each financial year.
for Ayala’s external auditing firm needed; convening and chairing All the directors recorded perfect
within the three years immediately the periodic meetings of the non- attendance for all Board meetings in
preceding the date of their election executive directors with the external 2017. Refer to page 198 for specific
or appointment. auditor and heads of internal audit, details on attendance.
compliance and risk management,
The non-executive and independent as needed; and contributing to In line with the guidelines
directors met on April 21, 2017 the performance evaluation of the in conducting performance
without the presence of Chairman of the Board. assessments, each year, the Board
the executive directors and conducts a review to evaluate
management. The meeting was BOARD PERFORMANCE (102-28) the performance of the Board, its
chaired by the Lead Independent The Board is committed to fulfilling Committees, and its individual
Director, Xavier P. Loinaz. Discussions its duties and responsibilities and members; to measure the
during the meeting revolved dedicates ample time for their effectiveness of the company’s
around cascading the role of the meetings. The presence of at governance practices and identify
non-executive directors under the least two-thirds of the number of areas for improvement; and
Code of Corporate Governance directors, as fixed in the Articles of to adopt new methodologies
for Publicly-Listed Companies. The Incorporation, constitutes a quorum towards further strengthening the
directors also exchanged ideas for the transaction of business. company’s corporate governance
on management succession and standards. Each of the directors
retirement issues, the identification The annual calendar of activities was requested to complete a self-
of potential female nominees to the for the Board and Committees are assessment form which includes
Board, technology and/or cyber risk established and approved at the start criteria such as: (1) structure of the
security issues, the performance of the year. To effectively perform Board, (2) shareholder benefits,
of the company’s share price, their roles and responsibilities, the (3) fulfillment of the Board’s key
and the quality of the company’s Board is supported by the Corporate responsibilities, (4) oversight
partnerships. The Corporate Secretary who monitors the calendar function, (5) effectiveness of the
Secretary also informed the directors for the Board and Committees Board’s processes and meetings, (6)
that, at the time, Ayala Corporation and ensures that the materials are quality of the Board-management
was preparing to comply with the made available at least five working relationship, (7) corporate ethics, and
requirements of the Data Privacy Act. days in advance of the scheduled (8) performance evaluation.

The results of the self-assessment All directors and senior management data and information, and apprise
survey were compiled by the met the SEC requirement to undergo participants of the movement
Compliance Officer and were corporate governance training towards greater transparency in both
reported and discussed during annually, through their attendance in government and the private sector.
the June 22, 2017 Board meeting training administered by either the
immediately following the Institute of Corporate Directors, or Ayala has also sponsored the ICD’s
completion of the survey. SGV & Co., both accredited training Distinguished Corporate Governance
providers of the SEC. Speaker Series for the past four years,
CORPORATE SECRETARY in support of the ICD’s advocacy to
As the Corporate Secretary, Atty. As a group-wide initiative, a promote professional directorship in
Solomon M. Hermosura plays Corporate Governance and Risk line with global principles. The series
an important role in supporting Management Summit has been held brings together the world’s foremost
the Board in the fulfillment of annually since 2014. The summit thinkers and corporate governance
its responsibilities. Among his serves as a venue for collaboration, practitioners in a forum to help
responsibilities are: assisting the promotes the importance of Philippine corporate directors add
Chairman in preparing the Board strengthening our corporate value to their boards.
meeting agenda, maintaining Board governance structures, and acts as
minutes and records, facilitating the a continuing education program DIRECTOR COMPENSATION
training of directors, and providing for the Board, CEOs, and senior The Personnel and Compensation
directors with updates on relevant management. In August 2017, the Committee has the responsibility
statutory and regulatory changes. group held its summit with the to recommend to the Board
He is knowledgeable on legal and theme of “Right to Privacy and remuneration packages for directors,
regulatory requirements and has Obligation to Transparency.” Its goal ensuring that compensation is
kept well-informed on relevant was to provide an overview of the consistent with the company’s
developments by taking on a part- changes in the Philippine regulatory culture, strategy, and control
time role in teaching graduating law landscape, particularly surrounding environment, and aligned with
students; appearing as a speaker
in various public fora; and taking
executive development programs
such as the Comparative Tax Policy
and Administration Program from
the Harvard Kennedy School in 2016.
Atty. Hermosura was also recognized
as “Company Secretary of the Year,”
“among Asia’s best,” by Corporate
Governance Asia in November 2014.
TRAINING OF DIRECTORS (102-27)

Ayala ensures that it provides
its directors with updates on
current trends and relevant
training. The company allocates
National Privacy Commissioner Raymund Liboro confers with Chairman and CEO Jaime Augusto Zobel de Ayala
an annual training budget for its at the 2017 Ayala CGRM Summit.
directors and encourages them
to attend continuing professional
development programs and other
applicable courses, conferences,
and seminars. All new directors
must undergo an orientation
program on the company’s business
and structure, vision and mission,
business strategy, Governance
Codes and Policies, Articles, By-Laws,
Corporate Governance Manual,
Board and Committee Charters,
SEC-mandated topics on governance
matters and other subjects essential
for the effective performance of their
duties and responsibilities. The CGRM Summit is a platform through which the group’s Board of Directors and executives can keep abreast of
trends and best practices in governance.
INTO THE FUTURE 161

the long-term interests of the
company and its stakeholders. Total
remuneration or changes thereto are
approved by the stockholders during
the annual stockholders’ meeting.
On April 21, 2017, upon the

recommendation of the Committee,
the Board approved a resolution
fixing the current remuneration of
non-executive directors. The power
of fixing the fees was delegated by
the stockholders to the Board during
the annual stockholders’ meeting
in 2011 and is as provided for in the
amended by-laws.
Non-executive and independent

directors are Board members who
are not officers of the company. They
receive remuneration consisting
of: 1) an annual retainer fee of
P3,000,000; 2) a per diem of P200,000
for each Board meeting attended;
and 3) a per diem of P100,000 per The Distinguished Corporate Governance Speaker Series allows global practitioners and thought leaders to share
Committee meeting attended. their insights and experiences with Philippine corporate directors.
None of the non-executive and

independent directors have been In 2017, the following directors received gross remuneration as follows:
compensated by Ayala for services Director Gross Remuneration
other than those provided as a
director. They are not entitled to Yoshio Amano 900,000.00
stock options and performance Delfin L. Lazaro 5,600,000.00
bonuses from the company. Xavier P. Loinaz 4,950,000.00
Keiichi Matsunaga* 4,700,000.00
As executive directors, Jaime
Augusto Zobel de Ayala and Antonio Jose U. Periquet 5,850,000.00
Fernando Zobel de Ayala do not Ramon R. Del Rosario, Jr. 5,450,000.00
receive remuneration for attending TOTAL 27,450,000.00
Board meetings.
*Mr. Keiichi Matsunaga was elected to be a member of the Board, replacing Mr. Yoshio
Amano, on April 21, 2017
An economic briefing is held every year to apprise employees and executives of the domestic, regional, and global economic outlook.

BOARD COMMITTEES (102-22)
The Board has created the following committees to assist in exercising its authority and responsibilities, and to aid in good
governance:
Executive Finance Corporate Audit Risk Personnel and Committee of
Committee Committee Governance Committee Management Compensation Inspectors of
and and Related Committee Proxies and
Nomination Party Ballots***
Committee Transactions
Committee
Jaime Augusto Zobel de Ayala C M

Fernando Zobel de Ayala M M
Keiichi Matsunaga* M M M M
Ramon R. Del Rosario, Jr.** C M M C
Delfin L. Lazaro* C M
Xavier P. Loinaz** M C
Antonio Jose U. Periquet** M M C
Solomon M. Hermosura C
Catherine H. Ang M
Josephine G. De Asis M
C - Chairman *Non-executive Director
M - Member **Independent Director
***May not be members of the Board of Directors
The Nomination Committee was Corporation and Manila Water reviews, and evaluates the financial
renamed “Corporate Governance Company, Inc. affairs of the company.
and Nomination Committee” in • Additional Capital Infusion into AC The Committee approved various
May 2017 to expand its role and Infrastructure Holdings Corp. and transactions in 2017:
assist the Board in the performance Disbursement of Funds for MCX’s • Additional Equity Infusions and
of its corporate governance Capital Expenditures, as well as Advances to Wholly-owned
responsibilities. AC Ventures Holding Corp. and its Subsidiaries of the Company
Initial Investments • Allocation and Use of the P2
Board Committees are established • Partial In-Kind Redemption of Billion General Investment Fund
to provide focus on specific Board Arran Investments Pte. Ltd.’s • Issuance of Fixed-For-Life Bond of
functions and assist the Board in Redeemable Preferred Shares in up to US$400 Million
the optimal performance of its roles Liontide Holdings, Inc. • Sale of Shares Held as Available-
and responsibilities. The rights and • Actions Relating to the Code of For-Sale
responsibilities of each Committee Corporate Governance for Publicly • Availment of Credit Facilities and
delegated by the Board are defined Listed Companies Authorized Counterparties for
in the specific Committee Charters • Reduction of Investment in Bestfull Peso Yield Enhancer/Investment
duly approved by the Board, all of Holdings Ltd. Products
which are available on the company’s • Issuance of Up to US$400 Million • Exercise of Right of First Refusal
website. Guaranteed Undated Notes by AYC over Renewable Energy Test Center
Finance Limited Shares
Executive Committee • Sale of Shares Held as Available- • Capital Allocation for Ayala
The Executive Committee has the For-Sale Education, Inc., AC Education, Inc.,
authority to exercise the powers • Execution of Amended and AC Industrial Technology Holdings,
and perform the duties of the Board Restated Equity Support Inc., and AC Energy Holdings, Inc.
within the powers granted to them. Documents for AC Energy’s GNPD • P30 Billion Shelf Registration
It acts by majority vote of all its Expansion • Availment of a Revolving USD
members during the intervening • Obtention of Confidential Credit Credit Facility from Bank of China
period between scheduled Board Rating from S&P Global Ratings • Bilateral Fixed Term Loan Facility
meetings. • Engagement of SWIFT’s Services from UnionBank of the Philippines
• Additional Capital Allocation for AC • Peso Yield Enhancers or
The Committee reviewed and Education, Inc.’s Project Gamma Investment Products
approved the following transactions • Investment in AC Infra for Logistics
in 2017: Business The Finance Committee had 10
• Renewal and Amendment of meetings in 2017. Refer to page 198
Administrative Support and Finance Committee for details on attendance.
Services Agreement between the The Finance Committee oversees,
INTO THE FUTURE 163

Corporate Governance and Corporate Governance and for the oversight of the company’s
Nomination Committee (102-24) Nomination Committee enterprise risk management system.
The Corporate Governance and The Committee ensures that
Nomination Committee is appointed The Corporate Governance and management maintains a sound
by the Board. This Committee is Nomination Committee is composed risk management framework and
tasked with ensuring that good of three members, all of whom are internal control system to mitigate
corporate governance principles independent directors, including the material risk exposures identified
and practices are complied with chairman. The Committee had three by the company. The Board also
and observed by the company. This meetings in 2017, during which the assigned the Committee to review
includes the adoption of an effective Chairman and members were all all material RPTs for endorsement to
Board process in the nomination, present. Refer to page 198 for details the Board to ensure that these are at
election, or replacement of Board on attendance. arm’s length, the terms are fair, and
members and the review of the they will inure to the best interest of
succession plans for members of the Audit Committee the company and its subsidiaries or
Board and senior executives. The To assist the Board in fulfilling its affiliates and their shareholders.
Committee strives to ensure that responsibilities, the Audit Committee
the Board composition allows it to oversees matters relating to the During the financial year, the
exercise effective decision-making financial statements and financial Committee reviewed and confirmed
powers by maintaining a suitable reporting process, external auditors, that the company’s risk management
number of independent directors. internal auditors, internal control, processes are effective. The
and compliance with applicable legal Committee also reviewed various
Annually and as necessary (i.e. and regulatory requirements. material RPTs and ensured that all
upon vacancy of position or when the transactions are at arm’s length
additional directors are required), As part of its function, the Audit prior to endorsement to the Board
the Committee recommends to Committee conducts a review on for approval. The Committee also
the Board qualified individuals the work performed and reports reports annually to the Board with
for nomination and election as provided by both internal and descriptions on how it carried out
directors based on the established external auditors. Based on the its responsibilities. Refer to the Risk
criteria to ensure sufficient diversity assurance gathered from the Management and RPT Committee
in the Board and aligned with the auditors as a result of their 2017 report on page 201 for the highlights
company’s vision, mission, strategic reviews, the Committee assessed of its 2017 activities.
directions, its By-Laws, Revised the company’s systems of internal
Manual of Corporate Governance, controls, risk management, and The Risk Management and RPT
and the rules of the SEC. For this governance processes to be Committee is composed of three
purpose, the Committee may make adequate. The Committee also members, the majority of whom are
use of professional search firms or reports annually to the Board, independent directors, including the
other external sources of candidates describing how their responsibilities chairman. The Committee had three
to search for qualified candidates to were discharged, as well as any other meetings in 2017, during which the
the Board. information required by law. Refer to Chairman and members were all
the Audit Committee report on page present. Refer to page 199 for details
The Committee’s accomplishments in 200 for the highlights of its 2017 on attendance.
2017 were: activities.
• The review of the qualifications of Personnel and Compensation
all persons nominated to positions The Audit Committee is composed Committee
requiring appointment by the of three members, the majority of The Personnel and Compensation
Board whom are independent directors, Committee is responsible for
• The approval of the final list of including the chairman. At least establishing a formal and transparent
nominees for directors for election one of the members possesses procedure for the development of
at the 2017 annual stockholders’ a background and expertise in a policy on executive remuneration
meeting after ensuring that all accounting. The Committee had four and for fixing the remuneration
nominees to the Board have met meetings in 2017. Refer to page 199 packages of corporate officers
all the qualifications and none of for details on attendance. and directors, ensuring that
the disqualifications as set forth compensation is consistent with
in the corporation’s By-Laws and Risk Management and Related the company’s culture, strategy, and
Revised Manual of Corporate Party Transactions Committee control environment; and is aligned
Governance, as well as the rules of To assist the Board on risk with the long-term interests of the
the SEC governance processes, a board- company and its stakeholders, while
• The approval of the revision of level Risk Management and Related remaining competitive against the
Committee Charter and additional Party Transactions Committee was market. The Committee is guided
functions as the reconstituted organized, which is responsible by the objective of ensuring that

the level of compensation should fairly • Provide updates to the Board corporate goals, annual targets,
pay directors for the work required, on the implementation of the and long-term strategic plans. It
considering the company’s size and scope. company’s strategy also adopts a performance-based
variable compensation scheme using
The Committee’s accomplishments in The respective roles of the Chairman the KRA scorecard accomplishments
2017 were: and CEO and the President and COO as metrics. In addition, Ayala provides
• The approval of the performance are complementary and ensure a a long-term incentive program for
bonus and merit increases of the strategic distribution of leadership senior executives and key talents.
company’s employees functions with clearly defined From the three percent of the
• The approval of the 2017 Employee accountabilities: company’s authorized capital stock
Stock Ownership Plan allocated by the stockholders, the
• The CEO takes the lead on Board approved the grant under the
The Personnel and Compensation company strategy, visioning, and stock ownership program to eligible
Committee is composed of three developing business partnerships. executives in April 2017. The basis
members, chaired by an independent • The President and COO is for grants is a consistent outstanding
director. The Committee had one responsible for daily operations, performance record over a period of
meeting in 2017. Refer to page 199 for new business initiatives, corporate three years. The grant price is based
details on attendance. policies, and resource allocation. on the PSE volume weighted average
price over 30-day trading days
Committee of Inspectors of Proxies In all functions and critical issues, ending April 17, 2017.
and Ballots both coordinate closely with each
The Committee of Inspectors of Proxies other. The Chairman and CEO and MANAGEMENT COMMITTEES
and Ballots has the responsibility of the President and COO are supported Management has created
ensuring that the validating process of by management committees committees to ensure that decision-
the proxies and ballots is transparent, composed of key executives who making is always made in the
fair, and in accordance with applicable meet regularly to discuss business best interest of the organization.
laws, regulations, and company performance and issues critical to Initiatives which are reviewed and
policies. the growth of the company, and to endorsed by management-level
facilitate the flow of strategic and committees are discussed at length
The Committee’s accomplishments in operational information among the with the appropriate Board-level
2017 were: company’s decision-makers. Committees for approval and
• The validation and tabulation of the consequently, for endorsement to
proxy votes received for the 2017 The Board, CEO, and senior the full Board for ratification.
Annual Stockholders’ Meeting leadership team are also supported
• The tabulation of the stockholders’ by the Chief Legal Officer. Through Ayala Group Management
votes for items taken up during the his deep knowledge of the law and Committee (102-20)
2017 Annual Stockholders’ Meeting regulations, he acts as an advisor The Ayala Group Management
on a range of issues and strategies Committee is composed of the
The Committee met twice during the to minimize legal risks, and on legal Chairman and CEO, the President
year where the Chairman and the matters and protocols that relate and COO, the five Ayala Corporation
members were all present. Refer to to their roles and the company’s Group Heads, and the CEOs of
page199 for details on attendance. operations. the Ayala group companies. The
Committee oversees the group
MANAGEMENT A culture of good governance strategic plan and ensures the
is fostered throughout the alignment of individual business
ROLES AND RESPONSIBILITIES organization, with the management unit priorities to the group-wide
Management is accountable to the and the Board equally responsible direction. It meets regularly to review
Board of Directors for the operations for ensuring that the mechanisms business performance, discuss
of the company and its performance. and structures for good governance group-wide issues and events, and
Furthermore, they: are securely in place. The Chairman identify areas of possible synergy
• Define the company’s business and CEO, the President and COO, and collaboration. The full profiles
objectives and goals in concrete and and members of the management of the Ayala Group Management
specific terms committees attend the annual Committee members can be found
• Execute the Board-approved stockholders’ meetings. on pages 204-206.
strategies for achieving these
targets SENIOR EXECUTIVE Investment Committee
• Inform the Board in a regular and COMPENSATION The Investment Committee is
timely manner about any issues Ayala provides market-competitive composed of the Chairman and
concerning the company’s strategy, executive compensation and CEO, the President and COO, and
risk management, and compliance benefits, which are aligned to key members of the company’s
INTO THE FUTURE 165

senior management. The IC the appointment and removal of There were no disagreements with
reviews, provides direction, and the external auditor. The Audit the company’s external auditor on
gives preliminary approval for Committee also oversees the work any matter of accounting principles
initiatives that may originate from of the external auditors and ensures or practices, financial statement
the company or its subsidiaries that they have unrestricted access to disclosures, or auditing scope or
specifically requiring funding from records, properties, and personnel procedures.
the company. Once a project clears to enable the performance of the
the IC, it is endorsed for approval to required audit. The Audit Committee Internal Auditors
the appropriate Board Committee had an executive session with Internal Audit supports the
and to the full Board. the external auditor in November Audit Committee in the effective
2017 without the presence of discharge of its oversight role and
Ayala Corporation management. responsibility. The Chief Audit
Management Committee Executive, Catherine H. Ang, reports
The Ayala Corporation Management All audit, audit-related, and permitted functionally to the Audit Committee
Committee includes the Chairman non-audit services rendered by the of the Board of Directors, and
and CEO, the President and COO, and external auditor must be approved administratively to the President
the five Group Heads. The Committee by the Audit Committee to ensure and Chief Operating Officer or his
approves corporate, administrative, that the external auditor maintains designate.
and organizational matters that the highest level of independence
pertain exclusively to the company, from the company, both in fact and Internal Audit adopts a risk-based
as well as group-wide affairs when appearance. Non-audit services audit approach in developing
relevant. expressly prohibited by regulations its annual work plan, which is
of the SEC are awarded to other audit reassessed quarterly to consider
INTERNAL GOVERNANCE firms to ensure that the company’s emerging risks. The Audit
MECHANISMS external auditor carries out its work in Committee reviews and approves
an objective manner. the annual work plan and all
STRATEGY FORMULATION AND deviations therefrom, and ensures
EXECUTION Total fees billed by SGV and Co. that internal audit examinations
Ayala utilizes an inclusive and for the years ended December cover the evaluation of adequacy
iterative approach in crafting and 31, 2017 and 2016 amounted to and effectiveness of controls
executing a long-term strategic plan P11.09 million and P17.04 million, encompassing the company’s
for the entire Ayala Group. respectively, inclusive of VAT. governance, operations, and
As these plans are finalized, we The Audit Committee reviewed information systems, reliability and
also ensure that risk is managed the nature of non-audit services integrity of financial and operational
appropriately using a robust risk rendered by SGV & Co. and the information, safeguarding of assets,
management process. Refer to pages corresponding fees and concluded and compliance with laws, rules,
52-55 for a discussion on Ayala’s that these are not in conflict with and regulations. The Committee
risk management mechanisms, and their function as the company’s also ensures that audit resources are
pages 56-58 for a discussion on the external auditor. The breakdown of adequate and reasonably allocated
company’s principal risks. the fees for 2017 and 2016 are shown to the areas of highest risk.
below:
ACCOUNTABILITY AND AUDIT As of 2017, the audit team has
External Auditors (Amount in millions of pesos) an average of 12.4 years audit
SGV & Co. is the external auditor of External 2017 2016
experience and an average of
the company for the year 2017, with Auditor Fees 7.5 years tenure in the company.
Lucy L. Chan as the lead engagement Audit and Audit- P10.97 P15.85 The audit team has the following
partner. During the Annual Related Fees certifications and professional
Stockholders’ Meeting last April 21, Non-Audit Fees 0.12 1.19 affiliations: certified public
2017, the shareholders re-appointed accountants, certified internal
Grand Total P11.09 P17.04
SGV & Co. as the company’s external auditors, a certified risk management
auditor. The external auditor’s Audit and Audit-Related Fees include the audit of
assurance practitioner, a certified
responsibility is to assess and provide Ayala Corporation’s annual financial statements foreign exchange professional, IT
an opinion on the conformity of and the mid-year review of financial statements auditors, a crisis communication
in connection with the statutory and regulatory planner; certified in ISO 9001, ISO
the audited financial statements filings or engagements for the years ended 2017
with Philippine Financial Reporting and 2016. This also includes assurance services
22301, ISO 27001, IT Infrastructure
Standards and the overall quality of that are reasonably related to the performance of Library, COBIT 5 (F), and Global
the financial reporting process. the audit or review of Ayala’s financial statements Innovation Management
pursuant to the regulatory requirements. Institute Level 1; and a member
The Audit Committee has the Non-Audit Fees include one-time, non-recurring
of the Financial Executives of the
primary responsibility to recommend special projects, consulting services and seminars. Philippines, and a fellow of the

Institute of Corporate Directors. disciplinary action There were no cross or pyramid
All the internal audtiors are also • Ensures the integrity and accuracy shareholdings.
members of the Institute of Internal of all documentary submissions to
Auditors-Philippines and adopt the regulators Accurate and Timely Disclosures
International Professional Practices • Identifies and manages Ayala is committed to providing
Framework promulgated by The compliance risks quality, accurate, and timely disclosures
Institute of Internal Auditors, Inc. • Ensures that the company adheres to regulators and the investing
to sound corporate governance public, including information on the
Ayala’s Internal Audit adopted and best practices results of its operations and financial
portfolio-based subsidiary oversight • Issues an annual Integrated Annual performance. There are procedures for
to standardize the implementation Corporate Governance Report that internal reporting and ensuring that
of good practices and ensure that is duly signed under oath by the disclosures are promptly provided
critical issues are monitored and Chairman, Chief Executive Officer, to the investing public on significant
addressed across the Ayala group. or President, all independent and market sensitive information
Synergy is also strengthened within directors, the Compliance Officer, that may affect their decisions. Ayala
the internal audit functions of the and the Corporate Secretary conducts investors’ meetings and
group, including its subsidiaries • Facilitates a yearly performance quarterly analysts’ briefings, as well
and affiliates, by sharing resources, assessment of the Board, Board as press briefings, where the senior
knowledge, tools, and best practices Committees, and individual management discusses the results
through the Ayala Group Internal members of the Board using a of the company’s operations with
Auditors’ Network Council, four formal self-rating system investment and financial analysts. Refer
AGIAN Circles, and AGIAN quarterly • Performs other such duties and to pages 172-175 for more details.
technical sessions. In November responsibilities as may be provided
2017, AGIAN also held its 2nd Chief for by the SEC All relevant disclosures are filed
Audit Executive Forum and 19th in a timely manner with the SEC,
Annual Conference with the theme On April 27, 2017, Atty. Hermosura Philippine Stock Exchange, and
“The Future is Now. Internal Audit participated as a panelist on Philippine Dealing and Exchange
and the New Reality” to further Unity in Diversity: The Changing Corporation. Policies and procedures
strengthen collaboration among Role of the In-House Counsel and are in place to make sure that Ayala
internal auditors and increase their Legal Profession within an ASEAN consistently complies with disclosure
awareness on digital disruption and Integration at the Asian Legal requirements under the listing rules
business model transformation. Business Philippine In-house Legal of the SEC, PSE, and PDEx.
Summit.
To equip the internal auditors with
the required auditing skills during DISCLOSURE AND TRANSPARENCY
the conduct of their reviews, the Ownership Structure (102-5)
company provides continuing As of December 31, 2017, Ayala’s outstanding common shares were held as follows:
training and development programs,
Outstanding % Ownership
from specific job skills to long-term
Common Shares
professional development.
Mermac, Inc. 296.3 million 47.68
CHIEF COMPLIANCE OFFICER PCD Nominee Corporation (Non-Filipino)* 168.2 million 27.07
As Ayala’s Compliance Officer, Atty. PCD Nominee Corporation (Filipino)* 71.3 million 11.48
Solomon M. Hermosura: Mitsubishi Corporation 63.1 million 10.15
• Ensures the proper onboarding of Others 22.5 million 3.62
new directors and the attendance
Total 621.4 million 100
of Board members and key officers
to relevant trainings *Out of the 239.5 million common shares registered under the name of PCD Nominee Corporation, 67.1
• Monitors, reviews, evaluates, million or 10.81% are for the account of Deutsche Bank Manila while 60.96 million or 9.81% are for the
account of Hongkong Shanghai Banking Corporation.
and ensures compliance by the
company, its officers and directors Outstanding Shares % Foreign Owned
with relevant laws, the Code of Common Shares 621.3 million
Corporate Governance for Publicly
Voting Preferred Shares 200.0 million
Listed Companies, and relevant
rules and regulations, as well Total Voting Shares 821.3 million 32.58
as all governance issuances of Preferred B Series 1 Shares 20.0 million
regulatory agencies Preferred B Series 2 Shares 27.0 million
• Reports to the Board if violations Total Outstanding Shares 868.3 million 30.83
are found and recommends
the imposition of appropriate
INTO THE FUTURE 167

As a result of Ayala’s continued overall value creation. Refer to disseminated to the public and
efforts to provide timely and relevant pages 40-43 and 72-74 of this report three full trading days had lapsed
information: for the financial and non-financial from the disclosure thereof.
• On April 11, 2017, the Annual performance indicators, respectively.
Report (SEC Form 17-A) together Reporting of Transactions
with the consolidated audited Ayala has an existing policy on Guidelines for all directors, officers,
financial statements for 2016 were Related Party Transactions. These are employees and consultants on when
submitted to the SEC, within 120 transactions between the company to declare trades have been clearly
days after year-end or any of its subsidiaries or affiliates established and implemented.
• On February 06, 2017, the Notice of and a related party which shall be
the Annual Stockholders’ Meeting subject to review and approval to All directors and officers from
with a detailed explanation of the ensure that they are at arm’s length, Managing Directors and above,
Agenda items was released to the fair, and will inure to the best interest and the Comptroller, Chief Audit
SEC and PSE, 74 days ahead of the of the company and its subsidiaries Executive, Chief Risk Officer,
scheduled annual meeting on April or affiliates and the shareholders. Treasurer, Corporate Secretary, and
21, 2017 These transactions may include Assistant Corporate Secretary must
• On March 22 and 26, 2017, the sales and purchases of goods and report all acquisitions or disposals, or
audited financial statements services to and from related parties any changes in their shareholdings
as contained in the Definitive that are concluded at normal in the company within three trading
Information Statement were commercial terms consistent with days from the transaction date,
submitted to the SEC and PSE, the principles of transparency two days earlier than the five-day
respectively, 26 days before the and fairness. As per policy, the disclosure requirement of the PSE. All
annual stockholders’ meeting company or a related party or any other officers and employees must
• Interim or quarterly financial of its subsidiaries or affiliates, as the submit a quarterly report on their
statements and results of case may be, shall disclose material trades of company securities to the
operations were submitted to the RPTs to the Risk Management and Compliance Officer.
regulators within 45 days from the RPT Committee for review and
end of the financial period. approval prior to entering into the Refer to page 203 for the directors’
transaction, unless it is considered and officers’ reported trades in Ayala
This information, past annual reports, as a pre-approved RPT. Material Securities in 2017.
and this Integrated Report and RPTs are transactions that meet the
the consolidated audited financial threshold values – P50 million or Trading Blackouts
statements are readily available five percent of the total assets of The Policy on Insider Trading provides
through the company’s website. either party, whichever is lower. that all directors, officers, consultants,
and employees of the company who
Refer to page 202 for the There were no RPTs classified as may have knowledge of material
company’s filings in 2017, including financial assistance to entities other facts or changes in the affairs of Ayala
unstructured disclosures and than wholly-owned subsidiaries. that have not been disclosed to the
clarifications of news reports. There were also no cases of non- public, and members of covered
compliance with the laws, rules, persons’ immediate families are
Financial and and regulations pertaining to prohibited from trading in Ayala’s
Non-Financial Reports significant or material RPTs in the shares during the trading blackout
Through the Audit Committee, the past three years. RPTs are discussed period commencing 10 trading days
Board has a responsibility to the and quantified in the Notes to the before and three trading days after
shareholders to ensure the integrity Consolidated Financial Statements, the disclosure of quarterly and annual
of the company’s consolidated which are made available on the financial results. In addition, they are
financial statements and any company’s website. also required to submit annually a
financial information disclosed in the certification of compliance with the
company’s Integrated Report. These POLICY ON INSIDER TRADING prohibition against trading during the
financial statements comply with Ayala adheres to zero tolerance for all blackout periods.
the Philippine Financial Reporting unethical practices and is committed
Standards. to complying with all relevant laws In 2017, notices of trading blackouts
and standards. were disseminated and issued to
Both financial and non-financial all covered personnel via e-mail.
performance indicators are To protect shareholders, the Compliance was strictly enforced
disclosed and thoroughly discussed company defined a policy against during these trading blackout periods
in the Integrated Report to help insider trading of company securities and there have been no violations
shareholders appreciate the and non-disclosure of material of the company’s policy on insider
company’s various businesses and non-public information to any trading in the past three years.
their impact on the company’s person until the information is

STAKEHOLDER RELATIONS Please refer to pages 59-61 for responsibilities. The Code is
Ayala aims to adhere to the highest further discussion on Ayala’s anchored on the company’s four
possible level of moral benchmarks relationships with its stakeholders. core values: integrity, long-term
and fairness in dealing with vision, empowering leadership,
shareholders, customers, employees, KEY PARTNERSHIPS and commitment to national
and business partners to constantly Ayala is among the oldest, largest, development.
strengthen its foundation for long- and leading conglomerates in the
term beneficial relationships. Philippines. The company has been All the company’s directors, officers
building businesses that transform and employees are expected to avoid
Shareholder Meeting industries, challenging the status situations of conflicts of interest
and Voting Procedures quo, and introducing innovations or impropriety. The Code provides
Stockholders are informed at least that contribute to the nation’s social for the definition, guidelines, and
28 days before the scheduled date and economic agenda. procedures, including the reporting
of meeting. The notice of regular or of any such circumstances involving
special meetings contains the agenda Ayala combines its over 180-years conflict of interest.
and sets the date, time, and place for of experience in doing business
validating proxies, which must be in the country with its partners’ On an annual basis, all directors,
done at least five business days prior expertise and strengths to grow officers, and employees are required
to the annual stockholders’ meeting. its businesses. The company has to report and disclose any business
interests in real estate, financial and family-related transactions to
Each outstanding common and voting services, telecommunications, water, ensure that all potential conflicts of
preferred shares of stock entitles the power, industrial technologies, interest are reported and brought
registered holder to one vote. infrastructure, e-commerce, to the attention of management,
healthcare and education. The whether actual or apparent.
Since 2014, Ayala has provided an company has also entered disruptive
electronic voting platform to enable sectors through investments in Management is responsible
stockholders in absentia to execute e-commerce and fintech. for enforcing and monitoring
their voting rights during the annual compliance with the Code and
stockholders meeting. The company Ayala continues to explore dynamic imposing sanctions for violations
also provides non-controlling or and innovative business models, thereof. As the overall governing
minority shareholders the right to and introduce pioneering products body, the Board ensures that all
nominate candidates for board of and services across its businesses. directors, officers, and employees of
directors. The company strives to maintain the company adhere to the Code.
mutually-beneficial relationships
Shareholder and with its partners to generate value WHISTLEBLOWER POLICY
Investor Relations for its stakeholders. Empowered by a legacy built
It is the policy of the company to on integrity, Ayala established
encourage active participation and CODE OF CONDUCT AND ETHICS the Whistleblower Policy to
regular dialogues with institutional (102-16) encourage directors, officers, and
and retail investors. Through The Board established a Code of employees and all suppliers, business
Investor Relations, a unit under Conduct and Ethics to guide all partners, contractors and sub-
Finance, information requirements directors, officers, and employees contractors, and other third parties to
of the investing public and minority in executing their roles and report any perceived wrongdoing or
shareholders are fully disclosed to
securities regulators on time.
Ayala continues to strengthen its

investor relations framework. In
2017, the Investor Relations Unit
organized the third Ayala Group
Investor Relations Forum to keep
management abreast of the best
practices, global trends, and external
perspectives on the evolving role of
investor relations. It also engaged
an external party to conduct an
Investor Perceptions Audit to
understand its strengths in investor
communications and identify areas
The Annual Stockholders’ Meeting is a venue for shareholders to learn about the company’s achievements and
for improvement. strategic direction from its leadership.
INTO THE FUTURE 169

malpractice involving the company their immediate family, with a view
or its personnel. to get favors or to influence business
recommendations are immediately
The policy is meant to encourage the reported to the appropriate
reporting of such matters in good reporting level. Directors, officers,
faith, with utmost confidence that and employees, are likewise
the whistleblower will be treated instructed not to accept gifts or
fairly and protected from reprisal, invitations of any form, except
harassment, disciplinary action, or when it meets the criteria set by the
victimization for whistleblowing. company. The company likewise
strictly adheres to the provisions of
The whistleblower may submit a the Anti-Money Laundering Law.
written report directly to the Office
of the Chief Compliance Officer, or DATA PRIVACY POLICY
by e-mail to whistleblower@ayala. Ayala appointed its Data Protection
com.ph, or through a face-to-face Officer, Atty. Solomon M. Hermosura,
meeting with any member of the and designated Compliance Officers
Disclosure Committee composed for Privacy, Atty. Charlene Mae C.
of one representative each from Tapic-Castro and Chris Angelica L.
the Office of the Chief Legal Officer, Bustonera, to support the company’s
Strategic Human Resources, Internal commitment to protect and respect
Audit, and Group Risk Management individual personal information in
and Sustainability. accordance with the Data Privacy Act
of 2012.
There is an established Disclosure
Committee and investigation process The company implements
for reported violations of company reasonable and appropriate physical,
policies, rules and regulations. All technical, and organizational security
reports are treated in confidence and measures to maintain the integrity
discussed with the Audit Committee, and confidentiality of personal
which monitors the resolution and data, and protect these against
closure of all reports. natural and human dangers, such
as accidental loss or destruction,
In 2017, there were no incidents unauthorized access, fraudulent
reported through the whistleblowing misuse, and unlawful alteration.
reporting channels. Inquiries or concerns regarding data
privacy or data subjects’ rights may
ANTI-CORRUPTION POLICY be communicated to the Office of
Ayala is committed to the highest the Data Protection Officer through
standards of ethical conduct and channels provided on the website.
has adopted a zero tolerance policy
towards corruption and bribery in WEBSITE
any form. The Anti-Corruption Policy Information on the company’s
embodied in the Code provides corporate governance initiatives,
guidance to all directors, officers, this Integrated Report, and all other
and employees on how to conduct relevant information is available on
business in a fair, ethical, and legal the company’s website at www.ayala.
manner. Seeking undue financial com.ph. As part of our stakeholder
and material advantage from any engagement, Ayala also maintains
transactions is strictly prohibited. social media accounts at Facebook.
The company has also set guidelines com/AyalaCorporation and Twitter
for dealing with gifts and gratuities @Ayala_1834. The Ayala Investor
to protect the integrity of its Relations mobile application also
employees and its business interests. offer the investment community
Any offer or gift of value given to with a wealth of investor-related
directors, officers, and employees, or information on Ayala.

A NN EX ES
INTO THE FUTURE 171

MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATION (102-45)
Ayala Corporation recorded a net reservation sales bounced back to Water

income of P30.3 billion in 2017, double-digit levels during the year at Manila Water posted a muted net
climbing 16 percent from the previous 13 percent, reaching P122 billion. income growth of one percent to P6.2
year on the back of robust double-digit billion as higher operating expenses and
growth of its real estate and power Commercial leasing revenues, business development costs tempered
businesses. meanwhile, grew 10 percent to P31 topline growth during the year.
billion driven by new mall openings,
Consolidated Sales of Goods stabilized occupancy of office spaces, Revenues rose five percent to P18.5
and Services and the improved performance of its billion, bolstered by strong revenue
Sales of goods and services climbed hotels and resorts portfolio. contributions from Laguna Water
22 percent to P242.2 billion, on the and Boracay Water, as well as higher
back of higher sales in all housing, Ayala Land’s strategy to rebalance supervision fees recognized by Estate
residential, and condominium units of its net income mix is increasingly Water balancing out flat revenue
Ayala Land; strong vehicle sales across taking shape. In terms of location, growth in the Manila Concession.
AC Industrials‘ automotive brands; and established estates (Makati, Nuvali,
the improved output of Integrated Bonifacio Global City, Alabang and Operating expenses expanded 19
Micro-Electronics‘ automotive Cebu) accounted for 54 percent, while percent to P7.4 billion on higher
electronics and industrial segments, new estates and growth centers made overhead costs owing to Estate Water’s
as well as the consolidation of its new up for 46 percent of Ayala Land’s net expansion, business development
subsidiary. In addition, higher service earnings in 2017. In terms of business costs, and a one-time write-off of
revenues from AC Energy, primarily line, Ayala Land’s recurring income uncollectible accounts in Laguna Water.
from the consolidation of its new (mall and office leasing, hotels and
subsidiary and Retail Electricity Supply resorts, and property management Manila Water posted higher billed
(RES) unit, as well as from IMI and segments) accounted for 35 percent, volume across all its business lines,
Manila Water, contributed to this. The while development income (property with the non-Manila Concession
account stands at 91 percent of Ayala’s sales and construction) contributed posting strong double-digit billed
total revenues for 2017. 65 percent of Ayala Land’s net income volume growth. This brought total
during the year. billed volume to 738.7 million cubic
Real Estate meters, three percent higher year-on-
The resurgence of property sales Ayala Land spent P91.4 billion in year. In the Manila Concession, the
combined with a solid leasing capital expenditure during the year. two percent-increase in billed volume
business drove Ayala Land’s net It launched 28 residential projects helped offset the impact of tariff
earnings during the year, jumping 21 amounting to P88.8 billion. In leasing, reduction.
percent to P25.3 billion. it opened five new malls with 189,000
in gross leasable area, and six new Manila Water continues to intensify
Revenues from property development, offices with 185,000 in gross leasable its infrastructure build-up with a
which includes residential and office- area. In addition, it opened six new 48 percent expansion in capital
for-sale developments, as well as hotel and resort facilities, adding 556 expenditures. Last year, the Manila
commercial lot sales, rose 24 percent rooms to its portfolio in 2017. Concession completed the Marikina
to P96.4 billion on new bookings North Sewerage Treatment Plant,
and project completion. Growth in while the Pasig North and South

(102-45)
System Project is scheduled for Last February, IMI successfully and infrastructure. Headquartered in
completion in November 2019. Both completed its P4.998 billion San Jose, California, Merlin currently
projects have a capacity of 100 million rights offer with the issue of 350 has additional manufacturing facilities
liters per day. million common shares to existing in Thailand.
shareholders. AC Industrials, which
Further, Manila Water received a notice previously held 50.6 percent of IMI’s Power Generation
of award from the City of Ilagan Water outstanding shares, subscribed to AC Energy’s net earnings jumped
District to establish a joint venture its proportionate share, as well as 31 percent to P3.5 billion in 2017,
for a bulk water supply and septage any unsubscribed rights shares. This primarily driven by fresh equity
management company. Manila Water raised its stake in IMI to 52 percent. earnings contribution from its
also received a notice of award from Proceeds of the rights offer will be geothermal platform, and boosted
the Leyte Metropolitan Water District used to fund IMI’s capital expenditure by solid contributions from its wind
to establish a joint venture for a program and for debt refinancing. energy assets.
concession company. As part of its
ongoing expansion in Southeast Asia, Meanwhile, revenues from AC A strong wind regime bolstered the
Manila Water is establishing a footprint Automotive expanded 37 percent to better performance of NorthWind and
in Thailand with the signing of a share P31.2 billion, boosted by strong sales North Luzon Renewables during the
purchase agreement in February to across all brands—Honda, Isuzu, year. Services income derived from the
acquire an 18.72 percent stake in Volkswagen, and KTM. financial close of a new power plant
Eastern Water Resources Development likewise contributed to AC Energy’s
and Management Public Company AC Industrials continues to ramp net earnings.
Limited, a publicly-listed water supply up its portfolio in global and
and distribution company in Thailand. domestic industrial technologies AC Energy continues to execute on
by capitalizing on opportunities its diversification strategy. Following
Industrial Technologies arising from disruptive technological the acquisition of Salak and Darajat
AC Industrials registered a net income shifts, changing industry landscapes, Geothermal in Indonesia in early 2017,
of P1.2 billion, up four percent from and increasing demand from end- AC Energy is assembling a portfolio of
its year-ago level, on the better users. Last month, AC Industrials renewable energy assets in Southeast
performance of both its electronics acquired a controlling stake in Merlin Asia. It is developing a 75 megawatt
manufacturing and vehicle retail units. Solar Technologies Inc., with an wind project in Sidrap, Indonesia,
ownership interest of 78.2 percent which is expected to come online in
IMI’s net earnings expanded 21 after the close of the transaction and the first quarter of 2018.
percent to US$34 million on the completion of other related activities.
back of solid revenue growth, which Merlin is an emerging company Last January, AC Energy, in partnership
exceeded the US$1 billion mark that is developing differentiated with BIM Group of Vietnam, agreed to
during the year. This topline growth solar solutions resulting in products jointly develop over 300 megawatts
was driven by contribution from with high durability, flexibility, of solar power projects in Ninh Thuan
recent acquisitions and sustained and increased solar power output, province, Vietnam. The initial 30
growth in the automotive and allowing for potentially innovative megawatts of the solar project broke
industrial markets. applications in areas with demanding ground, with investment for this phase
environments, such as transportation expected to reach 800 billion VND
INTO THE FUTURE 173

(102-45)
and to be completed within the year. gains registered in 2016. This was dropped five percent to P15.1 billion
The solar project is envisioned to partially offset by the bank’s higher in 2017 due to higher operating
be expanded by an additional 300 fee-based income, which grew 16 expenses and depreciation charges
megawatts. percent to P19.9 billion, lifted by as a result of increased investments
higher credit card fees, trust and in its data network.
Similarly, AC Energy is boosting its investment management fees,
conventional energy portfolio. Last insurance fees, bank commissions, Topline growth, however, remains
December, the project financing and service charges. strong, with service revenues
for the second unit of its 2 x 668 reaching P127.9 billion during
MW super-critical coal fired power BPI continues to be a leader in the year, up six percent year-on-
plant in Bataan, GNPower Dinginin, profitability metrics, with cost-to- year. This was fueled by sustained
achieved financial close. AC Energy income ratio at 54.3 percent, slightly demand for data-related products.
has approximately 50 percent higher from the 52.5 percent posted Mobile revenues grew seven percent
economic stake in the project, which a year ago, mainly driven by its to P98.5 billion. Globe’s mobile
has an estimated cost of US$1.7 digitalization initiatives. subscriber base reached 60.7
billion. The project will support the million at the end of 2017, three
increasing electricity demand of Total loans jumped 16 percent to percent lower from a year ago. The
Luzon and Visayas. Construction of P1.2 trillion, boosted by corporate decline in the cumulative mobile
the first unit is well underway, and is loans. Asset quality improved with subscriber base was a result of the
targeted for commercial operations the gross 90-day non-performing change in reporting Globe’s prepaid
by 2019, with the second unit loans ratio declining from 1.46 subscribers in 2017, which excluded
scheduled for completion by 2020. percent to 1.29 percent and reserve prepaid subscribers who do not
cover ratio increasing from 119 reload within 90 days of the second
Share of Profit of Associates and percent to 129 percent. expiry period. Mobile data continues
Joint Ventures to drive Globe’s total mobile
Share of profits of associates and Last year, BPI announced the creation revenues, accounting for 44 percent
joint ventures reached P18.5 billion, of a business banking segment, a from 38 percent a year ago.
up two percent, primarily on the new client group focused on the
steady increase of equity earnings banking needs of the country’s small Globe’s home broadband segment
from investees of Ayala Land and AC and medium scale enterprises. It also posted a seven percent increase in
Energy, and the better performance raised a record P12.2 billion from revenues to P15.6 billion in 2017.
of BPI. This was partially offset by a its offering of long-term negotiable Total home broadband subscribers
slight decline in share in earnings certificates of time deposit, the climbed 15 percent to 1.3 million
from Globe. largest issuance by far in the industry. year-on-year, putting Globe on track
with its target to provide internet
Banking Last January, the bank announced service to two million homes by
Bank of the Philippine Islands a stock rights offering of up 2020. Corporate data business
recorded a net income of P22.4 to P50 billion to support its increased four percent from a year
billion, up 1.7 percent from its year- strategic initiatives, including the ago to P10.3 billion owing to strong
ago level, as the absence of one-off strengthening of its market-leading demand for data-driven solutions by
gains tempered strong growth in its businesses and core franchises corporates.
core banking business during the through the expansion of lending
year. Excluding one-off gains from activities across consumer, SME, and Globe’s consolidated EBITDA
the sale of securities in 2016, net microfinance segments to capture improved seven percent to P53.3
income grew 31 percent in 2017. positive momentum in the domestic billion, while EBITDA margin stood
economy. In addition, the stock at 42 percent from 41 percent in the
Total revenues rose seven percent rights offer will strengthen BPI’s previous year.
to P71 billion as net interest income capital base as it pursues its growth
expanded 13 percent to P48 strategy in the medium term. Ayala Globe spent around P42.5 billion
billion driven by asset growth and has signified its participation in the in capital expenditure in 2017 to
improvement in net interest margin. rights offering. support its continuous network
Non-interest income, meanwhile, infrastructure enhancement. It
dropped five percent to P22.9 billion Telecom launched new products to enable
on the absence of significant trading Globe Telecom’s net earnings the Filipino digital lifestyle,

(102-45)
including Mynt’s rollout of the Balance Sheet Highlights loan-to-value ratio, or the ratio of
GCash scan-to-pay system in malls, Ayala’s balance sheet remains at a the parent net debt to the total
fast food chains, major retailers, and healthy level, allowing it to continue value of its investments, was 6.4
convenience stores. supporting its investments and meet percent as of end-December 2017.
its debt and dividend obligations.
Other Income (Charges) Outlook for 2018
Other income surged 66 percent to Investments in associates and joint 2017 marked a year of stronger-
P20.9 billion in 2017, as compared ventures rose to P202.6 billion, as than-expected, broad-based
to P12.6 billion in the previous a result of new investments made economic growth for the world,
year. This was largely attributed to by AC Energy, AC Ventures, and with a recovery in global trade,
income from higher rehabilitation Ayala Land. The parent’s share in net investment, and manufacturing.
works of Manila Water; the reversal earnings from BPI and Globe, as well This is expected to continue in the
of impairment provision for a as existing investees of Ayala Land, short-term, though medium-term
real estate property and higher Manila Water, AC Energy, and AC prospects are somewhat more
management and marketing fees Infrastructure, also contributed to muted. Asia continues to remain a
of Ayala Land; commission fees of growth, tempered in part by Bestfull’s bright spot in the global economy.
AC Energy; and gains on disposal of disposal of certain investments.
certain investments of AG Holdings. The Philippines continues to
Other charges which pertain to Investments in property jumped 24 grow at a healthy pace. Already-
rehabilitation works consequently percent to P137.7 billion through the robust domestic consumption
increased in 2017. real estate unit’s expansion projects is expected to increase further,
in malls, office properties, and select supported by the passage of the
Costs and Expenses land development. Meanwhile, first package of the government’s
Consolidated cost of sales for the investments in property and tax reform program. Some pockets
year stood at P175.7 billion, a 24 equipment recorded a 33 percent of uncertainty remain, particularly
percent increase, brought about increase to P85.4 billion. This was in external and internal policy that
by higher sales from the real estate lifted by AC Energy’s construction of may affect trade, and the local
segment, particularly in lots and power plants for GNP Kauswagan, business and investment climate.
residential units, AC Industrials‘ Ayala Land’s capex for hotels and As such, the group will continue
electronic manufacturing and resorts, IMI’s new capital spending to monitor relevant global
automotive retail businesses, and for its Europe and Mexico sites, and and domestic macroeconomic
stronger service revenues of the Manila Water’s expansion projects. indicators that may have an effect
energy group. The impact from the consolidation on its businesses.
of AC Energy’s and IMI’s new
Consolidated general and subsidiaries also factored in this Ayala remains overall positive
administrative expenses rose 20 account’s growth. about the macroeconomic
percent to P25.2 billion. This was a environment and its prospects for
result of combined increments in At the end of 2017, total debt at the growth as it continues to execute
the groups expenses, particularly consolidated level stood at P350.6 on its five-year growth strategy
from Ayala Land’s contracted billion, a 19 percent increase from through 2020.
services, professional fees, taxes, the December 2016 level of P295.9
retirement, and trainings; the billion. This was due to capital-raising Ayala maintains a healthy
parent’s, AC Energy’s, and Manila exercises by the parent, AYC, and balance sheet with access to
Water’s manpower, insurance costs, Ayala Land, as well as borrowings for various funding options to
depreciation expenses, as well as expansion projects of the real estate, meet requirements. A robust
Manila Water’s AR provisions; AC energy, and water segments. Total risk management system allows
Industrials‘ automotive business‘ assets crossed the P1 trillion mark in the company to maximize
marketing and promotional 2017. opportunities for reinvention, and
expenses, and IMI’s manpower costs navigate the challenges faced by
and professional and management Cash at the parent level reached its business units.
fees. This also includes the impact of P18.6 billion, while net debt stood at
consolidation of IMI and AC Energy’s P64.7 billion. Net debt-to-equity ratio
new subsidiaries. was 0.68 at the consolidated level,
and 0.59 at the parent level. Ayala’s
INTO THE FUTURE 175

MATERIALITY (102-46, 102-47, 102-49)
MATERIAL FACTORS RELATED GRI SPECIFIC TOPICS REPORTING COMPANIES WHY IT IS MATERIAL GRI
TOPICS DISCLOSURES
E C O N O M I C
Economic Performance 201:Economic Economic value generated, All companies This is our direct contribution to 201-1
Performance distributed and retained Philippine economy and to our
stakeholders.
Business Resilience to Climate 201:Economic Climate proofing of Globe Resilience of our infrastructure is 201-2
Change Performance infrastructure important for business continuity.
Impact of use of products or 203: Indirect Increase in income Globe, BPI, IMI, Ayala Land, AC As an indirect contribution to the 203-1, 203-2
services Economic Impact or productivity of Infra Philippine economy, our products
communities, enterprises and services help promote the
and companies served growth of other businesses.
Jobs supported in the supply 204: Procurement Indirect hires All companies except AC Managing our supply chain is 102-8
chain Practices Ventures integral to business continuity.
Spending on local suppliers Globe, Globe, Manila Water, AC 204-1
Energy (NLR, Montesol, SLTEC,
North Wind)
Supplier assessment and Globe, Ayala Land, IMI, Manila 308-2, 414-2
accreditation Water
Foreign and Indirect 203: Indirect Acquisitions Manila Water, IMI, AC Ventures, Expansion of our portfolio allows 203-2
Investments Economic Impact AC Industrials, AC Health, AC us to diversify, enter new markets
Health, AC Energy, AC Infra, BPI, and industries, and increase our
Globe sources of revenue.
CAPEX All companies
Impact to the vulnerable 203: Indirect Affordable education and AC Education, AC Health We innovate on products and 203-2
sector Economic Impact healthcare services to make them more
available especially for the low-
income segments.
E N V I R O N M E N T A L
Energy as Business 302: Energy Power generation from AC Energy Through our energy business, N/A
thermal and renewable we invest in power generation
sources to cater to the region’s energy
demand.
Energy as Consumption 302: Energy Electricity consumption All companies except AC Energy, in the form of electricity 302-1
within the organization Ventures and fuel, is used to run our
operations.
Electricity consumption Ayala Land 302-2
outside the organization
Fuel consumption within Ayala Land, BPI, Globe, Manila 302-1
the organization Water, IMI (Philippines only), AC
Infra, AC Energy, AC Automotive
Fuel consumption outside BPI, AC Automotive, AC Energy 302-2
the organization (SLTEC)
Energy intensity All companies except AC 302-3
Ventures
Reduction of energy Ayala Land, BPI, AC Infra (MCX), 302-4
consumption AC Education (APEC), IMI
Greenhouse gases 305: Emissions Scope 1 Ayala Land, BPI, Globe, Manila This is a by-product of our 305-1
Water, IMI, AC Infra, AC Energy, business operations. Managing
Scope 1 Intensity 305-4
AC Automotive and reducing GHG emissions
helps us move towards a low-
Scope 2 All companies except AC 305-2
carbon economy.
Ventures
Scope 2 Intensity 305-4
Scope 3 AC Automotive, Ayala Land, BPI, 305-3
Globe, Manila Water, IMI, AC
Energy

(102-46, 102-47, 102-49)
MATERIAL FACTORS RELATED GRI SPECIFIC TOPICS REPORTING COMPANIES WHY IT IS MATERIAL GRI
TOPICS DISCLOSURES
E N V I R O N M E N T A L
Water as Business 303: Water Water distribution Manila Water As a business activity, water is abstracted N/A
from nature, and is treated and
Used water treatment Manila Water 306-1
distributed to our customers.
Water abstraction Manila Water 303-1
Water as Consumption 303: Water Water consumption Ayala Land, IMI (Philippines Water is used in our business operations 303-1
only), BPI, Globe, AC as natural capital for industrial and office
Water intensity N/A
Energy (SLTEC), AC consumption.
Education, AC Automotive,
AC Health
Water recylced and reused AC Energy (SLTEC) 303-3
Ecosystems and 304: Biodiversity Biodiversity AC Energy (NLR), Ayala Some of our operations are located near 304-1, 304-4
Biodiversity Land areas rich in biodiversity. Protecting flora
and fauna is a form of environmental
Watershed management Manila Water 304-1, 304-3
stewardship, and their presence
Tree planting All companies in our sites is an indicator of good 304-3
environmental management.
Resource Efficiency 301: Materials Construction materials Ayala Land The materials we use in developing 301-1
306: Effluents and communities and the wastes we generate
Hazardous wastes Manila Water, Ayala Land, 306-2, 306-4
Waste in our operations pose significant
AC Infra (LRMC), AC
308: Supplier environmental impacts. We create efforts
Automotive, IMI, Globe
Environmental to manage them efficiently.
Assessment Non-hazardous wastes Ayala Land, Globe, IMI 306-2
(Philippines only), AC
Education, AC Energy
(SLTEC)
Recycling and landfill IMI, Globe 306-2
diversion
Effluents AC Energy (SLTEC), AC 306-1, 306-5
Automotive
Supplier environmental IMI, Ayala Land, Manila 308-1
assessment Water
S O C I A L
Employee Engagement 401: Employment Total employee headcount All companies except AC Our businesses create meaningful and 102-8
Ventures gainful jobs.
New hires and turnover All companies except AC 401-1
Ventures
Parental leave All companies except AC 401-3
Ventures
Indirect hires All companies except AC 102-8
Ventures
Employee engagement All companies 102-43
Collective bargaining Ayala Land, Manila Water, 102-41, 407-1
agreements BPI, Globe
Occupational Health and 403: Occupational Types of injuries All companies except Ayala A healthy workforce and a safe working 403-2
Safety Health and Safety Corporation, BPI, AC Infra environment are integral in the daily
and AC Ventures operation of our businesses.
Training and Development 404: Training and Training hours and training All companies except AC The sustainability of our businesses are 404-1, 404-2
Education programs Ventures directly related to the knowledge and
skills of our employees.
Diversity, Equal Opportuni- 405: Diversity and Breakdown of employees All companies except AC A highly engaged, diverse, and talented 405-1
ty & Anti-Discrimination Equal Opportunity by age, gender and rank Ventures workforce enables us to continue and
406: Non- expand our operations.
Non-discrimination All companies 406-1
discrimination
Workplace Conditions 408: Child Labor Child labor All companies Our businesses comply with labor 408-1, 414-2
409: Forced or standards.
Forced or compulsory All companies 409-1, 414-2
Compulsory Labor
labor
414: Supplier Social
Assessment
Customer Management 102: General Customer satifaction Ayala Land, Globe, Manila Customer satisfaction indicates quality 102-43
Disclosure performance Water, IMI (Philippines of our products and services, and drives
only), AC Automotive, HCX, customer loyalty and revenue growth.
AC Health
Security Practices and 410: Security Security practices Ayala Land, BPI, AC Infra We aim to ensure the safety of individuals 410-1
Privacy Practices (MCX) within our business scope against
418: Customer external dangers. We also comply to the
Data privacy policies Globe, BPI, Ayala 418-1
Privacy Data Privacy Act.
Foundation
Community Relationship 413: Local Sustainable livelihood Ayala Foundation We strongly believe in the need to play an 413-1
Communities programs active part in national development.
INTO THE FUTURE 177

TABLE OF RESTATEMENTS (102-48, 102-49)
GRI Disclosure Item Year Figure in 2016 <IR> Figure in 2017<IR>
201-1 Economic Value Generated 2015 378,908.65 362,123.09
201-1 Economic Value Generated 2016 421,406.15 402,338.02
201-1 Economic Value Distributed (Operating Cost) 2015 172,499.62 171,274.96
201-1 Economic Value Distributed (Operating Cost) 2016 190,795.76 191,682.98
201-1 Economic Value Distributed (Payment to the Employees) 2015 37,871.02 37,738.00
201-1 Economic Value Distributed (Payment to Employees) 2016 39,806.80 39,870.51
201-1 Economic Value Distributed (Payment to Providers of Capital) 2015 49,318.13 49,695.86
201-1 Economic Value Distributed (Payment to Providers of Capital) 2016 54,671.22 55,138.44
201-1 Economic Value Distributed (Payment to Government) 2015 33,863.74 33,881.21
201-1 Economic Value Distributed (Payment to Government) 2016 34,279.30 34,302.27
201-1 Economic Value Distributed (Payment to Communities) 2015 287.46 287.86
201-1 Economic Value Distributed (Payment to Communities) 2016 221.22 221.46
302-1 Diesel 2015 20,175,881.84 20,066,478.56
302-1 Diesel 2016 19,275,044.83 19,321,868.45
302-1 Gasoline 2015 3,112,322.56 3,234,395.22
302-1 Gasoline 2016 3,971,726.70 4,218,825.01
302-1 Electricity Consumption 2015 1,274,759,927.62 1,306,681,320.67
302-1 Electricity Consumption 2016 1,081,476,389.87 985,605,142.47
303-1 Water Consumption 2015 10,679,071.77 12,553,618.62
303-1 Water Consumption 2016 12,279,403.33 11,358,780.21
305-1 GHG Emission Scope 1 2015 720,731.97 715,410.97
305-1 GHG Emission Scope 1 2016 1,730,435.75 1,728,161.47
306-2 Hazardous Waste (Batteries) 2015 62,318.00 62,508.00
306-2 Hazardous Waste (Batteries) 2016 246,717.00 184,176.0
306-2 Hazardous Waste (E-waste) 2015 148,192.63 49,880.7
306-2 Hazardous Waste (Total) 2015 230,550.34 1,207,789.62
306-2 Hazardous Waste (Total) 2016 413,665.38 1,624,907.3
401-1 New Hires 2015 12,226.00 12,307.00
401-1 New Hires 2016 15,235.00 15,271.00
401-1 Turnover 2015 11,497.00 11,550.00
401-1 Turnover 2016 11,939.00 11,980.00
102-7 Total number of employees 2016 48,996.00 48,753.00
102-8 Total number of employees - male 2016 20,695.00 20,456.00
102-8 Total number of employees - female 2016 28,301.00 28,297.00
102-8 Total number of employees - below 30 years old 2016 19,698.00 19,650.00
102-8 Total number of employees -30 to 50 years old 2016 25,902.00 25,720.00
102-8 Total number of employees - over 50 years old 2016 3,396.00 3,383.00
102-8 Total number of employees - rank and file 2016 32,815.00 32,646.00
102-8 Total number of employees - middle management 2016 13,676.00 13,615.00
102-8 Total number of employees - senior management 2016 1,410.00 1,397.00
404-1 Average training hours 2016 18.22 17.43
404-1 Average training hours - rank and file 2016 14.97 14.73
404-1 Average training hours - middle management 2016 25.81 25.62
404-1 Average training hours - senior management 2016 15.83 14.43
404-1 Average training hours 2015 16.61 16.47
404-1 Average training hours - rank and file 2015 14.31 14.09
404-1 Average training hours - middle management 2015 25.97 25.72
404-1 Average training hours - senior management 2015 13.02 11.60
Billed Volume 2016 553.42 550.23
Net Electricity Generated 2016 6,179,604,813.00 5,992,622,789.00
CO2e Avoided 2015 125,670.14 126,025.28
CO2e Avoided 2016 164,067.62 160,475.99

(102-48, 102-49)
Unit Page Reason
Million peso 75, 187 Updated figures from IMI and BPI, exclusion of LiveIT, and inclusion of HCX and AffinityX
Million peso 76, 187 Updated figures from IMI , AC Health, BPI, exclusion of LiveIT, and inclusion of HCX and AffinityX
Million peso 187 Updated figures from BPI, exclusion of LiveIT, and inclusion of HCX and AffinityX
Million peso 187 Updated figures from AC Health, BPI, exclusion of LiveIT, and inclusion of HCX and AffinityX
Million peso 188 Exclusion of LiveIT and inclusion of HCX and AffinityX
Million peso 188 Exclusion of LiveIT and inclusion of AffinityX
Million peso 188 Inclusion of HCX and AffinityX
Liters 182 Updated figures from AC Automotive
Liters 182 Updated figures from AC Infra and AC Automotive
Liters 182 Updated figures from AC Automotive and inclusion of Ayala Land unleaded gasoline
Liters 182 Updated figures from AC Automotive and AC Infra and inclusion of Ayala Land unleaded gasoline
Kilowatt-hours 98, 182 Updated figures from Ayala Land
Kilowatt-hours 98, 182 Updated figures from Ayala Land, Manila Water, and Globe
Cubic meters 103, 181 Inclusion of water treated from Balayan Bay for process use of AC Energy (SLTEC) and updated figures from Ayala Land
Cubic meters 103, 181 Inclusion of water treated from Balayan Bay for process use of AC Energy (SLTEC) and updated figures from Ayala Land and Globe
Tonnes of CO2e 99, 183 Updated figures from AC Energy (SLTEC )
Tonnes of CO2e 99, 183 Updated figures from AC Energy (SLTEC )
Tonnes of CO2e 99, 183 Updated figures from Ayala Land
Tonnes of CO2e 99, 183 Updated figures from AC Infra and AC Health and inclusion of HCX and AffiinityX
Tonnes of CO2e 183 Updated figures from Manila Water
Kilograms 180 Updated figures from AC Automotive
Kilograms 180 Updated figures from AC Automotive and Globe and inclusion of Manila Water
Kilograms 180 Updated figures from Globe and inclusion of Manila Water and AC Infra
Kilograms 107, 180 Updated figures from AC Automotive, Globe and inclusion of Manila Water and AC Infra
Kilograms 107, 180 Updated figures from AC Automotive and Globe, inclusion of Manila Water and AC Infra, and addition of grease waste, asbestos-containing prod-
ucts, and other hazardous wastes
Head count 185 Inclusion of HCX
Head count 87, 184 Updated figures from AC Energy
Hours 86, 187 Updated figures from AC Energy
Hours 86, 187 Restatement due to changes in total training hours
Million cubic meter 101, 181 Updated figures from Manila Water (Laguna Water)
Kilowatt-hours 97, 183 Updated figures from AC Energy (GMCP and SLTEC)
Tonnes of CO2e 183 Updated figures from AC Energy (Northwind)
Tonnes of CO2e 183 Updated figures from AC Energy (Northwind and Montesol)
INTO THE FUTURE 179

PERFORMANCE INDICES
MATERIALS AND WASTE
MATERIALS USED AND WEIGHT HAZARDOUS WASTE GENERATED BY

BY TYPE IN TONNES (301-1) 2015 2016 2017 TYPE IN KG (306-4) 2015 2016 2017
Rebar/steel 188,160.0 253,928.0 165,625.0 Batteries 62,508.0 184,176.0 160,400.6
Consumed cement 230,262.0 295,710.0 355,876.0 E-waste 139,684.4 49,880.7 246,454.3
Intensity Rebars (Tonnes per 0.91 2.04 1.16 Organic solvent 28,548.0 18,755.8 19,178.0
million pesos revenue)
Used oil 206,337.0 345,144.4 520,961.4
Intensity Consumed cement 2.15 2.37 2.50
Grease-waste 8,848.5 5,115.0 12,263.0
(Tonnes per million pesos
revenue) Asbestos-containing products - - 21,800.0
Other hazardous wastes 126,197.8 604,717.8 807,613.2
NON-HAZARDOUS WASTE Total 572,123.6 1,207,789.6 1,788,670.5
GENERATED IN TONNES (306-2) 2015 2016 2017
Recyclables 2,428.5 6,638.6 4,915.0
HAZARDOUS WASTE GENERATED BY
Residual 10,361.9 16,560.7 17,022.5 COMPANY IN KG (306-4) 2015 2016 2017
Compostable and Food Waste 2,604.9 16,353.5 14,229.6 Globe 193,086.0 198,786.6 361,313.9
Total 15,395.3 39,552.8 36,167.1 IMI (Philippines) 171,831.3 207,267.4 588,628.1
IMI (Global Sites) - - 144,920.0
RECYCLABLES IN TONNES 2015 2016 2017 AC Automotive 207,206.3 319,610.6 430,153.0
Ayala Land 1,463.7 5,542.3 4,899.2 AC Infra (LRMC) - 4,285.0 1,379.9
Globe 24.2 24.4 15.8 Ayala Land - - 97,448.1
IMI (Philippines) 940.6 1,071.9 - Manila Water - 477,840.0 164,827.5
Total 2,428.5 6,638.6 4,915.0 Total 572,123.6 1,207,789.6 1,778,670.5
Recyclable construction waste 3,439.6 165.9 644.3
from Ayala Land in ‘000 cubic
meters BATTERIES IN KG 2015 2016 2017
Globe 58,926.0 167,360.0 116,298.0
RESIDUALS IN TONNES 2015 2016 2017 IMI (Philippines) 994.0 858.0 1,720.0
Ayala Land 10,167.2 16,359.9 16,867.0 AC Automotive 2,588.0 12,778.0 14,922.0
Globe 172.0 178.9 155.5 Ayala Land - - 19,927.1
IMI (Philippines) 22.7 21.9 - Manila Water - 3,180.0 7,533.5
Total 10,361.9 16,560.7 17,022.5 Total 62,508.0 184,176.0 160,400.6
Residual construction waste from 9,248.1 384.4 194.2

Ayala Land in ‘000 cubic meters ELECTRONIC WASTE IN KG 2015 2016 2017
Globe 124,572.2 22,812.9 224,290.7
COMPOSTABLE AND FOOD IN IMI (Philippines) 15,112.2 4,731.8 16,470.3
TONNES 2015 2016 2017
AC Infra (LRMC) - 746.0 153.5
Ayala Land 2,604.9 16,353.5 14,229.6
Ayala Land - - 4,399.8
Manila Water - 21,590.0 1,140.0
Total 139,684.4 49,880.7 246,454.3

WATER
USED OIL IN KG 2015 2016 2017 WATER CONSUMPTION FROM
WATER UTILITIES IN CUBIC 2015 2016 2017
Globe 739.3 3,498.7 8,462.2
METERS (303-1)
IMI (Philippines) 979.4 5,234.0 11,417.0
Ayala Land 11,089,483.4 9,834,866.1 12,868,284.2
Ayala Auto 204,618.3 306,832.6 415,231.0
IMI (Philippines) 711,495.8 823,334.1 900,845.0
AC Infra (LRMC) - 3,539.0 1,226.4
BPI 423,013.1 414,902.2 387,087.1
Ayala Land - - 20,494.8
Globe 216,309.4 125,340.8 104,129.9
Manila Water - 26,040.0 64,130.0
AC Energy (SLTEC) 113,317.0 160,337.0 161,499.0
Total 206,337.0 345,144.4 520,961.4
AC Education - - 43,933.0
AC Automotive - - 38,818.0
USED OIL IN LITERS 2015 2016 2017
AC Health - - 21,179.1
Globe 844.0 3,994.0 9,660.0
Total 12,553,618.6 11,358,780.2 14,525,775.4
IMI (Philippines) 1,118.0 5,974.9 13,033.1
Water Intensity (cubic meters/ 36.60 29.58 28.12
Ayala Auto 233,582.5 350,265.5 474,008.0 million pesos revenue)
AC Infra (LRMC) - 4,040.0 1,400.0 Water Productivity (million pesos 0.03 0.03 0.04
revenue/cubic meters)
Ayala Land - - 23,395.9
Manila Water - 29,726.0 73,207.8
WATER ABSTRACTION IN MILLION
Total 235,544.5 394,000.4 594,704.8 CUBIC METERS (303-1) 2015 2016 2017
Manila Water - from ground water 48.0 76.5 87.0
ORGANIC SOLVENT / SPENT 2015 2016 2017 Manila Water - from surface water 536.2 576.7 595.2
CHEMICALS IN KG
Total 584.2 653.2 682.3
IMI (Philippines) 28,548.0 18,755.8 19,018.0
AC Energy (SLTEC) - Drawn from 144,717.0 235,656.0 203,501.0
Manila Water - - 160.0 Balayan Bay and treated to be
Total 28,548.0 18,755.8 19,178.0 converted to Demineralized Water
for process use in cubic meters
GREASE WASTE IN KG 2015 2016 2017

WATER SUPPLIED (BILLED
Globe 8,848.5 5,115.0 12,263.0 VOLUME) IN MILLION CUBIC 2015 2016 2017
METERS
Manila Concession (East Zone) 461.4 478.9 488.4
BUSTED FLUORESCENT LAMPS IN KG 2015 2016 2017
Boracay Water 4.3 4.9 5.5
Ayala Land - - 52,626.5
Clark Water 12.8 13.4 14.5
IMI - - 300.0
Laguna Water 36.2 39.4 44.1
Manila Water - 2,670.0 16,564.0
Cebu Water 8.1 11.6 13.0
Total - 2,670.0 69,490.4
Estate Water - 2.1 4.5
Total (Philippine Operations) 522.8 550.2 570.0
ASBESTOS-CONTAINING PRODUCTS 2015 2016 2017
Manila Water - - 21,800.0
USED WATER TREATED IN
MILLION CUBIC METERS (306-1) 2015 2016 2017
OTHER WASTES 2015 2016 2017
Manila Concession (East Zone) 32.2 37.2 40.7
Manila Water - 424,360.0 53,500.0
Boracay Water 2.1 2.1 2.5
IMI (Philippines) 126,197.8 177,687.8 539,702.8
Clark Water 6.2 6.3 6.9
IMI (Global) - - 144,920.0
Laguna Water 1.9 1.7 1.5
Total 126,197.8 602,047.8 738,122.8
Estate Water - 4.3 4.8
Total (Philippine Operations) 42.4 51.5 56.4
WASTEWATER TREATED IN CUBIC

METERS (306-1) 2015 2016 2017
AC Energy (SLTEC) - Waste Water 33,258.0 39,645.0 48,059.0
Treated for re-use as service water
(303-3)
AC Automotive - through central- - - 38,818.0
ized water treatment in estates
where offices are located
AC Energy (SLTEC) - Percent water 23.0% 16.8% 23.6%
recycled of total withdrawal (303-3)
INTO THE FUTURE 181

ENERGY
ENERGY CONSUMED ENERGY CONSUMPTION
WITHIN THE FROM GASOLINE IN GIGA-
ORGANIZATION IN JOULES 2015 2016 2017
GIGAJOULES (302-1, 302-3) 2015 2016 2017
Ayala Land 4,681.3 6,479.5 7,396.0
Diesel 768,415.8 739,902.1 678,493.5
Globe 98,168.2 125,338.0 126,747.6
Gasoline 112,101.5 146,221.0 147,840.3
Manila Water 2,585.7 6,612.8 4,526.9
Sub-bituminous coal 6,774,994.0 17,339,968.0 22,437,639.0
IMI (Philippines) 493.3 591.0 375.8
Purchased electricity 4,704,052.8 3,548,178.5 4,623,469.7
AC Infra 6.1 80.1 101.7
Total direct energy 12,359,564.1 21,774,269.6 27,887,442.4
AC Energy 68.3 89.4 300.1
consumption
AC Automotive 6,098.5 7,030.2 8,392.1
Total Energy Intensity (GJ/ 32.60 51.13 53.98
million pesos revenue) Total 112,101.5 146,221.0 147,840.3
Total Energy Productivity 0.03 0.02 0.02
(million pesos revenue/GJ)
ELECTRICITY/INDIRECT 2015 2016 2017
ENERGY IN KILOWATT-HOURS
DIESEL CONSUMPTION IN Ayala Land (Inside) - 339,881,038.6 374,007,590.6
LITERS 2015 2016 2017
Ayala Land (Inside + Outside) 663,218,940.7 - -
Ayala Land 6,072,601.5 6,076,208.3 5,733,883.4
BPI 52,873,390.8 52,566,069.4 48,832,505.6
BPI 52,268.2 44,289.9 -
Globe 384,584,462.6 332,980,770.6 482,360,321.0
Globe 10,020,194.1 10,185,751.8 9,922,205.6
Manila Water 135,331,000.0 156,800,000.0 173,500,000.0
Manila Water 1,075,248.0 1,181,615.0 1,246,410.0
IMI (Philippines) 50,398,915.0 50,355,209.3 73,141,952.0
IMI (Philippines) 841,676.5 686,977.5 81,923.0
IMI (Global sites) - - 71,207,957.0
AC Infra 10,091.0 70,989.9 74,891.7
AC Health 610,400.0 1,193,468.9 1,364,502.4
AC Energy 1,983,850.1 1,047,996.1 596,865.0
AC Automotive 6,573,212.6 7,062,238.9 7,418,881.0
AC Automotive AC Automotive 10,549.2 28,040.0 62,059.9
AC Infra 10,208,182.0 42,660,890.0 49,460,939.0
Total 20,066,478.6 19,321,868.5 17,718,238.6
AC Education 1,959,750.9 1,464,463.7 2,725,524.0
HCX - - 103,000.0
ENERGY CONSUMPTION
FROM DIESEL IN GIGA- AffinityX - - 173,968.0
JOULES 2015 2016 2017 LiveIT 923,066.1 640,993.0 -
Ayala Land 232,541.2 232,679.3 219,570.5 Total electricity / indirect 1,306,681,320.7 985,605,142.5 1,284,297,140.7
BPI 2,001.5 1,696.0 - energy consumption
Globe 383,708.4 390,048.2 379,956.0 Indirect Energy Intensity in 0.0034 0.0023 0.0025
GWh per million peso revenue
Manila Water 41,175.0 45,248.2 47,729.4
IMI (Philippines) 32,230.7 26,306.8 3,137.1
ELECTRICITY/INDIRECT
AC Infra 386.4 2,718.5 2,867.9 ENERGY IN GIGAJOULES 2015 2016 2017
AC Energy 75,968.6 40,131.4 22,856.1 Ayala Land (Inside) - 1,223,571.7 1,346,427.3
AC Automotive 404.0 1,073.7 2,376.5 Ayala Land (Inside + Outside) 2,387,588.2 - -
Total 768,415.8 739,902.1 678,493.5 BPI 190,344.2 189,237.8 175,797.0
Globe 1,384,504.1 1,198,730.8 1,736,497.2
GASOLINE CONSUMPTION Manila Water 487,191.6 564,480.0 624,600.0
IN LITERS 2015 2016 2017
IMI (Philippines) 181,436.1 181,278.8 263,311.0
Ayala Land 135,068.0 186,948.0 213,392.9
IMI (Global sites) - - 256,348.6
Globe 2,832,388.3 3,616,301.0 3,656,970.6
AC Health 2,197.4 4,296.5 4,912.2
Manila Water 74,603.0 190,795.7 130,613.0
AC Automotive 23,663.6 25,424.1 26,708.0
IMI (Philippines) 14,232.8 17,050.9 10,842.0
AC Infra 36,749.5 153,579.2 178,059.4
AC Infra 175.5 2,310.9 2,933.2
AC Education 7,055.1 5,272.1 9,811.9
AC Energy 1,970.0 2,579.6 8,660.0
HCX - - 370.8
AC Automotive 175,957.7 202,838.9 242,132.6
AffinityX - - 626.3
Total 3,234,395.2 4,218,825.0 4,265,544.3
LiveIT 3,323.0 2,307.6 -
Total electricity / indirect 4,704,052.8 3,548,178.5 4,623,469.7
energy consumption in
gigajoules

EMISSIONS
ELECTRICITY CONSUMED GHG EMISSIONS IN TONNES
OUTSIDE THE ORGANIZA- CO2E SCOPE 1 DIRECT
TION IN KILOWATT-HOURS 2015 2016 2017 ENERGY EMISSIONS (305-1) 2015 2016 2017
(302-2)
Ayala Land 33,574.0 43,360.1 16,796.4
Ayala Land 8,918,624.6 388,869,075.2 410,507,701.4
BPI 138.5 117.4 -
Globe 36,779.9 39,081.2 38,531.8
ENERGY GENERATED FROM
Manila Water 3,056.0 3,952.1 3,768.9
THERMAL SOURCES IN
GIGAWATT-HOURS (302-1) IMI (Philippines) 154.5 256.2 246.9
2015 2016 2017
AC Infrastructure 27.5 48.1 147.0
GMCP 3,391.1 4,081.3 4,287.5
AC Automotive 763.6 980.5 1,131.3
SLTEC 689.5 1,569.2 1,854.4
AC Energy 640,917.0 1,640,366.0 2,122,608.0
Total 4,080.6 5,650.5 6,141.9
AC Energy (renewables) (126,025.3) (160,476.0) (196,224.2)
Total 715,411.0 1,728,161.5 2,183,230.2
ENERGY GENERATED FROM
RENEWABLE SOURCES IN Scope 1 Intensity (305-4) 1.89 4.05 4.28
GIGAWATT-HOURS (302-1) 2015 2016 2017
NLR (Wind) 181.2 212.9 259.4 GHG EMISSIONS IN TONNES
Northwind (Wind) 95.7 107.6 126.6 CO2E SCOPE 2 INDIRECT EN-
ERGY EMISSIONS (305-2) 2015 2016 2017
Montesol (Solar) - 21.6 24.3
Ayala Land (Inside) - 197,214.3 210,931.0
Total 276.9 342.1 410.3
Ayala Land (Inside + Outside) 357,885.0 - -
BPI 36,459.0 36,247.1 28,700.6
CO2 AVOIDED IN TONNES
CO2E 2015 2016 2017 Globe 216,345.9 251,047.8 271,458.8
NLR (Wind) 100,315.1 117,853.1 143,554.0 Manila Water 100,633.0 112,851.0 112,423.8
Northwind (Wind) 25,710.2 30,669.1 37,990.4 IMI (Philippines) 30,400.6 30,374.3 44,119.2
Montesol (Solar) - 11,953.8 14,679.7 IMI (Global sites) - - 63,454.2
Total 126,025.3 160,476.0 196,224.2 AC Health 387.5 719.9 823.1

AC Automotive 3,644.1 3,886.5 4,444.5
AC Infrastructure 6,157.6 42,016.8 29,385.1
ENERGY CONSUMED OUT-
SIDE THE ORGANIZATION IN 2015 2016 2017 AC Education 1,182.1 883.4 1,644.0
GIGAJOULES (302-2) HCX 65.0 109.4 62.1
Ayala Land 32,107.0 1,399,928.7 1,477,827.7 AffinityX 172.3 118.9 104.9
BPI 32,150.0 29,476.1 27,676.7 LiveIT 565.2 352.3 -
AC Automotive 3,775.7 5,334.3 5,188.4 Total 753,660.1 675,593.3 767,551.5
AC Energy (SLTEC) 922.1 3,457.8 5,590.9 Scope 2 Intensity (305-4) 1.98 1.60 1.49
Total 68,954.8 1,438,197.0 1,516,283.7
GHG EMISSIONS IN TONNES

CO2E SCOPE 3 OTHER
DIESEL CONSUMED OUTSIDE INDIRECT EMISSIONS (305-3) 2015 2016 2017
THE ORGANIZATION IN
LITERS 2015 2016 2017 Ayala Land (From sold 5,379.7 248,406.5 266,780.1
residential properties and
AC Automotive 98,598.7 139,301.0 135,489.8 common areas in malls
AC Energy (SLTEC) 24,079.0 90,298.5 146,000.0 and offices)
BPI 839,566.9 769,741.9 722,752.0 BPI 2,250.2 2,063.1 1,958.7
Total 962,244.6 999,341.4 1,004,241.7 Globe 2,247.4 1,893.7 1,610.4

Manila Water 1,126.0 1,765.0 1,652.8
IMI (Philippines) 2,188.4 2,097.3 -
AC Energy 1,193.1 2,047.8 2,672.2
AC Automotive 267.2 377.5 367.2
Total 14,652.0 258,650.8 275,041.4
INTO THE FUTURE 183

HR PERFORMANCE
TOTAL WORKFORCE GENDER DISTRIBUTION
(102-8 405-1)
BREAKDOWN OF
2015 2016 2017
PERMANENT AND
FULL-TIME EMPLOYEES MALE FEMALE MALE FEMALE MALE FEMALE
(102-7,102-8) 2015 2016 2017
Ayala Corp 67 66 70 78 70 79
Ayala Corp 133 148 149
Ayala Land 2,155 2,065 2,128 2,241 2,461 2,579
Ayala Land 4,220 4,369 5,040
BPI 4,392 10,255 4,514 10,687 5,214 11,822
BPI 14,647 15,201 17,036
Globe 3,620 3,244 3,806 3,374 3,860 3,346
Globe 6,864 7,180 7,206
Manila Water 1,013 542 1,120 633 1,250 772
Manila Water 1,555 1,753 2,022
IMI 5,320 9,008 5,581 8,565 6,261 9,011
IMI 14,328 14,146 16,748
AC Automotive 743 810 1,035 715 1,042 717
AC Automotive 1,553 1,750 1,759
Live It 1,689 1,442 292 282 - -
Live It 3,131 574 -
AffinityX - - - - 292 272
AffinityX - - 564
HCX - - 49 65 50 63
HCX - 114 113
AC Energy 128 67 128 79 438 168
AC Energy 195 207 606
AC Infra 889 392 1,001 491 1,064 489
AC Infra 1,281 1,492 1,553
AC Education 292 458 432 663 481 816
AC Education 750 1,095 1,297
AC Healthcare 186 223 270 367 606 487
AC Healthcare 409 637 1,093
AFI 31 58 30 57 27 51
AFI 89 87 78
Group-wide Headcount by 20,525 28,630 20,456 28,297 23,116 30,672
Group-wide Headcount 49,155 48,753 55,264 Gender
AGE DISTRIBUTION (405-1) 2015 2016 2017

BELOW 30 30-50 YEARS OVER 50 BELOW 30 30-50 OVER 50 BELOW 30 30-50 YEARS OVER 50
YEARS OLD OLD YEARS OLD YEARS OLD YEARS OLD YEARS OLD YEARS OLD OLD YEARS OLD
Ayala Corp 13 62 58 19 70 59 16 76 57
Ayala Land 1,634 2,245 341 1,765 2,297 307 2,144 2,552 344
BPI 7,005 6,477 1,165 7,270 6,892 1,039 8,484 7,494 1,058
Globe 1,543 5,116 205 1,641 5,291 248 1,609 5,304 293
Manila Water 399 619 537 491 711 551 600 907 515
IMI 6,085 7,591 652 5,871 7,575 700 6,871 7,594 807
AC Automotive 681 807 65 842 828 80 863 800 96
Live It 1,789 1,218 124 379 191 4 - - -
AffinityX - - - - - - 379 181 4
HCX - - - 62 50 2 52 59 2
AC Energy 93 88 14 91 107 9 197 359 50
AC Infra 192 878 211 288 981 223 383 959 211
AC Education 242 369 139 517 437 141 700 465 132
AC Healthcare 226 177 6 385 242 10 636 441 16
AFI 29 54 6 29 48 10 23 43 12
Group-wide Headcount by 19,931 25,701 3,523 19,650 25,720 3,383 22,957 27,234 3,597
Age Group

DISTRIBUTION BY
POSITION (405-1) 2015 2016 2017
RANK MIDDLE SENIOR RANK MIDDLE SENIOR RANK MIDDLE SENIOR
AND FILE MANAGEMENT MANAGEMENT AND FILE MANAGEMENT MANAGEMENT AND FILE MANAGEMENT MANAGEMENT
Ayala Corp 51 57 25 56 66 26 54 71 24
Ayala Land 2,858 1,185 177 3,167 1,138 64 3,700 1,276 64
BPI 8,903 5,555 189 10,095 4,913 193 10,427 6,411 198
Globe 2,572 3,828 464 2,617 4,086 477 2,527 4,203 476
Manila Water 252 1,202 101 255 1,375 123 444 1,444 134
IMI 12,476 1,447 405 12,171 1,577 398 13,137 1,747 388
AC Automotive 1,418 96 39 1,591 112 47 1,588 128 43
Live It 922 151 17 506 62 6 - - -
AffinityX - - - - - - 491 67 6
HCX - - - 70 42 2 69 42 2
AC Energy 65 107 23 143 52 12 278 278 50
AC Infra 1,200 51 30 1,384 71 37 1,091 397 65
AC Education - - - - - - 1,127 149 21
AC Healthcare 344 58 7 543 85 9 70 18 3
AFI 53 32 4 48 36 3 55 20 3
Group-wide 31,114 13,769 1,481 32,646 13,615 1,397 35,058 16,251 1,477
Headcount by
Position
TOTAL NEW EMPLOYEE HIRES (401-1) 2015 2016 2017 TOTAL EMPLOYEE TURNOVER (401-1) 2015 2016 2017
Ayala Corp 16 28 10 Ayala Corp 12 13 8
Ayala Land 902 848 1,199 Ayala Land 553 566 611
BPI 1,751 3,630 3,652 BPI 1,646 2,064 1,943
Globe 1,286 1,009 753 Globe 599 666 155
Manila Water 178 133 414 Manila Water 75 123 186
IMI 6,177 7,512 849 IMI 7,526 7,355 535
AC Automotive 423 547 450 AC Automotive 443 397 309
Live It 431 228 - Live It 304 200 -
AffinityX - - 35 AffinityX - - 35
HCX 81 36 28 HCX 53 41 31
AC Energy 61 103 146 AC Energy 46 112 58
AC Infra 511 213 188 AC Infra 16 101 69
AC Education 274 697 228 AC Education 83 156 160
AC Healthcare 197 271 23 AC Healthcare 166 173 35
AFI 19 16 16 AFI 28 13 13
Group-wide Total New Hires 12,307 15,271 7,991 Group-wide Total Turnover 11,550 11,980 4,148
PERCENTAGE OF EMPLOYEES
COVERED BY COLLECTIVE
BARGAINING AGREEMENTS (102-41) 2015 2016 2017
BPI 95% 84% 86%
Manila Water - 10% 9%
Globe 3% 3% 4%
Ayala Land 5% 4% -
INTO THE FUTURE 185

TOTAL TRAINING
HOURS (404-1) 2015 2016 2017
Ayala Corp 738 912 408 1,084 884 2 1,985 2,217 96
Ayala Land 70,394 29,254 2,856 67,981 35,599 1,311 89,275 39,725 3,337
BPI 246,744 150,304 1,464 286,533 129,680 1,800 250,360 90,848 1,136
Globe 46,468 96,324 5,564 45,156 121,772 9,656 30,884 91,953 1,765
Manila Water 1,564 39,531 3,365 2,350 31,311 2,350 2,351 38,735 2,768
IMI 6,438 8,902 2,666 11,141 18,901 3,260 413,766 92,487 18,980
AC Automotive 32,152 899 394 38,898 1,573 1,152 27,664 1,271 314
Live It 33,000 1,580 240 25,055 1,647 28 - - -
AffinityX - - - - - - 23,039 1,177 300
HCX - - - 28 48 - 156 521 24
AC Energy 768 26,358 227 2,084 6,884 532 1,569 5,638 240
AC Infra 72 29 - 406 236 20 2,127 7,730 862
AC Education - - - - - - 32,187 4,065 1,354
AC Healthcare - - - - - - 2,844 1,416 72
AFI - - - 309 215 48 1,027 554 57
Group-wide Total 438,338 354,092 17,184 481,023 348,748 20,157 879,234 378,337 31,304
AVERAGE TRAINING
HOURS BY RANK
(404-1) 2015 2016 2017
Ayala Corp 14.5 16.0 16.3 19.4 13.4 0.1 36.8 31.2 4.0
Ayala Land 24.6 24.7 16.1 21.5 31.3 20.5 24.1 31.1 52.1
BPI 27.7 27.1 7.7 28.4 26.4 9.3 24.0 14.2 5.7
Globe 18.1 25.2 12.0 17.3 29.8 20.2 12.2 21.9 3.7
Manila Water 6.2 32.9 33.3 9.2 22.8 19.1 5.3 26.8 20.7
IMI 0.5 6.2 6.6 0.9 12.0 8.2 31.5 52.9 48.9
AC Automotive 22.7 9.4 10.1 24.4 14.0 24.5 17.4 9.9 7.3
Live It 35.8 10.5 14.1 49.5 26.6 4.7 - - -
AffinityX - - - - - - 46.9 17.6 49.9
HCX - - - 0.4 1.1 - 2.3 12.4 12.0
AC Energy 11.8 246.3 9.9 14.6 132.4 44.3 5.6 20.3 4.8
AC Infra 0.1 0.6 - 0.3 3.3 0.5 1.9 19.5 13.3
AC Education - - - - - - 28.6 27.3 64.5
AC Healthcare - - - - - - 40.6 78.7 24.0
AFI - - - 6.4 6.0 15.8 18.7 27.7 19.0
Group-wide Average 14.1 25.7 11.6 14.7 25.6 14.4 25.1 23.3 21.2
Training Hours by
Rank

AVERAGE TRAINING HOURS (404-1) 2015 2016 2017 HEADCOUNT OF SUPPORT STAFF 2016 2017
Ayala Corp 15.5 13.3 28.8 Ayala Corp - 53
Ayala Land 24.3 24.0 26.3 Ayala Land 54,241 53,774
BPI 27.2 27.5 20.1 BPI 2,634 2,415
Globe 21.6 24.6 17.3 Globe 17,090 24,623
Manila Water 28.6 20.5 21.7 Manila Water 647 405
IMI 1.3 2.4 31.4 IMI 413 567
AC Automotive 21.5 23.8 16.6 AC Automotive - 698
Live It 11.1 46.6 - AffinityX 14 19
AffinityX - - 43.5 HCX 11 11
HCX - 0.7 6.2 AC Energy 308 820
AC Energy 140.3 45.9 12.3 AC Infra 91 162
AC Infra 0.1 0.4 6.9 AC Education 104 105
AC Education - - 29.0 AC Healthcare - 90
AC Healthcare - - 4.0 Ayala Foundation 64 68
Ayala Foundation - 6.6 21.0 Total 75,617 83,810
Group-wide Average Training Hours 16.5 17.4 23.3
PARENTAL LEAVE (401-3) 2017

ECONOMIC PERFORMANCE
Employees entitled to maternal leave 4,350
ECONOMIC VALUE GENERATED AND DISTRIBUTED (201-1)
Employees entitled to paternal leave 4,241
ECONOMIC VALUE GENERATED
Employees entitled to solo parent leave 30 - REVENUE IN MILLION PESOS 2015 2016 2017
Employees that availed maternal leave 176 ALI 107,182.94 124,628.80 142,297.00
Employees that availed paternal leave 132 BPI 59,359.00 66,551.00 71,020.00
Employees that availed solo parent leave 40 Globe 120,545.37 126,436.00 137,550.40
Employees that returned to work after maternal leave 158 MWC 17,277.78 17,971.21 20,019.73
Employees that returned to work after paternal leave 131 IMI 36,963.97 39,993.39 55,028.26
Employees that returned to work after solo parent leave 40 AC Infra 2.26 0.74 6.83
Employees that returned to work after maternal leave and still 105 AC Energy 38.50 960.92 2,215.64
employed after 12 months
AC Automotive 18,644.03 23,805.05 33,698.38
Employees that returned to work after paternal leave and still 84
AC Healthcare 1.27 40.36 16.30
employed after 12 months
HCX 626.55 335.06 208.69
Employees that returned to work after solo parent leave and 28
still employed after 12 months AffinityX 1,472.29 1,594.53 1,746.67
Return to work rate after maternal leave 90% AC Education 9.13 20.97 34.96
Return to work rate after paternal leave 99% AC Ventures - - -
Return to work rate after solo parent leave 100% Total 362,123.09 402,338.02 463,842.87
Retention rate after maternal leave 60%
Retention rate after paternal leave 64% PAYMENTS TO SUPPLIERS -
Retention rate after solo parent leave 70% OPERATING COSTS IN MILLION PESOS 2015 2016 2017
ALI 58,105.46 68,157.06 81,552.24
OCCUPATIONAL HEALTH AND SAFETY ILLNESSES (403-2) 2017 BPI 10,248.98 11,229.20 13,380.13
Headaches 654 Globe 54,081.45 55,729.80 60,458.40
First Aid Injury / Illness (FAI) inc. Minor Wounds 254 MWC 3,470.00 4,052.35 4,565.76
Musculoskeletal Strain 160 IMI 27,197.48 29,628.75 41,979.81
Hypertension, incl. Hyperlipidemia 110 AC Infra 30.84 35.98 79.62
Acute Upper Respiratory Infection 94 AC Energy 60.48 255.69 1,134.34
Medical Treatment Injury / Illness (MTI) 79 AC Automotive 17,651.33 21,985.31 31,148.60
Colds / Sorethroat 46 AC Healthcare 9.60 89.00 82.45
Urinary Tract Infection 46 HCX 3.86 3.28 6.93
Diabetes Mellitus 42 AffinityX 409.46 484.55 562.21
Physical Injuries 38 AC Education 6.00 32.00 82.60
Lost Time Injury / Illness (LTI) 17 AC Ventures - - 4.60
Fatality 2 Total 171,274.96 191,682.98 235,037.69
Other Illnesses 132
INTO THE FUTURE 187

PAYMENTS TO EMPLOYEES - WAGES PAYMENTS TO COMMUNITIES IN
AND BENEFITS IN MILLION PESOS 2015 2016 2017 MILLION PESOS 2015 2016 2017
ALI 4,943.55 5,458.79 4,969.21 ALI 126.02 84.83 42.67
BPI 12,295.73 13,266.30 13,652.65 BPI 103.34 109.20 87.21
Globe 9,764.17 10,109.60 12,236.30 Globe 5.94 - 5.00
MWC 2,118.45 1,924.02 2,084.55 MWC 51.67 26.67 31.84
IMI 6,763.17 6,971.61 9,319.86 IMI 0.50 0.50 0.65
AC Infra 21.62 26.45 24.81 AC Infra - 0.03 -
AC Energy 24.84 51.71 115.00 AC Energy - - -
AC Automotive 576.80 900.31 1,416.73 AC Automotive - - -
AC Healthcare 1.14 22.60 34.03 AC Healthcare - - -
HCX 359.47 211.96 123.15 HCX - - -
AffinityX 838.69 885.09 1,003.76 AffinityX 0.40 0.03 0.04
AC Education 30.37 42.07 47.05 AC Education - 0.22 0.20
AC Ventures - - - AC Ventures - - -
Total 37,738.00 39,870.51 45,027.10 Total 287.86 221.46 167.62
ECONOMIC VALUE GENERATED, DISTRIBUTED AND RETAINED (201-1)

PAYMENTS TO PROVIDERS OF
CAPITAL - DIVIDENDS AND GROUP-WIDE ECONOMIC
INTEREST IN MILLION PESOS 2015 2016 2017 PERFORMANCE IN MILLION PESOS 2015 2016 2017
ALI 12,663.03 14,375.60 15,041.67 Economic Value Generated 362,123.09 402,338.02 463,842.87
BPI 18,329.97 20,552.11 22,226.30 Payments to Suppliers - Operating 171,274.96 191,682.98 235,037.69
Costs
Globe 14,236.35 15,504.30 17,538.90
Payments to Employees - Wages and 37,738.00 39,870.51 45,027.10
MWC 3,497.49 3,514.33 2,444.69
Benefits
IMI 470.73 595.08 768.65
Payments to Providers of Capital - 49,695.86 55,138.44 58,238.45
AC Infra - - - Dividends and Interests
AC Energy - - 40.34 Payments to Government - Taxes 33,881.21 34,302.27 38,718.50
AC Automotive 88.85 112.47 144.81 Payments to Communities 287.86 221.46 167.62
AC Healthcare - - - Economic Value Distributed 292,877.89 321,215.66 377,189.37
HCX - - - Economic Value Retained 69,245.20 81,122.37 86,653.50
AffinityX 409.46 484.55 33.10

AC Education - - - AT THE PARENT COMPANY - AYALA
CORPORATION IN MILLION PESOS 2015 2016 2017
AC Ventures - - -
Economic Value Generated 193,759.79 217,610.27 259,656.58
Total 49,695.86 55,138.44 58,238.45
Operating Costs 111,893.58 132,761.25 168,029.26
Employee Wages and Benefits 20,320.08 17,161.38 21,274.78
PAYMENTS TO GOVERNMENT -
Payment to Providers of Capital 18,126.41 19,108.19 20,025.44
TAXES IN MILLION PESOS 2015 2016 2017
Payment to Government 44,959.85 44,528.39 50,492.09
ALI 9,537.44 11,200.97 13,146.88
Payment to Communities 608.51 406.72 254.89
BPI 11,978.32 12,115.17 13,578.03
Economic Value Distributed 195,908.43 213,965.93 260,076.46
Globe 8,162.11 7,209.10 8,020.10
Economic Value Retained (2,148.64) 3,644.34 (419.88)
MWC 2,852.76 2,981.09 2,878.52
IMI 451.72 515.85 682.25
AC Infra 17.47 14.06 18.34
AC Energy 232.03 69.89 167.86
AC Automotive 614.76 141.78 206.50
AC Healthcare 1.68 12.50 2.79
HCX 6.42 2.27 1.85
AffinityX 26.47 31.11 15.02
AC Education 0.02 8.46 0.37
AC Ventures - - 0.30
Total 33,881.21 34,302.27 38,718.50

INDEPENDENT ASSURANCE STATEMENT
2017 INTEGRATED REPORT OF
AYALA CORPORATION
Introduction
Ayala Corporation (“Ayala Corp.”) engaged DNV GL Business Assurance Philippines Branch (“DNV GL”), part of DNV
GL Group to undertake independent assurance of sustainability/non-financial disclosures in Ayala Corp.’s 2017 Integrated
Report (the “Report”) for the year ended 31st December 2017. This assurance engagement was planned and carried out using
DNV GL’s assurance methodology VeriSustainTM1 (Version 5.0) which is based on our professional experience, international
assurance best practice including the International Standard on Assurance Engagement 3000 (ISAE3000) Revised2 and the
Global Reporting Initiative (GRI) Sustainability Reporting Guidelines.
Scope of Assurance
The scope of assurance included a review of sustainability disclosures and performance data from Ayala Corp. and its
business units in the Philippines. The boundary of the Report for identified material topics and topic-specific disclosures are
set out in ‘About this report’ section, the respective chapters and Materiality section. We evaluated the Report for adherence
to the reporting principles for defining the sustainability report content as set forth in the GRI Standards and the guiding
principles in the International <IR> Framework (“<IR> Framework”). We understand that the reported financial data and
information are based on Ayala Corp.’s and respective business units’ financial statements, which are subject to a separate
independent audit process. The review of financial data taken from the Financial statements is not within the scope of our
work.
Responsibilities of Ayala Corp. and of the assurance provider

The Board of Ayala Corp. has sole responsibility for the integrity of the Report. The responsibility includes designing,
implementing, and maintaining internal controls over collection, analysis, aggregation and preparation, fair presentation of
the information, and data that are free from material misstatement including maintenance of integrity of their website. In
performing our assurance work, our responsibility is solely towards the management of Ayala Corp. in accordance with the
terms of reference agreed on with Ayala Corp., however our statement represents our independent opinion and is intended to
inform Ayala Corp.’s stakeholders. DNV GL’s responsibility is to form an independent conclusion, based on the procedures
we have performed and the evidence we have obtained. DNV GL is responsible for planning and performing the engagement
to obtain limited assurance about whether the selected information is free from material misstatement and meets the
disclosure requirements.
Basis of our opinion

To test the reliability of data and the robustness of the data aggregation process including related management approach for
identified material topics, a multi-disciplinary team of sustainability and assurance specialists performed the work at Ayala
Corp.’s headquarters (in Makati City) and its business units in the Philippines, from February to March 2018. As part of the
verification, we planned and performed our work based on DNV GL’s Risk Based Approach to obtain the evidence that we
considered necessary to provide a basis for our assurance opinion. Within the framework of our assessment, we performed
the following procedures and other activities including;
1
The VeriSustain protocol is available on request from www.dnvgl.com.
2
Assurance Engagements other than Audits or Reviews of Historical Financial Information
AS-PRJC-576876-2018-AST-PHL
INTO THE FUTURE 189

• conducted interview with data owners from Ayala Corp. and its business units including Ayala Land, Inc., Manila
Water Company, Inc., Globe Telecom, Inc. and Integrated Micro-Electronics Inc., Bank of the Philippine Islands, AC
Infrastructure Holdings Corporation, AC Automotive Holdings Corporation, AC Energy Holdings, Inc., AC Health,
AC Education and Ayala Foundation to understand the key processes and controls for reporting business units’
performance data;
• assessed the robustness of the underlying data and information flow and controls;
• performed data analysis using a risk-based approach and materiality; and
• challenged the sustainability-related disclosure, statements and claims;
• performed limited testing on a sampling basis of the selected information at corporate Headquarters, at business
units’ Headquarters and at facilities operated by business units to check that the selected environmental and social
data had been properly measured, gathered, recorded, collated and reported.
We also performed the following activities to assess the adherence to reporting principles;
• interviewed senior managers and representatives responsible for sustainability management and made enquiries to
determine their understanding of stakeholder engagement and materiality;
• reviewed the current sustainability issues that could affect Ayala Corp. and could be of interest of stakeholders.
Conclusion
Based on the work undertaken, we provide a limited level of assurance over non-financial disclosure presented in Ayala
Corp.’s 2017 Integrated Report i.e. nothing has come to our attention that causes us to believe that the reported data and
information disclosed in the Report does not give a fair representation of Ayala Corp.’s related sustainability performance.
Without affecting our assurance opinion, we also provide the following observations regarding the adherence to the reporting
principles for defining the sustainability report content and for defining report quality as defined in the GRI Standards and the
guiding principles in <IR> Framework;
Stakeholder Inclusiveness (GRI), Stakeholder relationships (<IR> Framework)

Ayala Corp. has identified key internal and external stakeholder groups including Investors and Shareholders, Creditors,
Investment Community, Government agencies and regulators, Employees, Customers, Industry Association, Media,
Communities, NGOs and Civil Societies. Ayala Corp. engages with the stakeholders at the Conglomerate and business units
levels through various channels to identify sustainability concerns and expectations. The Report discloses how Ayala Group
engages with stakeholders, what are their concerns with relevant material topics and how Ayala Group responds.
Sustainability Context (GRI)

The Report presents Ayala Corp.’s non-financial performance in the wide context of sustainability. Ayala Corp. commits to
creating shared value and improving the impact on society and the environment in its Sustainability philosophy and updated
360° Sustainability framework. The Report explains how Ayala Corp. and its business units have created shared value with
its core businesses and how various initiatives are aligned with achieving United Nations Sustainable Development Goals.
Materiality (GRI, <IR> Framework)

Ayala Corp. established a materiality matrix in 2013 and has revisited its material topics in 2017 through group-wide
materiality workshop and roadshows to business units. The Sustainability representatives from each Ayala business unit ,
together with senior management and data holders, participated in the workshop and roadshow to identify material topics and
business outputs for Ayala Corp. and the a Group as well as to validate the list of material topics at the business unit level. A
detailed materiality assessment process is addressed in the Report and Ayala Corp. provides a matrix of mapping material
topics and enterprise risks in the materiality section of the Report.
Reliability and Completeness (GRI, <IR> Framework)

The Report has fairly attempted to disclose material topics and relevant topic-specific disclosures. Ayala Corp. has selected,
compiled and reported information in a relatively consistent manner. The presentation within the Report enables stakeholders
to analyze changes in the sustainability performance over time. Data owners could demonstrate the origin and interpretation
of the data in a reliable manner. The Report covers global sustainability disclosures of Ayala Group for the identified material
topics.
Strategic focus and future orientation (<IR> Framework)

Risk description, potential impact, and corresponding control/mitigation measures addressed in ‘Risk management’ provides
insight into Ayala group’s strategy on risk management. The Report shows the value chain maps of each business unit with
six (6) capitals, key activities in the value chain, outputs and targets. The Report also presents how its capitals are managed
and its future strategy.
Connectivity of information (<IR> Framework)

The business models of Ayala Corp. and its business units describe the unique portfolio of businesses and the connection
with the respective business units’ roles and contribution to create the values in their unique value chain. Past and current
capability of Ayala Corp. and its business units are presented in terms of six (6) capitals and performances. Narrative and
quantitative information in the Report represents the Ayala Group’s ability on creating values. The Report also provides the
connection to references in relevant websites.
Conciseness (<IR> Framework)

Considering the principle of conciseness, infographics and graphs are appropriately used to convey information. The Report
clearly addresses stakeholder engagement results and materiality of Ayala Corporation. Relevant information on
sustainability performance and prospects are presented in a simple and succinct manner.
Consistency and Comparability (GRI and <IR> Framework)

Ayala Corp. has applied a consistent process to select, compile and report the selected information across the business units.
The Report in general presents its performance over time so that the reader can analyse changes and compare the
performances.
Balance (GRI and <IR> Framework)

In our opinion, the tone in the Report is generally neutral and with no obvious and deliberate intent to unduly influence the
stakeholders.
Accuracy (GRI)
The data measurement techniques and basis for calculations have been duly described to us and can be replicated with same
results. We have evaluated the accuracy of the selected data and information by sampling. Any errors or misstatements
identified during the engagement were communicated for correction prior to the Report being published. Certain restatements
are provided to changes in historical disclosure. Ayala Corp. has rolled out data collection portal which enables data
collection process faster and easier and reduces risk of human error during collating, compiling and computing process,
however some historical activity data provided by respective business units were found not accurate, which causes
restatement of disclosures. Ayala Corp. together with its business units could establish robust internal check process to
improve the quality and integrity of data. Any errors or misstatements identified during the assurance engagement were
communicated for correction prior to the Report being published.
Timeliness (GRI)
Ayala Corp. is committed to disclose its sustainability performance on annual basis and this is the second Integrated Report
from Ayala Corp. reporting its sustainability performance in the annual integrated report.
Clarity (GRI)
INTO THE FUTURE 191

The information is presented in the Report in a simple and logical manner and consolidated non-financial data tables help to
make the information understandable. All the information in this report will be made available to stakeholders through
printed hard copies and pdf soft copies which will be made accessible through the Ayala Corporation website.
Limitation
Our assurance relies on the premise that the data and information provided by Ayala Corp. to us as part of our review
procedures have been provided in good faith and free from misstatements. Because of the selected nature (sampling) and
other inherent limitation of both procedures and systems of internal control, there remains the unavoidable risk that errors or
irregularities, possibly significant, may not have been detected. The engagement excludes the sustainability management,
performance and reporting practices of Ayala Corp.’s associated companies, suppliers, contractors and any third-parties
mentioned in the Report. The company position statements, the statements for the management approach, and case studies
and examples are excluded from the scope of our work. We did not interview external stakeholders as part of this assurance
engagement. The reported disclosures related to Economic performances are based on the financial disclosures and data,
which were cross-checked with internal documents and the audited consolidated financial statements. Limited depth of
evidence gathering including inquiry and analytical procedures and limited sampling at lower levels in the organization were
applied as per agreed scope of engagement. The baseline data for Environmental and Social performance are verified with
samples randomly taken by and the aggregated data at the corporate level are used for the verification. The procedures
performed in a limited assurance engagement vary in nature and timing, and are less in extent than for a reasonable assurance
engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the
assurance that would have been obtained if a reasonable assurance engagement had been performed. We expressly disclaim
any liability or co-responsibility for any decision a person or an entity may make based on this Assurance Statement.
Statement of Competence and Independence

DNV GL applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC
17021:2011 - Conformity Assessment Requirements for bodies providing audit and certification of management systems, and
accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have
complied with the DNV GL Code of Conduct3 during the assurance engagement and maintain independence where required
by relevant ethical requirements. This engagement work was carried out by an independent team of sustainability assurance
professionals. DNV GL was not involved in the preparation of any statements or data included in the Report except for this
Assurance Statement. DNV GL maintains complete impartiality toward stakeholders interviewed during the assurance
process. DNV GL has provided assurance to Ayala Land, Inc., Globe Telecom, Inc and Manila Water which are business
units of Ayala Corp. In our opinion, there is no conflict of interest in the assurance engagement provided to the business units.
DNV GL did not provide any services to Ayala Corp. during 2017 that could compromise the independence or impartiality of
our work.
For and on behalf of DNV GL Business Assurance AS Philippines Branch
6 April 2018 / Manila, Philippines Seung Hyun Kwak Nandkumar Vadakepatth

Lead Assuror Assurance Reviewer
Head – Regional Sustainability Operations
Region India and Middle East
DNV GL Business Assurance India Pyt. Ltd. India
---------------------------------------------------------------------------------------
DNV GL Business Assurance is a global provider of certification, verification, assurance, assessment and training services, helping customers to build sustainable business
performance. www.dnvgl.com
3
The DNV GL Code of Conduct is available from DNV GL website (www.dnvgl.com)

GRI CONTENT INDEX (102-55)
This report has been prepared in accordance with

the GRI Standards: Core option
The GRI Content Index below indicates the reported disclosures,

the location of information in this report, and reference pages to
the independent assurance statement for relevant indicators.
GRI 101: FOUNDATION 2016

GENERAL DISCLOSURES
GRI Standard Disclosure Page number or direct answers
GRI 102: General Organizational Profile
Disclosures 2016
102-1 Name of the organization Ayala Corporation
102-2 Activities, brands, products, and services 6-7
102-3 Location of headquarters 6-7
102-4 Location of operations 10-11
102-5 Ownership and legal form 167
102-6 Markets served 6-7,10-11
102-7 Scale of the organization 86,184
102-8 Information on employees and other workers 86,184
102-9 Supply chain 82, Refer to Ayala Integrated Report 2016, p. 104
102-10 Significant changes to the organization and its supply chain 76-77
102-11 Precautionary Principle or approach 52-58
102-12 External initiatives Founding Member of UN Global Compact Network Philippines
102-13 Membership of associations Membership to other associations and advocacy organizations are
held in a personal capacity by AC citizens.
Strategy
102-14 Statement from senior decision-maker 20-31
102-15 Key impacts, risks, and opportunities 52-58
Ethics and integrity
102-16 Values, principles, standards, and norms of behavior 4,169
Governance
102-18 Governance structure 158
102-19 Delegating authority 52
102-20 Executive-level responsibility for economic, environmental, and social topics 34, 165
102-21 Consulting stakeholders on economic, environmental, and social topics 59-61
102-22 Composition of the highest governance body and its committees 163
102-23 Chair of the highest governance body 160
102-24 Nominating and selecting the highest governance body 164
102-27 Collective knowledge of highest governance body 161
102-28 Evaluating the highest governance body’s performance 160
102-29 Identifying and managing economic, environmental, and social impacts 62-69
102-30 Effectiveness of risk management processes 52
102-31 Review of economic, environmental, and social topics 70-71
102-32 Highest governance body’s role in sustainability reporting 3
INTO THE FUTURE 193

(102-55)
Stakeholder Engagement
102-40 List of stakeholder groups 59-61
102-41 Collective bargaining agreements 88, 185
102-42 Identifying and selecting stakeholders 59-61
102-43 Approach to stakeholder engagement 59-61, 83, 94
102-44 Key topics and concerns raised 59-61
Reporting practice
102-45 Entities included in the consolidated financial statements 172-175
102-46 Defining report content and topic Boundaries 176-177
102-47 List of material topics 176-177
102-48 Restatements of information 178-179
102-49 Changes in reporting 176-177, 178-179
102-50 Reporting period 2
102-51 Date of most recent report 2
102-52 Reporting cycle 2
102-53 Contact point for questions regarding the report 3
102-54 Claims of reporting in accordance with the GRI Standards 2
102-55 GRI content index 193-197
102-56 External assurance 2
MATERIAL TOPICS
E C O N O M I C
GRI Standard Disclosure Page number or direct answers
Economic Performance
GRI 103: 103-1 Explanation of the material topic and its Boundary 176-177
Management
Approach 2016 103-2 The management approach and its components 75,81-82,176-177
103-3 Evaluation of the management approach 20-31
GRI 201: Economic 201-1 Direct economic value generated and distributed 75-76, 187-188
Performance 2016
201-2 Financial implications and other risks and opportunities due to 81
climate change
Indirect Economic Impacts
Management
Approach 2016 103-2 The management approach and its components 77-81
103-3 Evaluation of the management approach Indirect economic impacts of Ayala Corporation have been increasing due
to acquisitions of new companies, and growth of existing businesses in the
group.
GRI 203: Indirect 203-1 Infrastructure investments and services supported 80-81
Economic Impacts
2016 203-2 Significant indirect economic impacts 77-78, 79-81
Procurement Practices
Management
Approach 2016 103-2 The management approach and its components 82
103-3 Evaluation of the management approach IMI does not track the spending on local suppliers due to the diverse supply
chain of its global sites. Data collection for this aspect is still being established
by the companies. Globe and AC Energy are yet to track total procurement
budget for all their sites.
GRI 204: 204-1 Proportion of spending on local suppliers 82, Manila Water spent 99 percent of its total procurement budget to local
Procurement suppliers.
Practices 2016
E N V I R O N M E N T
Materials
Management
103-3 Evaluation of the management approach 106

(102-55)
GRI 301: Materials 301-1 Materials used by weight or volume 106, 180
2016
Energy
Management
103-3 Evaluation of the management approach Expanded operations and energy efficiency initiatives across the group led to
only a minimal increase in energy consumption. Also, data collection for fuel
consumption of IMI sites abroad is still being established.
GRI 302: Energy 302-1 Energy consumption within the organization 98-99, 182-183, Electricity consumption was based on electric bills issued by
2016 distribution utilities. Fuel consumption was also based on receipts from fuel
purchases for company-owned vehicles and equipment.
302-2 Energy consumption outside of the organization 183, Electricity consumption was based on electric bills of tenants. Fuel
consumption was also based on receipts from fuel purchases for outsourced
vehicles and equipment.
302-3 Energy intensity 98-99, 182
302-4 Reduction of energy consumption 97-98
Ayala specific Total power generated 96-97
disclosures
Total power generated from renewable energy sources 96-97
Water
GRI 103: 103-1 Explanation of the material topic and its Boundary 103-105, 176-177
Management
GRI 303: Water 2016 303-1 Water withdrawal by source 103-105, 181
303-2 Water sources significantly affected by withdrawal of water 103-105
303-3 Water recycled and reused 181
Ayala specific Volume of water delivered (billed volume) 101
disclosures
Water loss (non-revenue water) 102
Biodiversity
Management
GRI 304: 304-1 Operational sites owned, leased, managed in, or adjacent to, 105
Biodiversity 2016 protected areas and areas of high biodiversity value outside
protected areas
304-3 Habitats protected or restored 104-105
304-4 IUCN Red List species and national conservation list species with 105
habitats in areas affected by operations
Emissions
GRI 103: 103-1 Explanation of the material topic and its Boundary 99, 176-177
Management
103-3 Evaluation of the management approach 100, Setting groupwide GHG targets is being explored.
GRI 305: Emissions 305-1 Direct (Scope 1) GHG emissions 99, 183, Standards used for the computation are based on the GHG Protocol
2016 Corporate Accounting and Reporting Standard. The gases reported include
carbon dioxide, methane and nitrous oxide.
305-2 Energy indirect (Scope 2) GHG emissions 99, 183, Standards used for the computation are based on the GHG Protocol
Corporate Accounting and Reporting Standard. Location-based grid emission
factors are based on the Department of Energy (Philippines) and Institute for
Global Environmental Strategies (global sites). The gases reported include
carbon dioxide, methane and nitrous oxide.
305-3 Other indirect (Scope 3) GHG emissions 99, 183, Standards used for the computation are based on the GHG Protocol
Corporate Accounting and Reporting Standard. Location-based grid emission
factors are based on the Department of Energy (Philippines). The gases
reported include carbon dioxide, methane and nitrous oxide.
305-4 GHG emissions intensity 99, 183
305-5 Reduction of GHG emissions 97-98
Effluents and Waste
Management
Approach 2016 103-2 The management approach and its components 103, 106-107
103-3 Evaluation of the management approach All local companies are compliant with DENR laws on transportation and
treatment of hazardous waste by hiring an accredited third party transporter
and treater.
GRI 306: Effluents 306-1 Water discharge by quality and destination 102-103, 181
and Waste 2016
306-2 Waste by type and disposal method 106-108, 180-181
306-4 Transport of hazardous waste 107-108, 180-181
INTO THE FUTURE 195

(102-55)
Supplier Environmental Assessment
Management
Approach 2016 103-2 The management approach and its components 82, 108, IMI does not track the number of suppliers due to the diverse supply
chain of its global sites. Data collection for this aspect is still being established
by the companies. Only the management approach and criteria is reported
this year.
103-3 Evaluation of the management approach 108, Environmental impacts in the supply chain were identified and managed
accordingly.
GRI 308: Supplier 308-2 Negative environmental impacts in the supply chain and actions 108
Environmental taken
Assessment 2016
S O C I A L
Employment
Management
GRI 401: 401-1 New employee hires and employee turnover 86, 185
Employment 2016
401-3 Parental leave 187
Occupational Health and Safety
Management
GRI 403: 403-2 Types of injury and rates of injury, occupational diseases, lost days, 84-85, 187
Occupational and absenteeism, and number of work-related fatalities
Health and Safety
2016
Training and Education
Management
GRI 404: Training 404-1 Average hours of training per year per employee 86,186-187
and Education 2016
404-2 Programs for upgrading employee skills and transition assistance 85-86
programs
Diversity and Equal Opportunity
Management
103-3 Evaluation of the management approach Male:female employee ratio has narrowed to 1:1.33 from 1:37 in 2016.
GRI 405: Diversity 405-1 Diversity of governance bodies and employees 86-87, 184-185
and Equal
Opportunity 2016
Non-discrimination
Management
Approach 2016 103-2 The management approach and its components An Employee Development and Industrial Relations Policy can be viewed at
www.ayala.com.ph. Moreover, non-discrimination is observed by the group.
103-3 Evaluation of the management approach Existing management approach is successful as no cases were filed against the
Ayala group for discrimination in the workplace.
GRI 406: Non- 406-1 Incidents of discrimination and corrective actions taken No incidents reported, no aspect of operations within our organization was
discrimination 2016 identified to have existence of discrimination
Freedom of Association and Collective Bargaining
Management
103-3 Evaluation of the management approach Existing management approach is successful as no parts of operations and
suppliers were found to be at risk of violating right to freedom of association
and collective bargaining
GRI 407: Freedom 407-1 Operations and suppliers in which the right to freedom of No incidents reported, no aspect of operations within our organization and
of Association association and collective bargaining may be at risk suppliers were found to be at risk of violating right to freedom of association
and Collective and collective bargaining
Bargaining 2016
Child Labor
Management
Approach 2016 103-2 The management approach and its components A Policy on Child Labor and Forced or Compulsory Labor can be viewed at
www.ayala.com.ph. Moreover, the group ensures that child labor is non-
existent in the companies and supply chain.
Ayala group for child labor in the workplace.

(102-55)
GRI 408: Child 408-1 Operations and suppliers at significant risk for incidents of child No incidents reported, no aspect of operations within our organization was
Labor 2016 labor identified to have existence of child labor
Forced or Compulsory Labor
Management
Approach 2016 103-2 The management approach and its components A Policy on Child Labor and Forced or Compulsory Labor can be viewed at
www.ayala.com.ph. Moreover, the group ensures that forced or compulsory
labor is non-existent in the companies and supply chain.
Ayala group for forced or compulsory labor in the workplace.
GRI 409: Forced or 409-1 Operations and suppliers at significant risk for incidents of forced No incidents reported, no aspect of operations within our organization was
Compulsory Labor or compulsory labor identified to have existence of forced or compulsory labor
2016
Security Practices
Management
103-3 Evaluation of the management approach Management approach is successful as there were no reported cases of
security personnel violation of human rights.
GRI 410: Security 410-1 Security personnel trained in human rights policies or procedures All of our security personnel undergo trainings with topics touching on
Practices 2016 policies and procedures on human rights.
Local Communities
Management
GRI 413: Local 413-1 Operations with local community engagement, impact 95
Communities 2016 assessments, and development programs
Supplier Social Assessment
Management
103-3 Evaluation of the management approach Social impacts in the supply chain were identified and managed accordingly.
GRI 414: Supplier 414-2 Negative social impacts in the supply chain and actions taken There were no reported cases of negative social impacts in our companies’
Social Assessment supply chain.
2016
Customer Privacy
Management
103-3 Evaluation of the management approach Our Privacy policy can be viewed at ayala.com.ph/privacy-policy
GRI 418: Customer 418-1 Substantiated complaints concerning breaches of customer privacy 95, Ayala Corporation has not identified any substantiated complaints.
Privacy 2016 and losses of customer data
INTO THE FUTURE 197

BOARD, BOARD COMMITTEE
MEETINGS, AND DIRECTORS’
ATTENDANCE
Board
Directors Composition No. of Meetings % Present
Attended/Held1
Jaime Augusto Zobel de Ayala Chairman (ED) 7/7 100
Fernando Zobel de Ayala Vice Chairman (ED) 7/7 100
Delfin L. Lazaro Non-Executive Director (NED) 7/7 100
Xavier P. Loinaz Independent Director (ID) 7/7 100
Ramon R. Del Rosario, Jr. Independent Director (ID) 7/7 100
Antonio Jose U. Periquet Independent Director (ID) 7/7 100
Yoshio Amano 2
Non-Executive Director (NED) 3/3 100
Keiichi Matsunaga 2
Non-Executive Director (NED) 4/4 100
Finance Committee
Members Designation No. of Meetings % Present
Attended/Held
1 Delfin L. Lazaro Chairman (NED) 10/10 100
2 Antonio Jose U. Periquet Member (ID) 9/10 90
3 Jaime Augusto Zobel de Ayala Member (ED) 10/10 100
4 Fernando Zobel de Ayala Member (ED) 10/10 100
Corporate Governance and Nomination Committee

Attended/Held
1 Ramon R. Del Rosario, Jr. Chairman (ID) 3/3 100
2 Antonio Jose U. Periquet Member (ID) 3/3 100
3 Xavier P. Loinaz Member (ID) 3/3 100
1 In 2017 and during the incumbency of the director

2 Mr. Keiichi Matsunaga was elected to be a member of the Board, replacing Mr. Yoshio Amano, on April 21, 2017
3 May not be members of the Board of Directors

Audit Committee
Attended/Held
1 Xavier P. Loinaz Chairman (ID) 4/4 100
2 Ramon R. Del Rosario, Jr. Member (ID) 4/4 100
3 Yoshio Amano 2
Member (NED) 2/2 100
4 Keiichi Matsunaga 2
Member (NED) 1/2 50
Risk Management and Related Party Transactions Committee

Attended/Held
1 Antonio Jose U. Periquet Chairman (ID) 3/3 100
2 Ramon R. Del Rosario, Jr. Member (ID) 3/3 100
3 Yoshio Amano 2
4 Keiichi Matsunaga 2
Personnel and Compensation Committee

Attended/Held
1 Ramon R. Del Rosario, Jr. Chairman (ID) 1/1 100
2 Delfin L. Lazaro Member (NED) 1/1 100
3 Yoshio Amano 2
Committee of Inspectors of Proxies and Ballots

Members3 Designation No. of Meetings % Present
Attended/Held
1 Solomon M. Hermosura Chairman 2/2 100
2 Catherine H. Ang Member 2/2 100
3 Josephine G. De Asis Member 2/2 100
INTO THE FUTURE 199

REPORT OF THE AUDIT COMMITTEE
TO THE BOARD OF DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2017
The Board-approved Audit Committee Charter defines the duties and responsibilities of the Audit Committee. In accordance with the
Charter, the Committee assists the Board of Directors in fulfilling its oversight responsibilities to the shareholders with respect to:
• Systems of internal controls, risk management and governance process of the Company
• Integrity of the Company’s financial statements and the financial reporting process
• Performance of the internal auditors and the external auditors
• Compliance with Company policies, applicable laws, rules and regulatory requirements
In compliance with the Audit Committee Charter, we confirm that:
• The Chairman and another member of the Committee are independent directors;
• We had four (4) regular meetings and executive meetings with the external and internal auditors;
• We recommended for approval of the Board and endorsement to the shareholders the reappointment of SGV & Co. as the Company’s
2017 external auditor and the related audit fee;
• We have reviewed and discussed the quarterly unaudited consolidated financial statements and the annual audited consolidated
financial statements of Ayala Corporation and Subsidiaries, including the Management’s Discussion and Analysis of Financial Condition
and Results of Operations, with management, internal auditors and SGV & Co. as the Company’s external auditors. We also reviewed and
discussed the annual Parent Company Financial Statements. These activities were performed in the following context:
- Management has the primary responsibility for the financial statements and the financial reporting process; and
- SGV & Co. is responsible for expressing an opinion on the conformity of the Ayala Corporation’s audited consolidated financial
statements with the Philippine Financial Reporting Standards.
• We have approved the overall scope and the respective audit plans of the Company’s internal auditors and SGV & Co. We have also
discussed the results of their audits, their assessment of the Company’s internal controls, and the overall quality of the financial
reporting process including their management letter of comments;
• We have reviewed the reports and updates of the internal auditors ensuring that management is taking appropriate corrective actions
in a timely manner, including addressing internal control and compliance issues. Based on the assurance provided by the internal audit
as well as SGV & Co. as a result of their audit activities, the Committee assessed that the Company’s system of internal controls, risk
management, and governance processes are adequate;
• We have reviewed and approved all audit, audit-related and non-audit services provided by SGV & Co. to Ayala Corporation and the
related fees for such services. We have also assessed the compatibility of non-audit services with the auditors’ independence to ensure
that such services will not impair their independence;
• We have conducted an annual assessment of our performance and confirm that the Committee had satisfactory performed its
responsibilities based on the requirements of its Charter; and
• We reviewed and reassessed the Audit Committee Charter to ensure that it is updated and aligned with regulatory requirements. The
revised Charter was approved by the Board of Directors in December 1, 2017.
Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the
Audit Committee recommends to the Board of Directors that the audited consolidated financial statements be included in the Annual
Report for the year ended December 31, 2017 for filing with the Securities and Exchange Commission and the Philippine Stock Exchange.
We are also recommending the re-appointment of SGV & Co. as Ayala Corporation’s external auditor and the related audit fee for 2018
based on their performance and qualifications.
March 7, 2018
XAVIER P. LOINAZ RAMON R. DEL ROSARIO, JR. KEIICHI MATSUNAGA

Chairman Member Member

REPORT OF THE RISK MANAGEMENT
AND RELATED PARTY TRANSACTIONS
COMMITTEE TO THE BOARD OF DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2017
The Risk Management and Related Party Transactions Committee assists the board in fulfilling its oversight mandate in the areas of risk
governance and related party transactions. Its objectives are to ensure that there exists a sound risk management framework and culture
within the company and to screen all material related party transactions for their fairness to shareholders.
The Committee held three meetings in 2017, during which it:
• Reviewed management’s adopted risk management framework and its ongoing programs to instill a culture of risk awareness within the
Ayala group.
• Was briefed on sources of downside risk and their possible effects on the company, as identified by management and the Group Risk
Management and Sustainability Unit.
• Evaluated proposed investments, asset sales, and leases involving related parties, and recommended them for either approval or
modification in accordance with fairness to the company’s shareholders.
• Reviewed its committee charter for relevance.
There were no emergencies that required the calling of any special committee meeting during the year.
March 5, 2018
ANTONIO JOSE U. PERIQUET RAMON R. DEL ROSARIO, JR. KEIICHI MATSUNAGA

Chairman Member Member
INTO THE FUTURE 201

2017 DISCLOSURES
In 2017, the company filed, among others, unstructured disclosures involving the following:
2017 UNSTRUCTURED DISCLOSURES • Notice of interest payment for all outstanding

• Ayala Corporation’s second P10 billion issuance in its corporate bonds.
fixed rate bond program rated PRSAaa • Annual and quarterly press statements on the
• AC Health invests in MedGrocer ePharmacy service financial and operating results
• Ayala acquires 43.3 percent stake in Zalora • Declaration of cash dividends to outstanding
Philippines Common and Preferred Shares
• Ayala group allots P185 billion capex in 2017 • Setting of the 2018 Annual Stockholders’ Meeting
• AYC Holdings transfers ownership in Integrated • AC Energy acquires renewable energy development
Micro-Electronics to AC Industrials platform
• Ayala and Ant Financial Services Group invest in • AC Energy completes acquisition of Chevron’s
Globe Fintech Innovations, Inc. Indonesia geothermal assets
• SEC’s approval of the Amended Articles of • AC Infrastructure and SM Investments Corporation
Incorporation (Extension of Corporate Term) submit unsolicited proposal for C3 Elevated
• Board Approval of ESOWN Grants Expressway
• Results of the 2016 and 2017 ESOWN Grant • AC Energy and UPC Renewables to develop small
• Results of Annual Stockholders’ Meeting and island power projects in Indonesia
Organizational Board of Directors’ Meeting • AC Energy Consortium transfers interest in Philippine
BidCo to AllFirst Equity Holdings, Inc.
• Redemption of AC’s P10 billion 7.20 percent fixed
• AC Energy and UPC Renewables to develop small
rate putable bonds due 2017
island power projects in Indonesia
• Participation of directors and officers in Corporate
• AC Energy Consortium transfers interest in Philippine
Governance seminars
BidCo to AllFirst Equity Holdings,
• Retirement of an Officer
• Financial close of GNPower Dinginin Unit 2
• Shelf registration with the SEC of up to P30 billion • AYC Holdings transfers ownership in Integrated
debt securities Micro-Electronics to AC Industrials
• Ayala Corporation successfully launches US$400 • AC Industrials acquires MT Misslbeck Technologies
million senior unsecured and guaranteed fixed for
life perpetual notes
• Notice and agenda of the 2017 Annual Stockholders’ NEWS CLARIFICATIONS
Meeting with detailed explanation of the agenda
• AC Energy eyes P7.489 billion RE investment deal in
items
Indonesia
• Attendance of the Board of Directors in 2017
• Ayala to expand healthcare business
• Top 100 Stockholders’ Reports
• Ayala also looking at logistics business
• Notices of Analysts’ Briefing
• Ayala also keen on rehab of MRT3
• Public Ownership Reports
• Certification of Nominees for Independent Directors • MetroPac offers P12 billion MRT3 rehab
• Updates on Annual Corporate Governance Report for • Big Consortium to Rebuild NAIA
the year 2017

CHANGES IN
SHAREHOLDINGS
Summarized below are the reported trades in Ayala Securities of the directors and officers in 2017:
Security Balance as of Acquired Disposed Of Balance as of
December 31, 2016 December 31, 2017
Directors
Jaime Augusto Zobel de Ayala Common 136,396 165,037 79,427 222,006
Preferred B Series 1 20,000 0 0 20,000
Voting Preferred 543,802 0 0 543,802
Fernando Zobel de Ayala Common 177,846 180,290 130,000 228,136
Keiichi Matsunaga Common 1 0 0 1
Delfin L. Lazaro Common 30,807 21,429 24,400 27,836
Xavier P. Loinaz Common 126,614 0 0 126,614
Antonio Jose U. Periquet Common 1,200 0 0 1,200
Preferred B Series 2 400,000 0 0 400,000
Ramon R. Del Rosario, Jr. Common 1 0 0 1
Officers
Jose Rene Gregory D. Almendras Common 10,800 28,545 0 39,345
Catherine H. Ang Common 10,209 5,987 0 16,196
Voting Preferred Shares 5,290 0 0 5,290
Arthur R. Tan Common 256,538 56,753 0 313,291
Alfredo I. Ayala Common 152,697 33,936 14,087 172,546
Paolo Maximo F. Borromeo Common 26,420 29,034 16,480 38,974
Cezar P. Consing Common 46,609 30,435 0 77,044
Ma. Cecilia T. Cruzabra Common 9,714 7,740 0 17,454
Josephine G. De Asis Common 9,201 7,329 0 16,530
Ferdinand M. Dela Cruz Common 0 39,755 0 39,755
Bernard Vincent O. Dy Common 0 9,567 0 9,567
Ernest Lawrence L. Cu* Common 75,205 28,569 0 103,774
John Eric T. Francia Common 81,516 61,341 9,090 133,767
Solomon M. Hermosura Common 96,993 69,358 44,010 122,341
Voting Preferred Shares 53,583 0 0 53,583
Jose Teodoro K. Limcaoco Common 163,688 76,689 13,700 226,677
Ruel T. Maranan Common 5,155 7,884 0 13,039
John Philip S. Orbeta Common 471,659 61,178 0 532,837
Dodjie D. Lagazo Common 0 0 0 0
Joanne M. Lim Common 0 0 0 0
TOTAL 3,790,741 920,856 331,194 4,380,403
*Not a reportable officer of Ayala Corporation but a member of the Ayala Group Management Committee
INTO THE FUTURE 203

AYALA GROUP MANAGEMENT
COMMITTEE MEMBERS
CEZAR P. CONSING Marketing and Sales of ALI. He also holds 2007 and has been a member of the Ayala
Filipino, 58, is a Senior Managing Director the following positions in other publicly- Group Management Committee since
of Ayala Corporation and has been a listed Companies: Chairman of Prime 2002. He has been the Chief Executive
member of the Ayala Group Management Orion Philippines, Inc. and Director of Cebu Officer of Integrated Micro-Electronics,
Committee since April 2013. He has Holdings, Inc., Cebu Property Ventures Inc., a publicly-listed company, since April
been the President and CEO of Bank of and Development Corporation, and MCT 2002. He was the President of IMI from
the Philippine Islands since April 2013, Bhd of Malaysia. His other significant April 2002 to June 23, 2016. Concurrently,
one of the Ayala Group’s publicly-listed positions include: Chairman of Ayala he is also the Chairman of the Board and
companies. He also holds the following Property Management Corporation, Chief Executive Officer of PSi Technologies
positions in other publicly-listed companies: Makati Development Corporation, Amaia Inc., President and Chief Executive Officer
Independent Director of Jollibee Foods Land Corporation, AyalaLand Commercial of Speedy-Tech Electronics Ltd.; and
Corporation and Chairman of National Reit, Inc., Bellavita Land Corporation, President and Chief Executive Officer of
Reinsurance Corporation of the Philippines. Ayagold Retailers, Inc., Station Square AC Industrial Technology Holdings, Inc.
His other significant positions are: President East Commercial Corporation, Aviana Prior to IMI, he was the Northeast Area
of Bancnet, Inc., Director of LGU Guarantee Development Corp., Cagayan De Oro Sales Manager and Acting Design Center
Corporation, Filgifts.com., The Rohatyn Gateway Corp., BGSouth Properties, Manager of American Microsystems
Group, Sqreem Technologies, and Endeavor Inc., BGNorth Properties, Inc., BGWest Inc. (Massachusetts, USA), from 1994 to
Philippines. He is also a board director of Properties, Inc., Portico Land Corp., and 1998, of which he became the Managing
the US-Philippines Society, trustee of the Philippine Integrated Energy Solutions, Director for Asia Pacific Region/Japan
Manila Golf Club Foundation, and a member Inc.; Vice Chairman of Ayalaland Estates, from 1998 to 2001. He graduated with
of the Trilateral Commission. He served as Inc., Ayala Greenfield Development B.S. in Electronics Communications
an independent director of CIMB Group Corporation, Alviera Country Club, Inc., Engineering degree from Mapua Institute
Holdings from 2006 to 2013 and First Gen and the Junior Golf Association of the of Technology in 1982 and attended post-
Corporation from 2005 to 2013. Prior to Philippines; Director and President of graduate programs at the University of
being President of BPI, he first worked for Bonifacio Land Corporation, Emerging City Idaho, Singapore Institute of Management,
BPI’s corporate planning and corporate Holdings, Inc., Columbus Holdings, Inc., IMD, and Harvard Business School.
banking from 1980 - 1985. He worked for J.P. Berkshires Holdings, Inc., Fort Bonifacio
Morgan & Co. in Hong Kong and Singapore Development Corporation, Aurora ERNEST LAWRENCE L. CU
from 1985 – 2004 and became the co-head Properties Incorporated, Vesta Property Filipino, 57, has been a member of the
of the firm’s investment banking business in Holdings, Inc., Ceci Realty Inc., Alabang Ayala Group Management Committee
Asia Pacific from 1997 – 2004 and President Commercial Corporation, and Accendo since January 2009. He is the President
of J.P. Morgan Securities (Asia Pacific) Commercial Corp.; President of the Hero and Chief Executive Officer of Globe
Ltd. As a senior Managing Director of J.P. Foundation Incorporated and Bonifacio Telecom, Inc., a publicly-listed company.
Morgan, he served as a member of the firm’s Art Foundation, Inc.; Director of Alveo He is a trustee of Ayala Foundation, Inc.
global investment banking management Land Corp., Amicass Process Solutions, and Hero Foundation, Inc. Prior to joining
committee and its Asia Pacific management Inc., Whiteknight Holdings, Inc., AyalaLand Globe, he was the President and CEO of
committee. He was a partner at The Rohatyn Medical Facilities Leasing, Inc., Serendra, SPI Technologies, Inc. In 2017, he was
Group from 2004 – 2013, ran its Hong Kong Inc., Alveo-Federal Land Communities, adjudged Best CEO by Finance Asia. A
office, and its private investing business Inc., ALI Eton Property Development second for Cu, he first received the award
in Asia, and was a board director of its real Corporation, and Nuevocentro, Inc.; in 2010. Also in 2017, for the fifth straight
estate, and energy and infrastructure private Trustee of Ayala Foundation, Inc. and year, Cu was recognized as one of the
equity investing subsidiaries. He graduated Ayala Group Club, Inc. In 2015, he was 100 most influential telecom leaders
with a degree of A.B (Accelerated Program) inducted as member of the Advisory worldwide by London-based Global-
Economics (Magna Cum Laude) from De La Council of the National Advisory Group for Telecoms Business Magazine Power 100.
Salle University in 1979 and M.A. in Applied the Police Transformation Development Frost & Sullivan Asia Pacific has also named
Economics from the University of Michigan, of the Philippine National Police. He him CEO of the Year twice, first in 2012, and
Ann Arbor, in 1980. earned a degree of B.B.A Accountancy again in 2017. He earned a degree in BS
from the University of Notre Dame in 1985 Industrial Management Engineering from
BERNARD VINCENT O. DY and took his Master’s Degree in Business De La Salle University in 1982 and took his
Filipino, 54, is a Senior Managing Director Administration in 1997 and in International Master’s Degree in Business Administration
of Ayala Corporation and has been a Relations in 1989, both at the University of at the JL Kellogg Graduate School of
member of the Ayala Group Management Chicago. Management in 1984.
Committee since April 2014. He is the
President and Chief Executive Officer ARTHUR R. TAN FERDINAND M. DELA CRUZ
of Ayala Land, Inc. Prior to this post, he Filipino, 58, has been a Senior Managing Filipino, 50, has been a Managing Director
was the Head of the Residential Business, Director of Ayala Corporation since January since 2011 and a member of the Ayala
Commercial Business, and Corporate Group Management Committee since

April 2017. He is the President and CEO Strategy for the International Renewable of Nueva Caceres; and Trustee of Ayala
of Manila Water Company, Inc. Prior to his Energy Agency held in Abu Dhabi. In Foundation, Inc. He is also a Trustee of
election as President of MWC, he was the the same year, the Philippines became Philippine Business for Education (PBEd).
Chief Operating Officer for Manila Water a rotating member of the Executive He has an MBA from the Harvard Graduate
Operations; and President of Manila Water Board of the International Energy Forum. School of Business Administration and
Total Solutions Corporation and Manila Last September 2013, after stepping B.A. in Development Studies (Honors) and
Water Foundation. He joined MWC in July down as Energy Secretary, Rene was Economics from Brown University.
2011 as the East Zone Business Operations awarded ASEAN Individual Excellence
Group Director and was concurrently in Energy Management by his fellow PAOLO MAXIMO F. BORROMEO
Group Director for Corporate Strategic Energy Ministers during the 31st ASEAN Filipino, 40, has been a Managing Director
Affairs. Before joining MWC, he was the Ministers on Energy Meeting and ASEAN since January 2016 and a member of
head of the Consumer Sales Group of Energy Awards, which was another 1st the Ayala Corporation Management
Globe Telecom for two years, and was for the Philippines. In June 2013, he was Committee and the Ayala Group
head of its Wireless Business Group from given the rare privilege of addressing Management Committee since September
October 2002 to June 2009. Prior to that, the United Nations Economic and Social 2014. He has served as Group Head of
he was the President and General Manager Council at the Palais des Nations, Geneva Corporate Strategy and Development of
of Kraft Foods (Philippines) Inc. for more and then again in December 2013 for the Company since September 2014. In
than a year and the same company’s the United Nations’ Special Meeting his role, he oversees the overall corporate
Country General Manager for its various of the ECOSOC in New York. He was planning process, portfolio strategy,
operating companies in Indonesia. He the President and CEO of Manila Water group-wide innovation projects, and
also held senior leadership roles in ALI, Company, Inc. before he decided to new business development initiatives.
San Miguel Brewing Philippines, Inbisco serve the government in 2010. During In addition, he leads Ayala Corporation’s
Philippines, and Unilever Philippines. his term, the company was awarded as healthcare businesses. He sits on the
He graduated cum laude with a degree one of the Best Managed Companies in board of Ayala Healthcare Holdings, Inc.
in BS Mechanical Engineering from the Asia, the Best in Corporate Governance, and the Generika Group of Companies. He
University of the Philippines. He is a board one of the Greenest Companies in the also sits on the board of AC Education, Inc.,
top-notcher and a licensed Mechanical Philippines, and hailed as the world’s Affordable Private Education Center, Inc.,
Engineer. Most Efficient Water Company. In June AC College of Enterprise and Technology
2016, a Presidential Award, Order of Holdings, Inc., LINC Institute, Inc., AC
JOSE RENE GREGORY D. ALMENDRAS Lakandula, Rank of Gold Cross Bayani, Ventures Holding Corp., AC Industrial
Filipino, 57, has been a Managing Director highest honor given to a civilian by the Technology Holdings Inc., HCX Technology
and member of the Ayala Corporation Republic of the Philippines, was awarded Partners, Inc., Ayala International Holdings
Management Committee and the to him by President Benigno S. Aquino III, Limited, AG Holdings Limited, and LiveIt
Ayala Group Management Committee for his remarkable performance during Investments, Ltd. Prior to joining Ayala,
since August 2016. He is currently the the Aquino administration. He obtained he was a Principal at Booz & Company,
President of AC Infrastructure Holdings his Bachelors of Science in Business a global strategy consulting firm, based
Corporation; Chairman of Light Rail Management degree from the Ateneo de in San Francisco, California, USA. He
Manila Holdings 6, Inc., and MCX Tollway, Manila University in 1981. He attended obtained his Bachelors of Science degree
Inc.; and Executive Vice President of the Strategic Business Economics Program in Management Engineering from the
Asiacom Philippines, Inc. He also serves from University of Asia & the Pacific in Ateneo de Manila University and his
as a member of the Board of Directors 1999. Master’s in Business Administration with
of the following companies within the honors from the Wharton School at the
Ayala Group: Light Rail Manila Holdings, ALFREDO I. AYALA University of Pennsylvania.
Inc., Light Rail Manila Holdings 2, Inc., Filipino, 56, has been a Managing Director
AC Energy, Inc., and A2 Airport Partners, of Ayala Corporation and a member of JOHN ERIC T. FRANCIA
Inc. On a concurrent basis, he heads the the Ayala Group Management Committee Filipino, 46, has been a Managing Director
Public Affairs Group of Ayala Corporation. since June 2006. He is the President and a member of the Ayala Corporation
He served as Secretary of Foreign Affairs and Chief Executive Officer of LiveIt Management Committee and the Ayala
for the Republic of the Philippines from Investments Ltd. and of AC Education, Group Management Committee since
March to June 2016. He also served as Inc. which are Ayala Corporation’s holding January 2009. He is the President and
the Cabinet Secretary under the Office companies for its business processing Chief Executive Officer of AC Energy, Inc.
of the President from November 2012 outsourcing and educations investments, In his previous role as Head of Ayala’s
to March 2016. Prior to his appointment respectively. Currently, he also holds the Corporate Strategy and Development
as Cabinet Secretary, he served as the following positions: Director of Affinity group, he led Ayala’s entry into the energy
Secretary of the Department of Energy Express Holdings, Ltd., Affinity Express and transport infrastructure sectors in
from July 2010 to October 2012. Under Philippines, Inc., and Azalea International 2011. Under his leadership, Ayala invested
his leadership, the Department of Energy Venture Partners Limited.; Chairman and in over 1,000MW of attributable capacity
ranked as one of the Top 10 Performers, President of AC College of Enterprise in the energy sector, and secured over
in a survey among government agencies and Technology, Inc. and LINC Institute; $1 billion worth of PPP projects in the
on government performance specifically Chairman of Affordable Private Education transport infrastructure space. He is a
in ensuring integrity in public service. Center, Inc. and Newbridge International Director of Manila Water Company, Inc.,
In 2011, he became the co-chair of the Investments Limited; Vice Chairman, a publicly-listed company. He is also a
high-level discussion on the Long Term President, and CEO of the University member of the Board of Directors of the
INTO THE FUTURE 205

following companies within the Ayala independent director of SSI Group, Inc, Outstanding Employer of the Year by the
group: Purefoods International Limited, also a publicly-listed company. He is the People Management Association of the
Ayala Healthcare Holdings, Inc., AC Chairman of Darong Agricultural and Philippines. Mr. Maranan earned his AB
Education, Inc., AC College of Enterprise Development Corporation, Zapfam Inc., Social Sciences degree from the Ateneo
and Technology, Inc., AC Ventures Holding and Arlington Mariveles Philippine GP de Manila University and his law degree
Corp., Ayala Aviation Corporation, Zapfam, Corporation. He is the President and CEO from the University of Santo Tomas. The
Inc., Northwind Power Development of AC Ventures Holding Corp. He is the Vice latter institution has recently granted
Corporation, North Luzon Renewable Chairman of Lagdigan Land Corporation. him the UST 2016 Outstanding Alumni
Energy Corporation, Light Rail Manila He is the President of Liontide Holdings, Award under Private Sector. He has also
Corporation, AC Infrastructure Holdings Inc. and of Philwater Holdings Company, completed the Leadership Management
Corporation, MCX Tollway, Inc., and various Inc. He is a Director of Ayala Hotels, Inc., Program under Harvard.
other companies. Prior to joining Ayala, AC Energy, Inc., Ayala Aviation Corporation,
he was a senior consultant and member AC Education, Inc., Asiacom Philippines, JOHN PHILIP S. ORBETA
of the management team of Monitor Inc., Ayala Group Legal, Michigan Holdings, Filipino, 56, has served as a member of
Group, a strategy consulting firm based Inc., AC Industrial Technology Holdings, the Ayala Corporation Management
in Cambridge, Massachusetts, USA. Prior Inc., Kauswagan Power GP Corp., A.C.S.T Committee since May 2005 and the Ayala
to consulting, he spent a few years in the Business Holdings, Inc., LICA Management Group Management Committee since
field of academe and media. He received Inc., and Just For Kids, Inc. He is the April 2009. He is currently the Managing
his undergraduate degree in Humanities Treasurer of Ayala Retirement Fund Director, Chief Human Resources Officer,
and Political Economy from the University Holdings, Inc. He joined Ayala Corporation and Group Head for Corporate Resources,
of Asia & the Pacific, graduating magna as a Managing Director in 1998. Prior to covering Strategic Human Resources,
cum laude. He then completed his Masters his appointment as CFO in April 2015, he Knowledge Management, Information &
Degree in Management Studies at the held various responsibilities including Communications Technology, AC Synergy,
University of Cambridge in the United President of BPI Family Savings Bank, and Corporate Support Services at Ayala
Kingdom, graduating with First Class President of BPI Capital Corporation, Corporation. He is currently the Chairman
Honors. Officer-in-Charge for Ayala Life Assurance, of Ayala Aviation Corporation; Chairman
Inc. and Ayala Plans, Inc., Trustee and and President of HCX Technology Partners,
SOLOMON M. HERMOSURA Treasurer of Ayala Foundation, Inc., Inc.; and Vice Chairman of Ayala Group
Filipino, 55, has served as Managing President of myAyala.com, and CFO of Club, Inc. Mr. Orbeta also serves as a
Director of Ayala Corporation since 1999 Azalea Technology Investments, Inc. He Board Director of Ayala Group Legal,
and a member of the Ayala Corporation has held prior positions with JP Morgan & AC Industrial Technology Holdings, Inc.,
Management Committee since 2009, and Co. and with BZW Asia. He graduated from Ayala Healthcare Holdings, Inc., Ayala
the Ayala Group Management Committee Stanford University with a BS Mathematical Retirement Fun Holdings, Inc., BPI Family
since 2010. He is also the Group Head Sciences (Honors Program) in 1984 and Bank, Inc., ALFM Growth Fund, Inc., ALFM
of Corporate Governance, and the Chief from the Wharton School of the University Money Market Fund, Inc., ALFM Peso
Legal Officer, Chief Compliance Officer, of Pennsylvania with an MBA (Finance and Bond Fund, Inc., ALFM Dollar Bond Fund,
Corporate Secretary, and Data Protection Investment Management) in 1988. Inc., ALFM Euro Bond Fund, Inc., and the
Officer of Ayala Corporation. He is the Philippine Stock Index Fund Corp. Mr.
CEO of Ayala Group Legal. He serves as the RUEL T. MARANAN Orbeta previously served as the President
Corporate Secretary and Group General Filipino, 55, has been a Managing Director and CEO of AC Industrial Technology
Counsel of Ayala Land, Inc., and Corporate of Ayala Corporation since January 2015. Holdings, Inc. (formerly Ayala Automotive
Secretary of Globe Telecom, Inc., Manila He has also served as President of Ayala Holdings Corporation) and Automobile
Water Company, Inc., Integrated Micro- Foundation, Inc. since March 1, 2015. Central Enterprise, Inc. (Philippine importer
Electronics, Inc., and Ayala Foundation, Inc. He is also a member of the board of of Volkswagen), and the Chairman and
He also serves as a Corporate Secretary directors of Asticom Technology, Inc. and CEO of Honda Cars Makati, Inc., Isuzu
and a member of the Board of Directors of a member of the board of representatives Automotive Dealership, Inc., and Iconic
a number of companies in the Ayala group. of CIFAL Philippines. He was the Group Dealership, Inc. Prior to joining Ayala
He served as a Director of the Bank of the Director of Manila Water Company, Inc.’s Corporation, he was the Vice President
Philippine Islands from April 18, 2013 to Corporate Human Resources Group from and Global Practice Director of the Human
April 9, 2014. He graduated valedictorian 2004 to 2014. Before joining MWC, he Capital Consulting Group at Watson Wyatt
with Bachelor of Laws degree from San was part of various organizations such as Worldwide (now Willis Towers Watson),
Beda College in 1986 and placed third in Globe Telecom, Inc., Vitarich Corporation, overseeing the firm’s practices in executive
the 1986 Bar Examinations. and Integrated Farm Management, compensation, strategic rewards, data
among others. In MWC, he introduced services, and organization effectiveness
JOSE TEODORO K. LIMCAOCO numerous innovations in human around the world. He was also a member
Filipino, 55, has been the Chief Finance resources management, rallying behind of Watson Wyatt’s Board of Directors. He
Officer and Finance Group Head of Ayala the company’s being the first Filipino graduated with a degree in A.B. Economics
Corporation since April 2015. He is also the company to win the prestigious Asian from the Ateneo de Manila University in
Chief Risk Officer and Sustainability Officer Human Capital Award in 2011, an award 1982.
of Ayala Corporation. He is a director of sponsored by the Singapore Ministry
Globe Telecom, Inc. and Integrated Micro- of Manpower, CNBC Asia-Pacific, and
Electronics, Inc., two of the publicly-listed INSEAD. Through his leadership in human
companies of the Ayala Group; and an resources, MWC was vested the 2006

SENIOR LEADERSHIP
MANAGING DIRECTORS ASSOCIATE DIRECTORS CONSULTANTS / ADVISERS
Emmanuel A. Aligada* Yla Patricia G. Alcantara Patrice R. Clausse*
Gil B. Genio* Maria Susana C. Bables Simon C. Mossesgeld*
Ginaflor C. Oris* Robert Michael N. Baffrey* Luis Juan B. Oreta*
Virgilio C. Rivera, Jr.* Antonio Joselito G. Lambino II Marciano A. Paynor, Jr.
Jaime E. Ysmael* Erwin P. Locsin* (retired Dec 31, 2017)
Guillermo M. Luz
EXECUTIVE DIRECTORS Gabino Ramon G. Mejia*
Josette Adrienne A. Abarca* Aditas Vivian L. Santamaria
Fatima P. Agbayani* Ma. Victoria A. Tan
Catherine H. Ang Gabriel Q. Villaluz III
Ruby P. Chiong*
Ma. Cecilia T. Cruzabra
Josephine G. De Asis
Emily C. De Lara
Rosallie A. Dimaano*
Maria Corazon G. Dizon*
Felipe Antonio P. Estrella III
Romualdo L. Katigbak*
Noel Eli B. Kintanar*
Monina C. Macavinta* (retired Dec 31, 2017)
Michael C. Montelibano
Jenara Rosanna F. Ong*
Maria Angelica B. Rapadas
Alfonso Javier D. Reyes*
Ma. Victoria P. Sugapong*
Sheila Marie U. Tan*
Norma P. Torres*
*seconded to subsidiaries
INTO THE FUTURE 207

AYALA GROUP NETWORK
AYALA CORPORATION GLOBE TELECOM Sustainability

34F Tower One The Globe Tower E-mail: Maranan.is@ayalainfra.com
Ayala Triangle, Ayala Avenue 32nd Street corner 7th Avenue
Makati City 1226 Philippines Bonifacio Global City AC INDUSTRIALS
Tel: +632 908 3000 Taguig 1634 Philippines
Fax: +632 848 5846 Tel: +632 730 2000 (Trunk Line for INTEGRATED MICRO-
www.ayala.com.ph Corporate Office) ELECTRONICS, INC.
+632 730 1000 (Customer Care) North Science Avenue, Special
Investor Relations +632 730 1010 (Sales) Export Processing Zone
E-mail: investorrelations@ayala.com.ph +632 730 1300 (Loyalty) Laguna Technopark, Biñan
Mobile: 211 Laguna 4024 Philippines
Sustainability www.globe.com.ph Tel: +632 756 6840
E-mail: sustainability@ayala.com.ph Fax: +6349 544 0322
Investor Relations www.global-imi.com
AYALA LAND E-mail: ir@globe.com.ph
31F Tower One Investor Relations
Ayala Triangle, Ayala Avenue Sustainability E-mail: ir@global-imi.com
Makati City 1226 Philippines E-mail: gtcorpcomm@globe.com.ph
Tel: +632 908 3000 Sustainability
Fax: +632 848 5336 MANILA WATER E-mail: maribeth.gamao@global-imi.com
www.ayalaland.com.ph 2F MWSS Administration Building
489 Katipunan Road, Balara AC AUTOMOTIVE
Investor Relations Quezon City 1105 Philippines 11F Bonifacio One Technology Tower
E-mail: iru@ayalaland.com.ph Tel: +632 917 5900 3030 Rizal Drive West corner 31st
Hotline: +632 1627 Street
Sustainability www.manilawater.com Bonifacio Global City
E-mail: gonzales.anna@ayalaland.com.ph Taguig 1634 Philippines
Investor Relations Tel: +632 459 4504
BANK OF THE PHILIPPINE ISLANDS E-mail: invrel@manilawater.com
6768 Ayala Avenue Sustainability
Makati City 1226 Philippines Sustainability E-mail: cruzag@hondamakati.com.ph
Tel: +632 818 5541 to 48 E-mail: sustainability@manilawater.com
Express Phone Banking: +632 89 100 HONDA CARS MAKATI, INC.
www.bpiexpressonline.com AC ENERGY 1 Pres. Sergio Osmeña Highway
4F 6750 Building Magallanes
Investor Relations Ayala Avenue Makati City 1232 Philippines
E-mail: investorrelations@bpi.com.ph Makati City 1226 Philippines Tel: +632 902 9393
Tel: +632 730 6300 Fax: +632 852 1158
Sustainability www.acenergy.com.ph www.hondamakati.com.ph
E-mail: sustainability@bpi.com.ph

ISUZU AUTOMOTIVE AC EDUCATION
DEALERSHIP, INC. 33F Tower One Ayala Triangle
Alabang-Zapote Road corner Acacia Ayala Avenue
Avenue Makati City 1226 Philippines
Ayala Alabang Tel: +632 744 5370; +632 908 3455
Muntinlupa City 1780 Philippines Fax: +632 892 5112
Tel: +632 807 1788 www.aceducation.ph
Fax: +632 809 5053
www.isuzuautodealer.com.ph Sustainability
E-mail: joyce.samaniego@apecshools.
AUTOMOBILE CENTRAL edu.ph
ENTERPRISE, INC.
11F Bonifacio One Technology Tower AC VENTURES
3030 Rizal Drive West cor. 31st Street 33F Tower One Ayala Triangle
Bonifacio Global City Ayala Avenue
Taguig City 1634 Philippines Makati City 1226 Philippine
Tel: +632 459 4555
www.volkswagen.com.ph AYALA FOUNDATION
8F 111 Paseo Building
AC INFRASTRUCTURE Paseo de Roxas corner Legaspi Street
32F Tower One Ayala Triangle Legaspi Village
Ayala Avenue Makati City 1229 Philippines
Makati City 1226 Philippines Tel: +632 717 5800
Tel: +632 908 3000 Fax: +632 813 4488
Fax: +632 759 4881 www.ayalafoundation.org
www.acinfra.com.ph
Sustainability
Sustainability E-mail: rebete.ji@ayalafoundation.org
E-mail: quesada.jam@acinfra.com.ph
AC HEALTH
3F Makati Stock Exchange Bldg.
6767 Ayala Avenue
Makati City 1226 Philippines
Tel: +632 745 2508
www.achealth.com.ph
Sustainability
E-mail: garcia.gp@achealth.com.ph
INTO THE FUTURE 209

2017 AWARD S A N D R E COG N I TI O N S
Ayala ranked 2nd in FinanceAsia’s Best Managed
Companies, Most Committed to Corporate
Governance, and Best at Corporate Social
Responsibility polls; 5th for investor relations; and
3rd for Best CEO
Ayala ranked 18th in Forbes Magazine’s Global

2000: World’s Best Employers list, the only
Philippine company in the Top 20
Chairman and CEO Jaime Augusto Zobel de

Ayala named a UN SDG Pioneer for his leadership
of Ayala’s sustainable business strategy and
operations
President and COO Fernando Zobel de Ayala

awarded the Andrea Palladio International Prize
at the 10th Dedalo Minosse, which recognizes the
role of clients in architectural achievements
CFO Jose Teodoro K. Limcaoco awarded CFO of

the Year by the Financial Executives Institute of
the Philippines and ING Bank NV
Ayala’s US$400M fixed-for-life perpetual bond

issuance named Philippine Capital Market Deal
of the Year by Thomson Reuters’ IFR Asia and Best
Corporate Bond in the Philippines at The Asset’s
Triple A Country Awards
Ayala won Enterprise Risk Program of the Year at

the StrategicRISK Awards
Generika won the inaugural ASEAN Inclusive

Business Award at the ASEAN Business Awards
AC Energy named Fastest Growing Energy

Platform by International Finance Magazine
Best Annual Report at IR Magazine’s Awards

(Southeast Asia), and placed second for Best in
Sector-Financials
Shortlisted finalist for the Sustainability Team of

the Year Award at the Ethical Corporation’s 8th
Annual Responsible Business Awards
Shortlisted finalist for Asia’s Best Integrated

Report and Best Reporting on the SDGs at
CSRWorks’ Asia Sustainability Reporting Awards
Shortlisted finalist for the Best Investor Relations,

Best Sustainability Program, and Best in
Governance at the Philippine Stock Exchange’s
Bell Awards for excellence in corporate
governance

AYAL A S YNE R G I E S I N MOTI O N
4
1 The Ayala Innovation Excellence Awards recognize
outstanding efforts from across the group.
2 ICT practitioners gather at the ICT Summit with Ayala’s

5
Chairman and CEO.
3 Team Ayala wins first place in the streetdance

competition of the JZA Cup.
4 Ayala CEOs Bong Consing (BPI), Ernest Cu (Globe), and

Ferdz de la Cruz (Manila Water) speak at a panel during
the Ayala HR Summit.
5 Chief Human Resource Officer JP Orbeta, Chief Legal

Officer Atty. Mon Hermosura, and Independent Director
6
of Manila Water and Generika Sherisa Nuesa join the
Ayala group internal auditors at the 2nd Chief Audit
Executive Forum and 19th Annual AGIAN Conference.
6 The Corporate Support Services group organized the

first Ayala Security Summit in November 2017.
INTO THE FUTURE 211

AYALA IN MOTION
Throughout its history, Ayala has been a prime mover in the Philippine business landscape: entering new industries,
innovating its products and services to bring about positive disruption to society. As we work to achieve our 2020 goals, we
strive to ensure the long-term sustainability of our businesses and create more value for all our stakeholders.
In the 2017 unified group annual and integrated reports, we present our continued evolution: an Ayala always in motion.
AYALA AYALA LAND BANK OF THE PHILIPPINE ISLANDS GLOBE TELECOM
TRANSFORM TOMORROW
MANILA WATER IMI AYALA FOUNDATION

CORPORATE INFORMATION
Stakeholder Inquiries Shareholder services and assistance

Ayala Corporation welcomes inquiries from analysts, the For inquiries regarding dividend payments, change of
financial community, institutional and retail investors, address and account status, and lost or damaged stock
customers, media, and the general public. Please contact: certificates, please write or call:
Investors: investorrelations@ayala.com.ph BPI Stock Transfer Office

Sustainability: sustainability@ayala.com.ph 16F BPI Building
Governance: corporatesecretary@ayala.com.ph 6768 Ayala Avenue
Data Privacy: acdataprivacy@ayala.com.ph Makati City, 1226, Philippines
Customers: acquery@ayala.com.ph
Media: corpcomm@ayala.com.ph Tel +632 816 9067 and 68
Careers: careersatayala@ayala.com.ph +632 816 9321
+632 816 9898
About the Cover
Our cover photo was shot in the Makati Central Business Fax +632 845 5515
District, and features a KTM Duke 390, which is locally smpongol@bpi.com.ph
assembled in IMI’s Laguna facility. mjmachado@bpi.com.ph
stocktransferoffice@bpi.com.ph
Financial Statements
Ayala’s 2017 Financial Statements are available for download About our paper
on its website: www.ayala.com.ph The Ayala Corporation Integrated Report cover and main
pages were printed on Toccata 270g and 100g White,
Developed and produced by Ayala Corporation Investor both of which are FSC Certified papers. Primex Printers,
Relations and Sustainability units. Inc. utilized a carbon neutral XL 75 offset press in the
production of this report.
Concept and design by Medium3
Layout by Publicis JimenezBasic
Portraits and cover photography by Cyrus Panganiban

www.heidelberg.com/co2 · 100000
Operational photography by Rolly Barayang
Other additional photographs from the Ayala group of
companies

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INTO THE FUTURE

INTO THE FUTURE a

To transform our businesses and harness disruptive innovation,

Integrated Report 2017

2017 Integrated Report

INTO THE FUTURE 1

2 2017 Ayala Corporation Integrated Report

INTO THE FUTURE 3

Ayala continues to develop Makati to enable connectivity and mobility.

4 2017 Ayala Corporation Integrated Report

37 OUR VALUE CREATION

111 BUSINESS REVIEW

157 OUR CORPORATE GOVERNANCE

INTO THE FUTURE 5

2013 2014 2015 2016 2017

2013 2014 2015 2016 2017

6 2017 Ayala Corporation Integrated Report

P46.67 1.31 23.2%

63.4M 410.3 GWH 139,074

P201.8B 65,102 570M

INTO THE FUTURE 7

8 2017 Ayala Corporation Integrated Report

INTO THE FUTURE 9

Europe Middle East

“This sustained earnings momentum validates

markets and customer segments, diversifying Singapore

geographically, strengthening our core

10 2017 Ayala Corporation Integrated Report

Ayala Land MWC AC Energy AC Ventures

INTO THE FUTURE 11

AYALA CORPORATION AYALA LAND

FOR THE YEAR

PER SHARE (IN PESOS)

12 2017 Ayala Corporation Integrated Report

- - - - - 24 286 553 552 554 346 323 326 333 339

INTO THE FUTURE 13

Ayala Corporation is a founding member

INTO THE FUTURE 15

P445.5 P422.5 MILLION

FamilyDoc provided affordable primary care services to more

With over 37,000 base stations, Globe served

AC Energy through its operating

IMI manufactured more than

410.3 GWh 139,074 JOBS

16 2017 Ayala Corporation Integrated Report

Ayala Land has developed a total of

Globe through Project 1 Phone Light Rail Manila Corporation served

Ayala Land maintains

Ayala Land protects 5 threatened plants

North Luzon Renewables’ biodiversity

INTO THE FUTURE 17

18 2017 Ayala Corporation Integrated Report

INTO THE FUTURE 19

The improving trajectory for the global economy continued in

INTO THE FUTURE 21

In ASEAN, despite worries of a have emerged as a result of rising

22 2017 Ayala Corporation Integrated Report

KTM’s facility in IMI Laguna

INTO THE FUTURE 23