jaime ysmael beyond-numbers

8/13/2019 Jaime Ysmael Beyond-numbers

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Beyond Numbers

CFOs who make a difference

Increasing and MaximizingShareholder Value

Jaime YsmaelRecipient of the 2011 ING-Finex CFO of the Year Award

Senior Vice President, Group Chief Finance Officer and Chief Compliance Officer Ayala Land, I nc.

Integrity in FinanceA CFO ForumIn partnership

With

4/F Henry Sy Sr. HallDe la Salle University taft Campus

14 March 2013, 6PM


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Product launches in new and existing growth centers served to reach its target

market of customers. Instead of footprints, new geographies are (dis)-covered

In the year 2012, the Ayala Land rolled out Php71.3 Billion in capital expenditures

which defrayed expenses for product launches, the continued completion of ongoing

projects and the acquisition of key parcels of land that will provide the company withthe development platforms to sustain the growth momentum over the medium

term. These included the acquisition of 800 hectares in key strategic areas in the

Food TerminaI, Inc. (FTI) property in Taguig, new areas adjacent to NUVALI, and

strategic areas in Alabang, Tarlac, Bulacan, Pampanga, and Cavite.

Residential Segment

Out of a total of 67 projects with an aggregate value of Php 110.0 Billion, 47 projects were in the

residential segment.

Shopping Center Segment

The resilient consumer spending, buoyed by a strong local economy and the steady flow of overseasremittances, continues to benefit the business of Ayala Malls Group (AMG). To take advantage of this

favorable environment, AMG sustained its portfolio build - up with the opening of 108,000 square

meters of new shopping center gross leasable area in some of the countrys fastest growing corridors.

This includes the re-developed Glorietta 1 and 2 at the Ayala Center, the San Antonio Plaza Arcade in

Makati, Harbor Point in Subic, Centrio Mall in Cagayan de Oro, and the District in Cavite.

This year, the Ayala Mall Group will engage in the operation of department stores and roll out of

some 300 stores nationwide.

Offices Group

With the countrys status as a preferred BPO destination, the Offices Group developed 130,000

square meters of new office space, which included the new Philippine Stock Exchange Building inBonifacio Global City.

The available leasable office space now totaling to 509,000 square meters under Ayala Lands

portfolio are : the ADP Building and the Sykes Building, part of the Ayala Center re-development, the

Maybank Corporate Office in Bonifacio Global City, and the 11th

building in the campus-type

development of U.P.- AyalaLand Technohub in Quezon City. The second BPO building in Baguio-

AyalaLand Tecnohub was completed.

Hotels and Resorts Group

Buoyed by the expected tourist arrivals expected to reach 10.0 million in 2016, the company

completed an 80% stake in the 280 room Fairmont Hotel and the 32 room Raffles Suites from

Kingdom Hotels, Inc. The Ayala Lands owner-operated boutique hotel brand SEDA opened inBonifacio Global City and Cagayan de Oro, adding 329 more keys to its room offering.

The fourth island resort in Palawan, Pangulasian Island Resort welcomed guests late last year with its

42 new villas. For 2013, SEDA Hotel Davao will open 186 rooms. Additionally, the 348-room Holiday

Inn 8 Suites in Makati is expected to open its doors to the public this year.

The steady growth of the tourism industry is expected to bring in more than 5.0 million visitors this

year, alone.

Construction and Property Management

Makati Development Corporation completed 26 developments and handled a total of 251 projects

87% of which are from the Ayala Land Group of Companies with a gross contract value of Php85.0

billion.


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In its undertakings, the MDC demonstrated sustainability and excellence by delivering projects within

its defined safety, quality, time, and cost targets. The company achieved a 98% zero-punchlist record

on the 1,669 units it turned over last year.

Its outstanding workmanship was demonstrated by the leadership in Energy and Environmental

Design Gold Certification for the design and construction of the US Embassy expansion project in

Manilathe first for a non- American contractor.

LEED consists of a suite of rating systems for the design, construction and operation of high

performance green buildings, homes, and neighborhoods developed by the US. Green Building

Council. MDC maintained its international certifications: International Organization for

Standardization (ISO 14001 (2004); Occupational Health & Safety Advisory Services 18001 (2007) and

ISO 9001 (2012).

Ayala Property Management Corporation provided world-class service to its managed properties. In

2012, the total number of facilities supervised is 153 accounts, 30 accounts of which were secured in

the last year.

Several spend-management initiatives implemented continued to reduce occupancy costs, even whilemaintaining a 99.75% uptime for all its equipment. These were seen in the reduced cost of

consumption in the decline of energy and water usage.

As an affirmation to these initiatives, the Department of Energy and the Asean Energy Awards cited

the company towards these efforts. It prides itself as the only property manager company in the

country with three international certifications of ISO standards.

Recently completed by the Philippine Integrated Energy Solutions is the construction of the energy-

savings district cooling system at the Alabang Town Center and the re-developed Ayala Center in

Makati. These structures will be replicated for the mixed - use projects in Cagayan de Oro and Davao.

The combined efforts of the Ayala Land Team generated total revenues ofPhp 54.524 Billion and Php 9.038 Billion in net income. With a market

capitalization of Php 354.0 Billion, the company reported a returnon-equity of

13%.

All of these were made possible by the smooth execution of our plans, allowing

for the continued investments across our businesses and supported by the

transformation we engineered within the organization. CFO Jaime E. Ysmael

reported on the 2012 financial performance and financial condition of the Ayala

Land, Inc.

The highlights of which he shared with an audience, composed of the finance

students of the RVR-College of Business, De La Salle University, gathered together to

learn more on the initiatives of the ING-Finex CFO Forum.

In supporting growth, the Ayala Land reflected PHP 354.0 Billion in capitalization, a

return on equity of 13%.

Cash outlay or expendituresPhp 71.3 Bilion for the completion of ongoing projects and the acquisition of strategic land

assets.


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Sources of cash

Issuance of Php 15.0 billion, 7-10 year fixed rate corporate bonds, issued at verycompetitive terms, at 5.625% and 6.0%, respectively, 230 basis point reduction in

blended borrowing rates

Overnight top-up equity placement of Php13.6 billion, an unprecedented offeringin the Philippines and the real estate sector in general

Homestarter BondWith ease and flexibility in the payment schemes of real estate properties, 5%-95% and new

payment schemes

The company continued its accreditation of additional partner banks to reach alarger base of home buyers

Avida, Amaia, and Bella Vita Brands, Pag-ibig payment schemes, unlocked newpayment channels, ie. Bayad Center, credit card and online facilities, phone

banking, and Pay Pal schemes

All these efforts improved affordability and provided more convenient modes of payment

Margin Improvement This refers to improved efficiencies in all areas of theproject life cycle, which includes design, procurement, construction and operations.

Improving Profitability

Implemented cost-reduction and spend-management programs which resulted to a net

income margin of 19% ;

Maintained General and Administrative Expenses (GAE) to Revenue, at 8%, despite the

significant growth in business

Through the adoption of the Spend-management programs included :

Managing the growth of direct operating expenses, strategic procurementinitiatives like standardization and aggregation, international sourcing and

partnering for major commodity items like steel, cement, and other construction

inputs generated savings ; enhancing procurement processes by strengthening and

streamlining procurement standards.

Expanding the pool of accredited vendors and implementing a new project savingscapture system

Transforming mindsets and driving a conscious effort to increase employeeproductivity and operational efficiencies to manage the growth of overhead

expenses. These involved outsourcing non-value adding tasks and implementing

sharedservice platforms.

Capital Efficiency. This refers to the area where the company optimizes the useof assets and increases leverage to more optimal levels.

Optimizing the Use of Capital

Raising a significant amount of debt and equity at very competitive terms to fund its

unprecedented capital expenditure program


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Bond issuance was sold-out, with the Php5.0 billion oversubscription option full exercised

by the close of the offer period at more than 30basis point discount compared to peers

Standby Php20.0 Billion Credit facilities, 20 basis points lower than banks prime lending

rates.

Php 13.6 billion Overnight top-up equity placement is the largest primary raising capital

through an overnight block in the Philippines

Largest real estate equity offering in Southeast Asia in 2012 and the largest realestate accelerated book-built offering after the 2008 global financial crisis.

This offering allowed the company to make some value-accretive acquisitions thatresulted in further stock price appreciation.

Php4.0 Billion sale of accounts receivables were sold by Ayala land Premier, Alveo, and

Avida to several banks on a non-recourse basis to raise additional cash and de-risk balance

sheet.

Tapped Internal Liquidity, to fund group requirements and to improve capital efficiency

Initiatives managed the build-up of debt, controlled group-wide interest expense

Stock price valued at Php 26.45 per share in 2012, vis--vis the Php15.16 per share

in 2011. While earnings per share is Php0.68 compared to the previous years of

Php0.55.

Cash Dividend Payment

Total of Php2.9 Billion, 40% of net income in 2011

Total of Php 4.1 Billion, 45% of net income 2012

Organizational Development. Initiatives harnessed a talent of professionalsthrough the companys continuing professionals-in-development (PID) program

and other employee training courses, retention, training and development, and

employee engagement.

Strengthening risk management

Enhance risk management systems and internal processes as part of the overall

organizational development initiatives

Residential business monitored and tightened contingent liability limits to ensurethat the development risks are covered, in relation to the growing portfolio of

vertical developments.

Regular review and update of risk exposure is conducted, putting in place riskmanagement, monitoring, and reporting structures and procedures to ensure that

all types of risks are identified early, addressed immediately and mitigated to the

extent possible

Expanded the scope of shared services under Aprisa Business Process Solutions,Inc. (APRISA) to enhance efficiencies within the group. Transactional accounting

processes of some newly opened malls and offices were being handled by this

wholly owned subsidiary

IT, procurement, and treasury functions


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Enhance our management information systems through the application of themost-up-to-date software that will accelerate report generation and facilitate the

evaluation of the operating and financial performance

Rolling out the IT-enabled management dashboards --- covering critical operatingmetrics, market statistics, financial information, and specific project details --- to

improve monitoring and enhance corporate decision making. Business Continuity Management (BCM) is critical in managing the risks associated

with products and services. A BCM organization was formally established and

rolled out to ensure the timely resumption and delivery of the Companys

essential services in any eventuality and guarantee uninterrupted operations

under any business condition.

Brand buildingThe company stands by its commitment to quality, as a way of life

Residential segment.

Innovative and best-in-class products across a broad spectrum of economic marketsegments

High-end

Ayala Land Premier in 2012 : 1,432 units sold, with an estimated value of Php 24. 3 Billion.812 residential units were turned over to buyers in 2012, 98% of these were accepted

without any punch listing. These projects include the Suites in Bonifacio Global City, The

Garden Towers in Makati City, Elaro in Nuvali, and Park Point Residence in Cebu

Upscale

Alveo introduced to the market a total of 4,112 units with an estimated value of Php30.0Billion and posted a record sales of Php 24.0 Billion

Middle Class

Avida launched 7,981 units valued at Php23.8 Biliion. Its corporate campaign, Finally anAvida for me!, aimed at the younger segment of the local population, Avida intensified its

sales efforts by developing local sales channels in multiple geographies and conducting

international roadshows. Coupled with increased seller productivity and higher efficiencies,

Avida delivered in Php 21. 3 billion in gross sales.

Avidas projects are located in new growth centers,namely Tagaytay ( Asilo Tagaytay ),

Bulacan ( Madera Grove Estates ) and Davao ( Avida Towers Davao)

Economic and socialized housing

Amaia launched 7493 units valued at Php 10.2 Billion, Capas, and the twin projects inManila : Avenida and Sta. Mesa and generated sales of Php 6.0 billion

BellaVita launched its projects in Cavite and Laguna, with a total of 2, 469 units at Php 1.4Billion. Even at its nascent stage, BellaVita proved its commitment to quality by achieving

an 87% zero-punch list for 200 units delivered last year.

Commercial and industrial lots. The company offers world-class commercial and industrial lots for

sale and lease in prime locations

Shopping centers afford customers a rewarding and memorable shopping and lifestyle experiences.

Offices are built with excellence in office real-estate solutions

Hotels and resorts offer convenient and attractive facilities for business travelers and world-class

resorts for the leisure market.

Services provide and sustain competitive advantage in quality, cost, and speed to market delivery,

thereby enriching customer experience and enhancing property values over time


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Enforcing compliance and corporate governance

Improve companys discipline and company practices to ensure that we exercisethe highest level of governance and compliance

Compliance adherence to the Code of Corporate Governance, the Anti-MoneyLaundering Act, insider trading rules, and the various disclosure and listing

requirements and regulations prescribed by the Securities and ExchangeCommission, the Philippine Stock Exchange, the Philippine Dealing and Exchange

Corporation, and the Bangko Sentral ng Pilipinas

Beyond numbers

At the end of the day, amongst us finance executives, we certainly may not count

ourselves as the largest company. Yet, we can all make what we have as the best of

what we hold as stewards of our company.

A cut not only from the BEST, but the very BEST. This deserves a much-deserved

WOW!

What the ING- Finex CFO of the Year Search is all about?

The Search shall bring to fore not only the financial strengths critical to the CFOs

effectiveness as the most senior finance manager in the organization, but also the

ability to:

1. Deliver positive relative shareholder return during tenure as CFO.

2. Possess significant operational experience to be able to be promoted to CEO.

3. Possess ability, through hands-on knowledge of business operations, to effectively

influence General Manager decisions.

4. Obtain highest return on executive time by controlling opportunity costs spent on

functions that are not revenue generating but are necessary to overall wealth

creation, such as administrative functions including compliance, IT, procurement,

strategic planning.

5. Devote executive time on performance-driving activities that require CFO

leadership and directly contribute to the companys balance sheet.

6. Observe succession requirements by way of a programme of internally - grooming

CFO internal succession candidates.

One thing I learned in my MBA in DLSU. There is the EVA and the MVA. EVA stands

for economic- value added and MVA stands for market - value added. Beyond

numbers or even perhaps in the absence of the numbers, you know there is value to

what you have invested in.

Indeed, this has been a long journey for our Super - CFO Jaime Ysmael, Recipient of the

2011 ING- Finex CFO of the Year.

jaime ysmael beyond-numbers

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