Profits That Matter
In the last five years, the Philippines has steadily continued its economic growth trajectory. Our country’s GDP has grown by an average of 6.3 percent from 2010 to 2014. This growth, however, has not come without environmental costs and remains uneven across sectors.
According to a UN report, the Philippine economy continued to grow at a robust pace, consolidating its middle-income status. But not all groups have benefited due to underinvestment in infrastructure and social services.
In a bid to enlarge the beneficial impacts of economic growth to more Filipinos, Ayala harnesses its strengths as a conglomerate to create shared economic, social, and environmental values. We thus continue to refine our value proposition, embrace market inclusivity, and pursue new business tracks that parlay our capital and diverse interests into tangible benefits for those who have to make do with much less.
This vision becomes clearer across our group as we enter new industries, touch base with lower-income markets, and learn new modes of market engagement.
Sustainable Economic Growth
Ayala’s profits have been growing above 20 percent for the past three years. The parent company’s net income increased by 46 percent in 2014 to ₱18.6 billion primarily driven by the solid performance of its real estate, telecommunications, and electronics manufacturing units and boosted by a net gain from the sale of its business process outsourcing asset.
Without the impact of the accelerated depreciation from its telecommunications network transformation initiative in 2013, Ayala’s core net income actually grew by 25 percent in 2014. The robust earnings performance was a result of the strong equity earnings contribution from its business units, which reached ₱24.9 billion, a 42 percent increase.
2014 was a milestone for the Ayala group as it represented our largest combined investments in the Philippines. Our group’s total capital expenditures totaled ₱152.2 billion, a 27 percent increase from 2013. Over the past five years, our cumulative capital expenditures have reached nearly ₱700 billion.
At the parent level, Ayala ended the year with a gross debt of ₱101 billion and cash of ₱48.3 billion. Our balance sheet remains comfortable with parent company net debt to equity ratio at 0.24 to 1 and consolidated net debt to equity ratio at 0.85 to 1. The healthy balance sheet and cash position allow Ayala to pursue investments as well as cover dividend and debt obligations.
Contribution to Economy
In 2014, our consolidated revenues reached ₱328.45 billion, 12 percent higher compared to ₱294.17 billion in 2013. From this total, the Ayala group disbursed approximately 80 percent or ₱263.52 billion as payments to its key stakeholders. This is a slight increase from the 78 percent total economic value distributed in the previous year.
Forty-seven percent of our payments to stakeholders was disbursed to local and international suppliers to cover operating costs. About 13 percent was paid as dividends and interest payments. Eleven percent was disbursed for employee salaries and benefits. Nine percent was paid to government as taxes and license fees. Our direct local community investments totaled ₱161 million.
At the parent level, our total economic value generated reached ₱183.97 billion, 17 percent higher compared to ₱157.87 billion in 2013. This excludes foreign exchange gains, insurance claims, recoveries of account written off, and mark-to-market gains. From this total, Ayala disbursed approximately 98 percent, or ₱179.69 billion, as payments to its key stakeholders, a 20 percent increase from ₱150.03 billion of total economic value distributed in the previous year.
Fifty-five percent was disbursed to local and international suppliers for operating costs. About nine percent was paid to providers of capital in the form of dividends and interest and financing charges. Another 10 percent was disbursed as salaries and benefits to employees, including personnel costs of Ayala Foundation. Twenty-four percent was paid to government in the form of taxes and licenses fees. Ayala Corporation’s donations and contributions and project implementation expenses for Ayala Foundation amounted to ₱615 million and went to direct local community investments.
Learn more about our sustainability journey in our sixth conglomerate-wide Sustainability Report, an externally assured publication based on G4 guidelines of the Global Reporting Initiative. The report, titled Let's create shared value, underscores the commitment of the Ayala group to continue aligning its business and social initiatives with the 17 United Nations Sustainable Development Goals.We also invite you to view our 2015 Sustainability Video.