Beyond Numbers CFOs who make a difference

Increasing and Maximizing Shareholder Value

Jaime Ysmael
Recipient of the 2011 ING-Finex CFO of the Year Award
Senior Vice President, Group Chief Finance Officer and Chief Compliance Officer Ayala Land, Inc.

Integrity in Finance
A CFO Forum
In partnership With

4/F Henry Sy, Sr. Hall De la Salle University, taft Campus

14 March 2013, 6PM

Jaime Ysmael
Recipient of the 2011 ING-Finex CFO of the Year Award
Senior Vice President, Group Chief Finance Officer and Chief Compliance Officer Ayala Land, Inc.

Jaime E. Ysmael is the Group Chief Finance of Ayala Land, Incorporated, the Philippines largest, most diversified and fully integrated property developer. He is responsible for managing the financial and administrative affairs of over 100 local and international companies engaged in various sectors of the real estate industry, which include two other publicly- listed entities and around 30 major operating companies. He oversees the following functions which are centrally managed at Corporate Head Office: Accounting ; Business Information Systems and Process; Control and Analysis, Corporate Communications, Imports, Logistics and Control; Internal Audit; Investor Communications and Compliance; Project Control; Risk Management; Supply Chain Management; Tax Management; and Treasury. Mr. Ysmael is the chairman of various senior management committees such as the Bidding Committee, IT Steering Committee and Anti-Money Laundering Compliance Committee. He is also the Chairman of the Board and Chief Executive Officer of Aprisa Business Process Solutions, Inc., and the President of CMPI Holdings, Inc. and Southgateway Development Corporation. He is a member of the Board of Directors of various Ayala Land subsidiaries and affiliates. He is likewise a member of the Board of Directors of the Asia Pacific Real Estate Association and Chairman of the Board of its Philippine Chapter. He is concurrently a Managing Director of Ayala Corporation. Mr. Ysmael holds a degree in Business Administration, Major in Accounting (Summa Cum Laude) at the University of the East, Manila, Philippines and is a Certified Public Accountant. He earned an MBA, Major in Finance, at The Wharton School and an MA in International Studies at The School of Arts and Sciences of the University of Pennsylvania in Philadelphia, Pennsylvania, USA, as a fellow of The Joseph H. Lauder Institute of Management and International Studies. One summer, while working as an auditor in an auditing firm, he found time to learn Spanish, a third language. Ayala Land, Inc Vision
Our vision is to enhance our standing and reputation as the Philippines leading real estate developer and to be a strong partner in nation building. By developing integrated, master-planned and sustainable mixed-use communities in vibrant growth center all over the country, we strive to continually elevate the quality of life for all of our customers. We shall be a responsible corporate citizen and act with integrity, foresight, and prudence. We shall empower our employees to deliver products that exceed our customers expectations and build long-term value for our shareholders.

The Real Estate Company

Ayala Land, Inc. is the Philippines largest, most diversified and fully-integrated property developer. The company offers a full line of end-to-end real estate products ---ranging from residential, retail, and office developments as well as hotels and island resorts, to construction and property management services. Integrity is about creating and maximizing shareholder value.
According to Ayala Lands CFO, Jaime E. Ysmael, the Company aims to take full advantage of a much - improved macro - economic landscape by embarking on an equally aggressive push this year and the years to come,

The Philippines, Today

Economic Parameter/s

2012 6.5% 6.2 % 9.6% per annum US$ 21.3 Billion US$ 27.4 Billion 10 million tourists

2009 1.1% 2.3% 10.6% per annum US$ 17.3 Billion US$ 7.2 Billion 3.0 million tourists

Positive GDP Growth Robust Private Consumption Affordable Mortgage Robust of Remittances Rising BPO Revenues Growing Tourist Arrivals

Reaping the Harvest of the 5 10 - 15 Plan (2010 2015)

Set amidst the Five - Pillar Strategy of growth, margin improvement, capital efficiency, organizational development, and brand building, the Ayala Land sets to accomplish within a 5-year horizon, a Php 10.0 Billion net income after tax, and a 15 % return on equity. This plan is now on its third year. Complementing President and Chief Executive Officer Antonino Aquino s drive for an aggressive expansion program, a more-balanced and long-term orientation anchored on growing its recurring income, thus, accelerating its developments, and land banking in strategic areas to maximize shareholder value, CFO Ysmael reported the improved financial performance and financial condition results by adopting the following plans and programs. A Glimpse of the Forward Plans and Programs of the Core Businesses Growth. At the heart of its shareholder value creation model is the companys market-leading platform and unique capability of developing large-scale, fully integrated, mixed use and sustainable communities. Its success is propelled by its creation of a functioning community, set in large scale master-planned projects covering wide geography, diverse markets, and products developed to suit its customers. President and CEO, Antonino Aquino affirms that At the heart of the companys shareholder value creation model is its market leading platform and unique capability of developing large-scale, fully-integrated, mixed-use and sustainable communities.

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 with the 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 overseas remittances, 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 th e 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 in Bonifacio 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 th Maybank Corporate Office in Bonifacio Global City, and the 11 building in the campus-type development of U.P.- AyalaLand Technohub in Quezon City. The second BPO building in BaguioAyalaLand 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 in Bonifacio 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.

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 Manila the 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 while maintaining 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 energysavings 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 of Php 54.524 Billion and Php 9.038 Billion in net income. With a market capitalization of Php 354.0 Billion, the company reported a return on-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 expenditures
Php 71.3 Bilion for the completion of ongoing projects and the acquisition of strategic land assets.

Sources of cash

Issuance of Php 15.0 billion, 7-10 year fixed rate corporate bonds, issued at very competitive 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 offering in the Philippines and the real estate sector in general Homestarter Bond

With 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 a larger base of home buyers Avida, Amaia, and Bella Vita Brands, Pag-ibig payment schemes, unlocked new payment 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 the

project 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 procurement initiatives 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 savings capture system Transforming mindsets and driving a conscious effort to increase employee productivity and operational efficiencies to manage the growth of overhead expenses. These involved outsourcing non-value adding tasks and implementing shared service platforms.

Capital Efficiency. This refers to the area where the company optimizes the use
of 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

Bond issuance was sold-out, with the Php5.0 billion oversubscription option full exercised by the close of the offer period at more than 30 basis 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 real estate accelerated book-built offering after the 2008 global financial crisis. This offering allowed the company to make some value-accretive acquisitions that resulted 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 year s 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 professionals

through 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 ensure that 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 risk management, 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

Enhance our management information systems through the application of the most-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 operating metrics, 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 building
The 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 market segments 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 Php30.0 Billion 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 an Avida 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 in Manila : 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 1.4 Billion. 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

Enforcing compliance and corporate governance Improve companys discipline and company practices to ensure that we exercise the highest level of governance and compliance Compliance adherence to the Code of Corporate Governance, the Anti-Money Laundering Act, insider trading rules, and the various disclosure and listing requirements and regulations prescribed by the Securities and Exchange Commission, 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.