Review of 2016 operations vs 2015
Ayala Land, Inc. (ALI or “the Company”) generated a net income after tax (attributable to equity holders of ALI) of P20.91 billion in 2016, 19% higher than the P17.63 billion posted in 2015. Consolidated revenues reached P124.63 billion, 16% higher than the P107.18 billion posted in the same period last year. Revenues from Real Estate increased by 17% to P117.70 billion driven by the steady performance of its Property Development, Commercial Leasing and Services businesses.
The ratio of General and Administrative Expenses (GAE) to revenues improved further to 5.6% from 6.2% while the Earnings before interest and taxes (EBIT) margin registered higher at 30% from 29% during the same period last year.
The details of the individual performance of each business segment are discussed as follows:
Property Development. This includes the sale of residential lots and units, office spaces, as well as commercial and industrial Lots. Total revenues from Property Development amounted to P79.24 billion in 2016, 17% higher than the P67.77 billion reported during the same period in 2015.
Revenues from the sale of residential lots and units reached P65.12 billion, 12% higher than P58.39 billion posted in the same period last year, driven by bookings and project completion across all residential brands.
Ayala Land Premier (ALP) registered revenues of P24.86 billion, slightly higher than the P23.40 billion posted in the same period in 2015 driven by higher bookings from projects such as Park Central Tower in Makati City and increased completion of residential buildings such as The Two Roxas Triangle and Garden Towers 1 & 2 in Ayala Center Makati, East and West Gallery Place in Bonifacio Global City, Arbor Lanes in Arca South, Taguig, and horizontal projects such as Riomonte and Soliento in Nuvali, Laguna and The Courtyards in Vermosa, Cavite.
Alveo meanwhile registered revenues of P18.57 billion, 29% higher than the P14.36 billion generated in the same period due to increased completion of residential towers such as Park Triangle Residences, One and Two Maridien and Two Serendra in Bonifacio Global City, Lerato Tower 3 and Kroma in Makati and Portico Tower 1 in Pasig and subdivision projects such as Lumira and Mondia in Nuvali, Laguna.
Avida recorded revenues of P17.07 billion, 16% higher compared to same period last year on the account of higher bookings from Avida Tower Sola 1 in Vertis North, Quezon City and One Union Place Tower 3 in Arca South, Taguig and increased completion of Vita Towers in Vertis North, Asten Towers in Makati, The Montane and Turf Tower 1 in Bonifacio Global City, Riala Tower 1 and 2 in Cebu IT Park, Avida Towers Davao and subdivision projects in Nuvali namely Hillcrest Estates and Southfield Settings.
Amaia posted revenues of P3.35 billion which is lower compared to same period in 2015 due to lower sales take-up from Amaia Scapes and Skies Projects.
BellaVita meanwhile significantly grew its revenues to P776.10 million, posting a 46% growth from P529.80 million last year due to higher bookings in General Trias Cavite, Alaminos Laguna, Tayabas Quezon, Cabanatuan City, Nueva Ecija and Cagayan De Oro City, Misamis Oriental.
Residential sales for 2016 reached a total of P108.00 billion, 3% higher year-on-year, equivalent to an average monthly sales take-up of P9.0 billion. Residential Gross Profit (GP) margins of vertical developments improved to 35% from 34% due to sale of higher margin projects such as Park Central Tower in Makati while horizontal projects slightly declined to 43% from 44% due to higher development and land cost of recently launched projects.
Revenues from the sale of office spaces reached P8.20 billion, posting a 28% growth from the P6.42 billion registered in the same period in 2015 driven by higher bookings from Alveo Financial Tower in Makati Central Business District, Alveo Park Triangle Tower and Alveo Park Triangle Corporate Plaza and higher completion of High Street South Corporate Plaza 1 and 2 in Bonifacio Global City. Avida’s office projects in Bonifacio Global City also contributed significant revenues from higher bookings from Avida Capital House and higher completion of One Park Drive. Gross profit margins of offices for sale buildings declined to 37% from 38% during the same period last year.
Revenues from the sale of commercial and industrial lots doubled to P5.92 billion from P2.95 billion due to higher lot sales in Arca South, Naic and Altaraza in 2016. GP margins of Commercial and Industrial lots declined to 41% from 50% due to sale of higher margin commercial lots in Arca South and Nuvali in the same period last year.
Commercial Leasing. This includes shopping centers and office leasing as well as hotels and resorts operations. Total revenues from commercial leasing amounted to P26.56 billion in 2016, 8% higher than the P24.50 billion recorded in the same period last year.
Revenues from Shopping Centers reached P14.97 billion, 12% higher year-on-year from P13.37 billion due to the improved performance of stable malls and contribution of new malls such as UP Town Center in Quezon City, Ayala Malls Solenad in Nuvali, Santa Rosa Laguna, Tutuban Center, Manila, Ayala Malls Legazpi in Albay and the higher occupancy and average rental rates of existing malls. Shopping Centers EBITDA margin declined to 67% from 69% due to lower margins of newly opened malls. Monthly average lease rates registered 1% lower to P1,143 per square meter from P1,155 per square meter in the same period last year. Same mall rental growth increased by 5% year-on-year. Average occupancy rate registered at 91%. Total gross leasable area (GLA) of Shopping Centers registered at 1.62 million square meters for full year 2016.
Revenues from Office Leasing reached P5.54 billion, 7% higher year-on-year from P5.16 billion due to the higher average rental rates of existing buildings and the positive contribution of new offices such as Bonifacio Stopover, UP Technohub Building P and UP Town Center BPO in Quezon City. Office Leasing EBITDA margin improved to 91% from 90% last year. Monthly average lease rates of offices registered 4% higher to P725 per square meter from P698 per square meter in the same period last year. Average occupancy rate registered at 87%, 3% higher than previous year due to the completion of leased office spaces for tenant fit-out. Total gross leasable area (GLA) of Office Leasing registered at 836 thousand square meters for 2016.
Revenues from Hotels and Resorts reached P6.05 billion, 1% higher year-on-year from P5.97 billion due to the improved revenue-per-available-room (REVPAR) of hotel and resorts. REVPAR of hotels increased by 0.7% to P3,786 per night while REVPAR of resorts increased by 7% to P8,087 per night. Hotels and Resorts EBITDA margin was at 28%. Average occupancy rate of Hotels registered at 73% while Resorts registered at 59% during the period. Hotels and Resorts currently operates 961 hotel rooms from its internationally branded segment; Cebu City Marriott, Fairmont Hotel and Raffles Residences Makati and Holiday Inn & Suites Makati, 213 island resort rooms from El Nido Resorts in Lagen, Miniloc, Apulit and Pangulasian Islands in the province of Palawan, 30 bed and breakfast rooms in Casa Kalaw Lio El Nido and 6 bed and breakfast rooms from Balay Kogon Sicogon, Iloilo and 817 rooms from its Seda Hotels located in Iloilo, Bonifacio Global City, Taguig, Centrio Cagayan de Oro, Abreeza in Davao and Nuvali in Santa Rosa Laguna. Total rooms under the Hotels and Resorts portfolio registered at 2,027 as of December 31, 2016.
Services. This includes the Company’s wholly-owned Construction and Property Management companies; respectively Makati Development Corporation and Ayala Property Management Corporation. Total revenues from the Services business amounted to P66.65 billion, 47% higher than the P45.25 billion reported in the same period in 2015.
Revenues from Construction reached P65.32 billion, 48% higher year-on-year from P44.07 billion due to the increase in order book of projects and higher completion within the Ayala Land Group. Revenues from Property Management reached P1.34 million, 14% higher year-on-year from P1.18 million due to the increase in managed properties from completed projects. Blended EBITDA margins of the Services businesses declined to 11% from 14%.
Equity in Net Earnings of Investees, Interest, Fees, Investment and Other Income
Equity in net earnings of associates and JVs registered a 495% growth to P554 million in 2016 due higher net earnings from Modular Construction Technology (MCT) Bhd., Ortigas & Co. Ltd Partnership and Fort Bonifacio Development Corporation. Meanwhile, Interest, Investment and Other Income reached P6.37 billion, mainly due to higher interest income on accretion and installment sales.
Total expenses registered at P91.97 billion in 2016, 16% higher than the P79.43 billion posted in the same period last year mainly driven by Real Estate and Hotels expenses which grew 17% to P76.57 billion from P65.34 billion last year.
General and Administrative Expenses (GAE) grew by 7% to P7.03 billion from P6.59 billion last year as a result of efficient cost management measures. GAE-to-revenue ratio further improved to 5.6% from 6.2% last year. Interest Expense, Financing and Other Charges meanwhile registered at P8.37 billion, 11% higher year-on year from P7.51 billion, mainly attributed to higher interest expense and a lower average interest rate of 4.49% compared to 4.71% during the previous year.
Project and Capital Expenditure
Ayala Land spent a total of P85.40 billion for project and capital expenditures in 2016. Of the total capital expenditure, 14% was spent on land acquisition, 5% was spent on the development of its estates, 43% was spent on the completion of residential projects and 30% was spent on commercial leasing projects with the rest of the amount disbursed for new businesses, services and other investments.
Ayala Land posted a solid balance sheet position in 2016 which provides adequate capacity to support its growth plans in the coming years.
Cash and Cash Equivalents including short term investments and UITF investments classified as FVPL stood at P22.64 billion, resulting in a current ratio of 1.12:1. Total Borrowings stood at P159.80 billion as of December 31, 2016 from P130.99 billion as of December 2015, translating to a Debt-to-Equity Ratio of 0.93:1 and a Net Debt-to-Equity Ratio of 0.79:1. Return on Equity was at 14.9% as of December 31, 2016.
Current ratio 1
Debt-to-equity ratio 2
Net debt-to-equity ratio 3
Return on assets 4
Return on equity 5
Asset to Equity ratio 6
Interest Rate Coverage Ratio 7
1 Current assets / current liabilities
2 Total debt/ consolidated stockholders’ equity (Total debt includes short-term debt, long-term debt and current portion of long-term debt)
3 Net debt/ consolidated stockholders’ equity (Net debt is total debt less cash and cash equivalents, short term investments and financial assets through fvpl)
4 Total Net income / average total assets
5 Net income attributable to equity holders of ALI / average total stockholders’ equity attributable to equity holders of ALI
6 Total Assets /Total stockholders’ equity
7 EBITDA/Interest expense