Financial Highlights

Results of Operations for the Nine Months Ended March 31, 2017

Review of 1Q 2017 operations vs 1Q 2016

Ayala Land, Inc. (ALI or “the Company”) generated a net income after tax (attributable to equity holders of ALI) of P5.56 billion in the first three months of 2017, 18% higher than P4.71 billion posted in the first three months of 2016. Consolidated revenues reached P31.64 billion, 17% higher than P26.97 billion posted in the same period last year. Revenues from Real Estate increased by 16% to P29.68 billion driven by the strong performance of the Property Development, Commercial Leasing and Services businesses during the period.

The ratio of General and Administrative Expenses (GAE) to revenues improved further to 5.7% from 6.2% while the Earnings before interest and taxes (EBIT) margin stood unchanged at 30%.

Business Segments

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 P19.72 billion, 21% higher than P16.31 billion posted in the same period in 2016.

Residential. Revenues from the sale of residential lots and units reached P16.58 billion, 11% higher than the P14.95 billion posted in the same period last year, driven by bookings and project completion across all residential brands.

Ayala Land Premier (ALP) posted a 24% growth in bookings while revenues reached P4.00 billion, lower than P6.11 billion last year, as majority of its bookings came from projects with lower completion such as Park Central Towers in Makati and Courtyards 1 Phase 2.

Alveo meanwhile registered revenues of P6.12 billion, 80% higher than P3.41 billion generated last year from bookings of recently launched projects such as Ardia in Vermosa, Cavite, The Gentry in Makati, and Patio Suites in Davao and existing projects such as High Park Tower 2 in Vertis North and Park Triangle Residences in Bonifacio Global City (BGC). Significant revenues were also contributed by the completion of Solstice 1 and Lerato Tower 3 in Makati, Montala in Alviera, Pampanga and Lumira and Mondia, both in Nuvali, Santa Rosa, Laguna.

Avida reached P4.63 billion in revenues, 16% higher than P4.00 billion last year given higher bookings and the completion progress of Avida Towers Riala Tower 3 in Cebu, Avida Towers Asten Towers 1 and 2 in Makati, Avida Towers One Union Place Tower 2 in Arca South, Taguig, Avida Towers Turf and The Montane in BGC and Avida Towers Sola in Vertis North.

Amaia registered revenues of P1.34 billion, 61% higher than P835.01 million last year from higher bookings and completion progress of Amaia Skies Avenida, Amaia Skies Sta. Mesa, Amaia Steps Sucat in Paranaque, Amaia Steps Altaraza in Bulacan, Amaia Steps in Alabang and Amaia Steps Parkway in Nuvali. BellaVita meanwhile grew its revenues to P125.04 million, 7% higher than P116.72 million last year from higher bookings and completion of its ongoing projects in Cagayan de Oro, General Trias Cavite, Tayabas Quezon, Pililla Rizal and Alaminos Laguna.

Residential Gross Profit (GP) margins of horizontal projects improved to 46% from 43% due to higher margins from Ayala Land Premier’s Riomonte in Nuvali and Alveo’s Ardia in Vermosa and Montala in Alviera while gross profit margins of vertical developments slightly decreased to 33% from 34%.

Office for Sale. Revenues from the sale of office spaces reached P1.50 billion, 26% higher than P1.19 billion in 2016 driven by bookings from Alveo’s Park Triangle Tower in BGC, Alveo Financial Tower in Makati CBD and Avida’s Capital House in BGC. Gross profit margins of offices for sale increased to 41% from 39% driven by higher margins from Alveo Park Triangle Tower and High Street South Corporate Plaza Tower 2.

Commercial and Industrial Lots. Revenues from the sale of commercial and industrial lots reached P1.64 billion driven by lot sales in Vermosa and Arca South. This was substantially higher than the revenues posted last year amounting to P167.67 million. Gross profit margins of Commercial and Industrial lots decreased to 30% from 48% mainly from the higher contribution of low margin industrial lots in Naic, Cavite.

Reservation sales reached a total of P27.27 billion, 10% higher year-on-year, equivalent to an average monthly sales take-up of P9.1 billion while net booked sales registered at P20.20 billion, 35% higher year-on-year.

Commercial Leasing. This includes shopping centers and office leasing as well as hotels and resorts operations.

Total revenues from commercial leasing amounted to P7.05 billion, 9% higher than P6.45 billion last year.

Shopping Centers. Revenues from Shopping Centers reached P3.84 billion, 12% higher than P3.42 billion last year due to the contribution of newly opened malls such as The 30th in Pasig City, UP Town Center in Quezon City, South Park in Alabang, Ayala Malls Legaspi and the addition of Tutuban Center in Manila.

Shopping Centers EBITDA margin slightly dipped to 67% from 69% due to lower margins from newly opened malls.

The average monthly mall lease rate registered at P1,088 per square meter while same mall rental growth is at 5%. Average occupancy rate is at 93%. Total gross leasable area (GLA) of Shopping Centers registered at 1.62 million square meters as of March 2017.

Offices. Revenues from Office Leasing reached P1.48 billion, 8% higher than P1.36 billion last year due to higher average rent of established offices and the contribution of newly opened BPO offices such as UP Town Center BPO and UP Building P in Quezon City and Ayala Center Cebu Corporate Center.

Office Leasing EBITDA margin improved to 91% from 90% due to the better performance of established offices.

The average monthly lease rates of offices registered at P740 per square meter. Average occupancy rate is at 85%. Total gross leasable area (GLA) of Office Leasing registered at 836 thousand square meters as of March 2017.

Hotels and Resorts. Revenues from Hotels and Resorts reached P1.74 billion, 4% higher than P1.67 billion last year. RevPAR of hotels increased by 2% to P3,954 per night while RevPAR of resorts increased by 7% to P10,542 per night.

Hotels and Resorts EBITDA margin registered at 31% slightly lower than the 32% posted during the same period last year due to newly opened rooms namely, Balay Kogon in Sicogon, Iloilo.

The average room rate of hotels is at P5,134 per night while the average room rate of resorts is at P15,118 per night. The average occupancy rate of hotels registered at 77% while resorts registered at 70% 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, 817 rooms from Seda Hotels located in Atria in Iloilo, BGC in Taguig, Centrio in Cagayan de Oro, Abreeza in Davao and Nuvali in Santa Rosa Laguna and 213 island resort rooms from El Nido Resorts in Lagen, Miniloc, Apulit and Pangulasian Islands and El Nido Cove, and 42 rooms at Lio Tourism Estate in Palawan and 6 rooms in Sicogon Tourism Estate in Iloilo. Total rooms under the Hotels and Resorts portfolio registered at 2,039 rooms as of March 2017.

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 P15.31 billion, 3% higher than P14.89 billion in 2016.

Construction. Revenues from construction reached P14.97 billion, 3% higher than P14.54 billion due to the increase in order book of projects from the Ayala Land Group.

Property Management. Revenues from Property Management registered at P342.48 million, similar to P342.82 million last year.

Blended EBITDA margins of the Services businesses was maintained at 10%.

Equity in Net Earnings of Investees, Interest, Fees, Investment and Other Income

Equity in net earnings of associates and JVs registered a gain of P138 million given the contribution from its various investments while, Interest, Investment and Other Income reached P1.82 billion, mainly due to higher interest income from accretion and installment sales.

Expenses

Total expenses registered at P23.13 billion, 17% higher than 19.72 billion in the same period last year mainly driven by Real Estate and Hotels expenses which grew 17% to P19.22 billion from 16.36 billion last year.

General and Administrative Expenses (GAE) grew by 8% to P1.80 billion, higher than 1.68 billion last year while GAE-to-revenue ratio further improved to 5.7% from 6.2% as a result of efficient cost management measures.

Interest Expense, Financing and Other Charges meanwhile registered at P2.11 billion, 25% higher than P1.69 billion, mainly attributed to higher interest expense resulting from a higher average daily loan balance.

Project and Capital Expenditure

Ayala Land spent a total of P21.8 billion for project and capital expenditures in the first three months of 2017. Of the total capital expenditure, 46% was spent on the completion of residential projects and 37% was spent on commercial leasing projects, 14% was spent on land acquisition, new businesses, services and other investments while 3% was spent on the development of its estates.

Financial Condition

Ayala Land posted a solid balance sheet position in the first three months of 2017 which provides adequate capacity to support its growth plans in the coming years.

Cash and Cash Equivalents stood at P23.0 billion, resulting in a current ratio of 1.13:1.

Total Borrowings stood at P161.47 billion as of March 31, 2017 from P159.80 billion as of December 2016. This translated to a Debt-to-Equity Ratio of 0.92:1 and a Net Debt-to-Equity Ratio of 0.79:1.

Return on Equity was at 15.0% as of March 31, 2017.

End-March 2017End-December 2016
Current ratio 11.13:11.12:1
Debt-to-equity ratio 20.92:10.93:1
Net debt-to-equity ratio 30.79:10.79:1
Profitability Ratios:
     Return on assets 44.8%5.0%
     Return on equity 515.0%14.9%
Asset to Equity ratio 63.083.11
Interest Rate Coverage Ratio 75.75.9

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

There are no events that will trigger direct or contingent financial obligations that are material to the company, including any default or acceleration of an obligation.

There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the company with unconsolidated entities or other persons created in 2017.