Ayala Corporation’s net profits grew 62 percent to ₱27.

8 billion in 2021, primarily

driven by realized income from the execution of strategic initiatives in the group,
boosted by the improved performance of Ayala Land and BPI.
• Ayala posted gains from executed transactions during the year, including the
remeasurement of its stake in Manila Water following the sale of secondary shares
to Trident Water, the sale of the Ayala group’s stake in GNPower Kauswagan, and the
entry of a new investor in Mynt.
• Ayala’s businesses recorded higher net profits during the year:
• Ayala Land’s net income grew 40 percent to ₱12.2 billion on the account of
resilient operations,
supported by relaxed quarantine restrictions in the fourth quarter of 2021.
• BPI’s net income increased 12 percent to ₱23.9 billion because of lower loan loss
provisions
and record-high fee income.
• Globe’s net income rose 27 percent to ₱23.7 billion from higher results from all
data-related
revenues, gain from the deemed sale of investment in Mynt, and the impact of the
CREATE law. These offset the impairment costs from the network related damages
caused by Typhoon Odette.
• ACEN’s net income increased 22 percent to ₱5.3 billion as robust earnings from
its international assets supported softness in Philippine operations.
• Excluding gains and other one-offs, Ayala’s core net income decreased 10 percent
to ₱23.5 billion, mainly driven by weaker net interest income in BPI, higher
depreciation expense in Globe, and reduced stake in ACEN following the completion
of its capital market issuances and sale of secondary shares to GIC combined with
higher financing cost taken up at the AC Energy parent level.

Ayala’s net income grew 46 percent to ₱8.4 billion in the fourth quarter compared
to the same period in the previous year, also driven by the abovementioned realized
gains.

Sale of goods and rendering services increased 17 percent to ₱225.6 billion mainly
due to higher residential bookings, incremental project completion, and
construction services in Ayala Land, better operation across all sites in IMI,
higher vehicle sales in AC Motors on the back of looser quarantine restrictions,
and higher revenues in AC Energy from the consolidation of Islasol and Sacasol, and
the consolidation of Qualimed into AC Health.

• Ayala Land’s total revenues increased 10 percent to ₱106.1 billion and its net
income grew 40 percent to ₱12.2 billion on the account of resilient operations,
supported by relaxed quarantine restrictions in the fourth quarter of 2021.
• Property development revenues were up 14 percent to ₱75.9 billion on continuing
construction progress and higher bookings.
• Residential sales reservations in 2021 grew 13 percent to ₱92.2 billion largely
from the strong demand for horizonal projects in Southern Luzon by Ayala Land
Premier and ALVEO. Sales reservations from lot sales alone jumped 36 precent to
₱41.5 billion during the year.
• Fourth quarter sales take-up posted a five percent growth to ₱22.1 billion
compared to the same quarter in 2020.
• Ayala Land launched a total of 22 projects worth ₱75.3 billion, seven times more
in 2020.
• Commercial leasing revenues declined five percent to ₱20.6 billion given limited
operations most of
the year.
• Shopping center leasing revenues went down 13 percent to ₱7.9 billion. With
improved mobility in the fourth quarter, revenues reached ₱3 billion, double the
level generated in the same quarter a year ago.
• Office leasing income grew five percent to ₱9.9 billion as BPO and HQ operations
remained stable throughout the period.
• Hotels and resorts revenues decreased 12 percent to ₱2.8 billion, improving from
the first nine months as resort operations were able to host 35 travel bubbles in
the fourth quarter, partially cushioning travel restrictions and lower hotel
occupancy earlier in the year.
• Ayala Land’s capital expenditures reached ₱64 billion in 2021, more than half of
which went to the completion of its residential projects.
• Ayala Land has earmarked ₱90 billion in capital expenditures and is prepared to
launch ₱100 billion- worth of residential projects in 2022.
• In January 2022, the Boards of Ayala Corporation and Ayala Land approved the
property-for-share swap with each other and Mermac, Inc. Under the transaction, AC
and Mermac will transfer five assets to ALI in exchange for 311,580,000 primary
common shares at a value of ₱55.80 per share, as validated by a third-party
fairness opinion. The acquisition further expands Ayala Land’s land bank and
commercial assets, which will create value for stakeholders.

ACEN’s net income increased 22 percent to ₱5.3 billion as robust earnings from its
international assets supported softness in Philippine operations.
• Equity earnings from international plants soared 51 percent to ₱4.9 billion,
driven by operating capacity with the commencement of operations of new wind farms
in Vietnam and solar farms in India.
• Earnings contribution from its Philippine plants decreased 20 percent to ₱3.1
billion as the start of operations of the Palauig and Alaminos solar farms was
outweighed by increased cost of purchased power due to higher spot market prices.
Without one-off retroactive feed-in tariff adjustment booked in 2020, earnings from
the Philippine assets would have been flat.
• ACEN’s attributable output increased 21 percent to 4.6 gigawatt hours, driven by
higher operating capacity and increased dispatch of thermal plants.
• Generation from international plants grew 24 percent because of additional
capacity from new wind farms in Vietnams and solar farms in India.
• Output from Philippine plants was up 20 percent to 2.7 gigawatt hours due to
improved utilization of peaking thermal plants, in addition to the start of
operations of the Alaminos and Palauig solar farms.
• ACEN has 3,751 MW of attributable capacity in its portfolio (pro forma), of which
87 percent is renewable. 63 percent of the portfolio is already operating.
• In line with its aggressive portfolio expansion in the Philippines, Vietnam,
India, and Australia, ACEN invested a total of ₱33.1 billion in capital
expenditures in 2021.
• With various projects and announced acquisitions slated in 2022, ACEN has
earmarked a CAPEX budget of ₱55 billion this year.
• In February, ACEN, through its wholly owned subsidiary, AC Energy Vietnam, signed
an agreement to acquire a 49 percent stake in Solar NT, which is owned by
Thailand’s Super Energy Corporation.
• Upon completion of internal restructuring, Solar NT will fully own and operated
837 MW of solar projects in Vietnam.
• The investment brings ACEN’s attributable international capacity to more than
2,200 MW, of which more than 1,000 MW are in Vietnam.

Share in net profits of associates and joint ventures increased 33 percent to ₱23.4
billion due to higher revenues from home broadband and the lower tax expense from
the impact of the CREATE law in Globe, lower loan loss provisions in BPI, higher
equity in net earnings resulting from GNPD’s liquidating damages in AC Energy, and
better performance from associates and joint ventures of Ayala Land. This also
includes share in net earnings of Manila Water from June to December 2021. As a
percentage of total revenues, this account was nine percent and eight percent on
December 31, 2021 and December 31, 2020, respectively.

BPI’s net income increased 12 percent to ₱23.9 billion because of lower loan loss
provisions and record-high fee income.
• Total revenues decreased four percent to ₱97.4 billion because of softer net
interest income and non- interest income.
• Net interest income was down four percent to ₱69.6 billion as net interest margin
contracted by 19 basis points to 3.3 percent, driven by lower yields across most
loan portfolios and treasury assets.
• Non-interest income went down six percent to ₱27.8 billion on the back of lower
trading income that was tempered by a 23 percent growth in fee income.
• Total loans rose five percent to ₱1.5 trillion primarily from higher mortgage,
credit card, and microfinance loans.
• Total deposits grew 14 percent to ₱2 trillion with CASA and time deposits
expanding 10 percent and 28 percent, respectively.
• CASA ratio stood at 77 percent.
• Loan-to-deposit ratio ended at 75.5 percent.
• NPL ratio stood at 2.49 percent and NPL coverage ratio settled at 136.1 percent.
These improved by
19 basis points and 21 percentage points, respectively.
• Operating expenses increased five percent to ₱50.7 billion because of higher
technology cost.
• Cost-to-income ratio stood at 52.1 percent.
• Total assets grew eight percent to ₱2.4 trillion. Total equity amounted to ₱293.1
billion.
• Indicative common equity tier 1 ratio stood at 15.8 percent.
• Indicative capital adequacy ratio stood at 16.7 percent.
• Return on assets was 1.1 percent.
• Return on equity was 8.4 percent.
• In line with the increased demand for banking services in the digital space, BPI
created its digital governance framework and launched its 7 Client Engagement
Platforms in 2021 to better serve its clients across different segments.
• On top of its four existing platforms Express Online, BPI Trade, BizLink, and
BanKo app, BPI is on track to launch BizKo for its SME partners. BizKo is tailored
to the needs of SME clients providing them solutions for payments, payroll,
invoicing, billing, and collection.
• BPI is also working on the sixth and seventh installments of the framework, which
are both slated to be launched in the second half of 2022. BPI will also launch its
BPI Trade app within the year.

Globe’s net income rose 27 percent to ₱23.7 billion from higher results from all
data-related revenues, gain from the deemed sale of investment in Mynt, and the
impact of the CREATE law. These offset the impairment costs stemming from Typhoon
Odette.
• Lower non-operating expenses were mainly due to the gain of ₱4.3 billion from the
deemed sale of investment in Mynt, partially offset by the impairment cost of ₱1.2
billion from the network related damages caused by Typhoon Odette. These also
include the upside impact of the CREATE law and higher equity share in affiliates.
• Globe’s core net income, which excludes the impact of non-recurring charges and
foreign exchange and mark-to-market changes, increased nine percent to ₱21.2
billion.
• Total service revenues grew four percent to ₱151.5 billion due to home broadband
and corporate data from increased data consumption. Total data revenues accounted
for 80 percent of Globe’s service revenues compared to the year-ago level of 76
percent.
• Growth Globe.
in demand for data was evident in the upward momentum of all data-related segments
of
• Mobile data revenues increased seven percent to ₱77.8 billion.
• Mobile data traffic jumped 48 percent to 3,733 petabytes.
• Home broadband revenues grew 10 percent to a record-high ₱29.4 billion.
• Home broadband subscriber base stood at 3.7 million subscribers as fixed wired
subscribers
grew by 31 percent, leading to a 26 percent improvement in fixed wired revenues.
Fixed wireless subscribers declined 11 percent as users shift out of the fixed
wireless service to the more consistent and reliable wired service.
• Corporate data revenues grew 12 percent to ₱14.2 billion mostly from growth from
domestic services and information and communication technology.
• Operating expenses including subsidies increased five percent to ₱76.6 billion
due to higher spending to support its aggressive upgrades and expenses related to
restoration, repair, and services costs resulting from Typhoon Odette.
• EBITDA increased two percent to ₱74.9 billion due to topline improvement while
EBITDA margin slightly contracted to 49 percent because of the impact of Typhoon
Odette.
• Aligned with its thrust to expand its data businesses, Globe’s CAPEX increased by
54 percent to an all-time high of ₱92.8 billion, representing 61 percent of gross
service revenues and 124 percent of EBITDA. About 86 percent went to data-related
requirements:
• Built 1,407 new cell sites nationwide for both 4G LTE and 5G
• Upgraded over 22,300 mobile sites
• Expanded 5G coverage to over 2,000 sites
• Rolled out 1.4 million FTTH lines on the home broadband front
• For 2022, Globe is earmarking ₱89 billion in CAPEX to continue its aggressive
network expansion to boost internet quality and coverage in the country.
• Globe is moving towards becoming a digital solutions company, leveraging its core
telco business to tap the shifting consumer landscape, which is being heavily
influenced by digital adoption. Within its portfolio are high-growth enterprises in
fintech, healthtech, adtech, and e-commerce among others.
• GCash reached positive full year EBITDA and profitability three years ahead of
its target. It has 55 million registered users, which drove gross transaction value
to increase three times to ₱3.8 trillion in 2021.
• In healthtech, HealthNow has 800,000 customers, processing 15,000 to 20,000
medicine delivery orders daily. KonsultaMD exhibited strong growth with more than a
doubling of revenue, reaching over 1 million members across 50,000 retail outlets
nationwide.
• AdSpark, the largest locally-based ad agency, grew its revenues 32 percent to
₱1.2 billion.
• RUSH, the leading loyalty solutions provider in the Philippines, doubled its
revenue in 2021
and has 3.8 million registered users.

Cost of sales and services increased 22 percent to ₱175.9 billion, in line with
higher sale of goods and rendering services. As a percentage of total costs and
expenses, this account was 85 percent and 82 percent on December 31, 2021 and
December 31, 2020, respectively.
• General and administrative expenses decreased six percent to ₱30.3 billion due to
cost-saving measures across business units, lower overhead costs in Ayala Land and
AC Industrials offset by higher taxes and licenses in AC Energy. As a percentage of
total cost and expenses, this account was 15 percent and 18 percent on December 31,
2021 and December 31, 2020, respectively.

Total assets declined four percent to ₱1.35 trillion from end-2020 level mainly due
to the 94 percent decrease of Assets under PFRS 5 to ₱12.4 billion because of the
deconsolidation of Manila Water.
• Cash & cash equivalents and Short-term investments jointly increased two percent
to ₱91.4 billion resulting from dividend collection, proceeds from the SRO, FOO,
and issuance of shares to GIC in ACEN, inflows from bond issuances in AC Energy,
AYCFL, and AC, net borrowings of AC and certain BUs, and sale of receivables by
ALI. These were partially offset by capital infusions, purchase of Ayala Land
shares, redemption of treasury shares by AC and ALI, dividend payout, and payment
of trade payables and lower cash collections in certain business units.
• Noncurrent receivables increased 45 percent to ₱83.3 billion from higher accounts
of AC Energy group.
• Investments in associates and joint ventures increased 15 percent to ₱294.1
billion due to retained investments in Manila Water, equity earnings partially
offset by dividends from BPI and Globe, additional investments of Ayala Land and AC
Energy, higher equity earnings from their investees, and restructuring of
receivable to investment in BHL.
• Parent level cash stood at ₱20.2 billion.
• Net debt stood at ₱115 billion.
• Parent net debt-to-equity ratio stood at 90 percent.
• Consolidated net debt-to-equity stood at 68 percent.
• Loan-to-value ratio, the ratio of its parent net debt (excluding the fixed-for-
life perpetuals which have
no maturity) to the total value of its assets, was at 6.7 percent.
• Parent blended cost of debt at 4.3 percent ending December 2021, with average
remaining life of 19.5
years.
• In 2021, the Ayala group’s combined capital expenditure reached ₱228 billion and
₱18 billion at the
parent level. Ayala parent capex was channeled mostly to the purchases of shares in
Ayala Land.
• For 2022, Ayala has allocated ₱285 billion in group CAPEX, with ₱24 billion
earmarked for Ayala parent
to fund investment opportunities.

A. The June 3, 2021 execution of Shareholders’ Agreement among, Ayala, its wholly-
owned subsidiaries, Philwater and ACEIC, and Trident Water Company Holdings Inc. as
part of the closing actions for the latter’s subscription to common shares in MWC
(see Notes 2 and 24). This resulted in the deconsolidation of MWC as of mentioned
date.
Prior to the above, the related subscription agreement between MWC and Prime
Strategic Holdings, Inc. (previously Prime Metroline Holdings, Inc.) was originally
signed in February 2020 which then resulted in the following classification of MWC
accounts in the Ayala consolidated financial statements: assets/ liabilities under
PFRS/ IFRS 5 in the Balance Sheet as of December 31, 2020; and operations under
PFRS/ IFRS 5 in the Income Statement for period ending June 3, 2021 and December
31, 2020.
B. The balance sheet accounts of GNPK from AC Energy group were similarly
classified as assets and liabilities under PFRS/ IFRS 5 in 2020. Significant
developments on this account are discussed in Notes 2 and 24 of the Group’s
December 31, 2021 consolidated financial statements.
C. Another key transaction that affected the Group’s consolidated balance sheet and
income statement is AC Health Group’s consolidation of Qualimed/MGHI (see Note 2
and 23). This resulted in higher balances for certain assets and liabilities
accounts. In the income statement, revenues costs and expenses similarly increased
due to this consolidation.
D. The Covid-19 impacted the health and economy globally. Consequently, this
affected the operations of the Group in year 2020 and ensued to year 2021 with
continued restricted mobility and community quarantines.

Cash & cash equivalents and Short-term investment – 2% increase from combined
balance of ₱89,476 million to ₱91,415 million
Increase coming from: AC Energy’s subsidiary, ACEN, as proceeds from SRO, FOO and
issuance of shares to Arran/GIC; ACEIC’s sale of ACEN shares to GIC; inflows from
bond issuance of AC Energy, AYCFL and AC; net borrowings of AC and certain BUs;
sale of receivable by ALI, dividend collection of AC. These were partly offset by:
AC’s capital infusions to investees, bonds and loan payments, purchase of
additional ALI shares; dividend payout and redemption of treasury shares by AC and
ALI; partially offset by declines in AC Industrials and AC Infra due to payment of
trade and loans payables; and IMI’s decrease due to capex and higher inventory
purchases. These accounts comprise 7% and 6% of the total assets as of December 31,
2021 and 2020, respectively.
Accounts and notes receivable:
Combined movements affected by increase of AC Energy’s development loans to
international investment and receivable from sale of GNPK, ALI’s and IMI’s higher
revenues, consolidation of AC Health’s Qualimed accounts and Philwater’s receivable
from sale of investment in preferred shares of MWC (see Note 2); partially offset
by ALI’s collections and sale of receivables and BHL’s restructuring of receivable
to investment in AJV account. These accounts are at 17% and 14% of the total assets
as of December 31, 2021 and 2020, respectively.
Other current assets – 10% increase from ₱74,315 million to ₱81,942 million
Increase coming from ALI’s higher advances and prepayments for unlaunched projects.
This account is at 6% and 5% of the total assets as of December 31, 2021 and 2020,
respectively.
Assets under PFRS 5 – 94% decrease from ₱196,137 million to ₱12,434 million
Decrease due to deconsolidation of MWC and partial sale of GNPK (see Notes 2 and
24). This account is at 1% and 14% of the total assets as of December 31, 2021 and
2020, respectively.
Investments in associates and joint ventures – 15% increase from ₱255,008 million
to ₱294,063 million
Increase due to retained investments in MWC (see Notes 2 and 24); equity earnings
partly offset by dividends of Globe and BPI; AC Energy’s and ALI’s additional
investments to and higher equity earnings from their investees; BHL’s restructuring
of receivable to investment account. This account is at 22% and 18% of the total
assets as of December 31, 2021 and 2020, respectively.
Investment Properties – 9% increase from ₱226,457 million to ₱246,806 million
Increase attributable to ALI group’s project construction completion of shopping
center, offices, land acquisitions and capitalized borrowing cost. This account is
at 18% and 16% of the total assets as of December 31, 2021 and 2020, respectively.
Right-of-use (ROU) assets – 6% increase from ₱19,813 million to ₱20,997 million
Increase attributable to AC’s ROU assets. This account is at below 2% of the total
assets as of December 31, 2021 and 2020.
Service concession assets – 5% decrease from ₱1,556 million to ₱1,482 million
Decrease attributable to depreciation of service concession assets. This account is
at below 1% of the total assets as of December 31, 2021 and 2020.
Intangible assets – 13% increase from ₱19,625 million to ₱22,128 million
Increase due to consolidation of AC Health’s Qualimed. This account is at below 2%
of the total assets as of December 31, 2021 and 2020.
Deferred tax assets-net – 11% increase from ₱14,634 million to ₱16,294 million
Increase attributable to ALI group. This account is at 1% of the total assets as of
December 31, 2021 and 2020.
Other noncurrent assets – 19% increase from ₱58,852 million to ₱69,959 million
Increase pertains to AC Energy’s additional investments in financial assets at
amortized cost; partly offset by AYC’s maturity of placements. The account also
includes the Group’s pension asset amounting to ₱68 million and ₱22 million in
December 31, 2021 and 2020, respectively.1 This account is at 5% and 4% of the
total assets as of December 31, 2021 and 2020, respectively.
Short-term debt – 7% increase from ₱32,440 million to ₱34,712 million
Increase due to borrowings of ALI and AC for payment of long-term debt and
operational expansion; partially offset by AC Energy’s, IMI’s and AC Industrial’s
loan settlement. This account is at 4% of the total liabilities as of December 31,
2021 and 2020.
Accounts payable and accrued expenses – 5% decrease from ₱177,315 million to
₱168,751 million
Decrease mainly due to ALI’s payment to suppliers and contractors; AC Industrial’s
and AC Energy’s payment of accounts payable; partially offset by IMI’s higher trade
payables. This account is at 22% and 21% of the total liabilities as of December
31, 2021 and 2020, respectively.
Income tax payable – 58% decrease from ₱1,907 million to ₱803 million
Decrease attributable to ALI coming from lower tax rate due to CREATE law and AC
Energy’s payment of tax due. This account is at below 1% of the total liabilities
as of December 31, 2021 and 2020.
Combined movements due to increase from AYCFL’s additional loan drawdowns and FFL
bond issuance partly used to settle maturing loans and maturing bonds; AC Energy’s
FFL bond issuance; AC’s bond issuance and loan availments offset by settlement of
maturing loans and bonds; AC Health’s Qualimed accounts; and ALI’s, IMI’s and AC
Industrials’ loan availments. This account is at 57% and 47% of the total
liabilities as of December 31, 2021 and 2020, respectively.
Lease liabilities:
ncrease coming from AC, AC Energy group and AC Health’s Qualimed accounts. This
account is at 4% and 3% of the total liabilities as of December 31, 2021 and 2020,
respectively.
Service concession obligation (current and noncurrent) – 17% increase from ₱86
million to ₱101 million
Increase from AC’s concession obligation. This account is at below 1% of the total
liabilities as of December 31, 2021 and 2020.
Other current liabilities – 13% increase from ₱26,596 million to ₱30,184 million
Mainly due to ALI’s higher deposits, reservation fees and advance rental payments.
This account is at 4% and 3% of the total liabilities as of December 31, 2021 and
2020, respectively.
Liabilities under PFRS 5 – 100% decrease from ₱124,291 million to nil
Decrease due to deconsolidation of MWC and GNPK (see Notes 2 and 24). This account
is at nil and 14% of the total liabilities as of December 31, 2021 and 2020,
respectively.
Pension liabilities5 – 21% decrease from ₱5,093 million to ₱4,021 million
Decrease attributable to ALI’s change in actuarial assumptions. This account is
below 1% of the total liabilities as of December 31, 2021 and 2020.
Other noncurrent liabilities – 22% increase from ₱52,776 million to ₱64,502 million
Increase attributable to ALI’s acquisition of parcel of land on installment and
higher deferred revenues from property development. This account is at 8% and 6% of
the total liabilities as of December 31, 2021 and 2020, respectively.
Share-based payments – 56% decrease from ₱103 million to ₱45 million
Decrease coming from issuance on the exercise of stock ownership plans of AC. This
account is below 1% of the total equity as of December 31, 2021 and 2020.
Remeasurement losses on defined benefit plan – 24% decrease from negative ₱6,351
million to negative ₱4,798 million
Decrease due to remeasurement gain as result of adjustments on actuarial
assumptions and factors. This account is at 1% of the total equity as of December
31, 2021 and 2020.
Fair value reserve of financial assets at FVOCI – 43x decrease from positive ₱41
million to negative
(-) ₱1,721 million
Decrease due to BPI’s lower marked to market valuation of its financial assets at
FVOCI. This account is at below 1% of the total equity as of December 31, 2021 and
2020.
Cumulative translation adjustments (CTA) – 170% increase from negative (-)₱1,636
million to positive (+)₱1,138 million
Increase due to forex translation (movement in forex for PhP vs. USD) of the Ayala
Group’s business units with dollar functional currencies. Forex of PhP vs USD
amounted to ₱50.999 in December 2021 vs. ₱48.023 in December 2020. This account is
at below 1% of the total equity as of December 31, 2021 and 2020.
Equity reserve – 11% increase from ₱30,741 million to ₱34,263 million
Increase coming from AC Energy’s change in ownership interest in ACEN as results of
SRO, FOO, issuance of shares to GIC; and AC Energy’s sale of secondary ACEN shares
to Arran (see Note 2). This is partly offset by AC’s purchase of ALI shares from
stock market. This account is at 6% of the total equity as of December 31, 2021 and
2020.
Retained Earnings – 9% increase from ₱238,073 million to ₱260,112 million
Increase due to overall growth in net income of the group. This account is at 46%
and 44% of the total equity as of December 31, 2021 and 2020, respectively.
Treasury stock – 87% increase from ₱6,605 million to ₱12,383 million
Increase due to AC parent’s buy-back of common shares (see Note 20). This account
is 2% and 1% of the total equity as of December 31, 2021 and 2020, respectively.
Reserves under PFRS 5 – 100% increase from negative (-)₱800 million to nil
Increase due to deconsolidation of MWC and GNPK (see Notes 2 and 24). This account
is at below 1% of the total equity as of December 31, 2021 and 2020.

Sale of goods and rendering of services – 17% increase from ₱193,622 million to
₱225,592 million
Increase due to ALI’s higher bookings from residential business, incremental
projects completion and construction service; IMI’s better operation across all
sites and ACI’s higher vehicle sales as community quarantine ease-up; and higher
revenues due to consolidation of AC Energy’s Islasol & Sacasol and AC Health’s
Qualimed. As a percentage to total revenue, this account is at 88% in December 31,
2021 and 2020.
GNPK revenues from electricity sales of ₱4,354.5 million, other income of ₱15.3
million and administrative expenses of ₱2,849.1 million for the period ended
September 30, 2021 were recognized in the consolidated income statement (see Note
24).
Share in net profits of associates and joint ventures (AJVs) – 33% increase from
₱17,616 million to ₱23,385 million
Increase due to AC Energy’s higher equity in net earnings resulting from GNPD’s
liquidating damages; Globe’s higher revenues from home broadband and lower income
tax as impact of the CREATE law (see Note 25); BPI’s lower provision for losses for
the year; and better performance from ALI’s AJVs. Also, includes share in net
earnings of MWC from June to December 2021. As a percentage to total revenue, this
account is at 9% and 8% in December 31, 2021 and 2020, respectively.
Interest income:
Combined movements of interest income from real estate and others resulted to
slight increase of 1% only.
Cost of goods sold and rendering services – 22% increase from ₱144,181 million to
₱175,895 million
Increase resulting from improvements in sales as explained above plus impact of
generally higher prices for direct costs and overhead of various BUs, higher
trading costs and high-priced purchases of electricity coupled with plant
downtimes. As a percentage to total costs and expenses, this account is at 85% and
82% in December 31, 2021 and 2020, respectively.
General and administrative expenses – 6% decrease from ₱32,326 million to ₱30,301
million
Decrease due to ALI’s and ACI’s lower overhead cost; and cost savings measures
across BUs; partly offset by increase in AC Energy due to higher taxes and
licenses. As a percentage to total costs and expenses, this account is at 15% and
18% in December 31, 2021 and 2020, respectively.
Dividend and other income – 145% increase from ₱6,209 million to ₱15,193 million
Increase coming from AC Energy’s gain on disposal of partial interest in GNPK as
well as remeasurement gain on the fair value adjustment of its remaining interest
(see Note 24); negative goodwill or gain fromcomputed notional purchase price
allocation (i.e., AC’s share in the fair value of net identifiable assets vs. the
book value of retained interest in MWC); and step-up gain on the acquisition of
Qualimed; partly offset by the impact of last year’s higher other income of AC
Energy arising from liquidated damages on delayed completion of GNPK plant and
marked to market gains on financial assets at FVTPL.
Provision for income tax (current and deferred) – 6% decrease from ₱5,239 million
to ₱4,912 million
Decrease mainly due to impact of CREATE law (see Note 25).
Operations of the segment under PFRS 5 – 119% decrease from net income of ₱9,797
million to net loss of ₱1,814 million
Includes the net income after tax of MWC less consolidation adjustments. Decrease
mainly due to lower billed volume and remeasurement loss. In addition to the
remeasurement loss taken up in years 2019 and 2020, an amount of ₱3.1 billion was
recognized for the period ending June 3, 2021, which formed part of the GAE of
operations of the segment under PFRS 5 (Note 24).
Income attributable to owners of the parent – 62% increase from ₱17,142 million to
₱27,774 million
Increase coming from better results of most of the investees plus the AC Energy’s
gain on disposal and remeasurement gain in GNPK and AC’s gain on retained interest
of MWC, as mentioned above. As a percentage to total net income, this account is at
77% and 59% in December 31, 2021 and 2020, respectively.
Income attributable to non-controlling interests – 32% decrease from ₱12,129
million to ₱8,262 million
Decrease coming from share in the remeasurement loss in MWC partly offset by share
in net income results of non-wholly owned subsidiaries. As a percentage to total
net income, this account is at 23% and 41% in December 31, 2021 and 2020,
respectively.

2021 continued to be a challenging year for the Philippines as the COVID-19

pandemic widened its spread. Quarantine measures throughout the year fluctuated
with the rise and fall of daily infections, affecting the flow of mobility,
business operations, and social activity. Despite the volatility, enterprises and
individuals alike grew more accustomed to such circumstances, resulting in a
generally more stable and predictable economic environment over the year. This was
helped in large part by an improvement in vaccination rates when the government’s
inoculation program kicked off in March. By the end of the year, over half of the
Philippine population was vaccinated.
The improvement in the country’s health response and inoculation rate was evident
in economic growth. GDP grew by 5.6% last year, reversing from a 9.6% decline in
2020 despite the higher number of COVID cases in 2021. As both individuals and
enterprises adopted to the consequences of the pandemic, mobility improved and so
did business stability. By the final quarter of the year, mobility levels in the
country returned to their pre-pandemic levels and GDP growth was at 7.7%. That
said, we acknowledge the pervading risks, perhaps foremost of which is the present
conflict between Russia and Ukraine. We are keenly monitoring its impact and are
watchful of how this could affect the momentum of recovery, particularly in the
form of rising oil prices, its effect on interest rates, exchange rates, and
inflation, and ultimately, disposable income and consumption. The BPI Global Market
team categorized its outlook into central, moderate, and adverse scenarios that
correspond to the average WTI oil price per barrel at US$75, US$100, and US$115.
Depending on the average price at year-end, it expects a real GDP growth for 2022
of 7.3%, 5.7%, and 4.6%, respectively.
A trend we have seen strengthen throughout the year is the adoption of
digitalization. Both consumers and businesses have turned to digital channels to
improve business continuity amidst restricted mobility. While quarantine measures
have eased, we have seen a stickiness in the use of digital channels, which we
expect to continue. Enterprises are focusing their efforts on driving activity to
the digital front as digital adoption has become ingrained in consumer behavior.
Another notable area of strength in 2021 was remittances which remained robust
despite the infection surges experienced throughout the year; the annual tally hit
an all-time high of US$34.1 billion. On a related note, we see the USD/PHP rate
breaching the ₱52.8 level in 2022 as imports recover with improving consumption on
a central case scenario. BPI Global Markets expects this to move up to ₱53.7 and
₱54.5 for moderate and adverse cases, respectively.With support to businesses
critical at this point, the Banko Sentral ng Pilipinas has kept interest rates at
their record low of 2.00%. However, as economic conditions improve and to temper
inflation, BPI Global Markets expects three rate hikes coming in this year in a
central scenario, bringing interest rate to 2.75%. However, it anticipates bigger
rate hikes following moderate and adverse scenarios, which correspond to year-end
rates to be at 3.25% and 3.50%, respectively. Alongside this, it sees a percentage
point cut to the required reserve ratio, bringing the figure to 11% from the
current 12%.
In this light, Ayala has budgeted a total of ₱285 billion in capital expenditures
this year, 25% higher than what was deployed in 2021. With guarded optimism, we
hope that looser quarantine restriction today will help boost our path towards
recovery, but at the same time are cognizant of the risks that the current
geopolitical landscape, particularly the conflict between Russia and Ukraine, may
bring.
Ayala maintains a healthy balance sheet with access to various funding options to
meet requirements. A robust risk management system allows the company to maximize
opportunities for reinvention, and navigate the challenges faced by its business
units.