EMBARKING ON NEW GROWTH PLATFORMS
The Chairman’s Message to Stockholders
Jaime Augusto Zobel de Ayala

It was, by all accounts, a positive year for the Ayala group. The fundamental drivers of the domestic economy remained intact despite uncertainties facing global financial markets in the latter part of the year. The steady flow of overseas Filipino workers’ remittances combined with low interest rates and the sustained improvement in the country’s fiscal position, continued to fuel domestic consumption. Moreover, increased activity in developing industries, such as power generation and transmission, infrastructure, and mining, as well as the emergence of high-growth industries like business process outsourcing, has helped reinvigorate foreign and local investments.

Delivering Record Earnings and Increased Value for Shareholders
The improvement in the domestic business environment underpinned the growth of our key businesses. Over the years, we have constantly aimed to nurture our businesses into positions of strength structurally, operationally and financially. We have consistently adjusted our strategies, even through challenging economic periods. Having repositioned our companies appropriately within defined industry structures, we were able to seize market opportunities as the economy began to turn around. As a result, our current portfolio has been able to generate above-average returns, deliver improved profitability, and create value for our shareholders.

In 2007 we posted a consolidated net income of P16.2 billion, 33% higher than the prior year and the highest ever recorded by the company. Return-on-equity was at its highest at 19.7%. Our share price performance partly reflected these positive fundamentals as it gained nearly 15% by year-end, following an 87% surge the prior year. Combined with the aggregate regular and special cash dividends of P8 per share, we generated a total return to shareholders of 16.5% for the year or a return of 38.9% in dollar terms. We paid a total of P7.3 billion in cash and stock dividends to our shareholders, nearly two and half times the level paid out in 2006 and equivalent to 60% of our earnings the prior year. Over the past six years, Ayala’s market capitalization has grown by three and half times to P234 billion from only P67 billion back in 2001.
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