Ayala Corporation (AC) Earnings Call Transcript & Summary

Good morning and welcome to the 2020 Annual Stockholders' Meeting of Ayala Corporation. We will begin with the Philippine national anthem. [Presentation]

Ladies and gentlemen, the Chairman of Ayala Corporation's Board of Directors, Mr. Jaime Augusto Zobel de Ayala.

Good morning. The Annual Stockholders' Meeting will now come to order. For the first time in our history, because of the current health crisis, we're holding this meeting in a virtual format. Welcome to everyone, and thank you for joining us. Let me welcome all of you who are joining us in this live webcast of these proceedings. And thank you also to all our stockholders who are participating in this meeting through our voting in absentia system or their appointment of the Chair as proxy. Let me just let you know who are joining me as presenters in this meeting: Mr. Fernando Zobel de Ayala, our President and Chief Operating Officer; Jose Teodoro Limcaoco, our Chief Finance Officer; Mr. Solomon Hermosura, our Corporate Secretary; Mrs. Celeste Jovenir, our Head of Investor Relations; Joanne Lim, our Assistant Corporate Secretary; also, 2 of our independent directors, namely Ramon R. Del Rosario, Jr., the Chairman of the Corporate Governance and Nomination Committee of our Board; and Mr. Xavier P. Loinaz, the Chairman of the Audit Committee of our Board. We also have our group management committee members: Rene Almendras, President of Manila Water; Fred Ayala, who leads our initiatives in education; Mr. Paolo Borromeo, President of AC Health; Mr. Cezar Bong Consing, President of BPI; Mr. Ernest Cu, President of Globe Telecom; Mr. Bobby Dy, President of Ayala Land; Mr. Eric Francia, President of AC Energy; Mr. Ruel Maranan, President of the Ayala Foundation; Mr. JP Orbeta, our Chief Human Resources Officer; and Mr. Art Tan, President of AC Industrials. The other members of our Board as well as all the nominees to our Board and our other officers and the representatives of SyCip Gorres Velayo & Co., our external auditor, are joining the meeting through the live webcast. Thank you again to everyone for being here. Mr. Secretary, have the stockholders of the corporation been duly notified of this meeting?

Yes, Mr. Chairman. Our stockholders have been duly notified of this meeting. On March 31, 2020, we sent to our stockholders of record as of March 10, 2020, the notice of this Annual Stockholders' Meeting and the definitive information statement in 3 ways: first, by e-mail to all stockholders who have given us their e-mail addresses; second, by posting on our corporation's website; and third, by disclosure in the Philippine Stock Exchange. In addition, the notice was published on April 2, 2020, in The Philippine STAR. Accordingly, Mr. Chairman, our stockholders have been notified of this meeting pursuant to our bylaws, the applicable SEC rules and, last but not the least, our internal guidelines on participation in stockholders' meeting by remote communication and voting in absentia under extraordinary circumstances, which are embodied in our definitive information statement that the Securities and Exchange Commission approved.

Thank you very much. Mr. Secretary, do we have a quorum at this meeting?

Yes. Mr. Chairman, we have a quorum, and this meeting may proceed. There are present in this meeting stockholders owning at least 657,183,159 shares, representing 75.05% of the 875,701,136 total outstanding shares. Let me also mention, Mr. Chairman, that we will reflect in the minutes the breakdown of the stockholders present in terms of their mode of attendance and the percentage of the outstanding shares that they own as well as the number of those joining us in the live webcast of the meeting.

Thank you very much, Mr. Secretary. Though we're holding this meeting in a virtual format because of government regulations that prevent us from conducting in-person meetings, we have strived to provide our shareholders the opportunity to participate in this meeting at the same extent possible as an in-person meeting. Our Corporate Secretary, Mr. Hermosura, will now share the rules of conduct and voting procedures for this meeting.

Mr. Chairman, the rules and procedures are embodied in the definitive information statement and in the explanation of the agenda items, which is part of the notice of this meeting. I would just like to highlight 5 points to our stockholders who are joining us on our live webcast. Number one is stockholders who registered under the voting in absentia and shareholder system or who e-mailed the company at corporatesecretary@ayala.com.ph by April 15, 2020, of their intention to participate in this meeting by remote communication may send their questions or comments to the same e-mail address. Number two, Celeste Jovenir, our Head of Investor Relations, will read the questions or comments received before 9:30 a.m. today during the Q&A period, which will take place after other matters under item 8 of the agenda. Management will reply to questions and comments not taken up during the meeting by e-mail. Number three, as indicated in the ballot for the voting of shareholders, there are 5 resolutions for consideration and adoption by the stockholders in this meeting. Each proposed resolution will be shown on the screen as the same is being taken up. Number four, stockholders could cast their votes on these proposed resolutions and in the election of directors beginning April 3, 2020, through our voting in absentia and shareholder system. The polls will remain open until the end of this meeting for stockholders who have registered to cast their votes electronically using our voting in absentia and shareholder system. Number five, and lastly, we have tabulated the votes cast as of April 17, 2020, after the end of the proxy validation process. Those votes are from stockholders owning 657,169,266 voting shares, representing 99.9% of the total voting shares represented in this meeting and 79.58% of the total outstanding voting shares. I will be referring to the results of the preliminary tabulation when I report the voting results throughout this meeting. The results of the final tabulation of votes with full details of the affirmative and negative votes and abstentions will be reflected in the minutes of this meeting. Thank you, Mr. Chairman.

Thank you, Mr. Secretary. The next order of business is the approval of the minutes of the Annual Stockholders' Meeting held on April 26, 2019. An electronic copy is available on the website of the corporation. I'll now ask our secretary to present the proposed resolution and the voting results on this item.

Mr. Chairman, management is proposing the adoption of Resolution No. S-01-2020 for the approval of the minutes of the annual meeting held on April 26, 2019. The resolution is on the screen. On the voting results, I am pleased to report that shareholders owning 657,169,266 shares or 99.9% of the shares represented in this meeting have voted in favor of the resolution. Therefore, the resolution has been approved.

Thank you, Mr. Secretary. The next item on the agenda is the annual report, which consists of the message of the Chairman, the report of the President and an audio-visual presentation. At this point, if you will please allow me to show my taped message. Fellow shareholders, welcome. The events of the past year have challenged the corporate momentum we have built over the last decade. However, history has shown Ayala's resilience across multiple business cycles over the 186 years that we've been in operation. This ability to deal with adversity has been built on our fundamental strengths of adhering to the highest standards of corporate governance, always looking to develop value over the long term, remaining flexible to adjust to changing circumstances and constantly aligning our business objectives with the broader development needs of the country. These fundamental values have stood us in good stead throughout the years, defined Ayala as a successful multibusiness group and ensured our continuity and relevance throughout the years. While the challenges of the past year have resulted in one of the most difficult periods in our corporate history, it is also during trying times that the strength of our diversification initiatives and massive expansion program are put to the test. Recall that in 2011, the Ayala group set in motion a strategic agenda that led to the expansion of our established franchises in real estate, banking and telecommunications to capitalize on the strong momentum we saw taking place in the domestic environment. In parallel, we invested in energy generation as a new growth platform from which we could derive future sources of earnings and value creation. These initiatives have cemented our competitive advantage, maintained our relevance in our markets and established the foundation for long-term growth and value regardless of the prevailing macroeconomic or competitive environment. In particular, we have seen how the strong performance of our core business pillars, Ayala Land, Bank of the Philippine Islands, Globe Telecom and AC Energy, sustained Ayala's trajectory in 2019. Their results cushioned the impact of the setbacks faced by Manila Water in connection with the water supply shortage in the metropolis. Further, these core businesses helped mitigate the slowdown AC Industrials confronted, which arose from headwinds in global manufacturing and the domestic automotive industries. I'm pleased to report that despite a challenging period, our profitability improved 11% to PHP 35.3 billion in 2019. Let me provide a background of the macroeconomic environment we faced during the period to put this year-end review into perspective. Global economic growth in 2019 was at its slowest since the global financial crisis, but developing countries in Asia still recorded strong growth even as trade tensions dampened the outlook for the region. Here at home, while the Philippines' economic growth of 5.9% in 2019 fell below the above 6% growth that we witnessed over the past 7 consecutive years, it continued to be bolstered by solid domestic consumption, driven by stable inflation, higher remittances and record-low unemployment. This continued to benefit Ayala Land, BPI and Globe, which remained as the top contributors to Ayala's performance during the year, along with AC Energy, which has been a consistent, significant source of growth over the past 3 years. AC Energy's announced pivot towards renewable energy and the sale of some of its conventional power assets allowed it to recycle capital, recognize gains, pointing us towards an exciting new future. We envision these 4 business pillars to remain as Ayala's core value drivers in the medium term. We have always actively managed our portfolio and believe in constantly rebalancing our business interests to either realize value as opportunities arise or to launch new business-building cycles in a specific industry. In particular, we've been proud of what Manila Water has achieved, turning around the East Zone concession and laying an efficient water supply and distribution system for the metropolis despite the absence of new water sources. However, we also need to be flexible, quick and open-minded to how industries, economic environments and regulatory agencies evolve. Thus, in February 2020, we invited the Razon Group as a strategic partner in Manila Water. I look forward to this partnership with a group that shares a deep commitment to contributing to the country's water infrastructure development. In AC Industrials, the company experienced a number of geopolitical headwinds, including the U.S.-China trade war and Brexit that contributed to the world economy's slowest year-on-year expansion since the financial crisis a decade ago. We recognize the acceleration of disruptive changes driven by intensifying competition and the evolving customer demands, which has created a challenging environment for worldwide manufacturing and trade. These have posed operational challenges for the various platforms under AC Industrials. To address this, we're in the process of reassessing AC Industrials' portfolio to identify the pain points, develop solutions and rationalize the long-term strategic direction of the business. Meanwhile, our social infrastructure portfolio continues to gain traction. AC Health continues to ramp up its clinic footprint with the acquisition of 100% stake in Healthway Philippines, which operates a network of mall-based multispecialty and corporate clinics. This complements FamilyDOC, the largest network of primary care clinics in the country. In education, with the merger of AC Education and iPeople, we have established a group of 7 educational institutions with a combined student population of approximately 60,000 across 28 campuses in Metro Manila and the Calabarzon, Bicol and Mindanao regions. During the year, the Ayala group also made great strides in our digital transformation journey. Our digital portfolio includes Zalora, the country's largest fashion e-commerce site with 10 million visits per month and carrying 20,000 fashion brands as well as its adjacent company, Entrego, a technology-driven logistics company that has gained foothold servicing the major e-commerce players in the country. In financial services, we are happy to see the many touch points that both BPI and Globe have been able to harness to address financial inclusion and facilitate higher engagement from the unserved and underserved segments of the population, including MSMEs and the low-income consumer segment. Between the BPI mobile app and Globe's GCash, the group has been able to reach over 1.9 million banking clients, 20 million registered users and over 75,000 merchants and partners. Today, the BPI ranks fifth in mobile banking on the App Store and 17th on the Google Play platform. Moreover, I'm delighted to share that our efforts to grow the fintech landscape in the country has gained significant traction, as GCash is currently the #1 finance app in the Philippines on both the App Store and Google Play. While we intend to remain as a Philippine-centric business group, we're open to overseas investments on an opportunistic basis, particularly in markets and sectors where we can bring our strengths and expertise. In November 2019, we acquired a 20% stake in the Yoma group, Myanmar's leading conglomerate with interest in sectors that are overlapping with Ayala, including real estate, power and financial services. Myanmar is an unpenetrated frontier market with a promising economic growth story, supported by its government's broad liberalization initiatives. We envision our investment in the Yoma group to serve as Ayala's main platform for strategic investments in Myanmar. As a final word, the unfortunate episodes that transpired in our country and the rest of the world at the beginning of 2020 have resulted in an existential moment of radical business transformation. The COVID-19 pandemic is adversely impacting many economies, markets and businesses in the national and global scale, which has not spared the Ayala group. Our President and COO will give more color on how the Ayala group is responding to alleviate some of the challenges our nation is facing from the COVID-19 pandemic. In the Philippines, even before the onset of this global pandemic, the eruption of the Taal Volcano in January had already affected certain industries domestically, including real estate and retail within the volcano's vicinity. While the outlook for the business environment has radically changed as a result of these unfortunate events, we take comfort in the fact that we have built a healthy balance sheet at the holding company and across the group that gives us a buffer to absorb external shocks such as the current global health crisis. We consider this to be one of our strongest attributes, having survived and thrived under multiple crises. It is within this context that I thank our Board of Directors for their engagement and foresight across a variety of working committees, our management team for ensuring a culture of professional commitment and our many business partners for their willingness to collaborate with us and our fellow shareholders for their continued support, trust and confidence in Ayala. We look forward to a lasting partnership as we weather these uncertain times, supporting our employees and our many stakeholders as we continue to contribute to society through our institutions, our products and our services. A big thank you to all of you. I now turn you over to our President, Mr. Fernando Zobel de Ayala.

Good morning, everyone. Please allow me to present my report, which has also been prerecorded. Good morning to everyone. Let me begin by thanking all of you for your continued support and confidence in Ayala. The past year was a trying time for our group as we confronted an unprecedented situation in Manila Water and our Metro Manila concession area. The water supply shortage that emerged in March 2019 impaired the high standards of service that Manila Water has maintained over the past 23 years. Several factors led to this unfortunate incident. While the situation was compounded by low dam levels brought about by the prolonged dry season last year, the main reason for the shortage was the delay in new water source development under the government's Water Supply Master Plan. In order to prevent this from happening again, Manila Water is working closely with MWSS and this administration on the timely execution of the Water Supply Master Plan. Several medium-term water supply projects are now in various stages of development. These projects will provide additional water supply for the growing water demand of our East Zone customers in the coming years. These initiatives, along with the continued network management and optimization program, has enabled water availability for customers to be maintained within regulatory levels despite a lower raw water supply. Although we faced significant challenges in both our water and global manufacturing businesses in 2019, our real estate, banking, telco and power units continued to serve as engines of growth. This validates the strength of a diversified portfolio and the expansion strategy we put in place a decade ago. We are happy to report that in 2019, as you heard earlier, Ayala recorded PHP 35.3 billion in net earnings, an 11% increase from 2018. This was lifted by gains from the partial divestment of AC Energy's thermal assets, as it moved towards the creation of a larger portfolio of renewable energy assets and the merger of our education arm with iPeople. Our results, however, were weighed down by the recognition of a remeasurement loss of PHP 18.1 billion, arising from a likely reduced stake in Manila Water, whose shareholders are being asked to approve an increased number of shares to open up opportunities for a strategic investor. We believe a partnership with a strategic investor will accelerate Manila Water's long-term strategic direction, including its regional aspirations. Over the past decade, Manila Water has established itself as a major water infrastructure player in Southeast Asia with investments in various platforms across Vietnam, Thailand, and Indonesia, and today continues to be on the lookout for opportunities in the region. Let me now touch on the performance of our business units in greater detail. Ayala Land continued to reap the benefits of its diversification strategy to achieve a better balance between its development and recurring income portfolio as well as in its geographic concentration. Its net profits rose 13% to PHP 33.2 billion, supported by office and commercial and industrial lot sales as well as a growing leasing operation. Ayala Land's geographic diversification continued, with new estates contributing 58% to its bottom line as the development of these new areas accelerates. With over 12,000 hectares of land bank, 29 estates and a presence in 57 growth centers across the country, Ayala Land offers a balanced and complementary mix of residential developments, shopping centers, offices, hotels and resorts. These estates contribute to progress and growth in the many communities they serve through various livelihood and entrepreneurial opportunities and increased economic activity. Bank of the Philippine Islands continued to work towards its goal of improving its earnings capacity and shareholder returns by focusing on its core lending business and increasing efficiencies through technology. In 2019, the bank's net earnings reached PHP 28.8 billion, jumping 25% from 2018 on strong core banking business revenues and a steadily growing fee-based segment, supported by higher securities trading gains. Consistent with the Ayala group's thrust to support the growth of MSMEs in the country, BPI aims to reach a greater number of our retail, micro and SME lending segments, which continues to be underserved today. MSMEs form an integral part of the Philippine economy, making up 99.5% of businesses, 60% of which are microentrepreneurs. In addition, they employ 63% of the Filipino workforce and contribute 35% of the country's GDP. In 2019, BPI continued to ramp up its microfinance arm, BPI Direct BanKo, with 300 branches servicing more self-employed microentrepreneurs nationwide. Only 3 years since its relaunch, BanKo is now the second largest microfinance bank in the country, having doubled its loan portfolio to PHP 4.3 billion. BPI's SME group, the 2-year old business bank, is likewise gaining traction, particularly in the mass market or loans below PHP 15 million. This segment expanded more than fourfold in approved loan applications, reflecting the bank's dedicated coverage of this customer group. Moving on to telecommunications. Globe continued to benefit from high demand for data-related products and services. The 20% expansion in its net income to PHP 22.3 billion was bolstered by data-driven customers across its mobile and broadband segments. It is worth noting that data-related services accounted for over 70% of Globe's service revenues, which grew 12% to PHP 149 billion during the year. Globe continues to harness an increasingly digitally enabled economy to promote financial inclusion through its mobile wallet, GCash. As our Chairman mentioned, GCash is the #1 mobile wallet in the Philippines today with 20 million registered users and over 75,000 QR merchants and partner billers. To enable access to more financial services to the unbanked population, GCash introduced GSave, which allows first-time depositors to participate in the formal banking system. GSave offers a competitive interest rate with no minimum initial deposit or maintaining balance requirement. Moving on to our energy division. AC Energy registered net profits of PHP 24.6 billion in 2019, lifted by contributions from its solar projects in Vietnam and gains from the partial divestment of its thermal assets. AC Energy increased its attributable energy output in 2019 by 25% to 3,500 gigawatt hours, of which 50% came from renewable sources. Given the increasing contribution of AC Energy to Ayala's equity earnings over the past 3 years, we have started to classify AC Energy as one of our core business pillars, together with Ayala Land, BPI and Globe. As it moves away from thermal energy, AC Energy continues to aggressively build up its renewable portfolio. It ended 2019 with an attributable capacity of over 1,800 megawatts, with 50% of total energy output coming from renewable sources. In addition, it has 1,200 megawatts of various solar and wind projects in the pipeline, bringing it on track to achieve 5,000 megawatts of renewable capacity by 2025. To support these aggressive targets, AC Energy tapped the capital market through the issuance of 2 green bonds, raising $810 million in combined proceeds. Moving to Manila Water. As mentioned earlier, the challenges in the East Zone concession weighed on Manila Water's performance in 2019. The water crisis took a toll on Manila Water's profitability, which declined 16% to PHP 5.5 billion. Business performance was dampened by the impact of the MWSS penalty and a voluntary onetime bill waiver program to assist severely affected customers. This was further affected when raw water allocation from the Angat Dam hit its lowest in July. To mitigate this, Manila Water implemented network efficiency measures to maintain service availability and be able to serve more than 7 million people in the East Zone. Manila Water likewise continued to work towards its goal of providing 32% wastewater coverage for the East Zone by 2021. Wastewater coverage currently stands at over 30% or equivalent to 2 million people served through nearly 400 kilometers of laid sewer network. This was only at 3% before Manila Water took over operations from MWSS in 1997. AC Industrials faced a challenging year due to the difficulties in global manufacturing and the automotive industries. These challenges also included the impact of geopolitical tensions such as the U.S.-China trade conflict and the prolonged uncertainty on Brexit. These macro headwinds, together with the disruptive changes currently affecting many key industries, have created a challenging environment for worldwide manufacturing and trade. In the electronics space, intensifying competition posed operational challenges for companies like AC Industrials, particularly its anchor manufacturing arm, IMI, and the new platforms Merlin Solar and MT Technologies. These challenges resulted in longer fulfillment times and higher material costs. Meanwhile, automotive sales likewise experienced weakness, and the industry's megatrends of connectivity, autonomy, sharing and electrification continued to disrupt the industry. In this difficult environment, AC Industrials recorded a net loss of PHP 2.4 billion in 2019. During these trying times, we take comfort in the fact that AC Industrials retains specialized technical resources such as advanced manufacturing engineering as well as proprietary technologies, including power electronics, camera and vision, smart energy and connectivity, which all serve as the foundation for future growth. Finally, we continue to support our long-term investments in infrastructure, health care and education. AC Infra is building up its logistics and fulfillment arm, Entrego, which posted a compounded monthly growth of 14% in volume throughout the year. This growth was underpinned by the rising demands of the e-commerce and retail sectors for B2B and B2C logistics services. Entrego also launched an automated sorting center to drive operational efficiencies and processes. AC Health acquired 100% stake in Healthway, one of the leading clinic networks in the country. The addition of Healthway's 7 mall-based multispecialty clinics and 40 corporate clinics expands AC Health's clinic portfolio, which today includes 74 FamilyDOC primary care clinics and 10 corporate clinics. It also expanded its pharma portfolio with new investments in IE Medica, one of the major importers of pharmaceutical products in the country, and MedEthix, its affiliated distribution company. AC Education's merger with iPeople in 2019 has significantly broadened our education footprint. Our student population has grown from 38,500 before the merger to approximately 60,000 students at present. The merger has resulted in several synergies, including leveraging the various schools' complementary strengths to improve the student learning experience and producing greater operational efficiency. As the Ayala group continued to be optimistic about the domestic macroeconomic environment, our combined capital expenditure reached PHP 215 billion in 2019. At the parent level, our balance sheet remained strong with enough capacity to support our future investments and cover dividend and debt obligations. In 2019, we paid PHP 8.30 per share in cash dividends, 20% higher than its 2018 level. We likewise took advantage of favorable market conditions to raise capital. These included the USD 400 million in fixed-for-life senior perpetual notes with an annual coupon of 4.85% for life with no step-up and the PHP 15 billion in preferred shares. In closing, at Ayala, we constantly strive to deliver a more holistic engagement with the communities we serve, and we make sure that we create a meaningful, lasting impact in conjunction with our economic aspirations. This desire to help bridge societal gaps has been embedded in our corporate culture and will continue to define our direction in the coming years. We're fortunate to have so many individuals in our institution who share this thinking and enable its execution across our many companies in the Ayala group. This kind of engagement from our Ayala citizens is evident as our group, along with individuals and institutions, collectively do their part in responding to the COVID-19 pandemic. In these unprecedented times, it is the Ayala group's foremost priority to ensure the safety of its employees while at the same time securing their financial health. With this in mind, the group has allocated PHP 2.4 billion in a relief package to assist our employees, including the daily wage earners or no work, no pay personnel. Furthermore, to help mitigate the impact of the Luzon-wide enhanced community quarantine on the urban poor, together with 36 other private institutions, we launched Project Ugnayan to support those who are most in need of help at this time. Through this effort, the consortium has raised over PHP 1.7 billion for food vouchers for more than 1.5 million urban poor families or approximately 7.5 million of our most vulnerable countrymen in Greater Metro Manila. We work closely with Caritas Manila and the over 600 parishes of the Catholic church for the distribution of PHP 1,000 supermarket vouchers. These efforts are similarly present across our business units. Ayala Land employees have so far raised PHP 71.4 million to help COVID hospitals and Project Ugnayan. In support of the Department of Public Works and Highways initiative and through its construction arm, Makati Development Corporation, a subsidiary of Ayala Land, has recently completed the renovation of the World Trade Center in Pasay into a 500-bed quarantine facility. To aid in the shortfall of personal protective equipment, Ayala, Ayala Land, BPI and Globe donated to the Philippine Red Cross, who facilitated the distribution of over 200,000 face masks to several hospitals in Metro Manila and other frontliners in the government as well as 104 PRC chapters nationwide. Furthermore, Ayala and Ayala Foundation have set aside over PHP 15 million to procure additional masks and vitamins for donation to various hospitals and local government units throughout the country, which will be done through AC Health. Meanwhile, Manila Water, recognizing the importance of sanitation in these times, has donated 1,800 hygiene kits and deployed much-needed drinking water to 6 Quezon City hospitals. Globe, mindful that efficient communication lines are necessary in battling this crisis, has donated 500 cellphone units to public hospitals and now provides free Internet connection to 68 hospitals nationwide with free calls to emergency and government hotlines available to all users. Globe has also raised PHP 43 million from its employees and customers through various donation drives to help hospitals. AC Health has more than 1,500 employees in its clinic network who are reporting daily, continuing to operate as extended frontliners. And they are able to help in the triage efforts of the government and private hospitals. Generika continues to operate and offer medicines at very reasonable prices. In addition, to help our health care system with the growing number of COVID-19 cases, AC Health is leading the Ayala group's efforts to convert QualiMed Sta. Rosa into a COVID-19-dedicated hospital. This initiative will cost PHP 150 million. Finally, AC Health will work in a partnership with other external stakeholders to build a COVID-19 testing facility that will give more Filipinos access to testing. Apart from bolstering our support to the health care system and our economically vulnerable countrymen, we also continue to ensure that the essential services we manage such as water, banking and telecommunications continue to operate. Select BPI branches remain open with all OTC branch fees and transfer fees to other banks waived during this period. BPI has also offered a grace period and relief options for affected clients with financial obligations to BPI. Manila Water, while operating with a reduced workforce, has been able to continue providing basic services during this time. Likewise, AC Energy's plants are sufficiently manned to operate at full capacity and provide vital electricity to our grids. Meanwhile, Globe is doubling down its efforts to ensure that its network stays reliable and consistent. Through all these efforts, we hope to instill faith and confidence in the Filipino people. The Ayala group is ready to carry on and support the country in our battle against COVID-19. In closing, Ayala owes its success to the commitment of our shared vision across the whole group's management team and staff, the guidance and leadership of our Board of Directors and the trust and confidence of our many stakeholders. We thank you all for your continued commitment and support. Thank you.

Throughout our history, our group has always been committed to helping the Philippines and our fellow Filipinos move forward amidst all the challenges and setbacks. Given all that is happening now, we have greater reason to remain resolute in this endeavor. Please watch this video. [Presentation]

Thank you very much. If I could now ask the secretary to present the proposed resolution of this item and the voting results, please.

Mr. Chairman, management is proposing the adoption of Resolution No. S-02-2020 for the noting of the corporation's annual report and the approval of the consolidated audited financial statements of the corporation and its subsidiaries as of December 31, 2019, as audited by its external auditor, SyCip Gorres Velayo & Co. The resolution is on the screen. On the voting results, I am pleased to report that stockholders owning 656,519,430 shares or about 99.8% of the shares represented in this meeting have voted for the adoption of the resolution. Therefore, Mr. Chairman, the resolution has been approved.

Thank you, Mr. Secretary. We now move to the next item on the agenda, the ratification and approval of all the acts of our Board of Directors and officers since our Annual Stockholders' Meeting on April 26, 2019, until today. Mr. Hermosura will explain this matter and present the proposed resolution together with the voting results thereon.

Mr. Chairman, our Board and management seek ratification of all the acts and resolutions of the Board, the Executive Committee and other Board committees exercising powers delegated by the Board, which were adopted from April 26, 2019, until today. These acts and resolutions are reflected in the minutes of the meetings, and they include the election of officers, members of the various Board committees and the lead independent director, the revisions of the company's related party transaction and insider trading policies, updating of list of attorney-in-fact and authorized signatories, capital allocation and disbursement of funds to subsidiaries, declaration of cash dividends and matters covered by disclosures to the Securities and Exchange Commission and the Philippine Stock Exchange. Stockholders' ratification is also sought for all the acts of our officers performed in the general conduct of our business or in accordance with the resolutions of the Board, the Executive Committee and other Board committees and of our bylaws from April 26, 2019, to date. Mr. Chairman, on the screen is the proposed Resolution No. S-03-2020. On the voting results, I am pleased to report that stockholders owning 656,207,280 shares or 99.8% of the voting shares represented in this meeting have voted for the adoption of Resolution No. S-03-2020. Therefore, the resolution has been adopted.

Thank you, Mr. Secretary. The next order of business is the election of the 7 members of the Board of Directors for the ensuing year. Mr. Ramon R. del Rosario, Jr., Chairman of the Corporate Governance and Nomination Committee, has prerecorded his explanation for this item.

Mr. Chairman, in accordance with our bylaws, corporate governance manual and charter of the Board of Directors, the following stockholders were duly nominated to the Board of Directors of the corporation for the ensuing term: Jaime Augusto Zobel de Ayala, Fernando Zobel de Ayala, Rizalina G. Mantaring, Delfin L. Lazaro, Xavier P. Loinaz, Keiichi Matsunaga, Antonio Jose U. Periquet. Messrs. Loinaz and Periquet and Ms. Mantaring have been nominated as independent directors. The Corporate Governance and Nomination Committee of the Board has ascertained that the 7 nominees, including the nominees for independent directors, are qualified to serve as directors of the corporation. All the nominees have given their consent to their respective nominations. Mr. Chairman, in closing, kindly allow me a few personal words. Please note that after serving for 10 years, I am stepping down from the Ayala Corporation Board. Allow me to thank you, Mr. Chairman, and the rest of the Board, and you, my fellow stockholders, for the honor and privilege of serving on the Board of this great institution for these past 10 years. I have no doubt that the future of the Ayala group will be even brighter in the years to come. Thank you.

Thank you very much, Ramon, and it's been really a pleasure having you also on the Board. Thank you for the kind words. Mr. Secretary, may we have the results of this election?

Mr. Chairman, each of the 7 nominees for directors has garnered at least 727,457,396 votes. Given this, I certify that each of the nominees has received enough votes for election to the Board, and that Resolution No. S-04-2020 has been approved. The resolution is on the screen.

Thank you very much. Let me then use this occasion as well to thank you, Ramon. It's been quite exceptional to have you with us. You've provided leadership across so many different fronts over the years, Ramon, and not only on the educational sector, on the business sector. And it's been actually a pleasure as well to have you as our partner in many ways. Our first entry into the energy space actually came because of the PHINMA group and the opportunities that you gave us, something we will never forget, Ramon. It's been a pleasure having you onboard, and we've really so much enjoyed your wise counsel, your advice and your frankness on occasion. You've been a true independent Board member and have given us, both Fernando and I, and the whole management team plenty of advice over the years. Thank you. Thank you, Ramon.