Since we took AEV public over two decades ago,                                                
our successful execution of initiatives towards
achieving our growth goals has enabled our strategic
business units (SBU) to become leading players in the
industries we are in. As we pursue further growth,
we aim to sustain leadership in our core businesses
of power, banking and financial services, food, land,
and infrastructure by staying focused on our Group’s
strategic pillars.

In 2015, all of our SBUs successfully aligned to
these strategic pillars: to grow and expand our
business, increase stakeholder engagement, build
human capital, and carry on execution excellence in
everything we do.

We grew and expanded our business, venturing
into the infrastructure space barely a year after
we announced it was going to be our fifth leg.
We believe infrastructure is what will propel our
country’s economic growth and our investment in
this sector is a great opportunity for us to contribute
to nation building. We are pleased to have found a
solid and reliable strategic partner in CRH, a global
leader in building materials. With this partnership,
we successfully acquired Lafarge’s cement assets in
the Philippines, now renamed Republic Cement and
Building Materials, Inc. We view Philippine cement
consumption as a direct proxy to infrastructure
investment in the country.

We have also made a successful entry into the
international market with AboitizPower in Indonesia
and Pilmico in Vietnam. We continue to be on
the lookout for growth opportunities that fit our
investment and risk appetite parameters and where
we can add value based on our proven competencies
and experience. Equally important for us is to always
choose a local partner who shares our core values
and with whom we have mutual trust.

Our disciplined investment criteria focuses on
cashflow and growth from our investments. As
you may know, our dividend policy is to annually
pay out one-third of AEV’s profits and one-half of
AboitizPower’s profits from the previous year, with
the balance to be made available for reinvestment
to fund our expansion. We have been dutifully
delivering these dividends to you and at times
even exceeding the policy depending on our cash
position and investment requirements in the
foreseeable horizon.

We are very positive about our future as we see
many opportunities for growth. We recognize
that sustaining leadership and growth means not
putting at risk what we have built so far. We are
keenly understanding, mitigating and managing
our risk exposures so we can turn these risks into
opportunities and make informed decisions to ensure
we achieve our strategic goals.

Performance of our Strategic Business Units
AEV closed 2015 with a consolidated net income
of P17.7 billion, 4% lower than in the previous
year. The decline, which was anticipated, was due
to lower contributions from our banking and land
business units.

Power remains our largest income contributor,
accounting for 73% of consolidated net income,
followed by banking and financial services, food,
land, and infrastructure. We are confident that we
will start seeing a more diverse income stream as
full-year earnings from our infrastructure business
unit come in this year.

Overall, our stock price performed well and we see
this as a clear sign of the trust and confidence that
the investment community has on our future and
our ability to deliver on our commitments. As you


"Our disciplined investment criteria focuses on cashflow and
growth from our investments. As you may know, our dividend
policy is to annually pay out one-third of AEV’s profits and
one-half of AboitizPower’s profits from the previous year, with
the balance to be made available for reinvestment to fund our
expansion. We have been dutifully delivering these dividends
to you and at times even exceeding the policy depending
on our cash position and investment requirements in the
foreseeable horizon."

will learn from the various sections of this report,                                                                 
your company’s fundamentals remain strong and we
remain on track with our strategic pillars across all
our businesses.

AboitizPower’s income contribution to AEV amounted
to P13.5 billion, a 6% increase from the previous
year’s P12.7 billion, due to higher revenues from
the new capacities of Therma South, Inc. (TSI) and
Hedcor Sabangan. There was also higher ancillary
revenue from the large hydro plants, which more
than offset the decrease in revenue due to the steam
decline of the geothermal group.

Attributable net energy sales rose by 11% year-on-year
(YoY) from 11,272 gigawatt-hours (GWh) to 12,550 GWh.
The distribution business group’s earnings also grew
by 19%, from P3.2 billion to P3.8 billion, due to higher
electricity sales across all customer segments as well
as the full-year contribution from LiMA EnerZone,
which was acquired in 2014.

With the full commissioning of TSI’s 300-MW Davao
baseload plant and San Carlos Sun’s (SacaSun) 59-MWp
solar plant in Negros Occidental, AboitizPower’s
net sellable generating capacity will increase from
3,044 MW to 3,350 MW.

We are on track in achieving our goal to increase our
generating capacity to 4,000 MW by 2020. Other
power projects undergoing construction include the
68-MW Manolo Fortich hydro plant in Bukidnon, the         

8.5-MW Maris Canal hydro of SN Aboitiz Power and
the National Irrigation Authority in Isabela, the 8.8-
MW biomass power facility in Batangas, the 340-MW
Therma Visayas baseload plant in Cebu, the 420-MW
Pagbilao III baseload plant expansion in Quezon
Province, and the 600-MW RP Energy baseload plant
in Zambales.

Power supply in Mindanao continues to be a
challenge due to a lack of capacity, the effects of
El Niño, the bombing of NGCP’s transmission lines,
as well as the repairs and maintenance of power
plants. TSI’s full commissioning of its two units
in February 2016 is providing the much-needed
baseload capacity to help ease the power shortage
as it is not dependent on weather conditions.

Along with the increase in our non-renewable
capacity, we are also vigorously pursuing
and growing our renewable energy portfolio.
AboitizPower is currently one of the largest
producers of clean energy in the Philippines
generating 1,263 MW, or close to 40% of our
total net sellable capacity.

While the Philippines contributes to only 0.3%
of global GHG emission, we fully support the
government’s call to further reduce our carbon
footprint. To ensure that we keep up with the
growing demand and secure the country’s energy
mix target of 30% renewable, AboitizPower will
continuously invest and develop more Cleanergy, its
brand for clean and renewable energy.                               

We plan to build and operate an additional 200 MW                                                       
of run-of-river hydro plants by 2020. We are also
actively pursuing the expansions of geothermal and
biomass power plants.

Offshore, we are eyeing geothermal and hydropower
projects in Indonesia, as part of AboitizPower’s
growth strategy in the ASEAN region.

Given our balanced mix of renewable and non-
renewable energy sources, we are uniquely
positioned to provide our customers with their choice
of the right power solution that is reliable, reasonably
priced, and has the least impact on our environment.
With our available power technologies, we cater
to different power-demand types of the grid. This
means we address the power needs for baseload,
intermediate and peaking loads, as well as ancillary
services for grid stability and system management.

Core to our gentailer (generator-retailer) strategy is
Open Access, which empowers end-users to choose
their own electricity supplier. Only through Open
Access can they be given the power of choice that
will truly transform the power industry into a more
competitive marketplace. It also gives us the ability to
expand our reach to end-users beyond our distribution
utilities’ franchise areas and the spot market.

TAlthough there has been a delay in the implementation
of a mandatory transition to Open Access and retail
competition, we are hopeful that it will happen in the
near future. We foresee greater customer diversity as
the timelines are realized for reducing the threshold
for contestability from 1 MW to 750 kW and,
eventually, a further reduction to 500 kW and even
down to the household level.

Banking & Financial Services
IUnionBank’s income contribution to AEV in 2015
dropped by 22% YoY from P3.2 billion to P 2.5 billion
mainly due to lower trading gains, which was partially
offset by strong growth in interest income.
Following its FOCUS 2020 roadmap, the bank shifted
from proprietary trading to an interest accrual and fee-
based business model, focusing on customer centricity
and channel expansion, which yielded favorable
customer income growth that is among the highest
as compared to other listed peer banks. It remains
focused on its goal to build a great retail bank.

CitySavings ended the year on a high note by opening
its 100th branch on the occasion of its 50th year
celebration. The thrift bank serves the needs of
teacher-partners through simple and innovative
programs, and also introduces new product offerings
for its customers.

Money remittance firm PETNET, Inc., our newly
acquired company, began contributing to AEV’s
income in June 2015. We expect this new business
to open up opportunities for us to distribute
complementary banking and financial services via its
extensive network of outlets across the country.

Our food business recorded the largest increase
in 2015 with a 31% growth in NIAT (net income
after taxes) brought on by the performance of
its feeds business. Overall, the company was
consistent in delivering income growth across
all its divisions.

Feeds-Philippines’ income contribution more than
doubled while Feeds-Vietnam, which celebrated
its first anniversary in August 2015, is enjoying
an 8% market share of the Mekong Delta aqua
feeds industry.

Farms’ income contribution fell due to the
lower prevailing market selling price of live hogs.
The company has also entered the higher-margin
meat selling business, introducing carcasses and
boxed meat products to institutional customers, and
diversifying into the poultry industry with its chicken
egg layers farm.                                                           
Flour’s earnings contribution was flat but retained                                                        
a steady volume growth alongside industry levels.
Representative offices in Vietnam and Indonesia
anchored the successful start of the Flour Export
Program in those countries as well as in Hong Kong.

In pursuit of its 2020 goal, Pilmico is focusing its
growth not only in the Philippines but also in the
region, actively seeking opportunities to diversify
its portfolio. It will expand geographically through
mergers and acquisitions while continuing the
expansion of its flour plants, feed mills, and farm
unit capacities.

AboitizLand’s full-year income contribution to
AEV amounted to P536 million, 15% lower from
the previous year. This was mainly due to the
decline in revenue from residential division and the
higher manpower cost as a result of an ongoing
organizational expansion. Despite the increase in
residential unit sales, the corresponding revenue
recorded under the percentage of completion (POC)
method was lower because of the slower pace of
construction in 2015 than in the previous year.
AboitizLand will see income growth in the residential
sector as units sold are built and recognized as
revenue under the POC method.

AboitizLand ended the year with 52% of total revenue
coming from its industrial communities West Cebu
Industrial Park, Mactan Economic Zone 2, and LiMA
Technology Center.

Residential sales accounted for 43% of the company’s
total revenue. Amoa, AboitizLand’s 60-hectare mid-
end residential community located in Compostela,
Cebu, surpassed its annual sales target by 300%.

The rest of the revenue came from the company’s
commercial business and other revenue streams.
Commercial properties grew by 30% YoY as major
retailers joined AboitizLand’s expanding roster of
merchants, indicating increased confidence in the
company’s role in achieving their development goals.
AboitizLand’s first project under the Cebu District
Property Enterprise, Inc., its partnership with Ayala
Land, is set to launch in 2016.

The company will take advantage of this heightened
interest and continue pursuing an aggressive
investment plan in land banking activities in
strategic areas of the country to meet the growing
demand from across residential, commercial, and
industrial segments.

Newly-acquired Republic Cement and Building
Materials, Inc., which started in mid-September 2015,
contributed P194 million to AEV. Along with our
partner CRH, the Aboitiz Group is now invested in the
Philippines’ second largest local cement manufacturing
and distribution group. It has six facilities across Luzon,
Visayas and Mindanao producing over 25% of the
country’s cement requirements.

To sustain the economic gains that our country
has made over the past few years, the national
government has targeted to increase its expenditures
for infrastructure to 5% of GDP. We believe this
will sustain the growth we have seen in cement
consumption and support expansion opportunities in
our cement business.

Apo Agua, our other business unit under the
infrastructure group, is focused on starting the
construction of the country’s second largest
private bulk water treatment facility, which will use
renewable hydropower generated from the Tamugan
River. The P12-billion project will directly benefit
Davao City’s one million residents and its many
commercial and industrial establishments.

We foresee large public and private investments
pouring into the infrastructure space in the next 10
to 20 years, and we want to play a major role in this
sector. We are participating in various public-private                                                    
partnership (PPP) bids including the bundled regional
airports and the LRT 2 O&M bid.

Corporate Center
OWith a growing enterprise that has over 31,000
team members across the Group, the AEV Corporate
Center needs to step up on its crucial roles of being
the knowledge center, governance agent, and
business partner of our SBUs. It will continue to
introduce best-in-class knowledge, value-adding
services, leading governance practices, and systems
capabilities that could help us maximize Group
resources, optimize common processes, and improve
overall effectiveness.

We are committed to quality management systems.
AEV’s ISO 9001:2008 certification in 2015 and
AboitizPower’s Project Forward, key milestones in our
quality journey, are testaments to this commitment.

We believe that only a strong team with the right
leadership can deliver excellent performance. As we
continue to build our bench, we will nurture leaders
from among our ranks who will lead by example,
mentor and foster teamwork, speak what’s on their
mind, and deliver results for sustainable growth.

Towards Creating Shared Value
Today, the Aboitiz Group is at the cusp of creating
shared value. No organization can exist for very
long without a larger purpose. We constantly ask
ourselves whether there is a better way to create
long-term value for all our stakeholders.

Our enterprise will only be truly sustainable and
enduring if all our stakeholders, including our team
members, our host communities and society at
large, benefit from our value creation efforts. As the
Group pursues further growth, we are facing greater
expectations from our stakeholders to help address a
variety of societal challenges, while generating value
for our businesses.

We have identified existing shared value initiatives
across the Group, and we will expand them as well as
create new ones to ensure a more sustainable social
impact and deliver the promise of greater good. We
are guided by the Aboitiz BetterWorld sustainability
mindset: We can do well by doing good, always
making the right long-term decisions that balance the
interest of people, planet and profit.

Message of Thanks
All of our plans and strategies will not yield the
anticipated positive results without the dedication
and talent of all our team members, who are truly
driven by the Aboitiz Passion for Better Ways. We
thank them for their invaluable contributions to the
sustained success and strength of our organization.

To you, our dear shareholders, we deeply appreciate
your continued trust in the Aboitiz Group and our
people. We affirm our commitment to sustaining
your company’s leadership in business, corporate
governance, corporate social responsibility,
and sustainability.

An even more exciting future awaits us in our
continuing journey towards creating a truly sustainable
enterprise that we can entrust to future generations.