Aboitiz Family Management Final Edit

7/22/2019 Aboitiz Family Management Final Edit

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P O L Y T E C H N I C U N I V E R S I T Y O F T H E P H I L I P P I N E S

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Introduction

This company has a rich background that stretches all the way from Spanish era.

The company has a history that can be said in times with the Philippine History from

the Spanish Occupation all the way to the 21st century. It is amazing that the

company has evolved and has kept up with the current times and is one of the

magnates. Unlike its peers in the early century; where a lot has already faded in the

background or has already been dissolve. This family corporation owned a group of

diversified companies comprising from the most basic necessity such as power

generation, to the luxury industries such as resorts and hotel chains.

It is interesting to have an understanding and knowledge how this company has

adapted to the recent times and is reached one of the top 10 most riches company

in the country. The challenges faced, solutions provided, adaptations, methods

provided, opportunities that came their way for such success. This are the times

that would come into mind What did these people do to reach such heights and

how is the continuity of such companies be possible where everybody else fails

after a more than a century of business. The decisions made to be able to stay

ahead of the pack and maintain leadership. What would be the next phase of their

empire.


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Currently the family patriarch is having the value of $3 billion net worth.

Surprisingly, they have such large organization that they also have some outreach

program or foundation to provide assiatnce to the less fortunate countrymen.

As a student who is deeply interested in history and its effects on modern times,

this company is truly worth looking into. Also It is a wonder that what we thought as

a budding company is already part of our nations history in its silent ways and

pivotal for the nations economical stability and necessary for the common mans

mundane lives. This company is silent yet is widely respected in business world.

Considering the vast influence of this familys company in our daily lives, It is quite

astounding that we ordinary citizens are clueless on their contributions and work.

Why Aboitiz a person might ask for the topic of my research. Its because of the

following:

History :

Aboitiz & Company, Inc.is the private holding company in the Philippines of

the Aboitiz Family. It traces its roots to the late 1800s starting out as a hemp trading

and general merchandise company in Ormoc, Leyte, central Philippines.

The family corporation traces its roots to a Spaniard mariner from Basque, Spain

named Paulino Aboitiz. Soon after Paulino Aboitiz married Emilia Yrastoza y

Torres, daughter of a Basque shipping merchant from Guipzcoa, Spain and a
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Spanish mestiza from Ormoc, Leyte, he traded in abaca fiber or hemp. Paulino

Aboitiz also operated a general merchandise business with Angel Moraza, his

brother-in-law and husband to his wifes sister, Guadalupe Yrastoza, who was

based in Baybay.

When the Spanish Government in Manila fell in 1900, Paulino Aboitiz moved his

family, wife and his ten children, to Cebu. There, Paulino Aboitiz created a business

partnership with Jose Muertegui, an Abaca dealer based in Palompon, and named

their business Muertegui y Aboitiz. Their business thrived and soon after, they had

the need to buy the ship, Picket in 1907 to transport their aba ca products.

Businesses combining shipping and abaca were common at that time.

The companys success and growth in hemp trading opened opportunities to

enter the transport business. It made good business sense to buy a ship to

transport their own goods across the islands. In 1907, the company bought its first

vessel, the Picket. Thus began the Aboitiz transport business. Ramon, Paulinos

second son assumed his position at the firm at the age of 22 and the business

prospered further. Together with his elder brother, Guillermo, Ramon established

another merchandising business named G. y R. Aboitiz to cover areas unreached

by Muertegui y Aboitiz. In 1916, the Aboitizes bought Muerteguis share for

PhP95,000 and the Muertegui y Aboitiz partnership ended.


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In 1918, Ramon bought passenger ship Tubig from Smith, Bell and Co. The

family then formed a new partnership called Viude e Hijos de P. Aboitiz that

operated on passenger shipping. Ramon petitioned to the Commission on Public

Utilities for their passenger ship to operate the route between the Cebu and Leyte

ports of Baybay, Inopacan, Hilongos, Bato and Hindang.

In 1919, Ramon, his wife Dolores and son Eduardo left for Spain and sold his

share to his brothers Guillermo and Vidal. He believed that he has left the business

in good condition for his mother and siblings to live by.

On February 4, 1920, the Bureau of Commerce approved the corporation

founded by Guillermo Aboitiz and a Portuguese businessman named Arnaldo F.

Silva called Aboitiz y Compania Incorporada that capitalized at 1.25 million and

PhP500,000 paid-up capital. Cousins Manuel Moraza and Joaquin Yrastoza bought

300 and 50 shares from the corporation, respectively, thereby joining the

corporation while Paulino and Luis bought 100 shares each.

A few months after, the business was in peril. Ramon Aboitiz had to come

back to the Philippines in September 1920 after his 14-month stay in Spain. He had

found out that corporation owed PhP2 million to the bank and others. Ramon had

an iron grip on the corporations reputation by refusing to declare bankruptcy.

Instead, he had arranged an PhP800,000 loan from Philippine National Bank (PNB)

manager Jose Martinez and borrowed money from businessmen, Gotiaco

Hermanos and Joaquin Castro. He had also convinced Macleod and Smith Bell to


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advance funds to the company in exchange for a first choice of any abaca

shipment. While having financial difficulties, Ramon nevertheless continued to

venture into profit-making businesses by acquiring Cebu Ice and Cold Stores Corp.

The hemp trade continued to flourish and in 1920, Aboitiz & Company was

formally incorporated. By then, it had become one of the leading Cebu-based ship

owners with 11 vessels. It also had a thriving commercial and trading business

offering services of cold storage, sold ice, fruits, meat and other refrigerated and

frozen goods.

Ramon was able to pay off the loan 20 years later and their business caught

up afterwards as demand for abaca hemp and copra grew.

In 1930, the company ventured into power generation and distribution, and

invention the company expand its power generation and distribution business and

enter other business ventures, among them, industrial gases, banking and finance,

insurance brokerage, food, coconut oil milling, construction, real estate

development, oleo chemicals, overseas shipping, crewing and shipbuilding.

WWII

When the Japanese invaded Cebu on April 10, 1942, they did not falter in

conducting their business. However, a huge blow struck them when the bombings

hit their knitting factory in Manila, their power plants in Mindanao, a portion of their

shipyard in Mactan Island, hardware store and ice plant in mainland Cebu.


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Through diversifying their businesses, the family corporation survived the

devastations brought by the war.

The Aboitizess knitting factory and liquor factory continued to bring in profit

throughout the years. At the same time, Ramon and his brothers rebuilt their

enterprises with what was left of their company assets.

Post World War II

With the onset of the American occupation in the Philippines, the US Navy sealed a

contract with the Aboitizes through their companys Cebu Shipyard and Engineering

Works. It allowed the US Navy exclusive use of the shipyard for two years.

From this point, the family corporation is venturing into another shipping company,

started manufacturing oxygen and started reviving their power plants in Cotabato,

Mindanao named Cotabato Light and Power Co. and bought a franchise of Davao

Light and Power Co.

Today, together with joint ventures and alliances with domestic and foreign

partners, Aboitiz focuses on six major areas, namely: power, banking, food, land

development, construction and shipbuilding. Over 60 operating companies with

27,000 team members now make up the Aboitiz Group of Companies.

The publicly-listed holding company of the Aboitiz family is Aboitiz Equity


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Ventures, which in turn has shareholdings in a number of other listed and privately

held companies (see Aboitiz Equity Ventures portion in About Us). After Ramons

management of the corporation, Ramons son, Eduardo, took over before handing it

to Ramons brother, Luis, and finally to, Eduardos son, Jon Ramon, who is

currently the Chief Executive Officer and President of the Aboitiz & Co. 1990s

After 74 years as a private, family-owned business, Aboitiz formed AEV and

subsequently listed it on the Philippine Stock Exchange in 1994. Aboitiz & Co. put

into the Company's basket, the best and most profitable businesses it had with the

view to expanding and growing the Aboitiz' businesses. This included the power

generation and distribution businesses of Aboitiz & Co. Under Jon Ramons

leadership of the Aboitiz & Co., the company has went public in 1994 through

Aboitiz Equity Ventures (AEV), a holding management company or business in

power distribution, financial and insurance services, food and industrial production.

AEV became the publicly listed holding and investment management company. The

thrust of the company is to work towards its business development in banking and

power.

Converting AEV into a Publicly Listed Company (PLC) was a transformation

since, for the first time, the Aboitiz Group not only gained non-family shareholders,

but also local and foreign shareholders. This big step required further
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professionalization of the Aboitiz Group as new disciplines and demands for

transparency, corporate governance and accountability and a more focused

business strategy also evolved. Today, we continue to follow the focused business

strategy and course we have set. And we continue to adapt to the changing

requirements for corporate governance practices and principles expected of a PLC.

The new management also understood the benefits of technology that it has

partnered with Bayantrade, a procurement exchange company and is partnered

withAyala Corporation,Benpres Corporation,JG Summit, Philippine Long Distance

Telephone Company and United Laboratories. Through this, Aboitiz Equity

Ventures has used information technology to expand its business opportunities and

increase productivity of its employees.

Aboitiz & Co. has expanded into industrial and commercial real estate

development, banking, power distribution and generation, freight forwarding and

food-related business.

AEV's market capitalization of Php 15 billion in 1996 increased to a market

capitalization of Php 292.4 billion in 2012.
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Nature of Business:

Aboitiz Equity Ventures, Inc. is a Philippines-based company primarily engaged in

power distribution and generation. The Company through its various subsidiaries

and Affiliates can be grouped into five main categories: power distribution, power

generation and retail electricity supply, financial services, food manufacturing, real

estate and portfolio investments. The Company operates in five segments: power

segment, which is engaged in power generation and sale of electricity; food

manufacturing segment, which is engaged in the production of flour and feeds and

swine breeding; the financial services segment, which is engaged in banking

operations; and the parent company and others, which include the operations of the

Company, air transport services, ship and crew management services, and real

property business of the Company.

Aboitiz Equity Ventures (AEV) listed in the Philippine Stock Exchange (PSE) in

1994 as the public-held holding company of the Aboitiz Family. Since its IPO, AEV

has been recognized by various local and international surveys and publications as

among the Philippines best managed companies. AEV has l ikewise received

numerous awards for its corporate governance practices.


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Company profile

Aboitiz Equity Ventures, Inc. was incorporated in September 11, 1989 as Cebu Pan

Asian Holdings, Inc. AEV is the holding company of the Aboitiz Group. To further

increase funding, the Aboitiz Company listed AEV in 1994. To date, the companys

shares are traded under the stock symbol AEV. AEV has business interests in the

following:

power distribution and generationAboitiz Power Corporation

financial servicesUnion Bankand Cebu City Savings Bank

food manufacturingPilmico Foods Corporation

transportationAboitiz Transport System,Accuria, Inc.

portfolio investments - Cebu Praedia Development Corporation, AEV Aviation,

Inc.

Subsidiaries

Power Distribution

Aboitiz Power Corporation is the power distribution and generation arm of AEV. It

owns 76.40% of the outstanding capital stock of AboitizPowe. Since its

incorporation in 1998, it has become of the leaders in the Philippine power industry.

Including the second and third largest in the country in terms of power sales. These

utilities are recognized for setting the standards in innovation, efficiency and
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customer service. AboitizPower, which debuted as a public company in 2007. The

power generation holdings include renewable, such as geothermal and

hydroelectric, and non-renewable plants. AboitizPower's portfolio of plants are

diversified in fuel source and located throughout the country, enabling it to cater to

the diverse needs of every power consumer. It is pioneer in offering Cleanergy, its

brand of clean and renewable power.

Financial services

AEVs financial services group is composed of Union Bank of the Philippines

(Unionbank) and City Savings Bank. Aboitiz Equity Ventures is the largest

shareholder of UnionBank, a publicly-listed universal bank also recognized as

among Asias best companies in banking and finance. UnionBank consistently

ranks as among the top banks in key performance ratios in profitability, liquidity,

solvency and efficiency. It is a pioneer in the application of information technology

in banking services. Aboitiz Equity Ventures also owns City Savings Bank, a

leading thrift bank based in central Philippines and currently expanding into Luzon

Unionbank was incorporated in 1968 as a savings bank. By 1982, the bank has

been granted a commercial banking license, and in 1992, became a universal bank.

Since incorporated, Unionbank has acquiredInternational Corporate Bankin 1994,
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and the International Exchange Bank in 2006. As of December 2010, AEV

beneficially owns 40.91 percent of UnionBank.

City Savings Bank was incorporated in 1965 originally known as Cebu Savings and

Loan Association. It was the first of its kind to be organized under the Savings and

Loan Association Act, otherwise known as Republic Act 3779. AEV currently holds

60 percent equity in City Savings Bank.

Food Manufacturing

Pilmico is one of the countrys largest manufacturers of flour and is ranked

among the top three domestic flour producers in terms of sales. It was incorporated

in 1958 and started out as a JV between the Aboitiz Group Lu Do Group, the

Soriano Group and the Pillsbury Group of the United States. The three groups

eventually sold off their holdings to AEV.

In Food, Pilmico Foods Corporation is one of the largest flour mill

companies in the Philippines. It is a top-3 player in the flour market and a leader in

operating efficiency. Pilmico also manufactures yeast and other bakery products,

and through its wholly-owned subsidiary, Pilmico Animal Nutrition Corporation,

operates a feed milling and swine growing operation
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Other portfolio investments

The Aboitiz Jebsen Group is a joint venture with the Jebsen Group of Norway,

primarily engaged in ship management, manning and crew management, and bulk

transport businesses.

AEV Aviation Inc. holds AEVs aviation assets, including the corporate aircraft and

accompanying support facilities. Incorporated on October 9, 1990, it was originally

known as Spin Realty Corporation, and was reorganized in late 1998 when the

newly acquired AEV corporate aircraft was placed under its holdings.

Cebu Praedia Development Corporation was incorporated in 1997 as a holding

company for AEVs real estate assets. It is engaged in leasing of properties located

in the cities ofMakatiand Cebu.

Awards and citations

AEV has received numerous awards and citations. Among them:

Asian CSR Award in 2010Asian Institute of Management

Best Management Company, 2010Asia Money

Asias Best Company, 2009 Finance Asia

Best Project Finance for Magat Hydro Power, 2007The Asset Asian Awards
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Recent business development

On December 1, 2010, AEV together and Aboitiz & Company, Inc. (ACO) entered

into a Securities Purchase Agreement with Negros Navigation Company, Inc.

(NENACO) for the purchase by NENACO of the entire equity stake of AEV and

ACO in AEVs transport subsidiary Aboitiz Transport System (ATSC) Corporation

(ATS). The sale included all the logistics and shipping businesses of ATS except

the ship management, manning and crew management, and bulk transport

businesses of ATSs joint venture companies with the Jebsen Group of Norway.

Current Company Holdings:

ShipBuildings

The Shipbuilding has been one of the core businesses of the Ablitiz Group. By

1920, it had become one of the leading Cebu-based ship owners with 11 vessels.

To date, its partner includes Tsuneishi Heavy Industries (Cebu), Inc., a world-class

shipbuilder located inside the companys industrial park in Cebu, central

Philippines.

Tsuneishi Heavy Industries (Cebu) Inc.is a joint venture between Aboitiz &

Company and Japanese shipbuilder the Tsuneishi Group. Tsuneishi (Cebu) builds

bulk carriers of up to 100,000 dead weight tons, car and truck carriers and soon,
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container ships.

In Construction, the Aboitiz Construction Group is a major player in the

country that specializes in civil, industrial facilities installation and steel fabrication

works. It is also a leading contractor for roads and bridges. Under Metaphil, It is a

major player in the country that specializes in civil, industrial facilities installation

and steel fabrication works. It is also a leading contractor for roads and bridges.

Metaphil is currently an ISO 9001:2000 company.

Real Estate

Aboitiz Land is the real estate arm of the Aboitiz Group. Aboitiz Land focuses on the

development of residential subdivisions, housing and the management of industrial

parks including Mactan Economic Zone 2, and West Cebu Industrial Park. It has

developed the trust and confidence in the market for quality and reliability.

Other projects include:

Residential

Ajoya

Kishanta

Molave Highlands

The Persimmon


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Pristina North

Office and Retail

iMez

The Persimmon Plus

Pueblo Verde

Leisure

Aboitiz Foodball Cup

Aboitiz Sports Field

Leisure Resorts

Aboitiz & Company is also part owner of the A. Soriano Corporation

subsidiary, Seven Seas Resort and Leisure, which in turn operates and promotes

the the world-famous Amanpulo luxury beach resort in Pamilican Island,Palawan
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Corporate Structure

As of End - 2012

Ownership

POWER %

Aboitiz Power Corporation 76

Power Generation

Aboitiz Renewables, Inc. 100

AP Renewables, Inc. 100

Cleanergy, Inc. 100

Hydro Electric Development

Corporation99

Cordillera Hydro Corporation 100

Hedcor Benguet, Inc. 100

Hedcor Bokod, Inc. 100

Hedcor Bukidnon, Inc. 100

Hedcor Sabangan, Inc. 100

Hedcor Sibulan, Inc. 100

Hedcor Tamugan, Inc. 100

Hedcor Tudaya, Inc. 100

Hedcor, Inc. 100

Luzon Hydro Corporation 100


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Manila-Oslo Renewable

Enterprise, Inc.83

SN Aboitiz Power-

Magat, Inc.60

SN Aboitiz Power-

Benguet, Inc.60

Neptune Hydro

Corporation

(Formerly: SN

Aboitiz Pangasinan,

Inc.)

60

Therma Power, Inc. 100

Therma Central Visayas, Inc. 100

Therma Luzon, Inc. 100

Therma Marine, Inc. 100

Therma Mobile, Inc. 100

Therma Power Visayas, Inc. 100

Therma South, Inc. 100

Therma Southern Mindanao,

Inc.100

Therma Subic, Inc. 100


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Therma Visayas, Inc.

(Formerly: Vesper Industrial and

Development Corporation)

100

Teraqua, Inc. 60

Redondo Peninsula Energy,

Inc.25

Abovant Holdings, Inc. 60

Cebu Energy

Development

Corporation

44

STEAG State Power, Inc. 34

Cebu Private Power Corporation 60

East Asia Utilities Corporation 50

Southern Philippines Power

Corporation20

Western Mindanao Power

Corporation20

Power Distribution

Visayan Electric Company, Inc. 55

Davao Light & Power Company, Inc. 99

Cotabato Light & Power Company 99


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Cotabato Ice Plant, Inc. 100

Subic EnerZone Corporation 99

Mactan Enerzone Corporation 100

Balamban Enerzone Corporation 100

San Fernando Electric Light & Power

Company, Inc.44

Retail Electricity Services

Aboitiz Energy Solutions, Inc. 100

Adventenergy, Inc. 100

Prism Energy, Inc. 60

Banking

Union Bank of the Philippines 45

Food

Pilmico Foods Corporation 100

Pilmico Animal Nutrition

Corporation100

Filagri Inc 100

Land

Aboitiz Land, Inc. 100

Propriedad Del Norte, Inc 100

Cebu Industrial Park 100


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Development Corp.

Cebu Praedia Devt. Corp. 100

Integrated Maritime Services

Aboitiz Jebsen Company, Inc.

(Formerly: Aboitiz Jebsen Bulk

Transport Corporation)

62

Aboitiz Jebsen Manpower Solutions,

Inc.62

Jebsens Maritime, Inc. 62

Others

AEV Aviation, Inc. 51

ASEAGAS Corporation 100

.

POWER AboitizPower Corporation

Generation Assets:

Renewable:Hydro,Geothermal

Non-Renewable:Coal-fired,Thermal

Distribution Assets:Davao Light and Power Company,

Cotabato Light and Power Company , Visayan Electric
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Company , San Fernando Electric Light and Power

Company , Subic Enerzone Corporation , Mactan

Enerzone Corporation , Balamban Enerzone Corporation

Services:Aboitiz Energy Solutions, Inc. , AdventEnergy,

Inc.,Prism Energy, Inc.

BANKING UnionBank of the Philippines,City Savings Bank

FOOD Pilmico Foods Corporation,Pilmico Animal Nutrition

REAL ESTATEAboitizLand , Cebu Industrial Park Developers, Inc. ,

Mactan Export Zone 2

CONSTRUCTIO

NAboitiz Construction Group, Inc.,Metaphil Division

OTHER

INVESTMENTS

Aboitiz Jebsen Bulk Transport Corporation, Tsuneishi

Heavy Industries (Cebu), Inc. , Seven Seas Resorts &

Leisure, Inc.

SOCIAL Aboitiz Foundation, Inc.,Ramon Aboitiz Foundation, Inc.
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Business Organizational Structure

DIRECTORS

Jon Ramon Aboitiz Erramon I. Aboitiz Roberto E. Aboitiz

Enrique M. Aboitiz, Jr. Justo A. Ortiz Antonio R. Moraza

Raphael P.M. Lotilla Jose C. Vitug Stephen CuUnjieng

Independent Director Independent Director Independent Director

OFFICERS

Jon Ramon Aboitiz Erramon I. Aboitiz Stephen G. Paradies

Chairman of the Board President & Chief Executive

Officer

Senior Vice

President/Chief Financia

Officer/Corporate

Information Officer

Mikel A. Aboitiz Enrique M.Aboitiz, Jr. Juan Antonio E. Berna

Senior Vice

President/Chief

Information Officer

Senior Vice President Senior Vice President


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Xavier Jose Aboitiz Gabriel T. Maalac M. Jasmine S. Oporto

Senior Vice President -

Chief Human Resources

Officer

Senior Vice-President - Group

Treasurer

First Vice-President -

Chief Legal

Officer/Corporate

Secretary/Compliance

Officer

Susan V. Valdez Luis Miguel O. Aboitiz Horacio C. Elicano

First Vice President -

Chief Reputation

Officer/Chief Risk

Management Officer

First Vice President First Vice President -

Chief Technology Officer

Patrick B. Reyes Romn V. Azanza III Melinda R. Bathan

First Vice President -Chief

Strategy Officer


Business Development


Controller

Narcisa S. Lim Joseph Trillana T. Gonzales Susan S. Policarpio


Human Resources and

Quality

Vice President - Legal and

Corporate Services

Vice President -

Government Relations


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Robin Patrick R.

Sarmiento

Vivien Vicente-Limjoco

Assistant Vice President -

Strategy and Corporate

Finance


Strategy and Corporate

Finance

Ronaldo S. Ramos Annacel A. Natividad


Business Risk

Management


Financial Risk Management

Dave Michael V.

Valeriano

Julie Ann T. Diongzon Aylmerita C. Pealoza


Investor Relations


Treasury

Assistant Vice President

Treasury

Geraldine Polanco -

Onganon

Ma. Kristina V. Rivera Noemi Sebastian


Human Resources and

Quality (seconded to the


Human Resources and

Quality (seconded to Aboitiz


Human

Resources and Quality


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Food Group) Power Corporation -

Generation Group)

Benedict James B.

Duran

Marilou P. Plando Maria Lourdes Y. Tanat


Human

Resources and Quality

(Seconded to City Savings

Bank, Inc.)


Business Administrator for

Legal and Corporate Services


Audit

Andy G. Torrato Joseph Y. Tugonon Catherine R. Atay


Plant Security

Assistant Vice President - Tax

Management Services for

Legal and Corporate Services


Corporate Secretarial an

Compliance Services for

Legal and Corporate

Services/Assistant

Corporate Secretary

DIRECTORS

Jon Ramon Aboitiz Roberto E. Aboitiz Luis M. Aboitiz,


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Jr.

Chairman Vice Chairman Director

Antonio R. Moraza Enrique M. Aboitiz, Jr. Mikel A. Aboitiz

Director Director Director

Erramon I. Aboitiz

Director

OFFICERS

Jon Ramon Aboitiz Roberto E. Aboitiz Erramon I.

Aboitiz

Chairman of the Board Vice Chairman President and

Chief Executive

Officer

Stephen G. Paradies Mikel A. Aboitiz Xavier J. Aboitiz

Senior Vice President - Finance/

Treasurer

Senior Vice President -

Strategy

Senior Vice

President - Huma

Resources


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Enrique M. Aboitiz, Jr. Antonio R. Moraza Luis Miguel O.

Aboitiz

Senior Vice President Senior Vice President First Vice-

President

Catherine R. Atay Mailene M. De la Torre

Corporate Secretary Assistant Corporate

Secretary

BOARD of ADVISERS

Enrique M. Aboitiz, Jr. Jaime Jose Y. Aboitiz Sabin M. Aboitiz

Chairman Emeritus Member Member

Andoni F. Aboitiz Luis Miguel O. Aboitiz Xavier J. Aboitiz

Member Member Member

Stephen G. Paradies Iker M. Aboitiz

Member Member

STRATEGY COMMITTEE


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Jon R. Aboitiz Erramon I. Aboitiz Roberto E.

Aboitiz

Chairman Member Member

Enrique M. Aboitiz, Jr. Mikel A. Aboitiz

Member Ex-Officio Member

SUCCESSION and COMPENSATION COMMITTEE

Jon. R.Aboitiz Erramon I. Aboitiz Enrique M.

Aboitiz

Chairman Member Member

Roberto E. Aboitiz

Member


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Findings:

Honor, Reputation, Trust and Integrity

The Legacy of Core Values

Aboitiz, hold Trust very dearly. They realize the importance of Trust from our

customers and that they value our products and services; that they are not cheated,

nor are they short changed in any way. We value Trust from our management and

employees, that they are respected and treated fairly and appreciated in their

contributions to the growth of the Company. We acknowledge the importance of

Trust that is reposed in us by our shareholders and investors, that their investments

are being handled with integrity, for their benefit, and not for those who run the

institution. Lastly, we value Trust from the community at large, that we are an asset

to the community by being a responsible member that shares and adds value to all.

We believe that Reputation is the Company's most important asset. It is the

sum of values that our stakeholders attribute to us, based on their perception and

interpretation of the image the Company communicates over time. We believe that

corporate reputation has to be earned; and once earned protected and managed,

and integrated into the Company's business strategy. Trust, Transparency,

Expertise, Commitment and Empathy are four factors that uphold our Reputation.


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Even at a young corporate age, Trust, Reputation, Governance and Corporate

Social Responsibility have since been important to the Aboitiz organization. Aboitiz

is what it is today because the family, shareholders, our professional team leaders

and team members in our various organizations and business units (BUs) have

always upheld strong values that we all believe in and practice, such as Honor,

Trust, Loyalty, Fairness and helping those who are less fortunate. From these

strong core values, we have also adopted the complimentary values of adherence

to quality, innovation, and service excellence.

A culture of Hard work, Sacrifice, Trustworthiness, Constant Improvement,

Customer focus, Quality and Social Commitment - this set of characteristics makes

us different and unique. This is what our Reputation is all about since the times

when Don Ramon Aboitiz laid the foundational legacy of core values and

characteristics for family and non-family team members to hold on to.

Corporate Social Responsibility

Corporate Social Responsibility is being practiced by the company long before

it became a corporate buzzword. We believe that CSR is a very integral part of how

we operate our businesses and an integral part of our overall governance and

philosophy of being responsible members of our society by sharing and being a

neighbour of choice wherever our companies operate.


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An integral part of the Aboitiz Corporate Philosophy is its Corporate Social

Responsibility institutionalized through the Aboitiz Foundation. Aboitiz

companies contribute yearly a percentage of their profits to the Foundation. The

Foundations areas of focus are on education, enterprise development, primary

health- and child-care, and environmental conservation & protection.

In its over a century of doing business, the Aboitizname has built a reputation

that stands for quality products and services. Today, more than ever, all Aboitiz

companies move as one in pursuing a strategic direction of focusing on their core

competencies, people, customers and systems. We see Corporate Social

Responsibility (CSR) as a way for businesses enterprises like the Company, to

manage their business processes to produce an overall impact to society. As a

corporate citizen, it is a our Company's continuing commitment to behave eithically

and contribute to the economic development of the country, while improving the

quality of life of its workforce, their families, our customers, our local communities,

our government and society at large. Bottom line being, that Corporate Social

Responsibility is about business giving back to society and acting in an ethical and

transparent manner in all its dealings with all stakeholders in society.

In 1965 or 47 years ago, Don Ramon Aboitiz gave a big part of his personal

wealth to establish the Ramon Aboitiz Foundation, Inc. It is one of the largest

shareholders of the Company. Our Company was one of the founding members of


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the Philippines Business for Social Progress when it was established in 1979 and

today is still active in both the Board of Trustees and Regional Executive

Committees. As the Aboitiz Group grew, CSR began to take on a much broader

and more meaningful perspective; it was no longer merely about doing philanthropic

acts but also reaching out to partners within our different communities. It has since

evolved into a more organized, structured, and professionalised commitment from a

dedicated team and from the Aboitiz workforce.

Thus, in 1988, the Aboitiz Group established the Aboitiz Foundation as the

social development arm of the Aboitiz corporate group. CSR teams from business

units nationwide were formed and now work together with the Aboitiz Foundation in

areas where our companies are located. These BUs are mandated to allocate a

percentage of their profits every year to fund the Foundation's projects in their

respective areas of operations and be the neighbour or choice to their host

communities.

The focus areas of our group CSR are primarily education, enterprise

development, health and environment. Over the last five (5) years, we have

allocated 1.5 billion for our various CSR projects. For 2012 alone, 390 million

was earmarked for projects. In addition, Aboitiz Foundation has collaborated and

partnered with other organizations and foundations when there was alignment of

goals or when a greater need of society required more interdependent CSR

strategies were required to assist society


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To fund growth opportunities, Aboitiz & Company listed Aboitiz Equity

Venturesin 1994 on the Philippine Stock Exchange as the holding company for its

power, banking, food and transport businesses. Aboitiz Equity Venturesmission

is To create long-term value for all its stakeholders. Since it went public in

1994, it has been recognized in different international surveys as among the

Philippines best companies.

Aboitiz Equity Ventures investments in Power are coursed through publicly-

listed.

.

An integral part of the Aboitiz Corporate Philosophy is its Corporate Social

Responsibility institutionalized through the Aboitiz Foundation. Aboitiz

companies contribute yearly a percentage of their profits to the Foundation. The

Foundations areas of focus are on education, enterprise development, primary

health- and child-care, and environmental conservation & protection.

Companies are challenged throughout the world to incorporate more

Sustainability practices into the business model. The Aboitiz Group is committed to

this effort and believes that in order to thrive, it must consider the triple bottom line

of people-planet-profit into everything it does.

In its over a century of doing business, the Aboitizname has built a reputation


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that stands for quality products and services. Today, more than ever, all Aboitiz

companies move as one in pursuing a strategic direction of focusing on their core

competencies, people, customers and systems.

Aboitiz Foundation also addresses the shortage of adequate infrastructure facilities

for basic social services by building water systems and health centers, day-care

and cooperative training centers.

Water is a basic necessity not readily available to everyone. Hence, the Foundation

has made the building of water systems the flagship project in the area of primary

health and childcare. So far, the Foundation has donated 30 water systems that

benefit 13,150 households in different marginalized communities in Cebu, Davao

and Iligan. Most of these water systems are level 3, which means water is piped

directly into individual households, making it easily accessible and convenient.

In order to improve the medical and dental services provided in certain

communities, the Foundation donates a starter set with basic medical and dental

equipment that poorer communities cannot obtain on their own.

Aboitiz companies, through the Aboitiz Foundation, also conduct medical, dental

and optical missions to make health services available to their host communities.

Aboitiz Power Renewables, Inc., Luzon Hydro Corporation, Subic Enerzone and

Hedcor regularly conduct medical missions in their areas of operations, namely in


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Maco, Nasipit, Davao, Subic, Ilocos, and Benguet.

The Foundation hopes to eventually see more children learning in classrooms than

roaming the streets. By holding non-formal education sessions under the Street

Education Program, the Foundation and the Children of Cebu Foundation aim for

street children to be motivated to go to school. The Foundation's goal is to bring at

least 40% of these children to get a formal education the following school year. Two

hundred fifty street children in six urban centers in Metro Cebu are supported

annually in this program. Aside from these non-formal education, the children were

also given bags and education supplies to use in their classes.

Some years ago, the Aboitiz Foundation became more involved in environmental

concerns in light of the global urgency to protect Mother Earth. As we see the need

to proactively respond to this call, the environment is now a new program

component in our CSR.

Through this and with the help of Aboitiz Equity Ventures' in-house sustainability

team, we will be able to tackle sustainability issues and take a step further

in environment conservation efforts.


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Every year, the Aboitiz Group conducts a simultaneous tree planting all over the

country. Over 2,000 Aboitiz employees coming from about 20 Aboitiz companies

commit to spare their weekend and lend a hand for mother nature. Last July 21

alone, a total of 2.68 million seedlings were planted together by employees across

the group. This is in support of the Aboitiz Passion for Reforest and Agroforest to

Keep (APARK) initiative that seeks to plant 3 million trees by 2015.

Aboitiz Foundation has been conceptualizing new projects and started taking small

steps to see it come to life. An example of this is a training workshop for organic,

natural and biodynamic farming systems, which will be open to its existing partner

cooperatives for a start.

With close to three million trees in its inventory, a newly launched Cleanergy Park,

and a strengthened sustainability agenda, the Aboitiz Group is gearing up its

sustainability program for 2014, as it levels up its sustainability reporting with the

Global Reporting Initiative (GRI), one of the worlds generally accepted standards.

It is currently at Level B self-declared, while the target is to accomplish the GRI-

checked Level B Sustainability Report. This entails reporting fully on a minimum of

20 performance indicators set by GRI with at least one on each area, namely

economic, environment, human rights, labor, society, and product responsibility.


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Last year, the group developed a sustainability policy, charter, and framework as

well as focus areas. The intent is to establish measurable objectives, set achievable

targets, and track them year on year.

Through its BetterWorld campaign, Aboitizs sustainability program aims to

increase awareness among stakeholders about its existing initiatives supporting the

triple bottom line of people, planet, and profit.

We will pursue an exciting future with the mindset that we can do well by doing

good, said Aboitiz Equity Ventures chief executive officer Erramon Aboitiz.

This complements the companys passion for better ways, as it makes the right

long-term decisions that balance the interests of the triple bottom line.

The Aboitiz Group, through its corporate social development arm Aboitiz

Foundation, exemplifies the best of people initiative as it focuses on education as

its flagship program.

Last year, the foundation also raised over P200 million in relief funds to help the

survivors of Super Typhoon Yolanda, the most powerful tropical cyclone that hit the

Philippines.


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Some 3,000 team members from across 24 business units also committed personal

time in 2013 for the Aboitiz Group-wide tree-planting program, APARK, which aims

to plant three million trees by 2015.

To date, a total of 2.9 million trees have been planted, and Aboitiz expects to meet

its target ahead of schedule.

Aboitiz said it is also committed to look into new businesses that are linked to its

core competencies, are scalable, and with strong recurring profits and cash flow.

These include the expansion of its investment portfolio, as it builds the countrys

first liquid bio-methane fuel plant through its joint venture, Aseagas.

TO PREVENT its employees from leaving for better-paying jobs abroad, the Aboitiz

Group continues to touch the emotional side of its workers.

If we keep telling ourselves that we cant compete with the pay abroad, were lost.

We have to make decisions to attract, retain and optimize our people, said Txabi

Aboitiz, vice president on quality and people development of Aboitiz and Co. Inc.

He said that human resource managers should ask why their people are making

decisions to leave for overseas jobs and recommended that the body, heart, mind

and spirit of employees should be addressed to help pump up the company.


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Several managers at Aboitiz and Co. sat in a panel during the second day of the

Third Aboitiz-organized Future Leaders Summit at the Waterfront Cebu City Hotel

and Casino to share how good bosses, work challenges, training and fun made

them stay with the company for years.

Among them is Judd Salas who has been with Aboitiz for more than 12 years, He is

presently corporate communications manager of the Aboitiz Transport System

(ATS).

Salas said that some of the ATS seafarers and information technology

professionals are among those who joined the the movement of labor to other

countries that is part of globalization.

Aboitizgives you opportunities to think world-class and be the best. If you value

learning, there is a place for you here to make a difference in the world, he added.

Meanwhile, Aboitiz Equity Ventures executive vice president and chief operating

officer Erramon Aboitiz attributed the companys success to a carefully laid out

strategic map (that is) skillfully executed by (its) great team of professionals.

As proof, he cited the bottom line contribution of the Aboitiz power business, which

grew to 61 percent last year from 41 percent in 1995. He also mentioned the 32-

percent increase of City Savings Banks net income in 2007, among others.

Aboitiz has evolved into a group totally focused on its core businesses growing its

assets to P61 billion from P21 billion at the start of the decade, he added.


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Conclusion:

Business & Family Values

A strong sense of business acumen lived through the legacy of the Aboitizes.

Ramon Aboitizs refusal to declare bankruptcy of Aboitiz y Compania Incorporada in

the 1920s proved that business astuteness and esteem could overcome such

difficulties. He wrote to Silva, the Aboitiz y Compania Incorparada president and

general manager at that time, "The biggest fortune that I have is my word and my

reputation. Money can be lost and can be recovered, but once reputation is lost and

ones word is worthless, one is surely finished."

Taking calculated risks allowed the Aboitiz group to evolve into a

conglomerate rather than to remain as a mere trading company was key through its

survival through World War II and maintain its longevity up to the present. When

Ramon Aboitiz acquired Cebu Ice & Cold Stores Corp., the company invested on

buying new equipment. However, after upgrading the companys equipment,

electric refrigerators at that time are coming into fashion. A market study was

inevitable and Ramon Aboitiz found out that only 20% of his clientele are able to

afford the refrigerators so he pursued investing on Cebu Ice & Cold Stores Corp.

This attitude of taking calculated risks combined with a keen sense of timing is

also an essential business practice among the Aboitizes. Through the years, the

company was able to find opportunities in businesses and selling their goods at the

right time. Ramon Aboitizs timing is near perfect that his pa rticular businesses are


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acquired sell at their peak. He sold goods with potential and sold them successfully

and however bleak the business economy is, his goods still sold and brought profit

to the company.

At the advent of the new century and the pervasiveness of technology, Jon

Ramon carries the same attitudes and leads Aboitiz Equity Ventures to invest on

the internet and e-commerce. "Every company has to have an Internet strategy

because future business is completely intertwined into the Internet and e-

commerce," notes Jon Ramon.

Jon Ramon is aware that closeness within his Aboitiz family is not enough to

succeed in business. "We realized early that its not an easy thing to stay together.

We have to work at it," he explains. It was necessary for them to create a family

council as a venue for regular meetings and discuss issues. Decisions emanating

from their family council are decisions voted by the majority.

After a decision is made, everybody abides by it, he says. Even family

members are not exempted from company rules. "Rules must be equally applied to

all," he adds. At present, 17 family members are working within the company.

Many people think were all-family, but were only 17 working family members, Jon

Ramon says.

Aboitizs family business has been passed on for four generations and they

have maintained a smooth transition from one generation to the next. Jon Ramons

father, Eduardo, made a ruling that family members employed in the company who


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are over 60 years of age must step down from position but will still serve as elderly

advisers to the younger generations.

Aboitiz family members do not become part of the Aboitiz & Co. merely

because of genealogy. They have to prove their worth. Starting from childhood, the

Aboitiz children should learn about the different aspects of their businesses. Taking

school breaks as an avenue to work for the company and learn the Aboitiz way of

doing business.

It is also important to the Aboitizes to maintain close ties with the Chinese

community and Aboitiz scions studied Mandarin in Beijing and Taipei to ensure this

relationship continues. Even Jon Ramon was branded useless by his grandfather

for not being able to speak in Chinese.

Business & Family Values

A strong sense of business acumen lived through the legacy of the Aboitizes.

Ramon Aboitizs refusal to declare bankruptcy of Aboitiz y Compania Incorporada in

the 1920s proved that business astuteness and esteem could overcome such

difficulties. He wrote to Silva, the Aboitiz y Compania Incorparada president and

general manager at that time, "The biggest fortune that I have is my word and my

reputation. Money can be lost and can be recovered, but once reputation is lost and

ones word is worthless, one is surely finished."

Taking calculated risks allowed the Aboitiz group to evolve into a

conglomerate rather than to remain as a mere trading company was key through its


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survival through World War II and maintain its longevity up to the present. When

Ramon Aboitiz acquired Cebu Ice & Cold Stores Corp., the company invested on

buying new equipment. However, after upgrading the companys equipment,

electric refrigerators at that time are coming into fashion. A market study was

inevitable and Ramon Aboitiz found out that only 20% of his clientele are able to

afford the refrigerators so he pursued investing on Cebu Ice & Cold Stores Corp.

This attitude of taking calculated risks combined with a keen sense of timing is

also an essential business practice among the Aboitizes. Through the years, the

company was able to find opportunities in businesses and selling their goods at the

right time. Ramon Aboitizs timing is near perfect that his particular businesses are

acquired sell at their peak. He sold goods with potential and sold them successfully

and however bleak the business economy is, his goods still sold and brought profit

to the company.

At the advent of the new century and the pervasiveness of technology, Jon

Ramon carries the same attitudes and leads Aboitiz Equity Ventures to invest on

the internet and e-commerce. "Every company has to have an Internet strategy

because future business is completely intertwined into the Internet and e-

commerce," notes Jon Ramon.

Jon Ramon is aware that closeness within his Aboitiz family is not enough to

succeed in business. "We realized early that its not an easy thing to stay together.

We have to work at it," he explains. It was necessary for them to create a family


46/59


46

council as a venue for regular meetings and discuss issues. Decisions emanating

from their family council are decisions voted by the majority.

After a decision is made, everybody abides by it, he says. Even family

members are not exempted from company rules. "Rules must be equally applied to

all," he adds. At present, 17 family members are working within the company.

Many people think were all-family, but were only 17 working family members, Jon

Ramon says.

Aboitizs family business has been passed on for four generations and they

have maintained a smooth transition from one generation to the next. Jon Ramons

father, Eduardo, made a ruling that family members employed in the company who

are over 60 years of age must step down from position but will still serve as elderly

advisers to the younger generations.

Aboitiz family members do not become part of the Aboitiz & Co. merely

because of genealogy. They have to prove their worth. Starting from childhood, the

Aboitiz children should learn about the different aspects of their businesses. Taking

school breaks as an avenue to work for the company and learn the Aboitiz way of

doing business.

It is also important to the Aboitizes to maintain close ties with the Chinese

community and Aboitiz scions studied Mandarin in Beijing and Taipei to ensure this

relationship continues. Even Jon Ramon was branded useless by his grandfather

for not being able to speak in Chinese.


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Vision and Mission:

AEV is the publicly listed investment vehicle of the Aboitiz Group (or the Group).

The Companys Mission and Vision are as follows:

Investments focuses on businesses that provide basic goods and services to meet

the demands of a growing economy. We will develop and rely on our core

competencies, financial strength, and reputation to achieve our goals. We are

committed to continuously maximize shareholder value and seek to become the

premier investment company in the Philippines.

Our corporate journey is not complete without telling you the story of our roots,

our past, and the core values that we have inherited and aim to preserve. It is a

past that is inextricably linked to a gentleman's tale of "Palabra de Honor" or "Word

of Honor".

Our corporate journey began in the 1920s with the founding of Aboitiz & Co. It

was during this period in history when the Aboitiz families consolidated and

expanded their existing businesses into a corporate entity. Whilst full of hope and

expectations, that period of corporate inception coincided with the deflation of World

War I's economic exuberance. Prices of abaca and other agricultural commodities

dropped dramatically. But, during this period of great difficulties was forged a deep

commitment to corporate governance.


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Aboitiz & Co. was on the brink of bankruptcy with big losses and a large debt.

However, the founder, Don Ramon Aboitiz, his brothers, cousins and employees

resisted calls from well meaning friends to walk away from the debts. Instead,

guided by the principles of "Palabra de honor", Don Ramon, as he is fondly

remembered, borrowed money from banks and friends for the purpose of reviving

the business with a commitment to pay back the debts.

In a letter to his sibling, he wrote: "The biggest fortune I have is my word and

reputation. Money can be lost and can be recovered but once your name and

reputation is lost, one's word is worthless and one is truly finished". Without that

determination to survive business hardships, with hard work and a commitment to

honor their word and reputation, the Aboitiz Group would not be around today.

One of the greatest lessons thus learned from that singular moment in our

corporate past has been woven into AEV's business fabric: That Honor, Reputation,

Trust and Integrity, are of paramount importance in running both our businesses

and in managing our personal lives. The practice of governance and ethics in our

business and our expanding Aboitiz family was crucial in the past and still remains

so for the challenges our companies will inevitably face in the future.

Honor, Reputation, Trust and Integrity


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The Legacy of Core Values

Aboitiz, hold Trust very dearly. They realize the importance of Trust from our

customers and that they value our products and services; that they are not cheated,

nor are they short changed in any way. We value Trust from our management and

employees, that they are respected and treated fairly and appreciated in their

contributions to the growth of the Company. We acknowledge the importance of

Trust that is reposed in us by our shareholders and investors, that their investments

are being handled with integrity, for their benefit, and not for those who run the

institution. Lastly, we value Trust from the community at large, that we are an asset

to the community by being a responsible member that shares and adds value to all.

We believe that Reputation is the Company's most important asset. It is the

sum of values that our stakeholders attribute to us, based on their perception and

interpretation of the image the Company communicates over time. We believe that

corporate reputation has to be earned; and once earned protected and managed,

and integrated into the Company's business strategy. Trust, Transparency,

Expertise, Commitment and Empathy are four factors that uphold our Reputation.

Even at a young corporate age, Trust, Reputation, Governance and Corporate

Social Responsibility have since been important to the Aboitiz organization. Aboitiz

is what it is today because the family, shareholders, our professional team leaders

and team members in our various organizations and business units (BUs) have


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always upheld strong values that we all believe in and practice, such as Honor,

Trust, Loyalty, Fairness and helping those who are less fortunate. From these

strong core values, we have also adopted the complimentary values of adherence

to quality, innovation, and service excellence.

A culture of Hard work, Sacrifice, Trustworthiness, Constant Improvement,

Customer focus, Quality and Social Commitment - this set of characteristics makes

us different and unique. This is what our Reputation is all about since the times

when Don Ramon Aboitiz laid the foundational legacy of core values and

characteristics for family and non-family team members to hold on to.

Innovation & Growth.

The company is committed to deliver bestin

class products and services to all

clients, developing deep client insight, selecting the right people and employing the

most innovative yet appropriate technology. The focus on quality and the customer

is the root and result of our passion for better ways.

Looking for APeople.

Aboitiz are strongly motivated individuals who like to get things done and who live

out our culture to deliver the brand promise every time, anytime. A people, the most


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qualified and driven to excel in everything with the company. Bold and Dynamic,

They have good training ground and developing individuals to able to work

cohesively as a unit and yet drive these same individuals to lead. Service oriented

company that instills service to meet client needs. Apeople take responsible action

and display personal discipline, integrity and pride in being part of a conglomerate

with a trusted name in business.

In pursuit of a more focused strategy, the company agreed to share a common

set of core values that represent us as a Group. The collective output of all the

different values we have espoused across the Group throughout the years, fused

together to become the Aboitiz Group Core Values, recognized and embrace by all

as their own.

Issues and Concern:

Lower selling prices of electricity and revaluation of dollar liabilities dampened

Aboitiz Equity Ventures Inc.s profit results in the second quarter.

In a regulatory filing, AEV said its consolidated net income declined 15 percent to

P5.1 billion in the April to June period compared with a year ago.


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For the three-month period, the revaluation of consolidated dollar-denominated

liabilities and placements resulted to a non-recurring loss of P1.1 billion versus last

years non-recurring gain of P294 million, the Aboitiz holding firm said.

However, core income, which excludes non-recurring items, rose six percent to

P6.2 billion in the second quarter.

The power business accounted for 74 percent of total earnings, followed by

banking, food and property at 19 percent, six percent and one percent, respectively.

Even with the drop in second quarter earnings AEV managed to post P11.9 billion

in consolidated net income in the first half, up one percent from P11.8 billion a year

ago.

First semester core net income grew 3.5 percent to P11.7 billion. The core earnings

stripped off the non-recurring gain of P217 million from the revaluation of dollar-

denominated liabilities and placements and P1.27-billion earnings from the sale of

City Savings Bank Inc. to AEV subsidiary Union Bank of the Philippines in January.

Our first semester performance figures are within our expectations. As a

conglomerate, our earnings are diversified, which gives it more stability, said AEV

president and CEO Erramon I. Aboitiz.

In terms of specific units, Aboitiz Power Corp.s income contribution sank 22

percent to P7.3 billion from P9.4 billion in the first half last year.


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When adjusted for non-recurring items, the power strategic business unit recorded

a six-percent year-on-year decrease in its earnings share to P8.4 billion from P8.9

billion, AEV said.

This as average price for its power output dropped 11 percent in the first half due to

weaker selling price in the Wholesale Electricity Spot Market and in bilateral

contracts.

AboitizPowers net generation rose five percent to 5,360 gigawatt-hours (gwh) in

the first half from 5,096 gwh a year ago due to the increase in demand brought

about by the hotter weather during the summer months, AEV said.

The power distribution groupsearnings contribution jumped 15 percent to P1.6

billion from P1.4 billion as total attributable electricity sales increased two percent to

1,997 gwh from 1,949 gwh, AEV said.

The banking and food units, for their part, posted higher earnings in the first six

months of the year.

The drop in earnings of the power business was made up by the stellar

performances of the banking and food businesses, Aboitiz said.

The banking strategic business units income contribution surged 42 percent to

P2.8 billion from P2 billion last year, driven by increases in both net interest income

and other income, AEV said.


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Net interest income climbed 11 percent to P4.1 billion primarily due to the

expansion in the average level of earning assets.

UnionBanks resources climbed 22 percent to P340.8 billion as of end-June on the

by back of the 37-percent growth in total deposits to P259.5 billion.

Pilmico Foods Corp. enjoyed a 22-percent uptick in its first semester income

contribution to P630.7 million from P522.2 million.

The movement was primarily due to the strong performance of the farms division,

which registered a net income of P114.6 million versus last years net loss of close

to P7 million as a result of the improved average selling price of market hogs for the

period in review, AEV said.

But the flour divisions income contribution eased six percent to P229.9 million as a

result of softer prices. The feeds divisions earnings inched up one percent to

P285.9 million, weighed down by higher input costs.

For the real estate business, Aboitiz Land Inc. posted a consolidated net income

contribution of P111.1 million during the first half of 2013 as revenues hit P612.5

million.

Our investment in AboitizLand has already begun to contribute to our earnings and

will further diversify our earnings base, Aboitiz said. In November, AEV folded

AboitizLand into the group.


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Moving forward, the company is gearing up for further expansion, particularly in the

infrastructure sector.

We remain excited about the opportunities that the Public-Private-Partnership

(PPP) projects of the government will bring to us, Aboitiz said.

Our cash flows and balance sheet continue to be strong, which will give us the

capability of funding our expansion plans, he added.

Shares in the Philippines' Aboitiz Equity Ventures (AEV) jumped as much as 5.6%

to a record high on Tuesday, with investors expecting it to benefit as power

shortages push up electricity prices.

AEV, a large shareholder of energy developer Aboitiz Power, was the most actively

traded stock by mid-morning as it rose to a peak of P14.25.

At 0250 GMT, the stock was at P13.75, up 1.9% and outperforming a 0.4% fall in

the broader market and other stocks in the sector.

AEV, which has risen 52.8% so far in 2010 in a market that is up just 0.4%,

accounted for 26% of market turnover by the mid-session on Tuesday.


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"It stands to be a major beneficiary of the spike in demand for power and with the

recent surge in the wholesale retail prices of energy," said Jojo Gonzales, research

head at Philippine Equity Partners.

"Its energy rivals either do not have as much merchant capacity or have all of their

output contracted out already. Investors see that the Aboitiz group could benefit

from this the most."

Dry weather due to the El Nino weather pattern has hit hydro-electricity production

in the Southeast Asian nation, leading to power outages even in the capital Manila.

Manila Electric Co. (Meralco), the Philippines' largest power distributor, last week

warned of a significant hike in charges for March due to higher costs for the power

supplied by generation companies.

Shares in Energy Development Corp., which contracts the bulk of its power to

Meralco, were steady on Tuesday. First Gen Corp., the country's biggest privately

owned power producer, was down 2.4% at mid-trade.

Last week, the government declared a state of calamity in the southern island of

Mindanao, where there have been blackouts of up to eight hours per day.

Recommendation:

The Aboitiz Family Governance


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Much is said about family owned companies or companies with controlling

shareholders - that these companies may lack the commitment to corporate

governance principles, or the discipline to work towards a long term horizon. This is

certainly not the case with the Company and the Aboitiz Group. Our track record in

the country clearly shows this.

After more than 100 years of doing business, the Aboitiz Group has grown

from a closely held family enterprise of less than 10 employees to a professionally

run business group focused in seven industries with about a 30,000 strong

workforce. This includes thirteen 4th generation Aboitiz family members and about

eight 5th generation family members working for the Aboitiz group in a professional

capacity. The unity and harmony of the Aboitiz family has been an important factor

to the Aboitiz Group's success and continuity. Open Communication, Trust and

good Family Governance are the cornerstones of the relationships of the Aboitiz

Family. The Aboitiz family has its own Family Constitution to guide family members

in their actions and to set rules family members must follow. This Family

Constitution, together with the legacy core values and philosophies, are especially

relevant to the handling of their corporate interests vis a vis the stakeholders of the

Company. In addition, the Aboitiz family also has a Family Council that is separate

from the business corporation and is intended to promote family unity and

involvement in different activities whether social or otherwise. Staying together and

building a legacy for the Aboitiz name and reputation is important.


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Aboitiz & Co. Inc. owns about 49.54% of Aboitiz Equity Ventures, Inc. (AEV)

as of March 31, 2013. AEV in turn currently owns about 76.83% of AboitizPower.

As of fiscal year 2012, AboitizPower accounted for 78% of the total net earnings

contributions of AEV's business segments.

Total Quality Management

In 1992, AEV launched its internal cultural evolution through the adoption of

the Total Quality Management (TQM) movement within the organization. To keep

up with the fast changing times, the Aboitiz Group needed to experience a re-birth,

a change in mindset to make the big transitional step to professionalize the

organization. Believing that only organizations that value and practice the quality

process, professionalism and good governance would grow and survive in the long

run, Management embraced TQM as the key ingredient and driving force behind its

business strategy. At that time, globalization and competition in the market place

required companies to step up and adopt a culture of constant improvement,

Documents

Aboitiz Family Management Final Edit