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Message from the Chairman

The year 2017 was marked by trailblazing achievements, unprecedented in the history of Alliance Global Group, Inc (AGI). Our subsidiaries continued to record new performance milestones, surpassing everyone’s expectations.

Overall, we have made further inroads to become a uniquely diversified global conglomerate, a position we have deliberately carved out for ourselves less than a decade ago when we decided to pursue an aggressive expansion program. AGI ended 2017 with a net income of P21.8 billion, reflecting a compounded annual growth rate of 16% for the past 10 years as consolidated revenues reached P141.6 billion. Attributable profit stood at P14.9 billion, also growing at an annual clip of 16% for the same period.

Our property arm, Megaworld Corporation, posted another stellar performance as net income reached P13.2 billion on revenues of P50.1 billion. It attained its target of launching 20 real estate projects during the year and then exceeded expectations with reservation sales of P105 billion, a first in its 28-year history. Megaworld now has 667 residential towers, 57 office buildings and 15 lifestyle malls all over the Philippines, and still has over 4,400 hectares in 30 cities for future development.

Its rental income amounted to P11.8 billion, well on its way to achieving its target of P20 billion in 2020. As of end-2017, Megaworld’s inventory of office and retail spaces totals 1.3 million square meters.

Its world-class and high-tech office buildings are home to a number of multinationals belonging to the Fortune 500 companies. Megaworld’s distinctive lifestyle malls offer a range of unique features and experiences, having established themselves as major retail, dining and entertainment destinations.

AGI continues to gain headway in the tourism industry as our hotel operations raked in P4.2 billion in revenues. The Group currently has a total capacity of 3,200 room keys spread over a diversified portfolio of renowned global hotel brands under Travellers International Hotel Group, Inc. (Travellers) and our own prestigious hotel brands under Megaworld. Our target is to bring this number to 12,000 keys within the next three to five years.

In the near-term, the Group is set to expand its international hotel brands with the addition of the Hilton, Sheraton, Okura and Ritz-Carlton to complement our existing Marriott and Holiday Inn hotels. Our own hotel brands also got a boost with the launch in 2017 of Savoy Hotel in Boracay, allowing us to expand our strategic foothold in one of the country’s prime tourist destinations. Savoy is a welcome addition to our existing hotel brands Richmonde and Belmont.

Our spirits business through Emperador Inc. registered total revenues of P42.7 billion in 2017 as it continued its brandy dominance in the local and international markets, while also expanding its presence in the global whisky segment through Scotland-based Whyte and Mackay (WMG).

WMG has been breaking new records in sales, making its mark as a significant growth driver of Group performance. This was led by its single malt whisky brands, The Dalmore and Jura, which have been enjoying brisk sales in Europe and Asia, mainly in China. In 2017, WMG launched a new blended malt brand, Shackleton, which gained strong market response. It is scheduled for broader distribution in 2018.

Emperador has also strengthened its portfolio of world-renowned brandies through Bodegas Fundador, whose premium brands like FundadorSupremo 18YO won the 2017 “Brandy of the Year” award. To further grow its dominance in the global brandy category, Emperador also acquired the Domecq brandies and wines during the year.

In the Philippines, the “Tama KaDyan” campaign was launched to help improve sales and strengthen the position of our flagship Emperador Light as brand of choice for Filipinos. Our leisure and entertainment business under Travellers saw Resorts World Manila (RWM) continue to set the benchmark for gaming thrills and excitement. In 2017, Travellers, a joint venture between AGI and Genting Hong Kong, recorded P21.1 billion in revenues.

In the coming months, Travellers is set to unveil the Grand Wing, which we believe will raise the bar in the industry.Once fully operational, the 14,000-square meter premium gaming facility under Phase 3 Expansion Program should help regain Travellers’ leading position in the country’s fast-growing gaming sector.

Our quick service restaurant business, Golden Arches Development Corporation (GADC), marked another sterling year as net income reached P1.7 billion on revenues of P25.5 billion. This was attributed to the healthy 5.8% growth in systemwide same-store sales. Also, in 2017, GADC opened 52 McDonald’s restaurants all over the country, bringing its total store count to 566 and making inroads in new territories such as Antique, Sorsogon, Masbate and Agusan del Sur. McDonald’s is set to bring its number of restaurants in the Philippines to 1,000 within the next few years, riding high on its popular brand and growing patronage.

AGI’s unique and diversified business has now come to a whole new level, with its foray into transport infrastructure development through our new wholly-owned subsidiary, Infracorp Development, Inc. (Infracorp). Its first undertaking is a 2-kilometer Skytrain monorail project that will link the MRT Guadalupe Station to our township in Uptown Bonifacio, thereby improving access to and in Fort Bonifacio. The project is expected to be operational by 2021.

Infracorp, through AGI, is also a party to the mega consortium that will rehabilitate the Ninoy Aquino International Airport (NAIA). The project is expected to bring the NAIA annual capacity to 47 million passengers by 2020 and then raise this further to 65 million by 2022.

Through the years, AGI has banked on the unwavering commitment of all our stakeholders to sustain corporate growth while contributing significantly to the country’s economy. I once again rely on this dedication to galvanize our various subsidiaries in being more innovative in developing and implementing strategic initiatives in the pursuit of our business objectives for 2018 and beyond.

Andrew L. Tan
Chairman and Chief Executive Officer
Alliance Global Group, Inc. and Megaworld Corporation

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