It is an understatement to say that the year 2009 was one of the toughest in recent times. As the country continued to plod through a global financial crisis, higher inflation rates, unstable world oil prices, a couple of super typhoons and extreme weather conditions further battered an already weakened economy.

And so it was in 2009 that the Philippine economy grew by barely a percent in Gross Domestic Product (GDP), the country’s slowest growth rate in over a decade, much lower than the 4.6% GDP growth the previous year. On a positive note, the Philippines weathered the global recession much better than its neighbors in the region, owing to its lower dependence on exports, a thriving business process outsourcing (BPO) industry, and stable domestic consumption fueled by remittances from millions of overseas Filipino workers.

Despite the challenges brought about by the previous year, your Company, Alliance Global Group, Inc. (AGI), came out stronger and better than ever—outdoing its already fine performance in the previous year. Our three major business segments—real estate through Megaworld Corporation (Megaworld); food and beverage through Emperador Distillers, Inc. (EDI); and quick-service restaurants through Golden Arches Development Corporation (GADC), the master franchise holder of McDonald’s in the Philippines—all did their share in spurring AGI’s impressive growth for the year by turning in strong sales performances in their respective areas.

Thus, in 2009, AGI’s total revenues grew by 7.6% to P38.8 billion from P36.1 billion in 2008. The increase in revenues was primarily due to the 7.1% growth in sales of consumer goods, a 35.9% growth in the rendering of services, and a 69.7% increase in realized gross profit on the previous year’s real estate sales. The real estate segment contributed 46% to total revenues, QSR contributed 25%, and food and beverage segment contributed another 16%.

AGI ended 2009 with a consolidated net income of P6.8 billion, up 11.5% from the P6.1 billion net income in the previous year. Net income after non-controlling interest went up 22.7% from P3.9 billion in 2008 to P4.8 billion at end-2009.

Continuing its creditable performance in 2009, your Company ended the first half of 2010 with total revenues of P21.3 billion, 22% higher than the P17.4 billion registered during the same six-month period one year ago. Consolidated net income, in turn, amounted to P4.8 billion or an increase of 36% from the previous year’s P3.6 billion. Net income attributable to shareholders rose to P3.7 billion, 43% higher than the P2.6 billion posted in the first half of 2009.

Indeed, 2009 and the first half of 2010 have been truly productive for AGI. The fact that your Company thrived during these challenging times is testament to the effective and efficient business strategy that our management has been implementing through the years. Specifically, our initial investment in the development of integrated tourism resorts through Travellers International Hotel Group, Inc. (Travellers International) has served us well. Our foray into tourism and gaming allowed your Company to expand its horizons and tap new areas of business, which we envision will help us grow by adding strength and better stability to an already formidable company.

When we entered into a joint venture in 2008 with Genting Hong Kong Limited to build the country’s first integrated tourism estate in Newport City called Resorts World Manila, we knew that this investment would not only stimulate tourism in the country but would also spur AGI’s continued growth in the years to come.

Apart from Resorts World Manila, Travellers International will also develop a larger integrated tourism estate called Resorts World Bayshore City, envisioned as a themed development with around 2,500 hotel rooms and several leisure, retail, and entertainment facilities. We are also excited by the prospects that this project will offer. Not only will it create more than 100,000 direct and indirect jobs for Filipinos, but it will also further enhance the country’s tourism industry and open doors for more business opportunities for your Company.

Our three major business units, in turn, have been holding their own in their respective areas. Megaworld continues to be the leading middle-income residential developer and BPO office developer and landlord in the country and has been continually creating integrated mega-communities following the live-work-play-learn development concept. EDI, for its part, has been enjoying brisk sales on the crest of the growing demand for its new product called The Bar. GADC, in turn, has been continuing its expansion program by opening new McDonald’s outlets and re-imaging a few restaurants.

Considering our achievements in 2009 and the first half of 2010, we are proud to say that all our business strategies have been working well. While we expect the markets to be even more competitive in the years to come, the strength of our brands and the prudence we exercise in marketing and financial decision-making will help us create long-term value for the benefit of our customers and shareholders.

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

AGI was incorporated in the Philippines on October 12, 1993 and began operations in 1994 as a glass container manufacturer after it acquired a glass manufacturing plant in Canlubang, Laguna. After its listing on the PSE in 1999, the Company obtained approval from the Philippine SEC to broaden its primary business and become a holding company. That same year, the Company began acquiring a diverse group of businesses, primarily in the real estate and food and beverage industries, as set out below:

• In August 2000, the Company's wholly-owned subsidiary, AGB, acquired McKester Pik-Nik International Limited and took over the international trade and distribution business for several branded consumer products.
• In February and October 2001, the Company acquired two Philippine-based real estate companies, Tradewind Estates and First Centro, Inc., respectively.
• In June 2003, the Company bid for and was awarded approximately 25 hectares of the land in Fort Bonifacio, Taguig, Metro Manila, now known as McKinley Hill, that were owned by the Bases Conversion and Development Authority ("BCDA"), a Government agency organized to arrange for the disposal of Government-owned land occupied by military bases. The Company subsequently entered into a joint development agreement with Megaworld in July 2003 to develop this property.
• In March 2005, AGI entered the quick service restaurants industry through the acquisition of 49% of the common shares in GADC, a company owned and controlled by Mr. George Yang, the then-Chairman and President of AGI, from McDonald's Restaurant Operations, Inc. ("MRO").
• In February 2007, AGI acquired EDI, a company that had previously acquired the brandy manufacturing assets and related brands of Consolidated Distillers, which is owned and controlled by the Tan Family.
• In February 2007, AGI acquired an additional 26% of the shares in Megaworld, a company founded by Mr. Andrew Tan in 1989, in which it already owned 21% of the shares through its wholly-owned subsidiary New Town Land Partners, Inc. Megaworld was listed on the PSE on June 15, 1994.
• In February 2007, the Company was reorganized to consolidate various businesses controlled by Mr. Andrew Tan, who had been appointed Chairman and Chief Executive Officer of the Company in September 2006.

We are priming ourselves for international competitiveness in the new century by consistently delivering products and services that meet the quality standards of markets both here and abroad. Through continuing research and innovation, we will enhance the company's ability to gain customer satisfaction and goodwill and build on our market franchise.

As a world-class Filipino conglomerate, we will be an active partner in national economic development through the pursuit of excellence in our core businesses and investment in industries that offer more room for profitability and growth.

As a matter of policy, we will always adapt to the dynamics of the market. Through export development and competitive pricing, we will enhance our competitiveness in an ever-expanding marketplace.

We will constantly strive to enhance shareholder value by making our products and services desirable, accessible and affordable to the target consumers in the Philippines and abroad. Through a continuing reward program, out stockholders will be entitled to an immediate share in the company's gains in the form of stock or cash dividends.