Aboitiz Equity Ventures, Inc. (AEV) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to our full year analyst's briefing. Today, we're going to present to you the financial and operating results of Aboitiz Equity Ventures and its strategic business units. This include AboitizPower and UnionBank of the Philippines. For a review of business units, we are going to present outlook and then power and then financial services and then food, infrastructure, land, AEV financials, and after that, a Q&A. For the Q&A, if you have a question and even during the presentations, please send us a chat message. Please send us your name, your question and the person that you're addressing your question to. When your turn comes, after we put you on queue, we will notify you during the live proceedings when you can ask your questions so that you can unmute your microphone. I'd like to introduce to you our presenters for this afternoon. We have Mr. Sabin Aboitiz, President and CEO of the Aboitiz Group. We have Mr. Manny Rubio, President and CEO of AboitizPower; Toto Hilado, Chief Finance Officer of UnionBank; Tristan Aboitiz, President and CEO of Pilmico Philippines; Cosette Canilao, President and CEO of Aboitiz InfraCapital; Dave Rafael, President and CEO of AboitizLand; and finally, to discuss AEV financials, we have Mr. [ Dmi ] Lozano, Chief Finance Officer of Aboitiz Equity Ventures. And now I'd like to introduce to you the presenters for today. May we please call on Mr. Sabin Aboitiz to present to us our outlook for the next 10 years.

Good afternoon, everybody. On behalf of the One Aboitiz, we thank you for joining us today as we share our full results for 2019. We were hoping that 2020 would have given us all a bit of a breather, but right at the start, the minute we hit that first week of January, Taal erupted, the African swine fever spread, and of course, the famous or infamous COVID-19 or coronavirus, which is still unfolding today. So the coronavirus, are we dealing with the black swan? Is it as severe as the 2008 global crisis or the 9/11 or Brexit or the Fukushima accident; and if we go further back in time, the sinking of the Titanic? Well, let's look at the 2008 global financial crisis. It wiped out $10 trillion of equity. Lehman Brothers Holdings Inc. announced the largest bankruptcy in U.S. history. They lost $600 billion and laid off more than 25,000 employees. 9/11, onetime, close to 3,000 victims. It shocked the world. The stock market dropped, losing $1.4 trillion of value in just 1 week. Is it unthinkable? Is it unimaginable a major impact on humanity and a major impact on humanity and the economy? Is this happening to us now? I wish we had a crystal ball, but I guess what we are dealing with is a not so normal crisis. So let's look at some facts: a possible pandemic with vaccine and a cure, not yet found. There are 110,000 reported cases in 104 countries, with close to 4,000 deaths since it was first reported of that case in China last December 2019. So what's the financial impact? Well, we don't know. It's still unquantified. Will a cure be found? Likely, but not sure when. So the coronavirus containment actions that have led to travel ban, lockdowns and disruptions. Italy, for example, is on total lockdown, as we know, which is unprecedented that the whole country is on lockdown. It is undoubtedly causing so much uncertainty in generating fear and panic, some of which is speculative to a certain degree. But this year, in Aboitiz, we are celebrating our 100th founding anniversary. We are extremely pleased with how far we have come so far. We have also been reminded over time in our history that was marked with uncertainty and our fair share of hardships. When Aboitiz was established 100 years ago, the great 1918 influenza pandemic was still wreaking havoc in many parts of the world. The pandemic took the lives of more than 50 million people. It was certainly a challenging time for Aboitiz to come to life. And still, our founders chose to incorporate and tackle the uncertainty ahead. In 1921, a year after its incorporation, the company almost went bankrupt. Abaca prices dropped, and they could not sell the huge inventory and huge at that time was one warehouse. And Don Ramon was determined to get Aboitiz back on its feet despite the advice to just simply file for bankruptcy. He borrowed money from his friends and businessmen with nothing but a promise, his palabra de honor. Long story short, the debt was all paid back. So as we mark our centenary, we are again faced with a potential pandemic brought by a tiny virus. The world is entering uncharted waters once again and the rough seas ahead will test our organization. But as an African proverb goes, smooth seas do not make good sailors. We had our share of hardships and have become good sailors. We've learned many lessons from the past, of which our near bankruptcy in 1921 was probably the greatest one. We are a resilient company with many trials etched in our DNA, so we will come out of here, stronger and smarter. The legacy of palabra de honor and our strong commitment to creating long-term value will guide us in the midst of all these uncertainties. We do have a strong balance sheet that can weather storms as we have done many times in 100 years. Our team is focused on understanding the possible ramifications of coronavirus on our businesses. Offhand, majority of our industries are actually resilient and are not as vulnerable as many other sectors. Our supply chain has prepared contingency plans and made sufficient adjustments to manage major disruptions. We have prepared many scenario plans for our businesses and are providing to work with accessible health care services for all our facilities nationwide. Our utmost concern now is the health and safety of all our team members. So we adopted travel, quarantine and hygiene measures. All our teams members here and abroad are constantly reminded of our measures, and are given regular updates by our COVID-19 technical working group. We are fully confident in our team of highly experienced leaders, supported by 40,000 team members in 11 countries to lead Aboitiz into the next decade. We don't know what lies ahead, but I know this much: Aboitiz team is committed to give its best as we become more and more comfortable with the unknown. Over the next 10 years, we commit to having to investing in capacities to advance business and communities wherever we operate. For 2020, together with our partners, AEV has allotted PHP 73 billion in capital expenditure. This is 37% higher than the PHP 53 billion we used in 2019. And of this amount, PHP 41 billion was earmarked for our power business for the completion of the GNPower Dinginin, as well as other new businesses. In the same manner, our infrastructure arm set aside most of its PHP 16 billion it had budgeted for the construction of its water businesses and its foray into airports and the tower businesses. Meanwhile, our land is expecting to utilize PHP 11 billion mainly for its landbanking efforts. Rounding out the balance are the provisions of the other SBUs. The Food Group has allocated capital expenditure for expansion, while our bank will sustain its investment efforts in its digital and branch transformation endeavors. We have set our ambitions on our 10-year EBITDA target. While I cannot tell you what the target is, here are some building blocks that will help you imagine how we will all get there. We will deliver on our commitment to being the best-in-class in our industries. Learning from the challenges we have been experiencing in the past year, we will continue to adhere to global standards of operational excellence. We see our businesses very resilient and not as vulnerable during these times. We provide stable and affordable power to support economic activity. We provide access to capital to entrepreneurs. We participate in government infrastructure projects to help generate jobs and spur economic activity. We provide feeds to farmers and fishermen, which they need to grow their livestock. Our SBU CEOs will discuss these in more details in the next hour. So there is no question of the coronavirus impact on the economy. The Philippine stock market has declined about 18% since the start of the year. So we have to buckle up for the possible economic downturn but be ready and resilient for the upturn. So let's focus on what we can control, such as preserved cash, eliminate waste, spend CapEx wisely, focus on customer experience and keep raising the bar. But it's during these tough times when the government and the private sector must work closer together. We really work together -- we really need to work closer to effectively mitigate the crisis. We fully support the government's actions such as waiving of landing fees to help local airlines and extending financial support to the local tourism industries, 2 sectors that are badly hit by this coronavirus. The government should also probably consider the following: source 100% of our raw materials such as cement and steel for its infrastructure projects from Philippine manufacturers, hire more locals for the projects in the provinces, speedy processing of all types of permits in various projects so they can start-up quicker, protect our manufacturers from cheap, poor quality imports. One sure way to keep the economy stimulated is the immediate implementation of the government's infrastructure program, especially the projects of national significance. It generates jobs, it triggers economic activity, and there is absolutely no question of its long-term benefits. Finance Secretary, Carlos Dominguez declared -- his declaration that the government's Build, Build, Build program will go full blast is really the right thing to do. We in Aboitiz have always been ready to invest time and money to build the infrastructure we Filipinos truly deserve. Another area of cooperation, the DOH, can work with the Philippine Disaster Relief Foundation or the PDRF and the private companies involved to strengthen our coronavirus monitoring and information campaign. So we will work as One Aboitiz to optimize opportunities across the group. We will have our SBUs work together on joint projects, leveraging on our strengths. For example, townships can be developed jointly by our property development units with inputs from our power, our water, our banking, our cement and our food units. We have to be resilient and show grit as I don't think this will be the last unpredictable test that we will face. One key in achieving our 10-year EBITDA target is to manage our risk and find opportunities in the world's sustainable development goals. We will elevate our sustainability programs by adopting leading ESG practices. AEV is the first Philippine company to enlist with a task force on climate-related financial disclosures or the TCFD. The TCFD provides voluntary and consistent financial disclosures on risks associated with climate change, such as potential impacts of flooding and the carbon tax. In early March, AEV signed up with the UN Global Compact, the fifth listed Philippine company to do so. These 2 partnerships show our commitment to sustainability. We will continue to support our clients and our customers to help them cope with this crisis. With the country, we will continue to build capacity to support sustainable development goals, such as grow our renewable power capacity and ensure affordable and reliable power to support economic growth. We will expand our digital banking infrastructure to support the unbanked and the underserved. We will strengthen our participation in infrastructure projects like bulk water projects to increase access to safe water, airports and common telco towers to improve access and spur economic activity. We will build up our urban and suburban housing projects to provide homes and create livable communities. So what will we all see at the end of the decade? I think a balanced business portfolio. Our share of our beneficial EBITDA portfolio will be about 50% from its current share of about 70%. We anticipate that our other businesses will grow at faster rates to eventually account for the balance. Our overseas activities will double its current beneficial EBITDA share from 5% to about 10%. By then, too, as part of our commitment to the sustainable development goals, we anticipate that about 50% of our energy capacity mix will be generated by renewable technologies in small and large hydro, solar, wind and geothermal power. The balance will be accounted for by a mix of baseload technologies that will be determined by the evolving economics of the global power sector. So we would like to thank all of you for continuing to tell our story. We have a clear picture of how the Aboitiz Group plans to create value for the Philippines in view of all these challenges. Aboitiz survived many challenges and will continue to adapt to change. We will continue to make bold and deliberate steps to grow our One Aboitiz and help build our beloved Philippines by creating opportunities in the communities we serve and operate. Thank you very much.

Thank you, sir. And now to present for power, may we please call on Mr. Manny Rubio.

Good afternoon. We recognized last year, AboitizPower faced a number of operational issues, which had a significant impact on our financial performance. However, despite the technical difficulties, we remain committed to putting safety at the core of our operations. In AboitizPower, we just want to manage a business that doesn't hurt anyone. Since we started operating our facilities, both in generation and distribution, the best safety performance of AboitizPower reached 20 million safe man hours currently, we had 5.6 million safe man hours and have recorded no lost time injury for the last 2 years and 10 months. In addition, no fatality involving any employee of AboitizPower has been recorded since the start of our operations. All our business units have also achieved an occupational safety and health certification following the standards of OSHAS 18001, and we are continuously monitoring all our key performance indicators for safety at corporate levels. Moving forward, we will leverage our strong culture and safety in achieving our plant availability and reliability targets and ultimately, our financial goals. For now, allow me to share AboitizPower's financial performance in 2019. In line with our reports in the past 3 quarters, our beneficial EBITDA declined by 12% year-on-year. This was driven by outages in TV, Pagbilao 3, GNPower Mariveles, Therma South, and in addition, we also needed to purchase replacement power at higher spot market prices for some of our customers, as well as for customers contracted in advance with Therma Visayas prior to it coming online. The remaining negative variance was due to lower revenues from spot market sales caused by lower volumes offered in the spot market. Our fourth quarter performance was lower compared to the previous quarter due to TSI and GMCP outages. Moreover, similar to the previous years, our fourth quarter performance was lower compared to the previous quarter as hydrology normalized to reflect typical fourth quarter inflows. EBITDA margins declined from 31% to 27% largely due to previously mentioned higher cost of purchase power and lower availability of coal facilities. This was partially offset by fresh contributions from Hedcor Bukidnon and 2 units of TVI. The group's core income for the year decreased by 30% as a result of the 12% decline in EBITDA, coupled with the increase in interest expense, depreciation and amortization. Interest expense increased mainly due to the full year take-up of 2018 bond issuance, with the additional issuance in October 2019 [ and ] recognition of interest expenses from Hedcor Bukidnon and Therma Visayas. Depreciation and amortization also increased due to the take-up of HBI and TVI new facilities. The peso appreciated compared to last year. It moved from PHP 52.58 as of end December 2018 to PHP 50.64 as of December 2019. With that, the group recognized and realized foreign exchange gains of about [ PHP 330 million ] from the revaluation of U.S.-denominated debts. There was also a onetime gain of [ PHP 372 million ] related to Aseagas VAT recovery and gain on land appraisal. As a result, AboitizPower's net income for the year was [ PHP 17.3 billion ], 20% lower year-on-year. Investments and advances increased by 77%, mainly due to the acquisition of additional shares in GNPower assets and equity infusions to GNPower Dinginin. Cash and cash equivalents decreased by 19%, primarily due to cash used to fund the previously mentioned acquisition and infusions to GNPD, which will be operational this year with one unit. Total liabilities increased by 19 -- by 9% -- 9% mostly due to the debt related to the GNPower asset acquisition, borrowings and bond issuance of the parent company. As we took up the debt related to acquisition, our net debt-to-equity increased from 1.2x to 1.4x. Capacity sales were slightly higher compared to the same period last year. Our new capacities from TVI and HBI have driven the increase in our net sellable capacity, reducing our buy exposure to the market. Our total revenue and energy sold were slightly lower compared to last year due to capacities on outage and lower hydrology compared to 2018. Our gross margin declined by 13%, mainly due to the previously mentioned higher cost of purchase power and lost margins from outages. This was partially offset by new capacities of TVI and HBI. As you can see from the quarterly performance charts on the right, gross margin in the fourth quarter registered a 20% decline compared to the previous quarter due to the outages of TSI and GMCP as well as lower hydrology. The energy generated in the fourth quarter decreased due to lower availability of our coal facilities. We bought replacement power for TSI at our option to partially offset the impact of the outage. There is available replacement power in Mindanao at rates where we can still make reasonable margins. Our average price decreased from 4.19 per peso per kilowatt hour to PHP 4.14 per kilowatt hour. Breaking down the contracts, bilateral contract selling prices decreased by 2% to PHP 4.37 per kilowatt hour, mainly from lower indices and competitive contestable market. The increase in spot selling prices by 43% to PHP 4.66 per kilowatt hour was due to higher demand, coupled with plant outages across the industry. Our availability and reliability performance was below target. We have since addressed the technical issues and continue to resolve ongoing concerns in TSI. Our geothermal asset has since recovered from the impact of Typhoon Usman. Since our previous briefing, GMCP resumed operations last December 17. However, TSI Unit 2 continued to pose challenges until the year-end, resulting in lower availability factor. As a benchmark, the average availability of our coal plant should be average around 85%. TSI Unit 2 suffered post outages starting July 15 2019, and we have been consistently providing updates since the last quarter. The said unit was synchronized on the grid on January 22, 2020, and was operational until we experienced issues related to the previous outage. We have identified the costs and are currently resolving the issue, and we expect the unit to be synchronized to the grid again by end April. We continue to be covered by business interruption insurance, and at our option, provide replacement power which is available in Mindanao at rates where we can make reasonable margins, as mentioned earlier. Our strategies are hinged on the availability and reliability of our plants. In order for us to deliver, we have implemented a number of operational and organizational improvements as a result of the lessons we have learned from our 2019 experience. We have fortified our bench with technical experts to fill the gaps in our expertise. In the last 5 months, we have hired 20 experts with global experience to achieve world-class operations across all our facilities. We have also revisited our processes and further strengthened governance across all our business units. We are positive that this will help us deliver on our availability and our reliability targets moving forward. On WESM, average 2019 load weighted average price was PHP 4.96 per kilowatt hour higher compared to the same period last year. The prices in the fourth quarter were higher compared to the last quarter due to the planned and forced plant outages. We are expecting lower prices in the first quarter of this year versus last -- versus first quarter due to higher availability of baseload plants, including AboitizPower's. On the water levels, Magat ended 2019 at an elevation of 191 meters above sea level, lower by 2 meters compared to the maximum. Due to below normal water inflows during the first weeks of this year and higher irrigation usage, we expect to end the first quarter below the rule curve. There is forecast probability though of a weak La Niña in the latter part of the year. For our distribution group, beneficial power sales were up by 6%, to 5,851 gigawatt hours compared to last year, which also grew significantly. The growth was driven by the increase in consumption across all segments, up 7% for residential, 4% for commercial and 5% for industrial. As we have reported in the past, we have decommissioned the Bajada power plant in Davao Light. This has resulted to lower gross margins from PHP 1.75 per kilowatt hour to PHP 1.63 per kilowatt hour year-on-year. All our systems sources were below the regulatory cap of 6.25%, except for sale Cotabato Light, which ended above the regulatory cap due to nontechnical losses with minimal impact on the bottom line. We continue to push a balanced mix strategy because we believe that the long-term energy security of the country can be solved by balancing sustainability, accessibility and reliability of power. We are on track to reach a capacitive target of 4,000 megawatts with the entry of GNPower Dinginin and our international acquisitions. Our goal is to grow our capacity to more than 9,000 megawatts by 2029. This will come from opportunities in both baseload and renewables. We aim to capture a significant portion of the opportunities coming from the implementation of the renewable portfolio standards, and we will continue to look for selective builds for baseload capacities. As we continue to put efforts into growing the business in the Philippines, it's also our responsibility to our stakeholders to look at opportunities outside. We have spent years studying the market and evaluating a number of countries. We have identified some countries in Southeast Asia, whose regulatory environments are acceptable to us and aligned with our risk appetite. We expect the international portfolio will be 13% of our total capacity, which will most likely be all Cleanergy, [ our ] brand for renewables. With this, we expect that 65% of new capacity investments will be Cleanergy. This will eventually shift our mix to almost 50/50 by the end of the decade. So allow me to update you on the projects signed up for commercial operations. GNPD is in the final stages of construction, despite numerous challenges, due to the outbreak of COVID-19 and the imposition of the travel ban on China. The timing of the outbreak was inopportune as the travel ban prevented the return of a number of our EPC contractors workers from the Chinese New Year holiday and the arrival of technicians critical for the commissioning of Unit 1. We have shifted workers from Unit 2 to Unit 1 and have augmented it with local contractors. Construction and commissioning works are progressing and currently, there are no cases of COVID-19 at the site. We have enforced strict precautionary measures to mitigate the risk of COVID-19 incidents. All of the returning Chinese workers, about 38 of them, have gone through and have passed the quarantine -- required quarantine period. As GNPD is an energy project of national significance, we are doing everything to move it forward as quickly as possible under very challenging circumstances. We still expect Unit 1 to come in October 2019 as scheduled. The timing of Unit 2 is more dependent upon when the travel bans are lifted, but assuming that occurs by mid-year, we would expect Unit 2 to begin delivering power at the same time to address the needs in Luzon for the summer of 2021. Last August, AboitizPower signed a share purchase agreement for the acquisition of 100% ownership of Mekong Wind, which owns 99.99% direct investment in Dam Nai Wind Power. Dam Nai is a 39.4 megawatt onshore wind power facility in Ninh Thuan province, Southern Vietnam. It is one of the first wind power projects in Vietnam to have been successfully brought online with commercial operations have been commenced in late 2017. This transaction is a milestone for AboitizPower. It sets the tone for expansion in the international market. We announced our intentions to go international some time back and have been prudent in looking for the right opportunity. We wanted to deliver the best value for the company and to our shareholders. The acquisition is subject to customary closing conditions and is expected to be completed within the next few weeks, if not the next few days. Just a quick update on the Naga power plant complex in Cebu. All 6 units have been tested and were synchronized to the grid last January during the conduct of its grid compliance tests. We still had to undergo certain tests with NGCP, but we are confident that we are all going to pass them within the next few weeks. We are in the process of securing certificates of compliance from ERC or a professional authority to operate. We expect the units to begin commercial operations once either a provisional approval or a final certificate of compliance are obtained. The units were able to show a capacity of 42 megawatts for certification. Together with our partners, AboitizPower allotted PHP 41 billion in capital expenditure for 2020, a 17% increase from the PHP 35 billion utilized in 2019. About 80% of the total CapEx for 2020 was allocated for new businesses such as GNPD. Meanwhile, AP approved regular cash dividends in the amount of PHP 1.18 per share to all stockholders of record as of the close of business hours on March 20, 2020, payable on April 3, 2020. That's it for AboitizPower. Thank you. [Foreign Language]

Thank you, sir. And now to report for the banking business, I'd like to call Mr. Toto Hilado.

Good afternoon. UnionBank had a record year in 2019, posting its highest income ever at PHP 14 billion or a 100% increase year-on-year. Our strong earnings performance was driven by strong top line revenues coming from the improvement in our margins in 2019, robust growth of higher-yielding loan segments, namely retail and SME loans, and higher noninterest income which includes fees and trading gains. Our strong earnings performance translated to a higher ROE ratio of 16.3% and a return on assets ratio of 2%. Net interest income grew by 12% year-on-year to PHP 22.3 billion, as earning assets grew by 14% year-on-year, driven by customer loans and securities and better margins. Margins were 76 basis points higher compared to its bottom levels in January of 2019. Improvement of margins were driven by [ repricing ] of our loan assets, the impact of the BSP's rate cut and reserve requirement cuts, as well as the bank's continuous efforts to shift funding to instruments with lower intermediation costs. Going to earning assets, total loans grew by 9% to PHP 310 billion. This was primarily driven by growth of our higher-yielding assets like business line or SME banking loans, which were up 40% year-on-year; credit card receivables, up by 35%; and other consumer loans, including mortgages, up 31% year-on-year. Commercial loans also grew by 16% year-on-year. On the funding side, CASA grew by 9% to PHP 172 billion, increasing our CASA ratio to 40%. Total liabilities grew by 12%. Deposits in total was slightly lower at 1% as we issued long-term bonds to comply with BSP regulations on LCR and NSFR ratios, which basically requires the bank to issue longer tenor liabilities. On noninterest income, it was up 2.6x year-on-year, driven by trading gains, which reached PHP 9.4 billion, higher fees from higher transactions, volume transactions across the banking group and miscellaneous income from our foreign exchange business and gain on sale of assets. As for operating expenses, OpEx growth was higher-than-expected at 22% year-on-year, primarily due to the acquisition of new subsidiaries by City Savings Bank, namely PR Savings Bank and PETNET. However, if we net out the onetime effect of these acquisitions, core OpEx grew by only 14%. On our capital ratios, total CAR slightly increased from 15.2% to 15.3%, while our CET1 ratio increased from 12.7% to 13.2%. In summary, 2019 was a record year for the bank, posting its highest income ever at PHP 14 billion. We had robust growth in our lending business, particularly retail and SME segments. We had substantial margin improvement in 2019, and lastly, we had strong growth in our noninterest income business, including fees, trading gains and foreign exchange income. Let me end my presentation with our outlook. We all know that the current situation is more challenging than usual to predict the trajectory of our business. However, we are confident that the BSP and the government will be able to implement measures that would reduce the negative impact of the coronavirus scare. For one, the BSP has room to cut its policy rates currently at 3.75%. If we recall, in 2018, the BSP increased policy rates by 1.75%. To date, they have only cut by 100 basis points, so we think that they have room to cut by another 75 basis points to about 3%. On top of that, they have leeway in cutting the reserve requirements, which is currently at 14%. The BSP Governor has committed that before his term ends, the reserve requirement will be at single digit. Currently at 14% each, 1% reduction in reserve requirement will translate to about PHP 100 billion in extra liquidity. On top of this, we are confident that the fiscal stimulus of the government through the Build, Build, Build program will be enough to counter the slowdown -- the projected slowdown in the economy. Last December, we saw government deficit reaching PHP 251 billion and bringing the deficit to GDP ratio to PHP 3.6 billion. And we saw the cash balances of the Bureau of Treasury go down to as low as about PHP 200 billion from about PHP 600 billion, which means that the cash has been deployed with the operating agencies. And so we think that the first semester of 2020, we will see strong spending from the government side. Given this, we are confident that our plan to have strong growth in retail and SME loans will materialize on top of our solid growth in CSB through our salary loans and motorcycle loans. And lastly, we also see strong customer acquisition this year through our digital channels. Thank you.

Thank you, sir. And now to present for Power, may we please call on Mr. Tristan Aboitiz -- Food, I'm sorry.

Hi, good afternoon, everyone. I am here to talk to the full year 2019 results of the Pilmico and Gold Coin operations, which I will be collectively referring to as the Food Group throughout this presentation. Revenue for the year jumped 16% versus 2018 on the back of positive contributions from all divisions, except our farms. EBITDA for the Food Group increased 29% to PHP 5.4 billion, following the improvement in revenue. EBITDA margin improved 100 basis points due to the higher-margin contribution of Gold Coin. This was primarily driven by an increase in average selling prices across the markets that we serve. Overall, Food Group operating NIAT improved 12% year-on-year to almost PHP 2.1 billion due to the recognition of the full year contributions of Gold Coin in 2019. I would like to note that we only recognize 9 months worth of Gold Coin financials in 2018. Without Gold Coin, Food Group revenue would have only grown by 1%, EBITDA growth would have been flat and NIAT would have dropped by 17% year-on-year. Turning specifically to revenue, total Food Group revenue grew 16% year-on-year to PHP 75 billion, primarily due to an increase of PHP 10 billion in contributions by the Gold Coin operations. Flour revenue rose 9% year-on-year to PHP 8.4 billion due to a 7% growth in volume, coupled with a 1% hike in average selling prices. Pilmico feed operations in the Philippines and Vietnam together were up by 2% year-on-year to PHP 21.3 billion due to a 2% hike in selling prices. The growth, however, was tempered by a 1% decline in volumes sold. Meanwhile, revenue contribution from our farms business fell 24% year-on-year as average selling prices and volumes sold plummeted 10% and 15%, respectively, due to the spread of ASF in the northern part of Luzon in 2019. For Gold Coin, a 28% increase in the total volume contribution, coupled with a 6% hike in selling prices, brought revenues up by PHP 10.2 billion or by 32% year-on-year. Comparing the full year of 2019 versus the full year of 2018, revenue figures for Gold Coin would have only been up by PHP 515 million or 1% year-on-year. Without the contribution from the Gold Coin operations, Food Group revenue would still be up by 1% year-on-year. Now turning to EBITDA, Food Group EBITDA jumped 29% to PHP 5 billion year-on-year due to the better performance of all divisions, again, except our farms. Starting with the flour business, EBITDA doubled following the 27% year-on-year increase in gross profit per bag. This was further enhanced by a 37% increase in contribution from our byproduct lines. EBITDA from Pilmico's Philippine and Vietnamese feed operations grew 25% on the back of a 22% and 65% improvement in margin, respectively. This growth is attributable to a rise in selling prices and a subsequent reduction in raw material costs to close out 2019. Our farms division suffered a 95% plunge in EBITDA, following compression in our margins and a drop in sales volume due to the spread of ASF in Northern Luzon in 2019. Lastly, our Gold Coin operations positively impacted the Food Group's total EBITDA with a contribution of PHP 1.2 billion, a 97% growth year-on-year. Comparing full year 2019 versus full year 2018 EBITDA for Gold Coin, we would have seen an increase of PHP 331 million or 16% year-on-year. Without Gold Coin, the Food Group's total EBITDA would have been flat year-on-year. Looking now at NIAT. The Food Group's full year 2019 operating NIAT improved 12% year-on-year due to the positive contributions from all divisions, again, except our farms. Flour NIAT serves 138% following the growth in EBITDA. This was slightly offset by an increase in interest expenses due to higher working capital requirements. For Pilmico's feed operations in the Philippines and Vietnam, NIAT grew 42% year-on-year, following a 25% increase in EBITDA, coupled with a 34% reduction in interest expenses. For our farms division, however, NIAT ended the year with a loss of PHP 281 million, down from a positive contribution of PHP 564 million in 2018. The plunge in the bottom line was driven by our lower EBITDA and a 59% increase in interest expenses due to a higher working capital requirement. Related to this number, due to depressed selling prices at year-end, a revaluation loss of PHP 268 million was reported, which dragged down total Food Group NIAT. Lastly, the full year contributions of our Gold Coin markets showed an increase of 88% year-on-year to the bottom line. Comparing full year 2019 versus full year 2018 results, NIAT for Gold Coin would have increased by PHP 97 million or 9% year-on-year. Without Gold Coin, the Food Group's operating NIAT would have fallen 17% from the year before. Turning now to some company updates, with Sabin assuming his new role as President and CEO of AEV, changes have been made, starting the 1st of January 2020 to the leadership team of the Food Group to ensure continuity and growth of the business. Hubert de Roquefeuil, the current President and CEO of Gold Coin will be taking the lead as the new President and CEO of the entire Food Group. I will be taking the lead for the Philippine operations and reporting directly to Hubert. I will work hand-in-hand with Hubert to ensure we take advantage of synergies across the group as we look toward continued growth in the markets that we operate in. Under Hubert's leadership, we have established that for 2020 and beyond, the key strategic priorities of the Food Group can be summed up in 3 words: balance, optimize and develop. We will work across the group to balance our product portfolios and market exposure to take advantage of market opportunities and spread our risk out in a more thorough manner. We will look to optimize our operations through a keen focus on execution excellence and by ensuring that our systems, processes and people are set up to drive the execution of our strategies. And lastly, we will continue to focus on the development of our team members, products and our businesses as we seek to occupy leadership positions in the industries and markets that we operate in. Turning now to project updates for the Food Group in 2020, we'll start with the completion of a depot constructed in Bangka, Indonesia. It was commissioned this January and will serve as a channel to effectively distribute our feed products to our customers in the Sumatra area of Indonesia. In April, we will see the completion of a floating fish line in Dongguan, Southern China. This will add an incremental capacity of 5 tons per hour to cater to the increasing demand for fish feeds in the region. Meanwhile, in Ha Nam, North Vietnam, a fish feed line with 5 tons per hour worth of capacity will also be completed in April. We are adding capacity to ride on the opportunities brought by the increasing farm gate prices of the different fish species in the region. In May, our third feed mill line in Iligan is expected to be commissioned. It will add an incremental capacity of 20 tons per hour to support the growing demand for livestock feed in the Visayas and Mindanao regions. And meanwhile, for our Farms business, we are expecting to complete the construction of our meat fabrication plant in Tarlac. This has a capacity of 346,000 heads per annum, equivalent to 1.3x our current hog production. This is a big step that we are undertaking to integrate our business forward along the value chain in the Philippines. And lastly, by December, the last grower-finisher farm of the Breeder 2 expansion will be completed. It will have a capacity of 9,460 heads. And for our layers business, we are expecting to finish 6 additional laying houses. These houses will have a total capacity to house 260,000 ready to lay hens, which will increase our egg production by an additional 6 million eggs per month. These are all the updates for the Food Group. Thank you very much.

Thank you, Tristan. To present for Infrastructure, may I please call on Cosette Canilao.

Hi, good afternoon. To start with our first operating business for Lima Water. Lima Water continues to provide end-to-end water services to some of the biggest multinationals based in Lima Technology center. Early last year, the Lima Water team was able to find ways on how to optimize our well operations, and this resulted in a 10% increase in water production. Combined with the implementation of new standards and a focus on preventive maintenance, facility uptime improved from 97% to 99%. On Apo Agua, construction for Apo Agua is in full swing with actual CapEx spend of PHP 3 billion for 2019. Pipe laying from the river to the treatment facilities are in full swing and majority of right-of-way access were already obtained. Foundations and wall structure of the treatment facility are currently ongoing, and once online, the project will supply 300 million liters per day of treated water to the Davao City water District for the benefit of over 1 million Davaoenos. For other active projects, as you may have heard last year, we received net aboard approval for our proposal to expand, operate and maintain Bohol-Panglao International Airport last December, and we are about to go into Swiss challenge phase. We are hopeful that this will commence in a couple of months. And meanwhile, we are gearing up for the takeover of the airport. Similarly, on NAIA, the consortium is also working with the government on finalizing the terms of our proposal before commencing Swiss challenge. In terms of our common towers project, we have signed MOUs with Globe, PLDT-Smart and DITO, and are working with them on-site acquisition and selection. We are also fine-tuning the offers with the objective of commencing the construction of initial batches of towers towards the second half of this year. We are pursuing this project in support of the ICP's common tower vision and to help improve the country's network connectivity. For RCBM, in 2019, we saw modest growth in cement demand as construction infrastructure was offset by the residential and nonresidential segments. Republic Cement, what do you call it, which is a joint venture between AUV and CRH experienced stable market prices as production costs remain under control, following improvement initiatives. One of this is the successful commissioning of kiln debottlenecking projects. New mills are also closer to completion. All in all, the company contributed PHP 604 million in net income to the group. The sector is expected to remain competitive with its new local capacity and continued imports, as well as the government's renewed enthusiasm for infrastructure. That concludes my presentation for infrastructure.

To present for land, may we please call on Mr. Dave Rafael?

Good afternoon. So I'll be presenting the year-end performance of AboitizLand. For 2019, AboitizLand contributed PHP 943 million in net income. This represents an increase of 46% year-on-year, driven primarily by fair valuation gains amounted to PHP 662 million and the absence of it in the previous year. In terms of residential sales, AboitizLand has generated PHP 2.2 billion, a 6% decrease versus the previous year. Despite the slight dip, improved sales operations in the newer projects, such as [ The Villages at Lipa ] and Ajoya Cabanatuan narrowed the gap during the second half of the year. In addition, sales in existing projects such as Seafront Residences and Amoa continue to contribute and demonstrate healthy take-up levels. With this, the company is looking to further increase this momentum in the succeeding year. In terms of revenue, AboitizLand contributed PHP 4.2 billion, up by 5% from the previous year. As construction and sales operations improved, the residential business saw an 18% increase in revenue contribution versus the previous year. The commercial business also continued its sustained performance with a 33% year-on-year increase attributable to the steady performance of our commercial assets in Cebu, maintaining close to full occupancy. And the continued momentum in the outlets at Lipa. On the other hand, the taking up the lion's share in the consolidated revenue, the industrial business unit had a slight decrease in its contribution due to the recognition of fewer hectares compared to 2018. Gross profit and net operating profit have a year-on-year decrease mainly due to the impact of the recent accounting decision on the treatment of interest expense. Gross profit for the year stood at PHP 1.5 billion, representing a 17% decrease versus the previous year while net operating profit came in at PHP 549 million or 43% lower than the previous year. Some business highlights for 2019. In December, we opened Lima Exchange, the latest commercial addition to our New Industry City in Lima. It houses a Robinsons supermarket, a public transport terminal and more establishments that cater to the community's basic needs. Our communities and elegantly designed homes caught the attention of award-giving bodies. We were a judged winner for the best house in value -- in VizMin for Amoa and the Best Developer in Luzon as well as nominees for Best Development in VizMin in Best Premium House for Seafront Residences. In 2019, AboitizLand partnered with Cebu Landmasters to deliver housing solutions to the Cebuano market. The JV's first project is a 3-tower condominium in Mandaue City, Cebu. Total estimated number of units is 1,800 and projected launch is June 2020. We also teamed up with Point Blue, a pioneer in integrated micro-studio market. Point Blue currently has 4 buildings in operation covering a total of 657 units and plans to build 20 more apartment buildings over the next 2 years. That's my presentation. Thank you.

I would like to remind everyone in the broadcast to please mute their microphones. I'd like to call on Dmi to present on AEV financials. Please kindly mute your microphones.

Good afternoon, ladies and gentlemen. I would like to start off the presentation for our financials with a summary of our key performance highlights. AEV recorded consolidated revenues of over PHP 200 billion for the full year of 2019. This is mainly attributable to the contributions of the Food Group mainly the entry of Gold Coin. This was an 8% increase from -- compared to 2018. I'll explain the other line items in the succeeding slides. For full year 2019 beneficial EBITDA, despite some challenges in our power unit, our full year beneficial EBITDA increased by 4% compared to 2018. The outperformance of our non-power units were due to the following: UnionBank saw robust loan growth and strong trading gains, as well as growth in other noninterest income. The Food Group benefited from a full year contribution from Gold Coin, plus better results from our flour and feeds businesses. In infrastructure, Republic Cement saw recovered cement selling prices and improved cost controls, which helped improve the bottom line. On a consolidated basis, our EBITDA was basically flat versus 2018. The group's core net income decreased by 7% due to increased interest expense, depreciation and amortization. Interest expense increased by 18%, mainly due to the following: retail bond issuances from both AEP and AEV, plus additional loans for our food, infra and power businesses. Depreciation and amortization also increased due to the take-up of Therma Visayas, as well as full year depreciation for Hedcor Bukidnon and Pagbilao Energy. The group recognized nonrecurring gains of PHP 516 million last year due to net foreign exchange gains and gains on reversal of impairment provisions. As a result, net income for the full year was PHP 22 billion, just below -- 1% below 2018. This translates to an earnings per share of PHP 3.91. Now moving to the balance sheet. On a consolidated level, cash and cash equivalents were lower by 21%, primarily due to the cash used to fund the GN and Gold Coin acquisitions. Consolidated assets increased by 6% as we continue to build up the investments in greenfield projects and new acquisitions. Total liabilities were higher by 10%, mainly due to increased long and short-term borrowings from power, the parent company, AEV and infrastructure. As we took up the debt related to the previously mentioned investments, our net debt-to-equity increased from 1x to 1.2x. The increase in parent net debt was mainly due to the PHP 5 billion AEV retail bonds that we issued in June 2019. As you can see, the balance sheet remains robust and keeps AEV ready to support the growth of our subsidiaries. And you saw quite a bit of that in the presentations early on. Finally, AEV approved regular cash dividends in the amount of PHP 1.30 to all stockholders of record as of close of business hours on March 20, 2020, payable on April 3, 2020. That concludes our presentations for today, and we'll be moving on now to the Q&A session. Thank you.

Thank you, Dmi. Can we please call on the presenters to please come up on stage for our live Q&A. So once again, for those listening and watching this broadcast, if you have a question, please send us a chat message. Please indicate your name, your question and the person that you're addressing your question to, and then we will put you on queue. When your turn comes, we will call you so that you can ask your question during the live broadcast. Okay, so do we have any questions on the floor? Any questions, Cedric, from the floor? Okay. I will -- yes, go ahead. Mark? Julian, are you going to ask questions on the floor?

Yes, I have 3 questions for power. First is on the outages of TSI and GMPC (sic) [ GMCP ]. Could you please quantify the earnings impact in the fourth quarter for these outages? Second on the Meralco CSB bidding, are you interested to participate? If yes, which particular assets are you inclined to put in bid for? Or will this be a financial bid similar to the previous ones? And then third, on the overseas expansion, have you earmarked a certain budget for acquisitions this year? If yes, how much? And is that included in the PHP 41 billion CapEx budget communicated in the slides? And you've mentioned that you have earmarked certain countries that you're looking at. May we know which ones? Those are my questions.

Thank you, Julian. Yes.

Thank you, Julian [indiscernible] Can you hear me? Yes. It's working. Thank you, Julian, for the questions. On the first question on the impact of TSI. TSI [indiscernible] 150 megawatts. If 1 unit is out, it's about 10 million increase of -- a day of EBITDA. But as I said, we are covered by business interruption. Insurance, we're still negotiating for a certain part, there's already acceptance of the cover. But for the extension, we're still working with insurers to accept the extension up to April when we -- which we -- and we expect the unit to be back online. Because we were back in January for a few days. I think we ran for a week until the experience team [indiscernible] As regards to Meralco, as I said, we're always looking forward to participate. We have not seen the new terms of reference. We know that they are going to schedule CSPs, but until we see the terms of preference, then we will make that decision. But yes, we are excited to participate. We have GNPower Dinginin Unit 2, which hopefully, can participate, depending again on the TOR. We'll wait for the TOR to come out. As far as international acquisition is concerned, we're not really remarking certain amounts for international play. But we are just -- we are actually more focused on projects rather than allocating certain CapEx. And if you find the projects to be acceptable in terms of returns, risks, then we will pursue, okay? We are really focused on Vietnam, we believe that there are still a number of projects that we're excited about Vietnam. We're looking at 2 to 3 projects that we can -- that we're looking at moving forward with. And in the past, we've mentioned that we're working with our partners in -- with SN Power in Myanmar. And we're always looking at opportunities in Indonesia. Hope that answers your question.

Yes. Just a follow-up on the first question, how about for GMPC (sic) [ GMCP ]?

GMCP can -- GMCP obvious have an option to actually pass on the -- or the buying to their consumers -- to their customers. There is some exposure. I just have the -- just don't have the number. Liza, do you have the number for GMCP?

Julian, to confirm, your question was the impact of the outage of GMCP in the fourth quarter?

Yes, correct.

For our beneficial share, it's 1.4 b. But technically, we're still entitled to BI, which we haven't gotten. So without the BI, the impact should -- to us should have been PHP 450 million already -- only, sorry, rather. But the BI, we did not yet collect in 2019.

Just a follow-up on the BIs, when can we expect collection or claims?

Which plant? TSI?

TVI, GMCP, TSI.

TVI has no BI.

That's LBC, sorry.

This year? Yes, for TSI and GMCP, expecting -- we're expecting them this year.

Thank you. Do we have other questions on the floor? Questions? Aaron, would you like to ask your question? Okay, shall I just read it out for you? So we have a question from Aaron Uy. I think this is directed to Cosette. Can you provide us an update on the real property tax issue of the NAIA consortium?

For that one that has already been incorporated in our latest negotiations with the government. That has already been factored in, in our latest proposal to the government.

Thank you, Cosette. Any other questions on the floor? If not, then I'll read a question from Elizabeth Santiago, Abacus. This is for UnionBank. How much of the 35% credit card loan growth came from: number one, increased cards in force; number two, higher billings; number three, higher revolving balances. This is addressed to you, Toto.

I don't have the exact breakdown. But in terms of the cardholder base, we increased by about 20%. Then in terms of the existing clients, we did a lot of portfolio optimization, meaning encouraging usage of credit cards throughout the year, which accounts for a big part of the increase in the outstanding balances for the credit card. So those 2 things would account for the 35% increase.