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

Hello. Welcome to our analyst briefing. Today, we're going to report on the second quarter financial and operating performance of Aboitiz Equity Ventures and its strategic business units. But first, here are the house rules for this briefing. All microphones are put on mute by default to minimize unnecessary background noise. Questions have been requested from our guests in advance. These will be prioritized in the Q&A today. If you have additional questions, please submit them through the Q&A button on the webinar controls. Questions submitted now will be answered at the end of the presentations if there is enough time. Those not taken up during the Q&A will be answered via e-mail. The briefing will be recorded for documentation purposes. By joining this session, you consent your name, voice, image and chat comments being recorded for use and dissemination. If you do not consent to the foregoing, please do not join the session. Our presentations will be in the following order: power, banking, food, land, infrastructure, cement, our consolidated financials and a Q&A. To present for power, we will have Mr. Manny Rubio, President and Chief Executive Officer of AboitizPower. To present for banking, we will have Mr. Toto Hilado, Chief Finance Officer of UnionBank. To present for food, we will have Mr. Tristan Aboitiz, President and Chief Executive Officer of Food Group Philippines. To present for land, we will have Mr. Dave Rafael, President and Chief Executive Officer of AboitizLand. To present for infrastructure, we will have Ms. Cosette Canilao, President and Chief Executive Officer of Aboitiz InfraCapital. To present for cement, we will have [ Bara Kalipali ], Chief Finance Officer of Republic Cement. To present AEV's consolidated financials, we have Mr. Dmi Lozano, Chief Finance Officer of Aboitiz Equity Ventures. We would also like to acknowledge the presence of key leaders inside our briefing room. We have AboitizPower CFO, Ms. Liza Montelibano; AboitizPower Gen, Chief Finance Officer, Ms. Racquel Bustamante; Aboitiz Power BU, Chief Finance Officer, Ms. Jen Borlaza; UnionBank Group Head of Corporate Planning and Investor Relations, Mr. Carlo Enanosa; One Food Group Vice President for Finance, Investments and Treasury, Ms. Gayle Guzman. And finally, we would like to acknowledge the presence of all the teams who helped put together the presentations for today and who are supporting our presenters. And now to present for power, Mr. Manny Rubio.

Thank you, Judd. Good afternoon. [Foreign Language]. And it's my pleasure to present to you the performance, second quarter performance of AboitizPower and discuss the full first half performance. So welcome to AboitizPower's Second Quarter 2021 Analysts Briefing. Back in April, this year, during our first quarter briefing, we shared our hope and optimism as we kicked off AboitizPower's 10-year growth strategy. I'm very happy to share that we are on track and making progress with our aspirational target over the next decade, that is to increase our generation portfolio to 9,200 megawatts with 50-50 balance between Cleanergy and thermal capacities without new coal. We will significantly grow Cleanergy, both domestically and internationally, which will bring our renewable portfolio to 4,600 megawatts by 2030. We are optimizing our existing baseload facilities to meet the existing critical market needs. Our options for a third unit in existing facilities remain open to address future baseload needs of the market. Given the power supply and purchase forecast of Meralco, GNPower Dinginin will bid in the scheduled 1,000-megawatt CSP that will be delivered in 2026. And we expect that to be -- the CSP to be scheduled Q4 2021 or Q1 of 2022. For baseload, we are shifting our focus on gas. We have early feasibility studies. And within the next 10 years, we are targeting to build 1 gas plant with a capacity of 1,000 megawatts, unless a cleaner technology proves to be more economical option. Our strategic directions are well in place. Our projects are underway. And we are very much excited and looking forward to realizing our aspirations and creating more sustainable energy future. Now allow me to share AboitizPower's second quarter results. Our beneficial EBITDA was 41% higher in the first half of 2021 compared to the same period last year. This was due to commissioning revenue from GNPower Dinginin Unit 1, higher water inflows in our hydros, higher demand and higher WESM dispatch in compliance with the must offer rule. GNPD injected maximum capacity of 668 megawatts that helped alleviate the thin supply during the second quarter of the year. As mentioned in the previous briefing, we were able to claim liquidated damages in the first quarter for the delay in the construction of GNPD and the final payment of business interruption claims resulting from the GMEC outages we experienced in 2019. Even if you exclude the liquidated damages and business interruption claims, EBITDA would have been higher by 24% year-on-year. As a result of what I had just mentioned, EBITDA margins improved from 31% to 37%. Our second quarter performance versus previous quarter was lower by 22%, primarily due to the previously mentioned liquidated damages and business interruption claims, which were collected in the first quarter. If you exclude the one-offs of the LDs and BIs, our first quarter performance was sustained in the second quarter. Meanwhile, it was higher by 27% versus the same period last year due to the commissioning revenue of our new facility, GNPower Dinginin. Unit 1, GNPower Unit 1 as well as higher water inflows, higher demand and higher vessel dispatch in compliance with the must offer rule. The increase in EBITDA drove core income 188% higher on year-on-year. The higher taxable income was offset by the decrease in tax rates due to the CREATE bill. Even if you take out the liquidity damages and business interruption claims, core net income for the year would have been 111% higher. The group recognized net recurring gains of PHP 5 million from the devaluation of U.S.-denominated debts. As a result, AboitizPower's net income for the first half was PHP 10.1 billion, 171% higher year-on-year. Even if you take out the liquidated damages and business interruption claims, net income for the year would have been 98% higher. Cash and cash equivalents were up by 7%, primarily due to the availment of the retail bond, which was drawn in March 2021. Investments and advances increased by 3% versus the end of last year, mainly due to equity infusions to GNPower Dinginin. The availment of the first tranche of bonds resulted in total assets increasing by 2% and total liabilities increasing by 1% compared to the end of 2020. With that, our net debt-to-equity decreased from 1.4x to 1.3x. Capacity sales grew by 6% year-on-year. This was due to the commissioning of our new facility, GNPD Unit 1, higher water inflows and higher vessel dispatch resulting from higher availability of our Pagbilao facilities. We are optimizing trading of energy that resulted in a higher capacity sold factor. Our total revenues increased by 23%, primarily due to an increase in sales volume, as mentioned in the previous slide, as well as high effective bilateral contract quantities and spot rates. Our total energy sold increased by 10% due to the higher dispatch resulting from higher plant availability of our Pagbilao facilities and higher water inflows. Ancillary services now form 16% of our total energy sold compared to 11% last year. We expect this to increase given that NGCP will require more ancillary services in the coming months. Spot sales have increased with the commissioning of GNPD Unit 1, but this will shift to bilateral contract quantity after its COD. Due to better availability of our Pagbilao facilities and higher water inflows, our purchase power volume decreased by 19%. This was offset by higher purchase power rates driven by higher WESM prices. This resulted in our peso gross margin increasing by 26% year-on-year. As you can see from the quarterly performance charts on the right, our gross margin increased by 9% due to better availability of our Pagbilao facilities, and this was offset by higher purchase power costs to mitigate margin losses from the GMEC outage. The increase in spot selling prices by 119% to 5.7 -- or PHP 5.70 per kilowatt hour was driven by higher WESM prices due to the higher volume of capacities on outage in the market. Our trading strategies also allowed us to take advantage of higher peak prices. Bilateral contract quantity selling prices increased by 12% to PHP 4.53 per kilowatt hour, mainly due to higher indices. Average NEWC for the first half of this year was $99 per metric ton versus $61 per metric ton in the same period last year. The recent movement in coal prices underscores the risks attached to fixed price contracts longer than 3 years. Our overall availability performance for the first half of 2021 was 83% compared to 86% availability in the same period in 2020. The rest of our facilities were able to sustain the high availability performance. You will also note that all our business units, except for coal, are above NERC benchmarks in terms of availability. Coal availability is at 75%. But if you exclude GMEC, which we are not running, we are not operating, this would be 88% versus NERC benchmark of 80%. As you may already know, GMEC went on outage as damage was found in a portion of the boiler of GMEC's Unit 1. The initial works and procurement of the necessary services for restoration works are underway. And based on current assessment, completion of the said works and Unit 1's return to service are targeted by the third quarter of this year at the latest. To note, there will be business interruption insurance collection from this GMEC outage. And we expect the return to service first week of September, well within the planned outage of Malampaya. GMEC's insurance brokers and adjusters have been informed, and the parties are currently undergoing the process of filing the insurance claims. Coordination with regulators and other key stakeholders is also ongoing. For our distribution business group, beneficial power sales were up by 4% to 2,745 gigawatt hours year-on-year. This was due to higher consumption as a result of the recoveries in demand. Energy sales from residential customers were sustained, while energy sales from commercial and industrial customers increased by 6%. This was due to looser community quarantines and resumption of operations of commercial and industrial businesses. The average gross margin was sustained at PHP 1.64 per kilowatt hour. All our systems losses were below the regulatory cap of 5.5%, except for Cotabato Light and Power Company, which ended above the regulatory cap due to nontechnical losses with minimal impact to the bottom line, to note that there are CapEx investments underway to reduce the systems loss of Cotabato Light. On WESM, average year-to-date LWAP, load-weighted average price, was at PHP 4.24 per kilowatt hour, 66% higher compared to the same period last year. This was due to the higher volume of capacities on outage in the market, either due to planned or forced outages of various plants. We expect higher WESM prices this year compared to last year due to higher capacity on outage and recoveries in demand. We will show how demand was affected by the community quarantines in the succeeding chart. Based on public data, we see how energy demand in Luzon and Visayas was affected by the imposition of the Enhanced Community Quarantine, or ECQ, and its succeeding variants. The red line shows us the Luzon and Visayas grids' average weekly peak demand for 2020. We have placed a coronavirus icon where -- to mark out when the ECQ started. You can see the corona icon right there. The green line is the Luzon and Visayas grids' average weekly peak demand for 2019. The blue line is the Luzon and Visayas grids' average weekly demand for 2021. Demand was lower in the first quarter of 2021 compared to the same period in 2020 due to the COVID-related community quarantines that only started in the second half of March last year. However, as of the fourth week of June 2021, public data now shows that the grids on average have registered higher demand, about 7%, versus the same period last year. This shows that the recently imposed NCR+ bubble quarantine has not had the same constricting effects as the previous year's ECQ. Please note that the demand is the first half of 2021 -- the first half of 2021 was generally tracking the 2019 level. It looks like we're beginning to understand and learn how to live with the virus. There's no public data available for Mindanao. Over the past few months, we have been seeing NGCP red alerts for Luzon grid. As for -- as our economy recovers and reopens once again, we expect the tight situation will continue and become tighter still in 2023 and onwards. We anticipate that new capacity will come probably late 2025 or 2026. In this chart, please closely note the broken black line, which represents the intersection of annual peak demand and the grid's reserve supply requirements. Amidst this evolving supply and demand situation, which includes the impact of the DOE moratorium and the building of new coal builds, we expect our GNPD units to play a significant role in addressing supply gaps and meeting critical market needs. Unit 1 will help address 2022 peak demand, while Unit 2 will help address 2023 peak demand, although 2020, the Unit 2 will start synchronizing before summer, but we expect commercial operations around July of 2022. We are currently working on 1,147 megawatts of attributable net sellable capacity to help us achieve our 2030 target of 9,200 megawatts. So allow me to update you in the next few slides. The GNPower Dinginin is in the final stages of construction, with Unit 1 achieving first synchronization last February 5, 2021. The commissioning and testing of Unit 1 is currently ongoing, and Unit 1's target date for commercial operations, including the issuance of the appropriate ERC Certificate of Compliance, has been moved from August 2021 to late September 2021, while completed over the unit by the EPC contractor is expected to extend beyond said date. Progress of the construction of Unit 2 is going well with the completion of the chemical cleaning of the boiler, a major milestone. We are still hampered by travel bans, slow processing of travel authorizations for foreign experts and personnel. Accordingly, the target date for Unit 2's commercial operations, including the issuance of ERC COC, is scheduled around the second quarter of 2022. In partnership with Wartsila and Aboitiz Construction, we recently started the installation of our battery energy storage system, or BESS, in our Therma Marine facility with a capacity of 49 megawatts in Maco, Davao de Oro. This will fortify TMI's capability to support the Mindanao grid, especially during the summer months when there is limited supply of energy generated by hydropower plants, providing needed contingency reserves. The project is currently 50% complete. And since commencement, there has been 0 time loss due to injuries. TMI hybrid BESS is 1 of the 12 projects with a total capacity of 248 megawatts for regulating and contingency reserves that we are targeting to develop in the next 10 years. It will serve as our model for future battery investments as well as hybrid renewable energy projects moving forward. We target for this to be operational by the first half of 2022. Just an update on our SNAP Magat BESS. Early works activities has been completed, including site survey and basic engineering design. Coordination is ongoing with the National Grid Corporation of the Philippines on transmission issues, particularly the advanced implementation of the Magat Santiago 230 kV transmission line reconductoring and upgrading. We target for this to be operational in the second half of 2024. For our SNAP Magat floating solar project, activities have been focused on securing the pertinent contracts and agreements. SNAP is working on the renewable energy service contract application with the Department of Energy. And since the National Irrigation Administration, or NIA, is the government agency in charge of dams and reservoirs, SNAP secured an extension of the Memorandum of Understanding with NIA on the conduct of the feasibility study with ongoing discussions regarding the agreement for use of the reservoir. To reiterate, the plan is to install up to 115 megawatts of floating solar, depending on the final technical solution and layout. PV Sinag Power is a 78-plant -- 78-megawatt plant located in Barangay Cayanga, municipality of Bugallon, Pangasinan. It is one of our priority projects to accelerate our renewable energy growth. The project is expected to be commercially operational by the end of 2022. Preparations for its planned construction and execution are in progress. The permits are 75% complete and are within target to comply with the permits -- with all the permits and appearances necessary prior to start of construction. The planned issuance of the Notice to Proceed for the solar plant and transmission line works is on October 30, 2021. Here's an update on the APRI steam field operator initiative to drill 12 new production wells with a minimum of 50 megawatts aggregated individually -- as individual wells and to provide 50 megawatts by 2023. The 2 make-up wells in MakBan had been contributing to at MakBan Plant B since April 10 and June 8, respectively. The new wells have provided incremental generation of approximately 10 megawatts. Another well with projected 5-megawatt capacity is also expected to [ close ] on or before the first week of August. We are also developing a 15-megawatt binary power plant project in Tiwi. Negotiations with top ranked bidders for design, optimization and final contracting are still ongoing, and we hope to award the project by the year-end, with commissioning by 2023. The first half of 2021 has been very positive for AboitizPower, both in terms of financial performance and operational developments. A key driver of this achievement is AboitizPower's continued commitment to being a sustainable organization. I'm very pleased to share that for the fourth year in a row, AboitizPower has again made it in the FTSE4Good Index Series, with a higher overall rating versus the previous year. We have increased our scores in metrics on biodiversity, climate change, health and safety, labor standards, anti-corruption and risk management. As we continue to work towards providing reliable, affordable and sustainable energy, we are committed to further strengthening our ESG standards and practices, sustaining our strong partnerships with our stakeholders and creating positive long-term impact for future generations. The projects that we just shared with you mark only the beginning of our road to 9,200 50-50. We recognize that there are still challenges ahead brought about by the global health crisis. But we at AboitizPower are one with the country and the world in working towards recovery and creating a more sustainable future for all of us. [Foreign Language] Good afternoon.

Thank you very much for that presentation, Mr. Rubio. And now to present for banking, Mr. Toto Hilado.

Good afternoon, everyone. Thank you for joining us this afternoon. Allow me to present the first half results of UnionBank. I will go through the financial performance of the bank, give a summary of our economic outlook and end with our usual digital updates. The bank posted a net income of PHP 8.3 billion in the first 6 months of 2021. This is 94% higher than the same period last year. Our results translated to a return on equity of 15.9%, higher than the industry's latest ROE data of 6.6%. Driving our first half performance was the strong top line revenues, which increased by 16% year-on-year to PHP 25.5 billion. This was due to our higher margins year-on-year, driven by the robust growth of our CASA deposits and lower funding costs; second, higher service fees from increased customer transactions and bancassurance commissions; and lastly, we also realized additional trading gains in the second quarter that further boosted our financial results. Provisions for loan losses was at PHP 3.1 billion, lower by 56% year-on-year as NPLs started to stabilize. As of June 2021, our gross NPL ratio is at 4.7%, a substantial improvement from 2020's 5.1%, mainly driven by the lower NPLs in the parent bank. Next slide, please. Net interest income was up 7% to PHP 14.8 billion due to margin improvement year-on-year. Net interest margins increased by 30 basis points to 4.7%, largely driven by a 94 basis point drop in funding cost. Contributing to this was the robust growth of our CASA deposits and the lower interest rate environment. Despite lower loans year-on-year, earning assets were slightly up 1%, driven by the growth in liquid earning assets. Next slide. Total loans in terms of average daily balance dipped by 6% to PHP 323 billion. Corporate loans declined by 9%, coming from clients' pretermination of loans in the last quarter of 2020 and the continuing muted demand for loans. Corporates continue to rationalize the amount of debt they carry as a result of the pandemic. We are, however, seeing some demand for short-term working capital loans. And hopefully, this would ramp up volumes by the end of the year. Our commercial banking and SME loans were down 9% as a result of lower demand and lower risk appetite on the part of the bank. Credit card receivables were also lower year-on-year due to lower consumer spending as a result of the pandemic. Meanwhile, other consumer loans continue to grow on the back of strong mortgage loan bookings. CSB loans were also higher, driven by strong DepEd loans and motorcycle loan releases. Deposits grew 2% to PHP 509 billion. While deposit growth was modest at 2%, the deposit mix improved as CASA deposits grew by 28%, giving us a CASA ratio of 51% from last year's 41%. Higher CASA volumes were also recorded across all segments. Client balances have gone up as a result of the stability and convenience of our cash management platforms and digital channels amidst the pandemic. Next slide, please. Noninterest income rose by 33% to PHP 10.7 billion, with all key segments contributing to the growth. Fee income increased by 19% to PHP 1.1 billion on higher customer transactions. This includes increased Visa interchange fees, bills payment fees, merchant acquiring charges, ATM fees as well as higher commissions from our bancassurance business. Trading gains were up 30% to PHP 8.2 billion. Miscellaneous income also went up by 71% to PHP 1.3 billion, driven by higher foreign exchange income and income from our trust operations. Operating expenses grew by 18% to PHP 12.1 billion. However, net of onetime expenses, OpEx would have gone up by only 13%. Next slide, please. The bank's gross NPL ratio was stable at 4.7% as of June 2021. This was driven by the parent bank's lower NPL ratio, which declined to 3.9% from 4.2% in the first quarter of 2021 as our proactive collection and payment arrangement efforts bore fruit. Our NPL cover is also stable at 66% for the group from 68% in the first quarter of 2021 and 72% for the parent bank from 74% in the first quarter of 2021. Next slide. The bank's capital ratios are higher year-on-year as the growth of capital outpaced the growth of risk assets. As of June 2021, our CET ratio -- CET1 ratio is at 16% and our CAR at 18.1%. Let me now go to our economic outlook for the rest of the year. Our GDP growth forecast, we maintain our view for a slower economic recovery in 2021 at 4% versus our original forecast of 5.7% due to the continued challenges in the second quarter of the year. Challenges include slower-than-expected vaccination rate and renewed lockdowns due to the new virus strain, which are key to reviving household consumption and investor sentiment. We expect GDP to return to pre-pandemic levels only in the latter part of 2022. We expect policy rates and the reserve requirement ratio to be maintained as a loose monetary policy is still necessary for economic recovery. We do not see any significant improvements yet in the factors mentioned by BSP Governor Diokno for monetary unwinding, which include a clear and solid path to recovery, a manageable inflation environment and consistent decline in COVID cases. As for our view on industry NPLs. Consistent with S&P and Fitch expectations, the banking industry's NPL levels will likely remain elevated in 2021 and can reach a high of 6% arising from the economy's sluggish recovery before improving in 2022. As for our digital updates, clients continue to affirm our digital strategy as we recorded strong take-ups in the second quarter of the year. We posted our highest number of sign-ups across our UnionBank Online and Portal platforms at 511,000. This brings our total app users to 2.9 million as of end June 2021. Similarly, we posted the highest number of new accounts opened in a fully digital manner via the app at 182,000 new accounts in the second quarter. This brings our total digital accounts opened to 804,000 or 28% out of our total digital users. Digital transactions also continued to grow by 2.4x to more than 7.2 million transactions in the month of June as we onboarded more users into our digital channels and as they become more familiar to transacting digitally. The bank also continues to pursue its Tech Up Pilipinas initiatives, helping other industries and sectors digitally transform their processes to make their services more accessible to their stakeholders, especially amidst this pandemic. Earlier this year, the bank signed a partnership with the Supreme Court of the Philippines for the judiciary e-payment system project. This is a solution that will allow litigants, counsels, law firms, bar takers and other stakeholders to pay legal fees digitally to the Supreme Court and its 2,000 courts nationwide. Moreover, we continue to enable more LGUs with banking solutions that will address stakeholder needs. In the cities of Navotas and Venezuela, for example, instead of lining up in the City Hall, residents and businesses can now pay their business fees and taxes via UnionBank Online app or SME business banking app. We have also carded close to 100,000 residents of Narvacan, Ilocos Sur, Paranaque and Imus with EON prepaid cards that allows them to transact digitally. Expanding our reach to MSMEs is a significant part of our strategy, noting that they are critical to the country's recovery. This July, we announced the issuance of our first social bond, which is all taken up by the International Finance Corporation. It is a 7-year bond in the total amount of USD 150 million. Bond proceeds will be used to finance more than 2,000 MSMEs, and loans -- and the loans will be disbursed through the bank's financial supply chain or FSC. FSC Is a digital platform that offers financing services such as payables discounting and dealer financing to corporates and SMEs who are part of a supply chain ecosystem. We expect this to ramp up as we disburse IFC's funds, onboard more supply chain communities and introduce more products to the platform, plus receivables discounting. Last slide, please. Finally, we are also pleased to share that our digital bank application has been approved by the BSP last July 15. Our digital bank, known as UnionDigital, shall be our vehicle to tap the lower end of the pyramid, who are usually unbanked and underserved by traditional banks. We will leverage on the community banking approach, whereby we can acquire customers en masse and cater to the needs of their specific community. UnionDigital is essential in our overall digital strategy as we fast-track the onboarding of our customers on to our digital channels. This also affirms our goal to promote inclusive prosperity as we enable more Filipinos to bank digitally, especially amidst this pandemic. Thank you.

Thank you for your presentation, Toto. And now to present for food, Mr. Tristan Aboitiz.

Thank you, Judd. Good afternoon, and thank you, everyone, for being here with us this Friday afternoon to listen to the results of the Aboitiz Group. Allow me to present the first half results of the Food Group. Total Food Group revenues in the first half of 2021 increased 14% year-on-year to PHP 40 billion or USD 837 million, driven by all of our operating divisions, except flour. Meanwhile, EBITDA declined 3% to PHP 2.6 billion or USD 54 million on the slide in margins in our feed and flour divisions. In line with that, our EBITDA margin overall decreased by 118 basis points, mainly driven by a weakened EBITDA margin of our Flour and Feeds division, which fell 340 basis points and 299 basis points, respectively. However, the NIAT for the Food Group improved 24% year-on-year to PHP 1.21 billion or USD 25 million due to the fact that our Farms division bounced back from a loss in the same period last year, and we saw positive impacts coming in from the CREATE bill and the recognition of income tax holiday savings on some of our farm assets. Moving on to revenue now. Results for the Food Group in the first half, as mentioned, increased 14% year-on-year, PHP 40 billion or USD 837 million. This was on the back of contributions of all of our divisions, except Flour. Our Farms revenue was up 3% year-on-year to PHP 1.5 billion or USD 31 million due to the near doubling of selling prices brought about by the shortage in supply of pork in the market. This was despite a 52% shortfall in volume during the period due to the reduced breeding capacity of our Breeder Farm 1. Regional Feeds revenue increased 17% year-on-year to PHP 35 billion or USD 723 million due to a 5% rise in selling prices of our feed that was needed to compensate for the increase in commodity prices. This was further boosted by a growth in volume of 1%. Meanwhile, our flour revenues fell 4% year-on-year to PHP 4 billion or USD 83 million due to a drop in average selling prices of about 6%. This drop in prices reflects the continued increase in competitiveness in the sector. Turning now to EBITDA. Our overall group EBITDA declined 3% year-on-year to PHP 2.6 billion or USD 54 million, and this was due to lower contributions coming from our Feed and our Flour divisions. Our Farms EBITDA jumped 288% year-on-year as gross profit per kilo of pork sold bounced back 619%, following the increase in selling prices of pork. Our consolidated Feeds EBITDA declined 28% due to the 14% squeeze in margins caused by the increase in cost of our raw materials that we use in the formulation of our products. Lastly, our Flour division's EBITDA shrank 25% year-on-year. It was pulled down by the lower contributions of our byproducts and higher operating and admin costs. Lastly, let's take a look at the group's NIAT for the period. The Food Group's NIAT jumped 24% year-on-year, and this was generally attributable to the performance of our Farms division, following the 288% growth in EBITDA, along with a positive PHP 53 million impact of the CREATE bill to our Philippine operations and recognition of PHP 95 million of income tax holidays related to our farm operations in 2020, but recognized in the first half of 2021. Meanwhile, our Flour net income after tax fell 18% year-on-year, following the 25% decline in EBITDA. The decline to the bottom line was cushioned by a 31% decline in our financing costs, coupled with the doubling of gains from ForEx due to money market placement. Our consolidated feed's NIAT meanwhile fell by 43%, following the 28% drop in EBITDA, which, again, was due to the higher overall raw material costs in the period. Turning now to the Food Group's overall aspiration and strategy. Our strategy remains anchored on our 3 pillars, which are balance, optimize and develop. Balance means diversifying our product portfolio to increase resilience as well as to balance our EBITDA contribution across countries, businesses and species. Optimized, meanwhile, means focusing on operational excellence by identifying and removing inefficiencies across our operations by the leveraging of technologies and simplification of processes. Develop means building new growth opportunities by investing in fast-growing and high-margin segments like aqua feeds, specialty nutrition and pet food. For the next 10 years, we have identified 5 strategic directions anchored on the 3 pillars, and they are the following: one, improve operational efficiency across our operations; two, diversify and grow feed sales across all geographies; three, selectively integrate downstream in farms and processing where it makes sense; four, protect market share and margins of our Flour business in the Philippines; and five, develop new businesses in the fast-growing aqua space and high-margin segments like specialty nutrition and pet food. These strategic directions will continue to guide the Food Group towards its aspiration of becoming an integrated regional agribusiness. Moving now to project updates. Let's take a look at the list of projects that we have completed since the last first quarter analyst briefing and also those that we have to look forward to for the balance of 2021 and even some leaking into 2022. Each project will be tackled in the succeeding slides. For our businesses abroad, we are glad to announce that the construction and commissioning of the 5-ton per hour fish feed line in West Port Malaysia was successfully completed in April of this year. The plant is expected to cater to the growing demand of fish feed in the region. Next, in Medan, in North Indonesia, we have started with the expansion of our raw material warehouse. This facility will store up to 3,000 metric tons once completed and is designed to improve efficiency, stabilize production of our mills and reduce our dependency on external warehouses. The project is expected to be completed by October of this year. For the Farms business in the Philippines, we continue to grow our brand and channel of meat distribution, which we have called The Good Meat. Two new physical stores will be fully operational in the coming months, each with a capacity of 2 metric tons per day. Furthermore, first half of this year, 22 supermarket concessions were established, and we look forward to opening another 48 in the balance of 2021. These initiatives should do 2 things for us. One is to further develop our B2C channel; and two is to provide an expansion to our supply chain, which we hope will ensure better distribution to all of our customers in the relevant area. We also anticipate to be able to capture a larger percentage of the margin that is available along the value chain through this initiative as we move closer to the end consumer of our products. Lastly, again related to our Farms business in the Philippines, we have started the preparation for the construction of our third breeder farm facility which will be located in Nueva Ecija. Perimeter fences have been constructed, a key bridge has been completed, and the project will officially have its groundbreaking in August 2021. The farm will have a capacity of 2,500 sow-level, and we expect to have it finished by September of 2022. This additional capacity will help to ease the shortage of supply of pork in the Philippine market. And we -- this farm should incorporate -- or will incorporate, sorry, the best biosecurity measures to ensure our animals are adequately protected from ASF. These are all the updates that I have for the Food Group to this point. Thank you, and good afternoon.

Thank you, Tristan, for your presentation. And now to present for land, Mr. Dave Rafael.

Good afternoon, everyone. I'm delighted to be here with you this afternoon to give you an update of the first half performance of AboitizLand. Next slide, please. For the second quarter of 2021, AboitizLand contributed a net income of PHP 383 million, a significant increase versus the same period last year. In terms of residential sales, AboitizLand generated PHP 2.6 billion in sales, a 125% increase versus the previous year, resulting from improved sales operations across the different projects and continued efforts in building up sales momentum. In terms of revenue, AboitizLand contributed PHP 1.7 billion, up 53% from the same period in the previous year. The industrial business experienced a decline of 42% compared to the previous year. This is largely due -- attributable to a decrease in revenue recognition as only 6 hectares achieved revenue recognition as compared to 7 hectares in the previous year period. The commercial business also posted a 3% increase due to increased utility costs as quarantine restrictions continued to be eased. The residential business had a significant increase in its revenue contribution year-on-year. This will be discussed further in the next slide. Focusing more on the performance of the residential business. AboitizLand generated PHP 1.2 billion in revenue during the second quarter of 2021, which is 271% higher compared to the previous year. This increase is attributable to enhanced construction activity as well as our continued strong performance in sales. AboitizLand continues to capitalize on our momentum this year, pushing our sales to PHP 2.6 billion, which is more than double what was generated in the same period last year. We are confident that we will be able to beat our target of PHP 2.9 billion in book sales by the end of the year. Our new digital strategy has proven to be effective as evidenced by our strong Q2 performance. We are now on track to surpass our 2020 sales and at the same time, keeping our cost to sales ratio at par with the previous year even lower than 2019. We are also at the end stages of development for the AboitizLand, Vecino app, which will help our vecinos by having a fully digital end-to-end buying experience. We also continued to improve our operations as we are able to complete more houses by expanding our contractor pool. We are also in the process of digitizing our construction operations to make the process more efficient. Finally, AboitizLand will continue to build on our digital initiatives and to further improve our infrastructure. As noted, we are ready to launch our Vecino app, which will serve as an end-to-end digital home buying platform. Some of our automation efforts have already been activated, and we will continue to automate other back-end processes to make our operations more efficient. Furthermore, we will continue to push our hybrid marketing activations as this has already proven itself to be effective. However, this will be supplemented with our efforts to further engage the OFW market as well as creating competitive pricing and payment terms. We are also now planning to launch a new phase in Foressa in Cebu by the end of 2021. We expect that all these efforts at innovation as well as our new inventory in our current projects will propel us to even greater heights this year. Thank you.

Thank you, Dave, for your presentation. And now to present for infrastructure, Ms. Cosette Canilao.

Thank you, Judd, and good afternoon to everyone. Welcome to this quarter's briefing. So if you go to the -- to our slide, please? Over the course of the second quarter, land development activities in our integrated economic centers have progressed well and are on track to be completed as scheduled. This, together with the execution of critical land banking activities, will support the group's direction to scale our industrial-anchored estates to capitalize on emerging opportunities. LIMA Land continues to strengthen its sales portfolio with 70% of Lima Estate's current inventory already reserved and with a healthy pipeline of prospective locators. This expansion will add 47 hectares of inventory to cater to the increasing demand for industrial lots in Batangas from both local and international locators. The expansion is expected to drive growth and generate up to 20,000 new jobs in the province and neighboring areas. Meanwhile, planning of the 40-hectare industrial expansion of West Cebu Industrial Park is nearly complete, and construction will commence by January 2022. With the limited industrial lots available in PEZA-proclaimed economic zones in Cebu, this project addresses the demand for both new and expanding locators in medium to heavy industries. Following the sales launch of our new commercial lots in April, we are getting ready to build a 7-tower office complex in the heart of the commercial area in Lima to capitalize on the anticipated boom of BPOs outside of NCR, beginning with our -- with the first tower, LIMA Tower One. New developments in the commercial lots and office complex will complement existing commercial components in Lima, such as The Outlets at Lipa, Lima Exchange, LIMA Park Hotel and LIMA Transport Hub. The IAC's (sic) [ AIC's ] performance remains resilient and on track. In the first half of 2021, our EBITDA is 80% higher than projected. Its strong financial outlook is driven by industrial lot sales and improving commercial operations as foot traffic continues to slowly increase. For CapEx, our main focus this year is the acquisition, planning and design developments for the LIMA and WCIP expansions. As of the second quarter, we've already spent PHP 456 million of our PHP 2.1 billion budget. In May, we officially launched Unity Digital Infrastructure, our joint telecommunication infrastructure platform with the Partners Group. Through Unity, Aboitiz InfraCapital will build and operate telecommunication towers and supporting infrastructure across the country to help mobile network operators improve connectivity and service reliability. Earlier this month, Unity completed the construction of its first common tower in Cebu. On the other hand, we've deployed more than 300 sites for Globe and DITO for their small cells attachments. We also continue to partner with Globe for KonekTayo WiFi access points to broadcast faster and reliable Internet within underserved communities. Over in Davao City, Apo Agua is working to achieve the first drop of water by the end of the year or beginning of 2022. To support its aggressive plan, Apo Agua and its contractor, JVAC, increased its manpower to over 5,000 workers. This is supplemented by simultaneous construction activities and extended hours in different work sites and increased subcontracting works to fast-track project completion. A total of about 65 kilometers of pipes of varying sizes are also being laid, leading to the 8 offtake points of Davao City Water District. Lima Water's build volume for the second quarter has returned to pre-pandemic levels, averaging at 7.4 MLD. Lima Water is optimistic that the increase in consumption will continue with the incoming additional production lines from existing and new locators. Parallel to that, Lima Water is also implementing automation and priority efficiency initiatives like the Smart Water Network to ensure the long-term sustainability of water supply. Overall, Aboitiz InfraCapital delivered strong performance in the first half of the year. Our EBITDA is 8x higher than projected, driven by higher gross profit from IEC operations and savings from direct project costs. CapEx spending is mainly attributed to the construction of Apo Agua and expansion of our industrial estates. Aboitiz InfraCapital remains optimistic about delivering a resilient performance for the year. We hope to continue gaining momentum with the launch of Unity, IEC expansions and completion of Apo Agua. This is my last slide. Good afternoon, and thank you again.

Thank you for your presentation, Cosette. And now to present for Cement, we have [ Mr. Bara Kalipali ].

Thank you, Judd. Good afternoon to all, and appreciate your time presence this afternoon to listen to us. As usual, for the Cement, we don't have the detailed presentation, but we will give you a brief view of the market and the outlook for the cement sector. Well, it is good news for the cement industry. Even if the national economy is still struggling to recover, I think Cement posted a strong growth in H1 2021. Well, versus 2020, yes, it's very strong growth, but we all know, the previous year, we had the strictest lockdown. So it is better to compare versus 2019 to understand the perspective of the cement market. And happy to inform you that versus 2019 also, the Cement posted a slightly better positive growth in the last 6 months. So this is good news because we all know that for the economy, it may take more than a year, that is 2022 Q3 or Q4, to reach the level of 2019, but Cement is already in positive versus 2019. Now as we discussed in the previous meetings also, now the sector-wise dynamics are a bit different. We see a very strong growth on the residential sector or what we call the individual housebuilding sector, which is doing very well. the And infrastructure improved over the last few months. Versus 2020, it is doing well, but still it's a bit struggling versus 2019. And the nonresidential sector, which is the commercial, which is, of course, this is a sector that is lagging behind very much, and that is also expected as well. So this is the brief about the market. And we hope the full year also will be good for the cement industry, and we will be positive versus 2019. Versus 2020, anything would be positive, but our comparison is versus 2019, and we expect to be higher than 2019 in 2021. Now coming to the RCBM. Yes, you all know that we have completed our debottlenecking projects, and we also added 2.3 million tons of additional capacity in the last 1 year, thus -- and now happy to inform you that Republic Cement is reaping the benefits of our CapEx program, both in improving our efficiencies and also increasing our volumes from our increase in capacity. And as you can see, the contribution for the H1 is at PHP 1.3 billion, which is meaningful versus previous year. Previous year, we had a slightly negative in H1. Now this PHP 1.3 billion also has a onetime impact of the CREATE adjustment, which is positive for us. And even if you exclude the CREATE adjustment, the contribution is at PHP 779 million for the H1. Actually, this is even higher than the full year contribution of 2020 or even 2019. So that's the good performance posted by the Cement division this H1. And I would like to end with the 2 important notes that for the H1, Republic Cement is the market leader as per our internal estimates. Though we don't have the official data, as per our internal estimates, we are the market leader. And for the full year also, we are expecting a resilient performance versus previous year and also versus 2019. Thank you. This is the brief from the Cement.

Thank you, [ Bara ], for your presentation. And now to present AEV's financials, we have Mr. Dmi Lozano.

Hi, good afternoon, everyone. I hope all of you and your families are doing well and staying safe despite the pandemic. Just wanted to start off with a quick snapshot of our key financial performance. What you'll see here is pretty much across the group. The first half has been a fairly strong performance despite the ongoing pandemic and lockdowns and as well as some pricing input costs to quite a few of our businesses. What I want to highlight in this page is our revenues, which are up 9% versus last year. And this is really due to the commissioning revenues from GNPD Unit 1, increasing sales volumes and higher effective BCQ contracts for power and the spot sales that they benefited from in the first half. But let me move on to the other information, so we can go into more detail. First half beneficial EBITDA was 51% higher compared to last year. This was due to a couple of key business units. In power, they were 41% above previous year's performance due to commissioning revenues from GNPD, higher water inflows, higher demand for power, higher WESM dispatch and recognition of some other income, including LBs. Finance -- or the financial services sector also was a big boost for our EBITDA. This came from higher net interest margins, strong trading gains and compared to last year, lower loan loss provisions. And finally, the infrastructure sector also saw a leap in the first half of this year. This is due to the Cement business, which saw stronger market demand, reduced costs and increased overall efficiencies. These are all related to the debottlenecking that [ Bara ] just mentioned a short while ago. Excluding other income from power and the trading gains from financial services, EBITDA would still have been higher 24% year-on-year, showing that there was strong overall performance across the group. Our second quarter performance, in particular, was higher by 45% versus the same quarter last year, mainly due again to the commissioning revenues from GNPower, higher WESM dispatch, higher margins and strong trading gains from UnionBank. This translates to a 43% increase in consolidated EBITDA. Moving on to core income. The increase in EBITDA and flattish controlled movement in interest expense, depreciation and amortization allowed our group's core income to jump by 246% on a year-on-year basis. The group recognized net nonrecurring losses of about PHP 169 million, mainly due to UBP's goodwill write-off related to City Savings Bank. And as a result, net income for the first half was PHP 13.4 billion, 243% higher than the same period last year. Again, excluding other income from power and the financial services, net income would have been higher by 102% year-on-year. And this translates to an EPS of PHP 2.39 per share. Moving on to the balance sheet. On a consolidated basis, our net debt increased by 3% because of continuing investments in associates and joint ventures as well as continuing payments for interest and of course, dividends. On both parent and consolidated levels, our net debt-to-equity ratios are well within our internal parameters of 1.5%. And on both parent and consolidated levels, our interest coverage ratios are quite strong. On a consolidated level, it increased due to higher EBIT. And on the parent level, this is mainly due to the timing of the dividends, which happened mostly in the first half of the year. Just as a side note related to the balance sheet. Last Monday, AEV received its certificate to offer and issue the third tranche of retail bonds from its SEC-registered PHP 30 billion fixed rate retail bonds shelf registration. This has a principal amount of PHP 5 billion, and we were able to use the oversubscription of an additional PHP 5 billion, which will all be issued on August 9, 2021. The retail bonds maturing in 2022, a year ahead of its maturity schedule. We will also partially finance future funding requirements of Aboitiz InfraCapital in 2021 and '22 for its towers project. The prepayments of the bonds are part of our continuing effort to reduce costs across the group to take advantage of lower interest rate environment and further improve the profitability for all our stakeholders. Let me take the time also to congratulate Toto and UBP on their successful $150 million social bond. This is quite a new achievement and hopefully, something that we will be seeing much more of moving forward. So through our strategy of diligent and thoughtful cash management, AEV is projected to have more than sufficient liquidity to sustain the prolonged community quarantines and importantly, to finance our continuing growth projects. So just to summarize. Some of the key takeaways I'd like you all to leave with is, first, the positive performance that you've seen in the first half across all of our strategic business units shows that we are seeing some headway in our recovery and growth plans. The government initiatives such as the passage of the CREATE bill should help the business recover and return, not just our growth path, but also the economy. Secondly, though, considering the potential impact of the Delta variant and especially today, with the announcement of recurring ECQ within NCR and other areas, we still have to take a lot of caution when we look in the future and try to optimize our opportunities and the balance sheet while maintaining a prudent approach to our investments. And third, as an extra note, we continue to take steps to protect our team members to sustain all of these businesses. Our company vaccination program has started with our different business units. And in combination with local government unit efforts, we continue to try to push for vaccination. We commit to continue to work hard and in hand with the national government until the Philippines succeeds in achieving population protection. Thank you, and we can proceed now to the Q&A session. Judd?

Yes. Thank you, Dmi. Before we move on to our Q&A, we would like to request our audience to complete the short survey that will pop out on your screen. Your feedback is very useful to us, and this is going to help us improve our events in the succeeding periods. So at the end of the event also, there will be a comments box that will pop up to give you the chance to type in additional feedback.

Are we good? All right. Thank you, everyone, for answering our survey. And now we are going to move on to our Q&A. We have received advanced questions, and we are going to take them up now. If we have time, we will address questions raised live on the platform. And so now for our first question, can you please flash it on the screen? This is for AEV, so we are going to direct this to Dmi. Can you kindly give us an update on the Aboitiz vaccination program? Have your vaccine orders arrived and has vaccination started?

Thank you, Judd. That's a very timely question. The Aboitiz Group has received already partial delivery of its AstraZeneca orders with a total of 12,270 orders -- doses, sorry, so far delivered last July 16. All business units have mobilized their vaccination plan, and vaccination has started in different sites since July 17. Team members are also encouraged to continue to get their vaccinations through the LGU if they are available. We continuously encourage all our members to get vaccinated. And as of today, I believe, in the last count, we have a total of 4,871 team members who are fully vaccinated and 2,260 team members who have received their first doses so far. Vaccination campaigns and information sessions are ongoing to increase the vaccination -- or vaccine confidence in the group. And we are optimistic that our team members would practice the values of responsibility in protecting themselves, their families and their fellow team members.

Yes. Thank you for that, Dmi. For our next question, our next question is addressed to the Food Group. The lockdown in Vietnam is reportedly very stringent. How is that affecting your supply chain and operations? Have you -- is there any strategy adopted to minimize operational disruptions, if any?

Yes, thanks. Thanks for the question. So yes, I mean, obviously, what's going on in Vietnam now, I think it's the first time that they go through this, right? Because they've, up until this point, really managed this COVID-19 pandemic quite well. Fortunately, for us, I mean, as far as the mills go, we have enough inventory in our facilities so that operations shouldn't be affected, right? What we've done, though, is with our teams, basically, we've broken our teams into 3 shifts. And we have 2 shifts staying on-site full time, right? Because I think in Vietnam, I think the regulation is right now that if you want to keep your facilities running, you have to have your teams actually staying in house. You can't have them coming in and out. So we have a rotation of shifts with 2 out of 3 at all times located in the facilities. What we're paying attention to now really is similar to what happened in the Philippines last year. As you shut down restaurants and hotels, which are large consumers of food, demand for those products really comes down, right? And so we've seen fish processors shut down operations temporarily. And so that has knock-on effects to farmers to stop feeding their fish, their ponds, right? And obviously, that then translates to less demand for feed, right? So we're -- obviously, this is very early days, so we're paying attention to that. Fortunately, on the livestock side of things, it seems like demand has remained strong. And if it's anything like what happened to the rest of the group last year as we went through the COVID-19 pandemic, it really boils down to those operations that have very good supply chains in place to ensure the continuity of supply of raw materials and delivery to customers. And we were able to do quite well last year, and I anticipate our Vietnam team to be able to replicate that.

Okay. Thank you, Chris. For next question, again, for the Food Group. Just curious also why the wide gap between pork farm gate and supermarket and wet market retail prices. Who is making money in between the farm to retail supply chain? And is this distribution market dynamics working against hog producers like you?

Yes. So the wide gap, right, I mean, honestly speaking, we don't really see that. I mean, the live weight prices have been quite high for some time now. And that elevated live weight price has been translated in the prices that you see in the supermarkets and the wet markets. Actually, over the last couple of months, as imported pork has come in, in greater volumes and at lower cost, right, the prices that we see -- that we continue to see in the wet market actually continued to come down. So they've begun to narrow with the live weight prices, right? So really, throughout all of this, the groups that were able to take advantage were those, at least in Luzon that had animals to sell, right, because the supply of animals was really heavily affected last year, right? And so this has actually been working in our favor as we've been able to restock our Breeder Farm 1 and continue to produce out of Breeder Farm 2, and we've been able to kind of grow our production of hogs over the last couple of months, right? Really, I mean what's worth pointing out here, I think, though is you really want to be a participant across all parts of the value chain, right? You want to be producing the hogs with the right biosecurity in place, and you want to be able to process the animals you produce and then market them to the end users, right? And doing that exposes you to the margins that exist all along the chain, right? And we figure eventually, that's really the right strategy to be employing, right? And that's what we're working towards at the moment.

Thank you. Thank you, Tris. Next question. For AboitizPower, how much was second quarter 2021 and first half 2021 core net profit, excluding insurance claims? This is for you, EVR.

Yes. Thank you, Judd. The first half core profit, without liquidated damages, is PHP 6.9 billion, with -- and there's no LD and business interruption insurance that were considered in the second quarter for 2021.

Okay. Next question. For AboitizPower, how much are the BI claim, business interruption claims, and liquidated damages pretax and post-tax for second quarter 2021 and first half 2021? And how much insurance claims were collected in second quarter?

Well, no, there were no LDs and BI insurance for second quarter of 2021, as I mentioned earlier. And in the first half of 2021, GNPD liquidated damages due to delay amounted to PHP 3.1 billion. That's already the beneficial amount. While GMEC business interruption claims from last year amounted to PHP 0.1 billion, PHP 100 million that's beneficial. After taxes, the LD and BI claims amount to PHP 2.4 billion.

Thank you. Next question. How much insurance gains did you book in second quarter 2021? Please provide a breakdown for both BI and LD on a per plant basis. Do you have updated figures for expected insurance claims in the second half of 2021 and full year 2022?

Okay. Thank you. Thank you very much for the question. No insurance gains, as I mentioned, were booked in second quarter of 2021. For the balance of the year, we're expecting insurance claims of PHP 33 million for the Tiwi outage due to Typhoon Rolly last year; $3 million for the Tiwi outage due to Typhoon Usman, which is quite a few years back; and PHP 190 million partial collection of -- for the Manolo Fortich outage. We're also targeting partial collection of the GMEC insurance claims of $7.8 million before the end of this year. That's for this current outage. For the year 2022, we are targeting to receive the balance of the GNPD liquidated damages of about PHP 560 million; Manolo Fortich insurance claim, about PHP 500 million; and GMEC insurance claim to complete the collection, about $11 million.

Thank you. Thank you, sir. Next question. Liquidated damages are typically capped at 20% to 25% of EPC costs for GNPD. Would you have an idea how much the cap is?

The cap for the GNPD LDs, I would believe, is around 10% to 15% of the EPC cost.

Thank you, sir. Next question. Business interruption coverage is normally capped at 20% to 25% of full year O&M. Would you know how much the cap is? Asking for this one for GMEC.

Well, for GMEC Unit 1, in 2021 -- sorry, no, I don't have the cap for GMEC. Liza, would you have the number for this? Is Liza on the line? Otherwise, we can go back to this question later on or just type it, Judd.

Yes, we'll get back to this. Next question. For AboitizPower still, how much do renewables contribute to net income today on a trailing 12 months? Any thoughts on potential contribution by 2030?

On the trailing 12 months for renewable, about more than PHP 6 billion. But for potential contribution, by 2030, we don't -- as usual, we don't give -- we don't do forecasts, and we don't disclose forecasts.

Thank you, sir. Next question. What is the potential additional revenue and/or earnings if the DOE enforces additional AS firm requirements, ancillary service firm requirement?

Yes. I cannot give a full number on the conversion because we have a number of plants that are already on firm, particularly our -- for the coal plants, we are firm during the off peak, but we're still evaluating if that can be converted to firm during peak. Also on the conversion from non-firm to firm for our regulating reserves, for our hydro plants. The issue is that we're raising the concern with DOE that we don't have control of fuel for the regulating reserves for hydros. So it's really difficult to convert a non-firm to firm when there may be instances where we cannot comply because there's no water behind the reservoir.

Thank you, sir, for that. Next question. As the existing asset portfolio matures, does management anticipate increasing the dividend payout ratio commensurate with free cash flow growth?

At the moment, we're still -- I would say that we'll still be maintaining the dividend to income 50% of net income and well -- and that will be subject to Board approval if we are going to change that.

Okay, sir. Next question. How much commissioning income did you recognize for GNPD in second quarter 2021, net of tax basis? And how much commissioning revenues were generated by GNPD Unit 1?

I don't have the details, please? Liza, would you have the details, please? Can we just answer also by e-mail, Judd? I don't have the details for the GNPD commissioning.

All right, sir. Yes. Next question also for AboitizPower. What was the retroactive impact of CREATE in July to December 2020 booked in second quarter 2021? And how much tax-related profit and loss adjustments were recognized due to CREATE law in second quarter 2021?

Okay. Judd, I don't have the forward notices on this, so I don't have the details. But we can answer this by e-mail. Liza, can you answer this?

Yes. Actually, it's here. We booked it in April 2021. It's 155 million in total.

Thank you. Thank you, Liza. Okay. So for our next question, this is regarding the coal price increase. How do you manage the increasing coal prices? Please elaborate on your hedging strategies and coal inventory management. For example, coal inventory in months, purchase commitments, et cetera.

Okay. For the coal cost, most of our capacity contracts actually, fuel is a pass-through. Of course, now the issue is how do we now manage customers where prices have actually really been going up since the cost of coal has been going up. But for energy contracts, where we have firm price contracts, we're hedging 100% all our coal -- all our contracts based on capacity. And depending on the length of the contract, we're hedging it. But the most that we can actually hedge as far coal cost is concerned, it's about 3 years. So all our fixed price contracts, we limit them to 3 years. So we're 100% hedging on fixed-price contracts. And then for some pass-through, then we will pass through.

Okay, sir. Thank you for that. Do we have our next question? Okay. So our next set of questions will be for UnionBank. All right. So Toto, this is for you. So what is the -- what is your assessment of the nonperforming loan ratio trajectory and provisions of the bank as the NPL cycle peaked? And do you have any more provisions dragged in the second half of 2021? What is your peak NPL assumption for this year?

Thank you, Judd. We ended the year 2020 with an NPL ratio of 5.1% and ended the first half with about -- a ratio of about 4.67% -- 4.69%. In our case, we think that our NPL ratio has peaked at 5.1% and has shown substantial improvement. And we see heading into the second half probably a little more improvement to about 4.5%. So in terms of the peak, we have hit that last year. And provisioning for the second half should not be as much as we did most of the provisioning in the first half of the year. What was the other question? My screen shifted. What was the last question, Judd? There.

Yes. Sorry, go ahead.

More provisions. So I said we did most of it already in the first half, peak NPL assumption. So the peak was in December last year.

Okay, sir. Thank you for this. We'll go to the next question. Again, for UnionBank, is there a comfortable nonperforming loan cover level for the bank, like a sort of target?

Actually, with the implementation of PFRS 9, we are bound by accounting rules to maintain our provisions at a level that is dictated by our ECL framework. Meaning, you try to assess the quality of your portfolio and then you try to project if there will be deterioration. There's 3 classifications, stage 1, stage 2, stage 3. And then you try to foresee what could happen in the economy, and then you try to include that in your projections. So there's really no, say, comfortable NPL cover, but rather what is the NPL cover that is dictated by your ECL framework. And that's what we follow because we are audited by our external auditors and the BSP if the coverage ratio that we have is sufficient. And you just have to follow what that framework tells you. A good example here is that if you look at the details, the coverage, most of our past due is really on mortgages. And mortgages are fully secured. So your assumption, your loss assumption is lower compared to a loan that is not secured. And therefore, if you have full collateral, your loss assumption would be a lot lower than a typical loan. And therefore, your coverage ratio may not necessarily have to be 100 for you to say that you're comfortable with 100. So it really depends on the kind of assets that went past due. Thank you.

Thank you. Yes. Thank you, Toto. Okay. So our next question is still for you. What is your view on the credit cycle, the time of pickup for the industry and for UnionBank? That of the Union loan book movement looks very conservative. What loan segments are rising? And where do you intend to make the push, if any at all?

Yes. So the loan growth in the system itself is really down, it's negative despite the substantial liquidity in the system. And that's because of the pandemic that we're going through. So our projections show that our loan growth will be a single digit for the rest of the year. And that's why the comment that it's conservative. So there's like, for example, a drop in our corporate portfolio. But on the other segments, like on the consumer, we still see an increasing portfolio. So like, for example, the portfolio of CSB in terms of the teachers' loans, it's still continuing. Motorcycle loans are still continuing because there's really a lot of demand for motorcycles since last year. So slow on the corporates in the middle market and some growth on the consumer, and that's where we intend to keep pushing, on the consumer side.

Okay. Thank you, Toto. We will go to our next question. Okay. Our next question is for the Infra Group. So this is for you, Cosette. For Aboitiz Infra, what is the estimated market size of the Philippines cell tower industry? And what is your group's target share in the near to mid-term and in the long term?

Yes. I think the government is encouraging to -- encouraging telcos to add about 50,000 more -- 50,000 towers. And we'd like to build and operate a substantial amount of that one to make us one of the top players, if not the top player in the towerco industry.