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

Hello, everyone. Welcome to our analysts' briefing. Today, we are going to report the financial and operating performance for the full year of 2021 of our publicly listed companies, namely Aboitiz Equity Ventures, AboitizPower and Union Bank; as well as our nonlisted businesses, namely one Food Group, AboitizLand, Aboitiz InfraCapital and Republic Cement. But first, here are the house rules. [Operator Instructions] Questions have been requested from our guests in advance. These will be prioritized in the Q&A today. [Operator Instructions] 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 program will flow as follows. To present for Power, we will have Mr. Manny Rubio, President and CEO of AboitizPower. To present for banking, we will have Mr. Toto Hilado, CFO of UnionBank; to present for Food, we will have Mr. Tristan Aboitiz, President and CEO of Food Group Philippines; to present for Land, we will have Mr. Dave Rafael, President and CEO of AboitizLand; to present for Infrastructure, we will have Ms. Cosette Canilao, President and CEO of Aboitiz InfraCapital; to present for Cement, we will have Mr. Vara Kalepalli, CFO of Republic Cement; to present AEV's consolidated financials, we have Mr. Dmi Lozano, CFO of Aboitiz Equity Ventures. At the end of the presentation, we will conduct a Q&A session. And now to present for Power, I will turn you over to Mr. Manny Rubio.

Thank you. Thank you, Judd. Good afternoon, everyone, and welcome to AboitizPower's Full Year 2021 Analysts' Briefing. 2021 was a turning point in AboitizPower's journey. In the midst of all the hurdles brought about by the pandemic, we kicked off our 10-year growth strategy and made significant progress towards our aspirations. One of last year's highlights is Aboitiz Renewables Incorporated, or ARI, a renewable energy arm which is focused on delivering our RE growth ambitions. Another important milestone is a partnership with JERA, which opens the whole space of exciting opportunities for us, particularly in LNG to power and renewable energy. JERA allows us to significantly grow our business and also gives us capabilities to enhance our baseload generation. JERA's leadership in the global LNG space provides us access to new perspectives, capabilities and opportunities for collaboration and new market entry. Yes, there were challenges and uncertainties. The whole world continued to navigate and manage the impact of COVID-19. But AboitizPower stood firm and remained resilient more than ever. Now allow me to share AboitizPower full year 2021 results, the key drivers of our performance and what we intend to achieve going forward as we continue to power a sustainable energy future. Next slide, please. Our beneficial EBITDA for the full year 2021 was 16% higher compared to 2020. This was due to commissioning revenue from our new facility, GNPower Dinginin and GNPower GNPD Unit 1; higher availability of our baseload coal plants, TSI, TVI and the TLI facilities; higher water inflow and higher WESM dispatch in compliance with the [ mast over ] rule. This was partially offset by the lower margins from the GNPower Mariveles Energy Center, or GMEC, outage that we experienced last year. As mentioned in previous briefings, we were able to claim liquidated damages or LD for GNPD Units 1 and 2 for the delay in the construction, and the final payments for business interruption or BI claims resulting from the GMEC and APRI outages in previous years. Our fourth quarter performance versus the previous quarter was lower by 4%, primarily due to effectivity of APRI's steam pricing based on 50% market clearing price, previously indexed to NEWC and lower water inflow. Moving forward, we will have free capacity to sell to WESM to [ meter ] the movements in APRI's WESM linked cost, and that's how we're planning to hedge it. Compared to the same quarter in 2020, EBITDA was lower by 11% in 2021, mainly due to recognition of TSI BI claim and TVI LP 2020, offset by GNPD Unit 2 LD recognition in the same quarter of 2021. The increase in EBITDA drove core income 68% higher compared to 2020. The higher taxable income was offset by the decrease in tax rates due to the CREATE bill. Even if you take out the LD and BI claims, core net income for the year would have been 33% higher still. The group recognized net recurring losses of PHP 228 million, mainly due from impairment costs of Therma Power Visayas and RP Energy. This was partially offset by net foreign exchange gains from the revaluation of U.S.-denominated debts. And as a result, AboitizPower's net income for the full year 2021 was PHP 21 billion, 66% higher compared to 2020. And even if you take out the LD and BI claims, net income for the year would have been 33% higher. Next slide, please. Cash increased by 48%, mainly from loan availments in anticipation of bond maturities in 2022 and equity infusion in 2 renewable projects. Investments and advances increased by 5%, mainly due to the increase in share of equity earnings. As a result, our total assets increased by 7%. Total liabilities increased by 3%, majority due to higher trade payables and net loan availments. With that, our net debt to equity improved from 1.4x to 1.1x. Capacity sales grew by 10% for the full year 2021 compared to 2020. This was primarily driven given -- driven by higher WESM dispatch, resulting from higher availability of our TLI and TVI facilities fresh from contributions from the commissioning of GNPD Unit 1 and higher water inflows. The optimization of our trading strategy resulted in a higher capacity sold factor. Our total revenue increased by 37%, primarily due to higher effective bilateral contract quantities and spot rates driven by indices as well as increased sales volumes as mentioned in the previous slide. Our total energy sold increased by 14% due to higher dispatch resulting from the higher availability of our TSI, TVI and TLI facilities and higher water inflows. Ancillary services now form 15% of our total energy sold compared to 10% last year given that NGCP requires more ancillary capacity. With the commissioning of GNPD Unit 1 in 2021, spot sales have increased by 6% compared to 2020. Our peso gross margin increased by 16% year-on-year, mainly due to the previously mentioned drivers. Due to better availability of our coal facilities and higher water inflows, our purchased power volume decreased by 8%. This was offset by increased purchase power rates driven by higher WESM prices. And as you can see from the quarterly performance charts on the right, our energy generated from the fourth quarter increased by 13% due to higher dispatch of TLI and the GNPD. Unit 1 of TLI -- oh, sorry, Unit 1 of GNPD continued to feed much needed energy into the grid. Spot and selling prices increased by 133% to PHP 5.70 per kilowatt hour. This was driven by higher WESM prices due to the higher volume of capacities and outage in the market, recoveries in demand and higher indices. Our trading strategies also allowed us to take advantage of higher peak prices. BCQ selling prices increased by 18% to PHP 4.79 per kilowatt hour, mainly due to high indices. Average NEWC for the full year 2021 was $137 per metric ton versus 60% (sic) [ $60 ] per metric ton in 2020. The recent movement in coal prices underscores the risks attached to fixed contracts longer than 3 years, which we have been saying in the past. Availability of TLI, TSI and TVI was at 87%, much higher than last year's 80%. All our BUs, except for coal, were at par or were above the NERC benchmark in terms of availability. In terms of availability, the rest of our facilities were available to sustain the high availability performance. GMEC's [ long ] forced outage in 2021 which we saw last November, but we continue to see issues with the balance of plants that we are currently addressing. And we are expecting to resolve with finality most of the issues when we do the major planned outage by August 2022. I'm just having some problems with the power. Hold on. Okay. Thank you. I'm back. A key driver of our improved plant availability and reliability is our organizational response to continuously strengthening our technical bench. We targeted hiring and placement of a strong and seasoned team of experts in asset management, digital initiatives, project development and execution, overall repair, services and project management, operational excellence, systems and strategy and the reliability and performance management across our various business units. For our distribution business group, beneficial power sales increased by 4% to 5,584 gigawatt hours year-on-year. This was due to higher consumption as a result of the recoveries in demand in 2021. Energy sales from residential customers increased by 2%, while energy sales from commercial and industrial customers increased by 5%. This was due to less stringent community quarantines and the resumption of operations of commercial and industrial businesses. Regarding the impact of the recent typhoon, Typhoon Odette, on our distribution business, as of February 28, 4,600 -- 468,658 out of 474 100 -- 474,182, or 99% of our affected customers have been energized. And for the parametric insurance of the [ DU ], it responded quickly, and we were able to collect the money in 5 weeks' time from the -- from when the typhoon occurred. As for generation business, the BI did not kick in because they are below the deductible; likewise, for property damage. The average gross margin slightly declined from PHP 1.68 per kilowatt hour to PHP 1.61 per kilowatt hour. This was due to the timing difference of pass-through charges brought about by higher coal prices. Except for Cotabato Light and Power Company, all of our systems losses were below the regulatory cap of 5.5%. Cotabato Light's systems losses ended above the regulatory cap due to nontechnical losses, which have minimal impact on the bottom line. But to note, given the CapEx adjustments, this was significant -- there was a significant drop in Cotabato Light's losses from 8.24 to 6.34, showing that we are on our way to paying lower -- lowering the cap. On WESM, average full year 2021 load-weighted average price was PHP 4.85 per kilowatt hour, 102% higher compared to 2020. This was due to recoveries in demand, the higher volume of capacities on outage in the market and higher indices. Indicatively, the average LWAP rate for the month of January '22 was already PHP 7.07 per kilowatt hour, 140% higher than the same month in 2021 of PHP 2.94 per kilowatt hour. And we're seeing this rate to continue. On average, we expect higher WESM prices this 2022 compared to last year, due to depletion of Malampaya Gas, upward impact of higher indices given the ongoing Ukraine-Russia war, and we also expect higher demand due to elections and less constructor expected quarantine restrictions versus last year. [ Corporate appreciation ] will show you the Luzon supply and demand situation in the next slide. Next slide, please. So the Luzon supply and demand situation is tightening. To meet existing critical market needs, we are optimizing our existing baseload facilities. So over the past few months, we have been seeing NGCP alerts for the Luzon grid. As our economy recovers and reopens once again, and assuming that the current -- that the recent surge in COVID cases does not merit another economic shutdown, and considering election-related demand, we expect that the tight situation will continue and become tighter still in 2023 and onwards. We anticipate that new capacity will come in late 2025 or early 2026. So in this chart, please closely look at the broken black line, which represents the intersection of annual peak demand and the grid's reserve supply requirements. So amidst this evolving supply and demand situation, which includes the impact of the DOE moratorium on building of new coal plants, we expect our GNPD units to play a significant role in addressing supply gaps and meeting difficult market needs. Unit 1 will have addressed 2022 peak demand, while Unit 2 will have to address 2023 peak demand, although we expect Unit 2 to be synchronizing mid- to late April. We currently have over 1,000 megawatts of projects under construction. These are expected to commercially operate this year. And on top of that, we have 160 megawatts of RE projects expected to be issued a notice to proceed this year. And finally, we have an additional 721 megawatts of RE projects under priority development, and this will help us achieve our 2030 target of 9,200 megawatts in total. So allow me to update you on some projects in the next few slides. Next slide, please. So GNPD Unit 1 officially went on COD last January 26, 2022. Unit 2 has started commissioning. The target of Unit 2's initial synchronization remains to be second quarter, maybe around April to late -- mid of April to late April, from which GNPD Unit 2 may start turning revenues selling in the spot market. Next. PV Sinag Power is a 94-megawatt peak plant located in Barangay Cayanga municipality of Bugallon, Pangasinan. The EPC contract was awarded to JGC Philippines last December 2021. The groundbreaking ceremony was held last month, and the project is expected to commercially operate by fourth quarter of this year. Necessary permits for the construction of our SNAP-Magat BESS project have been secured from various agencies and the local government unit. And the National Grid Corporation of the Philippines has officially confirmed to SNAP-Magat that it will upgrade the Magat Santiago 230 kV transmission line this first quarter of 2022. So this will allow SNAP-Magat to continue adding capacities within the Magat area for additional projects beyond this battery energy storage. The project is expected to commence construction this year with projected commercial operations date in the first half of 2024. Here's an update on the APRI steam field operator initiative, steam production enhancement campaign, which aims to drill 12 new production wells with a minimum of 50 megawatts aggregated individual well capacity by 2023. As of 2021, 4 wells were completed and 4 more will be added by 2022 and another 4 by 2023. In Tiwi, the initiative to convert waste heat from geothermal brine to power 15-megawatt binder power plant is reaching the final stages of tender. So we hope to start commercial operations by third quarter of 2023. And finally, in partnership with [ Pasila ] and Aboitiz Construction, we are in the final stages of installing our first battery and storage system, or BESS, project in Therma Marine or TMI 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, where there is a limited supply of energy generated in hydropower plants, providing needed contingency reserves. The project nears completion at around 90%, with the BESS barge already moored in the TMI facility right next to the power barge. The mobilized technical team continues to work on the testing and commissioning activities to get the plant running by May this year. It will serve as a model for future battery investments of AP, of AboitizPower, as well as hybrid renewable energy projects. So how much do we plan to spend on our capacity growth projects this year -- or sorry, these coming years? Together with our partners, we have allocated PHP 28 billion in capital expenditures. This is 95% increase from PHP 14 billion utilized in 2021. Over 50% of the budget is for expansion and upgrades, including the remaining investments for GNPD's construction, GMEC general overall and construction of solar and hydro plants and battery and storage system projects. The balance allocated for maintenance of business, mostly to ensure the availability of sufficient baseload this coming election period. And now on to our dividends. On March 4, 2022, AP approved regular cash dividends in the amount of PHP 1.45 per share to all stockholders as of March 18, 2022. This is payable on March 30, 2022. The total dividends payable for this year amounts to PHP 10.7 billion, which is equivalent to and consistent with our practice of paying 1/2 of the company's previous net income. Based on the closing price of PHP 34.25 on the day of our dividend was announced, this also translated to a dividend yield of 4.2%, which represents an increase from the previous year's payout. So with our ongoing and upcoming projects mostly focused on renewable energy, as shared earlier, we are well on our way to a sustainable energy transition road map. It's our commitment to drive the Aboitiz Great Transformation. We are doing this by ensuring that our energy transition journey is in step with economic development so we can power the growth of our customers, our communities and our country for many years to come. While on the road to 50-50 balanced mix portfolio by 2030, to serve the Philippines' requirements for reliable, affordable and environmentally sustainable energy, we also make sure that AboitizPower remains an agile, competitive and future-ready organization. We continue to empower our One AP team to drive our innovation, digitalization and sustainability goals. Exciting times ahead for AboitizPower. There's so much room for growth, and there's a lot to be done to create long-term, meaningful impact for our stakeholders. As we say it in AboitizPower, we are better together. And together, we will power sustainable energy future. [Foreign Language]

Thank you, sir. And now to present for financial services, I will turn you over to Mr. Toto Hilado.

Good afternoon. I'll be presenting the 2021 results of UnionBank. In the second part of my presentation, I will give an update on the strategic initiatives of the bank. So for 2021, UnionBank recorded a net income of PHP 12.6 billion. That's 9% higher compared to the previous year. Our earnings performance translates to an ROE of about 12%, which is higher than the industry's latest ROE, which is an average of about 9.2%. Net revenues increased by 7% to a new high of 45 billion, which was as a result of the following: higher net interest income due to increased margins, our margins increased by 9 basis points year-on-year due to a robust growth in our CASA deposits and lower funding costs because of the lower interest rate environment; higher service charges and fee income from customer transactions; higher income from foreign exchange gains; and trading gains amounting to 8.7 billion. Provisions for loan losses was recorded at 5.8 billion, 35% lower year-on-year, as our NPLs stabilized. Our NPL -- gross NPL ratio ended the year at 5%. Next slide, please. Our net interest income increased by 4% to 29.8 billion, driven by an improvement in our margins year-on-year. Our net interest margin increased by 9 basis points to 4.6%, largely driven by a 55 basis point drop in our funding cost. As mentioned earlier, the drop in funding costs is because of the growth in our cost of deposits, which increased by about 30%, and the full year impact of the lower interest rate environment in 2021. Despite lower loans year-on-year, earning assets were up 2% year-on-year driven by growth in between earning assets and investment securities. Next slide, please. Total loans went down by about 5% to 310 billion as demand for corporate and commercial loans remained subdued. Corporate loans declined by 12%, mostly from clients pre-terminating their loans in the fourth quarter of 2020 and muted demand for term loans. But we continued to provide short-term working capital loans to companies. And in the last quarter of 2020 -- 2021, we were starting to see a recovery. Our commercial banking and SME loans were also down 4% on lower risk appetite. Consumer loans, on the other hand, continued to grow on the back of strong mortgage loan bookings. NCSB loans were higher driven by strong motorcycle and non-[ debt head ] loan bookings. Total deposits were flat at PHP 514 billion. However, our CASA deposits grew by [ 13 ]%, improving our deposit mix from 42% to 54%. Our robust CASA growth were driven by customer segments as corporates and retail customers alike continued to deposit excess cash, due to stability and convenience in transacting with our cash management platform. Next slide, please. Noninterest income rose by 14% to 15.3 billion, mainly driven by fee income and miscellaneous income. Service fees -- and service charges and fees increased by 39% to 2.9 billion on increased customer transactions across the banking group. On the parent bank, this includes increased Visa interchange fees, electronic fund transfer fees as we reinstated our Instapay charges starting August, higher [ business ] payment fees and bank assurance commissions. For CSB, they had higher penalty fees and other fee income from loan availments. Miscellaneous income also went up by 59% to 3.7 billion, driven by higher foreign exchange income and income from our trust operations. Next slide, please. Operating expenses grew by 14% to 24.3 billion. However, net of onetime and volume-related expenses, OpEx would have gone up by only 11%. As for our NPL ratio, the bank's gross NPL ratio slightly decreased to 5% as of December 2021 from 5.1% in December 2020. So we did see an improvement in the consumer loans portfolio, like housing loans and credit cards. However, there was an increase on the middle-market loans. So while consumer loans improved in terms of the credit quality, we did see a slight deterioration on the middle-market accounts. But all in, our NPL ratio actually substantially -- or minimally went down to 5%. The bank also booked 5.8 billion in loan loss provisions, increasing our group NPL cover to 71% and the bank's NPL cover to 78% as of December 2021. In terms of our capital ratios, the bank's capital ratios are higher year-on-year as growth of capital outpaced the growth of risk assets. As of December 2021, our CET1 ratio was at 16.3% and CAR at 18.4%. As for our share price, we had a good run in our share price in 2020, with a share price appreciation of 73%. We also declared a 25% stock dividend last December and recently a cash dividend of 2.80 per share. We attribute the share appreciation on our getting a digital bank license and our winning the bid for Citibank's consumer banking business. Next slide, please. As for our economic outlook, for GDP growth, we revised our forecast downwards. Initially, our forecast was at 6.2% based on a strong recovery in the fourth quarter of 2021. However, with the Omicron -- with the increase in COVID cases because of Omicron and now the Ukraine war, we have downgraded our forecast for GDP to 5.4%. This includes the assumption that the impact of elevated oil prices may eventually hurt overall consumer consumption. For interest rates, we expect at least 50 basis points rate hike during the year, most likely happening in the second half. This is under the assumption that the inflation effect of higher oil prices may put the inflation out of the range of BSP's forecast, thus requiring an adjustment in the policy [ weight ]. We think, however, that in terms of the yield curve, part -- or mostly this is already priced in, in the yield curve given the steepness of the yield curve. Next slide, please. Let me now go to our strategic updates. If you recall, our strategy is composed of Plans A to B. And Plan A is basically UnionBank and City Savings, and Plan C is our, is the consumer business of Citi, which we hope to acquire by the middle of the year. And then Plan B, which is our UBX Tech fintech company; and Plan [ D ], which is Union Digital. Next slide, please. So for Plan A, which is the parent bank, we are already in Phase 3 of our transformation, which is the rollout and commercialization of our digital initiatives. Our digital onboarding further ramped up in 2021, now with 4.1 million registered digital users across our digital platforms. 30% or 1.3 million of this were new accounts opened in a fully digital manner via our UB Online app. Our digital channels provide us an efficient and economical means to acquire and engage our customers. Digital transactions also continued to grow versus physical transactions. Monthly transactions reached 8.3 million, with majority being fund transfers transactions, which provides us with a continuous stream of fee revenues as they grow. For 2022, we shall continue to grow our customer base with the help of digital channels and digital marketing. The goal is to further enhance customer lifetime value by increasing customers' usage of our digital offerings and features. As for Plan A, which includes CSB, CSB is no longer a one-product bank. CSB has grown and diversified into 2 other mass-market segments, namely the motorcycle lending business and pension and other salary loans business. With the help of digital tools and partner outlets, CSB registered record high bookings in its motorcycle loans and pension loans business, even surpassing pre-pandemic levels. Alongside the rapid growth of loans, continuous process tweaks are being done to further improve the profitability and efficiency of our overall mass-market business. Next slide, please. Plan B, which is essentially our subsidiary, UBX. UBX has also come a long way from the start of its operations in 2019. UBX is already driving the wave of e-commerce. UBX recently onboarded more than 180,000 MSMEs across its platforms, with monthly transactions reaching 1 million and now fueling recurring revenues. It is key for UBX to sustain growth from sign-ups and transactions in 2022 to increase recurring revenues that will support its operations. UBX is also gearing up for the next phase. It is to be the leader in the open finance environment by aggregating its ventures into one platform. And along with its API-ready infrastructure, fintechs, businesses and government and the local governments can easily connect to UBX and benefit from the digital solutions that they offer. Plan B, which is the Union Digital. The Union Digital opening is on track for commercial launch by mid-2022. Paperless and [ branch ] less on day 1, Union Digital shall be the challenger bank, which will help us unlock the formula serving the larger untapped retail segment in the country, in a cost-effective and sustainable manner. Plan C, which is the acquisition of Citi's consumer business in the Philippines. So we won the bidding in 2021. The transaction includes Citi's credit cards business, personal loans and wealth management business via CFSI, and the corresponding retail deposit business. The acquisition also includes Citi's real estate interests in relation to its building called Citibank Square in Eastwood, 3 full-service bank branches, 5 wealth centers. And we expect for that -- most of the 1,750 employees of Citibank, including senior management, will be joining UnionBank. The transaction will be financed by a combination of internal resources and an [ SRO ] up to 40 billion. We expect the transaction to close in the second half of the year after getting all the regulatory approvals. The acquisition of Citi's consumer business is considered to be transformational for the bank. Prior to the acquisition, the portfolio of UnionBank is only 7 billion. With the combined volume of Citibank and UnionBank, that will bring us to #4 in the industry. And that brings about 1 million new clients for the bank, and on the wealth management business that comes with 49,000 new customers. And in terms of the assets under management around 74 billion currently, that would increase our assets under management to 170 billion. With the acquisition of the consumer portfolio, it will increase the ratio of our consumer portfolio from 40% to 49%, and net interest margins will increase from 4.7% to 5.5%. Next slide, please. The Citi acquisition also involves revenue and cost synergies, not to mention that there is no overlap in terms of our businesses. So Citi is strong on the credit card business and on the wealth management business, while the bank is strong on the mortgages and auto financing business. In terms of revenue synergies, there will be cross-selling opportunities for UnionBank. With 1 million new accounts, we could cross-sell mortgages, auto financing and SME loans. And on the other hand, the Citibank credit card product can be cross-sold to UnionBank clients, including the wealth management business. In terms of the cost synergies, we expect to have lower funding costs because of the CASA base of the bank and savings on the IT infrastructure. Let me end this presentation with a summary. So for the financial highlights, so we ended the year with 12.6 billion income, an ROE of 12%, a 30% growth in our CASA. Our capital ratios remain above the regulatory minimum and shareholder returns of 78% coming from stock appreciation and a 5% cash dividend yield. In terms of the strategic highlights, our digital strategy continues to gain traction. We had 8x growth in digital users to 4.1. CSP continues to diversify in new product markets. UBX is ramping up their revenues. Union Digital is on track for commercial launch. And Citi accelerates the growth of our consumer banking business, and will be earnings-accretive on day 1. 2020 will be a -- 2021 will be a hard year to match as we enter 2022 with uncertainties, given the Ukraine war and its potential negative impact on the local economy. The first few months of the year will be challenging, but we remain hopeful that the second quarter, especially the second half, which is after the presidential elections, would present better business opportunities for the bank. Thank you.

Thank you, sir. And now to present for Food, I will turn you over to Mr. Tristan Aboitiz.

Thanks, Judd. Good afternoon, everyone, and thank you for taking time out of your schedules to be with us this afternoon. So I thought I'd start this presentation by briefly walking you through a reorganization that we implemented across the Food Group in January of 2022. The key change is that we have grouped our businesses into 2 specific business units: the Agribusiness unit and the Food & Nutrition unit. The Agribusiness unit largely refers to our livestock, aqua and pet feed businesses, as well as our Specialty Nutrition business across the region. Meanwhile, the Food & Nutrition business unit refers to our Flour business, our commodity training operation and our growing farms and meat businesses, all currently located here in the Philippines. The ambition is to grow both business units over time into regional businesses that, when put together, equate to a Food Group that is the lowest-cost producer and is more balanced in terms of revenue contribution across the protein value chain. As our vision states: a leading regional integrated agribusiness company. We believe that this reorganization will allow us to better deliver on our identified strategic pillars due to a higher degree of focus that can be dedicated to each area of business. And with that focus should come quicker execution. So now moving on to the key financial highlights for the full year of 2021. The Food Group's full year 2021 revenue saw a 20% increase year-on-year, ending at PHP 87 billion or USD 1.8 billion, due to the positive contributions coming from both our agri business and food and nutrition units. Meanwhile, EBITDA declined 17% to PHP 5 billion or USD 101 million due to margin compression that was experienced by our regional agribusiness unit, along with our Philippine Flour business. Likewise, the EBITDA margin decreased by around 258 basis points, which was mainly driven by declines in the EBITDA margins of our Philippine Flour division, which declined 824 basis points; and the regional Agribusiness unit, which saw a decline of about 316 basis points. Lastly, the Food Group's [ NIAT ] fell 11% relative to 2020, finishing at PHP 2.2 billion or USD 45 million. This again was due to the sharp pace of increases of our raw material costs that hit the bottom lines of our regional feed and Flour businesses. While we continue to pass these increases on, we spent most of 2021 playing catch-up, and this affected our margins and our bottom line. The year-on-year decline in [ NIAT ] was slightly tempered by the recovery of our food and nutrition businesses, farms division. Next slide. Focusing now on revenue in 2021. As mentioned, the Food Group's full year 2021 revenue increased 20% year-on-year to PHP 87 billion or USD 1.8 billion, due to the improvement in the contribution of both the Food and Nutrition business and the Agribusiness units; and a PHP 4.6 billion or $93 million incremental revenue earned from coal trading at Abaca, which is our Food Group's purchasing arm in Singapore. This was done in collaboration with Therma Luzon. The Food & Nutrition business delivered a total of PHP 15 billion or USD 306 million in revenues in 2021. This grew 18% year-on-year due to the positive contributions from our farms and trading divisions, despite a drop in the performance of our Flour division. Our Farm divisions revenue increased 15% year-on-year, which was largely attributable to a 1.8x increase in average selling prices of pork due to a scarcity in the supply of pork in the Philippine market. This was, however, tempered by a 29% decline in volume due to a reduction of our sow level in Breeder Farm 1, which was hit by ASF in 2020. Our trading division's revenue grew by 134% due to an increase in volumes sold over the course of the year. Volume was up 2.2x versus 2020 due to an increase in demand for feed [ wheat ] caused by a disappointing local corn harvest as well as a higher demand for soybean meal due to an unexpected shortage of soybean meal availability in the fourth quarter of the year in the Philippines. Meanwhile, our Flour division's revenue slipped about 4% year-on-year due to a 3% reduction in volume as demand for flour-based products such as biscuits and bread were reduced significantly over the year. This was seen as a knock-on effect of the various lockdowns and/or movement restrictions that were imposed in the Philippines throughout 2020. Lastly, the Agribusiness unit delivered a total of PHP 68 billion or USD 1.4 billion in revenues in 2021. The increase of 13% year-on-year was due to an 18% increase in the average selling prices of our feed across the region. These price hikes were implemented in order to limit the negative impact of increasing cost of our raw materials. For the full year 2021, 77% of the total revenue came from our agribusiness, and 17% was contributed by the Food & Nutrition unit, and 5% was generated from our coal trading with Therma Luzon. In 2020, the share of Agribusiness and Food & Nutrition was 82% and 18%, respectively. Looking now at our EBITDA for the year. The Food Group's full year 2021 EBITDA fell 17% year-on-year to PHP 5 billion or USD 101 million. The 17% decline in EBITDA was primarily due to the 32% drop in the contribution from our agribusiness unit. The overall decline in group EBITDA was despite a 25% improvement in the contribution coming from the Food & Nutrition business and the incremental PHP 163 million gain in EBITDA from our coal trading cooperation with Therma Luzon. The 25% year-on-year increase in the contribution of the Food and Nutrition business unit to PHP 1.6 billion or $33 million was mainly attributable to a 6x increase in contributions coming from our farms division, following the improvement in selling prices of pork in the Philippine market. Meanwhile, our Flour and Trading divisions reported a reduction of 52% and 53%, respectively, due to the increase in the raw material costs brought about by suboptimal weather conditions in key crop-producing areas around the world that resulted in lower crop yields, along with a decline in the contribution coming from our flour byproduct, which was a result primarily of a decrease in [ corn erd ] prices for the first 3 quarters of the year last year. Lastly, our agribusiness unit saw a 32% decline year-on-year in its EBITDA contribution, which was primarily due to the rapid increases in the cost of raw materials, coupled with the shift in the sales mix of [ our ] feed in favor of lower-margin products like poultry feed across the region. This shift in sales mix was a result of the diminishing market size for our swine feed, which is an effect of the continued spread of ASF in various parts of the region. Lastly, let's take a look at the group's full year [ NIAT ] numbers. The Food Group's 2021 [ NIAT ] fell 11% year-on-year to PHP 2.2 billion or USD 45 million. The decline of 11% year-on-year in the Food Group's income was primarily due to the 44% reduction in the bottom line of our agribusiness unit. This decline offset the recovery in our Food & Nutrition business, which experienced a 293% jump in income in 2021. The Food & Nutrition business ended 2021 with a consolidated net income after tax of PHP 790 million or USD 16 million. The increase in the bottom line was attributable to the recovery of our farms division from the prior year's losses to PHP 472 million or USD 10 million. You'll recall, as I mentioned earlier, in 2020 our farms were impacted by ASF. The Flour and trading divisions reported a decline of 57% and 73% year-on-year, respectively, to their [ NIAT ] in 2021. This was following the declines in EBITDA brought about by the increases in our cost of raw materials for those groups. We did benefit positively from the impact of the CREATE bill for these Philippine businesses, as they brought down taxes, thus helping to somewhat mitigate the drag in operating profits. Meanwhile, our Agribusiness unit ended 2021 with a [ NIAT ] that was 44% lower than the previous period, following the decline in EBITDA. This decline was cushioned by lower taxes due to our compressed margins, that resulted into lower taxable income across the various geographies. For the full year of 2021, 58% of the total net income after tax came from our regional Agribusiness unit. 36% was contributed by the Philippine Food & Nutrition businesses, and 6% came from our coal trading. This came from 92% and 8% contribution of agribusiness and food and nutrition, respectively, in 2020. Moving on now to One Food Group's aspirations and strategies. Our strategy remains to be anchored on the 3 pillars of balance, optimize and develop. Balance means diversifying product portfolios to increase resilience as well as to balance revenues and EBITDA by countries, businesses and species. Optimize means focusing on operational excellence by identifying and removing inefficiencies across different divisions and countries, and leveraging technology where there is an opportunity to do so. And Develop means building new growth opportunities by investing in fast-growing and high-margin segments like aqua, specialty nutrition and pet food. For the next 10 years, we have identified 5 strategic moves anchored on these 3 pillars, and they are: one, to improve overall group operational efficiency; two, to diversify and grow our feed business across the geographies that we are present in; three, to selectively integrate downstream in farms and processing; four, to protect our market share in the Philippine Flour business; and five, to develop new businesses in fast-growing sectors like aqua and pet food, as well as high-margin segments of the industry like specialty nutrition. These strategic moves will continue to guide the Food Group towards its aspiration of becoming a leading integrated regional agribusiness. Going now to the highlights and milestones of 2021. Here is a list of the projects that we undertook and successfully completed over the course of last year. In Vietnam, we successfully completed the 5-ton per hour expansion of our fish feed line. This gives us an opportunity to cater to the increasing demand for fish feed in the region. Furthermore, the plant has a capability to produce pet food that will enable us to capture the opportunity to export our own product to the nearby regions like Malaysia and the Philippines. In China, we completely automated and installed a new [ feed ] cleaning and pigeon feed mixing system that will substantially improve the efficiency in our production. We also increased our capacity by 5 tons per hour through a capital-light approach of leasing a mill in the city of Guangxi. In Malaysia, we completed the construction of a 5-ton per hour fish feed line that is expected to cater again to the growing demand of fish feed in the western part of that country. In Indonesia, we successfully completed the expansion of our raw material warehouse with an additional capacity to store 3,000 metric tons. This is expected to enhance our efficiency through a smooth and sustainable flow of production and increase our ability to procure locally grown raw materials when prices are at their lowest. And lastly, in the Philippines, we increased the presence of our meat business through establishing a partnership with over 70 concessionary stores to boost our brand, The Good Meat. This expansion is expected to continue in 2022, and I will discuss this in the succeeding slides. Turning now to projects that we are looking to start and complete in 2022. First, I just wanted to say that we view 2022 as a critical point in time to continue on our push to solidify our position in the pork value chain in the Philippines. 2021 was a year of building our foundations and making inroads into the physical and digital channels to push our pork products to Filipinos across Luzon. 2022 should be a year of capitalizing on the foundations that were laid last year and making further progress in terms of introducing our products to the Pinoy market and eventually occupying space in their freezers and pantries. We will detail the projects related to our integrated farms and meats businesses on the succeeding slides. In 2022, we will also begin the construction of significant expansions in feed milling capacity for our regional agribusiness unit. These expansions in China and Vietnam will be operational in 2023 and will add an additional 60 tons per hour total to our production platform. Next slide, please. Now turning to the details for the projects under our Food & Nutrition business in the Philippines. We continue to grow our brand and channel of meat distribution, The Good Meat. On top of the existing store that we have in San Juan City at the moment, we plan on opening 11 new physical stores and for them to be fully operational by the end of 2022, with an additional capacity of 2 metric tons per day per store. Furthermore, from the 60 supermarket concessions that were established in 2021, we are expecting to add around 20 more concessionaires by the end of the first quarter of this year. This is along with growing the presence of our ready-to-cook meals from the current 200 supermarkets around Luzon to over 250 by the end of this year. These initiatives should do 2 things for us: one, further develop the B2C channels that we have for our products; and two, provide an expansion to our supply chain, which will ensure better distribution to all customers in relevant areas, whether they are served through our physical channels or our various e-commerce channels, including thegoodmeat.ph. With this, we hope to capture a larger percentage of the margin that is available along the value chain, along with getting much closer to the final consumers of our products. And lastly, coming from the same business unit in the Philippines. We continue the construction of our third breeder farm facility in Nueva Ecija, which broke ground in August of 2021. The farm will have a capacity of 2,500-sow level and is expected to be finished by July of this year. The farm will sit on over 100 hectares of land, and that can support further expansions to our hog raising business in the future. This additional capacity will help to ease the shortage of supply of pork in the Philippine market and is key to us gaining efficiency in our operations at Tarlac Meatmasters. With our improved biosecurity protocol and methodology, we are confident to expand our capacity amidst the spread of ASF in the country. To end this presentation, let me share with you the buyout of the 30% share of our minority partner in Gold Coin Malaysia and Brunei, which was completed in December of last year. This buyout will enable us to capture the full benefits of our future strategic plans for the company, such as the expansion into the aqua market and pet food categories. This will also give us better flexibility to bring in potential partners that we believe will be able to add more value to the business in the future. Thank you, and that's all for the Food Group this afternoon.

Thank you, sir. And now to present for Land, I will turn you over to Mr. Dave Rafael.

Yes. All right. Okay. Thank you, Judd, but your video is -- there. Okay. All right. All right. Thank you, everyone, for giving us your time to listen to our presentation. I'm very pleased to announce that in spite of the very uncertain year in 2021 with the pandemic and in the late December because of Odette, I'm pleased to announce that 2021 was a very good year for AboitizLand. In terms of key financial and operational metrics, I think we exceeded all our targets in 2021. So our revenues, we recorded a revenue of 5.3 billion, which is 47% higher than the previous year. Our gross profit was 2.5 billion, which is 71% higher than the previous year. We grew [ NIAT ] to 2.3 billion in 2021. That's a 601% improvement. And in terms of our residential sales, we recorded a record-breaking 4.5 billion in gross book sales in 2021, which is 54% higher than the previous year. Next slide, please. So in 2021, what we will see here is in terms of the revenue contribution, the residential component in 2021 accounted for 60% of total revenues for AboitizLand, which reverses the previous trend of the industrial being the more -- being the bigger contributor of their revenues for 2021. The residential was really quite strong and accounted for 60%, which is an increase of 3x that of 2020. Next slide, please. So as I mentioned, the 2021 was a record breaker in terms of our gross book sales. We recorded 4.5 million (sic) [ billion ]. In addition, we're quite proud to mention that we've gotten quite a number of recognition from international award-giving bodies, namely the Property [ Huro ] Group, which is a Singapore-based property consultancy. So we were awarded for Seafront Residences. It was awarded the best housing development in the Philippines and also the best housing development in Southern Luzon. Our Amoa project was awarded the best affordable housing development in the Visayas and our Villages at Lipa was given the highly commended award for the best housing development in Southern Luzon. So next slide, please. Okay. I guess just to -- maybe to explain a little bit about how we were able to turn around and produce such good results in 2021. It was -- they really rested on these 3 pillars, which is operational excellence, culture of innovation and strategic alliance. Let me just briefly go through it one by one. So what do I mean by operational excellence? It really means really getting all the basics really done, the important basics working on it. This will be -- for example, it will be our marketing. We were very aggressive and very creative in combining online as well as on-site marketing whenever it would permit. Of course, we were also one of the pioneers in online end-to-end sales selling among all the property developers. We had different marketing campaigns. We were very aggressive. We were very -- we were quite active both in social media and traditional media in terms of marketing our projects. We were also -- we also listened very carefully to our customers as well as to competition in terms of our pricing and payment terms. We realized how difficult it was for many of the customers because of the impact of the COVID in terms of their financial capabilities. So we had to also adjust our payment terms and our pricing. And primarily, which is very important in the real estate company, we really made tremendous strides in improving our construction and project management processes now, which, as you all know, plays a big factor in revenue recognition. So in terms of innovation, in 2021, we embraced innovation. We realized that in times of great uncertainty and unpredictability, the best weapon against all this uncertainty is really to embrace agility and innovation. So just some of the examples, we spent 2021 developing our -- and further improving our contactless homebuying app, which we have now started rolling out. We're also going to be introducing a lot of technical innovations -- technological innovations in the way we plan and design houses, like this 3D modeling for design and construction. And we are also going to be pursuing new construction technologies. We're veering away from the traditional buhos type of construction to more precast fabricated panels, which will -- not only will speed up construction, but will eliminate a lot of the contractor risk in terms of quality and completion. So we're starting it in Seafront. We're using -- it's a Danish technology called Connovate, but we'll also be doing something similar in our other projects as well. And lastly, we've also sought strategic alliances. One example of this is we -- there's a new group that has -- it's a group called Nook, and we've teamed up with them so that they will help us in the very complicated and time-consuming process of bank takeouts because they will be working with our customers to work with banks so that they can do all the documentation, look for the best banks that offer the best rates, and therefore facilitate this bank takeout process at no cost to us, because basically the group will be making their money from commissions from the banks. Okay. So we're going to build on this. And in closing, let me just say that AboitizLand has a very bullish outlook in 2022. We're very bullish and optimistic about the property sector as a whole with -- as we're coming out of COVID, we're seeing some changes in consumer preference in terms of property, which I think will be very beneficial to us. For example, we're seeing that there is now a preference for buyers to look for bigger, more spacious houses, even if they're not within the -- even if they're not in the city, because of the acceptance of work from home, right? And of course, we've got all this infra development. The roads and all these highways and skyways, which makes that all possible. So we think that all of these trends will be beneficial to AboitizLand because all our projects are all outside these -- are all outside the metros capital city but in nearby neighboring cities. And that's why we're also bullish about AboitizLand because of those trends. Because we feel that in 2022, we will start harnessing all the developments, all the investments that we've made in all our digitalization strategy. We also think that we've not -- we've barely touched the OFW market. We have not done enough, and we will do so in 2022 onwards. And we also want to be more customer-focused, improving our quality and really improving our customer-centered -- being customer-centered because we think that's going to be a key competitive advantage. And lastly, because of this bullishness about the property sector and about AboitizLand, we are announcing that we are -- for 2022, we are going to be launching new phases in few of our developments in Foressa, in Balamban in Cebu. The villages at Lipa will be opening a new phase there as well as in Amoa. We'll be opening a new phase there. Amoa is in the northern part of Cebu in Compostela, okay? So with that, thank you, and that ends my presentation.

Thank you, sir. And now to present for infrastructure, I will turn you over to Ms. Cosette Canilao.

Good afternoon, everyone, and thank you, Judd. Much like the rest of the world and the Philippines, Aboitiz InfraCapital continued to face challenges and uncertainties last year. COVID-19 presented new obstacles in the form of new variants and Typhoon Odette unexpectedly wreaked havoc in the Visayas in northern Mindanao. Despite all these, Aboitiz InfraCapital remained resilient. And thanks to our hardworking and highly adaptable team members, we were able to achieve our targets and stay true to our mission of enabling businesses and uplifting communities. So in 2021, Aboitiz InfraCapital seized opportunities and built strong foundations to grow in our sectors of focus. We invested heavily in our operations and capability building initiatives. And as a result, we were able to grow our EBITDA by 7% year-on-year. Apo Agua made significant progress on the construction of the [ power ] project with the [ CEDC ] water district, while Lima Water Corporation had another solid year with a 54% increase in EBITDA. Economic estates put in another strong performance, hitting PHP 1 billion. Last year, we also launched Unity Digital Infrastructure, our common tower joint venture with the Partners Group. And lastly, to our small cell business, we were able to deploy more than 350 sites for the small cells for Globe Telecom and Dito Telecommunity. As noted in the previous slide, doubling our CapEx led to the 7% boost in EBITDA year-on-year. Our higher CapEx is attributed to our economic estates land acquisition and expansion projects. To date, the team has secured close to 25% of the 860 hectares we plan to acquire. And we've also secured about 15% LOI of the target area. In addition, Apo Agua also ramped up its construction CapEx in line with our efforts to start operations this year. On the other hand, our EBITDA was driven by the economic estates sales in 2021, coupled with higher average selling prices and higher percentage of completion. The water -- our water businesses contribution increased 100% year-on-year, and that's thanks to the implementation of Lima Water's new tariff and also due to higher build volume and higher ancillary business. Over the course of 2021, our economic states continue to work towards expansion and its transformation. The Industrial business unit hit PHP 1 billion, which is 18% higher than the previous year. Again, this was driven by higher reservation, reservation sales and prices versus our expectations or budget and the healthy pipeline of closable accounts. Also an additional 47 hectares in Block 9-2 is set to begin construction this quarter. The development of LIMA's Block 9-1 progressed well to 80% completion by year-end, again, well beyond our budget or target of 61%. And we expect the last 20% to be completed by the third quarter of this year. Five projects equivalent to about $2 billion in contracts were awarded last year, all within budget. And construction of these projects have start -- have commenced already beginning last month. These projects include the LIM Block 9-2, Block 6 of LIMA, the Lima Tower 1 and the commercial lot spaces 2 to 3 and the rest Cebu estate expansion. The Luzon and the Cebu commercial businesses also posted consolidated revenue of $250 million, an improvement of 13% versus last year -- versus the previous year. The current occupancy rate of the building leases is 4% higher compared to 2020. The outlets at Lipa also recorded its highest single-day footfall of 41,000 on Christmas Day and December weekday foot traffic averaged at 18,000 compared to 9,000 in 2020. In 2021, the team also achieved close to 9,000 square meters in commercial lot sales exceeding budget. And the commercial business also played a key role in the implementation of our community programs as venues for mass testing efforts as well as vaccination drives in partnership with the local government units, Philippine Red Cross and the Philippine Economic Zone Authority. So our economic estates team proved their resilience also in agility with a quick response to challenges caused especially by Typhoon Odette. West Cebu and MEZ II estates were fully operational with power and water by December 23 or a week -- a few more than -- a little over a week after Odette hit. And all roads for both estates were already passible before Christmas. Over in Davao City, we are looking forward to the start of operations of our bulk water project with the Davao City Water District. As I mentioned earlier, thanks to the dedication of our colleagues in Apo Agua, we are on track to launch operations for the second half of this year. Construction of the raw water facilities intake wear and civil works of the water treatment plant are substantially completed. Our EPC contractor, JVACC, has also begun road restoration in areas where treated pipelines were laid. With the main structure almost finished, the Apo Agua team is gearing up for the completion testing and commissioning of the whole system. We are excited to start delivering over 300 million liters per day of sustainably sourced water to over 1 million of [ double venues ] by the second half of this year. In parallel, the Apo Agua team continues to make an impact in its host communities through the CSR programs that tackle the areas of education, health, safety and more. Together with our other double-based Aboitiz business units, Apo Agua also operated vaccination drives in the city that fully inoculated over 21,000. Back in Batangas, Lima Water is improving profitability and exploring new areas for growth. The Lima Water team successfully implemented its new tariff last year, as I mentioned earlier, which resulted in 54% increase in EBITDA year-on-year. We are optimistic that Lima Water earnings and water consumption will continue to grow with the new production lines from existing and new locators in our ecozone as well as new coverage areas such as its expansion in MEZ II and West Cebu Estates. Meanwhile, our digital infra business is ramping up their rollout this year, following the launch of Unity Digital Infrastructure in 2021, we quickly -- they quickly engaged all the 3 mobile network operators and are now and -- they are now in active business with the MNOs for the construction of the initial batches of our orders. For the small cell business, we completed a deployment of over 400 -- 350 sites in Cebu, Davao and Subic last year. And the teams are now targeting to deliver over 1,000 operating macro towers and small cell sites or pools by the end of the year. 2022 is set to be a pivotal year for Aboitiz InfraCapital defined by the new business' growth. And we remain committed to participating in the government's infrastructure program, especially in moving forward with our projects with original proponent status. Yes, that's the last slide, that ends my presentation. Thank you.

Thank you, ma'am. And now to present for cement, I will turn you over to Mr. Vara Kalepalli.

Good afternoon, once again, to all of you. Let me present Cement results to you this afternoon. And as usual, for the cement, we'll not be able to give you the financials, but we'll talk about the market growth and what have been the RCBM's achievements in the last successful -- last year. Talking about cement demand, I think 2021 is stronger than 2020. I think it's -- as per our estimates, it is above 18% growth in 2021 versus '20. But then we no longer compare with actually '20, but if you compare to the pre-pandemic year, that is 2019, I think the market has grown by more than 7%, so which has been a good recovery for the industry. And talking about Republic, I think the market went up by 7%, but the Republic volumes went up by 26% versus 2019 and was almost 28% versus 2020. So this is the result of, what should I say, the improvement in our grinding capacity as well as the successful completion of our DP projects, the fruits have been seen now. And I'm also happy to inform that Republic emerged as the market leader as per our internal estimates. We are the market leader for 2021 in the Philippines. And concerning on the -- we continue to emphasize on our cost control and also operational excellence programs to improve our performance. Of course, our [ DP ] projects are also helping us in improving our energy efficiency and also increase in our alternative fuel consumption to mitigate global headwinds. And talking about the full year contribution to AEV, it's around the PHP 1.56 billion, it's almost higher by almost PHP 1 billion, like PHP 968 million versus 2020. Of course, there is also an impact of create build here, which is also reducing our deferred tax liability. So excluding that impact, the contribution to AEV would be around PHP 1.02 billion, still it is higher by 73% versus 2020. So overall, 2021 has been a very successful and also a satisfying year for RCBM, and we also emerged as the market leader for the country. Thank you. This is all from cement side. If you have any questions, we'll be happy to answer.

Thank you, sir. And now to present AEV's financials, I will turn you over to Mr. Dmi Lozano.

Hi. Good afternoon, everyone. I'll try to do this quick because I'm sure everyone is excited to get to the Q&A session. So let's really breeze through this. On this page, I just want to highlight the revenues. AEV recorded consolidated revenues of PHP 224 billion for the full year of 2021. This was 20% higher compared to the previous year. This was mainly due to the strong performance, really across all of our SBUs but particularly our power and food businesses. Power had higher revenues due to better selling prices across the group and also higher availability of our key facilities and increased sales volume as demand picked up in 2021. Food, on the other hand, saw higher revenues across -- mainly because of selling price improvements, both in farm and our feeds businesses. Our full year beneficial EBITDA increased by 18% compared to last year. This was due to the following: 11% increase from power due to the commissioning revenue from our newest facility, GNPD Unit 1, higher availability across our thermal facilities, better water inflow and higher vessel dispatch. Real estate saw a 4% increase, primarily due to some asset monetization, fair value gains on our investment properties and also increased construction activities and improved sales performance in our high-value developments. For Financial Services, we saw a 3% increase due to the higher margins, higher fees and commissions that Toto was talking about earlier, as well as higher foreign exchange income and strong trading gains. Our fourth quarter performance versus the previous quarter was higher by 12%, primarily due to the same reasons I mentioned above for our real estate business and the recognition of LD's 4 GNPD Unit 2. Let me just point out on a forward-looking note in view of the completion of our strategic partnership with JERA in December 2021, AEV's beneficial ownership in AP will go down from 77% to 52%. So proportionately affecting its share of AEV's EBITDA for the coming year. Next slide. So on a consolidated basis, EBITDA is up 16% for the same reasons I've mentioned in the previous slide. So this increase in EBITDA and coupled with a flattish movement in interest expense, depreciation and amortization drove our core income 68% higher year-on-year. The decrease in tax and others was due to the decrease in tax rates and also tax adjustments as a result of the credit build in 2021. Net income, up by 77% mainly because of EBITDA growth and lower taxes. So we recognized nonrecurring gains of PHP 527 million, mainly due to the revaluation of our dollar-denominated assets. So as a result, net income for the full year 2021 was about PHP 27 billion, 77% higher than 2020. This translates to an earnings per share of PHP 4.85 per share. If we exclude the nonrecurring items, other income from power and real estate, loan loss provisions from the financial services and the tax adjustments, net income would still have been higher by 45% compared to 2020. Now let's move on to the balance sheet. On a consolidated level, cash and cash equivalents increased by over 100%, primarily due to the cash received from the JERA deal in December. As a result, on a parent level, AEV now is in a net cash position of PHP 18 billion. With our cash on hand, aside from the payout of our annual dividends, our plan is to fund AEV's growth plans, which include infrastructure projects in our new endeavors, digitization efforts in our banking and also the Citibank acquisition as well as other CapEx that I will discuss further in a later slide. Meanwhile, on a consolidated level, our net debt to equity ratio is well within our internal parameters. On both parent and consolidated levels, our interest coverage ratios have improved quite significantly. And on a consolidated level, this increase due to higher EBIT or earnings before interest and taxes. Regarding the potential impact of the Russia, Ukrainian war on the company's interest rate and foreign currency exposures, the outstanding loan of the group are largely based on a fixed rate basis and at least for now, insulated from increasing rates. Further, we have been able to take advantage of last year's low interest rate environment as we stretched out most of our maturing or soon to mature bonds and loans. We prepaid a number of bonds and loans, refinancing with a lower cost and also most importantly, longer tenors. However, moving forward, this is something that we have to take a close eye on. We shall need to take higher interest rates into account when evaluating our future projects. Similarly, the group has a conservative foreign exchange risk management policy, where exposures are actively hedged to mitigate the impact of a weaker peso. As mentioned earlier, our cash on hand will be partially used to pay out our annual dividends. on March 4, 2022, AEV approved regular cash dividends in the amount of PHP 1.62 per share to all the stake -- sorry, stockholders, not stakeholders, on record as of March 18, 2022. This is payable on March 30, and the total dividends payable for this year amounts to PHP 9 million, which is equivalent to and consistent with our practice of paying 1/3 of the company's previous year's net income. Based on the closing price of PHP 61.50 on the day our dividend was announced, this also translates to a dividend yield of 2.6%, which represents an increase from the previous year's payout. Looking into the near future, the balance of our cash will be used to fund our growth plans for 2022 and beyond. Together with our partners, we have allocated approximately PHP 69 billion in capital expenditures for 2022, 152% higher than the PHP 27 billion that we utilized in 2021. From this, the biggest use will be set aside for our infrastructure arm for the completion of Apo Agua, the backwater project and land acquisition and new site development for economic estates and expansion of the telco tower business. What's interesting to note is -- and quite exciting is this is the first time probably in recent memory that our largest capital investments will be going to a nonpower business. This is in line with our long-term goal of balancing our portfolio by accelerating the growth of the non-power share across the years. By the end of this decade, we anticipate that our share or the non-power share of our beneficial EBITDA will grow from about 30% today to over 50% by the end of the decade. Our power business unit though it's not slowing down. We'll remain focused on balancing the country's energy needs and appropriated most of its PHP 28 billion budget for the tail end construction of GNPower Dinginin, general overhaul and construction of various solar and hydro projects as well, sorry, as battery energy storage system as well. Our SBU also has allocated a budget to ensure availability of sufficient base load for this coming election period. Our food business is focused on -- is focusing its CapEx on the expansion of the feed mills. Our real estate business is looking at CapEx to complete its various residential projects. And for the bank, as usual, lot of this CapEx will really be going to the same sustained development and investment in our digital channels. So here are the key takeaways for today for us. For full year 2021, AEV's performance trajectory has continued a positive performance trajectory. We have been able to sustain double-digit EBITDA and NIAT growth, in spite of a challenging environment for input costs and even before other income and provisioning. Towards the end of the year, 2 key developments took place, which are going to be impacting us for many years, which is the completion of the JERA deal and the selection of Union Bank as the winning bidder for the Citibank assets. We approached the year with some cautious optimism as COVID begins to abate and vaccinations have been increasing. But I'm consciously and very acutely aware that there are headwinds coming because of the ongoing Russia, Ukraine war. And why we are actually looking at risk management for this, we know that not all of this is easy for us to anticipate. But through various contracting mechanisms and other cost controls and productivity improvements, we hope to minimize the conflict's impact on our commodity prices as both countries are significant suppliers of oil, coal and wheat to the rest of the world. But our long-term outlook remains bright. We look forward to working closely with the new administration in coming -- in keeping our country on the steady path of economic development. As our strategic partnerships with JERA kicks off as well in the full year in 2022 and as we complete our Citibank acquisition, we expect quite a lot of exciting new developments over the next few years. These provide us increased optionality and more financial muscle to pursue our growth ambitions, led by more investments in digitization and innovation to ultimately transform and modernize our business throughout this decade. Thank you, and back to you, Judd.

Thank you, Dmi. Before we move on to our Q&A, we would like to request our audience to complete 1 of 2 polls that will pop out on your screen. Our presentation development team spends considerable time putting together this briefing for you. Our high satisfaction rating suggests that either you are very satisfied with our current format or just afraid to hurt our feelings. So just as a reminder to all our friends, we use your feedback to make sure that we continue to address the needs of the financial community. At the end of the event, a comments box will also pop up to give you the chance to type in additional feedback, including suggestions and what you want to see more or less of. Here's the first of 2 polls. Thank you for answering our call. Now on to our Q&A.

We have received advanced questions. We will take them up now. If we have time, we will address questions raised live on the platform. Our first set of questions will be for non-power SBUs. And we're going to ask our non-power SBUs to answer this question beginning with the bank, food, infra cement and land. And so the question is, do you have any assessment on the impacts and mitigations, direct and indirect of the ongoing crisis in Ukraine on your strategic business unit? May we ask the bank to respond to this first, Toto?

Yes. We've been trying to assess this, but there is really no direct impact on the bank. The indirect impact, of course, will be more on higher prices of oil and potentially food prices, which could increase inflation, and the potential impact of higher oil prices on consumer demand. So the tendency most likely is for people to cut back on expenses, and therefore, that will affect consumption. And if it affects consumption, then it will be a slowdown in the economy. So we can only hope that this thing gets resolved soon, because otherwise, I think it's not only going to be the Philippines that will be affected, it will be a global slowdown that we are expecting because of that. So indirectly through reduced consumption if prices continue to grow.

Yes. Thank you, Toto. Can we ask the Food Group to respond to this question. Tris?

Yes, sure, Judd. I think Toto kind of hit the nail on the head, right? It really depends on how long this conflict, I mean, remains in progress for, right? I mean -- but I mean, just looking at it, I think the impact on the Food Group, I mean, that we've looked at so far, there are really kind of 4 different areas that we see being impacted, right? Commodity prices. Our supply chain is impacted because of the price of fuel, and therefore, increases to freight costs, both kind of on the global level and on the local level, right? Foreign exchange is also impacted and interest rates, right? So I think commodity prices basically since the conflict started -- to begin with, commodity prices were already quite high. But they have continued to climb, right, particularly the cost of wheat because Ukraine and Russia together represent approximately about 30% of total wheat production on globally, right. So it's a pretty significant area of wheat production, but they also export quite a bit of wheat. So in the past, whenever you've had these conflicts, what ends up happening is basically traders no longer look to operate out of the Black Sea region, right? And that's happened in this case. I think all the major trading companies have halted operations to this point, right? So we've seen wheat prices shoot up, right? I think since the conflict started, on average, depending on what type of wheat you're looking at, we've seen increases of close to 20% at this point, and that takes into account the last 2 days worth of declines in future prices, right? Corn and soybean prices have also climbed, though they have not climbed as steeply as wheat has, right? Again, with -- so that's one area of commodity prices. I mean that -- obviously we will have to pass these prices on. Eventually, that's going to impact demand for product, right, and be a driver for inflationary pressure in the country -- in the countries that we operate in until such time that the prices come down, right? So impact of commodity prices, again, oil prices at the levels they're at now. We've seen freight prices, they were, again, also very elevated to begin the year. They are even higher now. And it's becoming -- when you combine the price of the commodity plus the freight, I mean, it just means your landed cost of imported product is extremely expensive, right? And then you've got -- add onto the impact also of foreign exchange, right, which I mean we've seen depreciation of currencies, I think, across the region. The peso, we've seen blow past 52. It's come back down a little bit today. So again, all of this basically end up translating into a more expensive cost of imported product, which our feed business and our flour business rely on across the regions. And then the last one that I touched on earlier were interest rates. We're forecasting them to climb a little bit in the short term as well. So we're doing what we can. Depending on the country that we operate in, we've got a larger buffer of raw material stock already in place. But without a doubt, again, as Toto mentioned earlier, right? The longer that this conflict lasts, the more pronounced I think the impact would be on our operations and on the various economies, frankly, that we operate in.

Thank you for those answers, Tris. To respond on behalf of the infra team, may we call on Cosette?

Yes. Well, again, like what Toto and Tristan mentioned. So the general impact is really in terms of higher fuel prices and higher commodity prices, right? And potentially, interest rates might increase. But for the specific business units, for Unity, steel prices are likely to go up. And of course, the impact to building the towers, but would be a bit higher. But we've ordered actually -- we have enough inventory for the first few orders that we expect to get for this year. So if the conflict is resolved sooner then maybe the impact would be very minimal. Similarly, as to our economic estates, it would be -- the impact would be mainly related to the development activities, higher input prices and higher development costs. But for both, we do have provisions in our contracts for extraordinary increases in input prices to manage this risk. So hopefully, it will not come to that. Now for Apo Agua, we're in the latter stages of construction. And though we have equipment coming from Europe, there is a very low risk that the ongoing conflict will impact air and sea freight. So hopefully -- but of course, for everything, we continue to closely monitor developments in the region and see. And always -- we always assess the impact to our operations.

Thank you for that response, Cosette. To respond on behalf of the cement team, Vara?

Hi. Just like my colleagues have already explained, the major -- the general impacts. But coming to the cement, basically, the main impact would be on the energy, energy prices. I mean, cement is a highly energy intensive process. So our impact is on the fuel and also on the power related costs. But then we have existing mitigation actions already in place. Even before the war, given the high commodity prices, we have our strategy and our mitigation actions in place, like widening our supply base in Indonesia, even if 1 or 2 suppliers don't respect the contract, we have the wide supply base. And we're also improving our alternative fuel consumption and also in other words, we improve our pet coke also. We are finding alternatives to the traditional high cv coal where the cost is high. And we also have our continued -- our operational excellence programs to improve our energy efficiency programs also. So -- but then all this can only mitigated to some extent. I mean the price -- the current prices are quite high, and there will be an impact on the cost, and we will have to pass on this cost to the customers. So it's impacting everybody equally. So I think that's what we can we expect as of now. But we also have a good inventory of the fuels for the next 3 months. So at least hopefully, by that time, there should be some positive news coming up in this crisis.

Thank you, Vara. And finally, to respond on behalf of the land team, we have Dave.

Yes. Okay. So I guess in terms of real estate, the -- directly in terms of our cost -- our input cost, basically, it's mostly cement and steel, not rebars and all. So that will be impacted, definitely. But fortunately, I think at least for 2022, we've advanced and locked in our -- can you hear me?

Yes. We hear you well.

Yes. So fortunately, we've locked in advance our requirements for the year. So directly, I think for 2022, we won't feel much of it in terms of our input cost. But definitely, the indirect cost in terms of the economic impact of higher prices and inflation and all that, what everybody has said, that will definitely impact the purchasing power of our buyers. And I guess, just like what happened during the pandemic, really you just have to be very agile. And you just have to look for new markets. You just have to look at different ways to price your [ pressure ] the real estate, the payment schemes. And so that it will meet the needs, the conditions of your buyers. That's really all you can do. You just have to be very flexible and just very adaptable.

Thank you for that, David. Next question. Our next question is for power. So how do you see the Ukraine Russia crisis affecting AP, both in terms of impact on inventory and prices? Is this something that concerns the company? Is there any anticipated issue for margin pressures or shortfall of coal inventory? Manny?

Thank you, Judd. Well, again, answered already by my colleagues and other business units, I guess the impact of Ukraine and Russia war is global. And the way we're feeling it is that it's increasing commodity costs everywhere, particularly fuel or it is power. But inventory, it should not be -- it's not too constrained. We are complying with, at the minimum, the DOE policy of maintaining 30 days of inventory at site, given our domes and our yards in Pagbilao, domes in our own AP-owned plants plus always another 30 days of inventory in transit between Manila and our source in Indonesia. There will be margin pressures for sure, with especially in the long term if this becomes a protracted event. Not just for coal, but also for coal -- sorry, for oil, which would be -- I'm sure, which would be reflected in the -- in vessel prices. As always, in most cases, it will be oil or will be the clearing plant in vessel. Our rule of thumb is that for every $100 of increase per barrel of oil brent, the impact to short-term marginal cost of fuel is around PHP 8 per kilowatt hour. So you can just do the math and how much those plants would be offering in the spot market. And then given, of course, that there is a secondary price cap, that will be triggered if the average price for 3 days is at PHP 9, the secondary price cap will take effect at PHP 6.25. In our case, at PHP 6.25 our low calorific coal should be at around PHP 2.70. So we're -- we should be okay, as far as our margins as for coal is concerned. But again, there will be -- there is pressure because we could have bought coal at a cheaper price. And when oil plants are clearing, then there's a significant variance between those 2. But we will see and how this is going to turn out. I think we will also see that offpeak prices will also increase to reflect short-term marginal cost of fuel for coal plants, which are the ones mostly clearing during offpeak. So then this should be reflected in their offers in the spot market as well.

Thank you, Var. Next question. For power, at what new price level will the WESM price caps be triggered? At what new price level will trading in the WESM no longer be profitable, considering the WESM price caps? Are you still protected as current coal spot prices? Given the context of soaring coal prices and the global reopening and Ukraine tensions, until what price is AP's fixed supply contract for coal hedged up, considering its current commodity swap position?

Okay. The take up for the secondary price cap is actually around -- is at PHP 10 for 3 days. And assuming that the one that should be clearing will be oil plants. So certainly, they will be offering much higher than the PHP 9 cut, right, and then just triggering the PHP 6.25. If a coal plant is using high calorific value coal, then it is very much close to that -- to the new index, and that would be probably -- our estimate is around PHP 4.70 to be to breakeven at PHP 6.25. But for low calorific value, coal using plants like TLI, TBI, GMC, GNPD, you could be around -- sorry, the cost of coal would be around PHP 2.45. So this, as I mentioned earlier there, there's still margins. We have been -- if ever, we actually have contracts that are fixed. The policy is to hedge that contract 100% for the term of the supply contract. That's why we have not been entering in any new fixed term supply -- fixed price supply contract at the moment because the cost of hedging is very expensive, given the new index assessed that we have been seeing. So we are still protected with that contact. So now the question is how about the one that you're selling in the spot market? And as I said, if our coal cost is around anywhere between PHP 2.45 or a little bit higher than that, which is the value of the local calorific coal given a new index of PHP 4.27, we should be okay at PHP 6.25 at the secondary price cap. And then having said that, there is still a mechanism in ERC for you to be able to recover or file for the cost recovery if your short-term marginal cost is higher than the PHP 6.25, which most of the oil plants would be doing just in case.

Thank you, sir. Next question. How is your coal hedging strategy structured? How much of your generation contracts have fuel pass-through provision? Are 100% of fixed price contracts fully hedged? If so, should we not expect any margin contraction for the coal plants despite coal prices reaching USD 400 per metric ton? How big is the impact of rising coal price to APs margin?

So for pass-through contracts, the movement of the index is passed on to the customer. And when it is a fixed price contract shortly after the contract is signed. As I mentioned earlier, we hedge it against new assumption of the price given to the customer for the duration of the contract. So we nominate that new number, and that's where we hedge it. This mechanism protects AP margins. So for instance, if the new consumption for coal at the time, the contract is signed, say, it's $100 per metric ton, then AP would have hedged at $100 for the duration of the contract. So given this scenario, if AP's buying physical coal today at $230, AP gets a hedge between the index and the hedge price, effectively bringing the fuel cost back to $100, so we're neutral. So as such, it's not materially valuable to determine the mix between pass-through and fixed price contracts is they do not affect AP's margins. The question now is that today, if we signed a fixed contract today, the hedge cost is actually high, very much, much higher than the time when we were signing this because of the volatility. You can easily lose on those hedges. So that's why we really avoid signing long-term fixed price contracts. And you know that, I think we've mentioned that in the past. And as for WESM prices, there are actually many variables that drive them, and it will be difficult to determine the extent of the price movements due to the impact of coal prices.

Next question. What is the estimated average capacity factor for GN Dinginin? How much kilocalories of coal that GN Dinginin consume and for which countries does the plant purchase coal? What percent of GM Dinginin's capacity is open to WESM contracting. Long term, what is an ideal balance for GN Dinginin between bilateral contracts and WESM?

Okay. Thank you, Judd. Well, for the month of February, GNPD Unit 1 average capacity [ racked up ] 94%. We are now -- and that means -- that doesn't mean that we shut down on certain days. We just cycle depending on the real demand. We are now supplying to our customers, but we have not yet fully accepted the plan from the EPC contractors. So we've been running at full cap most of the time. GNPD is a long-term supply contract for Indonesia and its average calorific value is around 4,300 gigawatts. Currently, the contracting level of GNPD is at 89% including customers with pending ERC approvals. A majority of our GNPD Unit 2 capacity will be exposed to the spot market. If there is a contacting opportunity, though that meets our requirements, benchmark on WESM prices, of course, we will consider it. And in terms of the long-term ideal balance for GNPD between bilateral contracts and open position in WESM, it will depend on the situation in the market. As mentioned, if there's a good contracting opportunity in the market, we will consider contacting it. And we have been openly saying that we are looking forward to the Meralco CSP that would probably come around April or May, to be delivered in 2026 and participate with Unit 2 of GNPD.

Next question. What led to the higher cost of steam of APRI in fourth quarter of 2021? Other plans to remove coal indexation in your steam requirements at [indiscernible]. How do you manage input price risk for this asset?