Union Bank of the Philippines (UBP) Earnings Call Transcript & Summary

Hello, everyone. Welcome to our analyst briefing. Today, we are going to report the financial and operating performance for the full year 2022 of our publicly listed companies, namely Aboitiz Equity Ventures, AboitizPower and UnionBank, as well as our non-listed businesses, namely our One Food Group, AboitizLand, Aboitiz InfraCapital and Republic Cement, but first, here are the house rules. [Operator Instructions] This briefing will be recorded for documentation purposes. By joining this session, you can send your name, voice, image and short comments being recorded for use in dissemination. If you do not consent to the foregoing, please do not join in this 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. Dmi Lozano, CFO of Union Bank. To present for Food, we'll 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. Toto Hilado, CFO of Aboitiz Equity Ventures. At the end of the presentation, we will conduct a Q&A session. And at the end of the event, when the Zoom platform closes, a pop-up screen will appear, which will allow you to provide feedback regarding the event. And now on to our presentation, beginning with a video from Aboitiz Power. [Presentation]

To present for Power, I will turn it over to Mr. Manny Rubio.

Thank you, Judd. Good afternoon, and welcome to AboitizPower's quarterly analyst briefly. In 2022, we set out on and communicated the grand-scale purpose of the storming energy for a better world. AboitizPower is pursuant of bringing our 94-megawatt Cayanga Solar power facility in the middle of this year and the groundbreaking for our 17-megawatt Tiwi, the thermal plant last January, a proof of that. Our renewable and [indiscernible] subsidiary, Aboitiz Renewables is at the forefront of our efforts to over a more sustainable future energy system. We are determined to grow at these entry capacity to 50% of our total generation portfolio by 2030. We are making significant progress in our decarbonization objectives with over 1,000 megawatts on building slow-speed energy projects taking us closer to our RE capacity goal of 4,600 megawatts by the end of this decade. We have dedicated team, a dedicated team focused on land banking to secure properties for future projects. There is still so much to do, the challenges are many, but we have taken them in strike, one step at the time. As we move forward in our pursuit of a lower carbon future, we continue seeking a balance between the nation's economic growth and sustainability aspirations. We recognize this need and are stepping up the challenge and helping meet the country's power requirements to fuel socioeconomic development while reducing our carbon footprint. I'm proud to announce that the efforts are already paying off, which I'll discuss further in our fourth quarter results. Our beneficial EBITDA for the full year 2022 was 11% higher compared to 2021. This was due to press contribution from GNPower Dinginin and higher availability across the portfolio. Gains with commodity hedges and water inflows and higher inflows. With this, GNPD has been delivering much of its energy to the grid. The higher performance was partially offset for the impact of Typhoon Odette and recognition of good EBITDA images at DEI claim sheet 2021. Without this one-off items, EBITDA would have been higher by 19%. Our fourth quarter performance in 2022 was higher by 15% compared to same quarter in 2021, mainly due to fresh contributions from GNPD and higher availability performance across the portfolio. The increase in EBITDA drove core income, 27% higher compared to 2021. Interest expense was lowered due to Therma Luzon or TLI lower finance leads and effect a full payment of dollar loans of [ 87 ]. [indiscernible] assisted others decreased due to lower tax rates. If we were to remove the impact of Typhoon Odette, LD and BI claims that we have collected across 2020 to 2021, income would have been higher by 47% versus last year. The group recognized net recurring gain of PHP 1 billion. This relates to the portion of commodity hedge gains, which were not recognized in fuel costs. As a result, AboitizPower's net income for the full year of 2022 was PHP 27.5 billion, 32% higher compared to 2021. If we were to remove the impact of [indiscernible] debt and LD and BI claims that we have collected across 2020 to 2021, net income for the full year of 2022 would have been higher by 52% compared to 2021. Cash decreased by [ 13% ] due to the loan drawdown made in the last quarter of 2022, which was intended to finance Renewable projects. Investments and advances increased by 20%, mainly due to share in equity to be strong, GNPD and as an AboitizPower. And as a result, our total assets increased by 12%. Total liabilities increased by 9% due to the previously mentioned loan drawdown. Our debt -- net debt to equity decreased from 1.1x to 1.0x. Capacity sales increased by 7% for the full year 2022 compared to 2021 due to fresh contributions from GNPD and higher Western dispatch of our portfolio. GNPD Unit 2 was selling to the spot market as originally planned in anticipation of high spot prices in the short- to medium-term. Our total revenue increased by 75%, primarily due to both units of GNPD running, higher availability across our portfolio and higher effective bilateral contract quantity and spot prices rates -- spot prices driven by the indices. Our total energy cost was higher by 16% due to the same reasons mentioned in the previous slide. Our base on gross margin increased by 22% compared to 2021, mainly due to the previously mentioned drivers. Our Purchased power volume increase as a result of our trading and arbitrage strategy. Spot selling prices increased by 33% to PHP 7.56 per kilowatt hour driven by higher demand and higher fuel costs of material flats. Note that this increase already takes into consideration intervals that were subjected to secondary price caps. Our trading strategies also another [indiscernible] advantage of higher peak prices, bilateral contract quantity selling prices increased by 40% to PHP 6.70 per kilowatt hour, mainly due to higher indices. Average NEWC for the full year of 2022 was $360 per metric ton versus $137 per metric ton in 2021. The reason the movement in both prices underscores the risks attached to fixed price contracts. For our distribution business group, beneficial power sales increased by 4% compared to 2021. With the exception of Visayan Electric, which is impacted by industrial customers that are doing rehabilitation and [indiscernible] all our project areas are at pre-pandemic levels. Energy sales from residential customers remain flat. On the other hand, commercial and industrial energy sales were higher by 5% due to recovery in demand. Overall, average gross margin increased from PHP 1.61 per kilowatt hour to PHP 1.65 per kilowatt hour, and this was due to time making pass-through charges. And I will also highlight what we have done for Cotabato Light in the past 2 years. Cotabato Light system loss has significantly declined from 6.34% in 2021 to 5.14% in 2022, as a result of improved efficiencies due to CapEx investments. With that, we are happy to report that all our system losses are now below the regulatory Cap of 5.5%. On Visayan, average full year loan weighted average price was PHP 7.72 per kilowatt hour, 59% higher compared to 2021. Based on [ currency ] updates, this was due to the supply in the market caused by an increase in unplanned outages of [indiscernible] plants and increase in fuel costs, driven by the ongoing Ukraine-Russia war. And for better appreciation, we will show you the Luzon supply and demand situation in the next slide. The Luzon supply and demand situation continues to tighten. So with existing digital market needs, we are optimizing our existing base loan activities. Over the past few months, we have been seeing NGCP alerts for the Luzon grid and as our economy continues to recover, we expect that the tight situation will continue and become tighter in the medium-term. As per the benefit of those who are unfamiliar with the strike, please closely note the broken black line which represents the destruction of annual peak demand and the grids reserves supply requirements. And amidst this evolving supply and demand situation, which includes the impact of the DOE moratorium and the building of new foreplans and the depletion of the Malampaya gas fields, we expect GNPD units to play a significant role in addressing supply gaps and meeting typical market leads, including what we will be commissioning in our renewable energy portfolio. We have over 1,000 megawatts of disclosed projects so far. This has delivery commitments within the next few years. And with that, we are well on our way towards delivering 3,700 megawatts of additional R&D capacity by 2030. This is part of our decarbonization journey. So allow me to update you on some projects in the next slides. The Cayanga Solar project is for the construction of a 94-megawatt fixed solar power plant located in Barangay Cayanga municipality of Bugallon, Pangasinan. Construction activities of [indiscernible] futures and [indiscernible] are ongoing. And the project status today is around 88% completed with 0 lost time incident. The project is expected to begin commercial operations by June 2023. The Laoag Solar project is over 159 megawatts-peak plant located in Barangay Laoag municipality of Aguilar, Pangasinan. The construction activities of its from the PV Sinag control buildings, substations and transmissions are ongoing. The project status is at 53% completion with 0 lost time incidents. The first phase, which is a capacity of 72 megawatts peak is expected to be tested and commissioned by the third quarter of 2023, and the second phase with a capacity of 87 megawatts peak will be in the first quarter of 2024. SNAP-Magat battery project began construction in August 2022. The project status today is at 90% completion with 0 lost time incidents. It is expected to begin commercial operations in the first quarter of 2024. Here is an update on the base team lead operations. Operator initiatives steel production enhancement campaign which aims to drill 12 new production wells with a minimum of 50-megawatt aggregated individual well capacity by 2023. 10 wells we so far on done. And at the last 2 are scheduled to be completed by this month. Moreover, in Tiwi, there is an initiative to convert waste heap onto [indiscernible] brand to power 17 megawatts of binary power plants. In April 2022, APRI signed an agreement with the [indiscernible] a geothermal production company for the supply of the price fuel. And with the groundbreaking ceremony held last January '23, the project is expected to begin commercial operations by the end of this year. The Maco Battery project started commercial operations last November 2022, survey 49 megawatts contingency reserve. This is the largest single-unit battery, energy storage system in the grid, and the only floating one. This is one of the 12 projects with a total capacity of 248 megawatts to provide [ utility ] services that AboitizPower is targeting to develop. For this year, together with our partners, we have allocated 32 business base loads in capital expenditures. This is a 84% increase from the PHP 18 billion utilized in 2022. The budget for this year is for the development and construction of various solar, geothermal, [indiscernible] hydro wind project. The continuous improvement of the reliability of base load plants as well as various land acquisitions, new substations and new meters for our distribution business unit. And now on to our dividends. On March 30, 2023, AP approved regular cash dividends in the amount of PHP 1.87 per share to all stockholders as of March 17, 2023. This is the highest dividend per share that we have paid out in the company's history. This is payable on March 30, 2023. The total dividend payable for this year amounts to PHP 13.8 billion, which is equivalent to [indiscernible] with a practice of paying 1/2 of the company's previous years' net income. So based on the closing price of PHP 13.15 -- PHP 38.15 on the date our dividend was announced, this was the -- is also specific to a dividend yield of 4.9%. Our '22 performance is a result from diligent planning, forecasting and the hard work of all our team members. And as we move into 2023, we must contain and build on this momentum. This year, we are ready to ride the waves of transformation to leverage digitalization and innovation to improve our operations further. And at the heart of everything we do is a passion for providing exceptional customer service. We understand that technology is vital to achieving this in today's fast-paced digital age. That's why we are constantly exploring new ways to maximize cutting-edge tech to enhance our services and ensure our customers are always at the top of our minds. But we're not stopping there, we are also excited to venture into new energy adjacent opportunities such as distributed energy resources, mobile energy storage, Internet of Things and micro grids. These new ventures are just the beginning of our journey to transform the energy landscape for the better, and we aim to create a world where community site and the environment is protected for future generations. A deep sense of purpose drives us and we will not rest until we achieve our vision. Our under lending focus on excellence and aim to create better energy solutions make the future look brighter each day. So to summarize my presentation, here are our key takeaway for today: One, first, development in our RE growth strategy are proof of our pursuit of transforming energy for a better world. Our 2022 performance results from diligent planning, forecasting and a hardworking team. We will provide the waves of change in 2023 with digitization and innovation, and we will help transform the PH power landscape with new energy-adjacent opportunities. And I don't want to end this day without expressing my heartfelt appreciation for the amazing people who make last year's wins possible. Our AboitizPower team members from all over the country, their unwavering passion, dedication and hard work have helped us achieve great success over the past year. [Foreign Language] Thank you very much.

Thank you. [Presentation]

Now to present our financial services, I will turn you over to Mr. Dmi Lozano.

Thank you, Judd and good afternoon, everyone. We can get started. So -- in 2022, we delivered on our key strategic initiatives that altogether resulted in a fundamental transformation of UnionBank's balance sheet and income composition. The smooth integration of the Citi consumer business, the commercial launch of UnionDigital and the diversification of the portfolio of Citi Savings Bank. All of these accelerated our goal of becoming a great retail bank. One manifestation of this change was a strong growth in our core business that produces recurring income. Recurring income grew 43%, mainly due to the 5-month contribution of the acquired Citi consumer portfolio, strong growth in earning assets, record growth in CASA and the doubling of fee income due to growing customer base and digital transactions. As a result, despite the absence of trading opportunities unlike the previous year, the bank was able to book around the same level of net income of PHP 12.7 billion. It is also worth highlighting that in 2022, we crossed the PHP 1 trillion mark in terms of our asset base. Net interest income grew by 30% to PHP 38.9 billion. The organic growth of Union Bank's legacy business and the accrual of the acquired Citi loans both contributed to this strong performance. Net interest margins also improved by 27 basis points to 4.9% despite the high interest rate environment we were facing. And this was mainly driven by 2 things: one, a higher proportion of higher yielding consumer assets due to the PHP 76 billion of receivables that we got from the Citi consumer business; and two, sustained record growth in CASA since the pandemic. Earnings assets also grew by 23%, mostly coming from the consumer loans and redeployment of excess funds to securities and amortized core... Total loans grew by 45% to PHP 448 billion. Excluding the impact of the acquired Citi portfolio, total loans, they still grew by 20%. This increase is mostly due to the consumer loan growth in the parent bank and that of key subsidiaries, Citi Savings and UnionDigital. Consumer loans in the parent bank grew by 152% to PHP 160 billion, PHP 76 billion of which came from the Citi consumer business. Our subsidiaries' consumer loans also grew by 45%. Citi Savings loans grew by 37% coming from strong features and motorcycle lending. UnionDigital also contributed PHP 5 billion worth of digital personal loans in 2022, which is quite amazing since it was only launched in July of 2022. On the funding side, total deposits grew by 21%, mainly due to the strong CASA growth at 29%. Over the last 3 years, following the pandemic, the bank has benefited from the shift towards digital that resulted in the bank averaging close to 30% per annum in terms of CASA growth. From a pre-pandemic CASA ratio of 39% in 2019, it has increased to 58% by end of 2022. We have also seen the increase in balances from retail customers who opened an account purely online from an average daily balance of PHP 6,800 per account in 2019, this has already increased to over PHP 10,000 to date, equivalent to a 47% growth in average daily balance. Our cash management digital solutions contributed a large portion of the CASA growth as our corporate customers also shifted towards more digital transactions. Noninterest income declined by 13%, mainly due to the higher trading gains that we saw in 2021 that didn't manifest themselves in 2022. However, when you exclude trading, noninterest income more than doubled to PHP 13.4 billion from PHP 6.6 billion, and this was due to the growing customer base, which almost doubled from pre-pandemic levels. Most of these customers are doing digital transactions by the UnionBank app as well as the interchange fees, for example, InstaPay, bills, payments, cards, et cetera. Recurring fee-based income was PHP 6 billion -- PHP 6.8 billion, driven by digital fund transfer transactions, bill payments, interchange and other card-related fees. PHP 2 billion of this growth in fees came from the acquired Citi consumer business. The bank also booked PHP 6.6 billion in other income, mostly from gains from assets sold, foreign exchange income and miscellaneous income from the card network. Next slide, please. Operating expenses grew by 30% for the year, mainly because of new businesses consolidated and launched in 2022, basically Citi and UnionDigital. If we are to exclude the impact of the integration from the Citi consumer business as well as those costs attributed to UnionDigital, total OpEx only grew by 10%, mostly due to volume-related expenses. Non-volume-related only grew by 7.1% or PHP 1.1 billion year-on-year, mostly in manpower and tech-related expenses. Moving on to our capital ratios. Capital adequacy ratio declined to 13% in 2022 from 18.4% in 2021, while CET1 ratio declined to 11.3% in 2022 from 16.3% in 2021. The decline is due to the strong growth in earnings assets plus the acquired Citi portfolio. But these are all contributing to our recurring income and will continue to do so for the years to come. Having said this, the bank had positive movements in other comprehensive income in January and successfully completed its PHP 12 billion SRO in February. Post SRO, capital adequacy ratio and CET1 are estimated to be at 15.4% and 13.7%, respectively. This is more than sufficient to cover the further expansion of our balance sheet in 2023. Over and above our financial results, we are happy to report that we successfully delivered on the 3 strategic initiatives that I mentioned earlier. The market has rewarded us for these accomplishments and made possible the reentry of UnionBank into the Philippines Stock Exchange Index after 14 years. The first key initiative was the smooth integration of Citi, where we needed to ensure that we manage the attrition of both the customers and the employees. Last August 1, we successfully integrated the business into our books. And this transaction added PHP 98.1 billion in assets which is comprised of PHP 68.5 billion in loans and PHP 30.1 billion in cash and liquid assets. This also provided us PHP 67.1 billion in deposits with a CASA ratio of 89%. We've encountered less than 1% attrition from depositors and 0 attrition from our borrowers. And we owe the success to the strong employee retention program that we had in place which we were able to absorb over 1,500 new employees from Citi, including 100% of the senior leadership team running the business. The second initiative was us commercially launching UnionDigital in just 6 months. As of December, the bank already had a path to profitability after booking over PHP 5 billion in digital personal loans. The growth in lending was attributable to the cross-sell program anchored on the large ecosystem of retail customers sitting within UnionBank. Recall that we have more than doubled our customer base to close to PHP 11 million in 2022 versus pre-pandemic levels. With UnionDigital, we are now able to provide personal loans using alternative credit scoring models to the underserved customers of UnionBank. And the third key initiatives we have promised at the beginning of last year has also been delivered. Citi Savings has diversified its mass market proposition outside of teachers' loans. Citi Savings now is 3 profitable business lines, teachers' loans, motorcycle loans and salary loans to other ecosystems like pensioners, private school teachers and other government offices. The diversification of its portfolio resulted for allowed it to post strong loan growth in 2022, and they are now contributing around 20% to 25% of the group's net income. Moving forward, we shall serve as our pillars to accelerate our ambition of becoming one of the largest and most profitable banks, consumer banks in the Philippines. The bank's trust is to build a solid recurring income base, which shall be the main driver of profitability for many years to come. As it is today, we are delivering PHP 12.7 billion in income, in which we have yet to realize the full impact of the acquired Citi consumer franchise. Given our focus on net interest income and fees, the questions raised by many would be how the economic landscape, rising interest rates and the recent discussion on bank regulations would affect our profitability in 2023? We are cognizant of the recent pronouncements of potential rising interest rates due to the rising inflation that we've seen. And similar to the industry, our cost of funds will be at risk, given that banks rely on time deposits as one of our funding sources. Having said that though, we are confident that we can manage to improve our margins due to the following: Number one, the lifting of the credit card rate cap from 2% to 3% per month will cushion the impact of the higher funding costs. Number two, with the pandemic now behind us, we expect economic recovery to continue. In fact, we are now seeing growth in new-to-bank customers and new-to-bank credit card holders, even higher than what we used to see in the pre-pandemic levels. Number three, the opening of travel and leisure, which is a large component of consumer spending will also be positive for the consumer business. The next one is the path towards reducing the reserve requirements, which the BSP has mentioned as something that couldn't happen within this year. We've also looked at sustaining record growth in the CASA levels due to the digital shape of consumers and corporations. And finally, while there are talks of removal of fees and small ticket transactions, we think that the impact of this to our fees is minimal, given that the average fund transfer transaction for the bank is around PHP 6,000, which is higher than regular e-Wallet transactions. So in closing, we believe that 2023 will be a pivotal year for Union Bank. Our commitment to you for this year shall be as follows: One, to complete the migration of the acquired Citi consumer customers into our system so that we can realize the cost synergies and cross-sell opportunities as soon as possible; number two, make UnionDigital profitable in the soonest possible time; and three, continuously grow our retail franchise with the objective of becoming one of the largest and most profitable consumer bank in the Philippines over the next 3 years. Thank you, everyone. And Judd, back to you.

Thank you. [Presentation]

Now to present for food. I will turn you over to Mr. Tristan Aboitiz.

Thanks, Judd. Good afternoon, everyone, and thank you for spending your time with us this afternoon. So allow me to recap the Food Group's financial highlights for the full year of 2022. The Food Group's revenue increased 21% year-on-year, ending at PHP 106 billion or approximately USD 1.9 billion, with improvements in revenue contribution coming from both the Agribusiness division and the Food & Nutrition division, which were higher by 16% and 28%, respectively. Meanwhile, EBITDA decreased 6% to PHP 4.6 billion or USD 85 million, driven by a 53% year-on-year decline in EBITDA contribution from the Food & Nutrition business unit, and this decrease was tempered by a 12% increase in contribution coming from the Agribusiness unit, which represents our regional feeds business. Similarly, EBITDA margin posted a decrease year-on-year of about 127 basis points. Pulled down by the large declines in both our Farms and Flour divisions margins. Lastly, our full year 2022 may have went down drastically by about 101% year-on-year, finishing at a PHP 14 million loss for the year, which is approximately negative USD 260,000. The drop was due to the subdued performance in both the Agribusiness and Food & Nutrition units as we saw contractions of 87% and 153% in their NIAT contributions, respectively. The gains in the Agribusiness EBITDA were offset by a series of one-offs coming from the impact of adverse macroeconomic factors on our operations in Sri Lanka, Thailand and the Philippines, and the impact of disease in our farms operations. So let me talk you through this briefly. The total impact of the strategic decision to divest from our Sri Lanka business unit was about PHP 951 million or about USD 18 million, which includes the previously reported FX loss of about CHF 485 million or USD 9.3 million and a PHP 311 million or USD 6 million goodwill impairment. We also recognized a PHP 120 million or USD 2.3 million goodwill impairment and a PHP 40 million loss provision for Gold Coin Specialties Thailand, GCST, which is one of our subsidiaries in Thailand, and reflects the impact of the challenging conditions in the market on our Thai feed business unit. Lastly, due to weaker Philippine peso against the U.S. dollar, our Agribusiness, Philippines division and Food & Nutrition business units incurred a loss of about PHP 232 million or USD 4.3 million, related to its U.S. dollar-denominated payables largely used for the importation of grains for our businesses. Excluding these items, NIAT for 2022 would have been about PHP 1.5 billion or down 33% versus the full year of 2021. Zooming in now on revenue. The Group's revenue grew 21% year-on-year to PHP 106 billion or USD 1.9 billion, which is attributable to the increase in selling prices across all divisions to try and counter the rise in commodity costs. The Food & Nutrition business unit contributed PHP 19 billion or USD 355 million in 2022, which is 28% higher year-on-year. Double-digit year-on-year revenue growth was seen across all divisions, our Flour division, Farms and Trading. Our Farms division revenue increased 24% year-on-year on the back of a 34% increase in volumes sold, due to the successful recovery in our operations of Breeder Farm I, which was hit by ASF in 2020. Average selling prices, on the other hand, move sideways year-on-year. The Trading division's 30% increase in revenue was largely driven by a 38% increase in selling prices, needed to pass on the rise in cost for both feed wheat and soybean mill. Our Flour division meanwhile, revenue rose 29% year-on-year to PHP 10.6 billion or about USD 194 million. Driven by price increases, again, necessary to offset the sharp increases in the cost of mill in wheat seen throughout the entire year of 2022. The cost of wheat stayed elevated due to global supply shortages, which were exacerbated by the conflict in Ukraine. Lastly, our regional Agribusiness unit delivered a total of PHP 80 billion or about USD 1.5 billion in revenue, which was 16% higher than 2021. The increase of about PHP 11 billion or USD 205 million was driven by increases in average selling prices of 33%. Prices, again, same as supply division has to be increased throughout the year to offset the impact of rising raw material costs as well as rising costs related to local and global freight. In terms of revenue contribution of the business units, 75% of total revenue came from our Agribusiness unit, 18% was contributed by Food & Nutrition, and the balance of revenue share was generated through our Trading in Abaca. In 2021, the share of Agribusiness, Food & Nutrition and Abaca was 79%, 17% and 4%, respectively. Now turning to the Food Group's EBITDA. The full year EBITDA decreased 6% year-on-year to PHP 4.6 billion or USD 85 million, pulled down by the lower contribution of our Farms and Flour division by 82% and 13%, respectively. However, despite the challenges in commodity prices, our Agribusiness EBITDA grew 12% versus the same period last year, driven by its recovery in gross margins as we were able to catch up from some of the increases we have seen in commodity costs and improved in our procurement as well as savings on the OpEx side of things. On the other hand, aside from rising feed costs, our Farms division was also heavily impacted, again, due to the challenges posed by ASF in Luzon, causing its EBITDA to go down by 82% to PHP 165 million or USD 3 million. Our Flour division's 13% year-on-year short fall in EBITDA was attributable to its margin to its drop in margin and volume for traction due to the surge in wheat prices. In terms of the EBITDA contribution of the different business units for the full year of 2022, 78% of total EBITDA was derived from our regional Agribusiness units. 16% was contributed by the Food & Nutrition units and 7% was derived from Abaca. This is versus a 68%, 31% and 3% contribution in 2021, respectively. Moving on now to the Group's net income after tax. Our Food Group recorded a PHP 14 million net loss or $260,000 net loss which lagged behind last year's net income performance by about 101%. The uncertainties brought about by the Ukraine and Russia war have impacted the profitability of the Food Group at 2 levels. The first from a landed input cost perspective as we saw raw material prices rising to unprecedented levels, and these were further exacerbated by a weaker local currency against the U.S. dollar, which effectively thinned out our operating margins; and second, increased financing costs with the start increases in borrowing rates against a more expensive working capital requirements. As mentioned earlier, disease continues to challenge our businesses with ASF impacting the farms business by about PHP 122 million in terms of mortality costs and reversing last year's gains that remain in the first 3 quarters. Furthermore, the drag in profitability can also be attributed to the strategic move of the Group to divest from our Sri Lankan unit and the impairment of our Thailand assets, as mentioned earlier in the presentation. These moves will enable the Group to focus our resources toward key markets for operation in the future, but did hamper our profitability in 2022. If we exclude the nonoperating write-offs from Sri Lanka and Thailand as well as our FX losses in the Philippines, income contribution for the Food Group for 2022 would have been about PHP 1.5 billion or USD 28 million, which would have been 33% lower than 2021. Turning now to the strategic projects that were ongoing and are completed in 2022. And starting with our Agri business division and the construction of our new feed mill in Yunnan. The lease of our food mill plant in the Yunnan area of China expires in April of 2024. And so we need to move to a new location and are constructing a 150,000 metric ton per annum feed mill, with the potential to be expanded up to 270,000 metric tons per annum in order to achieve this. This will also have an additional ruminant production line and mass conditioning line, which will allow us to enter into other segments of the livestock feed market. The target date of completion was adjusted from the fourth quarter of 2023 to the second quarter of 2024, after realignment of schedule with our EPCM contractors. Moving now to our Agribusiness unit in Vietnam. Our Long An Mill in the southern area of Vietnam will give us the ability to grow our livestock feed business in the region. This mill will have a capacity of approximately 200,000 metric tons per annum and can potentially increase by another 100,000 metric tons if we add a third line. This mill will complement our facilities in Binh Duong and Dong Nai in South Vietnam, which are near maximum capacity at this point. As of now, the initial filing work is already done, and our project team is preparing for the first large packages of the project, civil and structural work. Looking now at our Farms and Meat division, which is under our Food & Nutrition unit in the Philippines, we continue to grow our brand and channel of meat distribution, which we call The Good Meat. 2 new physical stores were opened last October 2022 with a capacity of 2 metric tons per day per store. These additions have grown our TGM stores from 1 in 2021 to 5 in 2022. The remaining branches, which are located in Kapitolyo, Pasig, and [ Lima ] will be fully operational by the end of the first quarter of 2023. The Good Meat is now made available in the Philippines through different digital platforms such as Lazada, Shopee, Metromart, Grab and our own online store, The Good Meat app PH and furthermore, the group has strengthened its position in our business-to-consumer channels for the meat business with 60 concessionaire stores and a presence in over 200 supermarkets such as Robinsons, Puregold, Shopwise, MerryMart. These initiatives will allow the Food Group to develop into our B2C channels further and expand our supply chain, ensuring better distribution to all customers in our relevant markets. Lastly, an update on our Breeder Farm in [indiscernible]. The facility which has the capacity currently of 2,500 Sow levels, broke ground in August of 2021 and was completed in October of last year. We have completed the loading of 2,500 [ parents ] stocked into Breeder Farm III, and market hubs produced from this facility are expected to be available by the second quarter of this year. It is our intention to continue to invest in our swine- raising business, supporting the hog raising industry. And with our improved biosecurity protocols in place, particularly in this facility, we are confident that we can expand our capacity, I mean [indiscernible] to spread ASF in the country. This is a step forward for us in our strategy to build along our strong integrated mill-to-mill business in the Philippines. So to recap, here are the key points to the full Group's full year 2022 financial and operating results and project milestones. Despite very challenging conditions around the region, the Group registered revenue improvement due to increases in selling prices that were designed to keep up with our rising commodity cost base. However, because of the commodity headwinds, our EBITDA slid 6% year-on-year. And our bottom line was further dragged down by weaker local currencies against the U.S. dollar and increased financing costs, which were on the back of more expensive working capital requirements overall. For the 2 feed mill expansions of our Agribusiness unit, the focus of the first half of this year will be on the final design and construction, while the second half will include equipment installation. The new mills are expected to be fully operational by April 2024 and December 23. And lastly, our divestment in Sri Lanka, which enhances our ability to focus on Southeast Asia and China, where the Food Group already holds a strong presence. We believe this divestment is a strategic move that will put the Food Group in a better position in the market. As we pursue our vision to become one of the leading regional integrated Food & Argibusiness companies in the Asia Pacific, we will continue to invest in market expansion and business integration opportunities in the region. That's all for the Food Group. Thank you, and back to you, Judd.

Thank you, Tris. [Presentation]

And now to present for Land, I'll turn you over to Mr. Dave Rafael.

Good afternoon, everyone. Allow me to give you a rundown of the AboitizLand performance during 2022 and a glimpse of what some of our plans are for 2023. So key financial metrics for the full year 2022 shows the AboitizLand residential sales were up by 6% from last year at PHP 4.8 billion. AboitizLand contributed total revenues of PHP 4 billion for 2022, a 23% increase from the previous year. This is primarily due to the residential businesses ramped up construction activity and strong sales performance which I will be discussing in more detail. EBITDA increased by 10% from the previous year. However, taking our total EBITDA in 2022 versus 2021, because of onetime gains in the monetization of nonstrategic assets, it was actually down by 41% versus 2021. Next slide, please. Our positive revenue variance is due to increased house construction of revenue-generating units and significant site development completion in a number of projects, strong sales performance across all projects, coupled with spot [indiscernible] sales for our high-end projects also contributed to residential revenue [indiscernible]. Next slide, please. Next slide, please. Our partnerships with leading free cash construction systems on [indiscernible] and smart [indiscernible] led to the reduction of house construction duration by 50% with our construction operations amplified by these innovations, we are starting to see positive results in transforming our ability to build distinctive and high-quality homes faster and better. Our data-centric approach to collections enabled us to surpass last year's collection performance by 28%, even with disruptions like rising interest rates. Our partnerships with mortgage brokers offered our Vecinos more options for home financing as well as more hassle-free experience in the loan application process. We achieved sustainable property value escalation for all projects, in turn, delivering more value for Vecinos and stakeholders. Buoyed by the continued robust market perception for our residential products, we launched, in 2022, a new phase of Foressa Mountain Town and the third and most premium of the villages at Lipa enclaves, Meadow village. Next slide, please. AboitizLand is carving a niche and differentiating itself as innovation-driven property development. We received various recognitions from leading property industry award-giving bodies in 2022, like when we bagged the Developer of the Year award for Visayas and Mindanao at Lamudi's The Outlook, Philippine Real Estate Awards and when Amoa was once again hailed as the best housing development in the Visayas at the PropertyGuru Philippine Property Awards. These are testaments not only to the quality of our developments but also to the innovative solutions we continue to pioneer as we innovate ways to bring Filipino families home. Next slide, please. As we look ahead to 2023, we are mindful of the challenges the new year presents as we navigate the risks of a volatile world and the vulnerable markets we serve. But with our time-tested values, AboitizLand maintains a positive outlook towards future growth. From 2023 to 2025, we will achieve 15% year-on-year growth on EBITDA while establishing the foundations for long-term sustainable growth. AboitizLand is projecting a more than 100% increase in ROE for 2023 as we expect gains on our continued monetization of inventory and new project launches this year. We aim to achieve long-term sustainable growth trajectory towards making AboitizLand a more meaningful investment in the AEV portfolio. We will maximize innovation as our key competitive advantage as we continue to reap the rewards of our early and bold investments in innovative solutions that will result to improvements in operational efficiency, customer experience and our financial bottom line, fueled by a highly engaged organization. We will sustain the organization. We will sustain the expansion of our footprint in a South Luzon and Cebu, further enabled by our synergy with Aboitiz InfraCapital as we serve the residential housing needs of the integrated economic estates. AboitizLand will also leverage on the power of being part of a powerful conglomerate, drawing from the industry expertise of our sister business units to deliver better value for our stakeholders and to the Aboitiz Group. We will likewise continue our forays into new business streams through tokenized real estate, real estate formats that deliver recurring income such as dorms. Last slide, please. Okay. So these are the key takeaways from this presentation. AboitizLand's key operational and financial metrics for financial year 2022 were met while showing significant improvements year-on-year. We continue to reap the results of our contactless home buying service as it allowed us to achieve record high levels in reservation sales and book sales. Operational and innovation milestones in line with the GT 2025 transform the way we provide key business results, building on the success of our banner year in 2021 and sustaining to deliver on our promise to our stakeholders. We believe that the new year will remain to be challenging as we navigate the risks of the volatile economies and vulnerable markets that we serve. With this, AboitizLand will pursue a controlled and self-sustained strategy in 2023. AboitizLand maintains a bullish outlook towards the future growth of the business and the property sector. In response, we will accelerate our activities in international sales, land bank development, project launches and monetization of nonstrategic land assets. Thank you very much.

Thank you, Dave. [Presentation]

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

Thank you, Judd. Good afternoon, everyone. So let's start on the next slide, please. 2022 saw Aboitiz InfraCapital achieve major milestones in all 4 business sectors despite the challenges of natural calamities, geopolitics and the transition to the new normal after COVID-19 hard lockdowns. Combining our resources and expertise with the Philippines' unique strength in the post-pandemic economy, we were able to exceed our 2022 financial target, resulting in 100% increase in our EBITDA to PHP 1.6 billion versus the previous year. 2022 NIAT ended at PHP 1.4 billion. Refueled AIC's growth and expansion with a total CapEx spend of around PHP 39 billion, more than 6x our CapEx from 2021. The major drivers for the significant increase in CapEx were our acquisition of a 1/3 stake in Mactan-Cebu International Airport, coupled with the ongoing expansion of our economic estates. In addition, digital infrastructure capital expenditures increased to PHP 1.4 billion last year, including the acquisition of 650 towers owned by PLDT Smart. Our CapEx investment has resulted in a 100% year-on-year increase in EBITDA. The significant jump is mainly driven by economic estates with a huge EBITDA contribution of PHP 1.8 billion. That's plus 55% versus last year and the onetime gain of PHP 390 million from the sale of the small cell site business to Unity. Now we go into more specifics about the recent business developments, beginning with our acquisition initiatives. Our recently acquired stake in Mactan-Cebu International Airport will form a cornerstone of our business going forward. We are excited to work with the MCIA team to take the country's second largest airport to greater heights. Using cutting-edge technology and enhanced customer service, we intend to deliver a premier passenger experience at one of the country's biggest international gateways. Marking our official entry into the airport industry, we consider this as a fitting anchor asset to what we aspire to create, an Aboitiz Philippine airport platform. We plan to build on this through our proposals to operate the Bohol-Laguindingan and Bicol airports, where we have had original proponent status since 2019. We also continued to strengthen our digital infrastructure portfolio with the signing of the sale and leaseback agreement between Unity Digital Infrastructure and PLDT Smart for the acquisition of 650 telecom towers. Turnover of towers will be completed by the third quarter of this year, including 220 build-to-suit towers. This significantly scales up Unity's presence to 5% in the Philippine telecom towers market. Our investment in Unity is geared towards becoming a key player in the local common tower market and improving connectivity across the country. Construction is in full swing for our Apo Agua bulk water supply project in Davao. After taking over the construction management in the middle of 2022, Apo Agua has been able to accelerate time lines for a planned start of operations in the first half of this year. We are proud to report that the water for Tamugan River has already reached the water treatment plant, which will supply more than 300 milliliters of clean, safe water to Davaoenos this year. In 2022, we also commenced various expansion projects to diversify and complement our existing portfolio. Our economic estates continue to be a leader in industrial anchored mixed-use developments. We added almost 200 hectares of land to LIMA Estate in Batangas. This will host new locators and will create an additional 40,000 jobs. We are also adding housing and hospitality facilities to transform LIMA into a more livable industrial estate. Meanwhile, our expansion plans for the 30-hectare LIMA central business district will bring a host of exciting opportunities as well. LIMA Tower One, the first of the seven tower office park at the heart of LIMA CBD, just recently topped off and will provide a foothold for BPO companies looking to access the highly skilled labor force in South Luzon. West Cebu on the other hand, West Cebu estate will mark its 30th anniversary this year. It's also undergoing a new expansion that is expected to generate an additional 14,000 jobs and will diversify its locator mix to include light to medium manufacturing as well as its own CBD with commercial lots, a neighborhood mall and a transport terminal and a communal park. Our economic estates went beyond expanding and developing its footprint. We actively participated in local and international business fora to encourage global investors to establish and expand their businesses in the country. Our digital infrastructure businesses have also diversified into the data center industry via our partnership with EdgeConneX. This joint venture aims to develop data centers in key areas in the country and provide a platform for local businesses to access global cloud services and connect with other businesses and users around the world. With the agreement being -- having been signed in the third quarter of 2022, we are now working to finalize the site selection, and we will proceed with the construction of the data center facility soon after. We also underwent our own transformation last year as we redesigned AIC's culture and procedure to help better bring to life our massive transformative purpose of enabling businesses and uplifting communities. LIMA Estate became the first and only industrial development in the country to receive a 5-star BERDE rating from the Philippine Green Building Council. This is the highest rating given to economic districts for their commitment to sustainable development, including the contribution of projects to health and well-being, community engagement and economic opportunities. Our various green initiatives include the promotion of renewable energy among our locators and low-carbon transportation through an electric mini bus system provided by Global Electric Transport. To ensure that our locators have access to a reliable and sustainable water supply that meets quality standards, we have implemented a smart water network that transforms all our water facilities into interconnected and intelligent systems. As a mark of further innovation and synergy, Apo Agua will be implementing the water-energy nexus concept in the Philippines, the first in Southeast Asia, where it will have 100% renewable energy-run water treatment facility powered by the run-of-river hydroelectric power plant. In summary, 2022 has been one of AIC's most productive years yet, but this is only the beginning with an overarching strategy of creating synergies to realize the techglomerate premium. We are determined to make more things happen this year. That ends my presentation. Thank you, and good afternoon again.

Thank you, Cosette. [Presentation]

And now to present for Cement, I will turn you over to Mr. Varaprasad.

Hi. Good afternoon to all. Once again, thank you for spending your time with us today. As usual, Republic will give you some of the highlights of the industry and the company for the last year. We will not be able to share the detailed data as we are not a listed company. So last year, 2022 was a very challenging year on many fronts for the cement industry. A combination of macro factors and also the local factors impacted the performance of the industry. It was also a presidential election year, which is normally a low growth year for cement industry. But for the first time probably since the last many years, the industry demand has seen a negative growth in 2022. Even during the financial crisis, we had a positive growth in the -- for the cement in Philippines. Now apart from this, we also saw unprecedented commodity inflation, affecting both our fuel costs and also our power cost. As you all know, it's a global problem, not just for Republic Cement. But this high commodity inflation could not be passed on to the market for various reasons. Key initiatives were in place to improve the performance of -- both in our operational excellence and also commercial excellence to compensate this high cost for us, but this could not fully cover the total inflation. RCBM also suffered an unexpected breakdown of our finished mills in our Iligan plant, which affected the operations for more than 2 to 3 months in Iligan. Now consequentially, RCBM has posted -- RCBM contribution to AEV leads to around PHP 300 million negative contribution in the last year. Now what we see will for 2023, okay? I think the basic fundamentals are in place, and of course, the elections are over. The transition has been smooth. So we are hoping for a good growth in the current year. Of course, the commodity prices are also easing a lot. You all know that. I think from the highs of Newcastle Index, from a high of 400 plus, now it is below 200. Of course, this will improve our margins even pricing is constrained. So overall, we expect a better year for 2023. We are also working -- we also have our sustainability targets. We have the road map for the CO2 reduction by 2030. And we are also aiming for more than 20% of our electricity sources to be -- to come from renewable sources. If you go to the next slide. So I'm also happy to share with you about the 68the Presidential Mineral Industry Environment Awards (sic) [ Presidential Mineral Industry Environmental Awards ] that RCBM plants have bagged, okay? Four plants got awards, three of them are Presidential Awards and also a platinum award for our Bulacan plant. Okay, this is demonstrating that our responsible mining approach and also our commitment to safety and environment. That's all from us. Thank you.

Thank you, Vara. And now to present AEV's financials, I will turn you over to Mr. Toto Hilado.

Thank you, Judd. Good afternoon, ladies and gentlemen. Thank you for joining us this afternoon. As you all probably know, Dmi and I switched roles as part of our cross-posting program in the AEV Group. Dmi did a perfect presentation as he has been a longtime director of UnionBank. But in my case, I am still learning the ropes. So indulge me as I go through the presentation of AEV's financial results for 2022. Starting with our key performance highlights. Revenues for the year was up 37% at PHP 307 billion, primarily driven by strong performance from our Power Group. Fourth quarter performance was also strong at PHP 90 billion or 37% higher. Consolidated EBITDA was higher by 6% to PHP 71 billion. For the fourth quarter, it was down 3%. Net income came in at PHP 25 billion or 9% lower due to lower-than-expected performance from our Food Group and the Cement Group. Next slide, please. At the consolidated level, EBITDA was up by 6%. Real estate was down 51%, food was down 6%, infra was lower by 22%, bank was more or less flat, and power had an increase of 13%. On a beneficial basis, our full year 2021 beneficial EBITDA was 20% lower compared to 2021. But on a normalized basis was up 4%. The drop was mainly due to the following. While essentially because of the 17% decrease in EBITDA from power due to change in ownership, recall that AEV's ownership and therefore, a share in earnings in AEV, have declined because of the change in ownership from 77% to 52% at the end of 2021 as a result of the strategic partnership with JERA. If we retain the same ownership structure of 77% to 10%, normalized beneficial EBITDA would have been higher by 4%. Next slide, please. The group's net income dropped 9% from PHP 27.3 billion to PHP 24.8 billion. The group recognized net nonrecurring gains of PHP 3.5 billion, mainly due to the devaluation of U.S. dollar cash and liquid financial instruments. This translates to an earnings per share or PHP 4.41 per share. On a normalized basis, meaning, if we had not sold to JERA, our net income would out increase by 4% or higher by about PHP 1.2 billion. Next slide, please. Moving to our balance sheet. On a consolidated level, cash and cash equivalents decreased by 19% to fund AEV's acquisition and investment in the infra business and in banking. On a consolidated level, net debt increased by 36% due to investments and refunding of some business units for 2023 expansion plans. Meanwhile, on a consolidated level, our net debt-to-equity ratio remained low at 0.7x and interest coverage at 3.6x. Next slide, please. As for our CapEx plans, we are allocating PHP 73 billion for 2023, 8% higher than the PHP 68 billion used in 2022. Although PHP 68 billion used in 2022, it is interesting to note that for the first time in years, the spend for our non-power business has exceeded that of our power business, indicating momentum in our efforts to diversify our business mix. Of the total CapEx spent last year, 64% went to our infra group, mostly for airports, water and power business. Of the PHP 73 billion budgeted for 2023, we are allocating PHP 32 billion or 44% to our infra business for the expansion of its power and economic estates business, new investments in digital infra, completion of Apo Agua and maintenance of its other businesses. For our power business, we are allocating PHP 32 billion for the development and construction of various solar, geothermal, hydro and wind projects. Our food business is expecting to invest almost PHP 5 billion, mainly for feed mill expansion. Our real estate business is allocating a capital expenditure of PHP 3 billion for the construction and completion of its residential projects. And finally, as it continues to double down on its digital transformation, our banking business has allocated PHP 1 billion for its capital expenditures in 2023. On March 3, 2023, AEV approved regular cash dividends in the amount of PHP 1.47 per share to all stockholders on record as of March 18, 2022, which is payable on March 30, 2023. The total dividends payable for this year amounts to PHP 8.3 billion, 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 53.95 on the day our dividend was announced, this translates to a dividend yield of 2.7%. To summarize, our normalized beneficial EBITDA was up by 4%, reflecting the underlying strength of our power and banking businesses and the overall resilience of our portfolio. Secondly, we have deployed a significant part of the JERA proceeds to M&A deals, Citi's consumer loans business and Mactan Airport. The Citi deal accelerates our push to become the largest consumer bank in the country. The Mactan Airport provides the anchor asset for our push to create an airport business platform. Third, we will spend over PHP 70 billion in CapEx together with our partners in 2023, focusing on renewable energy and new businesses to accomplish our ESG goals and portfolio diversification. And lastly, we continue to have a strong balance sheet that would allow us to take advantage of investment opportunities as we continue to execute on our plan to become the country's first techglomerate. As we close another transformative year for the Aboitiz Group, our techglomerate strategy continues to take shape, not just in our business strategies, but also in the major culture shifts taking place within our organization. We will continue to focus our energy and resources on strategic innovations and more importantly, on people and talent. Thank you. Back to you, Judd.

Thank you, Toto. Before we move on to our Q&A, we would like to request our audience to complete a survey that will pop up on your screen. [Presentation]

Thank you for answering our survey. 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. So our first question will be addressed to our bank, and this will be answered for us by Dmi. So for UnionBank, what is the breakdown of the 2021 extraordinary trading gains? And is it due to FX gains? Dmi?

Yes. So it's not due to FX. It's -- 100% of this is the gain on sale of investment securities at amortized cost. So basically, [indiscernible] securities.

Okay. Thank you for that, Dmi. Our second question will be for our Food Group, and this will be answered for us by Tristan. So Tristan, do you see any volume recovery this year? If yes, which segments would be the growth drivers? Which business segments also can we expect to remain challenging? And are you also set to continue a higher pricing strategy? If yes, by how much to hopefully cushion margin impact of elevated costs in 2023? Please also share your cost efficiency measures that may help preserve margins. Tris?

Yes. Thanks, Judd. So yes, volume recovery is expected in some key feed markets as well as our flour business, but really will depend on our cost base decreasing over the course of the year, right? And I say this because, at current prices, right, we have begun to see some demand destruction as small businesses get priced out of the market as they become quite uncompetitive. We believe that our feed and flour businesses do hold the potential for improvement this year. So a lot rests on raw material cost movements, right? Currently, those costs are still quite high despite decreases that we've seen in wheat and corn compared to the second half of last year. We do anticipate our farms business to remain quite challenged throughout 2023. And this is despite Breeder Farm III coming online as we look to build back volume over the course of the year. On the question of pricing, we have always been, I think, historically a premium-priced player in our categories, right? And I anticipate that we will be able to continue to push this strategy moving forward due to the quality of the product, right? And lastly, I mean, as far as cost efficiency measures are concerned, right, I mean, to name a few, we are quite active in terms of formulation redesign as far as our regional feed and flour businesses are concerned. And the objective of doing this, right, is really to ensure the least cost production per bag of feed and flour sold, right? So it's really quite important that we continue to remain open to using alternative raw materials, right, and raising inclusion as needed, right? We also continue to automate quite a bit of low value-adding work throughout our production facilities. These are things like bagging of product, palletizing products and loading of finished good product into our trucks or vessels or whatever it may be, right? And lastly, we continue to revisit and deploy our neutral position pricing model when it comes to the buying of our raw materials, right? And really, the objective, I think, of employing this model is to be as competitive as possible when it comes to buying key commodities needed for the production of our products. I hope I covered everything.

Thank you for that, Tris. Our next question will be for Aboitiz Power. EVR, can you give an update on the turnover status of GNPD? And when will the management start recognizing D&A for GNPD for Units 1 and 2?

Thank you. Thank you, Judd. What we have done is we've taken care, custody and control of the 2 units upon full testing of the facilities. We will accept the unit as soon as we deem it reliable and then as long as the EPC actually has secured it and closed out all the open items in the punch list. At the rate that they're going, we expect that we will start depreciation second -- earliest, second quarter of 2023; latest, third quarter of 2023.

Okay, sir. Next question also for AboitizPower. What was GNPD's net profit contribution in the fourth quarter of 2022 and full year of 2022?

I'll ask Liza to answer this. Liz?

Yes. Hi, good afternoon, everybody. GNPD's beneficial net income contribution was PHP 4.8 billion in fourth quarter of 2022 and PHP 10.4 billion in the full year of 2022.

Okay. Next question. What was GN Mariveles' capacity factor in 2022? Can we get an update on GMEC's plant? And does management anticipate any more major work to be done in 2023 to rectify operating issues?

As far as capacity factor is concerned, being a baseload power plant, this would be way above 80%. But we have also disclosed that 1 unit of GNPower will undergo and has a major planned outage scheduled for about 60 days to address all the balance of plant issues that we were experiencing in the past. It's now running, and we're seeing significant improvements. And we expect the 2 units to be performing much better than its previous performance.

Okay. Next question, still for AboitizPower. What drove higher purchase power in the fourth quarter and in 2022? Can we expect purchase power to decline in 2023, keeping a net selling position to the spot market?

Well, TP was on a net seller position in 2022 with the commissioning of GNPD. The higher purchase power volume was a result of trading and arbitrage particularly for our retail business. The trend for the purchased power volume depends on the opportunities present in the market for 2023. If there is a net benefit, we will continue implementing our trading and arbitrage strategy, always being depends on our cost versus resin prices.

Okay, sir. Next question, why did the cost of generated power and the cost of purchase power ballooned by 109% and 125%, respectively, in full year 2022?

Yes. Liza, can you provide the details?

Okay. So the increase in generation cost was mainly from fuel costs, which increased resulting from higher indices, particularly Newcastle and ForEx. Total fuel costs in absolute value also increased due to the new operations of GNPD. Plus it also resulted -- but with that, it also resulted to increased revenues. So the cost of purchased power increased due to higher [indiscernible] rates and due to higher purchase power volume as a result of our trading and arbitrage strategy, particularly for our retail business.

Thank you, Liza. Next question. Why is your fourth quarter performance down versus your third quarter performance? Also for AboitizPower.

Yes. Generally, Q4 is actually lower than Q3 because of lower demand, lower resin prices and because of the planned outage that we had with 1 unit of GMEC.

Okay, sir. Next question. Also for AboitizPower, what drove the strong quarter-on-quarter turnaround in distribution beneficial EBITDA?

Liz, you like to answer this?

Yes. So this is due to timing and pass-through charges driven by the drop in the NEWC. So you would recall, the NEWC started to drop in the latter part of 2022, and this results to a positive pass-through in timing for the DUs.

Thank you, Liza. Next question, still for power. How much energy was produced, sold and earned, including year-on-year [ change ] by the hydro plants in the fourth quarter and in the full year?

We're comparing to fourth quarter 2022 against the same period last year and sold is flat, while EBITDA increased by 14%, mainly due to higher spot market prices. If we compare full year 2022 against the full year last year, energy sold and EBITDA increased by 12% and 11%, respectively, due to higher water inflows and net BCP margins.

Thank you for that, sir. Our next question is still for AboitizPower. What composes AP's parent negative EBITDA? Why did this jump by 72%.

Liz, answer this, please.

So parent's negative EBITDA was largely due to -- we increased in costs both in personnel and related expenses as we're putting serious resources behind our drive to build 3,700 megawatts over the next how many years. And also, there are a lot of things that we're investing in that's consistent with our great transformation. So you're seeing it there in our parent EBITDA. It's also a true show of commitment that we're putting in resources for what we're trying to achieve.

Yes. And we also took over management of GNPD and GMEC.

Thank you for that. And the next question, why did EBITDA margin contract from 33% to 23%?

I'll give this to you, Liz.

So EBITDA margin declined year-on-year due to the higher indices resulting to the higher revenues, particularly pass-through fuel. But the percent -- but the absolute peso margins were actually preserved.

Thank you for that. Next question, what is the peso amount of each of these nonrecurring items? LD, BI claims FX loss hedging that led to estimated PHP 26.5 billion core income.

Liz?

The LD and BI claims amounted to PHP 445 million, while the fuel hedges actually was quite significant, about PHP 13 billion.

Thank you for that. Our next question, what is the profile of the AboitizPower Group's PHP 248 billion debt in terms of 1 percentage breakdown between fixed and floating interest rates, PHP 2-dollar or FX loans and 3 short-term, long-term bonds and note?

I'll let Liza answer this one.

I'll do this. So 80% of AP's debt have fixed rate, while the remaining 15% has floating rates, but 19% of the total debt is U.S. dollar-denominated that is matched with dollar-denominated contracts as well. As for the composition, 63% are your long-term project-related loans, 17% are bonds, 11% are lease-related and 9% are short-term loans.

Next question. Thanks, Liza. How much of the PHP 18 billion CapEx in 2022 was spent on maintenance? And how much was spent for new expansion projects?

Well, 70% of the PHP 18 billion of the CapEx was spent for upgrades and expansion, particularly in the RE. And the remaining was spent for maintenance works and critical spares.

Thank you for that sir. Next question. Can we get an update on the contracting of GNPD for units 1 and 2?

Okay. Well, we aim to meet the minimum contracting levels that's required in our loan covenants. Having said that, WESM will always be our benchmarked in making decisions on how much open position that we will be taking and how much we should be contracting. So if we believe that we can get higher prices in WESM but contracting them, we will keep a certain position to maximize the same opportunities, especially in the short term. If there's an opportunity to lock in, though, especially for baseload capacity, we'll do so long as it's within the target margins.

Thank you for that. Next question. How effective were the group's fuel pass-through provisions in power contracts and coal hedging contracts in mitigating the impact of rising coal prices in 2022??

Well, fuel pass-through provision was -- provisions in our contracts were very effective. It's actual fuel costs were charged to counterparties. Hedging allowed us to honor our existing fixed fuel contracts. And in fact, we had 14.4 [indiscernible] commodity hedge gains in 2022.

Thank you. What is the status of the transmission connectivity for your upcoming RE capacity in 2023 and 2024?

For the existing -- for the current projects that we have, that we expect to go on stream, go on COD for this year, Cayanga and the portion of the [indiscernible] transmission connectivity has been fully addressed for these projects. For new RE capacity to be added in 2024, all the required transmission development plans or PTP transmission assets are either available already or have been under construction as far as NGCP is concerned.

Thank you. Thanks for this question. Sorry, sir.

NGCP's development plan, though. But please note that there's no transmission without -- there's no transition without transmissions, so it's really needed.

Thank you for that, sir. Next question. What is the counterparty policy? If counterparty does not pay for 3 months, will you cut off the power? Are there security deposits?

Well, there are a number of remedies from employing our contracts, depending on the counterparties, that we can exercise at any time if there's breach. Disconnection and [ looming ] on the security deposits and penalties among others are just some of them. And application of such will be dependent, as I said, in the -- what is in our contracts.

Thank you, sir. Any updates on the rate rebasing process on the distribution utility side? And related to this, what is the updated CapEx guidance for this segment?

Okay. Well, based on the ERC solution on rules for setting distribution billing rates, the regulatory periods that -- revised regulatory periods are as follows. Cotabato Light will start April 1, 2023 to March 31, 2027. Davao Light and Visayan Electric will be July 1, 2024 to June 30, 2028. And Subic EnerZone, October 1, 2025 to September 30, 2029. So with regard to the expectation of new tariffs, we have yet to build up our case applications. Then we will undergo the ERC's process for a public hearings and technical evaluation. The DU's budgeted CapEx, though, for 2023 is about PHP 7 billion at 100% ownership, primarily for various land acquisitions, new substations, new meters to serve our new customers.

Thank you for that. Next question. Can management generally comment on its outlook for WESM in light of the recent decline in coal prices? Does management expect prices to still trend higher?

Well, if the coal plants will be the marginal plant [indiscernible] WESM today. But if demand continues to grow, right, and there are no new capacities and oil plants will actually be the marginal plants, I think we will continue to see higher WESM prices in the short term.

Sir, I think there was a transmission problem. Would you -- I'm sorry, but I will have to ask you to please kindly repeat your answer for this.

Can you hear me, Judd? Am I clear?

[ Rose ] clear.

Can you hear me?

Yes. Yes, EVR, we can hear you. Yes.

Okay, sir. Can you kindly repeat your answer?

As long -- yes. If the coal plants are the marginal plans, right, and I'm quite sure that they're offering a short-term marginal cost of fuel, then we should be expecting lower prices because it will follow the trend -- the lower the declining trend of indices that we're seeing today. But if demand continues to grow and we expect demand to grow, right, and there are no new capacities that will be coming in, I believe oil plants will be the marginal plant and thus, we'll probably see still higher price in WESM.

Thank you for that, sir. Next question, what is the outlook for the water availability of hydroelectric plants this year?

For the first half of the year, we expect hydrology in most of our hydros to be normal. Second half, we are expecting a slight El Nino.

Thank you for that. Next question. What is the latest on AP's planned LNG power plant project?

AP is exploring a number of options, and the LNG is one of them to power opportunities, specifically in Cebu in the mid-term and Luzon in the next 6 to 7 years with our partner, JERA. We are considering LNG as a source of additional baseload power, but we remain open to cleaner technology options that may become commercially viable in the near term and scalable as well. It is still too early to disclose any amount of investment needed in LNG power -- LNG to power as well as when these are expected to come online since there are multiple options that are being considered by AboitizPower at the moment.

Thank you for that, sir. And actually, surprisingly, we have come to our last question. And the last question for today is what is AP's contracting strategy for its power gen portfolio this year? Will it still look to increase spot market exposure? Or will it start to bid for long-term PSAs, such as the upcoming Meralco CSPs? What are the trends in pricing and changes in provisions you're seeing in both recently closed [ DO PSAs ] and RES contracts?

Okay. Thanks, Judd. Well, as I mentioned earlier, the driver for contracting -- the first driver would be to meet the requirements of the lenders' loan covenants. Then having said that, WESM will always be our benchmark price in contracting. I mentioned that if WESM is higher, then we will keep a certain open position and then -- but be open to long-term contracts under bilateral contracting if the margins are acceptable, and the risks are acceptable. I think that's critical. If there's an opportunity to lock in long term, we will do it as long as within the target margins. And recent CSP still show a big price requirement, but there may be appetite for index contracts, or we will pass through given the observed downward trend of fuel indices and what we have seen also in the market and the risks that this fixed price contracts actually entail.

Thank you, sir. That wraps up our Q&A. Please rest assured that we will answer the remaining questions. And I see that there's just 1 left. We will answer that. [ Cristina ], we will answer you by e-mail. Don't worry. And for the benefit of those who missed this event or would like to rewatch the event, we would like to remind everyone that this briefing was recorded and will be uploaded on our website as soon as possible. At the end of this event, there will be a survey form that will pop out that will allow you to type out additional feedback. Before we end, we would like to thank the entire presentation development team, over 70 of them, including our panelists for today for the work that they put into our briefing today. Thank you also to our analysts, banks, investors and other friends in the financial community for joining us and for helping us tell our story. See you all again in our first quarter briefing on May 2. Until then, good bye for now.