John Eric Francia
President & CEO, AC Energy
Annual Stockholders’ Meeting | 19 April 2021
Fellow shareholders, colleagues from board and management, ladies and gentlemen. Good morning.
2020 was an exceptionally difficult year for everyone. I would like to thank the men and women of AC Energy who remained committed to deliver amidst the unprecedented challenges, and for living the true spirit of Bayanihan along with the rest of the Ayala group. While the challenges persist, we have learned to cope, adapt, and continue to progress with our transformation journey at AC Energy.
On a brighter note, 2020 was an extraordinary turnaround year for the company. AC Energy Corporation registered a record Php 3.75 billion in net income.
The exceptional performance was driven by three factors.
First, the company was able to achieve significant improvement in operating efficiencies and reliability. Plant availability increased by 29 percentage points for our thermal assets (internal note: 59 to 88 for SLTEC only).
These improvements were borne out of the plant renewal initiatives that the company carried out when we started the transformation journey in the middle of 2019.
Second, the company significantly improved its operating margins. This was largely driven by the ability to secure longer term contracts that provide more stable cash flows. Our agile energy portfolio also allowed the strategic sourcing of competitive priced electricity and fuel to help improve margins.
Third, the company successfully completed the acquisition of additional stakes in three renewable projects in early 2020: the North Luzon Renewables wind farm in Ilocos Norte and Sacasol and Islasol solar farms in Negros Occidental.
These acquisitions, with a total investment of Php 7.4 billion pesos, were earnings accretive given the operational status of the power plants.
To further augment its generating capacity and notwithstanding the pandemic, the company carried out the construction of five projects through 2020 totaling around 374 MW of gross capacity.
These projects include the 120 MW solar project and the 40 MWH battery storage project in Alaminos Laguna, the 60 MW solar project in Palauig Zambales, and the 150 MW quick response thermal plant in Pililla, Rizal. The company is also constructing a renewable energy laboratory in Mariveles, Bataan equivalent to a 4 MW hybrid solar plant integrated with an energy storage system, which will test various new technologies in solar and battery storage. This will help the company select the best technologies as it scales up its investments in solar and storage in the coming decade.
With all of these capacity additions, AC Energy now has over 1,000 MW of attributable capacity in the Philippines, with almost half of the capacity coming from renewable sources. We expect the share of renewables to significantly grow over time as the company focuses on scaling up its investments in solar and wind farms.
The company has also recently reaffirmed the March 2020 board decision to infuse the international assets of its parent, AC Energy and Infrastructure Corporation.
The international assets is comprised of approximately 1,400 MW of attributable capacity in operation and under construction across multiple geographies including Vietnam, Indonesia, Australia and India. 100% of these capacities are from renewable sources – particularly solar, wind and geothermal.
After the infusion is completed, this will increase AC Energy’s attributable capacity to 2,400 MW, of which over 1,800 MW or 77% is from renewable sources.
This puts AC Energy in an excellent position to attain its vision of reaching 5 GW of renewables by 2025, and realize its aspiration of becoming the largest listed renewables platform in Southeast Asia.
In order to achieve its bold ambition, the company is further strengthening its balance sheet and augmenting its cash position. In January 2021, the company completed its stock rights offering that raised Php 5.4 billion from the issuance of 2.27 billion primary shares.
This was followed by the successful completion of a private placement of 4billion primary shares to GIC, Singapore’s sovereign wealth fund. The private placement added around Php 11.9 billion of cash, resulting in a total of Php 17.3 billion pesos of additional cash in the first quarter of 2021.
The planned infusion of the international assets and the recent fund raising will further grow the company’s balance sheet by about three and a half times.
Our strong balance sheet is complemented by a robust pipeline of renewable projects, and a highly capable and motivated team. This places AC Energy in an excellent position to play a meaningful role in the green-led recovery.
On behalf of the company’s board and management, I would like to thank the entire AC Energy team for the unparalleled commitment and exceptional results delivered under an extraordinarily difficult situation.
Thank you to our shareholders for the continuing trust and support.
We are all very excited to continue this journey as we all work towards our aspiration of becoming the largest listed renewables platform in Southeast Asia. Thank you.