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Good day, everyone. Thank you for joining this online briefing to discuss the First Pacific 2022 Full Year Financial and Operating Results. The results presentation is available on First Pacific website, www.firstpacific.com, under the Investor Relations section Presentation page. Please note this results briefing is being recorded and the replay will be available on First Pacific website in the Investors Relations section as well.

For participants from the media, please note that Q&A session is open for investors and analysts only. If you would like to ask questions, please contact us when the meeting is finished. Today, we have with us Mr. Manny Pangilinan, our Managing Director and Chief Executive Officer; and Mr. Chris Young who just joined us, our Executive Director; Mr. Joseph Ng, our Chief Financial Officer and Associate Director; and Mr. John Ryan, our Associate Director and Chief Sustainability Officer, and other senior executives of the Head Office of First Pacific. Over to you, John, for the presentation, please.

Thanks very much, Sara. As ever, I'll do a quick run through highlighting the important factors in our results for the full year of 2022. And then we'll switch to Q&A and our Chief Executive, Manny is primed to help you, and so are our other senior executives.

Now Amy, could you please click on the screen so that I can press page down? Thank you. Now a quick overview of the assets that we hold, not much change since we've last spoken to you back in August. We own a little bit more MPIC owing to repurchases by that company of their shares.

I'm sorry. But when you click away from here, I cannot page down. Sorry about the interruption there. Amy, could you click it forward one page, please? Thank you, Amy.

Page 3, we're looking at, everyone. Notwithstanding a sharp decline in the Indonesian rupee, almost 10% last year and of the peso, almost 4%. We managed to deliver a recurring profit increase of almost 1/5 to a record high and that's on the basis of record high turnover and record high contribution from operations. As you can see in the column chart on the top left of this page, the change in recurring profit is led by higher contributions from PLP and Indofood followed by MPIC and slightly improved results from our sugar business underneath First Pacific Natural Resources.

As you can see from the Head Office, red line, our net interest expense rose about 7% to just under $55 million owing to higher interest rates, which we'll discuss in a moment. Notwithstanding that increase, we have recurring profit of over $0.5 billion for the year. Recurring earnings per share, as you can see, rose just a little bit more to just under $0.12 per share. And the distribution for the full year was up 16% to a full HKD 0.22 a share, up HKD 0.03 from a year earlier. As you can see from the cash flow column chart, that distributions paid was just over $110 million. And turning over now to the next page, let's have a look at our balance sheet and borrowings.

Amy, could you please page forward to the slide. Thanks. Okay. Just about a year ago, we were granted investment-grade credit ratings from S&P and Moody's. And our debt levels and cash levels are really unchanged over the course of the year. As you can see from this debt maturity chart at the bottom of the page, we've got an average maturity that's a little bit short at 2.8 years, and our interest coverage ratio is at 4x, well above the minimum of 3x that we'd like to see regarding our borrowings.

Please bear in mind that there is a bond maturing next month. You can see in the blue box at the top. It's on the 16th of April. And we have funds in hand in our bank account to pay those bonds when they mature and our CFO, Joseph Ng, who also runs our treasury operations, can also talk about the bank loans that we've got coming up due in 2024. Overall, fixed rate borrowings are just under 2/3 of the total at 64% and do remember that none of our associates, affiliates or subsidiaries have any recourse to Head Office on their borrowings.

Now the next page shows us a quick pie chart of our gross asset value. There's a change here that I'd like to draw your attention to, we have a valuation now of $150 million on PacificLight Power. That's our power company in Singapore, which we noted a moment ago, was a big source of the increase in recurring profit for us last year.

Now let's split award 2 pages to Page 7 and a quick word about our ESG report for 2022 that will be published on April 27 along with our annual report. There are some highlights listed here. Among them are ESG performance KPIs and the annual staff bonus and just agreed by our Board of Directors this morning, First Pacific Head Office now has a net zero target pro Scope 1 by the year 2030, by which time we will have no automobiles that run on ICE, internal combustion engines.

Now let's move to our biggest holding on Page 8, Indofood. Record high net sales, record high EBITDA, record high core profit, and that's notwithstanding some gyrations in soft commodities, particularly with regard to wheat and palm oil, which affected the Bogasari pasta business and the Plantations business as well.

As you can see, the EBIT margins pretty much held up in the blue box down at the bottom, a little bit down on the Noodles and rather up in Bogasari, where we balanced the price movements of wheat rather well. So it was a strong year, again, record high numbers. Looking ahead, 2023 revenues are seen up by double digits, and the EBIT margin, their forecast is 18% to 20%, and that's the same forecast they gave for 2022 as a whole.

Now the Pinehill transaction saw the first major penetration into markets in Middle East and Africa and a little bit in Southern Europe. That expansion is continuing now and moving into 2023. Two years ago, when we bought Pinehill almost 3 now, 2.5 years, there was a noodle making capacity of 9 billion packets a year. That is now up by 1/3 to 12 billion packets a year, and that shows the confidence that Indofood has in the growth of those markets.

A quick look on the following slide at ICBP, which is the parent of those Pinehill companies. Again, we've got some record high numbers for sales and so on going forward. But we've got a flat EBIT margin with a Noodles EBIT at 22.9%, and that was down largely because of higher input costs, the CPO and the flour that it uses in the manufacture of the noodles. Noodles are particularly important, as you can see, an 82% almost share of EBIT when you take away unallocated income and before elimination.

Moving quickly to Page 10, let's have a quick look at the external sales column chart on the top left. As you can see, every single business saw an increase in sales, except for Edible Oils and Fats, which declined rather a lot. And all of these businesses, almost all [indiscernible] increases in volumes, however, once that didn't include the aforementioned Edible Oils and Fats, Bogasari saw lower volumes and so did Dairy.

Now let's move to PLDT. The largest and highest quality phone company in the Philippines, more record highs here. Service revenue is up 6% to a record high. EBITDA over PHP 100 billion first time ever, and the margin is still strong at over 50%. We see the service revenues and EBITDA hitting in consecutive record highs in 2023. And as you can see in the column chart down at the bottom, this is all driven by data.

On the next page, there's a glance at the 3 main businesses, the ring chart shows you on Page 12, that data and broadband service now generate 80% of revenues and that ranges from 73% at the enterprise business up to 85% of all the revenues at the Home business, where demand for data is flat out, like clients with the individual business where data traffic on mobile phones was up by almost 1/3 in 2022.

Very quickly on the next page, Page 13, the network quality continues to be well ahead of all the competitors, whether they are on the fixed line or wireless segments.

Now let's move over to Metro Pacific Investments a holding company in Philippines, which has these investments, which I think we're all familiar with.

Turning very quickly to Page 15, you can see the rise in contribution was led by the Toll Roads business and Power as the country began to recover from pandemic mandated shutdowns across the economy. Now if you look at the operating revenue and core profit column chart to the right there, you can see in 2019 that we had some record high numbers. MPIC's best year ever, was there. And there is some hope that the improvements expected in 2023 might have investors thinking fondly about those levels yet again.

On the next page, a quick word about Meralco, biggest electricity distributor in the country, enormous growth in electricity generation, where it's got a commitment to build out 1,500 megawatts of renewable capacity over the next 4 years. Revenues and profit up to record highs, and we see continued steady and growth in Meralco going forward.

On the next page, we have got the Toll Roads business, where the map shows you that the biggest toll road network in the country is growing very, very well. Revenue is up by almost 1/3 in 2022. As you can see in the blue box, more roads are being built out domestically as well as abroad. And we expect to see further record highs in revenues and profit in that company going forward.

A last quick word about Water underneath MPIC. Maynilad continues to be a steady generator of cash flows for the company. Revenues up just a bit. Core profit down by 7%, and that's due mostly to concession amortization from completed CapEx.

And now to PacificLight Power, that's an LNG-fired power plant in Singapore, which has seen a 50% growth in revenues, more record highs here. I'm repeating myself rather a lot. EBITDA tripled to SGD 365 million and even faster growth in core profit. Kedar, if you don't have a question about PLP, I'll be rather disappointed.

Now let's move on to Philex Mining. In 2022, we had some difficulties with some breakdowns of machinery. So revenues were down and core profit was down. Grades were not terribly changed from the year previously. But as we can see, this is a mine Padcal that's been in operation for 64 years. And the focus now is towards development of the Silangan project down in the south of the country, which is expected to begin operations in 2025, a good 2 years before the Padcal mine is expected to run out following a life of mine extension there.

So that's a quick snapshot of what's been happening with First Pacific and the operating companies. We've had, I think, 2 years in a row with some record high numbers at First Pacific Head Office and some of our other companies. We're quite optimistic for the future, as the increase in our distribution to shareholders suggests we're quite confident. And in this mood, we're ready to take questions.

Thank you, John. We are now ready for questions. [Operator Instructions]. Go ahead.

Congratulations for results. I have three questions, but my first question is really about SP and Power. So the business has done quite well in 2022. So how should we think about the business earnings capability going into the current year? How many of the strength last year can be carried forward into the 2023? And maybe in the longer term, it will be helpful if you can help us think through this business.

Stanley Yang is in charge of corporate development forces on the Board of this PLP and he'll respond to you.

Hi, Jeff. So on PLP, one of the aspects of the businesses, the improvement in performance was driven by a mix of a few things. One being, demand has continued to rise in the Singapore market. There's been no supply of capacity. And in fact, some of the F-class units, I think, 7, are going to be more than 25 years or older soon. And so when you look at these factors, plus in terms of the LNG and the gas shortage that's been in the market that's led to the strong performance for PLP in terms of the numbers. And so on a 100% basis, EBITDA in 2022 was SGD 365 million versus the prior year in 2021 at SGD 111 million.

Looking to this year, one of the things that management was able to do was to lock in a number of retail contracts, which constitute the bulk of their generation capacity that they're expecting for this year. And those margins are quite attractive. The sustained margin in the market has carried into this year. And so in the early months, we're seeing that growth continue. And so we expect that when you see the first half that, that will be a strong results stemming from the continued shift. But longer term, I think where Singapore is facing is that need to build additional capacity, and so EMA, the regulator has pushed for improving the potential for imports of solar as well as domestic supply.

And so the question really in the long run will be whether that additional capacity will be enough to make up for, one, the aging of some of the existing generators. And second, in terms of the continued demand, I think that's where we're really going to see. And so EMA is aware of that. They are aware that the crunch today, is leading to that under shortage of the supply and pushing our prices very high.

One of the things that they're looking to do is to implement more of the vesting contracts. That was something that in the past when PLP was struggling was a lifeline. Today, that's a way to cap the prices, but these are pretty high margins. They are close to around SGD 50 per megawatt hour. And so I think that this bodes well in the absence of significant capacity coming in, in the future for a sustainable return of the business. But will they continue at the high levels as last year? Perhaps not, right? I think the EMA and the regulatory is something that we're aware of. But what I would say is that for this year, the outlook continues to be very strong.

The second question is from Grant at [indiscernible] business. The question is, can you please give us an update on the CapEx over spending and amidst reporting at PLDT with investigations and accountability go up to the highest levels?

Well, the forensics that have been authorized by the Board sometime mid-December last year, has been completed and sometime, the third week of March, the final report was surrendered to the Board first in executive session and in the Board meeting of PLDT when the results were announced some time March 24. So basically, the leader of the forensic was [indiscernible], which is a New York-based law firm led the investigation with the help of PWC and a local law firm, which is the first time the PLDT has commissioned or [indiscernible]. It's an independent -- these are independent agents that did the forensics on behalf of the Board, and reporting through the Audit Committee of the Board. So the investigation has gone up to the highest level of the corporation, which is the Board and of course, the senior management of PLDT.

In terms of accountability, yes, we have identified who are responsible for this. As you said, in this reporting, I think that's what you said, to senior management and eventually to the Board. And I think one of the major highlights of the of the forensic as there was no fraudulent transaction, but the team uncovered no deliberate intent to hide the mistakes, and there were some basis to restate the historic financial accounts. The period in question of the investigations was through COVID 2019 up till the year 2022. So those are the highlights of the results of that investigation.

Now I think after the investigation was finished and reported to the Board and publicly as part of the overall disclosure of PLDT, last March 24, now we have to address how we deal with those who were responsible for this overspending, miss-reportings as you called it. So I think we should be able to announce it in next week or two as to the results. There are now active discussions with certain of these individuals. And I think we're making progress in terms of the approach through the separation of these individuals from PLDT.

And if you could turn to Page 13, I'll just add a point or 2 to what Manny has to say. Now there is a CapEx last year amounted to PHP 96.8 billion, as you can see, there's some details written down here, and I think it's worth drawing attention to the fact that we've now got over almost 77,000 base stations across the Philippines owned by Smart, most of them, about 39,000 are LTE base stations. We've got over 7,000 5G and 17,000 3G base stations. And I think the net greatest consequence of this CapEx overspend was perhaps to build up a lot of capacity rather quickly in a short amount of time with the end result we've only got that 2% increase in base stations over the course of the whole year.

And I think you'll find over 2023 that 5G base station construction is going to go a bit more slowly and that full year 2022 CapEx number, that's the peak, both in absolute terms and as a share of service revenues, as you can see, it's just under half of the total. So a little less CapEx going forward, I think, is what I wanted to add to Manny's words.

Yes. Are there any other questions?

Yes. So Metro Pacific has recently made a few investments in agriculture and solar businesses, as I read from the media reports. So maybe the thing that I would just like to ask is on the broader group perspective, what kind of assets are you looking to invest in the near term and the medium term? And if there's any implication on the underlying entities, dividend and also the capital allocation strategy at First Pacific Head Office level. So this is something that -- I would just like to learn your thoughts on it, and I will have a follow-up after that.

Well, I think that to answer your question, Jeff. Let me deal with. Each year when investments that we made in Solar Philippines, which has to be called SPNEC, right? That is an investment in a pure solar facility somewhere in the middle of the Luzon, the Island of Luzon, which is the biggest island, closest to the main market of Metro Manila. The partner there is a person called Leandro Leviste, who's really in charge of gathering together as many as 3,000 hectares or a bit more in order to enable SPNEC together with the ICTSI group to build as much as a nameplate capacity of 3,000 megawatts of solar, effective capacity basis without any batteries of megawatts supply.

I think so far, SPNEC acquired about 1,100 hectares subject to conversion from, because these are mainly agriculture lands and there's a conversion requirement from agricultural land to commercial and industrial use. So it's 2/3 of the way there, he and the SPNEC. So Metro Pacific has -- yes, this is an important piece of investment for Metro Pacific.

So the 2 billion pesos that Metro has made will be sufficient to pay for the balance of the cost of the land part of which SPNEC has advanced already. So I would dare say though that eventually, we would have to pass on the investment made by Metro Pacific to Meralco, which I believe should be the proper owner of this generation facility, which will be the largest in the country, and I would guess one of the largest in Southeast Asia. So in many ways, this is an interim step for big orders to secure that we said in this very important sort of facility for the group and for the country.

As to the second part of your question was the agri facilities -- or sorry, the agri investments. We made a modest investment in daily farming. We come is best that cost us about PHP 190 million or a little less than $4 million.

The next one we made was Axelum, which is the largest coconut processing facility in the country. It's a facility that processes 700,000 coconuts each day and 90% of its revenues are export. So the business model is quite good because it is a dollar-based revenue and peso-based expenses. So it's pretty much like in the mining business. But we export the coconut products into the U.S., which is the main market for it and to some degree, beginning to export into Europe, to the EU community. And the buyer of our finished coconut products are the branded coconut water, the pharmaceutical companies and the cosmetic companies, desiccated coconut and for the coconut [indiscernible]. So that's the investment in Axelum. That's probably our biggest investment in a single agri-related company in the Philippines.

And the third one is, in these greenhouses located Metro Manila, 22 hectares, and I think the projected volume of -- it's pure vegetable operations with the -- we partnered with the Israelis. They are both on the Dairy side and on the greenhouses where I think the LR Group of Israel has taken a 40% stake. And we want to -- this is the first step in our greenhouse effort, it's all organic, and we want to expand that. Those 22 hectares are on land, but First Pacific -- sorry, Metro Pacific bought for its logistics business. And there's another 20 acres we own in the southern part of Metro Manila, and we want to invest greenhouses as well in that piece of property owned by MPIC.

I think the idea now or the intent is to expand the Dairy business and when we announced our investment there, it has a quite a number of interest from local dairy farms not doing well, but bigger than farmers' best. So that's the ability we've been able to obtain a scale in the dairy farm business with the help of these [indiscernible] greenhouses with them. Axelum also offers us the opportunity to consolidate the coconut industry in a bigger way. And so we're looking at other coconut processing facilities and coconut plantations that are available for investment or partnership in the Philippines.

Basically that's a waterfront for now in terms of the agri business. So where the real test will be is to get into large-scale commercial farming, and a number of the local government units have offered land to us for development into large-scale farm, but nothing concrete has been agreed, it is a choice or an option, but we have to consider very carefully.

Joseph, just while you're -- the follow-up question was, let's start thinking about capital allocation going forward? Do you want to take that?

Well, the capital allocation, I mean clearly it's the function of the kind of strong cash flow situation at headquarter's level, we put up our numbers for 2022 and showing a dividend income of 220 million in aggregate and see in the cash flow, a big part of that has overhead and interest roughly allocation $70 million, and people would be aware that the interest rate is actually has gone up starting from the second half of 2022. The interest rate little bit increased starting the first half 2020, really onwards. So there will be some uplift in the interest expenses figure from the $52 million reported in 2022 to a high level, now we have gross debt a little bit less than $1.5 billion and net debt say $1.4 billion, and then interest costs of 5% thereabout, and you're talking about $60 million to $70 million. So that will be some uplift -- quite a bit of uplift, I would say, in the interest expenses.

So net of all this then is actually the cash that we would allocate for return to the shareholders and any capital investment. So we announced the dividend payout of final dividend payout of HKD 0.115. So adding together is HKD 0.22. In a full year basis that's roughly USD 120 million. So that's a big part of the cash that we have. So going forward, we monitor the cash flow. But bear in mind that in 2022, we have not received any PLP dividend yet, and that is a very strong performance of PLP in 2022, and we started to collect quite a strong stream of dividend from PLP starting in first quarter 2023. So we expect that the dividend stream coming from PLP in the course of 2023 will be very strong. And the total dividend will be increased quite a bit as a result of that.

Now we will look into the -- on a full year basis as to the overall cash flow situation as to how to allocate between return to the shareholders in the form of distribution and then investment in other investment opportunities that will be available to us.

Thank you, Joseph.

May I just have a very quick follow-up on the dividends here. So the full year payout ratio slightly dipped to 24% in this year, which is below the 25% sort of committed payout, I would say. So just wanted to see if there's any structural change in thinking about the dividend policy or whether that is just a one-off consideration here?

Let me take that. I mean, in terms of the dividend per share growth, that's very, very -- I mean, that's 16% growth, very broadly in line with the 19% growth in the [indiscernible]. And we say that, yes, I mean the dividend policy has been 25%. Last year, it was a little bit more than 24%, this year, it's actually on a round basis, actually close to that. As I said, it's all subject to the cash flow situation. $120 million a year to our cash flow is not a small amount, and I think on a dividend per share basis, on a growth basis is very, very reasonable, and is actually mid-teens. And if we compare to the dividend we paid in the past 2 years or so, you're talking about increasing 50% in absolute amount in 2 years' time.

So we need to balance all this. The -- we need to monitor the dividend stream on all the units, including the PLDT, like Indofood, like Metro Pacific, and in's particular, PLP in the course of 2023.

Now in terms of whether there's any significant change in the dividend policy, I think we said in our announcement that we basically stick with the 25% -- up to 25% in order to build in some flexibility in terms of percentage pay out. But on a dividend per share basis, I think we kind of maintain at least at that level. That's what we are thinking for the moment. So I think in terms of total return, if you have the share purchase we did in 2022, the total return is about 27%. So that's above your 25% guidance.

We have another question from Grant at [indiscernible]. He asked, Metro Pacific trades at a big discount to [indiscernible] has a concern about capital allocation amongst other things. Will it be better to adjust those concerns by buying back stock rather than investing in new business lines?

Well, of course, we know that MPIC trades at a big discount to the underlying market value of the company. So we try to address that by buying back shares. I think, which we've had for the past 2 or 3 years, and it hasn't really moved the stock price up despite doing that, and that was a significant buyback effort by MPIC. And despite -- I must say, for the past year or so, despite the regulatory capture that has been unleashed or thrown at MPIC for being unable to realize the tariff adjustments scheduled, I think we managed to get tariff adjustments for the Water business, for the Tollways business, not fully, but significantly, the Light Rail and Meralco, that was a delay of 7 years from July of 2015 to June of 2022. And it did not move on the share price.

So I think there might be some more basic issue with MPIC. I don't think it's the underlying business as such, but it's something perhaps some people call structural subordination of the cash flows because there are operating debts at the operating companies, Metro itself has some debts by the parent and -- is it structure? Is it because conglomerates are obsolete concept nowadays? So that's something we are trying to address. We have to address that because we cannot -- Metro has not raised any new money in recent memory, and it cannot do that at these share prices, so we got to get to the root of this issue.

Yes. These new investments in new businesses, I think one thing that is emphasizing is that they are far less regulated than the Water, Toll Roads and Electricity businesses that Manny just mentioned, where there have been struggles, big struggles in recent years with regulators to get contractual tariffs allowed, and on balance, none of the businesses have gotten everything that they felt that they were due. So there's a little bit of diversification is the investment in the new businesses.

Thank you, John and Manny. Are there any questions? I think there's no more questions. Please, may I invite Manny to give us a closing remark.

Well, first of all, I'd like to thank everybody for joining us this afternoon. I guess having just announced the 2020 results, so it's time to look forward and I think when you asked the question in reference to Singapore farm plant or the outlook is at least for 2023. I think in our outlook or conclusion portion of our press release, we were quite positive and in terms of a robust output for 2023 at least.

And I think, Jeff, who asked the question about PLP and the outlook this year is quite -- it's very positive actually for PLP. And if you look at who will be the main driver of growth in profitability, for this year to the PLP, it is actually Meralco itself. The Distribution business continues to grow at a pace a little higher than economic growth and the efficiencies of scale proved that its earnings, the Distribution earnings will rise this year. At the same time, there's a recovery to profitability of the Global Business Power. Last year, they produce a loss of for a number of reasons. And starting this year, they've returned to profitability. So that has added to a positive outlook to the generation business.

The San Buenaventura plant is also -- for past 2 or 3 months, also showing higher profitability this year compared to last year. And our retail supplier business, this is the direct supply of electricity to mainly on enterprise customers are also showing a positive growth compared to last year.

The other driver of our profitability this year would be Tollways. I think in our [indiscernible], we have about 136 kilometers of network in the Philippines, Indonesia and Vietnam and the roads under construction, will be about 160 kilometers more. So by -- in the next 12 months or so, we will have more than 600 kilometers. And so we anticipate the Tollways group to grow by something like 40% in net profit in 2023.

And of course, that's the useful reliables, PLDT and Indofood, we guided the PLDT to mid-single-digit growth in revenues and EBITDA this year, and we hope we certainly will improve in 2023 over 2022 core profitability. The CapEx issue is behind us. There'll be some residue that we need to reflect as it was flowing from the PHP 33 billion adjusted outstanding deals for the major vendors will have to be completed and delivered in 2023 and 2024. So we'll have to deal with those additional CapEx. But we have reduced the CapEx and the fresh CapEx levels in both years to lower level so that the overall CapEx will be the around PHP 50 billion. For Indofood, I think we shall go to Chris.

Yes. I think Indofood certainly had a good second half. The indications are that will continue into the coming years. So yes, also positive from the IndoFood business.

Now I think part of your question related to the dividends at First Pacific, and the [indiscernible] us the proper level of dividends really [indiscernible] MPIC so we should get on MPIC back to give us more dividends in the Indofood. So we have some work to do in our subsidiaries.

Thank you, Manny. If you have any follow-up questions, please get in touch with John and me. Thanks, everyone, for joining today's online briefing.

Bye, bye. Thanks, everyone.