2020 INTEGRATED REPORT
ENABLING SUSTAINABLE RECOVERY To help the economy rise from the effects of the pandemic, AC Energy remained focused on its renewables growth strategy. Our 2020 investments in the Philippines created more than 3,000 jobs within our host communities, and continue to be vital pieces towards reigniting the economy and creating economic activity.
We believe that moving to a low-carbon economy will produce jobs and further prevent human harm. The World Bank estimates that transitioning to low-carbon, resilient economies could create 65 million new jobs by 2030*. We will continue to collaborate with partners that can help us drive progress towards our sustainable energy transition.
*Worldbank.org, Human capital and climate action: Outcomes Photo: Concrete pouring of the massive wind turbine foundation that deliver for people and planet, May 12, 2020
1 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 2 ABOUT THE REPORT
Table of Contents About the Report
4 About the Report Approach Rto eporting Management Review This is the second Integrated Report of AC Energy The contents of the Report have been reviewed 5 Protect, Serve, Pivot: Ayala Group's Corporation (PSE: ACEN), formerly AC Energy by the senior executives of AC Energy Corporation, Philippines.R The eport outlines AC Energy including the President and Chief Executive Officer, Response to the Pandemic Corporation’s value-building strategy towards Chief Finance Officer, the Head of Legal and its stakeholders, measuring its impact on the Regulatory and the Vice President and Head of 9 AC Energy in 2020 economy, society and the environment, while Corporate Communications and Sustainability. managing risks and leveraging on opportunities 13 Message from the Chairman and the President in its external and internal environments. External Assurance 17 Sustainable Transformation To establish quality and materiality of the Reporting Principle and Period Covered information contained herein, AC Energy has 21 Geographic Presence The Report is prepared in accordance with the engaged DNV as an independent third-party Key Guiding Principles and Content Elements of external verifier to assure and review the non- 23 How We Create Value the Integrated Reporting
Photo: North Luzon Renewables Wind Farm in Pagudpud, Ilocos Norte
3 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 4 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES
5 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 6 7 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 8 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES AC ENERGY CORPORATION IN 2020
AC Energy CORPORATION in 2020
We aspire to be the largest listed renewables platform in Southeast Asia, with a goal of reaching 5GW of renewables capacity by 2025.
Net Income Shareholders' Equity % Renewables Share Increase ₱3.75B ₱21.35B 1,034 MW 65x 30% 47% 416 MW 491 MW 15% Revenue Market Capitalization 62 MW 543 MW ₱20.44B ₱110.48B 354 MW 27% 7x 2018 2020 Thermal RE RE Share %
The Philippines remains to be AC Energy’s core 29% market, and the company reinforces its strong Our 120 MW GigaSol Alaminos solar commitment to invest in much needed energy projects in the country as it takes strides to expand farm features a pioneering Sustainability and diversify its generation portfolio, and significantly increase its renewables capacity. Hub and is surrounded by Ayala Land’s 71% Carbon Forest.
Under Construction Operating
Photo: 120 MW GigaSol Alaminos in Laguna
9 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 10 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES 2020 HIGHLIGHTS
Renewables Share 2020 47% Highlights
MTC02e Emissions avoided 349,437
Protecting the Turtles In the coastal town of Bangui, species of endangered marine turtles have been observed laying eggs and nesting along the shoreline of the Birds of the Conservation Estate bay. Through awareness In Ilocos Norte, residents have campaigns and continuous discovered the value of protecting coordination with the locals, nature, and have become stewards the danger of poaching and of AC Energy’s Conservation Estate. smuggling of the eggs have The forests witness an increase in significantly decreased, biodiversity as AC Energy and its with the residents acting as wind farms, North Luzon Renewables guardians of the endangered and NorthWind, with the help of the species, becoming partners locals, create an ecologically diverse of AC Energy in turtle landscape. The forest is now home conservation. to 117 species of birds, 33 of which are endemic, and four are classified as vulnerable.
Piloting circular approach in construction sites AC Energy integrated a circular approach in its renewable energy developments. In Alaminos and Palauig, a total of 8, 645 kg of plastic waste from solar panel packaging have been recycled into eco bricks to be used as construction materials for solar plant facilities.
Capacity Building With various training workshops to Land protected and restored build their skills, local residents learn sustainable farming techniques Our sustainability strategy is embedded such as contour hedgerow and 910 hectares watershed systems at AC Energy’s in our corporate strategy and aligned with model farm in Ilocos Norte. They Sustainability Investments are also taught how to produce the UN Sustainable Development Goals. mushrooms, ginger, ube, and other root crops, fruits and vegetables. Today, there are close to 2,000 fruit ₱151.51M trees of cacao, coffee, calamansi from 2018 to 2020 and cashew flourishing in the farm.
11 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 12 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES MESSAGE FROM THE CHAIRMANMESSAGE FROM AND THETHE PRESIDENTCHAIRMAN
Message from the Chairman and the President
Dear Fellow Shareholders,
After more than a year, the COVID-19 pandemic Green-led recovery remains as the most challenging crisis we have all Amidst plans to revive our economy, we believe faced in recent times in terms of its unprecedented that we have a once-in-a-lifetime opportunity to impact to human life as well as our healthcare and “build back better” towards a more sustainable, economic system. Amidst the continuing challenges, resilient, and inclusive future as we steadily we recognize the tremendous sacrifice and service move the post-COVID world. Sustainable of our many healthcare and economic frontliners. recovery is now seen as perhaps our We deeply appreciate all that you continue to do for the country. best and only way forward to achieve our environmental goals to mitigate Strong Bayanihan spirit climate change, to create jobs, build On behalf of the entire Ayala Group, we give our economic resilience, and ultimately, sincere thanks to the entire AC Energy team for improve the well-being of people. We its unwavering commitment to go the extra mile are delighted that AC Energy has made to ensure stable and reliable access to power for our communities, especially during these times. significant progress along these fronts We extend our deepest gratitude to our various and continues to be recognized as a energy frontliners, some of whom have had to key contributor to sustainable growth stay at our powerplants and away from their and development. families for several months in order to provide power for commerce, industry and everyone For the past year, AC Energy Corporation or ACEN, working and schooling from home. remained focused on its renewables growth strategy through continuous renewable energy investments. We also thank our colleagues at AC Energy for Despite the difficult year, the company earmarked going beyond the call of duty and contributing ₱10 billion in CAPEX and augmented its generating resources in the fight against COVID-19. capacity with the construction of two new solar Your assistance in establishing treatment facilities plants, battery storage and firming facilities in early during the pandemic was greatly appreciated. Luzon. This brings ACEN’s total attributable We are delighted to see the strong spirit of capacity to 1,034 MW, with almost half of the Bayanihan in our organization, and hope that capacity coming from renewable sources. we can sustain this moving forward. Our 2020 investments created more than 3000 jobs within our host communities and continue to be vital As our understanding of the pandemic deepens, pieces towards reigniting the economy and creating we believe that there is now a renewed appreciation economic activity. of the interconnectedness of communities and the infrastructure that hold these together. We recognize As the country looks ahead to bounce back that complex global issues, such as the pandemic, quickly from the pandemic, ACEN remains strongly economic inequality, and climate change, trace their committed to our vision of a sustainable energy roots to failures in fully integrating sustainability future. In fact, we believe that this commitment to principles to decision-making and operations. a green-led recovery is more important now than In the same vein, embracing sustainability will ever. Towards this end, we built our sustainability be our way forward in addressing these intricate framework on three focus areas embedded across global challenges. We are encouraged that several our business operations, governance, and culture. governments and private institutions, including many We aim to have a low carbon portfolio by 2030, in the Philippines, are renewing their commitments protect the environment, and invest in our to these same principles. host communities.
13 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 14 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT
Extraordinary turnaround year AC Energy Corporation registered a record Net Income ₱3.75 billion in net income in 2020, an exceptional performance that was driven by three factors: ₱3.75B First, the company was able to achieve significant Fernando Zobel de Ayala John Eric Francia improvement in operating efficiencies and reliability. Chairman President and CEO Plant availability increased by 29 percentage acquisition of additional stakes in three renewable points for its thermal assets. These improvements projects in early 2020: the North Luzon Renewables were borne out of the plant renewal initiatives wind farm in Ilocos Norte and Sacasol and Islasol that the company carried out when it started solar farms in Negros Occidental. These acquisitions, the transformation journey in the middle of 2019. with a total investment of ₱7.4 billion pesos, were earnings accretive given the operational Second, the company significantly improved its status of the power plants. operating margins. This was largely driven by the ability to secure longer term contracts that To further augment its generating capacity provide more stable cash flows. The company’s and notwithstanding the pandemic, the company agile energy portfolio also allowed the strategic carried out the construction of five projects through sourcing of competitive priced electricity 2020 totaling around 374 MW of gross capacity. and fuel to help improve margins. Third, the company successfully completed the
These projects include the 120 MW solar project and the 40 MWh battery storag e project in Alaminos, Laguna, the 60 MW solar pro ject in Palauig, Zambales, and the 150 MW qu ick response thermal plant in Pililia, Rizal. Th e 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.
Total Attributable Capacity 1,034 MW
Total Renewables Capacity 491 MW
AC Energy's Significantly Significantly Successfully completed exceptional improved improved the acquisition of performance in operating operating additional stakes in efficiencies margins three renewable projects 2020 was driven and reliability by three factors
15 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 16 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT
2025 Outlook Our strong balance sheet is complemented AC Energy now has over 1,000 MW of attributable by a robust pipeline of renewable projects, and capacity in the Philippines, with almost half of a highly capable and motivated team. This places the capacity coming from renewable sources. We AC Energy in an excellent position to play a expect the share of renewables to significantly grow meaningful role in the green-led recovery and to over time as the company focuses on scaling up its continue this journey as we all work towards our Sustainable Transformation investments in solar and wind farms. aspiration of becoming the largest listed renewables platform in Southeast Asia. The company has also recently reaffirmed the March 2020 Board decision to infuse the We thank the entire AC Energy organization and international assets of its parent, AC Energy its management team for a milestone 2020, and Infrastructure Corporation. despite the many challenges. We still have quite a journey ahead towards our full recovery, but We aspire to be the largest The international assets is comprised of encouraged that we have built a solid platform approximately 1,400 MW of attributable from which to continue our growth as a company, capacity in operation and under construction while contributing to the progress of the country. listed renewables platform across multiple geographies including Vietnam, Indonesia, Australia a nd India. 100% of these On behalf of the Board of Directors, the in Southeast Asia. capacities are from renewable sources - management, and our entire team, our particularly solar, wind and geothermal. sincere appreciation to our shareholders and our many stakeholders for your continued trust #LALIREPSEA After the infusion is completed, this will and support. We remain committed to play a increase AC Energy’s attrib utable capacity meaningful role in the green-led recovery, as we to 2,400 MW, of which over 1,800 MW or 77% accelerate our investments in the midst of the is from renewable sources. This puts AC Energy in sustainable energy transition. 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 ₱5.4 billion from the issuance of 2.27 billion primary shares. This was followed by the successful completion of a private placement of 4 billion primary shares to GIC, Singapore’s sovereign wealth fund. The private placement added around ₱11.9 billion of cash, resulting in a total of ₱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.
17 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 18 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES KEY MILESTONES
Key Milestones
NET ATTRIBUTABLE CAPACITY 696 MW 621 MW 1,034 MW 2,400 MW TARGET AC ENERGY, INC. FOLLOW-ON OFFERING 66.34% OWNERSHIP INTEREST INFUSION OF ACQUISITIONS AND AND INFUSION OF PHINMA ENERGY AC ENERGY PHILIPPINES PHILIPPINE ASSETS GREENFIELD DEVELOPMENTS STOCK RIGHTS OFFERING INTERNATIONAL ASSETS 2
Formerly Trans-Asia Oil and Mineral ■ 51.48% of Phinma Energy ACEIC transferred rights and Purchase of 20% stake of Axia Renamed to AC Energy ■ ■ ■ Private placement by GIC Development Corporation acquired and an additional interests in its Philippine generation Power in SLTEC, and equity Corporation (“ACEN”) 14.86% subscribed by AC Energy 1 and development assets to ACEPH interests in NLR, SACASOL and Follow-on o ering3 and Infrastructure Corp. ■ ff ISLASOL ■ Successful completion of ACEN’s Stock Rights Offering (“SRO”) ACEIC to infuse international Renamed to AC Energy ■ ■ ■ Development of 120 MW solar business and investments into Philippines, Inc. (ACEPH) plant in Alaminos, Laguna, 150 ■ SRO raised approximately ACEN2 MW diesel plant in Pilillia, Rizal, ₱5.4B in gross proceeds 60 MW solar plant in Palauig, Zambales, 40 MWh Alaminos Battery Energy Storage System and 4 MW RE Lab in Bataan
June - September October January 1969 2019 2021
1. Increase in authorized capital stock and subscription via property-for-shares approved by the SEC on 22 June 2020. 2. Expected to be filed and closed in 2021, subject to Board approval, various regulatory approvals and other contingencies. 3. A REGISTRATION STATEMENT RELATING TO THE OFFER SHARES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BEEN DECLARED EFFECTIVE. NO OFFER TO BUY THE OFFER SHARES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE ACCEPTED OR RECEIVED UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE, AND ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME PRIOR TO NOTICE OF ITS ACCEPTANCE GIVEN AFTER THE EFFECTIVE DATE.
19 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 20 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GEOGRAPHIC PRESENCE
Geographic Presence AC Energy Corporation (PSE: ACEN) Through its strong network of partners is the listed energy platform of the and banking relationships that help Ayala Group. The company has ~1034 accelerate its growth across the region, Philippine Assets MW of attributable capacity in the and its highly motivated, dynamic 81 MW Philippines. This is expected to increase and agile team that has consistently North Luzon with the planned infusion of AC Energy executed and surpassed expectations, Renewables Operating Plants International, which has ~1,400 MW AC Energy is very much on track to Under construction 52 MW of attributable capacity. realize its aspiration to become the NorthWind largest listed renewables platform Asia Pacific is just at the very early in Southeast Asia. stage of the energy transition, and AC Energy is in an excellent position 176 MW to capture these opportunities. Net Attributable Luzon Capacity Peaking Plants
MW 1,034 60 MW Palauig 1 Renewables Including Solar Plant International Assets 100% MW 491 32 MW 150 MW Net Attributable Capacity Renewables Maibarara Ingrid Peaking Plant India Geothermal Vietnam Plant 4 MW Bataan RE Lab ~1,400 MW 210 MW 244 MW 120 MW 140 MW Quang Binh Alaminos Solar Plant Sitara Solar Operating Status SLTEC Wind 80 MW 40 MWh Khanh Hoa & 29% Dak Lak Solar Under Alaminos BESS Construction 70 MW 405 MW Paryapt Solar Ninh Thuan Solar 88 MW Ninh Thuan Wind 80 MW 71% Mui Ne 60 MW Operational Wind2 Lac Hoa & Hoa Dong Wind
75 MW Indonesia Sidrap Wind Technology 1% 54 MW Geothermal Guimaras 637 MW 14% Wind Farm combined capacity Wind 24% Salak & Darajat Coal 48 MW Geothermal Plants Power Barges 45 MW 29% SacaSol Solar 80 MW IslaSol 30% Australia Diesel 521 MW 4% New England Other 63 MW 18 MW Solar Biopower MonteSol
1. Will be infused into listed platform ACEN, subject to Board and regulatory approvals 2. Includes 40 MW wind for Mui Ne under construction Map shows installed capacities as of March 2021, using DC capacities for solar projects * Map shows installed capacities as of end March 2021, and presents DC capacities for solar projects
21 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 22 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES HOW WE CREATE VALUE
How We Create Value
25 27 31 Our Sustainability A Low Carbon Protecting Focus Areas Portfolio by 2030 the Environment
35 41 43 Community Value Stakeholder Investments Creation Engagement
23 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 24 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES OUR SUSTAINABILITY FOCUS AREAS
AC Energy’s commitment to sustainability Our Priority SDGs is linked to its corporate strategy and We focus on these SDG areas where we believe we vision, and aligned with the UN Sustainable can make the most difference and are most relevant Development Goals. Guided by its to our business. Our Contribution to the Environmental & Social (E&S) Policy, the company’s sustainability framework is built Sustainable Development Goals on three focus areas embedded across its business operations, governance, and culture: having a low carbon portfolio by 2030, protecting the environment and investing in communities.
Measuring Our Impact on Sustainability AC Energy started to develop targets and measures to help drive its sustainability agenda a cross the organization and with We remain strongly it business partners.
committed to our vision Sustainability is fully integrated in the company’s strategy. In March 2020, of a sustainable future. AC Energy announced the board approval of its E&S Policy, incorporating sustainability SDG 13 SDG 7 in its business and organization. At the core Climate Action Affordable and of the policy is the company’s transition to Clean Energy a low carbon portfolio and divestment of SDG 8 its coal plants by 2030. SDG 15 Life on Land Decent Work and Economic Growth AC Energy also established a management system that incorporates global best SDG 9 practices in biodiversity management, Industry, Innovation circular economy, community relations, and Infrastructure and organizational diversity, well-being, and safety.
AC Energy and the TCFD Green Finance Leadership In Q1 2021, AC Energy signed up as a supporter of the Task Force for Climate- In 2020, AC Energy's parent, AC Energy & Infrastructure Related Financial Disclosures. The TCFD Corporation (ACEIC) was cited as the largest issuer of was established by the Financial Stability green bonds in the Philippines, with four tranches of Board to develop voluntary, consistent, green bonds outstanding rangi ng in size from US$ 75 climate-related financial disclosures that million to US$ 400 million. As of end 2020, 70% of the would be useful to investors, lenders and green bonds have been deployed to the company's insurance underwriters in understanding various renewable energy projects. In the Philippines, the material climate risks. These disclosures bonds have funded two new greenfield solar projects in revolve around four thematic areas: Alaminos, Laguna and Palauig, Zambales. governance, strategy, risk management, and metrics and targets.
AC Energy’s sustainability framework is built on three focus areas:
A Low Carbon Protecting Community Photo: North Luzon Renewables Wind Farm in Pagudpud, Ilocos Norte Portfolio the Environment Investments by 2030
25 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 26 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES A LOW CARBON PORTOLIO
Sustainable Development and the Energy Transition A Low Carbon Portfolio by 2030
Amidst the pandemic, AC Energy The company is also constructing showed resilience to “build back a renewable energy laboratory in better” and pursue energy transition Mariveles, Bataan which wi ll test Total Attributable through sustained renewable energy various new technologies in solar Capacity investments to counter the socio- and battery storage. This will help economic crisis. The company the company select the best remained committed to sustainable technologies as it scales up its 1,034 MW development and drive the investments in solar and storage renewables expansion given its in the coming decade. key role in the green-led recovery. Energy with purpose These renewable energy investments AC Energy now has 1,034 MW Total Renewables help reignite the economy and create of attributable capacity in the Capacity means operating safely, jobs while mitigating climate change. Philippines, with almost half of the capacity coming from reliably and sustainably. To further augment its generating renewable sources. ~491 MW capacity, AC Energy carried out the construction of five projects in AC Energy’s transformation 2020 with an aggregate capacity of is well underway, and it is 375 MW. These projects include the well-positioned to accelerate Renewables 120 MW solar project and 40 MWh its sustainable investments as it Share in 2020 battery storage project i n Alaminos strives to play a meaningful role Laguna, the 60 MW solar project in in a green-led recovery. Palauig, Zambales, and the 150 M W 47% quick response thermal plant in Pililla, Rizal.
Enabling Community Progress
As the 120 MW GigaSol Alaminos solar farm takes shape, AC Energy showcases its ability to play a prominent role in providing clean energy to the grid while spurring inclusive and sustainable economic growth to its host communities.
For the local community, the solar development brings significantvalue by creating job opportunities that reignite the economy amidst the pandemic, showing the social and economic benefits of sustainable investing.
The solar farm in Alaminos is a living example of AC Energy’s efforts to create shared value in the communities where it operates - ensuring renewable Photo: NorthWind Wind Farm in Bangui, Ilocos Norte energy supply while strengthening community vitality.
27 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 28 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES A LOW CARBON PORTOLIO
Ensuring Reliable and Sustainable Energy
As AC Energy scales up its renewables business, PLANT OPTIMIZATION Operating our plants at top it also ensures its power plants are operating at AND RELIABILITY top efficiency. In 2020, the company was able level efficiency must be in to achieve significant improvement in For its wind farms, AC Energy tapped WindESco operating efficiencies and reliability for its for assessment studies to be conducted and parallel with the scaling up plants. enhancements to be implemented on its wind The improvements were borne out of the plant turbine operations, resulting in increase in energy of our renewables business. renewal initiatives that AC Energy carried out yield for up to 95%. Detailed maintenance of its when it started its transformation journey in substations, feeders, switchgears and transmission 2019. With a focus on strate gic investments, the lines also contribute to the improved availability company also operates thermal assets to of the plants. complement its renewable assets and ensure power reliability, with these assets increasing Consistently implementing health and safety its availability by 29 percentage points. protocols in its operations, SacaSol and IslaSol achieved 1 million safe manhours without LTA, Sig cant nifi Sig cantly alongside strict health protocols to address the improvement nifi improved in operating threat of COVID-19 at the workplace. operating e ciencies ffi margins. and reliability.
HEALTH AND SAFETY AT THE FOREFRONT The Road to International Certification In October of 2020, a senior executive was Committing to sustainability means committing to appointed to lead health and safety and an responsible plant operations in the most efficient immediate focus ensued to establish an enterprise- manner with the least possible environment impact. wide health and safety progra m. The program aims In early 2020, AC Energy set to achieve ISO certification in the areas of Quality Management System (ISO to elevate and transform the company’s health and 9001:2015), Environmental Management System (ISO safety culture, review and enhance policies, and 14001:2015) and Occupational Health and Safety establish proactive metrics. Management System (ISO 45001:201), with the aim to implement effective and robust processes to increase The centerpiece of the program is a focused and plant efficiency and productivity while generating consistent, measured and monitored output. AC Energy plant-exclusive two-day Boo t Camp to which leaders is targeting to secure the certifications within 1H 2022. of each plant were invited and exposed to various experiential and instructio nal sessions that underscore the importance of foundational health and safety practices such as stop-work authority, In July 2020, Power Barge 102 in Iloilo had an hazard identification, and empowerment. unfortunate accident which led to an oil spill of about 268,000 liters of bunker fuel off het Iloilo strait. The oil Constant, enjoyable, and rigorous weekly spill had been subsequently contained and collected using interactions between plant and corporate Health and the Shoreline Cleanup Assessment Technique conducted Safety Leads, meant to rei nforce the learnings and by a third-party service provider. AC Energy collaborated enhance collaboration, followed the various Boot with the Department of Environment and Natural Camps. Resources - Environment Management Bureau Region 6, the International Tanker Owners Pollution Federation Most of all, the health and safety is a priority for and Brand Marine Consultants to conduct continuous plant leadership and demonstrated, among other monitoring of the environment through the University ways, by the fact that it is their biggest deliverable, of the Philippines Visayas. AC Energy places the health weight-wise, for 2021. Furthermore, fthe unctional and safety of its people on top of its agenda. H&S leads deployed at each plant and site now feel they have strong corporate backing and support in the programs they need to implement.
29 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 30 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES PROTECTING THE ENVIRONMENT
Stewards of the Environment
AC Energy currently monitors and protects over 910 hectares of forestlands and habitats spread over 15 sites in the Philippines. The company conducts biodiversity assessments periodically to determine the types of species on these project sites and their vulnerability status, and invests on habitat protection and restoration. Since 2018, AC Energy has spent over 34.87M towards initiatives that aim deliver a positive ₱ impact on biodiversity.
The Conservation Estate in Ilocos Norte Since reforestation initiatives began in the 700-hectare Conservation Estate, close to 400,000 seedlings have been planted, including endemic and fruit-bearing trees. The area has become an important wildlife habitat in the Northern Luzon region, and the forests witness an increase in biodiversity as AC Energy, with the help of the locals, create an ecologically diverse landscape through analogue forestry. And as the trees grow, the animals return – the forest is now home to 117 species of birds, 33 of which are endemic, and four are classified as vulnerable. Additionally, studies identified the presence of near-threatened monkey species, bats and other animals. AC Energy is constantly working with local communities, creating awareness on coastal environment protection, turtle conservation and biodiversity, to help them understand how their livelihood is directly linked to the natural resources and wildlife.
Forestlands protected 910 hectares Protecting the Environment Investment on Environment ₱34.87M
Trees planted at the The protection and management Conservation Estate of these ecosystems are a critical ~400,000 component of our sustainable development strategy. Other Environmental Initiatives In Bulacan, the five-year, 50-hectare Bininit Reforestation has been completed in partnership with the Bulacan Dumangat Community Association and MENRO-Bulacan, planting around 19,000 seedlings. In Guimaras, the five-year, 27-hectare Aroboretum Project has been completed, planting over 6,000 trees in the forest with the objective to be an educational resource for students. In Alaminos, in partnership with PUNLA, AC Energy has set a target to turnover around 132,000 seedlings in three years. Photo: Black naped oriole at the Conservation Estate, Ilocos Norte *from North Luzon Renewables
31 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 32 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES PROTECTING THE ENVIRONMENT
Turtle Conservation Ongoing awareness and training programs for environmental preservation and biodiversity being conducted by AC Energy’s wind farms, North Luzon Renewables and North Wind, empower the locals to become stewards of the Conservation Estate in Ilocos Norte. In 2020, over 13 turtles were rescued and released into the sea, 18 turtle nests have been recorded and monitored, 240 eggs were managed with a hatching rate of 74% , with over 398 eggs being monitored.
Marine Life Support In October 2020, South Luzon Thermal Energy Corporation in Batangas coll aborated with the Department of Environment and Natural Resources to support and monitor the growth of a 10-hectare mangrove plantation in C alatagan. In March 2021, AC Energy’s Guimaras Wind signe d an agreement with the Dumangas local govern ment to develop a fish sanctuary through the placement of artificial reefs to supplement the habitat of marine life in the area.
120MW Solar Farm
Aya la La nd's Future Community Carbon Forests Livelihood Center
Plastic Waste Recycling Future Eco Nursery Learning Hub
Integrating Circular Approach We aim to “close the loop" To help reduce the environmental impact in its AC Energy aims to extend this circular approach construction sites and host communities, AC Energy and close the loop within its project locations through in our project locations, and developed a program to sustainably use its resources, the development of Eco-hub recycling facilities. and eliminate waste by reusing or recyc ling them. This program will not only help manage the issues on In Alaminos and Pal auig construction sites, a total community plastic wastes, but will also create income help communities live in a of 8,645 kg of plastic from solar panel packagi ng and livelihood for the community. A partnership with the were upcycled into eco-bricks, which were then used Provincial Government of Ilocos Norte is underway for pollution-free environment. as construction materials for the plant facilities. implementation this year. It will be the first of many that AC Energy envisions to create within its developments.
33 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 34 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES COMMUNITY INVESTMENTS
Enabling Community Progress
Community Investments As a priority focus area in its sustainable growth, AC Energy believes that the socio-economic progress of its host communities is a key metric of the company’s business success, and supporting the communities’ self-reliance and economic security enables AC Energy to create shared value.
Since 2018, AC Energy has invested over ₱116.63 Our sustainability initiatives million towards its partner host communities. As of 2020, AC Energy group has uplifted close to support the development 35,994 individuals, 40,609 households, and 437 organizations through its community initiatives, and prosperity of our host engaging in a range of social development initiatives to ensure the health and livelihood communities, with the ultimate of the local communities. goal towards self-actualization. Livelihood and Eco-Tourism Investment in Communities AC Energy’s Guimaras Wind launched the Green Spark Project in Q4 2020, a program that ₱116.63M promotes the use of locally made “bambikes” or bamboo-made bikes within the wind farm. With the bamboo bikes set up near the wind farm’s Lives Reached Pasalubong Center, the local community have 35,994 found livelihood opportunities in the program.
Households Uplifted Education Aside from its nationwide Brigada ng Ayala initiative, in Ilocos Norte, AC Energy, through North 40,609 Luzon Renewables, has an ongoing scholarship program for the youth of Pagudpud. Since 2014, the program has already produced 12 graduates.
Disaster Assistance Programs
With the increase in force and frequency of natural disasters, along with recovery costs, AC Energy has always ensured the quick implementation of measures to mitigate these events and leverage on the Ayala Group’s strengths. AC Energy supported the affected communities of the Taal Volcano eruption by donating solar lamps to families who were living without access to electricity. In December 2020, in lieu of holiday festivities, AC Energy donated 2.1M to ₱ Ayala Foundation in support of families in Luzon who were greatly impacted by typhoons Rolly and Ulysses. The company also mobilized truckloads of water and sent Photo: The Conservation Estate in Ilocos Norte sacks of rice and medical supplies to the communities. In Ilocos Norte, aside from providing aid during disasters, the company’s wind farms, North Luzon Renewables and NorthWind, continuously train the locals on disaster preparedness and response.
35 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 36 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES COMMUNITY INVESTMENTS
AC Energy, together with the Ayala Group, was at the forefront of nationwide response. The company launched a series of social investment and support initiatives to mitigate the impact of the community quarantine, raising over ₱64 million that was cascaded to Our Response to the Pandemic electricity, health and food relief, medical supplies, cash donations, and employ ee wages and emergency funds, with the priority to keep the employees, host communities and customers safe.
Powering the “WTC We Heal as One Center” and other facilities To augment the capacity challenges We ensured uninterrupted in hospitals, the Ayala Group, together with the ICCP Group and Manila access to power while providing Exhibition Center, Bases Conversion Development Authority and the national government, converted the aid to as many Filipinos as possible. World Trade Center into a designated quarantine facility. AC Energy covered the electricity cost together with partner donor Manila Electric Co., and provided critical supplies such as bed frames, mattresses, pillows and other furnishings, for a total package valued at ₱24 million.
AC Energy also supported the La Salle group as they launched their Safe Shelter project and opened their doors to provide a temporary home for COVID-19 frontliners.
Brigada ng Ayala Through the Brigada ng Ayala program, AC Energy’s power plants responded to the needs of teachers and learners by providing aid for the new normal in education. From Pagudpud, Ilocos Norte to Guimaras, Western Visayas, the company’s various plants distributed close to 2,000 “Educare” hygiene kits to 24 schools, with each one containing 150mL of alcohol, two bars of soap, face masks, and one face shield, among other items. The plants also distributed over 3,000 reams of bond paper to Pandemic Response Fund more than 200 schools across ₱64M the nation.
37 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 38 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES COMMUNITY INVESTMENTS
Ensuring health and wellness of employees For its own employees, AC Energy ensured the health and safety of its workforce through company-wide initiatives aimed to protect their overall well-being. Apart from the continuing provision of employee wages and allocation for emergency funds, the company spearheaded innovative weekly health checks, periodic updates about the crisis, a dedicated h otline for COVID emergencies, tele-psychological consultation services and online Medical aid to the most vulnerable AC Energy’s subsidiary, South Luzon Thermal Energy engagement activities. AC Energy assisted in the conversion of Corp, donated funds to support the UP PGH AO Qualimed in Nuvali into a COVID-19 dedicated project to develop venti masks, a breakthrough mask For the swift transition to remote working hospital, and the HOPE project in Quezon City, that aims to lower the risk of COVID-19 patients to be for its headquarter-based employees a 175-bed capacity quarantine center. The intubated and sedated, thereby allowing patients to and provide essential business continuity projects were valued at ₱7 million. remain conscious and fight for life. amidst the crisis, AC Energy immediately established various systems alongside a solid ICT infrastructure. Collaboration Supporting host communities tools, internal communication apps, Together with the Ayala Group, AC Energy provision for access to wifi and other took part in Project Ugnayan, a fund-raising measures were put in place. initiative together with more than 30 conglomerates and in partnership with the Philippine Disaster Resilience Foundation and Caritas Manila.
The project raised a total o f ₱1.37 billion in support of families that have been economically displaced by the community quarantine in Metro Manila. AC Energy AC Energy recognizes the raised over ₱6 million in contribution to the unprecedented crisis that the project, and another ₱6 million as food country and the whole world reserve fund. is facing right now, and these programs are a testament of what can be achieved if we all work together to aid the For its host communities and their frontliners, most vulnerable. The company AC Energy, through its power plants, allotted will continue to lend support ₱13 million and mobilized local teams to donate to help the country recover, cash, medical supplies, as well as food supplies. and reinforces its strong commitment to invest in much The company donated over 2,000 sacks of rice needed energy investments in as aid to the locals of Norzagaray, Bulacan, the Philippines as access to Bacnotan, La Union, and Bangui and Pagudpud, stable power is critical Ilocos Norte. now more than ever. Meanwhile, in Iloilo and Guimaras, AC Energy extended aid to communities to provide critical relief for strained healthcare systems, educational support for the communities, and environmental rehabilitation.
39 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 40 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES VALUE CREATION
Value Manufactured Natural Financial We derive energy from our renewable assets that are We strive for excellence in the conservation To maintain our strong balance sheet, we are disciplined complemented by thermal energy, and we continuously and protection of natural resources within and and strategic in allocating our financial capital, and we invest on plant optimization and reliability while ensuring beyond our host communities, while mitigating Creation strive to raise value through sustainable growth. the health and safety of our employees. our ecological footprint
Market Capitalization Revenue Total Attributable Capacity Land and Biodiversity Investment on Protected Environment ₱110.48B ₱20.44B 1,034 MW 910 hectares ₱34.87M 7x 27% from 2018 - 2020 Ensuring Renewable Energy Capacity e cient use of Share Price Net Income MW Trees Planted Seedlings ffi 491 Produced ₱8.06/share ₱3.75B 59,027 our resources 4x 65x Attributable Energy Output 94% survival rate 67,500 2,165 GWh Total CO2 GHG Our multi-capital approach in the Shareholder's Equity Return on Equity Attributable Output from Emissions Avoided Renewable Sources implementation of our business ₱ 21.35B 20.76% 349,437 MT CO2e model allows us to identify valuable 30% 45x 520 GWh levers for value creation anchored on sustainability. This chart presents Human Social Intellectual the management approach to our Our people are the core of our business. Apart from We actively pursue open dialogue and consistent In our power plants, the adoption of emerging competency enhancement to drive excellence in their collaboration in engaging our host communities. We strive technologies play a prominent role in our renewables capitals, and their corresponding performance, we continue to invest in the welfare of to understand their needs, involve them in our business expansion. For our home-based workforce, our employees, ensuring their health, safety and process, and communicate our sustainability strategy the company’s enhanced IT infrastructure are highlights for the year 2020. overall well-being. in order to create long- term shared value. mission-critical assets that give us competitive edge.
Direct Hires Indirect Hires COVID-19 Community R&D Spend Response Fund Investment 649 762 ₱483.90M ₱64M ₱116.63M Jobs Created in from 2018 - 2020 Retention Rate Host Communities Lives Reached Families 96% 3,200 Through Programs Reached Investment in Employee Safe 35,994 40,609 Training and Development Man Hours ₱2.68M 7,256,162
41 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 42 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES STAKEHOLDER ENGAGEMENT
Stakeholder Investors and Shareholders Customers Business Partners Engagement
Our Objective Our Objective Our Objective To maximize shareholder value To be a long-term partner in sustainability To be a catalyst for growth
Their Value Their Value Their Value As our ultimate “customer”, they sharpen our focus on The heart of the energy transition, providing opportunities Springboard to success by providing operational leverage sustainability and help shape our renewables expansion to expand the renewables industry Fostering and How We Engage How We Engage How We Engage ■ Regular one-on-one interactions nurturing bonds ■ Through an active and engaged Investor ■ Regular client meetings ■ Timely compliance and monitoring checks Relations team ■ Organized interactive webinars ■ Regular vendor briefings and accreditation updates with our ■ Regular investor and analyst briefings ■ Regular email updates ■ Engaging retail electricity website ■ Dedicated corporate website ■ Active group messaging apps partners in ■ Regular social media updates ■ Timely press releases sustainability ■ Responsive email correspondences
We engage with our stakeholders actively and effectively through open Government and Regulators Employees Community dialogue and consistent collaboration. By understanding our stakeholders' needs, involving them in our business process and communicating our sustainability strategy, we create long term shared value.
Our Objective Our Objective Our Objective To be a steadfast partner in policy formulation and To maintain a safe and rewarding work environment To enable socio-economic progress adherence Their Value Their Value Their Value The bloodline of the business and the key to its success Partners in making projects real, successful and Provider of regulatory framework to enable business sustainable and ensure business continuity How We Engage ■ Active communication channels How We Engage ■ Monthly e-newsletters How We Engage ■ Engaged routine and timely filings of required reports ■ Collaborative employee engagement committee ■ Regular dialogues with local communi ty leaders ■ Regular consultation sessions ■ Organized townhalls ■ Regular capacity enhancement trainings ■ Collaborative interactions ■ Timely engagement surveys ■ Timely community needs assessments ■ Participative regulatory audits ■ Regular provision of wellness consultation services ■ Active community welfare and other ■ Active participation in organized online dialogue on ■ Timely boot camps on operational health and safety support programs regulations, policty and market outlook
43 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 44 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Governance and Leadership Team
47 65 73 Corporate Our Board Our Governance of Directors Management Team
45 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 46 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Corporate Corporate Governance Structure Governance
Board of Directors
Amidst these unprecedented times, The Company’s governance framework Board Committees AC Energy Corporation adopted a resilient is constantly evolving to align with best stance in its corporate governance system. practices and to satisfy the changing ■ Executive Committee Cognizant that stakeholder needs have expectations of regulators, investors, and ■ Corporate Governance and drastically changed over the period, the other stakeholders brought about by the Nomination Committee Company has been flexible in its approach move towards greater ASEAN integration. ■ Audit Committee in ensuring that stakeholder interests are Through continuously evaluating and ■ Board Risk Management and Related fundamental considerations in the Company’s improving our governance structures, Party Transactions Committee oversight and decision processes, on top of systems, and procedures, we can ensure ■ Personnel and Compensation Committee compliance with requirements, standards, proper and adequate controls are in place and best practices. to sustain the business.
AC Energy Corporation affirms that AC Energy Corporation complies with the adherence to good corporate governance Code of Corporate Governance for Publicly- Chairman principles is essential for the achievement Listed Companies set forth by the Securities of its strategic goals. We believe in doing and Exchange Commission (SEC), supported Corporate Secretary business with integrity and in full compliance by an attestation from the company’s Chief with laws and regulations. At the core of our Executive Officer (CEO) and Chief Audit Company are four corporate values: integrity, Executive (CAE) in 2020. President and CEO long-term vision, empowering leadership, and Compliance Officer commitment to national development. Chief Audit Executive The Company’s Corporate Governance System is a combination of its clear organizational structure, guided by an Management Committees active Board and its Committees, visionary Chief Risk Officer management, strong core values and Strategic Management adequate policies and controls. ■ ■ Finance ■ Organizational Development ■ Compensation and Benefits
Strategic Business Units, Functional Units and Subsidiaries
47 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 48 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Board Structure and Process
Key Roles and Responsibilities Board Composition We ensure an independent minority representation in The Board’s roles and responsibilities as stated The Board is comprised of qualified and dedicated the Board and the exercise by minority shareholders in its Charter include establishing the vision, directors with a diverse mix of expertise, experience, of their rights, including the right to cumulative strategies, and policies of the Company, and skills, and backgrounds to guide management voting in the election of directors and appraisal right. a system to monitor, evaluate and improve in carrying out its responsibilities. The structure, management’s performance. Also, in exercising size, and composition of the Board are reviewed Chairman and Vice Chairman Non-Executive and Independent Directors its powers and duties, the Board always considers and monitored by the Corporate Governance and Fernando Zobel de Ayala, Chairman, and Jaime As of December 31, 2020, more than 70% of the the best interest of the Company, its shareholders, Nomination Committee. Augusto Zobel de Ayala, Vice-Chairman, assumed Board membership is composed of non-executive and other stakeholders. their respective positions on July 23, 2019. and independent directors of which five are There is also an appropriate mix of non-executive, The positions of Chairman of the Board and CEO independent and five are non-executive directors. The Board consistently reviews and ensures the independent, and executive directors from a wide are held by different persons. This enables the The independent directors do not have interest or adequacy of the Company’s internal control variety of backgrounds: Board to maintain independent reviews and relationship with the Company that may hinder mechanisms and risk management process for quality discussions at meetings. their independence, or which could reasonably good governance, and the proper implementation • Each director is elected by the shareholders be perceived to interfere with the exercise of their of the Code of Conduct and Ethics. The Board annually and serves a term of one year. Role of the Chairman and Vice-Chairman independent judgment while carrying out their reviews and affirms the true and fair representation • More than 70 percent of the Board is composed The Chairman leads the Board by promoting responsibilities as directors. of the annual financial statements, as it did for the of non-executive and independent directors. active engagement and open discussion among financial statements for fiscal year 2020. • None of the independent directors own the directors. The Chairman presides at all A limit of nine years has been set by the Company more than two percent of the Company’s meetings of the Board and of the stockholders, for its independent directors in accordance with the outstanding capital stock. exercise the powers given to him in the By-Laws, rules laid out by the SEC. As of 2020, none of the and perform the duties enumerated under the independent directors have served the Company Corporate Governance Code as well as such for more than nine years, reckoned from 2012, in The profile of each director can be found in the Board of Directors section of this report on pages 65 to 72. other responsibilities as the Board may impose compliance with SEC Memorandum Circular No. 9, Year Appointed upon him. The Chairman also guides senior series of 2011. Furthermore, none of the directors 2020 Board of Directors Designation (No. of years in Expertise management on its strategic actions on the or senior management have worked for AC Energy the Board) business. In the absence of the Chairman, Corporation’s external auditing firm within the General management, real three years immediately preceding the date of their Non-Executive, the Vice-Chairman succeeds the duties Fernando M. Zobel de Ayala 2019 (2) estate, utilities, arts and Chairman of the Chairman. election or appointment. culture Non-Executive, General management, Role of the Non-Executive and Independent Jaime Augusto M. Zobel de Ayala 2019 (2) Lead Independent Director Vice-Chairman strategy and finance To promote good relationships and functions of the Directors (NEID) Executive, General management, Board, the Company appointed Sherisa P. Nuesa a s The role of the NEID is to exercise independent John Eric T. Francia 2019 (2) President & CEO strategy, utilities, energy its Lead Independent Director at its organizational judgment, ensure the continuing soundness, General management, meeting on April 21, 2020. effectiveness and adequacy of the Company’s Gerardo C. Ablaza, Jr. Non-Executive 2019 (2) utilities control environment, and act in the best interest of the Company, the stockholders and General management, Role of the Lead Independent Director Jose Rene Gregory D. Almendras Non-Executive 2019 (2) utilities, banking, When needed, the Lead Independent Director the stakeholders considering transparency, sustainability, energy acts as an intermediate between the Chairman accountability and fairness in all activities. General management, of the Board and the other directors, convenes John Philip S. Orbeta Non-Executive 2019 (2) strategic human resources and leads the periodic meetings of the non- executive directors with the external auditor General management, Non-Executive, Sherisa P. Nuesa 2019 (2) nance and accounting, and heads of internal audit, compliance and Lead Independent fi utilities, real estate risk management, and contributes to the performance evaluation of the Chairman Non-Executive, Finance and accounting, Ma. Aurora Geotina-Garcia 2019 (2) Independent capital markets of the Board. Non-Executive, Banking, capital markets, and Mario Antonio V. Paner 2020 (1) Independent treasury Non-Executive, Finance and accounting, Consuelo D. Garcia 2019 (2) Independent banking, capital markets Non-Executive, Energy systems and Melinda L. Ocampo 2019 (2) Independent regulations
49 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 50 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Board Performance Corporate Secretary Independent Directors’ Remuneration The Committee deliberated, reviewed and The Board is devoted to carry out its duties and In the discharge of his duties as the Corporate On July 23, 2019, upon the recommendation of approved the following transactions in 2020: responsibilities and commits enough time for their Secretary, Atty. Solomon M. Hermosura plays a the Committee, the Board approved a resolution meetings. The presence of at least two-thirds of significant role in supporting the Board fulfill its fixing the current remuneration of IDs. The 1. The entry by the Company into: (a) hedging instruments with Macquarie Bank Limited the number of directors, as fixed in the Articles responsibilities. Among his responsibilities include power of fixing the fees was delegated by the to cover the Company’s oil and diesel of Incorporation, constitutes a quorum for the assisting the Chairman in preparing the Board stockholders to the Board as provided for in the requirements, and (b) a guarantee fee transaction of business. The Board held four (4) meeting agenda, maintaining Board minutes and Amended By-laws. arrangement with AC Energy, Inc. ("ACEI") regular, one (1) special, and one (1) organizational records, facilitating director trainings, and updating in exchange for ACEI guaranteeing the The existing remuneration framework for the IDs meetings in 2020. directors with relevant statutory and regulatory Company’s payment obligations under such changes. He is an expert on legal and regulatory adopted by the Company consists of attendance hedging instruments. The annual calendar of activities for the Board requirements and is well-informed on relevant fees. Executive Directors and other directors who and Committees are established and approved at developments through lectures to graduating are not independent directors do not receive 2. The conduct the Company’s annual the start of the year. The Board is supported by law students and in various public fora. attendance fees. stockholders’ meeting (the “2020 ASM”) the Corporate Secretary who monitors the Board scheduled on 20 April 2020 at 9:00 AM via activities and ensures materials are available Training of Directors In 2020, the following IDs received gross remote communication in lieu of an in-person at least three days in advance of the scheduled It is AC Energy Corporation’s policy that all its remuneration as follows: meeting, and to allow the participation of stockholders and other stakeholders in the meeting allowing the Board to make informed directors attend at least a four-hour annual Board and 2020 ASM decisions. continuing training program on corporate Independent Directors Committee Meetings Attendance Fees governance. All new directors must take at the 3. The issuance of 16,685,800,533 Shares to Performance Assessment minimum an eight-hour orientation program on Melinda L. Ocampo ₱ 620,000.00 ACEI at ₱2.97 per share in exchange for The Board commits to a formal assessment the company’s strategy, business and structure, Ma. Aurora D. Geotina-Garcia ₱ 660,000.00 100% of ACEI’s shares of stock in Presage. process to review and evaluate the performance vision and mission, Governance Codes and Policies, Consuelo D. Garcia ₱ 640,000.00 Presage is ACEI’s subsidiary, which owns its of the Board, its Committees, and its individual Articles, By-Laws, Corporate Governance Manual, international business and investments. Mario Antonio V. Paner ₱ 600,000.00 members. The purpose of the assessment is to Board and Committee Charters, SEC-mandated measure the effectiveness of the Company’s topics on governance and other subjects needed in Sherisa P. Nuesa ₱ 580,000.00 4. The issuance of 16,685,800,533 Shares to ACEI a 2.97 per share in exchange for governance practices and identify areas for the performance of their duties and responsibilities. TOTAL ₱ 3,100,000 t ₱ improvement; and to adopt new methodologies 100% of ACEI’s shares of stock in Presage. Presage is ACEI’s subsidiary, which owns its towards further strengthening the company’s To remain relevant in a global environment with None of the IDs receive compensation from international business and investments. corporate governance standards. increasing competitiveness, Ayala facilitates an AC Energy Corporation for services other than those provided as a director. They are annual group-wide Corporate Governance and 5. The appointment of Sycip Gorres Velayo & not entitled to stock options and performance In 2020, AON was appointed as the independent Risk Management Summit which has been held Co. as the Company’s Independent Validator consultant to assist in the board assessment since 2014. The summit serves as a continuing bonuses from the Company. for its 2020 Annual Stockholders’ Meeting exercise. education program for the Board, CEOs, and scheduled on 20 April 2020. senior management, and at the same time Board Comittees Each of the directors was requested to complete promotes the importance of strengthening our The Board Committees assist the Board in 6. The filing of the following documents to a self-assessment form which includes Board corporate governance structures. On November the discharge of its functions, in aid of good the Energy Regulatory Commission (the evaluation categories such as: (1) board 10, 2020, the group held its virtual Integrated governance, and are governed by their rights “ERC”) in accordance with Article 2.12 of composition, (2) roles and functions, (3) Corporate Governance, Risk Management and and responsibilities as defined in their Charters the Business Separation Guidelines: (a) The Accounting Separation Statements based information management, (3) representation Sustainability Summit with the theme “The Board’s duly approved by the Board. on 2018 Audited Financial Statements; (b) of shareholders and environment, social and Agenda: The Business of Building Back Better” that The Auditor’s Report on those Accounting Executive Committee governance (ESG) factors, (4) managing revolved around the Board roles and skills for the Separation Statements prepared; (c) The The Executive Committee acts on such speci c Company’s performance, (5) senior executive’s ‘new normal’ and navigation of the complexity and fi Management Responsibility Statement; (d) performance management and succession obstacles of the market in times of the pandemic. matters within the competence of the Board The General Information Sheet; and (e) The planning, (6) director development and as may from time to time be delegated to it in BSUP Compliance Report. management, (7) risk management and internal Director Compensation accordance with the By-Laws. The Committee control, and (8) overall perception. Total director remuneration or changes thereto are is composed of not less than three (3) but not 7. The Company’s investment of up to ₱2.2 recommended by the Personnel and Compensation more than five (5) members and designates billion into its subsidiaries, namely, Bataan The results of the self-assessment survey, Committee to the Board and are approved by the from among the members of the Committee a Solar Energy, Inc. (“Bataan Solar”) and Giga including the comments of the directors, were stockholders at the annual stockholders’ meeting Chairman and a Vice Chairman. Ace 4, Inc. (“Giga Ace 4”) compiled by the Corporate Secretary and to ensure these are consistent with the Company’s 8. The Company’s Quarterly Report (SEC Form reported during the Board meeting immediately culture, strategy, control environment, and aligned 17Q) for the Second Quarter of 2020, and following the completion of the survey. with the long-term interests of the Company to authorize its release to the Securities and and its stakeholders. Exchange Commission and the Philippine Stock Exchange on or before August 12, 2020.
51 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 52 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
The Executive Committee had The Committee’s accomplishments in 2020 are as follows: The attendance of the directors at the meetings of the Board and of stockholders held in 2020 is as follows: five (5) meetings in 2020. 18-Mar-20 20-Apr-20 20-Apr-20 11-Jun-20 18-Aug-20 11-Nov-20 17-Dec-20 No. of 1. Received the nominees for director of the Company, Percent Directors meetings 1 2 Organiza- 1 1 1 1 present Regular ASM 1 Regular Regular Regular Special Corporate Governance and evaluated their qualifications and endorsed qualified tional attended Nomination Committee nominees for nomination to the Board for the year 2020. Fernando M. Zobel de Ayala o o o o o o o 7/7 100% The Corporate Governance and Nomination Committee has three 2. Approved and endorsed to the Board the revised Charter Jaime Augusto M. Zobel de Ayala o o o o o o o 7/7 100% independent directors, including of the Corporate Governance and Nomination Committee. Gerardo C. Ablaza, Jr. o o o o o o o 7/7 100% the Chairman. The Committee Jose Rene Gregory G. Almendras o o o o o o x 6/7 68% makes sure that good corporate 3. Approved and endorsed to the Board the revised Charter John Eric T. Francia o o o o o o o 7/7 100% governance principles and practices of the Board of Directors. John Philip S. Orbeta o o o o o o o 7/7 100% are compiled with by the Company. Consuelo D. Garcia (Independent) o o o o o o o 7/7 100% This includes the adoption of a 4. Approved and endorsed to the Board the proposed Board process in the nomination, revisions to the Code of Conduct and Ethics. Ma. Aurora Geotina-Garcia o o o o o o o 7/7 100% election, or replacement of Board (Independent) members and the review of the 5. Approved and endorsed to the Board the Charter Sherisa P. Nuesa (Independent) o o o o o o o 7/7 100% succession plans for members of of the Executive Committee. Melinda L. Ocampo (Independent) o o o o o o o 7/7 100% the Board and senior executives. Mario Antonio V. Paner o o o o o o 6/6 100% The Board composition is reviewed 6. Approved and endorsed to the Board the (Independent) regularly to allow the Board to Whistleblower Policy. o - Present | x - Absent | 1via video conference | via livestream at https://asm.ayala.com/ACEPH2020 exercise effective decision-making powers and meet the 7. Approved and endorsed to the Board the revisions to the needs of the Company. Corporate Governance Manual. Audit Committee The Audit Committee has three (3) independent internal and external auditors through reports 8. Reviewed, discussed, and endorsed to the Board for members including the chairman, and all its provided. Based on the assurance provided by discussion the Board, Board Committees, and Individual members have background and expertise in the auditors from their reviews, the Committee Effectiveness Evaluation Report by AON Consulting. accounting. The Committee assists the Board assessed the Company’s systems of internal by overseeing matters relating to the financial controls, compliance and governance processes statements and financial reporting process, as adequate. Please refer to the annual report of The Committee had five (5) meetings in 2020, during which the Chairman and members were all present. external and internal auditors, internal control, the Committee to the Board on the discharge of Board and Board Committee Membership Stockholders, Board, Board Committee and compliance with applicable legal their duties and responsibilities on pages 88-89. Meetings, and Directors' Attendance for the year ended December 31, 2020 and regulatory requirements. The Committee had four (4) regular meetings and For 1 January 2020 until 31 December 2020, the Board committees and their members were as follows: During the year, the Committee reviewed the two (2) special meetings in 2020, during which the Board Risk Corporate Company’s parent and consolidated financial Chairman and members were all present. Management & Personnel & Audit Governance Executive Directors Related Party Compensation statements, and the work performed by both & Nomination Committee Committee Transactions Committee Committee Committee Fernando M. Zobel de Ayala C Jaime Augusto M. Zobel de Ayala M John Eric T. Francia M Gerardo C. Ablaza, Jr. M Jose Rene Gregory G. Almendras John Philip S. Orbeta C Ma. Aurora Geotina-Garcia C M (Independent) Consuelo D. Garcia (Independent) M C Sherisa P. Nuesa (Independent) C M Melinda L. Ocampo (Independent) M M Mario Antonio V. Paner (Independent) M M
C: Chairman | M: Member *effective 20 April 2020
53 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 54 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Board Risk Management The Committee’s accomplishments in 2020 are as follows: Personnel and Compensation Committee and Related Party The Personnel and Compensation Committee 1. Approved and endorsed to the Board Transactions Committee 1. Approved and endorsed to the Board the amendment of has three (3) members including an independent the pay-out of entitlements under the The Board Risk Management the Power Administration and Management Agreement director. The Committee’s role is to establish a Company’s 2016 Stock Purchase Plan to the o cers who have retired from and RPT Committee is a board (PAMA) with One Subic Power Generation Corporation, on transparent policy and procedure for the fixing of ffi the Company but are eligible to receive level Committee with three (3) terms as presented. the remuneration packages of corporate officers members who are independent and directors. The Committee ascertains that benefits under the Plan. directors, including the chairman. 2. Approved and endorsed to the Board the terms of the compensation is aligned with the Company’s The Committee is responsible for assignment to the Company of the Lease Contract culture, strategy, and control environment and 2. Approved and endorsed to the Board the oversight of the Company’s between AC Energy, Inc. and Tabangao Realty, Inc. competitive against the market, and ensures the revised Charter of the Personnel and enterprise risk management that it is reasonable for the work required, the Compensation Committee. system and for the review of 3. Approved and endorsed to the Board the proposed Company’s size, and scope. all material related party Development Management Agreement (DMA) between transactions of the Company. AC Energy Corporation and its project companies. Mich: The Committee had one (1) meeting in The Committee had one (1) meeting in 2020, during 2020 where it approved for endorsement to which the Chairman and members were all present. The Committee had six (6) 4. Approved and endorsed to the Board the amendments to the Board the pay-out of entitlements under meetings in 2020, during which the Administration and Management Agreement (AMA) the Company's 2016 Stock Purchase Plan to the Chairman and members between AC Energy Corporation and SLTEC. the eligible officers who have retired from the were all present. Company and approved for endorsement to the 5. Approved and endorsed to the Board the engagement of Board the revised Charter of the Personnel and BPI Capital Corporation as Sole Global Coordinator, Joint Compensation Committee. bookrunner, and Joint underwriter in connection with AC Energy Corporation’s Follow-On Offering (FOO) Management Roles and Responsibilities 6. Approved and endorsed to the Board the Related Management is primarily responsible for the to discuss significant matters relevant to the Party and Conflict of Interest Disclosure Form and execution of the Board-approved strategies and achievement of targets and continuous growth its implementation. monitoring of performance. Management also of the Company. Initiatives which are reviewed designs and implements adequate and effective and endorsed by the Management Committees 7. Approved and endorsed to the Board the proposed system of internal controls and risk management are discussed with the corresponding Board financing for the Arayat solar project through a secured a processes to ensure achievement of objectives Committees for approval and endorsement loan for 100% of the total project cost of the Arayat solar while maintaining compliance with laws, rules, to the Board of Directors for ratification. project of up to ₱3.33 billion, on terms as presented to the and regulations. Committee To facilitate the flow of strategic and operational Internal Governance Mechanisms Strategy 8. Approved and endorsed to the Board the proposed information among the internal decision-makers, Formulation and Execution financing for the Balaoi Project on terms are presented, the Company has created specific management AC Energy Corporation utilizes an inclusive and the use of the Company’s credit lines to Bayog Wind committees for strategic management, investment, iterative approach in crafting and executing a Power Corporation for the requirements of the project; the finance, procurement, organizational development, long-term strategic plan. It ensures that risks are issuance of a corporate guarantee to the EPC contractor in and compensation and benefits. These Committees managed appropriately using a risk management accordance with the Investment Framework Agreement. are composed of key executives who meet regularly process as these plans are finalized.
The Committee had six (6) meetings in 2020, during which the Chairman and members were all present.
55 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 56 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Accountability and Audit Chief Compliance Officer External Auditors As AC Energy Corporation’s Chief Compliance The Board of Directors has a responsibility to On April 20, 2020, the stockholders, upon The audit results were presented to the Officer, Ms. Maria Corazon G. Dizon: the shareholders to ensure the integrity of the recommendation of the Audit Committee Audit Committee on its March 1, 2021 meeting. Company’s consolidated financial statements and endorsement by the Board of Directors, There were no disagreements between the ● ensures proper onboarding of new Directors and non-financial information disclosed in the approved the re-appointment of Sycip Gorres Management and SGV & Co. on any matters (i.e. orientation on the Corporation's business, Integrated Report. The financial statements Velayo and Co. (SGV & Co.) as the independent of accounting principles or practices, Charter, Articles of Incorporation and By-laws, comply with the Philippine Financial Reporting external auditor of AC Energy Corporation. financial statement disclosures, among others); Standards, with significant accounting The lead engagement partner of SGV & Co. or auditing scope or procedures. judgments and estimates disclosed. is Mr. Benjamin N. Villacorte, a Securities ● monitors, reviews, evaluates and ensures the and Exchange Commission (SEC)-accredited Internal Auditors compliance by the Company as well as its In dealing with Related Party Transactions audit partner. Internal Audit, headed by the Chief Audit Officers and Directors with the relevant laws, (RPTs), the Board of Directors, with the Executive (CAE), Henry T. Gomez, Jr., maintains the Corporate Governance Code for PLCs rules assistance of the Board Risk Management The responsibilities of SGV & Co. include providing organizational independence by functionally and regulations, and all governance issuances of and Related Party Transactions Committee an opinion on the conformity of the Company’s reporting to the Audit Committee and regulatory agencies; composed of independent Directors, reviews parent and consolidated financial statements administratively to the Group Chief Financial and approves the material RPTs of the with Philippine Financial Reporting Standards and Officer. The Audit Committee is responsible in ● ensures the integrity and accuracy of all Company in accordance with the RPT policy, assessing the quality of the Company’s financial advising the Board of Directors regarding the documentary submissions to regulators, among reporting process. SGV & Co.’s overall plan, which qualifications and recruitment, appointment, others; ensuring that the transactions are at arm’s includes the objectives, scope and timing of the and removal of the CAE and evaluating Internal length, fair, and inure to the best interest of the audit, was reviewed and approved by the Audit Audit’s performance at least annually. ● identifies and manages compliance risks; Company and its subsidiaries or affiliates and the Committee on its August 3, 2020 meeting. shareholders. Based on the policy, the related The audit team is composed of professionals, ● ensures that the Company adheres to sound party or any of its subsidiaries or affiliates, shall To ensure that the external auditor maintains certified as follows: certified public accountants, corporate governance and best practices; disclose any material RPT to the Board Risk the highest level of independence from the certified internal auditors, and certified lead Management and RPT Committee for review Company, both in fact and appearance, the auditors in ISO 9001, ISO 45001, ISO 14000, ● issues an Integrated Annual Corporate and approval prior to entering the transaction, Audit Committee had pre-approved all audit, and ISO 27001. All the internal auditors are Governance Report that is duly signed under unless covered under any of the exceptions audit-related, and permitted non-audit services members of The Institute of Internal Auditors- oath by the Chairman, Chief Executive Officer under the policy. rendered by the External Auditor. Philippines and adopt the International or President, all independent directors, the Chief Professional Practices Framework promulgated Compliance Officer, and the Corporate Secretary; Furthermore, there were no cases of The total external auditors fees of SGV & Co. in by The Institute of Internal Auditors, Inc. noncompliance with the laws, rules, and 2020 amounted to ₱9.64, exclusive of VAT and ● strives to conduct a yearly performance regulations pertaining to significant or material out-of-pocket expenses. The Audit Committee The activities of Internal Audit are governed by assessment of the Board, Board Committees, and RPTs in the past three years. The summary of the reviewed the nature of these non-audit services a separate Internal Audit Charter approved by individual members of the Board using a formal material RPTs of the Company is presented in the and concluded that these are not in conflict with the Audit Committee. Internal Audit adopts a self-rating system; and Notes to the Consolidated Financial Statements SGV & Co.’s function as the Company’s external risk-based approach in developing its annual under Related Party Transactions. auditor, both in relation to their significance to work plan, subject to the review and approval ● performs such other duties and responsibilities the audit and the Company’s total expenditure of the Committee. The Committee likewise as may be provided by the SEC. Ownership Structure on consultancy. ensures that audit resources are appropriate, As of December 31, 2021, 53.23% of AC Energy sufficient, and effectively allocated to Corporation’s outstanding common shares 2020 External Auditor Fees Amount in Million Pesos accomplish the approved plan. Disclosure and Transparency were held by PCD Nominee Corporation Audit and Audit-Related Fees ₱ 9.26 In line with the Company’s policies on disclosure (Filipino and Non-Filipino) (“PCD”). AC Energy Non-Audit Fees .38 Quarterly, Internal Audit presents to the Audit and transparency and the disclosure requirements and Infrastructure Corporation (formerly Gra nd Tota l ₱ 9.64 Committee the results of its reviews as well as of the Securities and Exchange Commission (SEC), AC Energy, Inc.) owned 81.62% of AC Energy the status of Management’s corrective action Philippine Stock Exchange (PSE), all material and Corporation’s outstanding common shares, The audit and audit-related fees include the plans to address control or compliance issues. market-sensitive information about the Company with 36.45% lodged with the PCD. audit of AC Energy Corporation’s annual as well as other relevant information were publicly financial statements, quarterly reviews and For the year 2020, the Internal Audit attests, and timely disclosed to the investing public, other assurance services related to performance that AC Energy Corporation’s system of stakeholders, and other interested users through of the audit or review of the Company’s internal controls, risk management, compliance, media a nd analysts’ briefings or other means. financial statements pursuant to the regulatory and governance processes are designed Such information includes key results of operations, requirements. Non-audit fees include training adequately and continue to operate effectively. execution of contracts, declaration of dividends and a special project/consulting. and investment, among others.
57 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 58 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
2020 Disclosures In 2020, the Company filed, among others, unstructured disclosures involving the following:
Unstructured Disclosures ● Approval by the Board of the amendments ● Executive Committee’s approval of the ● Approval of the Company’s Board of Directors ● Appointment of directors and officers to the Charter of the Executive Committee, Company’s issuance of 16,685,800,533 of the declaration of cash dividends of ₱0.04 ● Notice and Agenda of the 2020 Annual Whistleblower and Non-Retaliation Policy, additional primary shares to AC Energy, Inc. at per share on the 13,692,457,210 issued and Stockholders’ Meeting and Corporate Governance Manual an issue price of ₱2.97 per share in exchange outstanding shares of the Company, or a ● Results of 2020 Annual Stockholders’ ● Amendments to the Articles of for property consisting of 100% of ACEI’s total dividend amount of ₱547,698,288.00, Meeting and Organizational Board of Incorporation and By-laws shares in Presage Corporation to be paid on September 17, 2020 to the Directors’ Meeting ● Approval of the Company’s hedging policy, ● Request for an extension to submit the shareholders on record as of September 3, ● Acquisition and sale of Company shares by additional hedging counterparties, and Company's Annual Report in view of the 2020 the directors, officers, and 10% owners guarantee fee arrangement with ACEI imposition of an Enhanced Community ● Change in number of issued and/or ● Public Ownership Reports ● Executive Committee's approval of fuel Quarantine and Stringent Distancing Measures outstanding shares for the issuance of ● Top 100 Stockholders Reports hedge instruments of the Company over Luzon and across other provinces in the 6,185,182,288 new shares of AC Energy ● Report by Owners of More Than Five Percent ● Matters taken up at the regular country to prevent the spread of the 2019 Philippines, Inc. to AC Energy, Inc. ● Share buy-back transactions board meetings Coronavirus Disease (COVID 19) ● Participation of the Company’s directors ● Change in Corporate Name and/or ● Approval of renewal and additional ● Signing of a credit facility with AC Energy, and officers in the Advanced Corporate Stock Symbol credit lines with local and foreign banks Inc. for up to ₱5.0 billion for the Company's Governance Training administered by the ● Press Releases ● Approval of the increase of the Company’ various development projects Institute of Corporate Directors during ● Notice of Analysts' Briefing authorized capital stock to ₱48.4 billion pesos, ● Subscription by ThomasLloyd CTI Asia the Ayala Group Integrated Corporate ● Approval by the Executive Committee meeting divided into 48.4 billion common shares Holdings Pte Ltd. to shares in Islasol Governance, Risk Management, and Suitability of the Audited Financial Statements for the ● Board approval of the consolidation of ACEI’s ● Signing of a Shareholders' Agreement among Summit held on August 9, 2019 at the New year ended December 31, 2019 international business and assets into the AC Energy Philippines, Inc., ACE Endevor, Inc., World Hotel, Makati City ● Approval of the Company’s budget for Company via a n assets-for-shares swap and Axia Power Holdings Philippines Corp ● Report on the Company’s receipt of the calendar year 2021 ● Signing of subscription agreements with ● Joint Venture via a Shareholders’ Agreement Bureau of Internal Revenue’s Certification ● Annual Report for the fiscal year ended subsidiaries that are special purpose vehicles among AC Energy Philippines, Inc., ACE Ruling SN027-2020 dated 30 October 2020, December 31, 2020 for development projects used by the Endevor, Inc., and Axia Power Holdings as update on the Property-for-Share Swap ● Submission of the Company’s 2019 Integrated AC Energy group Philippines Corp. for the development, between ACEN and AC Energy, Inc. Annual Corporate Governance Report, in ● Philippine Competition Commission (“PCC”) construction and operation of the 150MW ● GIC Private Limited potential investment of compliance with SEC Memorandum Circular approval of and transaction completion of diesel power plant project in Pililla, Rizal, with approximately ₱20Bn in ACEN No.15 Series of 2017 the purchase of the entire shares of PINAI in PCC approval on December 2, 2020 ● Board of Directors’ approval of the ● Quarterly Reports for 2020 PhilWind resulting to direct and indirect 67% ● Resolution of the DENR-EMB dated 27 July pricing for, and volume, of the shares to ● Approval by the Board and announcement ownership of North Luzon Renewables 2020 on Notice of Violation No. 20-NOVW- be issued as update to the Company’s of availability of the amended Board Risk ● PCC approval of and transaction completion 0630-164 issued to Power Barge 102, owned Stock Rights Offering and Related Party Transactions Committee, of the acquisition of the PINAI Investors’ by the Company, in relation to the oil spill ● Company’s receipt of the Confirmation Corporate Governance and Nomination ownership interest in San Carlos Solar Energy, incident of July 3, 2020 Letter issued by the Markets and Securities Committee, and Personnel and Compensation Inc. (Sacasol) and Negros Island Solar Power ● Approval of the Company’s dividend policy Regulation Department of the Securities Committee Charters Inc. (Islasol) to declare and pay dividends on an annual and Exchange Commission as update on the ● Approval by the Board and announcement of ● Filing of Current Report Under Section 17 basis using a payout ratio of 25% to 50% of Company’s Stock Rights Offering availability of the amended Charter of Board of the Securities Regulations Code Amid the previous year’s core net income, excluding ● Disclosure/details on the Company’s Stock of Directors and Code of Conduct and Ethics COVID-19 Pandemic significant non-recurring gains (including Rights Offering: The terms of the Company’s value realization proceeds) or losses, to be stock rights offering for the issuance of effective on January 1, 2021 2,267,580,434 shares at an offer price of ₱2.37 per share, and at an entitlement ratio of 1.11 shares:1 offer share, subject to applicable SEC and other regulatory approvals of the offer, including the offer price.
59 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 60 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Clarification of News Articles Financial and Non-Financial Reports Stakeholder Relations accessible to all stockholders, easy to use, ● AC Energy to Consolidate The Board ensures the integrity of the Company’s consolidated As a stronger, bolder, and faster energy company, and allows stockholders to exercise their right its Internationaland financial statements and non-financial information as disclosed AC Energy Corporation’ ultimate goal is to uplift if unable to attend the Annual Stockholders’ Philippine Platforms in the company’s Integrated Report. the lives of its stakeholders and help build a more Meeting. Equal effect is given to votes whether ● AC Energy expects to sustainable future for Filipinos. It aims to uphold cast in person or in absentia. Non-controlling post profit this year The financial statements including significant judgments and the highest possible level of moral benchmarks and or minority shareholders are given the right to ● 321 residents evacuated estimates disclosed thereto comply with the requirements of fairness in dealing with shareholders, customers, nominate, elect, and remove candidates for board amid power barge oil spill the Philippine Financial Reporting Standards. Non-financial employees, and business partners to strengthen its of directors. in Iloilo City performance was prepared using the guiding principles and foundation of long-term beneficial relationships. ● Company’s first half net content elements of the Integrated Reporting framework. Shareholder and Investor Relations income of ₱1.96 billion Shareholder Meeting and Voting Procedures The Company encourages active participation following the completion of its To help stakeholders gain a better understanding of the Notice of regular or special meetings are and regular dialogue with institutional and onshore assets restructuring Company’s business and its process of value creation, a sent to shareholders at least 21 or seven days retail investors. Information requirements of ● AC Energy expects to hit half thorough discussion on both financial and non-financial respectively before the scheduled date. It details the investing public and minority shareholders of 5,000MW RE goal in 2021 performance indicators is provided in the Integrated Report. the agenda a nd sets the date, time, and place are fully disclosed to the securities’ regulators ● SEC approves AC Energy’s for validating proxies, which must be done at on time and are accessible both through the stock rights offering Please refer to pages 41-42 for the financial least five (5) business days prior to the annual company’s website and through the Philippine and non-financial performance indicators, respectively. stockholders’ meeting. Each outstanding Stock Exchange. The Investor Relations Team who common share of stock entitles the registered directly reports to the Group Chief Finance Officer holder to one vote. provides for an avenue to receive feedback, Changes in Shareholdings complaints, and queries from shareholders other Reported trades of directors and officers of AC Energy Corporation’s Securities in 2020: For transparency and improved shareholder than through the annual stockholder’s meeting. involvement, the Company provides multiple % TOTAL voting options such as appointing a proxy, BALANCE AS OF BALANCE AS OF ACQUIRED DISPOSED OF OUTSTANDING voting in-person, or through electronic voting DECEMBER 30, 2019 DECEMBER 31, 2020 SHARES in absentia. The Company established a secure
DIRECTORS Electronic Voting in Absentia System that is Fernando M. Zobel de Ayala 237,264,671 113,700 - 237,378,371 1.73% Jaime Augusto M. Zobel de Ayala 1 195,200 - 195,201 0.00% Gerardo C. Ablaza, Jr. 1,000,001 - - 1,000,001 0.01% Code of Conduct and Ethics Policy on Insider Tradings Jose Rene Gregory D. Almendras 1 500,000 - 500,001 0.00% All directors, officers, and employees are required A policy on insider trading has been defined by John Eric T. Francia 78,981,271 - - 78,981,271 0.58% to always act in the best interest of the Company. AC Energy Corporation to ensure compliance John Philip S. Orbeta 2,000,001 - - 2,000,001 0.01% They are directed to avoid any situation that with Corporate Disclosures Manual and prevent Melinda L . Ocampo 1 - - 1 0.00% could interfere or appear to interfere with his or unlawful practice of using to one’s own advantage Ma. Aurora D. Geotina-Garcia 1 - - 1 0.00% her independent judgement in performing his or confidential information one has access to. Consuelo D. Garcia 1,000 - - 1,000 0.00% Sherisa P. Nuesa 240,000 600,000 - 840,000 0.01% her duties. The policy also prohibits employees Mario Antonio V. Paner elected on 4/20/20 1 - 1 0.00% from using their official position to secure a Reporting of Transactions OFFICERS contract of employment for a related party, AC Energy Corporation has established and Solomon M. Hermosura 16,712,000 - 16,712,000 - 0.00% soliciting gifts or any property for personal gain implemented guidelines for all directors, Dodjie D. Lagazo 6,526,166 - - 6,526,166 0.05% from any individual or organization that deals with officers, and employees on when to declare Maria Corazon G. Dizon 20,432,383 - - 20,432,383 0.15% the Company and using Company information for trades. All directors and officers from Managing Jose Maria Eduardo P. Zabaleta elected on 4/20/20 - - - 0.00% personal gain. No employee may engage in any Directors and above, the Comptroller, Chief Gabino Ramon G. Mejia 5,221,428 - - 5,221,428 0.04% business or undertaking that is indirectly or directly Audit Executive, Chief Risk Officer, Treasurer, Roman Miguel G. de Jesus 10,994,049 - 1,550,000 9,444,049 0.07% in competition with or prejudicial to the interests Chief Compliance Officer, Corporate Secretary, Sebastian Arsenio R. Lacson appointed on 1/2/20 817,000 300,000 517,000 0.00% of the Company. and Assistant Corporate Secretary must report Danilo L. Panes 529,737 190,000 - 719,737 0.01% all acquisitions or disposals, or any changes in Alan T. Ascalon 623,173 46,000 - 669,173 0.00% their shareholdings in the Company within the Mariejo P. Bautista 2,252,677 122,000 - 2,374,677 0.02% period specified in the policy. Irene S. Maranan 4,402,718 929,000 1,400,000 3,931,718 0.03% Andree Lou C. Kintanar 1,584,660 - - 1,584,660 0.01% Ma. Teresa P. Posadas 213,898 21,000 - 234,898 0.00% Henry T. Gomez - - - - 0.00%
61 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 62 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Trading Blackouts The Board Risk Management and Related Party Conflict of Interest Policy To ensure compliance with PSE Insider Trading Transactions Committee is tasked with overseeing No officer or employee may be involved in any The Office of the Data Protection Officer Rules, the Company issues a blackout notice the implementation of this policy. business or undertaking that influences or could can be reached through writing or email to all concerned whenever a price sensitive influence the ability to exercise objectivity and ([email protected]) information has been disclosed to the Exchange. Policy Against Sexual Harassment perform responsibilities in the best interest of the should there be any inquiries or concerns Increasing awareness of the value of respecting Company. Any potential conflict of interest, actual on data privacy or data subjects’ rights. The Policy on Insider Trading provides that all the dignity and rights of each employee is a or apparent, must be brought to the attention of directors, key officers, employees, consultants, commitment from AC Energy Corporation. the appropriate levels of authority and all relevant Risk Management and advisers of the Company who may have The Company is dedicated to keeping its work facts are required to be disclosed. Risk management is embedded in the Company’s knowledge of material information that have environment free from sexual harassment and all management practices and business operations. not been disclosed to the public, including their forms of sexual intimidation and exploitation. In Whistleblower Policy The Company ensures that risk management immediate families, are prohibited from trading keeping with this commitment, the Company will AC Energy Corporation conducts its business with plays an integral part in its strategic planning in AC Energy Corporation’s shares during the not tolerate harassment of its employees and will the highest ethical standards. The Company and process and value creation. trading blackout period lasting from the time penalize any such actions with a permanent ban its directors, officers, and employees strive to uphold the information is obtained until a minimum of from the Company working environment. a culture of good corporate governance by heeding ACEN’s Risk Management and Related Party two trading days after the disclosure thereof integrity in all its transactions internally, with its Transactions Committee provides board-level with the PSE. In addition, they are also required Policy on Anti-Fraud customers, suppliers, contractors, business partners, oversight of the Company’s risk management to submit annually a certification of compliance AC Energy Corporation has adopted a zero- government, regulators and the public. activities. The Company’s risk management with the prohibition against trading during the tolerance policy towards fraudulent reporting, process is driven by the Chief Risk Officer, who blackout periods. misappropriation of assets, corruption, bribery The Whistleblower Policy provides a mechanism leads the implementation of the Enterprise Risk in any form, and all unethical practices, and is and an avenue to report any perceived wrongdoing, Management process. The Company is also committed in taking all appropriate measures in malpractice, and any irregularities that are contrary represented at the ERM council led by Ayala’s Policy on Related-Party Transactions complying with relevant laws and standards. The to the Company’s Core Values and protects Risk Management unit. AC Energy Corporation recognizes the fiduciary Policy on Anti-Fraud prohibits directors, officers, whistleblowers against possible retaliation. responsibility of its board of directors to ensure and employees, from doing business with malicious The Company seeks to continuously improve its the fairness, transparency, and integrity of the intent. It provides guidance to everyone on how to The whistleblower may submit a written report risk management process by adopting processes Company’s related party transactions (RPTs) conduct business in a fair, ethical, and legal manner. directly to the Office of the Compliance Officer, and strategies in line with Ayala’s best practices. for the protection of all shareholders’ interest. Seeking unwarranted monetary and substantial or by email to [email protected] The Company is strengthening its approach to risk To support the implementation of this duty, advantage from any transaction is strictly forbidden. or through a face-to-face meeting with any management by aligning its risks with current and the Company has adopted a Related Party The policy also applies even if business was made of the Whistleblower Committee composed of emerging trends through research and by consulting Transactions Policy that: through another person. one representative each from the Legal and with risk management experts. Earlier this year, Regulatory Department, Human Resources AC Energy signed up as a supporter of the Task ● Defines related party relationships Policy on Gift and Gratuities and Corporate Services, Internal Audit, and Force for Climate-Related Financial Disclosures. and transactions The Company has established guidelines Enterprise Risk Management. This includes improved disclosures over risk on gifts and gratuities to protect the management of material climate risks. ● Provides guidance in the review, approval, integrity of its employees and its business There is an established investigation process on maintenance of registry, and disclosure of interest. Any offers given to directors, officers, reported violation of Company policies, rules, and Website material RPTs to ensure that the terms are fair, and employees, or their immediate family, with regulations. All reports are treated in confidence Information on the company’s corporate governance and inure to the best interest of the Company an intent to influence business decisions and and monitored until resolution and closure. initiatives, this Integrated Report, and all other and all its shareholders recommendations are strictly prohibited and relevant information is available on the company’s must be disclosed immediately to the appropriate Data Privacy Policy website at https://www.acenergy.ph ● Mandates regular monitoring of the Company’s reporting level. Directors, officers,and employees In keeping its utmost commitment to safeguard business relationships are likewise prohibited from accepting gifts or and respect the right to personal data privacy As part of our stakeholder engagement, AC Energy invitations of any form, except token gifts of of stakeholders, AC Energy Corporation appointed also maintains social media a ccounts at ● Promotes the objectives of the Securities and small value that meet the criteria a Data Protection Officer, Atty. Alan T. Ascalon. Exchange Commission (SEC) Rules on Material set by the Company. With the support of the different business units, Facebook Related Party Transactions for Publicly Listed AC Energy Corporation’s data privacy team https://www.facebook.com/acenergyinc/ Companies regularly reviews the security measures that the Company puts in place to maintain the integrity, and LinkedIn ● Prohibits, remedies, and penalizes material RPTs confidentiality and availability of the personal https://ph.linkedin.com/company/acenergyinc deemed non-compliant with policy data that it collects and processes. The policy aims to protect these data from accidental loss or destruction, unauthorized access, fraudulent misuse, and unlawful alteration.
63 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 64 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Our Board of Directors
Fernando Jaime Augusto Zobel de Ayala Zobel de Ayala
Mr. Zobel de Ayala is President and Chief Operating Officer Corp., and Bonifacio Art Foundation, Inc.; Director of Live Mr. Zobel de Ayala is Chairman and CEO of Ayala University, including the Global Advisory Council, HBS of Ayala Corporation since April 2006. He has been a It Investments, Ltd., AG Holdings Ltd., AC Infrastructure Corporation since April 2006. He has been a Director of Board of Dean’s Advisors, and HBS Asia-Pacific Advisory Director of Ayala Corporation since May 1994. Holdings Corporation, Altaraza Development, Corporation, Ayala Corporation since May 1987. He holds the following Board, which he chairs. He is Chairman Emeritus of the He holds the following positions in publicly listed Asiacom Philippines, Inc., Ayala Retirement Fund Holdings, positions in publicly listed companies: Chairman of Globe Asia Business Council, a member of the Global Board companies: Chairman of Ayala Land, Inc., Manila Water Inc., Honda Cars Philippines, Inc., Isuzu Philippines Telecom, Inc., Integrated Micro-Electronics, Inc. and Bank of Adviser of the Council on Foreign Relations, and Company, Inc., and AC Energy Corporation (formerly Corporation, and Manila Peninsula; Member of the Board of the Philippine Islands; and Vice Chairman of Ayala Co-Vice Chairman of the Makati Business Club, AC Energy Philippines, Inc.); and Director of Bank of the of INSEAD Business School and Georgetown University; Land, Inc., Manila Water Company, Inc. and AC Energy Chairman of Endeavor Philippines, and a board member Philippine Islands, Globe Telecom, Inc. and Integrated Member of the International Advisory Board of Tikehau Corporation (formerly AC Energy Philippines, Inc.). He is of Eisenhower Fellowships. He was awarded the Micro- Electronics, Inc.; and Independent Director of Capital and of the Hispanic Society Museum & Library also the Chairman of Ayala Retirement Fund Holdings, Presidential Medal of Merit in 2009, the Philippine Legion Pilipinas Shell Petroleum Corporation. He is the Chairman International Advisory Council; Vice Chairman of the Inc., AC Industrial Technology Holdings, Inc., AC Ventures of Honor with rank of Grand Commander in 2010, and of AC International Finance Ltd., Liontide Holdings, Inc., Philippine-Singapore Business Council, member of the Holding Corp., AC Infrastructure Holdings Corporation, the Order of Mabini with rank of Commander in 2015 AC Energy and Infrastructure Corporation (formerly World Presidents’ Organization and Chief Executives AC Energy International, Inc. and Asiacom Philippines, Inc.; by the President of the Philippines in recognition of his AC Energy, Inc.), Ayala Healthcare Holdings, Inc., Organization; Chairman of Habitat for Humanity Co-Chairman of Ayala Foundation, Inc. and Ayala Group outstanding public service. In 2017, he was recognized as Automobile Central Enterprise, Inc., Alabang Commercial International’s Asia-Pacific Capital Campaign Steering Club, Inc.; Director of Alabang Commercial Corporation, a United Nations Sustainable Development Goals Pioneer Corporation, Accendo Commercial Corp. and Hero Committee; and Member of the Board of Trustees of Ayala International Pte. Ltd., AC Energy and Infrastructure by the UN Global Compact for his work in sustainable Foundation, Inc.; Co- Chairman of Ayala Foundation, Inc. Caritas Manila, Pilipinas Shell Foundation, and the Corporation (formerly AC Energy, Inc.), Ayala Healthcare business strategy and operations. The first recipient of the and Ayala Group Club, Inc.; Vice-Chairman of AC Industrial National Museum. Holdings, Inc., Light Rail Manila Holdings, Inc. and AG award from the Philippines, he was one of 10 individuals Technology Holdings, Inc., ALI Eton Property Development Holdings Ltd. Outside the Ayala group, he is a member recognized for championing sustainability and the pursuit Corporation, Ceci Realty Inc., Fort Bonifacio Development Mr. Zobel de Ayala graduated with B.A. Liberal Arts of various business and socio- civic organizations in of the 17 SDGs in business. Corporation, Bonifacio Land Corporation, Emerging at Harvard College in 1982 and holds a CIM from the Philippines and abroad, including the JP Morgan City Holdings, Inc., Columbus Holdings, Inc., Berkshires INSEAD, France. International Council, JP Morgan Asia Pacific Council, Mr. Zobel de Ayala graduated with B.A. in Economics Holdings, Inc., AKL Properties, Inc., AC Ventures Holdings and Mitsubishi Corporation International Advisory Council. (cum laude) from Harvard College in 1981 and obtained He sits on the board of the Singapore Management an MBA from the Harvard Graduate School of University and on various advisory boards of Harvard Business in 1987.
65 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 66 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
John Eric Jose Rene John Philip Francia Gregory Orbeta Almendras
Mr. Francia is the President and Chief Executive Mr. Almendras concurrently serves as Senior Mr. Orbeta is currently the Managing Director, Chief Officer of AC Energy Corporation (formerly AC Managing Director of Ayala Corporation, President Human Resources Officer and Group Head for Corporate Energy Philippines, Inc). Under his leadership, & Chief Executive Officer of Manila Water Company, Resources at Ayala Corporation, covering Strategic Ayala established its energy platform from a Inc. (MWCI) and President & Chief Executive Officer Human Resources, Information & Communications standing start in 2011, to become one of the largest of AC Infrastructure Holdings Corporation. He is Technology, AC Synergy, Brand & Reputation renewable energy platforms in Southeast Asia, with also a member of the AC Management Committee, Management, Knowledge Management, and Corporate over 1800MW of attributable renewables capacity. member of the Ayala Corporation Management Support Services. He has served as a member of the Ayala Committee and the Ayala Group Management Corporation Management Committee since May 2005 Mr. Francia is also a Managing Director and Committee since August 2016. He is the Chairman and the Ayala Group Management Committee since April member of the Management Committee of Ayala of the Executive Committee of MWCI and a Director 2009. He is currently the Chairman of Ayala Aviation Corporation since 2009, and was appointed as of the following companies within the Ayala Group: Corporation, Ayala Group HR Council, Ayala Group Chairman of Ayala’s Investment Committee in AF Payments Inc.; Light Rail Manila Holdings, Inc.; Corporate Security Council and Ayala Business Clubs; 2021. He is also a Director of various Ayala group MCX Tollway Inc.; and AC Energy Corporation Chairman and President of HCX Technology Partners, Inc.; companies including AC Infrastructure, AC Health, (formerly AC Energy Philippines, Inc.) and Vice Chairman, President and Chief Executive Officer AC Ventures, Manila Water and as Chairman and of Ayala Group Club, Inc. CEO of ACE Enexor. Mr. Almendras spent 13 years with the Citibank group where he started as a management trainee Mr. Orbeta a lso serves as a Board Director of AC Energy Mr. Francia earned a Master’s Degree in and landed his first CEO position as President Corporation (formerly AC Energy Philippines, Inc.) Ayala Management Studies at the University of of City Savings Bank of the Aboitiz Group at the Group Legal, AC Industrial Technology Holdings, Inc., Cambridge in the United Kingdom, graduating with age of 37. In 2011, he was recognized by the World Ayala Foundation Inc., Ayala Healthcare Holdings, Inc., First Class Honors. He received his undergraduate Economic Forum as a Sustainability Champion for Ayala Retirement Fund Holdings, Inc., Generika Group of degree in Humanities and Political Economy from his efforts as President of MWCI. During his stint Companies, BPI Family Bank, Inc., ALFM Growth Fund, the University of Asia & the Pacific, graduating as MWCI President and Chief Operating Officer, Inc., ALFM Money Market Fund, Inc., ALFM Peso Bond magna cum laude. the company received multiple awards and was Fund, Inc., ALFM Dollar Bond Fund, Inc., ALFM Euro Bond recognized as one of the Best Managed Companies Fund, Inc., ALFM Global Multi-Asset Income Fund, Inc., in Asia, Best in Corporate Governance, one of the ALFM Retail Corporate Fixed Income Fund, Inc. and the Greenest Companies in the Philippines and hailed Philippine Stock Index Fund Corporation. Mr. Orbeta as the world’s Most Efficient Water Company. Under previously served as the President and CEO of Ayala the Administration of President Benigno S. Aquino Automotive Holdings Corporation and Automobile Central III, he served as a member of the Cabinet, holding Enterprise, Inc. (Philippine importer of Volkswagen) and the positions of Secretary of the Department of the Chairman and CEO of Honda Cars Makati, Inc., Isuzu Energy, Office of the Cabinet Secretary and the Automotive Dealership, Inc. and Iconic Dealership, Inc., Department of Foreign Affairs. and Board Director of Honda Cars Cebu, Inc. and Isuzu Cebu Inc. In June 2016, Mr. Almendras was acknowledged by the Administration for his remarkable Prior to joining Ayala Corporation, Mr. Orbeta was the performance in addressing the country’s urgent Vice President and Global Practice Director of the Human issues and was awarded the highest Presidential Capital Consulting Group at Watson Wyatt Worldwide Award given to a civilian - Order of Lakandula, (now Willis Towers Watson), overseeing the firm’s Rank of Gold Cross Bayani. practices in executive compensation, strategic rewards, data services and organization effectiveness around the world. He was also a member of Watson Wyatt’s Board of Directors. He graduated with a degree in Economics from the Ateneo de Manila University in 1982.
67 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 68 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Gerardo Ablaza, Jr. Consuelo Ma. Aurora Garcia Geotina- Garcia
Mr. Ablaza is currently a management consultant Ms. Garcia is an independent director of AC Energy Ms. Geotina-Garcia is currently the President of Mageo at Ayala Corporation and a member of the Board Corporation (formerly AC Energy Philippines, Inc.). Consulting Inc., a company providing business advisory of Directors of AC Energy and Infrastructure She is currently an Independent Director of The and corporate finance consulting services. A Certified Corporation and its listed company, AC Energy Philippine Stock Exchange, Inc., Sun Life Investment Public Accountant, she started her professional career Corporation. He served as President and CEO and Trust Corporation, and FEU Alabang, Inc. She is at SGV & Co./ Ernst & Young Philippines, where she led of Manila Water Company, Inc. from June presently the Senior Consultant for Challengers and the Firm’s Global Corporate Finance Division. She is also 2010 to April 2017 and remains involved as a Growth Markets, Asia for ING Bank, Currently, she is currently an Independent Director of ACE Enexor, Inc., Director and member of various management a member of the board of the Financial Executives Cebu Landmasters Inc., and Queen City Development committees. From 1998 to April 2009, he was Institute of the Philippines (FINEX) and the Finex Bank. She is the first female Chairperson of the Bases President and CEO of Globe Telecom. In June Academy. She is the liaison director to the Finex Conversion and Development Authority (BCDA) ( 2015 2015, he became a member of the International Capital Markets Development Committee and is a -2016 ) , and was a Director in the following companies: Advisory Panel of the Institute for Water Policy member of the Ethics and Sustainable Development Bases Conversion and Development Authority (2011- under the Lee Kuan Yew School of Public Policy Working Group of the International Association 2016), BCDA Management Holdings, Inc. (2011-2016), Fort in Singapore. of Financial Executives Institute. She is also a Bonifacio Development Corporation (2011-2016), Heritage director of a family-owned business - Saje Wellness Park Management Corporation (2015-2016), Bonifacio Mr. Ablaza graduated as summa cum laude Corporation. She was formerly the Country Global City Estates Association, Inc. (2012-2016), Bonifacio and obtained his degree in Liberal Arts Manager and Head of Clients of ING Bank N.V. Estates Services Corporation (2012-2016), and HBC, Inc. (Honors Accelerated Program), Major in Manila, Philippines from September 2008- (2012-2016). Mathematics from the De La Salle University. November 15, 2017. She joined ING in February 1991 as Head of Financial Markets. She previously Ms. Geotina-Garcia is a Fellow and Trustee of the worked with SyCip, Gorres, Velayo & Co. and Bank Institute of Corporate Directors (ICD) and a Trustee of Boston. She served as Director of the Board of the Shareholders Association of the Philippines. and concurrently Chairman of the Capital Markets Today, she leads the Philippine Women’s Economic Committee of the Bankers Association of the Network as its Chairperson. She also Co-Chairs the Philippines and Finex for many years. She was Philippine Business Coalition for Women Empowerment a former Board of Director and Treasurer of the and is former Co-Chair of the ASEAN Women's European Chamber of Commerce of the Philippines Entrepreneurs' Network where she remains as one of the from 2011–2015. In 2010, she was a National Member Philippine Focal Points. She serves several women business of ASEAN Bond Market Forum. organizations as a long-time Trustee, namely: Women’s Business Council Phils., Inc., Business & Professional Ms. Garcia received a Bachelor of Science degree Women’s, Makati (BPW), the Philippine chapter of Women in Business Administration, major in Accounting Corporate Directors and the Samahan ng Pilipina para sa (magna cum laude) from the University of the East Reporma at Kaunlaran (Spark! Philippines). and is a Certified Public Accountant. Ms. Geotina-Garcia received her Bachelor of Science degree in Business Administration and Accountancy from the University of the Philippines in 1973 and completed her Master of Business Administration from the same university in 1978.
69 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 70 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Sherisa Melinda Mario Nuesa Ocampo Antonio V. Paner
Ms. Nuesa is an independent director of AC Energy Ms. Ocampo is an independent director of Mr. Paner is an independent director of AC Energy Corporation (formerly AC Energy Philippines, Inc.). AC Energy Corporation (formerly AC Energy Corporation (formerly AC Energy Philippines, Inc.). She was a former Managing Director of Ayala Philippines, Inc.). She served as President of the He was previously the Treasurer and head of the Corporation until her retirement in 2011. Currently, Philippine Electricity Market Corporation, a non- BPI’s Global Markets Segment, responsible for she is a member of the respective Board of Directors stock, non-profit private organization that governs managing the Bank’s interest rate and liquidity of Manila Water Company, Inc. (MWCI), Integrated the country’s wholesale electricity spot market, from gaps, as well as its fixed income and currency Micro-electronics, Inc. (IMI), Far Eastern University, 27 March 2009 until 31 July 2017. Her experience market-making, trading, and distribution Inc., FERN Realty Corp, and the ALFM Mutual includes developing energy policies and programs activities–in the Philippines and abroad. Funds Group. She is also a member of the Boards as Undersecretary of the Department of Energy of Trustees of the Institute of Corporate Directors, from May 2005 to December 2007. She was also Mr. Paner was also previously the Chairman of the Judicial Reform Initiative, and the Financial involved in electric utility system regulation, the BPI’s Asset & Liability Committee and was a Executives Institute of the Philippines. planning and technical feasibility of electric power member of the Management Committee and Asset generation, transmission and distribution systems Management Investment Council. He also served as As a former Managing Director of Ayala including granting of electric franchises to both a Board member of BPI Europe Plc. He joined BPI Corporation, Ms. Nuesa served in various senior electric cooperatives and private distribution in 1985, when the Bank acquired Family Savings management positions, namely: Chief Finance utilities. She has extensive knowledge of energy Bank and performed various Treasury and Trust Officer and Chief Administrative Officer of IMI regulation including petroleum and electricity positions until 1989. Between 1989 and 1996, he (January 2009 to July 2010); Chief Finance Officer pricing and competition rules and has provided worked at Citytrust, then the consumer banking arm of MWCI (January 2000 to December 2008); Group consulting services to legislators on electricity of Citibank in the Philippines, which BPI acquired Controller and later Vice President for Commercial pricing, particularly on the power purchased in 1996. At BPI, he was responsible for various Centers of Ayala Land, Inc. (ALI) (January 1989 to adjustments. She was also a consultant in the businesses of the bank, including Risk Taking, March 1999); and as member of the boards of the World Bank’s project on Electric Cooperatives Portfolio Management, Money Management, Asset various subsidiaries of ALI, MWC, and IMI. system loss reduction program and to the USAID Management, Remittance and Private Banking. under the Asia Foundation in its project to introduce Ms. Nuesa graduated from the Far Eastern the open access and competition in the coverage of Mr. Paner served as President of the Money Market University with a Bachelor of Science Degree in Philippine Economic Zone. She was a board member Association of the Philippines (MART) in 1998 Commerce (summa cum laude). She is a Certified (February 1996 to June 1998) and Chairman (August and remains an active member up to present. Public Accountant. She completed the Financial 1998 to August 2001) of the Energy Regulatory He is currently the Vice Chairman of the Bankers Management Program of the Stanford University Board (now Energy Regulatory Commission). Association of the Philippines’ (BAP) Open Market in 1991 and the Advanced Management Program She served as a division chief (October 1979 Committee. He is also a member of the Makati of the Harvard Business School in June 1999. She to November 1988) and a director (December Business Club, Management Association of the then obtained her Master’s Degree in Business 1988 to February 1996) of the National Philippines, British Chamber of Commerce, and the Administration from the Ateneo-Regis Graduate Electrification Administration. Philippine British Business Council. School of Business in 2011. In 1977, Ms. Ocampo obtained her Bachelor of Mr. Paner obtained an A.B. Economics degree from Science degree in Commerce, Major in Accounting, Ateneo de Manila University in 1979 and completed from the Republic Central Colleges, in Angeles various courses in Business and Finance, including City, Pampanga. She received her MBA from the Strategic Financial Management in 2006. In 2009, University of the Philippines, Diliman, Quezon City. he completed the Advanced Management Program She is a certified public accountant.
71 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 72 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES GOVERNANCE AND LEADERSHIP TEAM
Our Management Team
John Eric Francia Maria Corazon Dizon Jose Maria Zabaleta Gabino Ramon Mejia Sebastian Arsenio Lacson Irene Maranan President & Chief Executive Chief Finance Chief Development Executive Director & Senior Vice President & Co-Head, Vice President & Head, Officer, AC Energy Officer & Treasurer; Officer Co-Head, Plant Operations Plant Operations Corporate Communications Compliance Officer & Sustainability Chief Risk Officer
Dodjie D. Lagazo Solomon Hermosura Roman Miguel de Jesus Alan Ascalon Andree Lou Kintanar Executive Director & Head, Corporate Secretary Executive Director & Head, Assistant Corporate Secretary Vice President & Head, Legal and Regulatory Group, Commercial Operations Human Resources & Assistant Corporate Secretary Corporate Services
73 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 74 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES ANNEXES
Annexes
Annexes
75 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 76 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES ANNEXES
The materiality assessment started with the The findings were further validated through Materiality identification of initial topics through industry questionnaires disseminated across senior benchmarking and extensive desk-research based management. on global ESG standards. A materiality assessment was conducted in order to identify the Company's material issues with regards The results are the Company's baseline material to its business strategy, capitals, and stakeholder concerns. The Company references the SASB Materiality Initial material topics were then priotitized according topics and will be subjected to annual review to Map and GRI Standards in identifying its material topics. to the results of consultation sessions, taking into ensure accuracy and relevance. account stakeholder concerns and accounts from stakeholder-facing units. Economic
Material Factors and Management Reporting the relevant
Economic Performance Direct cconomic value This is our direct contribution to See pages 9, 16, 41 • Direct economic value See Annex: Environmental GRI: 201-1 Financial Capital generated, distributed the Philippine economy and to generated, distributed and Performance Indices SASB: IF-EU-110a.1 and retained our stakeholders. retained Power Generation Power generated Our core business is to be able to See page 42 • Power generated See Sustainable Transformation Financial Capital provide reliable, affordable, and • Attributable installed capacity Manufactured Capital Installed capacity sustainable power to meet the See pages 21-22, 42 country's energy demand. Plant operational See pages 29-30 efficiency
Anti-Corruption Anti-Corruption Our Company commits to See page 63-64 • Confirmed incidents of No incidents reported, no GRI: 205-3 Financial Capital ensuring all our business corruption and actions taken aspect of operations within our activities are conucted in an organization was identified to ethical and legal manner. have existence of corruption
Footnote: Economic material topics cover all plants listed under ACEN and are reported on an equity share approach.
Social
Material Factors and Management Reporting the relevant
Employee Engagement Total employee The Company considers its See pages 40-41 • Employee headcount See Annex: Human Capital GRI: 102-8 Reporting scope Human Capital headcount human capital as one of its most • Total new hires Performance Indices covers the important assets to its value • Employee turnover Company's direct New hires and turnover creation. GRI: 401-1 employees
Diversity, Equal Breakdown of employees A diverse and healthy workplace The Company practices • Employee count by age, GRI: 405-1 Reporting scope Opportunity & Anti- by age, gender and rank environment enables the its policy on equal gender, and rank covers the Discrimination Company to expand. opportunity employment Company's direct Non-discrimination GRI: 406-1 Human Capital Social and diversity employees and Relationship Capital
Community Sustainable livelihood Our operations are located See pages 35-40 • Community investments See Community Investments GRI: 413-1 Relationship programs within the proximity of local Social and Relationship communities and may directly Capital affect their livelihood and way of living.
Training and Training hours and Upskilling of talent is material See pages 40-41 "• Total and average training See Annex: Human Capital GRI: 404-1, 404-2 Reporting scope Development training programs to our Company given the fast- hours Performance Indices covers the Human Capital evolving nature of our industry. • Training hours by gender and Company's direct Intellectual Capital rank" employees
Occupational Health Types of injuries A safe working environment is See pages 29, 40-41 "• Number of safety-related See Annex: Human Capital GRI: 403-2 Reporting scope and Safety of paramount importance in our incidents Performance Indices SASB: IF-EU-320a.1 covers both direct and Human Capital business. • Total safe manhours" indirect employees within the Company's plants
Footnote: Social material topics cover all plants listed under ACEN excluding the Maibarara Geothermal Plant due to insignificant economic stake by the Company. The Company has no operational control over the excluded plant.
77 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 78 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES ANNEXES
Environmental
Material Factors and Management Reporting the relevant
Energy Consumption Electricity consumption Energy, in the form of fuel and We conduct continuous • Energy consumed See Annex: Environmental GRI: 302-1 Natural Capital within the organization electricity is a significant input to monitoring of our • Energy intensity Performance Indices our operations. energy consumption Fuel consumption within across all plants and the organization are implementing structural retrofits to improve plant efficiency in identified thermal plants.
Water Consumption Water consumption Water is used in our business We conduct continuous • Water consumed GRI: 303-3, 303-5 Extraction from Natural Capital operations, especially in our monitoring of our water • Water withdrawn SASB: IF-EU-140a.1 surface water and thermal plants. consumption and consumption from comply with relevant third-party water environmental laws is disclosed in across our plants. cubic meters
Effluents and Waste Hazardous wastes The Company's plant operations We implement a strict • Hazardous waste generated GRI: 306-2 Natural Capital regularly generate hazardous policy ensuring that • Hazardous waste disposed waste and coal ash as by-products. the hazardous wastes that we generate are turned over to DENR- accredited haulers for proper disposal.
Flyash Management Coal residual is sold • Flyash generated SASB: IF-EU-150a.1 to cement processing • Percentage of flyash recycled companies for co- processing purposes. Excess waste is disposed through DENR-approved disposal pits.
Biodiversity Impacts Biodiversity The Company commits to ensuring See pages 31-34 • Habitats protected See Protecting the Environment GRI: 304-1 Natural Capital environmental responsibility is Tree planting practiced across the different GRI: 304-3 stages of operations.
Greenhouse gas Scope 1 GHG emissions GHG emissions are a by-product The Company regularly • GHG Emissions See Annex: Environmental GRI: 305-1 emissions of our operations, especially our monitors its GHG • GHG Intensity Performance Indices SASB: IF-EU-110a.1 Natural Capital thermal plants. emissions across all its Scope 2 GHG emissions plants. GRI: 305-2 SASB: IF-EU-110a.1
Climate Strategy Installed RE Capacity Embedded in our business strategy See pages 27-30 • Attributable RE capacity See A Low Carbon Portfolio Natural Capital is building towards a low-carbon by 2030 Manufactured Capital RE projects within the portfolio. pipeline
Footnote: Environmental material topics cover all plants listed under ACEN excluding the Maibarara Geothermal Plant due to insignificant economic stake by the Company. The Company has no operational control over the excluded plant.
79 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 80 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES ANNEXES
Economic Environmental Performance Indices Performance Indices
2019 2020 Electricity and Fuel Consumption Unit 2019 Performance 2020 Performance Economic Performance Unit Performance Performance Electricity Consumption kWh 20,230,325.42 14,606,177.67 Diesel Consumption liters 40,904,680.85 15,097,503.66 Direct economic value generated 15,998,254.00 22,176,467.00 ₱ Gasoline Consumption liters 1,832,223.45 32,839.73
Direct economic value distributed ₱ 18,480,902.00 25,461,910.00 Coal Consumption Tons 782,489.26 1,037,355.79 2019 electricity consumption realigned to capture purchased electricity only Operating cost ₱ 14,982,848.45 13,957,452.40 Energy Consumption Unit 2019 Performance 2020 Performance Employee wages and benefits ₱ 382,675.00 1,114,761.00 Energy consumption from diesel GJ 1,566,383.66 578,136.35 Energy consumption from gasoline GJ 63,503.36 1,138.20 Dividends given to stockholders and interest ₱ 2,530,658.00 8,007,305.00 payments to loan providers Energy consumption from coal GJ 9,467,050.40 12,531,452.48 Electricity/indirect energy GJ 72,829.17 52,582.24 Taxes given to government ₱ 580,199.00 2,349,176.00 Energy consumed within the organization GJ 11,169,766.59 13,163,309.27
Investments to community (CSR, sponsorships, ₱ 4,521.55 33,215.60 donations, contributions) Emissions Unit 2019 Performance 2020 Performance
Scope 1 Emissions Tons CO2e 1,006,202.70 1,215,009.82
Scope 2 Emissions Tons CO2e 14,394.02 10,373.16 Scope 1 Emissions (attributable) Tons CO e 513,628.37 1,214,866.86 2019 2020 2 Procurement Practice Unit Performance Performance Scope 2 Emissions (attributable) Tons CO2e 11,576.31 9,908.66 Our Scope 1 emissions include the direct combustion of various diesel and gasoline among our Company's plant equipment, generator sets, and company-owned vehicles, as well as, the combustion of coal in SLTEC. Standards used for the computations are based on the GHG Protocol Corporate Accouting and Reporting Procurement budget spent on local suppliers % 96% 70% Standard. The gases reported include carbon dioxide, methane, and nitrous oxide. Our Scope 2 emissions include the indirect energy emissions from the purchase of electricity from the national grid. Location-based grid emission factors used for local facilities are based on the Department of Energy (Philippines).
Water Unit 2019 Performance 2020 Performance Water Consumption cu.m 117,292.84 194,254.87 Water Withdrawal cu.m 248,211,000.00 265,006,345.08
This table refers to water consumed by ACEN plants from local water supply lines, as well as surface water sourced by SLTEC from Balayan Bay
Hazardous Waste Generated by Type Unit 2019 Performance 2020 Performance Batteries kg 1,300.00 1,215.60 Electronic waste kg 465.00 4,344.45 Used oil kg 975,792.98 985,409.02 Busted fluorescent lamps kg 267.60 333.52 Oil contaminated materials kg 63,001.70 1,431,801.80 Chemical contaminated materials kg 50.00 2,338.00 Other hazardous wastes kg 1,782.00 804.80
Other hazardous wastes include plant-specific wastes such as clinical waste, resinous material
Flyash Management Unit 2019 Performance 2020 Performance Flyash generated tons 44,277.15 60,955.65 Percentage of flyash recycled % 92.35 81.72
81 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 82 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES ANNEXES
Human Capital Performance Indices INDEPENDENT ASSURANCE STATEMENT
Employee Headcount Permanent Employees by Gender Introduction DNV GL AS Philippines Branch (“DNV”) has been commissioned by the management of AC Energy Total Permanent 2019 2020 2019 2020 Corporation (“AC Energy” or “the Company”, SEC Identification Number: 069-039274) to undertake an Employees 428 649 Male Female Male Female independent assurance of the sustainability/non-financial disclosures in AC Energy’s 2020 Integrated 328 100 488 161 Report (the “Report”) in its printed format for the year ended 31st December 2020. The intended users of this Assurance Statement are the management of the Company. Hires and Turnover 2019 2020 We performed this assurance engagement using DNV’s assurance methodology VeriSustainTM, which is based on our professional experience, international assurance best practice including International New Employee Hires Total Employee Turnover New Employee Hires Total Employee Turnover Standard on Assurance Engagements (ISAE) 3000 Revised*, along with the Global Reporting Initiative’s 67 53 90 63 (“GRI’s”) Principles for Defining Report Content and Report Quality and the Sustainability Accounting Permanent Employees by Age Standards Board’s (“SASB’s”) industry-specific Standards. The verification engagement was carried out during December 2020 - April 2021. 2019 2020 Under 30 years Over 50 years Under 30 years Over 50 years old 30-50 years old old old 30-50 years old old We understand that the reported financial data a nd related information are based on statutory disclosures and Audited Financial Statements#, which are subject to a separate independent statutory audit process. 153 188 87 222 332 95 We did not review financial disclosures and data a s they are not within the scope of our assurance Permanent Employees by Position engagement. 2019 2020 We planned and performed our work to obtain the evidence we considered necessary to provide a basis Middle Senior Middle Senior Rank-and-file Management Management Rank-and-file Management Management for our assurance opinion related to assurance of non-financial sustainability disclosures in this Report. We are providing a ‘limited level’ of assurance based on DNV’s VeriSustain, and no external stakeholders were 54 350 24 208 388 53 interviewed as part of this assurance engagement. Training Hours by Position Training Hours by Position
2019 2020 The engagement excludes the sustainability management, performance, and reporting practices of AC Energy’s suppliers, contractors, and any third parties mentioned in the Report. The Company’s position Employee Total Training Average Employee Total Training Average Position Hours Training Hours Position Hours Training Hours statements, the statements for the management approach, and case studies and examples are excluded from the scope of our work. Rank-and-file 584 11 Rank-and-file 4,789 23 Middle Middle Responsibilities of the Management of AC Energy Corporation and of the Assurance Provider Management 5,371 15 Management 4,400 11 The Board of AC Energy has sole responsibility for the preparation of the Report and is responsible for Senior Senior all information provided in the Report as well as the processes for collecting, analysing and reporting the Management 106 4 Management 840 16 information presented in the Report. AC Energy has stated that this Report has been prepared based on the Training Hours by Gender Training Hours by Gender Guiding Principles and Content Elements of the International
Female 1,469 15 Female 3,280 20 DNV’s assurance engagements are based on the assumption that the data a nd information provided by Total Training Hours Total Training Hours the Company to us as part of our review have been provided in good faith, true, and free from material Total Employee Training Hours 6,061 Total Employee Training Hours 10,029 misstatements. Because of the selected nature (sampling) and other inherent limitation of both procedures and systems of internal control, there remains the unavoidable risk that errors or irregularities, possibly Company-wide Average Training Company-wide Average Training Hours 14.16 Hours 15 significant, may not have been detected. DNV was not involved in the preparation of any statement or datum included in the Report except for this Assurance Statement. DNV expressly disclaims any liability or Occupational Health and Safety co-responsibility for any decision a person or an entity may make based on this Assurance Statement. 2019 2020 Tota l Tota l Tota l Safe Tota l Tota l Tota l Safe Our verification engagement included a limited level of verification of sustainability performance disclosures number number of number of manhours number number of number of manhours for the identified material topics of AC Energy. This is as identified under the reporting boundary which of non- disabling fatalities of non- disabling fatalities disabling injuries for disabling injuries for has been brought out in the Report in the section “Materiality”, that is, covering entities over which AC injuries for employees injuries for employees Energy has operational control or has seconded employees in operations. Our verification applies a ±5% employees employees uncertainty threshold towards errors and omissions for the performance data brought out in the Report. 15 0 0 2,543,234 109 14 1 7,256,162
This table includes Occupational Health and Safety data for both direct and indirect workers at the plant level.
1 The VeriSustain protocol is available on dnv.com. * Assurance Engagements other than Audits or Reviews of Historical Financial Information. # Dated 8th March 2021
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Basis of our Opinion and Limitations We planned and performed our work to obtain the evidence considered necessary to provide a basis for Materiality our assurance opinion. As part of our assurance engagement, we adopted a risk-based approach, i.e. The process of determining the issues that are most relevant to an organization and its stakeholders. we concentrated our verification efforts on the issues of high material relevance to AC Energy and its key stakeholders. A multi-disciplinary team of sustainability and assurance specialists reviewed non-financial Nothing has come to our attention to suggest that the Report does not meet the requirements related to disclosures related to the Head Office at Makati City, and selected entities of AC Energy (South Luzon the Principle of Materiality. Thermal Energy Corporation (SLTEC) and North Luzon Renewables Corp. (NLR) in the Philippines), based The Report presents a description of how the Company carried out a materiality assessment exercise on DNV’s sampling plan. Due to the outbreak of the COVID-19 pandemic and associated travel restrictions, considering the SASB Materiality Map, GRI Standards and other global environmental, social and we carried out remote assessments as one-to-one discussions and onsite location assessments were not governance (ESG) standards, as well as the Company’s business strategy, capitals and stakeholder feasible. We undertook the following activities: concerns. The process also involved prioritization of the topics identified for bringing out within the Report, considering views from various internal stakeholders and validation and review by the senior management ● Review of the non–financial sustainability disclosures in this Report; teams. ● Review of approaches to materiality determination and stakeholder engagement; DNV did not have any direct engagement with external stakeholders; Responsiveness ● Review of information provided to us by the Company on its reporting and management processes The extent to which an organization responds to stakeholder issues. related to sustainability performance for the reporting year based on the reporting framework adopted by AC Energy; Nothing has come to our attention to suggest that the Report does not meet the requirements related to ● Interviews with selected members of leadership team, and senior managers responsible for management the Principle of Responsiveness. of sustainability issues and review of selected evidence to support issues discussed. We were free to The Report brings out AC Energy’s responses and strategies related to identified material topics and key choose interviewees and interviewed those with overall responsibility for the programmes to deliver the stakeholder concerns through disclosures on management approach, governance, policies and appropriate targets for medium- and long-term vision, mission and milestones; performance indicators from selected GRI Topic Specific Standards and SASB accounting metrics. The ● Performed desk review of selected sustainability parameters for sampled entities, and findings were Report also bring about the Company’s creation of value across the six capitals of
Stakeholder Inclusiveness Nothing has come to our attention to suggest that the Report does not meet the requirements related to The participation of stakeholders in developing and achieving an accountable and strategic the Principle of Completeness. response to Sustainability. The Report brings out the Company’s non-financial disclosures considering the Content Elements of the
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85 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 86 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES ANNEXES
Report of the Audit Committee to the Board of Directors For the Year Ended 31 December 2020
Nothing has come to our attention to suggest that the Report does not meet the requirements The Board-approved Audit Committee (“the Committee”) Charter defines the duties and responsibilities of related to the Principle of Neutrality. the Committee. In accordance with the Charter, the Committee assists the Board of Directors in fulfilling its The Report brings out disclosures related to the Company’s performance, challenges and concerns of oversight responsibilities to the shareholders with respect to the: stakeholders during the reporting period and corresponding to the macro-economic environment in a neutral, consistent and balanced manner, applying adequate consideration to not unduly influence stakeholders’ opinions made based on the reported data a nd information. ● Integrity of the Company’s financial statements and the financial reporting process; ● Appointment, remuneration, qualification, independence and performance of the external auditors Statement of Competence and Independence and the integrity of the audit process as a whole; DNV applies its own management standards and compliance policies for quality control, in accordance ● Effectiveness of the system of internal control; with ISO/IEC 17021:2015 - Conformity Assessment Requirements for bodies providing audit and certi cation fi ● Performance and leadership of the internal audit function; and of management systems, and accordingly maintains a comprehensive system of quality control including ● Company’s compliance with applicable legal and regulatory requirements. documented policies and procedures regarding compliance with ethical requirements, professional standards, and applicable legal and regulatory requirements. We have complied with the DNV Code of In compliance with the Audit Committee Charter, we confirm that: Conduct during the assurance engagement and maintain independence wherever required by relevant ethical requirements. ● All the Audit Committee members are independent directors, including the Chairman;
This engagement work was carried out by an independent team of sustainability assurance professionals. ● We had four (4) regular meetings and two (2) special meetings with Management, internal auditors DNV was not involved in the preparation of any statement or datum included in the Report except for this and external auditors and one (1) executive meeting with internal auditors and external auditors; Assurance Statement. DNV maintains complete impartiality toward internal stakeholders interviewed during the assurance process. ● We recommended for approval of the Board and endorsement to the shareholders the reappointment of SGV & Co. as the Company’s 2020 external auditors and the related audit fee; DNV has provided assurance to Ayala Corporation, Manila Water Company Inc., Ayala Land Inc., Globe Telecom, Inc and the Bank of Philippine Islands. In our opinion, there is no con ict of interest in the fl ● We reviewed and discussed the quarterly unaudited and the annual audited parent and consolidated assurance engagement provided to the business units of Ayala Group. DNV did not provide any service financial statements of AC Energy Corporation (ACEN) and Subsidiaries, including the Management’s to AC Energy in 2020 that could compromise the independence or impartiality of our work. Discussion and Analysis of Financial Condition and Results of Operations and the significant impact of new accounting standards, with management, internal auditors and SGV & Co. These activities were performed in the following context: - Management has the primary responsibility for the financial statements and the financial reporting process; and - SGV & Co. is responsible for expressing an opinion on the conformity of the AC Energy Corporation’s audited parent and consolidated financial statements with the Philippine Financial Reporting Standards.
● We reviewed the Pro Forma Condensed Consolidated Financial Information as at September 30, 2020 and for the Nine-Month Period Ended September 30, 2020 and Year Ended December 31, 2019 showing the impact of the infusion of the offshore and on-shore assets of AC Energy and Infrastructure Corp. to ACEN for inclusion in the Offering Circular in relation to the stock rights offering;
● We approved the overall scope and the respective audit plans of the Company’s internal auditors and SGV & Co. We reviewed the adequacy of resources, the competencies of staff and the effectiveness 7th April 2021, Manila, Philippines of the auditors to execute the audit plans ensuring that resources are reasonably allocated to the DNV GL AS Philippines Branch is part of DNV – Business Assurance, a global provider of certification, verification, assessment and areas of highest risks. We also discussed the results of their audits, their assessment of the Company’s training services, helping customers to build sustainable business performance. www.dnv.com internal controls, and the overall quality of the financial reporting process including their management letter of comments;
● We evaluated the effectiveness of the internal audit function, including compliance with the International Standards for the Professional Practice of Internal Auditing;
● We reviewed the reports and updates of the internal and external auditors ensuring that management is taking appropriate corrective actions in a timely manner, including addressing internal control and
2 The DNV Code of Conduct is available from the DNV website (www.dnv.com)
87 AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 88 INTRODUCTION 2020 HIGHLIGHTS MESSAGE CREATING VALUE GOVERNANCE ANNEXES
Corporate Information
compliance issues. Based on the assurance provided by the internal audit as well as SGV & Co. as a Stakeholder Inquiries Financial Statements result of their audit activities, the Committee assessed that the Company’s system of internal controls, risk management, compliance, and governance processes are adequate; AC Energy Corporation welcomes AC Energy Corporation’s 2020 Audited inquiries from analysts, the financial Financial Statements and Definitive ● We reviewed and approved all audit, audit-related and non-audit services provided by SGV & Co. to community, institutional and retail Information Statement may be AC Energy Corporation and the related fees. We also assessed the compatibility of non-audit services investors, customers, media and the accessed from www.acenergy.ph with the auditors’ independence to ensure that such services will not impair their independence; general public. Please contact:
● We conducted an annual assessment of our performance, in accordance with Securities and Investors Shareholder Services Exchange Commission guidelines, and confirmed that the Committee had satisfactorily performed [email protected] and Assistance its responsibilities based on the requirements of its Charter; and Corporate Communications For inquiries regarding dividend ● We reviewed the Audit Committee Charter to ensure that it is updated and aligned with & Sustainability payments, change of address and regulatory requirements. [email protected] account status, and lost or damaged stock certificates, please write or call: Based on the reviews and discussions undertaken, and subject to the limitations on our roles and Governance responsibilities referred to above, the Audit Committee recommends to the Board of Directors that the [email protected] BPI Stock Transfer Office audited financial statements be included in the Annual Report for the year ended December 31, 2020 3F BPI Buendia Center for filing with the Securities and Exchange Commission and the Philippine Stock Exchange. We are also Data Protection 372 Sen. Gil Puyat Avenue recommending the reappointment of SGV & Co. as AC Energy Corporation’s external auditors and the [email protected] Makati City, 1226 Philippines related audit fee for 2021 based on their performance and qualifications. Human Resources Tel + 632 85804693 to 95 [email protected] [email protected] 17 March 2021
Signed by:
MA. AURORA D. GEOTINA-GARCIA CONSUELO D. GARCIA MARIO ANTONIO V. PANER
Chairperson Member Member
Concept by Wunderman Thompson Execution by Ampersand Design Think Lab
89 AC ENERGY CORPORATION 2020 INTEGRATED REPORT AC ENERGY CORPORATION 4F 6750 OFFICE TOWER, AYALA AVENUE, MAKATI CITY, 1226 PHILIPPINES TEL: +632 7730 6300 acenergy.ph