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We performed this assurance engagement using DNV’s assurance methodology VeriSustainTM, which is based on our professional experience, international assurance best practice including International Standard on Assurance Engagements (ISAE) 3000 Revised*, along with the Global Reporting Initiative’s (“GRI’s”) Principles for Defining Report Content and Report Quality and the Sustainability Accounting Standards Board’s (“SASB’s”) industry-specific Standards. The verification engagement was carried out during December 2020 - April 2021.
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. We did not review financial disclosures and data a s they are not within the scope of our assurance engagement.
We planned and performed our work to obtain the evidence we considered necessary to provide a basis 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 interviewed as part of this assurance engagement.
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 statements, the statements for the management approach, and case studies and examples are excluded from the scope of our work.
Responsibilities of the Management of AC Energy Corporation and of the Assurance Provider The Board of AC Energy has sole responsibility for the preparation of the Report and is responsible for all information provided in the Report as well as the processes for collecting, analysing and reporting the information presented in the Report. AC Energy has stated that this Report has been prepared based on the Guiding Principles and Content Elements of the International <IR> Framework (the ”<IR> Framework”) and has adopted general disclosures and selected topic-specific disclosures related to identified material topics from the GRI Standards 2016, selected GRI Standards (2018 and 2020) as well as the SASB Standards 2018 (Electrical Utilities) and disclosures related to the Task Force for Climate-Related Disclosures.
DNV’s assurance engagements are based on the assumption that the data a nd information provided by the Company to us as part of our review have been provided in good faith, true, and free from material 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 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 co-responsibility for any decision a person or an entity may make based on this Assurance Statement.
Our verification engagement included a limited level of verification of sustainability performance disclosures for the identified material topics of AC Energy. This is as identified under the reporting boundary which has been brought out in the Report in the section “Materiality”, that is, covering entities over which AC Energy has operational control or has seconded employees in operations. Our verification applies a ±5% uncertainty threshold towards errors and omissions for the performance data brought out in the Report.
Employee Headcount Permanent Employees by Gender.
Total Permanent Employees 2019 2020 2019 2020 428 649 Male Female Male Female 328 100 488 161.
Hires and Turnover 2019 2020.
New Employee Hires Total Employee Turnover New Employee Hires Total Employee Turnover 67 53 90 63.
Permanent Employees by Age 2019 2020.
Under 30 years old 30-50 years old Over 50 years old Under 30 years old 30-50 years old Over 50 years old 153 188 87 222 332 95.
Permanent Employees by Position 2019 2020.
Rank-and-file Middle Management Senior Management Rank-and-file Middle Management Senior Management 54 350 24 208 388 53.
Training Hours by Position Training Hours by Position 2019 2020.
Employee Position Total Training Hours Average Training Hours Employee Position Total Training Hours Average Training Hours.
Rank-and-file 584 11 Rank-and-file 4,789 23.
Middle Management 5,371 15 Middle Management 4,400 11.
Senior Management 106 4 Senior Management 840 16.
Training Hours by Gender Training Hours by Gender.
Gender Total Training Hours Average Training Hours Gender Total Training Hours Average Training Hours.
Male 4,592 14 Male 6,749 14.
Female 1,469 15 Female 3,280 20.
Total Training Hours Total Training Hours.
Total Employee Training Hours 6,061 Total Employee Training Hours 10,029.
Company-wide Average Training Hours 14.16 Company-wide Average Training Hours 15.
Human Capital Performance Indices.
Project No.: PRJN-214527-2021-MSC-PHL 1 The VeriSustain protocol is available on dnv.com. * Assurance Engagements other than Audits or Reviews of Historical Financial Information. # Dated 8th March 2021.
Page 1 of 4.
Occupational Health and Safety 2019 2020.
Total number of nondisabling injuries for employees.
Total number of disabling injuries for employees.
Total number of fatalities.
Safe manhours Total number of nondisabling injuries for employees.
Total number of disabling injuries for employees.
Total number of fatalities.
Safe manhours 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.
ANNEXES.
AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 84 83.
MESSAGE INTRODUCTION ANNEXES CREATING VALUE GOVERNANCE 2020 HIGHLIGHTS
Basis of our Opinion and Limitations We planned and performed our work to obtain the evidence considered necessary to provide a basis for our assurance opinion. As part of our assurance engagement, we adopted a risk-based approach, i.e. 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 disclosures related to the Head Office at Makati City, and selected entities of AC Energy (South Luzon Thermal Energy Corporation (SLTEC) and North Luzon Renewables Corp. (NLR) in the Philippines), based on DNV’s sampling plan. Due to the outbreak of the COVID-19 pandemic and associated travel restrictions, we carried out remote assessments as one-to-one discussions and onsite location assessments were not feasible. We undertook the following activities: ● Review of the non–financial sustainability disclosures in this Report; ● Review of approaches to materiality determination and stakeholder engagement; DNV did not have any direct engagement with external stakeholders; ● Review of information provided to us by the Company on its reporting and management processes related to sustainability performance for the reporting year based on the reporting framework adopted by AC Energy; ● Interviews with selected members of leadership team, and senior managers responsible for management of sustainability issues and review of selected evidence to support issues discussed. We were free to choose interviewees and interviewed those with overall responsibility for the programmes to deliver the targets for medium- and long-term vision, mission and milestones; ● Performed desk review of selected sustainability parameters for sampled entities, and findings were discussed and resolved with the Corporate Sustainability Team; ● Carried out remote assessments with teams at SLTEC and NLR to review the processes and systems for preparing site level sustainability data a nd implementation of sustainability strategy. We were free to choose the sites for remote assessment or verification; ● Review of supporting evidence for key claims and data disclosed in the Report. Our verification processes were prioritized based on our risk-based approach, i.e. relevance of identified material topics and sustainability context of the business; and ● Review of the processes for gathering and consolidating the performance data a nd, for a sample, checking the data consolidation at site and corporate levels.
The procedures performed in a limited assurance engagement vary in nature and timing and are shorter in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained if a reasonable assurance engagement had been performed. During the assurance process, we did not come across limitations to the scope of the agreed assurance engagement.
Opinion and Observations On the basis of the assurance engagement undertaken, nothing has come to our attention to suggest that AC Energy’s 2020 Integrated Report does not properly describe the non-financial performance of identified material topics based on the Guiding Principles and Content Elements of the International <IR> Framework (“<IR> Framework”). Without affecting our assurance opinion, we also provide the following observations against the principles of VeriSustain:
Stakeholder Inclusiveness The participation of stakeholders in developing and achieving an accountable and strategic response to Sustainability.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Stakeholder Inclusiveness. The Report brings out investors and shareholders, customers, business partners and suppliers, government and regulators, employees and community as the key stakeholder groups with whom the Company actively engages and collaborates to create long term shared value. The Report explains the various formal and informal modes of engagement through which AC Energy understands various needs and concerns of stakeholders and involve them in business processes.
Project No.: PRJN-214527-2021-MSC-PHL Page 2 of 4.
Materiality The process of determining the issues that are most relevant to an organization and its stakeholders.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Materiality. The Report presents a description of how the Company carried out a materiality assessment exercise considering the SASB Materiality Map, GRI Standards and other global environmental, social and governance (ESG) standards, as well as the Company’s business strategy, capitals and stakeholder 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 teams.
Responsiveness The extent to which an organization responds to stakeholder issues.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Responsiveness. The Report brings out AC Energy’s responses and strategies related to identified material topics and key stakeholder concerns through disclosures on management approach, governance, policies and appropriate performance indicators from selected GRI Topic Specific Standards and SASB accounting metrics. The Report also bring about the Company’s creation of value across the six capitals of <IR> framework and how it measures its impact on the economy, society and environment; however, the Company may strengthen its disclosures related to interconnectedness of different capitals as well as disclosures on long-term targets and strategies towards value creation related to identified material topics.
Reliability The accuracy and comparability of information presented in the report, as well as the quality of underlying data management systems.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Reliability. The majority of the performance disclosures verified through offsite verification, i.e. at the Head Office and sampled sites, and through desk reviews and remote verification, were found to be fairly accurate, reliable, identifiable and traceable to the source. Considering the limited sampling, we did not detect any major errors related to data collection or aggregation. We also reviewed the calculations and related assumptions used for its suitability, taking into account the principle of Reliability. Some of the data inaccuracies identified during the verification process were found to be attributable to interpretation and aggregation errors. These identified errors were communicated, and the responses and corrections made to the reported data a nd information were reviewed.
Completeness How much of all the information that has been identified as material to the organization and its stakeholders is reported.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Completeness. The Report brings out the Company’s non-financial disclosures considering the Content Elements of the <IR> framework while its performance during the reporting period related to its identified material issues for the identified boundary of operations in the Philippines are brought out using appropriate GRI Topic Specific Standards and Sustainability Accounting Standards Board (SASB) accounting metrics.
Neutrality The extent to which a report provides a balanced account of an organization’s performance, delivered in a neutral tone.
Project No.: PRJN-214527-2021-MSC-PHL Page 3 of 4.
ANNEXES.
AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 86 85.
MESSAGE INTRODUCTION ANNEXES CREATING VALUE GOVERNANCE 2020 HIGHLIGHTS
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Neutrality. The Report brings out disclosures related to the Company’s performance, challenges and concerns of 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.
Statement of Competence and Independence DNV applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC 17021:2015 - Conformity Assessment Requirements for bodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control including 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 Conduct during the assurance engagement and maintain independence wherever required by relevant ethical requirements.
This engagement work was carried out by an independent team of sustainability assurance professionals. DNV was not involved in the preparation of any statement or datum included in the Report except for this Assurance Statement. DNV maintains complete impartiality toward internal stakeholders interviewed during the assurance process.
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 conflict of interest in the assurance engagement provided to the business units of Ayala Group. DNV did not provide any service to AC Energy in 2020 that could compromise the independence or impartiality of our work.
7th April 2021, Manila, Philippines.
DNV GL AS Philippines Branch is part of DNV – Business Assurance, a global provider of certification, verification, assessment and training services, helping customers to build sustainable business performance. www.dnv.com 2 The DNV Code of Conduct is available from the DNV website (www.dnv.com)
The Board-approved Audit Committee (“the Committee”) Charter defines the duties and responsibilities of the Committee. In accordance with the Charter, the Committee assists the Board of Directors in fulfilling its oversight responsibilities to the shareholders with respect to the: ● Integrity of the Company’s financial statements and the financial reporting process; ● Appointment, remuneration, qualification, independence and performance of the external auditors and the integrity of the audit process as a whole; ● Effectiveness of the system of internal control; ● Performance and leadership of the internal audit function; and ● Company’s compliance with applicable legal and regulatory requirements.
In compliance with the Audit Committee Charter, we confirm that: ● All the Audit Committee members are independent directors, including the Chairman; ● We had four (4) regular meetings and two (2) special meetings with Management, internal auditors and external auditors and one (1) executive meeting with internal auditors and external auditors; ● 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; ● We reviewed and discussed the quarterly unaudited and the annual audited parent and consolidated financial statements of AC Energy Corporation (ACEN) and Subsidiaries, including the Management’s 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 of the auditors to execute the audit plans ensuring that resources are reasonably allocated to the areas of highest risks. We also discussed the results of their audits, their assessment of the Company’s 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.
Report of the Audit Committee to the Board of Directors For the Year Ended 31 December 2020.
ANNEXES.
AC ENERGY CORPORATION 2020 INTEGRATED REPORT Enabling Sustainable Recovery 88 87.
MESSAGE INTRODUCTION ANNEXES CREATING VALUE GOVERNANCE 2020 HIGHLIGHTS
MA. AURORA D. GEOTINA-GARCIA.
Chairperson.
CONSUELO D. GARCIA.
Member.
MARIO ANTONIO V. PANER.
Member compliance issues. Based on the assurance provided by the internal audit as well as SGV & Co. as a result of their audit activities, the Committee assessed that the Company’s system of internal controls, risk management, compliance, and governance processes are adequate; ● We reviewed and approved all audit, audit-related and non-audit services provided by SGV & Co. to AC Energy Corporation and the related fees. We also assessed the compatibility of non-audit services with the auditors’ independence to ensure that such services will not impair their independence; ● We conducted an annual assessment of our performance, in accordance with Securities and Exchange Commission guidelines, and confirmed that the Committee had satisfactorily performed its responsibilities based on the requirements of its Charter; and ● We reviewed the Audit Committee Charter to ensure that it is updated and aligned with regulatory requirements.
Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the Audit Committee recommends to the Board of Directors that the audited financial statements be included in the Annual Report for the year ended December 31, 2020 for filing with the Securities and Exchange Commission and the Philippine Stock Exchange. We are also recommending the reappointment of SGV & Co. as AC Energy Corporation’s external auditors and the related audit fee for 2021 based on their performance and qualifications.
17 March 2021.
Signed by:
Corporate Information.
Stakeholder Inquiries.
AC Energy Corporation welcomes inquiries from analysts, the financial community, institutional and retail investors, customers, media and the general public. Please contact:
Investors investorrelations@acenergy.com.ph.
Corporate Communications & Sustainability corpcomm@acenergy.com.ph.
Governance corpsec.acen@acenergy.com.ph.
Data Protection dataprivacyaceph@acenergy.com.ph.
Human Resources careers@acenergy.com.ph.
Financial Statements.
AC Energy Corporation’s 2020 Audited Financial Statements and Definitive Information Statement may be accessed from www.acenergy.ph.
Shareholder Services and Assistance.