Manila Electric Co. · PSE:MER
Manila Electric — H1 2022 Earnings Presentation
38 slides from Manila Electric's earnings presentation, Jul 25, 2022
Slide 1: Half Year Ended June 30, 2022 Financial and Operating Results
HALF YEAR ENDED JUNE 30, 2022 FINANCIAL AND OPERATING RESULTS July 25, 2022
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS This presentation is prepared for the parties presently invited for the purpose of discussion. This presentation has consequential limitations and is not a comprehensive discussion about MANILA ELECTRIC COMPANY AND ITS SUBSIDIARIES (Meralco). These materials are restricted to t
Slide 3: Financial Results
HALF YEAR ENDED JUNE 30, 2022 FINANCIAL RESULTS July 25, 2022
Slide 4: Financial Highlights in PhP, Mn
1H 2022 Financial Highlights in PhP, Mn With 1H 2021 comparative figures NET INCOME AND CASH AND EBITDA REVENUES EXPENSES BORROWINGS CCNI Gross Revenues Purchased Power Cost Cash & Cash Equivalents 13,088 199,606 148,412 49,999 p 15% 11,399 p 34% 149,097 p 40% 106,044 q 3% 51,812 Coal and Fuel/ Repo
Slide 5: Revenues in PhP, Mn
1H 2022 Revenues in PhP, Mn Driven by growth in power generation revenues and increase in pass-through charges with the global increase in fuel prices. 4
Slide 6: Cost and Expenses, Capital Expenditures in PhP, Mn
1H 2022 Cost and Expenses, Capital Expenditures in PhP, Mn Purchased power costs accounted for 79% of total Costs and Expenses. DU CAPEX largely from electric capital projects to support new connections, asset renewals and load growth. 5
Slide 7: Net Income and EBITDA in PhP, Mn
1H 2022 Net Income and EBITDA in PhP, Mn Increase in CCNI driven by continued contribution from power generation and higher DU volumes. 6
Slide 8: Power Generation Results of Operations
1H 2022 Power Generation Results of Operations CCNI contribution from power generation as a result of PacificLight’s turnaround performance driven by the increasing demand in Singapore and higher margin on spot prices, SBPL and BulacanSol’s continued delivery to Meralco under 20-year PSAs. (Php 517
Slide 9: Credit and Debt Profile in PhP, Mn
1H 2022 Credit and Debt Profile in PhP, Mn (except ratios) 8
Slide 10: Earnings per Share and Dividends in PhP per share
1H 2022 Earnings per Share and Dividends in PhP per share Increasing shareholder value with declaration of Php 5.806 per share interim dividends, representing 50% of 1H 2022 Core Earnings per Share. 9
Slide 11: Operating Results
HALF YEAR ENDED JUNE 30, 2022 OPERATING RESULTS July 25, 2022
Slide 12: Operational Highlights
1H 2022 Operational Highlights BUSINESS DRIVERS SERVICE PERFORMANCE ELECTRICITY RATE per kWh Energy Sales System Loss Average Retail Rate 23,968 GWh 5.86% PhP 9.33 ▲ 6% vs. 2021 ▲ 0.03%PT, 12-MMA vs. 2021 ▲ 18%, vs 2021 Customer Count System Average Interruption Frequency Index 7.519 M 0.660 times ▲
Slide 13: Consolidated Energy Sales in GWh
1H 2022 Consolidated Energy Sales in GWh Surpassed pre-pandemic levels as total energy sales increased 6% vs. 2021 driven by double-digit growth from Commercial segment 23,968 22,823 22,663 21,665 21,139 ▲ 6% 7,085 Industrial 6,656 6,781 30% 6,379 29% 5,523 30% 30% 26% 8,305 Commercial 8,951 7,430 7
Slide 14: DU Energy Sales Profile and Drivers
1H 2022 DU Energy Sales Profile and Drivers 2022 2021 2020 GWh RESIDENTIAL ▲ 2%, YTD GWh COMMERCIAL ▲ 11%, YTD GWh INDUSTRIAL ▲ 4%, YTD 2,000 2,000 2,000 1,500 1,500 1,500 1,000 1,000 1,000 500 500 500 0 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Slide 15: Consolidated Customer Count in M
1H 2022 Consolidated Customer Count in M Sustained PCA and OSA performance driven by energizations of mixed-use buildings, subdivisions, and telecoms customers Project-covered Applications (PCA) 2021 7.519 2022 7.274 0.011 912 0.011 Industrial 0.562 8% Commercial 787 722 724 781 0.549 662 651 670 67
Slide 16: Consolidated NSI in GWh
1H 2022 Consolidated NSI in GWh Higher vs. pre-pandemic performance driven by recovery across all customer segments Power Fuel Sources Mix Special Solar 1% Contracts 1% Liquid Fuel 25,289 7% WESM 4% 24,299 23,868 22,942 22,458 ▲ 6% 23% New PSA 28% Multi-fuel 31% RES 33% Coal 38% IPP/ 34% Natural Gas
Slide 17: Peak Demand in MW
1H 2022 Peak Demand in MW Meralco and Luzon peaks above 2021 due to heightened activities amid Alert Level 1 Luzon 12,113 11,640 Meralco ▲ 4% 8,111 7,808 ▲ 4% May 27, 2021 May 13, 2022 May 28, 2021 May 12, 2022 16
Slide 18: System Loss in %, 12-MMA
1H 2022 System Loss in %, 12-MMA Slightly higher vs. 2021 due to ramp up in consumption towards latter part of June supply month, but still below cap 6.5% SYSTEM LOSS CAP 2020-2021 6.44 6.19 6.18 6.14 6.08 6.10 6.03 5.96 5.97 6.07 5.96 6.02 5.88 5.83 5.89 5.90 5.85 5.83 5.86 5.75 5.76 5.64 5.51 2021
Slide 19: S-Factor Performance and Guaranteed Service Levels (GSL)
1H 2022 S-Factor Performance and Guaranteed Service Levels (GSL) Continued to deliver well within performance ceilings despite slight increase in SAIFI SAIFI times SAIDI CAIDI in minutes Rewards < 6.98 in minutes Rewards < 144.40 Network ▲ 1% ▼ 4% ▼ 4% • % Probability of Voltage Violation at 0.660 0
Slide 20: Networks CapEx in PhP, B
1H 2022 Networks CapEx in PhP, B 40% of CapEx budget utilized with ~90% of spend in new connections, asset renewals, and load growth, while continuing to support BBB and DPWH projects PhP 21.91B CapEx Budget 6.92 New Connections Pole Relocation Program BUILD, BUILD, BUILD (BBB) DPWH ROAD WIDENING 3.
Slide 21: Development of Commonwealth GIS Substation
Networks Project Updates Development of Commonwealth Gas-Insulated Switchgear (GIS) Substation • Commissioned 83 MVA power transformer bank 1 and distribution feeder on April 12, 2022 as part of RY2019 CAPEX filing (PhP 606M) • Implemented to: - Unload critically-loaded power transformer banks in Di
Slide 22: Development of Escoda GIS Substation
Networks Project Updates Development of Escoda GIS Substation • Commissioned 83 MVA power transformer bank 1 and three distribution feeders on April 28, 2022 as part of RY2016 CAPEX filing (PhP 436M) • Implemented to: - Relieve loading of Paco transformer banks 1 and 2, and Tegen transformer banks 7
Slide 23: Commissioning of Parang-San Mateo 115 kV Line
Networks Project Updates Commissioning of Parang-San Mateo 115 kV Line • Commissioned on May 6, 2022 as part of San Mateo Substation Development RY2017 CAPEX filing • Implemented to: - Provide needed N-1 contingency for Parang, San Mateo, and Commonwealth substations, improving operational switching
Slide 24: NLEX-SLEX Connector Road Pole Relocation
BBB/PPP Pole Relocation Project Updates NLEX-SLEX Connector Road • 8-km, 4-lane, all-elevated expressway - C3 Road Caloocan Interchange to PUP Sta. Mesa, Manila - Connects to Skyway Stage 3 and mostly traverses PNR Rail Track • Relocated 1,121 poles - June: Relocated 68 poles including those along P
Slide 25: PNR North Rail Transit Pole Relocation
BBB/PPP Pole Relocation Project Updates PNR North 1 Rail Transit • 38-km urban rail transit - Part of North-South Commuter Railway (NCSR) - Connects Malolos City, Bulacan with Tutuban, Manila - Consists of 10 stations for construction • Relocated 470 poles - June: Relocated 72 poles allowing complet
Slide 26: Average Retail Rate in PhP per kWh
1H 2022 Average Retail Rate in PhP per kWh 18% increase vs. 1H 2021 due to higher generation, transmission, system loss charges, and taxes • 29.6% increase in Generation: Higher fuel costs, Peso depreciation, Average Rate 9.33 and higher WESM prices per Customer Segment 5.84 • 13.6% increase in Tran
Slide 27: ERC Decision on Maximum Average Price for RY2012-2015
Regulatory Updates ERC Decision on Maximum Average Price (MAP) for RY2012-2015 • June 10, 2022: Decision on ERC Cases 2010-069RC (3RP), 2011-088RC (MAP 2012), 2012-054RC (MAP 2013), 2013-056RC (MAP 2014), and 2014-029RC (MAP 2015) recognizing “intertwined and causal relationship” between 3RP Opening
Slide 28: ERC Decision on Interim Average Rate for Lapsed Period
Regulatory Updates ERC Decision on Interim Average Rate (IAR) for Lapsed Period • June 16, 2022: Decision on ERC Case 2015-112RC, Meralco’s proposed IAR due to lack of rules governing 4RP • Due to revision in Meralco’s 3RP Opening RAB and CapEx, Smoothed MAP (SMAP) for RY2012-2015 recalculated, and
Slide 29: ERC Decision on Confirmation of Lapsed Period and AWAT Refund
Regulatory Updates ERC Decision on Confirmation of Lapsed Period Calculation and Final Actual Weighted Average Tariff (AWAT) Refund • June 16, 2022: Decision on ERC Case 2020-043RC adopting confirmation and true-up process in determining the Lapsed Period rates, by factoring in adjustments made in M
Slide 30: Summary of PBR Refunds
Regulatory Updates Summary of PBR Refunds Rate Refund DRTU-1: AWAT vs AWAT (July 2015-Nov 2020) Basis 1.4414 Amount IAR for Jul 2015 to Less: Interim Average Rate (IAR) 1.3810 Nov 2020 Difference 0.0604 PhP 13.9B Excess over Excess over 1.3810 1.3810 + DRTU-2: AWAT vs AWAT (Dec 2020-Dec 2021) 1.4794
Slide 31: Supreme Court Decision on November 2013 Billing Charge 1/2
Regulatory Updates Supreme Court Decision on Staggered Approval of November 2013 Supply Month Billing Charge 1/2 DECISION (Voting 6-5) • July 6, 2022: Received Supreme Court (SC) Decision resolving consolidated petitions: - G.R. No. 210245 – Partylist reps. (Bayan Muna, Gabriela, ACT Teacher and Kab
Slide 32: Supreme Court Decision on November 2013 Billing Charge 2/2
Regulatory Updates Supreme Court Decision on Staggered Approval of November 2013 Supply Month Billing Charge 2/2 RULING • Affirmed validity of December 9, 2013 ERC letter granting Meralco’s proposal on staggered recovery of generation costs - ERC has not acted with grave abuse of discretion. ERC act
Slide 33: Meralco MSCI ESG Ratings (2018-2022)
#PoweringTheGoodLife Meralco MSCI ESG Ratings (2018-2022) MSCI upgrades Meralco to BBB in latest ESG ratings ESG Ratings • 8,500+ companies rated on general and industry-specific ESG issues MSCI ESG ratings (Philippine companies) COMPANY RATING • Rating system: 0 / CCC (lowest) to 10 / AAA (highest)
Slide 34: Meralco part of WBA SDG2000
#PoweringTheGoodLife Meralco now part of World Benchmarking Alliance’s (WBA) SDG2000 Meralco now part of SDG2000 and included in two benchmarks: • 200+ non-profit organizations and financial institutions that develop seven benchmarks to 1. Urban Transformation: drive private sector engagement toward
Slide 35: Power Generation Operating Results
HALF YEAR ENDED JUNE 30, 2022 POWER GENERATION OPERATING RESULTS July 25, 2022
Slide 36: Highlights: Energy Delivered in GWh
1H 2022 Highlights Energy Delivered in GWh YTD YTD • MGen Group energy delivered at 6,562 GWh, 6% lower vs. % change 2022 2021 6,963 GWh in 1H 2021 due to outages • GBP energy delivered at 2,361 GWh, a decline of 7% vs. 2,533 GWh in 1H 2021 due to impact of typhoon Odette and outages 2,361 2,533 ▼ 7
Slide 37: Renewable Energy Development
Renewable Energy Development • Target of 1,500 MW renewable energy (RE) capacity in next 5-7 years • RE Projects under Construction: - 75 MWac solar in Baras, Rizal (in partnership with Mitsui) - 68 MWac solar in Ilocos Norte (in partnership with Vena) • RE Projects under Development: - 45 MWac sola
Slide 38: Thank You
THANK YOU & AC be
Manila Electric Company (Meralco) — H1 2022 Earnings Presentation on 6ix