Manila Electric Co. · PSE:MER
Manila Electric — H1 2020 Earnings Presentation
44 slides from Manila Electric's earnings presentation, Jul 27, 2020
Slide 1: Financial and Operating Results
ate ANCIAL AND 1 OPERATING RESULTS Investors and Analysts Briefing July 27, 2020
Slide 2: Financial Highlights 1H 2020
Slide 3: Net Income & EBITDA, Revenues, Expenses, Cash and Borrowings
NET INCOME & CASH AND REVENUES EXPENSES EBITDA BORROWINGS CCNI GROSS REVENUES PURCHASED POWER COST CASH & CASH ₱10,588 14.0% ₱142,254 13.8% ₱104,147 17.8% EQUIVALENTS ₱27,580 1.0% REPORTED INCOME DISTRIBUTION REVENUE OPERATING EXPENSES ₱6,844 43.0% ₱33,365 2.8% ₱13,783 9.0% BORROWINGS
Slide 4: Revenues
164,953 164,953 142,254 32,455 142,254 Electricity Revenues = 161,267 Distribution revenues 33,365 89,575 Electricity Revenues = 138,631 Q2 72,225 128,812 Generation & other pass- through charges 105,266 Q1 70,029 75,378 Non-electricity revenues 3,623 3,686 1H 2020 1H 2019 1H 2020 1H 2019
Slide 5: Costs and Expenses; Capital Expenditures
13,271 4,045 10% Costs and Expenses 13,783 3% 10% 104,147 77% Purchased Power Operating Expenses Depreciation & Amortization Other Expenses 10,708 Capital Expenditures Generation 1,703 25% Others 6,860 24% Subtransmission & Distribution 51% 1H 2020 1H 2019
Slide 6: EBITDA and Income Margins
10.8% 12.1% 8.0% 12.1% Margins 7.4% 7.5% 4.8% 7.3% 19,879 19,879 15,368 11,051 11,051 12,317 12,007 Q2 6,960 11,395 10,588 6,719 6,336 6,300 4,864 6,844 8,408 8,828 8,828 4,225 Q1 5,095 5,724 5,598 5,671 2,619 1H 2020 1H 2019 1H 2020 1H 2019 1H 2020 1H 2019 1H 2020 1H 2019 Core EBITDA Reported E
Slide 7: Total Debt
TOTAL DEBT (in Million PhP) 40,900 12,459 31,261 (in Million PhP, Except Ratios) 1H 2020 1H 2019 15,944 28,441 Cash & Cash Equivalents 27,580 27,319 15,317 Gross Debt 40,900 31,261 1H 2020 1H 2019 Net Debt 13,320 3,942 Current Portion Non-current Portion Gross Debt/EBITDA 1.8 0.8 LONG-TERM DEBT REPA
Slide 8: Earnings and Dividends Per Share
Earnings and Dividends Per Share (in PhP) REPORTED AND CORE EARNINGS PER SHARE DIVIDENDS DECLARED (in PhP Per Share) (in PhP Per Share) 10.653 10.928 9.394 6.072 5.464 4.697 Earnings Per Share Core Earnings Per share 1H 2020 1H 2019 1H 2020 1H 2019 Pay-out Ratio 50% 50%
Slide 9: Rating Highlights
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Slide 10: Performance Highlights 2020 vs. 2019
PERFORMANCE HIGHLIGHTS presi ace 2020 vs. 2019 BUSINESS DRIVERS SERVICE PERFORMANCE CONSOLIDATED ENERGY SALES* SYSTEM LOSS 21,139 GWh 5.66% vI% 0.19 %PT, 12-MMA CONSOLIDATED CUSTOMER COUNT SYSTEM AVE. INTERRUPTION 6.936M FREQUENCY INDEX a3% 0.662 V27% NET SYSTEM INPUT 4,158 GWh SYSTEM AVE. INTERRUPT
Slide 11: 1H 2020 Consolidated Energy Sales
1H 2020 CONSOLIDATED ENERGY SALES (in cwh) Reduction in volumes driven by impact of community quarantine 21,139 26% Industrial 35% Commercial 39% Residential ales volume of Parent is 99%, CEDC is 1% Flat streetlights account for <1 % 2017
Slide 12: 1H 2020 Monthly Energy Sales
1H 2020 MONTHLY ENERGY SALES (in cwn) Shift in sales mix as residential customers increased consumption; C&I Sector slowly ramped up during GCO 3,953 3,625 3,802 2,977 25% Industrial 28% Commercial iescwae 47% Residential t=) Sales volume of Parent is 99%, CEDC is 1% Flat streetlights account for <1
Slide 13: Energy Sales Drivers
it 1H 2020 E N E R GY SA L E S D R | V E R n) @sidential consumption rose in April, peaked in May and gradually in GWh normalized in June = Start of rainy season dampened sales on certain days COMMERCIAL More businesses allowed to operate and less restrictions on mobility - BPOand Finance activities
Slide 14: June 2020 YTD Consolidated Customer Count
JUNE 2020 YTD CONSOLIDATED CUSTOMER COUNT (in my Closing in on rm customer mark 6.936 6.742 Industrial Commercial 0.525 Residential 6.209 5 92% Customer count of Parent is 99.9%, CEDC is 0.1%
Slide 15: 1H 2020 Energization
1H 2020 ENERGIZATION Steady recovery in energization of Projects and Ordinary Service Applications (OSA) 581 436 395 305 PROJECT COVERED APPLICATIONS (PCA) 213 175.9 170.7 187 ORDINARY SERVICE APPLICATIONS (OSA) x100
Slide 16: 1H 2020 Consolidated Net System Input
1H 2020 CONSOLIDATED NET SYSTEM INPUT (in wn) Reduction driven by community quarantine and Typhoon Ambo Parent is 99%, down by 8% vs. 2019 YTD CEDCis 1%, down by 15% vs. 2019 YTD YEAR TO DATE June 2019 June 2020
Slide 17: 1H 2020 Consolidated Net System Input
1H 2020 CONSOLIDATED NET SYSTEM INPUT (in cwh) ° 22,458 NETSYSTEM INPUT POWER SOURCES 1. 2 MIX IPPs/Old PSAs
Slide 18: 1H 2020 Peak Demand
JH 2020 PEAK DEMAND (in mw) Meralco and Luzon peaks lower vs. 2019 driven by COVID-19 11,344 *110,642 JUNE 2020 PEAK June 23 June 23 MERALCO LUZON
Slide 19: June 2020 System Loss Performance
JUNE 2020 SYSTEM LOSS PERFORMANCE (in %, 12-mma) . Improved by 0.19% points vs. 2019 and 1.34% points below cap SYSTEM LOSS CAP 7.25% 2019-2020 « 2018-2019 *
Slide 20: 1H 2020 S-Factor Performance (Network)
1H 2020 $-FACTOR PERFORMANCE (NETWORK) 7 Continued to achieve rewards levels across all performance indicators SAIFI SAIDI Forced and Pre-arranged e-arranged times in minutes 2019 2020 2019 2020 2019 2020 Rewards < 6.98 Rewards < 126.57 Rewards < 144.40 © % Probability of Voltage Violation - not con
Slide 21: 1H 2020 S-Factor Performance (Customer)
le 1H 2020 $-FACTOR PERFORMANCE (CUSTOMER) Continued to achieve rewards levels across all performance indicators* AVERAGE TIME TO PROCESS APPLICATIONS in days R PERFORMANCE 2019 2020 2019 2020 2019 2020 Rewards < 7.91 Rewards < 3.56 Rewards < 13.56 Rewards levels based on 3RP * Considering exclusion
Slide 22: RY2020 Guaranteed Service Levels (GSL)
le RY2020 GUARANTEED SERVICE LEVELS (GSL) Continued to deliver well within performance ceilings GSL1 Customers experiencing cumulative duration of sustained interruptions GSL2 mers experiencing a number of 1 jot provided on the day ‘sustained interruptions with the customer iration of supply to a cu
Slide 23: 1H 2020 Networks Capex
1H 2020 NETWORKS CAPEX (in Php, B) 51% of full year CapEx utilized as projects resume with lifting of ECO PhP 9.34B NETWORKS CAPEX 2.88 New Connections 2.42 2.39 Asset Renewals PhP 4.76B 51% UTILIZATION 2.27 Load Growth 0.75 Non-Network 0.55 Electrification 0.03 0.45 Build Build Build
Slide 24: Networks Project Updates: San Jose - Camarin Line
NETWORKS PROJECT UPDATES SAN JOSE - CAMARIN 115 KV LINE © Successfully energized on June 28 upon close coordination with NGCP © Benefits: - Unload Paco, Duhat, and Balintawak Delivery Point Substations - Provide N-1 contingency to Sector 1 © Major challenges in construction included negotiations for
Slide 25: Networks Project Updates: NAIA-3 Substation Expansion
NETWORKS PROJECT UPDATES EXPANSION OF NAIA-3 SUBSTATION (2ND BANK) @ May 28 - commissioned with additional capacity of 83 MVA and new feeder 420VX © Benefits: - Address forecasted critical loading (75%) of NAIA-3 Bank No. 1 - Improved service to locators in Newport City, NAIA Terminal 3 and areas of
Slide 26: Networks Project Updates: Maintenance and Customer Allocation
NETWORKS PROJECT UPDATES MAINTENANCE AND CUSTOMER ALLOCATION PROJECTS Maintenance Projects MayYTD JunYTD 2020 Target Pole replacement 1,148 1,315 11,862 Conductor shielding 1411 1,279 5/157 Meter replacement 49,345 64,633 161,925 Substation equipment 425 476 1115 replacement Pole relocated (DPWH-rel
Slide 27: Networks Project Updates: Meralco Electrification Program
NETWORKS PROJECT UPDATES MERALCO ELECTRIFICATION PROGRAM PROJECTS (PRIORITY 2 AND 3)* Estimate Estimated Seatie Uedate of ea Project Cost pe 47 energized; 87 ongoing construction; Bulacan aks BO UE IY 3 ongoing PROW acquisition Cavite 126 5,608 SN a eeu Pion e then design Lagune va SEP | HAO | Frog
Slide 28: Networks Project Updates: Build, Build, Build Projects
NETWORKS PROJECT UPDATES BUILD, BUILD, BUILD PROJECTS PIR North 2 4x ongoing Design PNR North © 362 out of 1,824 affected poles were relocated as of June 30, 2020 Items emer INLEX'SLEX Cormecton Rod 4e ongoing Design © Priority government projects: - BGC-Ortigas link - Skyway Stage 3 | — 148 out of
Slide 29: 1H 2020 Average Retail Rate
1H 2020 AVERAGE RETAIL RATE PhP 1.06 reduction vs. June 2019 YTD 9.25 m2 OVO PhP/kWh Generation © 17% decrease in Generation charge with the implementation of new PSAs, lower WESM prices and invocation of FM claims during the community quarantine periods. © 2% decrease in Transmission charge due to
Slide 30: Meralco PowerGen Corporation Overview of Operations
Meralco PowerGen Corporation Overview of Operations
Slide 31: San Buenaventura Power Limited Co. (SBPL)
31 San Buenaventura Power Limited Co. (SBPL) 500MW (gross) Supercritical Coal-Fired Power Plant in Mauban, Quezon ▪ First operational supercritical coal power plant in the Philippines ▪ Commercial operations started on September 26, 2019 ▪ Net generation at 2,290,289 MWH from September 2019 to June
Slide 32: Atimonan One Energy, Inc. (A1E)
32 Atimonan One Energy, Inc. (A1E) 2x600 MW (net) Ultra Supercritical (the first in the Philippines) Coal-Fired Power Plant in Atimonan, Quezon Total Project Cost: <PhP160 Billion (<USD 3.0 Billion) ▪ Awaiting final terms of reference and will participate in Meralco’s Competitive Selection Process.
Slide 33: MGEN Renewable Energy, Inc. (MGreen)
33 MGEN Renewable Energy, Inc. (MGreen) ▪ MGreen was established to serve as MGen’s subsidiary for its renewable energy investments. ▪ MGreen targets around 1,000 MW of renewable energy projects over the next 5-7 years. ▪ The focus is on the development of a portfolio of utility scale solar, wind an
Slide 34: PowerSource First Bulacan Solar, Inc. (PFBSI)
34 PowerSource First Bulacan Solar, Inc. (PFBSI) 50MWac Solar Power Plant in San Miguel, Bulacan Total Project Cost: PhP4.25 Billion ▪ 40%-owned by MGEN Renewable Energy, Inc. (MGreen) ▪ MGreen’s first solar investment; covers a total land area of 72 hectares ▪ Signed an engineering, procurement and
Slide 35: PowerSource First Bulacan Solar Site Construction Photos
PowerSource First Bulacan Solar, Inc. Site Construction Photos As of July 17, 2020 Confidential 35
Slide 36: Site Footage
Site Footage Confidential 36
Slide 37: Drainage Works (Excavations)
Drainage Works (Excavations) West Drain NS-2 (Mid) Drain East Drain Confidential 37
Slide 38: Inverter Stations
Inverter Stations IS-1 IS-2 IS-3 Confidential 38
Slide 39: Photovoltaic (PV) Works
Photovoltaic (PV) Works 3 4 Block-3 Block-4 Installation of PV Mock-up Installation of screw piles and mounting structures Confidential 39
Slide 40: Cable Trench Excavation
Cable Trench Excavation Confidential 40
Slide 41: Substation Area
Substation Area Confidential 41
Slide 42: Transmission Line
Transmission Line Pad and Chimney Foundation for Self-Supporting Steel Poles 1 and 2 Confidential 42
Slide 43: competitive uncertainties and contingencies which are beyond MERALCO’s control.
This presentation is prepared for the participants of the MERALCO Investors and Analysts Briefing & Teleconference held on July 27, 2020. This presentation has consequential limitations and is not a comprehensive discussion about Manila Electric Company and Subsidiaries (MERALCO). The same materials
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Manila Electric Company (Meralco) — H1 2020 Earnings Presentation on 6ix