Manila Electric Co. · PSE:MER

Manila Electric — FY2016 Earnings Presentation

52 slides from Manila Electric's earnings presentation, Feb 27, 2017

  1. Slide 1: Financial and Operating Results

    FINANCIAL AND OPERATING RESULTS OG Va 74

  2. Slide 2: Operations Report

    OPERATIONS REPORT Performance ended December 2016

  3. Slide 3: Operating Highlights

    Operating Highlights Energy Customer Peak Net System Sales Count Demand Input (NSI) 8.1%* 4.4%* 7.1%* 8.0%* 40,142 GWh 6.04 million 6,748 MW 42,866 GWh 2016 NSI Ave. Retail S-Factor Sources Rates & GSL** 69.3% IPP/PSA* 9.2%* Sustained Service Business 10.5% WESM Updates 18.5% RES P7.50/kWh Impr

  4. Slide 4: Details

  5. Slide 5: Energy Sales: 2016FY

    Energy Sales: 2016FY  Exceptional Sales growth, up 8.1% vs. 2015 (+3,018 GWh) Share /  for 2016: CAGR10Y: 4.8% RESIDENTIAL CAGR5Y: 5.6% 11.9% 31.0% 8.1% Increase in organic sales and other 8.3% factors plus new COMMERCIAL 40,142 sales 39.5% INDUSTRIAL •Private Services 37,124 4.3% 29.1% •Real Est

  6. Slide 6: Customer Count: 2016FY

    Customer Count: 2016FY  Up 4.4% vs. 2015 (+254,288 new customers) Share /  for 2016: RESIDENTIAL CAGR10Y: 3.2% CAGR5Y: 3.7% 4.6% 91.7% 2.7% 241,157 new customers COMMERCIAL 4.4% 8.1% INDUSTRIAL 6.04 0.2% 12,855 new 5.57 5.78 2.1% 209 new customers customers 5.37 5.19 Count for Flat Streetlight is

  7. Slide 7: Sales & Customer Drivers: 2016FY

    Sales & Customer Drivers: 2016FY EARLY WARMER -ENERGIZATION- TEMPERATURE; -PROCESSING- -DESIGN- “EL NIÑO” -FACILITATION- ELECTION YEAR EXPANDING CUSTOMER BASE LOW INFLATION ROBUST & RELIABLE SUBTRANSMISSION – POSITIVE 40,142 GWh DISTRIBUTION SYSTEM ECONOMIC CONDITION 8.1% S STABLE EARLY POWER -PROS

  8. Slide 8: Record Customer Count: 2016FY

    Record Customer Count: 2016FY  We reached a significant milestone, as our customer base grew… 6-Mn customers 5-Mn customers 4-Mn Oct 2016 customers Nov 2011 Aug 2003 8 yrs., 4 yrs., 3 mos. 11 mos. Nov2004 Nov2009 Nov2014 Apr2005 Apr2010 Apr2015 Aug2003 Jan2004 Aug2008 Aug2013 Jun2004 Jan2009 Feb200

  9. Slide 9: Ave. Temperature (°C): 2016FY

    Ave. Temperature(°C): 2016FY  Warmer temperature mostly in 1st half of 2016 vs. 2015 2016 Ave: 28.5C 2015 Ave: 28.0C 30.3 30.5 29.7 2014 Ave: 27.7C 30.3 29.5 29.2 29.9 28.7 29.4 28.7 28.5 28.5 28.4 29.1 28.3 28.3 28.4 28.5 28.2 27.8 27.7 28.2 27.2 27.9 28.0 27.2 27.8 27.0 26.7 27.5 26.9 25.7 26.

  10. Slide 10: Clark Electric (CEDC): 2016FY

    Clark Electric (CEDC): 2016FY ENERGY SALES, in GWh CUSTOMER COUNT 559.2 1,987 508.9 9.9% 1,914 3.8% 2015 2016 2015 2016 CEDC’s top 5 sales contributors for December 2016 include Phoenix Semiconductor Philippines Corp. (PSPC), Yokohama, SN Aboitiz Power, Premier Central (SM Clark), and SMK Electron

  11. Slide 11: Meralco Peak Demand: 2016FY

    Meralco Peak Demand: 2016FY Luzon Peak Demand: 2016FY  Meralco Peak Demand up 7.1% at 6,748 MW.  Up 8.9% at 6,748 MW. CAGR10Y: 4.0% CAGR10Y: 4.2% CAGR5Y: 5.0% CAGR5Y: 5.2% 8.9% 7.1% 9,726 ** 6,748 * 6,298 8,717 8,928 6,121 8,305 5,928 7,889 5,633 in MW *May 4, 2016 in MW **May 3, 2016 2012 2013

  12. Slide 12: Energy Sources: 2016FY

    Energy Sources: 2016FY Details  Contracted supply contracts (PSAs and IPPs) delivered 69% of total volume in 2016 in spite of power plant outages 42,866.1 GWh 39,694.2 GWh 8.0% (100.0%) (100.0%) RES 18.5% 19.0% 7,909.3 7,526.0 752.4 Special Contracts* 1.8% 1.8% 730.5 4,498.4 10.5% 1,986.1 5.0% WES

  13. Slide 13: Power Fuel Mix: 2016FY

    Power Fuel Mix: 2016FY Details Natural Gas provided 42.2% of fuel sources while Coal 37.6% with balance, multi-fuel 42,866.1 GWh 39,694.2 GWh (100.0%) (100.0%) 8.0% 20.2% 8,649.8 16.5% 6,548.3 MULTI-FUEL* 37.9% 15,040.4 37.6% 16,123.5 COAL 3.9% 1,548.1 0.1% 22.3 Liquid-fuel** 41.7% 16,557.4 NATURA

  14. Slide 14: Average Retail Rates: 2016FY

    Average Retail Rates: 2016FY  9.2% lower than 2015 average rates (-P0.76/kWh); all bill components, except FIT-All, reduced charges  For 2016, Generation Charge, largest component in customer’s bill, 51.4%; Meralco 19.0%; NGCP 11.4% P8.26/kWh 9.2% P7.50/kWh 1.00 TAXES, UNIV CHARGE 0.04 FIT-ALL 0.

  15. Slide 15: Containing the Customer Bill

    “Containing the Customer Bill” Generation Charge* Average Retail Rates** Monthly generation charges in 2016 are lowest since 2004 Average Retail Rates in 2016 are lowest since 2010 (or in the last 13 years) (or in the last 7 years) 9.64 5.75 9.44 9.42 5.39 5.47 9.14 5.23 14.3% 8.26 9.2% 4.60 7.50

  16. Slide 16: Overall Average Rates Bill Components: 2016FY

    Overall Average Rates Bill Components: 2016FY Transmission System Loss P 0.85 /kWh P 0.32 /kWh 11.4% 4.3% Generation MERALCO P 3.85 /kWh P 1.42 /kWh 51.4% 19.0% Taxes/ UC/ Subsidies P 0.94 /kWh 12.5% FIT-Allowance P 0.11 /kWh 1.4% PARENT

  17. Slide 17: Record System Loss Performance

    “Record System Loss Performance” 8.5% System Loss Cap 2008-2016: TOTAL SAVINGS TO CUSTOMER EQUIVALENT TO P26.9 Bn or 9¢/ kWh 7.35 % 2.15% 7.04 % 6.92 % 6.49 % 6.47 % 0.12% (improvement) 6.35 % 2011 2012 2013 2014 2015 2016 • Official ERC-filed Meralco System Loss, in percent which excludes Clark El

  18. Slide 18: Operating Performance: 2016FY

    Operating Performance: 2016FY  Sustained service improvements vs. past levels* SAIFI, Forced & PAI (Times) CAIDI, Forced & PAI (Minutes) SAIDI, PAI (Minutes) Prob. of Voltage Violations (% not falling w/in limits) 4.80 80.05 0.23 116.67 103.39 92.87 58.47 54.68 2.43 2.18 0.04 2016 vs. 2011: 54.6%

  19. Slide 19: GSL Performance: July - December 2016

    GSL* Performance: July - December 2016  Sustained service improvements vs. past levels* REGULATORY GSL Jul– Dec 2015 Jul– Dec 2016 STANDARDS REMARKS INDICATORS (3RP / RY 2016) (3RP / RY 2017) No. of Violations per Year (Reward Ceiling) INDICATIVE GSL 1 373,658 customers 100 2,290 SAVINGS INDICATIVE

  20. Slide 20: Business Updates

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  21. Slide 21: Interim Power Supply Agreements

    Business Updates: Significant Events/ Customer Initiatives & Programs Interim Power Supply Agreements  To mitigate the impact to consumers of the scheduled SPEX-Malampaya 20-day outage*  Subject to approval of ERC IPSA ASSOCIATED POWER PLANT / CONTRACT CONTRACTED CONTRACTED SIGNING DATE FUEL TERM

  22. Slide 22: Solar Power Supply Agreements

    Business Updates: Significant Events/ Customer Initiatives & Programs Solar Power Supply Agreements  Further augment power supply to meet higher customer requirements  Subject to approval of ERC With Solar Philippines Combined Capacity 50 100 MW MW Rates at max. of With Powersource First Bulacan S

  23. Slide 23: Philippines' First R&D and Training Facility

    Business Updates: Significant Events/ Customer Initiatives & Programs Philippines’ First R & D and Training Facility  October 3, 2016 - Breaksground at Meralco Center Ceremonial groundbreaking of 2-storey structure of Power Tech, which will serve as a facility that will rapidly accelerate competenc

  24. Slide 24: Major Capital Projects 2016FY

    Business Updates: Major Capital Projects 2016FY Increased substation capacity by 531 MVA and circuit length by 67 km SUBSTATION PROJECTS (P1.90 B) Expansion of Bagbaguin (1-83 MVA, Apr. 13) 1. Expansion Expansion of Masinagof(1-83 Bagbaguin MVA, May(1-83 26) MVA, Apr. 13) 8 Dev’ t2. Expansion of Sit

  25. Slide 25: Storm Hardening Accomplishments 2016FY

    Business Updates: Storm Hardening Accomplishments 2016FY POLE REPLACEMENT AND RELOCATION 3,943 Replacement of ageing poles Replacement of defective and hazardous poles RE-INSULATION AND CONDUCTOR SHIELDING 21,719 Reconductoring to covered conductor and spun cable (no. of spans) Replacement of bare p

  26. Slide 26: One Meralco Power Restoration Assistance

    Business Updates: One Meralco Power Restoration Assistance 2016F 3 TYPHOONS Ferdie (Sept 21-29); Lawin (Oct 27-Nov 12); Nina (Dec 29, 2016 – Jan 11, 2017) 8 PROVINCES (all in Luzon; farthest is Batanes) 93 DAYS ASSISTANCE (From Sept 21, 2016 to Jan 11, 2017) 47 VEHICLES (One Meralco) 229 PERSONNEL (

  27. Slide 27: Significant Events/Customer Initiatives & Programs

    Business Updates: Significant Events/ Customer Initiatives & Programs Meralco Receives AWARD OF EXCELLENCE from Safety Organization of the Philippines, Inc. - Industrial Safety Division Leading Collaboration and Growth in Meralco holds FIRST K-LIGTAS AWARDS East Asia and Western Pacific  K-Ligtas (

  28. Slide 28: Customer Initiatives & Programs

    Business Updates: Customer Initiatives & Programs Program that aims to improve customer experience (CX) throughout different customer journeys/ moments that matter (Join, Pay, Ask, Need Repair) with an integrated set of solutions (Platform, Process/ Policy, People/ Partners) 2016 – Decision & Prepar

  29. Slide 29: Products, Services and Solutions

    Business Updates: Products, Services and Solutions RESIDENTIAL Postpaid CSI 8.28 Reached 40,000 target milestone 8.07 CSI Mandaluyong was added to the coverage area which includes Manila, Angono, Cainta, Taytay and Binangonan Rizal, parts of Pasig, San Juan, Novaliches, Caloocan, San Jose del Monte

  30. Slide 30: Working closely with the regulator on customer programs

    Worked closely with the regulator for better understanding of customer programs and innovation projects Powerlab Visit AMI Demo Feb 11, 2016 Aug 11, 2016

  31. Slide 31: Programs to delight our customers

    Business Updates: Programs to delight our customers CSI Power Up Forum • 4 Special forums: 2 for RCOA, 2 for ILP We aimed to • 24 Regular forums: 790 attendees strengthen our • 4 Finance forums:  320 executives from 170 companies claim as the total  Companies enrolled to ADA: 7  Pending for ADA e

  32. Slide 32: Programs to delight our customers

    Business Updates: Programs to delight our customers Sustained awareness on Meralco BIZ Partners & solutions CSI Power Up Forums Trade Activations Mounted 9 PUFs for various Sustained visibility and industries, averaging 64 attendees engagement for customers in per event, kicked off with a select tra

  33. Slide 33: Programs to delight our customers

    Business Updates: Programs to delight our customers CSI Energizing Partnerships Program Increase engagement/ partnerships with LGUs and focus on improving customer experience 37 LGUs signed in Total since Dec 2014 14 LGUs signed in 2016 LGUs CSI 8.44 (Inc. by 2 sig pts. 8.05 in 2015) Orange Tag & Br

  34. Slide 34: Awards and Recognition

    SALBABOTE SUMMER CRISIS KURYENTE LOAD 2015 ANNUAL REPORTS MAVERICK OF THE YEAR ORANGE TAG ELECTRIFICATION

  35. Slide 35: Project Updates

    The information as contained herein may neither be reproduced nor used, in whole or in part, for any other purpose nor furnished to any person(s) without express written permission from MERALCO PowerGen Corporation PROJECT UPDATES 27 February 2017

  36. Slide 36: San Buenaventura Power Limited Co. (SBPL)

    San Buenaventura Power Limited Co. (SBPL) 455MW (net) Supercritical Coal-Fired Power Plant in Mauban, Quezon  Construction of the power project is now on its 15th month and on schedule for commercial operations in 2019. 36

  37. Slide 37: San Buenaventura Power Limited Co. (SBPL)

    San Buenaventura Power Limited Co. (SBPL) 455MW (net) Supercritical Coal-Fired Power Plant in Mauban, Quezon  A 20-year Power Supply Agreement (“PSA”) with Meralco was approved by the Energy Regulatory Commission (“ERC”).  The P42.15-billion financing was secured in 2015 following the signing of a

  38. Slide 38: Redondo Peninsula Energy, Inc. (RP Energy)

    Redondo Peninsula Energy, Inc. (RP Energy) 2x300 MW CFB Coal-Fired Power Plant in Subic, Zambales  Power plant site is ready for major construction activities starting off with first phase which is targeted to be completed in 2020. The second phase shall follow within 12 months.  Power supply agre

  39. Slide 39: Redondo Peninsula Energy, Inc. (RP Energy)

    Redondo Peninsula Energy, Inc. (RP Energy) 2x300 MW CFB Coal-Fired Power Plant in Subic, Zambales  RP Energy executed contracts with Doosan Heavy Industries & Construction Co. Ltd. and Azul Torre Construction, Inc. for engineering, procurement and construction of the power plant.  The company sign

  40. Slide 40: Atimonan One Energy, Inc. (A1E)

    Atimonan One Energy, Inc. (A1E) 2x600 MW Ultra Supercritical Coal-Fired Power Plant in Atimonan, Quezon  In April 2016, A1E signed a PSA with Meralco for the full output of the plant. The PSA is still subject to the ERC’s approval. 40

  41. Slide 41: Atimonan One Energy, Inc. (A1E)

    Atimonan One Energy, Inc. (A1E) 2x600 MW Ultra Supercritical Coal-Fired Power Plant in Atimonan, Quezon  Construction and turnover of resettlement site for the affected families are expected to be completed in March 2017.  Evaluation of the engineering, procurement and construction (“EPC”) bids re

  42. Slide 42: St. Raphael Power Generation Corporation (SRPGC)

    St. Raphael Power Generation Corporation (SRPGC) 2x350 MW Pulverized Coal-Fired Power Plant in Calaca, Batangas  MGen and Semirara Mining and Power Corp. entered a Joint Venture Agreement for a 50-50 stake in the planned 2x350 MW coal plant in Calaca, Batangas in 2016.  A Power Supply Agreement (P

  43. Slide 43: Other Investments

    Other Investments 43 PROJECTS IN OPERATION GLOBAL BUSINESS POWER CORPORATION (GBPC) MGen holds 14% equity interest in GBPC, the largest independent power producer in the Visayas with an existing portfolio totaling 854 MW (coal and diesel plants). PACIFICLIGHT POWER PTE LTD (PLP) PLP has been opera

  44. Slide 44: Financial Highlights FY 2016

    FINANCIAL HIGHLIGHTS FY 2016

  45. Slide 45: Consolidated Revenues

    Consolidated Revenues (in Million PhP) 258,399 257,181 8,626 7,975 Electricity Revenues = 249,206 Electricity Revenues = 249,773 194,710 192,336 55,063 56,870 FY 2015 FY 2016 Distribution Revenues Generation & Other Pass-through Charges Non-Electricity Revenues

  46. Slide 46: Costs and Expenses / Capital Expenditures

    Costs and Expenses/Capital Expenditures (in Million PhP) 7,312 9,373 24,935 3% 4% Costs and Expenses 11% 189,853 82% Purchased Power Operating Expenses Depreciation & Amortization Other Expenses Capital Expenditures FY 2015 11,303 FY 2016 11,394 0.8%

  47. Slide 47: Consolidated EBITDA and Net Income

    Consolidated EBITDA and Net Income (in Million PhP) 33,956 34,049 30,926 31,124 19,583 19,098 19,176 18,887 13.2% 13.2% 7.6% 7.5% 12.0% 12.0%  Margins  7.3% 7.4% Core EBITDA Reported EBITDA Core Net Income Reported Net Income FY 2015 FY 2016

  48. Slide 48: Cash & Cash Equivalents and Investments

    Cash & Cash Equivalents, Available-for-Sale and Held-to-Maturity Investments 93,189 83,040 10,186 10,961 36,347 21,239 50,840 46,656 FY2015 FY2016 Cash and Cash Equivalents Held-to-maturity investments Available-for-sale investments

  49. Slide 49: Credit and Debt Profile

    Credit and Debt Profile TOTAL DEBT (in Million PhP) 40,347 (in Million PhP, FY 2015 FY 2016 Except Ratios) 30,308 26,999 Cash 50,840 46,656 27,370 Gross Debt 30,308 40,347 13,348 Net Debt (20,532) (6,309) 2,938 FY 2015 FY 2016 Gross Debt/EBITDA 0.97 1.18 Current Portion Non-current Portion Net Debt/

  50. Slide 50: Earnings per Share and Cash Dividends

    Earnings per Share and Cash Dividends REPORTED AND CORE EARNINGS PER SHARE (in P) 16.94 16.76 17.01 17.37 15.27 15.10 16.02 16.08 15.19 14.43 13.21 11.76 2011 2012 2013 2014 2015 2016 Earnings Per Share Core Earnings Per Share DIVIDENDS DECLARED OUT OF CORE EARNINGS FOR THE YEAR (in Peso per share)

  51. Slide 51: Dividend Yield

    Dividend Yield YEAR-END STOCK PRICE DIVIDENDS DECLARED DURING THE YEAR 30.00 350.0 320.0 25.08 300.0 25.00 260.6 251.0 256.0 265.0 247.2 250.0 20.00 200.0 15.00 15.25 150.0 10.00 12.36 10.20 100.0 7.80 8.10 5.00 50.0 - - 2011 2012 2013 2014 2015 2016 DIVIDEND 3% 3% 4% 5% 5% 9% YIELD

  52. Slide 52: Cautionary Statements

    Cautionary Statements This presentation is prepared for the participants of the MERALCO Investors and Analysts Briefing & Teleconference held on February 27, 2017. This presentation has consequential limitations and is not a comprehensive discussion about Manila Electric Company and Subsidiaries (ME

Manila Electric Company (Meralco) — FY2016 Earnings Presentation on 6ix