Manila Electric Co. · PSE:MER

Manila Electric — 9M 2016 Earnings Presentation

45 slides from Manila Electric's earnings presentation, Oct 24, 2016

  1. Slide 1: Financial and Operating Results

    FINANCIAL AND OPERATING RESULTS Investors and Analysts Briefing Nine Months Ended September 30, 2016 October 24, 2016

  2. Slide 2: Operations Report

    OPERATIONS REPORT Performance ended September 2016

  3. Slide 3: Operating Highlights

    Operating Highlights Energy Customer Peak Net System Sales Count Demand Input (NSI) 9.5%* 4.1%* 7.1%* 9.2%* 30,103 GWh +235,477 +2,726 customers +450 MW GWh 2016 NSI Ave. Retail S-Factor Sources Rates & GSL** 71.6% IPP/PSA* 11.4%* Within* Business*** 8.5% WESM - P0.97/kWh Regulatory Updates 18.

  4. Slide 4: Details

  5. Slide 5: Energy Sales and Customer Count: 9M 2016

    Energy Sales: 9M 2016 Customer Count: 9M 2016 CONSO  Up 9.5% vs. 2015 (+2,607 GWh)  Up 4.1% vs. 2015 (+0.24 million customers) 5.98 5.74 30,103 5.53 5.16 5.33 27,496 4.98 4.1% 25,616 26,253 3.9% 3.8% 24,448 9.5% 3.3% 22,725 4.7% 3.5% 4.8% 2.5% 7.6% CAGR10Y (2006-2016) 4.8% CAGR10Y (2006-

  6. Slide 6: Average Temperature Monitoring

    Ave. Temperature(°C) monitoring 30.3 30.5 29.7 9M 2016 Ave: 28.7C 30.3 29.5 9M 2015 Ave: 28.0C 29.2 9M 2014 Ave: 27.8C 29.9 29.4 28.7 28.7 28.4 29.1 28.3 28.5 28.5 28.5 28.3 28.2 28.2 27.9 28.0 27.2 27.8 27.0 26.7 27.2 27.5 26.9 26.5 25.7 25.0 25.6 24.7 2014 2015 2016 Jan Feb Mar Apr May Jun Jul

  7. Slide 7: Clark Electric (CEDC): 9M 2016

    Clark Electric (CEDC): 9M 2016 Energy Sales, GWh Customer Count 414.2 382.5 8.3% 1,986 1,870 6.2% 2015 2016 2015 2016 CEDC’s top 5 sales contributors for 9M 2016 include Phoenix Semiconductor Philippines Corp. (PSPC), Yokohama, SN Aboitiz Power, Premier Central (SM Clark), and Nanox Phils. II NSI,

  8. Slide 8: NSI and Peak Demand: 9M 2016

    NSI: 9M 2016 Peak Demand: 9M 2016  NSI up by 9.2% vs. Sept. 2015 YTD (+2,725.8 GWh)  Meralco Peak Demand of 6,748 MW, 7.1% up vs. 2015 Meralco YTD Peak Demand, MW: 9M 2016 , GWh: 6,748 6,298 7.1% 9.2% 32,258.9 29,533.2 2015 (Aug 18) 2016 (May 4) 2015 2016 Luzon YTD Peak Demand, MW: 9,726 8,928 8

  9. Slide 9: Power Sources and Fuel Mix: 9M 2016

    Power Sources: 9M 2016 Fuel Mix: 9M 2016 9M 2016 9M 2016 Liquid Fuel, 0.1% SOURCE TYPE OF FUEL GWh Share GWh Share PSA Natural Gas 13,938.8 43.2% Coal PSAs-Total 12,524.2 38.8% 38.8% IPP 38.4% SEM-Calaca 1,286.0 4.0% 32.7% Coal 12,394.0 38.4% MPPC-Masinloc 1,697.4 5.3% Natural Gas Liquid Fuel* 20.3

  10. Slide 10: Average Retail Rate: 9M 2016

    Average Retail Rate: 9M 2016  11.4% lower (-P0.97/kWh) than 9M 2015 average rates  Except FIT-All, all components decreased  Generation Charge, largest component in customer’s bill, 51.2%; Meralco 18.9%; NGCP 11.7% BILL COMPONENT 9M 2015 Overall Ave, 9M 2016 Overall Ave,  P/kWh P/kWh P/kWh Trans

  11. Slide 11: Generation Charge Series

    Generation Charge Series  2016 Gen Charges are lowest since 2004 (or in the last 12 years) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Reference 2015 P3.50 2016Oct 2004 JAN 3.40 4.78 4.84 4.69 4.43 4.50 3.92 4.74 5.46 5.79 6.12c 1st 4.72 P3.72 Jun 2016 3.92 6.77 6.74 FEB 3.19 4.78 5

  12. Slide 12: Average Residential Rate Series (200 kWh)

    Ave. Residential Rate Series (200 kWh)  2016 Ave. Rates are lowest since 2010 (or in the last 7 years)  More so, excluding FIT-All 13.47 Reference P8.24 Jan 2010 1st P8.32 Jun 2016 2nd P8.34 Oct 2016 3rd P8.40 Jan 2016 LOWEST IN 7 YEARS 2010 Ave. Resdl. 2016 Ave. Resdl. 8.40 8.32 8.34 8.24 In Php

  13. Slide 13: Average Residential Rate Series (200 kWh)

    Ave. Residential Rate Series (200 kWh)  2016 Ave. Rates are lowest since 2010 (or in the last 7 years)  More so, excluding FIT-All Reference P8.24 Jan 2010 Reference P8.20 Jun 2016 1st P8.22 Oct 2016 2nd P8.32 May 2016 3rd P8.33 Sept 2016 4th P8.36 Jan 2016 LOWEST IN 7 YEARS 2010 Ave. Resdl. 2016

  14. Slide 14: System Loss Performance: September 2016, 12-MMA

    System Loss Performance: September 2016, 12-MMA  12-MMA ending September 2016 at 6.40%  ALL-TIME RECORD LOW  Improved by 0.16% pt. vs. September 2015’s 6.56%  Lower by 2.10% pts. vs. SL cap of 8.5% 8.5% SL CAP, 2010-PRESENT Oct 2014 - Sept 2015 Oct 2015 - Sept 2016 2.10% 6.40% ALL-TIME LOW in 11

  15. Slide 15: S-Factor and GSL Performance

    S-Factor & GSL Performance: 9M 2016 & RY2017 (for GSL)  All S-Factor indicators are well within rewards range; All GSL performances are well within set limits SAIFI, Forced and PAI (Times) GSL1 : Customer experiencing a cumulative duration of Ave. Time to Process App. (Days) sustained service inter

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  17. Slide 17: Business Updates: Power Supply Agreement Signing

    Business Updates: Power Supply Agreement Signing  At P5.39/kWh, these PSAs with MERALCO is significantly lower than ERC-approved Solar FIT of P8.69/kWh.  Subject to ERC approval MERALCO & Powersource First Bulacan Solar JV MERALCO & Solar Philippines SIGNING DATE POWER PLANT / LOCATION GENERATING

  18. Slide 18: Business Updates: Major Capital Projects

    Business Updates: Major Capital Projects Construction of Tabang-Calumpit 69 kV Line Installation of 34.5 kV Metalclad Switchgear at July 29, 2016 Dasmariñas Substation Location: Inside NGCP Dasmariñas Substation  This project provides the 69 kV looping September 8, 2016 of Malolos, Calumpit and Tab

  19. Slide 19: Business Updates: Major Capital Projects (PPP and Relocation)

    Business Updates: Major Capital Projects PPP & Government Relocation Updates DPWH Relocation Projects as of September 30, 2016 as of September 30, 2016 TOTAL RELOCATION TOTAL COMPLETED (Poles) PROJECTS Project Poles Prev. Month Pres. Month % Comp PPP PROJECT MNTC Segment 10 15 143 11 19 13% REGION C

  20. Slide 20: Impact of Typhoon Karen on Operations

    Business Updates: Impact of Typhoon Karen on Operations  5PM, Oct 14, 2016, Meralco franchise area (Laguna, Bulacan, Cavite, Batangas, Rizal and Metro Manila) was under Public Storm Signal (PSS) number 1.  TS Karen intensified into a typhoon by 10PM, Oct 14, 2016 (max. sustained winds of up to 120

  21. Slide 21: Impact of Typhoon Lawin on Operations

    Business Updates: Impact of Typhoon Lawin on Operations  5 PM, Oct. 17, 2016, LAWIN entered PAR with max. sustained winds of up to 175 kph, gustiness of up to 215 kph  8 AM, Oct. 19, 2016, LAWIN gains more strength with maximum sustained winds of up to 210 kph near the center and gustiness of up t

  22. Slide 22: BATANELCO Power Restoration Assistance Update

    Business Updates: BATANELCO Power Restoration Assistance Update Batanes Group of Islands served by Batanes Electric Cooperative (BATANELCO) Typhoon Ferdie (int’l. name Meranti) • Landfall in Itbayat, Batanes • Sept 14, Wed., 12:15 AM • Signal No. 4, 171-220 kph • 600 km in diameter • Basco Town rema

  23. Slide 23: BATANELCO Power Restoration Assistance Update

    Business Updates: BATANELCO Power Restoration Assistance Update  Meralco sent a team composed of 35 personnel (excluding OMF)  The 1st batch worked for 11 straight days while the 2nd batch for 9 days  Daily working time was 6:00 am to 9:00 pm (team volunteered not to charge several hours)  Worke

  24. Slide 24: BATANELCO Power Restoration Assistance Update

    Business Updates: BATANELCO Power Restoration Assistance Update  DESPITE THE CHALLENGES, THE MERALCO TEAM  DONATION OF TOOLS AND WORK WAS ABLE TO ACCOMPLISH: EQUIPMENT* REQUESTED BY  79 pole-related activities BATANELCO THROUGH  18 erected new poles ONE MERALCO FOUNDATION (OMF)  47 straightened

  25. Slide 25: Interruptible Load Program / Need for New Generating Capacity

    Business Updates: Interruptible Load Program (ILP) / Need for New Generating Capacity ILP is a voluntary, demand-side management program that allows customers to operate their generating sets & collectively reduce electricity drawn from the grid when power interruptions are imminent to ration limite

  26. Slide 26: Interruptible Load Program Enrolees

    Business Updates: Interruptible Load Program (ILP) ILP enrolees as of Sept 30, 2016 CUST TAG SUPPLIER TOTAL MW SIGNED Count of Services POTENTIAL Count of Services CAPTIVE – PRVT MERALCO 396.7 393.6 223 3.1 5 CAPTIVE Total* 398.4 395.3 224 3.1 5 CONTESTABLE MPOWER 295.0 235.5 111 59.5 14 OTHER RESs

  27. Slide 27: Meeting with Senate Energy Committee Chairman

    Events of Interest: Meeting with Senate Energy Committee Chairman Sherwin Gatchalian August 10, 2016 Meralco’s Recommendations on Supply Deficiency 1. Fast track Final ERC Approval of PSAs for new power plants within the next 60-90 days 2. Early ERC approval of NGCP Capex for transmission interconne

  28. Slide 28: Significant Business/Customer Initiatives, Programs and Events

    Business Updates: Significant Business/ Customer Initiatives & Programs/ Events PARTNERSHIPS 35,704 ACCOUNTS With Filinvest Meralco with NHA execs With City of Mandaluyong

  29. Slide 29: Thank You

    THANK YOU 2016 Meralco Team Power Restoration Assist in Batanes

  30. Slide 30: 9M 2016 Financial Highlights

    9M 2016 FINANCIAL HIGHLIGHTS oe

  31. Slide 31: Consolidated Revenues

    Consolidated Revenues (in Million PhP) 197,047 195,164 5,551 6,029 Electricity Revenues = 189,135 Electricity Revenues = 191,496 149,836 146,273 41,660 42,862 9M 2015 9M 2016 Distribution Revenues Generation & Other Pass-through Charges Non-Electricity Revenues

  32. Slide 32: Costs and Expenses / Capital Expenditures

    Costs and Expenses/Capital Expenditures (in Million PhP) 5,206 6,894 18,417 3% 4% Costs and Expenses 10% 144,423 83% Purchased Power Operating Expenses Depreciation & Amortization Other Expenses 7,784 Capital Expenditures 9M 2015 7,509 3.5% 9M 2016

  33. Slide 33: Consolidated EBITDA and Net Income

    Consolidated EBITDA and Net Income (in Million PhP) 27,104 27,167 26,217 26,310 15,795 16,149 15,676 14,966 13.8% 13.4% 13.8% 13.5%  Margins  8.0% 7.7% 8.2% 8.0% Core EBITDA Reported EBITDA Core Net Income Reported Net Income 9M 2015 9M 2016

  34. Slide 34: Credit and Debt Profile

    Credit and Debt Profile TOTAL DEBT (in Million PhP) (in Million PhP, 9M 2015 9M 2016 40,114 Except Ratios) 29,907 Cash 44,921 36,581 27,004 Gross Debt 29,907 40,114 27,387 13,110 Net Debt (15,014) 3,533 2,520 9M 2015 9M 2016 Gross Debt/EBITDA 0.83 1.14 Current Portion Non-current Portion LOAN REPAYM

  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 as of 24 October 2016

  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 project is already on its 10th month following the issuance of Notice-To-Proceed in December 2015.  The consortium of South Korea’s Daelim Industrial Co. Ltd. and Japan

  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 Off-taker Electricity generated by the project will be sold by SBPL to Meralco under a 20-year Power Supply Agreement approved by the Energy Regulatory Commission.  Financing The P42.15-b

  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  Engineering, Procurement and Construction (EPC) Contract  Executed Contracts with Doosan Heavy Industries & Construction Co. Ltd. and Azul Torre Construction Inc. for the Engineering, Procurement & C

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

    Redondo Peninsula Energy, Inc. (RP Energy)  Power Off-take  Power output will be sold to Meralco (225MW) and Aboitiz Energy Solutions, Inc. (AESI, 75MW).  RPE signed Power Sales Agreements with Meralco and AESI in April 2016.  Financing  Strong interest from Philippine commercial banks; entire

  40. Slide 40: Redondo Peninsula Energy, Inc. (RP Energy)

    Redondo Peninsula Energy, Inc. (RP Energy)  Interconnection  The Energy Regulatory Commission approved the transmission line interconnection for the project (from the RPE Site to Hermosa Substation) in May 2015.  Rights-of-way for the transmission line for Phase 1 (from RPE Site to the Hanjin sub

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

    Atimonan One Energy, Inc. (A1E) 2x600MW Supercritical Coal-Fired Power Plant in Atimonan, Quezon  Power Supply Agreement (PSA)  The Company in April 2016 signed a 20 year PSA with Meralco for the full output of the plant. The PSA is still subject to the approval of the Energy Regulatory Commission

  42. Slide 42: Atimonan One Energy, Inc. (A1E)

    Atimonan One Energy, Inc. (A1E)  Engineering, Procurement and Construction (EPC)  Bids were received from four potential EPC Contractors in late 2015. These are currently under assessment.  Selection of preferred EPC contractor is targeted the fourth quarter of 2016.  Construction  Site prepara

  43. Slide 43: Other Investments: Projects Under Development

    Other Investments PROJECTS UNDER DEVELOPMENT ST. RAPHAEL POWER GENERATION CORPORATION (SRPGC)  MGen and Semirara Mining and Power Corp. entered a Joint Venture Agreement to develop the 2x350 MW SRPGC coal plant in Calaca, Batangas.  A Power Supply Agreement was signed by SRPGC and Meralco in April

  44. Slide 44: Other Investments: Projects in Operation

    Other Investments 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 operat

  45. Slide 45: Cautionary Statements

    Cautionary Statements This presentation is prepared for the participants of the MERALCO Investors and Analysts Briefing & Teleconference held on October 24, 2016. This presentation has consequential limitations and is not a comprehensive discussion about Manila Electric Company and Subsidiaries (MER

Manila Electric Company (Meralco) — 9M 2016 Earnings Presentation on 6ix