Manila Electric Co. · PSE:MER
Manila Electric — FY2014 Earnings Presentation
49 slides from Manila Electric's earnings presentation, Feb 23, 2015
Slide 1: Financial and Operating Results Investors and Analysts Briefing
Financial and Operating Results Investors and Analysts Briefing Year Ended December 31, 2014 February 23, 2015
Slide 2: Operations Report FY 2014
Operations Report FY 2014
Slide 3: 2014 Operating Highlights
2014 Operating Highlights Growing Energy Sales Expanding Customer Base Rising Peak Demand Higher Net System Input Ave. Customer Bill Flat Y-O-Y NSI Sources NSI Fuel Mix Operational excellence in Distribution System & Customer Service Performance Business Updates & Events of Interest
Slide 4: Details
Slide 5: Growing Energy Sales: 2014FY
Growing Energy Sales: 2014FY Energy sales Up 3.2% vs. 2013 (+1,076 GWh) Net of impact of Typhoon ‘Glenda’ (in July), Total Sales is 3.8% up Movers* for 2014: 35,160 3.2% 4.2% 30.9% 3.9% INDUSTRIAL 34,084 Food & Beverages Basic Metals 39.3% 32,771 Rubber & Plastics COMMERCIAL Real Estate 29.5% Privat
Slide 6: Expanding Customer Base: 2014FY
Expanding Customer Base: 2014FY Up 3.9% vs. 2013 (+207,056 new customers) Highest YE growth since 2004 (10 years ago) Segment share for 2014: 3.9% 5.57 2.4% 4.0% 91.4% 5.37 RESIDENTIAL 5.1 million Customers 8.3% 5.19 COMMERCIAL 5.03 0.464 million 0.2% Customers 4.85 INDUSTRIAL 9,824 1.2% Customers i
Slide 7: Rising Peak Demand: 2014FY
Rising Peak Demand: 2014FY Meralco Peak Demand up 3.3% vs. 2013 (+193 MW) Meralco Peak Demand, MW: Luzon Peak Demand, MW: 8,717 * 5.0% 6,121 * 3.3% 5.3% 8,305 5,928 5.2% 4.5% 7,889 5,633 1.4% 6.6% 1.7% 7,656 5,374 7,552 5,283 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 PARENT *occurred on May
Slide 8: Clark Electric (CEDC) - Fast Growing: 2014FY
Clark Electric (CEDC)- Fast Growing: 2014FY Strong growth in Energy Sales and NSI vs. 2013 Energy Sales, GWh Customer Count 436.7 379.5 15.1% 1,819 1,858 2.1% 2013 2014 2013 2014 NSI, GWh 2014 Sales, Share Count, Share 464.0 402.0 Commercial 38.6% 57.9% 15.4% Industrial 60.2% 6.7% Residential 0.9% 3
Slide 9: Power Sources: 2014FY
Power Sources: 2014FY Details Contracted Supply 76.7% of NSI ; WESM 2.9%; RESs 18.5% of NSI 36,672.6 2.5% 37,578.0 7.4% 2,711.4 RES*** 18.5% 1.9% 680.8 Spe. Con.** 6,945.4 5.3% 1,948.9 725.0 1.9% WESM 1,091.9 2.9% 35.7% 13,100.0 IPP 12,832.6 34.2% 49.7% 18,231.5 PSA* 15,983.1 42.5% 2013 2014 *Includ
Slide 10: Power Fuel Mix: 2014FY
Power Fuel Mix: 2014FY 46.8% of NSI from Nat. Gas-fired plants, 38.9% from Coal-fired and 14.3% from hydro, geothermal as well as coal 36,672.6 2.5% 37,578.0 5,307.7 Multi-fuel* 5,380.4 14.3% 14.5% 40.4% 14,826.2 COAL 14,618.2 38.9% NATURAL 17,579.4 46.8% 45.1% 16,538.7 GAS 2013 2014 *Coal, Hydro, B
Slide 11: Average Retail Rate: 2014FY
Average Retail Rate: 2014FY Average Customer Bill 0.3% lower than 2013 (-3¢/kWh) Generation Charge, largest component in customer’s bill, 56.7%; Meralco 17.1%; NGCP 9.7% Generation, Distribution and System Loss Charge lower by 1%, 3% and 4%, respectively vs. 2013 P9.45/kWh 0.3% P9.42/kWh 11.4% 1.08
Slide 12: Operational Excellence - System Loss Performance: 2014FY
Operational Excellence - System Loss Performance: 2014FY 12-MMA ending December 2014 at 6.49% Record best Improved by 0.43%pts vs. 2013’s 6.92% SAVINGS TO CUSTOMER 2008: P0.37 Bn 2009: 1.37 2010: 1.14 2011: 2.40 2012: 3.44 2013: 3.53* 10.21% 10.10% 9.65% 2014: 4.56 (13 ¢/kWh) 9.5% Total : P16.81 Bn
Slide 13: Operational Excellence - S Factor Performance: 2014FY
Operational Excellence - S Factor Performance: 2014FY All indicators well within rewards* range; vs. last 4 years, 6/8 all indicators at “all-time” best SAIFI, Forced & PAI CAIDI-Forced & PAI SAIDI, PAI (Mins) (Times) (Mins.) 141.27 93.81 6.52 94.09 59.65 2.66 2010 2012 2014 2010 2012 2014 2010 2012
Slide 14: Operational Excellence - S Factor Performance: 2014FY
Operational Excellence – S Factor Performance: 2014FY All indicators well within rewards* range; vs. last 4 years, 6/8 all indicators at “all-time” best Ave. Time to Call Center Connect (Days) Performance (Secs) 3.38 24.55 2.52 5.64 2010 2012 2014 2010 2012 2014 PARENT
Slide 15: Performing Under Adverse Condition: Typhoons Glenda, Mario & Ruby
Performing Under Adverse Condition: Typhoons ‘Glenda’, ‘Mario’ & ‘Ruby’ SUMMARY OF IMPACT OF MAJOR WEATHER Typhoon T yphoon Storm DISTURBANCES TO MERALCO 'GLENDA' 'MARIO' ‘RUBY' Inclusive Dates (including completion of restoration) July 15-20, 2014 September 19 only December 9, 2014 627 91 12 Circui
Slide 16: Performing Under Adverse Condition: Power Supply Volatility
Performing Under Adverse Condition: Power Supply Volatility Inadequate power Insufficiency of plant capacity required reserves YELLOW & RED ALERTS 83 FORCED OUTAGES* 52 SCHEDULED OUTAGES Worsening weather Increased reliance on disturbances expensive oil-fired plants. *including 27 due to “Ruby” and
Slide 17: Higher Productivity Performance: 2014FY
Higher Productivity Performance: 2014FY PRODUCTIVITY ∆ 2014 vs. ∆ 2014 vs. 2010 2011 2012 2013 2014 2013 2010 PERFORMANCE Regular Employee 6,203 6,071 5,960 5,898 5,766 -2.2% -7.0% Count Sales Per Employee 4.83 4.99 5.45 5.71 6.02 5.4% 24.6% (GWh/Employee) Customer Per 781 828 870 910 967 6.2% 23.7%
Slide 18: Other Business Highlights
C4 Onmter Business Hicrients
Slide 19: Increasing Capital Expenditures: 2014 FY
Increasing Capital Expenditures: 2014 FY 12,350 21.2% 10,321 10,187 9,053 8,748 2010 2011 2012 2013 2014 In PhP, Mn
Slide 20: Business Updates: 2014 4Q
Business Updates: 2014 4Q Completed Electric Capital Projects 83 MVA Transformer at Tegen S/S Therma Mobile, Inc. (TMO) Araneta-Cubao-Kamuning 115 Connection kV Line Caliraya-Botocan 115 CPIP Substation kV Line Restoration Batangas City-Bolbok- Facilities relocation for Simlong 69 kV Line NAIA Proje
Slide 21: Business Updates: 2014 4Q
Business Updates: 2014 4Q Confronting Thinning Power Supply New IPSAs / PSA ILP ADVOCACY ENERGY SAVING (~524 MW) (~617.2 MW*) MEASURES *736 MW signed out of the committed 882 MW *617.2 MW signed out of the committed 901.0 MW
Slide 22: Business Updates: 2014 4Q
Business Updates: 2014 4Q Customer-driven Technology & Innovation Initiatives Power Lab PRES / Kuryente Load Campaign New Business Center Look Net Lima eV Meralco Charging Station Advisory Ateneo eV Shuttle Leasing Comet eJeep Energy Efficiency & Deployment Savings Programs
Slide 23: Business Updates: 2014 4Q
Business Updates: 2014 4Q Making a Difference in Society and Communities OMF President Jeffrey O. Tarayao receives award on behalf of Meralco from jury members Dr. Jayanthi Desan, Managing Dir. of Synergio Consulting SDN BHD and Andrew Bryant, Author of Self Leadership MERALCO AWARDED FOR CORPORATE
Slide 24: Regulatory Updates FY 2014
Regulatory Updates FY 2014
Slide 25: Regulatory Updates - Outline
Regulatory Updates - Outline • WESM Primary Offer Cap and Secondary Price Cap • FIT Updates • Updates on Emergency Powers
Slide 26: Primary offer cap was reduced to P32/kWh from P62/kWh
Primary offer cap was reduced to P32/kWh from P62/kWh Jun 9, 2006 – ERC, DOE and PEMC issued Joint Res 2, S. 2006, setting the primary offer price cap to P62,000/MWh for 90 days Dec 27, 2013 – ERC, DOE and PEMC issued Joint Res 2, S. 2013, setting the primary offer price cap to P32,000/MWh for 90 da
Slide 27: WESM prices capped at P6.245/kWh upon breach of threshold
WESM prices capped at P6.245/kWh upon breach of threshold May 5, 2014 – Interim mitigating measure: P6,245/MWh secondary price cap (ERC Res 8, S. 2014) Jun 16, 2014 – Extended secondary cap for 45 days (ERC Res 13, S. 2014) Jul 23, 2014 – ERC conducted a public consultation Aug 5, 2014 – Extended se
Slide 28: ERC sets final secondary price cap in the WESM
ERC sets final secondary price cap in the WESM Final Interim Jan 2015- May-Dec 2014 onwards Rolling Ave P9,000/MWh P8,187/MWh Threshold Rolling 7 days (168 hours) 3 days (72 hours) Period Secondary P6,245/MWh P6,245/MWH Price Cap a. Rolling Average Threshold: Final Preemptive Measure Interim Mitigat
Slide 29: Feed-in-Tariff (FIT) Implementation
Feed-in-Tariff (FIT) Implementation • 1st Batch of Installation Targets set by the DOE FIT Rates* Installation RE Technology (Php/kWh) Targets** (MW) ROR- Hydro 5.90 250 Biomass 6.63 250 Wind 8.53 200 Solar 9.68 50 OTEC Deferred - Total 750MW *FIT Rates approved by the ERC in July 2012 ** Installati
Slide 30: Additional 450MW of Solar PV under the FIT Program
Additional 450MW of Solar PV under the FIT Program DOE formally transmitted ERC PUBLIC CONSULTATION to the ERC a certification o Meralco said the add’l 450MW should consider -- adjusting the solar • Readiness of DU networks to accommodate the installation target to 500 additional capacity MW under t
Slide 31: New bill component: FIT-All (Renewable)
New bill component: FIT-All (Renewable) ERC Order dated 10 October 2014 “Cthe Commission hereby PROVISIONALLY APPROVES the Feed-in-Tariff Allowance (FIT-All) of Php 0.0406/kWh.” Collection Agents i.e. Meralco, Mpower, MEP, CEDC, PELCO II, implemented starting February 2015 bills to customers. MERALC
Slide 32: Meralco's Info Campaign to Customers and Employees
Meralco’s Info Campaign to Customers and Employees Spark February 2015 Issue Bill Advisory Appeared on all February bills to customers
Slide 33: President Aquino's speech on additional generating capacity
“Very soon, we will formally ask Congress for a joint resolution, that will authorize the national government to contract an additional generating capacity to address the 300-megawatt projected deficit, and, on top of that, to have sufficient regulating reserves equivalent to four percent of peak de
Slide 34: Updates on Emergency Powers
Updates on Emergency Powers Sep 25, 2014 : House Resolution No. 1533 “Directing The Committee On Energy To Conduct An Inquiry, In Aid Of Legislation, To Determine Government Options To Alleviate Power Shortage In 2015” was filed by Speaker Belmonte and Majority Floor Leader Neptali Gonzales Jr. Nov
Slide 35: Updates on Emergency Powers
Updates on Emergency Powers SALIENT FEATURES OF HOUSE JOINT RESOLUTION NO. 21: • Additional generating capacity shall be sourced from: (1) the Interruptible Load Program (ILP) (2) fast tracking of new committed projects, and plants for interconnection and rehabilitation; and (3) adoption and executi
Slide 36: Updates on Emergency Powers
Updates on Emergency Powers Sep 25, 2014 : Senate Committee on Energy Consultative Meeting on: • Section 71 of R.A. No. 9136 (EPIRA) in Reference to the Letter of His Excellency, President Benigno S. Aquino III Dated 12 September 2014 Seeking the Immediate Enactment of the Same • Senate Resolution N
Slide 37: Updates on Emergency Powers
Updates on Emergency Powers SALIENT FEATURES OF SENATE JOINT RESOLUTION NO. 12: • DOE, in coordination with other government agencies, to suspend application of necessary certifications, permits, licenses, consents, and other authorizations to ensure existing committed projects and plants for connec
Slide 38: Amendment to Biofuels Act of 2006
Amendment to Biofuels Act of 2006 On 9 Feb 2014, the Senate Committee on Energy, conducted a hearing on Senate Bill No. 2622 entitled: An Act Amending Republic Act No. 9367, Otherwise Known as the "Biofuels Act of 2006" (by Senator Osmeña) Chairperson Osmeña introduced SB 2622 which seeks to exempt
Slide 39: MGen Updates FY 2014
MGen Updates FY 2014
Slide 40: San Buenaventura Power Limited
San Buenaventura Power Limited (460-MW Coal-Fired Power Plant, Quezon) Power Supply Agreement with MERALCO Signed on 30 May 2014 and submitted to the ERC for approval on 2 June 2014 All hearings concluded last year ERC ruling expected by Q1 2015 Financing Final stages of evaluation to appoint lead a
Slide 41: Redondo Peninsula Energy
Redondo Peninsula Energy (600-MW CFB Coal-Fired Power Plant, Subic) Supreme Court resolution, 03 February 2015, by a unanimous 13-0 vote: The 30 Jan 2013 Decision and 22 May 2013 Resolution of the Court of Appeals are reversed and set aside The Petition for Writ of Kalikasan is denied for insufficie
Slide 42: Atimonan One Energy
Atimonan One Energy (2 x 600-MW PC Coal-Fired Power Plant, Quezon) Development activities for the 2 x 600-MW supercritical pulverized coal-fired power plant in Atimonan, Quezon gained headway in 2014. An experienced international engineering firm has been engaged as Owner’s Engineer. Engineering, Pr
Slide 43: Global Business Power Corporation (GBPC)
Global Business Power Corporation (GBPC) MGen acquired a 20% equity interest in GBPC in Oct 2013. GBPC operates a total of 627-MW (gross capacity) composed of coal and diesel- fired power plants. In addition, it has 232 MW (gross) of coal-fired power plants under construction in the Visayas. In June
Slide 44: Financial Highlights FY 2014
Financial Highlights FY 2014
Slide 45: Revenues, EBITDA and Net Income
Revenues, EBITDA and Net Income CONSOLIDATED REVENUES (in P mn) EBITDA (in P mn) AND MARGINS & ENERGY SALES (in GWh) CORE REPORTED 298,636 36,000 33,172 32,979 18% 300,000 32,000 30,845 30,682 16% 266,336 28,000 14% 24,000 12% 250,000 20,000 12% 12% 10% 16,000 10% 10% 8% 12,000 6% 35,000 200,000 8,0
Slide 46: Costs and Expenses
Costs and Expenses TOTAL EXPENSES (in P mn) 10,992 6,093 168,979 203,242 19,525 34,263 Purchased Power - Generation Purchased Power - Transmission Operating and Maintenance Depreciation and Amortization Other Expenses - net CAPITAL EXPENDITURES (in P mn) MAJOR ELECTRIC CAPITAL PROJECTS IN 2014: 12,3
Slide 47: Credit and Debt Profile
Credit and Debt Profile TOTAL DEBT (in P mn) 33,591 30,042 (in P mn except ratios) FY 2013 FY 2014 Cash 59,851 69,467 11% Total Debt 33,591 30,042 2013 2014 Net Debt (26,260) (39,426) Current Maturities Non-current Maturities DEBT REPAYMENT SCHEDULE (in P mn) 11,884 Total Debt/EBITDA 1.09 0.91 Net D
Slide 48: Earnings per Share and Cash Dividends
Earnings per Share and Cash Dividends REPORTED AND CORE EARNINGS PER SHARE (in P) 16.02 16.08 15.19 15.27 15.10 14.43 13.21 11.76 10.78 8.59 2010 2011 2012 2013 2014 Earnings per Share Core Earnings per Share DIVIDENDS DECLARED OUT OF CORE EARNINGS FOR THE YEAR (in P/share) AND PAYOUT RATIO Payout R
Slide 49: Cautionary Statements
Cautionary Statements This presentation is prepared for the participants of the MERALCO Investors and Analysts Briefing & Teleconference held on February 23, 2015. This presentation has consequential limitations and is not a comprehensive discussion about Manila Electric Company and Subsidiaries (ME
Manila Electric Company — FY2014 Earnings Presentation on 6ix