Meralco 1H2019 Financial and Operating Results with Comparatives vs 2018

Highlights

• Consolidated Core Net Income for the first half of 2019 at PhP12.3 billion, 14% higher than in the first half of 2018
• Consolidated Reported Net Income for the first half of 2019 at PhP12.0 billion, flat compared with 2018
• Consolidated revenues of PhP165.0 billion for the first six (6) months of 2019, 10% higher year-on-year
• Consolidated volume of energy sold for the first half of 2019 was 22,823 GWh, 5% higher than the 21,665 GWh for the same period in 2018
• Total number of billed customers rose to 6.7 million as at June 30, 2019, reflecting a year-on-year growth of more than 4%
• Consolidated costs and expenses at PhP149.6 billion for the six (6) months ended June 30, 2019, 9% higher compared with PhP136.9 billion in 2018
• Consolidated EBITDA amounted to PhP19.9 billion, up 13% year-on-year
• Core earnings per share at PhP10.928, PhP1.301 higher than in the first half of 2018
• Reported earnings per share at PhP10.653 compared with PhP10.623 in 2018
• Interim regular cash divided of PhP5.464 per share payable on September 20, 2019, representing 50% payout of Core Earnings

Manila Electric Company (PSE: MER) today announced its unaudited financial and operating results for the six (6) months ended June 30, 2019. Consolidated Core Net Income, which excludes one-time, exceptional gains and charges, amounted to PhP12.3 billion, 14% higher than the PhP10.9 billion registered in the first half of 2018. Core Earnings Per Share was PhP10.928, PhP1,301 higher than in the first half of 2018.

Consolidated reported net income was flat at PhP12 billion for the period. Reported EPS stood at PhP10.653.

Consolidated revenues in the first half of 2019 was PhP165 billion, 10% higher compared with PhP150.5 billion for the same period in 2018. The increased generation charge brought about largely by higher prices in the Wholesale Electricity Spot Market, the weakening of the Philippine peso vis-a-vis the US dollar from an average of PhP51.964:$1 in the first half of 2018 to PhP52.199:$1 for the same period in 2019 and the 5% increase in energy sales volume, largely accounted for this increase in revenues. The volume over Commercial and Industrial Sales recorded in the first half of 2019 compared with the same period lat year resulted in a higher average distribution rate.

For the first six months of 2019, non-electric revenues consisting largely of revenues from operations of non-electric subsidiaries was PhP3.7 billion, slightly higher relative to the amount for the same period last year. Non-electric revenues were primarily generated by certain subsidiaries, namely, (a) CIS Bayad Center Inc. with its fees from payment collections for 1,377 corporate and government billers in 34,775 sites and collection partners, spot billing volumes, remittances and other fee-based transactions; (b) Radius Telecoms Inc. with higher recurring revenues as a result of an expanding customer base and high service reliability; (c) Meralco Energy Inc. with its revenues for the supply and installation of powerhouse, load side and substation equipment, and for energy efficiency services; and (d) Meralco Industrial Engineering Services Corp. with revenues from engineering, procurement and construction and electromechanical contracts.

Total costs and expenses for the first half of 2019 amounted to PhP149.6 billion, 9% higher than in 2018. The cost of purchased power stood at 85% of total costs and expenses consisting largely of labor and contracted services were slightly higher at PhP12.6 billion. This amount also includes documentary stamp taxes related to issuance of shares in Meralco PowerGen Corp., real property taxes, fees and permits in the first half of 2019 totaling PhP706 million, 40% higher year-on-year.

Consolidated EBITDA for the first six (6) months of 2019 was PhP19.9 billion, with EBITDA margin on consolidated gross revenues, steady at 12%.

Consolidated capital expenditures implemented amounted to PhP10.7 billion in the first half of 2019, 62% higher than in 2018, of which Electric Capital Projects accounted for PhP8 billion or 75% of total CAPEX. Meralco continues to implement ECPs filed in each of the Regulatory Years of the fourth Regulatory Period (July 1, 2015 to June 30, 2019) which have been manifested as emergency CAPEX.

The total 4RP CAPEX filed amounted to PhP73 billion, of which a total of PhP24.1 billion have been approved by the Energy Regulatory Commission for implementation while PhP15.7 billion were manifested as emergency projects, while waiting for approval from the ERC.

The CAPEX being implemented primarily ensure adequacy and address reliability, power quality and network resiliency matters while providing enhanced customer service. A significant portion of the workload includes support for the Government’s “Public Private Partnership” and “Build Build Build” projetcs.

Apart from the 4RP CAPEX, the consolidated amount of CAPEX also included site development costs related to a power plant project of MGen totaling PhP1.7 billion.

Cash dividends declared in the first six (6) months of 2019 pertaining to final dividends out of the 2018 CCNI totaled PhP11.9 billion or PhP10.594 a share.

“In our meeting today, the Board approved cash dividends of PhP5.464 per share to all shareholders of record as at August 28, 2019, payable on September 20, 2019 representing interim regular cash dividend from the first half 2019 CCNI. This is 50% of Core Earnings for the period.

“We are happy to announce the successful synchronization to the grid of the 455 MW (net) San Buenaventura supercritical coal-fired power plant during the second quarter and are even more encouraged with its achievement of supercritical pressure and full load output in May, as we look forward to its full commercial operations later in the year. This will be a welcome addition to the supply base and security for Meralco’s franchise area customers, and to the Luzon Grid.

“We will continue to look into value and cash-flow accretive opportunities in the energy supply chain within and outside the Philippines to the extent that these are consistent with laws and regulations,” stated MR. MANUEL V. PANGILINAN, Chairman.

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