Lopez Holdings

Articles

2012 Report of the President and COO

Fellow shareholders:

Lopez Holdings ended 2012 with only US $ 23million in restructured debt and P67 million in LT CPs (longterm commercial papers). When the company declared a standstill in 2002, its debt reached a high of US $ 560million. A clean balance sheet enables your management to work on further improving company value and shareholder returns.

 DEBT   UPDATE
US $ 560million in 2002  US$ 23million in 2012
 
 Milestones  
2005 US$ 160million guarantees removed (Maynilad) 
2007 US$ 43million debt bought back at a discount
2009 US$ 262million debt bought back at a discount
2010 US$ 24million debt restructured
2011 US$ 35million debt bought back at face value
2012 US$ 5million debt bought back at face value

Your company remains focused on two core businesses:
  • ABS-CBN Corporation (ABS-CBN) leads synergies with affiliate Sky Cable Corporation and sister company Bayan Telecommunications, Inc. This reflects the diverse nature of its operations which include among other things, television, radio, cable, film, talent development, magazines, recording, international content distribution, licensing and public service. ABS-CBN maintained national ratings leadership in 2012 with inspired programming that touched the hearts and minds of viewers; and,
  • First Philippine Holdings Corporation (FPH), which is a recognized leader in clean and renewable energy through First Gen Corporation and Energy Development Corporation. In addition, FPH controls premier property developer Rockwell Land Corporation; the investors’ choice community, First Philippine Industrial Park; construction firm First Balfour, Inc.; and ventures in green manufacturing.

ABS-CBN metrics

  2012 2011
Contribution to Consolidated
Revenues 
   
 – Advertising 60% 62%
 – Consumer Sales 40% 38%
 EBITDA Margin 21% 24%
 Earnings per share ( ₱) 2.304 3.264
 Book value per share ( ₱) 29.02 27.70
 Dividend Payout ( ₱ mn) 593 1,637
 Interest coverage ratio 3.65 4.64
 Capital Expenditures ( ₱ bn) 4.958 4.205
 Capex/Consolidated Revenues 16%  15%

FPH metrics

  2012 2011
Contribution to Consolidated
Revenues 
   
 – Sale of electricity 75% 83%
 – Real estate 8% 1%
 – Equity in associate 7% 1%
– Contracts and services  5%  4%
 – Sale of merchandise 5% 11%

 Earnings per share ( ₱ )

16.744 3.099
 Book value per share ( ₱ )  136.61 133.58
 Dividend Payout ( ₱mn)  1,284 1,489
 Interest coverage ratio    4.75  2.51
 Capital Expenditures ( ₱ bn) 1.637 4.631
 Capex/Consolidated Revenues 2% 7%

These major investees continue to perform well in increasingly competitive markets and often challenging regulatory environments. Through the continuing investments of and in these core businesses, Lopez Holdings expects future growth.

As of March 31, 2013, Lopez Holdings owned 60.3% of ABS-CBN and 46.2% of FPH.

  March    
  2013 2012 2011 
Major Asset Values* (in ₱bn)                 44.2 37.8 28.9
 ABS-CBN (60.3%) 17.5  14.9 13.3
 FPH (46.6%)      
 Less: Total Debt 1.0  1.0 1.3
Net Asset Values – Total (₱ bn)            

43.2 

36.7 

27.6 

 – ₱per share 9.42 8.02

9.42 8.02 6.02
Market Capitalization –Total ( ₱bn) 33.1 28.8 23.4
– ₱per share 7.22 6.28 5.10
Book value per share 9.97  9.97 9.15
*Asset values are market values for ABS-CBN and FPH


Focus on equities


The Philippine stock market landed in the top ten of the world’s best performing markets in 2012 with the PSEi (Philippine Stock Exchange index) gaining 33 percent year-on-year (YoY).

In Southeast Asia, it was a close second to Thailand which advanced by 36 percent YoY.

The higher value of Philippine shares, which rose to price-earnings ratios of 18x 2012 earnings, was supported by real growth in corporate earnings (up 18 percent YoY for January-September), and robust economic indicators: historically low interest rates (91-day Treasury bill rate averaged 1.58 percent in 2012 and closed at 0.20 percent in December); gross domestic product at 6.6 percent, surpassing the 5 to 6 percent national government target and 2011’s 3.9 percent; and benign inflation which averaged 3.2 percent versus 4.6 percent the previous year.

The PSE’s market capitalization grew by 26 percent YoY to ₱10.9 trillion from ₱8.7 trillion as of end-2011.

For Lopez Group member companies, FPH (First Philippine Holdings Corporation) and FGEN (First Gen Corporation) outperformed the general market with YoY gains of 46 percent and 52 percent, respectively. Meanwhile, FPH subsidiary RO CK (Rockwell Land Corporation) ended the year 66 percent higher than its indicative price when it was listed by way of introduction in May 2012.

PSE Index and Performance of Selected Stocks
  December 28, 2012 December 29, 2011 Close  % YoY Change in 2012  
PSEi 5,812.73 4,371.96 +32.95
ABS  ₱33.30 ₱29.70  +12.1
ABSP ₱34.00 ₱29.90 +13.7
EDC   ₱6.75 ₱6.29 +7.3 
FGEN ₱22.30 ₱14.62 +52.5
FPH ₱90.00 ₱61.50 +46.3
LPZ ₱6.28 ₱5.10 +23.1
ROCK ₱2.43 Not applicable +66.4a

Based on stock market prices as of the end of the first quarter of 2013, Lopez Holdings’ combined shareholdings in ABS-CBN and FPH amounted to ₱44.2 billion — ₱17.5 billion for ABS-CBN and ₱26.7 billion for FPH.

Because debt of the parent company has decreased to a manageable level of ₱962 million, Lopez Holdings’ market capitalization of over ₱33.1 billion reflects a coverage of almost 33x its debt level.

Your company is committed to support its core companies by all means necessary to secure their path toward sustainable growth.

There are many opportunities in the horizon. Your management is guided by the lessons of Lopez Holdings’ young corporate history, as it approaches future investments with a balance of prudence and daring.

In behalf of the officers and staff members of Lopez Holdings, I thank you all for your trust in your management team.

  Frame-Salvador Tirona
Salvador G. Tirona
President, Chief Operating Officer and Chief Finance Officer

Mailing List

Please enter your email address to join our mailing list and receive our corporate updates.

CONTACT US

Lopez Holdings Corporation (formerly Benpres Holdings Corporation)
4/F Benpres Building, Exchange Road, 1605 Pasig City, Philippines

  • Trunkline: (632) 449-2345
  • Fax: (632) 634-3009