REPORT OF THE PRESIDENT, CHIEF OPERATING OFFICER AND CHIEF FINANCE OFFICER
Fellow shareholders, a pleasant and safe morning to all!
It has been 30 years since Lopez Holdings was organized on June 8, 1993. Originally named Benpres Holdings Corporation, the company invested in vital infrastructure and world-class services to support the development of the country and its people. Lopez Holdings continues this support through its current investees, First Philippine Holdings Corporation (FPH) and ABSCBN Corporation, which provide valuable and honorable service to all our stakeholders.
For the year 2022, Lopez Holdings reported P5.439 billion in net income attributable to equity holders of the Parent. This is 254% higher than the P1.538 billion in net income attributable to equity holders of the Parent in 2021.
The financial results primarily reflect the recovery in the businesses of units under investee First Philippine Holdings Corporation (FPH), following the easing of community quarantine measures in 2022. Hence, consolidated revenues increased by 36% year-on-year to P170.338 billion from P125.159 billion. Investee ABS-CBN Corporation also reported a smaller net loss, helped by an increase in advertising revenues and the sale of some properties and equipment. This is reflected in the Equity share in net losses from investment accounted for at equity method amounting to P943 million for the year 2022 from an equity share in net losses of P2.848 billion in the previous year.
As of December 31, 2022, Lopez Holdings’ total consolidated assets grew to P428.426 billion from P401.500 billion as of December 31, 2021. This figure mainly includes assets of First Philippine Holdings. Debt-to-equity ratio slightly declined at 0.58x in 2022 from 0.62x in 2021 while the book value per share increased at P19.41 a share at the end of 2022 from a book value of P17.15 a share in 2021.
Since 2017, the Parent Company, Lopez Holdings has had no more direct obligations. However, on a consolidated basis, total liabilities stood at P204.246 billion at year end-2022. First Philippine Holdings benefited primarily from the strong performance of its operating unit, First Gen Corporation. Moving forward, this means that the energy group would have sufficient resources to meet its obligations and fund its committed investments.
Total equity attributable to Parent stood at P78.776 billion as of December 31, 2022 from P65.071 billion year-on-year.
Let us now move to the performance of our investee companies. FPH reported a 26% increase in net income attributable to equity holders of the Parent to P12.676 billion from P10.021 billion in 2021. Recurring net income attributable (RNI) to FPH was at P12.784 billion, 27% higher than P10.055 billion the previous year. Its year-on-year (YoY) consolidated revenues were higher by 36% at P170.338 billion from P125.159 billion.
The favorable performance of the FPH Group was driven by improved earnings across the conglomerate’s core business groups, with power, real estate, and energy solutions showing significant growth.
Its year-on-year (YoY) consolidated revenues were higher by 36% at P170.338 billion from P125.159 billion. The favorable performance of the FPH Group was driven by improved earnings across the conglomerate’s core business groups, with power, real estate, and energy solutions showing significant growth. Sale of electricity accounted for 85% of revenues in 2022 and 2021.
First Gen Corporation (FGEN), a key investee of FPH, forged ahead with its Interim Offshore LNG (liquefied natural gas) Terminal (Project) to accelerate its ability to introduce LNG to the Philippines. The Project will play a critical role in ensuring the energy security of the Luzon Grid and the Philippines, particularly as the indigenous Malampaya natural gas resource declines.
FGEN LNG Corporation (FGEN LNG), a wholly-owned subsidiary of FGEN, requested the Department of Energy to extend the validity of its Permit to Construct, Expand, Rehabilitate and Modify (“PCERM”) for its Interim Offshore LNG Terminal (Project) from September 23, 2022 to March 23, 2023, in accordance with the provisions of the Philippine Downstream Natural Gas Regulations (PDNGR). The delay in the completion of the Project was caused by events and circumstances not within the reasonable control of FGEN LNG.
Separately, FGEN LNG and its Floating Storage Regasification Unit (FSRU) provider, BW FSRU IV Pte Ltd (BW), agreed to move delivery of the FSRU BW Paris from Q1 2023 to the end of Q2 or early Q3 2023. In April 2021, FGEN LNG and BW executed a five-year Time Charter Party (TCP) for the charter of the BW Paris, which will serve to provide LNG storage and regasification services to FGEN’s existing and planned gas-fired power plants and other thirdparty terminal users.
On the other hand, ABS-CBN reported a 2022 net loss of P2.636 billion, 54% lower than the P5.670 billion net loss in 2021. YoY revenues increased by 8% to P19.197 billion from 17.825 billion. Advertising revenues improved by 21% due to election-related placements and regular advertising growth. The company also sold treasury shares and PDRs (Philippine Depositary Receipts) to our ultimate parent, Lopez, Inc., as well as certain land and equipment to external parties.
While lacking a broadcast franchise, ABS-CBN remains committed to serving the Filipino anywhere in the world. With Kapamilya Channel on cable TV and its digital streaming channel “Kapamilya Online Live” on YouTube and Facebook, a content supply agreement with Zoe Broadcasting that allows it to air certain shows on the A2Z Channel and TV5, partnerships like PIE Channel with Kroma Entertainment and BEAM, ABS-CBN is able to generate advertising revenues from its programs.
It is building up content sales and licensing to domestic and international clients—including TV5, GMA Network, AMBS, Netflix, Viu, iQiyi, and WeTV. The Company distributed over 381 titles to various territories in Asia, Africa, the Middle East, and Europe, as well as over-the-top platforms. It continues to utilize various third party platforms like Youtube, Facebook, Tiktok, and Instagram to maximize its reach and generate advertising revenues.
As economies began to open up in 2022, ABS-CBN also resumed staging events and releasing movies in various countries worldwide.
Let me now report on the unaudited financial results for the first quarter of 2023. Lopez Holdings reported P1.666 billion in net income attributable to equity holders of the Parent. This is 96% higher than the P851 million in net income attributable to equity holders of the Parent reported in the first quarter of 2022. The First Philippine Holdings group reported improved earnings while ABS-CBN’s net loss continued to decline.
First Philippine Holdings posted a 32% increase in net income attributable to equity holders of the parent to P4.342 billion P3.295 billion in 1Q2022. It reported a 21% increase in revenues to P42.491 billion from P35.074 billion. Sale of electricity accounted for 85% of revenues in 1Q2023, compared to 83% in 1Q2022.
On the other hand, ABS-CBN reported a net loss of P1.218 billion, which is 13% lower than the net loss of P1.397 billion in 1Q2022. It reported unaudited revenues of P4.262 billion, 8% lower than P4.650 billion in the same quarter last year.
Your company is working closely with its investees to identify opportunities and mitigate risks as we all tread the path toward a regenerative future. For FPH, this means collaborating with a host of businesses, communities and institutions in the transition to a decarbonized energy environment. For ABS-CBN, this means collaborating with creative talent, established distribution channels and emerging platforms in the transition to digital media content that showcase the best of the Philippines to global audiences. This is a major pivot for ABS-CBN from being a traditional broadcasting company to a full time content creation entity.
As we look forward toward recovery and growth, we take this opportunity to remember our late leaders whose singular contributions have allowed the company to weather the toughest of adversities. The year 2023 sadly saw the demise of Ambassador Manuel M. Lopez, chairman emeritus of the company as of his death on January 12, 2023, and Oscar M. Lopez, chairman emeritus from 2010 up to 2020, who passed away on April 22, 2023.
Mr. Oscar M. Lopez served as chairman and chief executive officer from 1999 up to 2010. It was under Mr. Oscar M. Lopez’s leadership at the most critical period when the company, then called Benpres Holdings, painstakingly worked to resolve its financial challenges triggered by the Asian Financial contagion. On the other hand, Ambassador Manuel M. Lopez served as chairman and chief executive officer from 2010 up to 2020 and then as chairman emeritus until this year. He oversaw the recovery of your company to financial health, resulting in steady annual returns to shareholders from 2011. He also served the country as Ambassador to Japan under the Aquino Administration, highlighted by the delivery of prompt relief and vital assistance to our fellow Filipinos during the Great East Japan Earthquake in 2011.
We are forever grateful for their unwavering leadership and service. Their vision and values will continue to guide Lopez Holdings on its path toward a regenerative future, creating value for all stakeholders in the service of God and our countrymen.
We thank you, fellow shareholders, for your continued support and for your confidence in your management team.
Salvador G. Tirona
President, Chief Operating Officer
and Chief Finance Officer