Lopez Holdings

Articles

REPORT OF THE PRESIDENT, CHIEF OPERATING OFFICER
AND CHIEF FINANCE OFFICER AT THE 2018 ANNUAL STOCKHOLDERS’ MEETING

Fellow shareholders:

Lopez Holdings Corporation reported P4.225 billion in net income attributable to equity holders of the Parent for the year 2017, 36% lower than the P6.557 billion in net income attributable to equity holders of the Parent reported in 2016. The financial performance of investees First Philippine Holdings Corporation and ABS-CBN Corporation accounted for these results. First Philippine Holdings reported one-off gains or non-recurring income in 2016, pertaining to the arbitration settlement proceeds received by the First Philippine Electric group, and collection of liquidated damages by First Gen Corporation for its San Gabriel flex-plant. Also, ABS-CBN generated more revenues in 2016 from political ads and policacies being an election year on top of revenues from its Pay TV and new business initiatives. The absence of these accounted for most of the decline in 2017.

For the year 2017, consolidated revenues actually increased by 14% to P104.890 billion from P91.910 billion in the previous year. This was primarily due to the increase in the Sale of electricity of First Philippine Holdings’ subsidiary First Gen. Sale of electricity accounted for 82% of revenues in 2017 versus 81% in 2016.

Earnings from investments accounted for under at equity method was lower by 12% at P2.038 billion from P2.328 billion year-on-year, representing the performance of ABS-CBN, as well as share in the performance of First Philippine Holdings units. ABS-CBN’s net income decreased by 10% year-on-year.

For the first quarter of 2018, however, your company reported P1.145 billion in net income attributable to equity holders of the Parent. This is 10% higher than the P1.042 billion in net income attributable to equity holders of the Parent reported in the first quarter of 2017. Foreign exchange losses reduced the consolidated bottom line, despite an 8% increase in First Philippine Holdings’ revenues from its equity share in net earnings of subsidiaries, First Gen and Rockwell, and lower losses from its other businesses.

Additionally, equity in net earnings from associate ABS-CBN through Lopez PDRs amounted to P284 million, reflecting a 4% increase versus the P272 million share reported in the first quarter of 2017.

For the full year 2017, Lopez Holdings’ total consolidated assets grew to P388.050 billion from P366.250 billion in 2016. This figure mainly includes assets of First Philippine Holdings. Debt-to-equity ratio improved at 0.84x in 2017 versus 1.03x in 2016. Also, book value per share was up at P13.83 a share at the end of 2017 from a value of P13.06 a share in 2016.

As of December 31, 2017, the Parent Company, Lopez Holdings had no direct obligations, compared to US$5 million in restructured notes held as of year end-2016. On a consolidated basis, total liabilities stood at P200.791 billion at year end-2017 versus P206.725 billion at year end-2016.

For the first quarter ending March 31, 2018, Lopez Holdings’ total consolidated assets grew by 3% to P399.07 billion from P388.05 billion as of December 31, 2017. On a stand alone Parent Company’s financial position accounted for at equity method, Lopez Holdings total assets as of March 31, 2018 stood at P62.22 billion. It is composed of Current assets which is mainly cash and cash equivalents and Noncurrent assets representing our carrying value of investments in First Philippine Holdings and ABS-CBN.

Total equity attributable to Parent stood at P61.94 billion.

In 2017, Lopez Holdings received P1.020 billion in cash dividends from conglomerates First Philippine Holdings and ABS-CBN. In the same year, your company paid out P463 million in cash dividends to shareholders and paid in full the remaining US$5 million in restructured notes. Hence, Lopez Holdings ended the year with zero direct obligations.

Last May 17, 2018, your company declared a cash dividend of ten centavos (P0.10) per share to stockholders of record as of May 31, 2018 and payable on Monday, June 18 (since June 16 falls on a Saturday while tomorrow, June 15 was declared a holiday). This is the 8th consecutive year that your company paid cash dividends since the complete resolution of the company’s long-standing debt issues in 2010.

For our investee ABS-CBN, it continued to dominate national TV ratings in 2017 and produced more digital content on more platforms than any Philippine broadcaster. Its online and mobile channels continue to attract niche viewers that prefer content on-demand.

The power group under First Philippine Holdings continued to improve approaches to environmental risk.

An earthquake in April 2017 in Mabini, Batangas caused some damage to the San Lorenzo Switchyard, which connects the San Lorenzo, San Gabriel and Avion power plants of First Gen to the transmission lines of the National Grid Corporation of the Philippines. Although said three plants did not suffer any damage that would have prevented them from operating, they only got reconnected to the grid after the Switchyard was restored.

Another earthquake in July caused geothermal power plants of Energy Development Corporation or EDC in Leyte to trip. EDC proceeded to redesign some of its facilities in Leyte to withstand future earthquakes. Then in December, a typhoon brought floods and landslides, damaging pipelines and the marshalling station of the Leyte Geothermal Project. Because of typhoon-proofing measures initiated several years ago, the power plants avoided major damage, but the pipelines and marshalling station had to be restored before any power produced could reach the grid.

Hence, the theme of this year’s annual report, “Adapting for Sustainability” is as timely as ever. In our Sustainability Report, Lopez Holdings shares with our shareholders what our investees have been doing to promote a sustainable environment, as well as to reduce or eliminate any negative impact of operating activities.

Over the years, First Philippine Holdings has been consciously addressing the multiple risks that attend to power plant, property development and manufacturing business operations, not just on a technical basis, but also on a social level, engaging neighboring communities to actively protect the environment.

Consistent with its motto, “In the Service of the Filipino”, ABS-CBN for example has a whole program called “Red Alert”, that partners with non-government organizations as well as government agencies to bring climate risk reduction and management information to the grassroots through roving caravans and of course, to regular TV audiences.

Even in a simple office set-up of a holding company, Lopez Holdings contributes to this initiative by minimizing waste through efficient energy and water consumption.

The truth is everybody can contribute toward a healthier environment and a better society. We just need to be conscious of the power we hold, not only because of the important resources we have under stewardship, but more so because of the long-term consequences of every action we take today.

It is important for the public and private sectors to cooperate to mitigate the impact of climate change on our people. And we have to help educate our fellow citizens on what each one can do to prepare for and survive natural and man-made disasters.

The image on the cover of this annual report says it all: it is in our hands what kind of world we will hand over to the next generation. Let us make it a living, vibrant and sustainable world.

Thank you for your confidence in your management team and a good day to everyone!

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CONTACT US

Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

  • Trunkline: (632) 8878 0000
  • Fax: (632) 8878 0000 ext 2009