Lopez Holdings


Salvador G. Tirona

Fellow shareholders, a pleasant and safe morning to all!

For the year 2020, your company reported P2.625 billion in net loss attributable to equity holders of the Parent. This is a considerable drop from a net income of P5.322 billion reported in 2019. The financial performance of First Philippine Holdings Corporation or FPH offset by the significant impairment losses of ABS-CBN Corporation (ABS-CBN) accounted for the decrease.

Lopez Holdings consolidated revenues decreased by 20% year-on-year to P107.281 billion from P133.594 billion. In 2020, we saw weaker performance from the operating units under investee FPH as a consequence of the economic slowdown due to COVID-19 quarantine measures, as well as the net losses posted by investee ABS-CBN.

Equity share in net loss from investment accounted for at equity method amounted to P7.163 billion for the year 2020 from an equity share in net loss of only P977 million in the previous year. This represents mainly the performance of ABS-CBN for the year 2020, partly offset by the share in the performance of FPH units. In 2020, ABS-CBN incurred a net loss of P13.344 billion versus P2.645 billion in 2019, with net loss attributable to equity holders of the Parent at P13.269 billion from P1.625 billion in the previous year. This was after ABS-CBN recognized impairment losses and one-time expenses which included, among others, expenses for the separation of employees, write-offs of pre-production costs, intangibles and goodwill, property and equipment, provision for doubtful accounts and inventory impairments following the denial of its broadcast franchise in July 2020.

For the full year 2020, Lopez Holdings’ total consolidated assets grew to P397.970 billion from P392.584 billion in 2019. This figure mainly includes assets of FPH. Debt-to-equity ratio was maintained at 0.34x in 2020. However, book value per share was down at P14.12 a share at the end of 2020 from a value of P15.35 a share in 2019.

As of December 31, 2020, the Parent Company, Lopez Holdings had no more direct obligations. On a consolidated basis, total liabilities stood at P196.947 billion at year end-2020 versus P193.527 billion at year end-2019. FPH benefited primarily from the strong performance of its operating unit, First Gen Corporation or FGEN. Moving forward, this means that FPH’s energy group would have sufficient resources to meet its obligations and fund its committed investments.

Total equity attributable to Parent stood at P64.148 billion as of December 31, 2020, down by 8% from P69.991 billion year-on-year.

For the year 2020, FPH reported a 22% decrease in net income attributable to equity holders of the Parent of P9.860 billion from P12.583 billion reported in 2019. Recurring net income attributable (RNI) to FPH was at P9.406 billion or 21% lower than the P11.979 billion in the previous year. As already mentioned, the downturn was generally caused by lower sales volumes and incomes of its business units, mainly reflecting the financial impact of the community quarantine measures implemented in response to the COVID-19 pandemic.

Despite the current economic challenges, FPH forges on toward a regenerative future, as its major investee FGEN, pursues its Interim Offshore LNG Terminal or IOLT Project. Last year, FGEN LNG Corporation received from the Department of Energy (DoE) a Permit to Construct, Expand, Rehabilitate and Modify (PCERM), with respect to its application for the construction of an IOLT Project located in the First Gen Clean Energy Complex (FGCEC) in Batangas City. This will allow FGEN LNG to bring in a Floating Storage & Regasification Unit (FSRU) on an interim basis and accelerate the company’s ability to introduce LNG to the Philippines as early as the third quarter of next year.

Also last year, FGEN and Tokyo Gas Co., Ltd. signed a Joint Cooperation Agreement or JCA, representing the next phase of their joint development of the IOLT Project. Under the JCA, Tokyo Gas will have a 20% participating interest in the IOLT Project and provide support in the development, construction, operations and maintenance work to achieve a Final Investment Decision or FID. Upon reaching FID under the JCA, the parties will enter into a Definitive Agreement with respect to the IOLT Project.

Despite the difficulties and restrictions brought about by the pandemic, First Philippine Industrial Park pursued to completion two new clusters of ready-built factories or RBF, as there remained a robust demand for leasable warehouse and factory space. Even with the additional 30,000 square meters, average RBF occupancy rate for 2020 reached 92%.

Likewise, Rockwell Land Corporation is expanding its footprint in emerging cities with the recently launched development projects in Angeles City in Pampanga and in Bacolod City in Negros Occidental. These initiatives show that the companies are ready for the expected recovery of economic activity in the next couple of years.

Moving on to ABS-CBN, it reported a net loss of P13.344 billion in 2020, which is 404% greater than the net loss of P2.645 billion incurred in the previous year. The company provided for impairments and one-time expenses totaling P5.241 billion. These included, among others, expenses for the separation of employees, write-offs of pre-production costs, intangibles and goodwill, property and equipment, provision for doubtful accounts and inventory impairments following the denial of its broadcast franchise in July 2020. It must be noted that year-on-year revenues declined by 49% to P21.420 billion from P42.835 billion.

Operating under the new normal, ABS-CBN brought back full programming through its Kapamilya Channel which is made available on SKY Cable, Cablelink, G Sat, and most member-cable operators of the Philippine Cable Television Association nationwide. It also launched Kapamilya Online Live to provide livestreaming of its shows on ABS-CBN Entertainment’s YouTube and Facebook pages, available exclusively in the Philippines.

ABS-CBN’s digital pivot is meant to address the Filipino audiences’ growing demand for online content. By March 2021, ABS-CBN Entertainment’s YouTube channel became the most subscribed and most viewed in Southeast Asia with 32.7 million subscribers and 43 billion views. Also as of March 2021, its Facebook page, ABSCBNnetwork, had 28 million followers while its streaming service, iWant, had 11 million subscribers.

Aside from its online platforms, ABS-CBN is now also airing some entertainment programs on A2Z Channel 11 through a blocktime agreement with Zoe Broadcasting Network, Inc., as well as on TV5. And just last July 1, 2021, two of its homegrown cable TV channels, Cinema One and MYX, began airing on Cignal.

With the loss of its free TV broadcasting franchise, ABS-CBN has endeavored to recover its audience reach through various digital platforms as well as partnerships with other free TV broadcasters and cable operators. While the process may be slow and challenging, the company is determined to recover its audience reach and to continue its mission of “being in the service of the Filipino”.

Let me now report on the financial performance of Lopez Holdings for the first quarter of 2021.

Based on unaudited numbers for the first quarter of 2021, Lopez Holdings reported P613 million in net income attributable to equity holders of the Parent. This is 47% lower than the P1.156 billion in net income attributable to equity holders of the Parent reported for the same period last year. Lower income generated by the energy sector from the FPH Group, higher foreign exchange losses and higher equity share in net losses from ABS-CBN through Lopez PDRs accounted for the decrease.

FPH, however, posted a 7% increase in net income attributable to equity holders of the parent to P3.424 billion from P3.199 billion in 1Q2020 despite a reported 5% decrease in revenues to P27.873 billion from P29.292 billion. Sale of electricity accounted for 83% of revenues in 1Q2021, compared to 84% of revenues in 1Q2020.

On the other hand, ABS-CBN registered a net loss of P1.951 billion for the first quarter of 2021, 156% lower than the net loss of P763 million for the same period last year. It reported unaudited revenues of P3.920 billion, 55% lower than P8.635 billion in 1Q2020.

Likewise, in the first quarter of this year, FPH conducted a tender offer for Lopez Holdings shares. This has resulted in FPH now owning 15.68% of the issued and outstanding shares of the company. The tender offer gave us some opportunity to touch base with a number of shareholders, including those who have held our shares since the initial public offering in 1993 of your company which was then known as Benpres Holdings Corporation. During those instances, we received some words of encouragement in the light of the challenges faced by investee ABS-CBN and also messages of hope that a new Phoenix will rise once more from the ashes.

We sincerely appreciate such messages and assure you, our fellow shareholders that your management team continues to work hard, cognizant of the many risks and challenges, in order to deliver value to you and be deserving of your continued support.

On behalf of the Lopez Holdings Board of Directors, officers and staff, I thank you for your continued trust and confidence. Good day to all!

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

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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