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QUARTERLY INTERIM REPORT
To Our Shareholders:
Results of Operations
The FPH Group posted a consolidated net income of
₱13.4 billion for the first half of 2012, significantly higher
than the ₱455 million profits for the same period in 2011. The
increase in the bottom line was primarily due to the
recognition of the gain on sale of Meralco shares amounting to
₱6.1 billion and the business combination gain of ₱1.8 billion
related to the Rockwell Land investment. Equity in net
earnings of associates, mainly EDC and FG Hydro, jumped to
₱3.0 billion from share in net losses of ₱1.2 billion last year.
Net income attributable to Parent surged to ₱10.8 billion, as
against the prior year’s loss of ₱402 million. Without the gain
on sale and the gain from business combination, net income
attributable to Parent was still higher at ₱2.9 billion.
In January 2012, First Philippine Utilities Corporation
(FPUC) sold 30 million Meralco shares to Beacon Electric for
a total consideration of ₱8.9 billion and realized a gain of ₱3.3
billion. On May 11, 2012, the Rockwell Land shares were
listed by way of introduction in the Philippine Stock Exchange
(PSE) at an initial price of ₱1.46 per share. In June 2012, FPH
received 1.4 billion shares of Rockwell Land valued at ₱2.8
billion from Beacon Electric pursuant to the Investment and
Cooperation Agreement dated March 12, 2009 (as
subsequently amended on November 20, 2009 and March 1,
2010). This was recognized as an additional gain relating to
the previous sale of Meralco shares. Additionally, FPH
acquired 52.8 million shares from Beacon Electric for a total
consideration of ₱106.1 million. As of June 30, 2012, the
Group owned 75.6% of Rockwell Land. Under Philippine
Accounting Standards, such events necessitated the
revaluation of the book value of FPH’s existing equity
interest in Rockwell Land to its fair value resulting in a non-
cash gain of ₱1.8 billion.
On July 27, 2012, FPH acquired 681.6 million shares of
Rockwell Land for a total consideration of ₱1.4 billion from
San Miguel Corporation (SMC) via a special block sale at the
PSE. The shares were received as property dividends by SMC
from Meralco. As a result, the company’s ownership in
Rockwell Land increased to 86.8%.
First Gen reported a net income attributable to Parent of
₱4.0 billion (US$92.8 million) for the first semester of 2012,
up from the ₱698 million (US$16.0 million) in net losses last
year. The turnaround in net results was brought about by
First Philippine Holdings Corporation
JUNE 30, 2012
ASSETS 2012 2011 Increase
(As restated) (Decrease)
Current Assets
Cash and cash equivalents ₱25,968 ₱22,487 ₱3,481
Short-term investments 99 6,476 (6,377)
Trade and other receivables 14,654 8,639 6,015
Inventories 11,836 4,222 7,614
Other current assets 3,381 2,484 897
55,938 44,308 11,630
Asset classified as held for sale – 157 (157)
Total Current Assets 55,938 44,465 11,473
Noncurrent Assets
Investments and deposits in associates 55,239 58,929 (3,690)
Investment in equity securities 11,606 20,516 (8,910)
Property, plant and equipment 30,524 32,056 (1,532)
Investment properties 10,485 1,349 9,136
Goodwill and intangible assets 574 612 (38)
Retirement benefit asset 940 890 50
Deferred tax assets 719 511 208
Other noncurrent assets 7,212 8,431 (1,219)
Total Noncurrent Assets 117,299 123,294 (5,995)
TOTAL ASSETS ₱173,237 ₱167,759 ₱5,478
LIABILITIES AND EQUITY
Current Liabilities
Loans payable ₱3,734 ₱– ₱3,734
Trade payables and other current liabilities 16,574 12,581 3,993
Income tax payable 258 211 47
Current portion of:
Long-term debt 3,501 9,053 (5,552)
Bonds payable 3,082 – 3,082
Total Current Liabilities 27,149 21,845 5,304
Noncurrent Liabilities
Bonds payable - net of current portion – 4,297 (4,297)
Long-term debt - net of current portion 46,816 44,079 2,737
Derivative liabilities 2,538 1,800 738
Deferred tax liabilities 1,604 388 1,216
Retirement benefit liability 123 160 (37)
Other noncurrent liabilities 603 1,433 (830)
Total Noncurrent Liabilities 51,684 52,157 (473)
Total Liabilities 78,833 74,002 4,831
Equity Attributable to Equity Holders of the Parent
Common stock 6,036 6,014 22
Preferred stock 6,300 6,300 – Subscriptions receivable (4) (4) – Capital in excess of par value 3,881 3,841 40
Parent company preferred shares held by a consolidated subsidiary (2,000) (2,000) – Treasury stock (3,345) (2,105) 1,240
Unrealized fair value gains on investment in equity securities 3,099 6,911 (3,812)
Cumulative translation adjustments (11,542) (15,895) (4,353)
Share in other comprehensive income of associates 2,877 6,117 (3,240)
Equity reserve (2,557) (2,557) – Retained earnings 71,243 59,416 11,827
Equity Attributable to Equity Holders of the Parent 73,988 66,038 7,950
Non-controlling Interests 20,416 27,719 (7,303)
Total Equity 94,404 93,757 647
TOTAL LIABILITIES AND EQUITY ₱173,237 ₱167,759 ₱5,478
FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Position
(Amounts in Millions)
(unaudited)
June 30
higher earnings of EDC and FG Hydro and one-month of full
earnings contribution from the First Gas Group (FGHC, FGP
and First NatGas Power Corporation). On May 30, 2012, First
Gen, through its wholly-owned subsidiary Blue Vulcan
Holdings Corporation, acquired BG Group’s 40% interest in
the First Gas Group for $360 million. First Gen now
beneficially owns 100% of the First Gas Group. EDC
reported higher revenues following the re-pricing of bilateral
power contracts of the Tongonan I and Palinpinon power
plants that became effective mid-2011 and the absence of
impairment provisions on its Northern Negros Geothermal
Plant (NNGP) that was recognized in 2011. The ancillary
services provided to the National Grid Corporation of the
Philippines increased the net earnings of FG Hydro.
First Philippine Industrial Park’s (FPIP) net income
reached ₱922 million this semester from last year’s ₱71
million due to major land sales. FPIP sold a total of 42
hectares during the period compared to 2 hectares last year.
Rockwell Land posted net income of ₱440 million for the
current period, up from ₱394 million a year ago, primarily
driven by the higher construction completion of Edades and
strong demand for The Grove and 205 Santolan, its new
project launched last May 2012.
First Balfour has earned ₱67 million to date, up from
only ₱3 million last year on account of the substantial
contribution from its well drilling subsidiary, ThermaPrime
Well Services, Inc. (ThermaPrime). ThermaPrime generated a
net income of ₱62 million during the current period.
First Philec incurred a net loss of ₱671 million for the
period, a reversal from last year’s net income of ₱83 million
due to market conditions and disputes with joint venture
partners. The arbitration filed by First PV Ventures
Corporation (First PV) and First Philec Nexolon Corporation
(FPNC) against Nexolon Co., Ltd. is currently with the
International Chamber of Commerce. First Philec Solar
Corporation (FPSC) is, likewise, in dispute with SunPower
Philippines Manufacturing, Ltd. (SPML), a joint venture
partner of First Philec in FPSC. SPML is alleging a breach on
the part of FPSC and is purporting to terminate their Wafering
Supply and Sales Agreement dated November 7, 2007. FPSC
denies the allegation and has also pointed out contractual
breaches on the part of SPML. FPSC has contested the
termination. The Supply Agreement is supposed to run until
the middle of 2013.
2012 2011 Increase
(As restated) (Decrease)
REVENUES
Sale of electricity ₱30,179 ₱27,638 ₱2,541
Equity in net earnings (losses) of associates 3,022 (1,155) 4,177
Sale of merchandise 2,851 3,830 (979)
Sale of real estate 2,170 43 2,127
Contracts and services 1,618 1,132 486
Share in project revenue of joint ventures 20 – 20
39,860 31,488 8,372
COSTS AND EXPENSES
Operations and maintenance 24,719 22,249 2,470
General and administrative expenses 2,900 1,876 1,024
Merchandise sold 2,576 3,414 (838)
Contracts and services 1,216 1,033 183
Real estate sold 943 15 928
32,354 28,587 3,767
OTHER INCOME (EXPENSES)
Gain on sale of investment in equity securities 6,084 – 6,084
Gain related to business combination 1,834 – 1,834
Finance costs (2,111) (2,338) (227)
Finance income 586 446 140
Foreign exchange loss (170) (105) 65
Other income 621 458 163
6,844 (1,539) 8,383
INCOME BEFORE INCOME TAX 14,350 1,362 12,988
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current 1,182 1,024 158
Deferred (205) (117) 88
977 907 70
NET INCOME 13,373 455 12,918
Attributable To
Equity holders of the Parent 10,776 (402) 11,178
Non-controlling Interests 2,597 857 1,740
₱13,373 ₱455 ₱12,918
Earnings (Loss) Per Share for Net Income (Loss) Attributable to
the Equity Holders of the Parent
Basic ₱19.677 (₱0.707) ₱20.384
Diluted ₱19.564 (₱0.707) ₱20.271
FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Amounts in Millions, Except Per Share Data)
(unaudited)
Six-Month Period Ended June 30
FEDERICO R. LOPEZ
Chairman and Chief Executive Officer