Meralco Presentation for Accounting Subb

Accounting

1. THESIS DEFENSE

2. FINANCIAL STATEMENT ANALYSIS OF MERALCO

3. OUR TEAM ALONTO, MYRA S. AMANODIN, NORODIN HADJINOR, AJEMAH M. JAMIL, ALYSSA M. MATANOG, SAIMAH L. MINSUARI, NURHASNIE G. MOHAMMAD, AL MERA S. RATABAN, PRINCESS FARHANISA

4. INTRODUCTION TABLE OF CONTENT 1 2 3 4 SCOPE AND LIMITATION INTERPRETATION & ANALYSIS CONCLUSION 5 RECOMENDATION

5. INTRODUCTION

6. An electricity provider, often referred to as an electric utility or power company, is an essential entity in the modern world, responsible for generating, transmitting, and distributing electricity to homes, businesses, and industries. These organizations play a crucial role in ensuring a steady and reliable supply of electrical energy, which is a fundamental necessity for nearly all aspects of daily life. INTRODUCTION

7. These companies or facilities are responsible for producing electricity. They employ various methods to generate power, including fossil fuels (such as coal, natural gas, and oil), renewable sources (like wind, solar, and hydroelectric power), and nuclear energy. Electricity generation is a complex process that involves the conversion of energy from these sources into electrical energy through generators or turbines. Electricity providers are typically regulated by government agencies to ensure the safe and reliable delivery of electricity to consumers. They must adhere to safety standards, invest in infrastructure maintenance and upgrades, and often work to minimize their environmental impact through the use of cleaner energy sources and energy efficiency measures. INTRODUCTION

8. INTRODUCTION Meralco, short for the Manila Electric Company, is the largest electric distribution company in the Philippines. Meralco is responsible for delivering electricity to a significant portion of the country, particularly in the Greater Manila area, which includes Metro Manila and its surrounding provinces. The company was founded in 1903 and has played a crucial role in the development and expansion of electrical services in the Philippines.

9. INTRODUCTION Meralco, short for the Manila Electric Company, is the largest electric distribution company in the Philippines. Meralco is responsible for delivering electricity to a significant portion of the country, particularly in the Greater Manila area, which includes Metro Manila and its surrounding provinces. The company was founded in 1903 and has played a crucial role in the development and expansion of electrical services in the Philippines.

10. SCOPE AND LIMITATIONS

11. SCOPE AND LIMITATIONS The Financial Statement Analysis only cover the Comparative Financial Statements of the said company for the year 2022 and 2021 composed of the company’s comparative Balance Sheet, comparative Income Statement, comparative Cash Flow Statement, comparative Shareholder’s Equity and Notes to Financial Statement for the (year). The horizontal analysis and the vertical analysis were only made on the comparative Balance Sheet and Comparative Income Statement.

12. Financial Statement Analysis of Manila Electric Company is bound by some limitation. The interpretation of the results of the financial operation and the analysis of the financial status is based only on the data as presented in the Comparative Financial Statements made available. All the errors and discrepancies in the financial statement will not be corrected and it will be analyzed as is. Also, certain assumption like sales and purchases are made on all payables were on trade for no distinction was given.

13. COMPARATIVE FINANCIAL STATEMENTS

14. 2021 (As restated - Note 3) 2022 ASSETS (Amounts in millions) Noncurrent Assets Utility plant, generation plant and others 7 and 10 P243,323 P225,326 Investments in associates and interests in joint ventures 8 and 23 31,888 23,317 Investment properties 9 1,495 1,496 Intangible assets 7 and 10 21,691 15,054 Deferred tax assets – net 28 22,657 27,143 Financial and other noncurrent assets 2, 11, 15, 26, 27 and 30 43,920 53,125 Total Noncurrent Assets 364,974 345,461 Current Assets Cash and cash equivalents 12 and 27 55,832 55,007 Trade and other receivables 13, 24 and 27 54,683 45,013 Inventories 14 10,629 9,817 Financial and other current assets 11, 15, 23 and 27 33,143 28,317 Total Current Assets 154,287 138,154 Total Assets P519,261 P483,615 MANILA ELECTRIC COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

15. MANILA ELECTRIC COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Common stock 16 P11,273 P11,273 Additional paid-in capital 4,111 4,111 Equity reserve (111) (116) Employee stock purchase planUnrealized fair value gains on financial assets at fair value through other comprehensive 16 1,049 1,049 income (“ FVOCI ”)Remeasurement adjustments on retirement 11 311 502 and other post-employment liabilities Share in remeasurement adjustments on 26 7,282 2,681 associates’ retirement liabilities 8 (16) (25) Cumulative translation adjustments of associates Cumulative translation adjustments of 8 (30) 306 Subsidiaries 51 40 Treasury shares 16 (11) (11) Retained earnings Equity Attributable to Equity Holders 16 85,755 75,394 of the Parent 109,664 95,204 Non-controlling Interests 3 and 16 14,445 10,124 Total Equity 124,109 105,328 EQUITY AND LIABILITIES Equity Attributable to Equity Holders of the Parent

16. MANILA ELECTRIC COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2021 (As restated -Note3) 2022 (Amounts in millions) Noncurrent Liabilities Interest-bearing long-term financial liabilities net of current portion 17 and 27 P68,757 P52,720 Customers’ deposits - net of current portion 18, 22 and 27 31,590 30,901 Long-term employee benefits 26 2,893 10,257 Provisions 19, 22 and 29 12,657 13,554 Refundable service extension costs net of current portion 22 and 27 4,653 5,334 Deferred tax liabilities – net 28 5,427 5,959 Other noncurrent liabilities 2, 5, 7, 24 and 29 63,450 97,981 Total Noncurrent Liabilities 189,427 216,706 Current Liabilities Notes payable 21 and 27 29,491 28,834 Trade payables and other current liabilities 16, 22, 23, 27 and 29 163,902 119,067 Customers’ refund 2, 20 and 27 2,905 2,929 Income tax payable 92 1,637 Current portion of long-term employee benefits 26 3,750 – Current portion of interest-bearing long-term financial liabilities 17 and 27 5,585 9,114 Total Current Liabilities 205,725 161,581 Total Liabilities 395,152 378,287 Total Liabilities and Equity P519,261 P483,615

17. MANILA ELECTRIC COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Note 2022 2021 2020 (Amounts in millions) NET INCOME P28,588 P24,083 P16,149 OTHER COMPREHENSIVE INCOME Items that will be reclassified to profit or loss in subsequent years:Unrealized fair value gains (losses) on fair value through other comprehensive (“ FVOCI ”) financial assets 11 (280) 139 100 Cumulative translation gains (losses) of subsidiaries 11 18 (10) Cumulative translation gains (losses) of associates (336) 300 (756) Net other comprehensive income (loss) that will be reclassified to profit or loss in subsequent years (605) 457 (666) Items that will not be reclassified to profit or loss in subsequent years:Remeasurement gains (losses) on retirement and other postemployment liabilities 26 6,135 8,671 (5,186) Income tax effect (1,534) (2,168) 1,557 4,601 6,503 (3,629) Unrealized fair value gains (losses) on equity securities at FVOCI 99 43 (3) Income tax effect (10) (4) – 89 39 (3) Share in remeasurement gains (losses) on associates’ retirement liabilities 8 9 (12) (1) Net other comprehensive income (loss) that will not be reclassified to profit or loss in subsequent years 4,699 6,530 (3,633) OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAX 4,094 6,987 (4,299) TOTAL COMPREHENSIVE INCOME, NET OF INCOME TAX P32,682 P31,070 P11,850 Total Comprehensive Income Attributable To Equity holders of the Parent P32,525 P30,485 P12,017 Non-controlling interests 157 585 (167) P32,682 P31,070 P11,850

18. MANILA ELECTRIC COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Note 2022 2021 2020 (Amounts in millions) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P35,236 P32,995 P22,415 Adjustments for:Provision for probable losses and expenses from claims – net 2 and 29 (15,022) 7,951 14,473 Depreciation and amortization 7, 9 and 10 16,031 12,499 8,555 Interest and other financial charges 17, 18 and 21 3,754 3,728 1,594 Interest and other financial income 11 and12 (2,063) (2,197) (2,323) Equity in net earnings of associates and joint ventures 8 (12,035) (3,127) (1,233) Impairment losses 2,601 – – Provision for expected credit losses (“ ECL ”) 2,548 557 1,827 Others (592) 12 (151) Operating income before working capital changes 30,458 52,418 45,157 Decrease (increase) in:Trade and other receivables (15,083) 11,127 (27,922) Inventories (812) (2,136) (926) Financial and other current assets (4,100) (2,573) 184 Increase (decrease) in:Trade payables and other current liabilities 18,253 (12,832) 18,215 Customers’ deposits 1,143 1,244 1,282 Customers’ refund (24) (20) (83) Long-term employee benefits (1,336) 2,855 1,573 Cash generated from operations 28,499 50,083 37,480 Years Ended December 31

19. Icome tax paid (3,317) (6,902) (7,608) Net cash flows provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Global Business Power Corporation 25,182 43,181 29,872 (“ GBPC ”) n – net of GBPC ’s cash upon acquisition Additions to: 3 – (16,476) – Debt securities at amortized cost 11 (18,587) (23,115) (15,949) Financial assets at FVOCI 11 (26,267) (42,458) (92,057) Utility plant, generation plant and others 7 (33,663) (26,260) (19,662) Intangible assetsInvestments in associates and interests in joint 10 (8,533) (976) (896) ventures 8 (504) (992) (466) Short-term investments (2,784) (435) (5,472) Investment properties Proceeds from maturity of: 9 (3) (1) – Financial assets at FVOCI 30,396 43,070 85,268 Debt securities at amortized cost 22,707 14,059 23,999 Short-term investments 3,025 – 23,680 Interest and other financial income receivedProceeds from disposal of utility plant, generation plant 2,033 2,184 2,657 and others 914 161 353 Dividends received from associates and joint ventures 4,039 1,778 475 Increase (decrease) in minority interests 4,164 (1,364) 651 Decrease in financial and other noncurrent assets 982 1,358 195 Net cash provided by (used in) investing activities (22,081) (49,467) 2,776

20. CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Global Business Power Corporation (“ GBPC ”) – net of GBPC ’s cash upon acquisition Additions to: 3 – (16,476) – Debt securities at amortized cost 11 (18,587) (23,115) (15,949) Financial assets at FVOCI 11 (26,267) (42,458) (92,057) Utility plant, generation plant and others 7 (33,663) (26,260) (19,662) Intangible assetsInvestments in associates and interests in joint 10 (8,533) (976) (896) ventures 8 (504) (992) (466) Short-term investments (2,784) (435) (5,472) Investment properties Proceeds from maturity of: 9 (3) (1) – Financial assets at FVOCI 30,396 43,070 85,268 Debt securities at amortized cost 22,707 14,059 23,999 Short-term investments 3,025 – 23,680 Interest and other financial income receivedProceeds from disposal of utility plant, generation plant 2,033 2,184 2,657 and others 914 161 353 Dividends received from associates and joint ventures 4,039 1,778 475 Increase (decrease) in minority interests 4,164 (1,364) 651 Decrease in financial and other noncurrent assets 982 1,358 195 Net cash provided by (used in) investing activities (22,081) (49,467) 2,776 (Forward) Note 2022 2021 2020 (Amounts in millions) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from availment of:Interest-bearing long-term financial liabilities 17 P32,507 P24,513 P2,578 Notes payable 21 2,920 22,880 179 Payments of: Notes payable (2,263) (17,419) (199) Dividends 16 (16,890) (13,748) (16,796) Interest-bearing long-term financial liabilities 17 (18,679) (7,388) (3,669) Interest and other financial charges (241) (215) (1,446) Proceeds from disposal of non-controlling interests 6 – – Increase (decrease) in other noncurrent liabilities 367 2,238 (938) Net cash provided by (used in) financing activities (2,273) 10,861 (20,291) NET INCREASE IN CASH AND CASH EQUIVALENTS 825 4,575 12,357 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 55,007 50,912 38,262 NET UNREALIZED FOREIGN EXCHANGE LOSSES (GAINS) – (480) 293 CASH AND CASH EQUIVALENTS AT END OF YEAR 12 P55,832 P55,007 P50,912

21. Interpretations & Analyse s

22. A. HORIZONTAL ANALYSIS This technique enables us to better able to spot the direction of change in account balances and the magnitude in which that change has occurred .

23. Asset 2022 2021 Amount % Non-current Asset Utility Plant, generation plant and others P243,322 P225,326 P17,996 7.98% Investment 31,888 23,317 8,571 3.67% Investment Properties 1,495 1,496 (1) (6.68%) Intangible Assets 21,691 15,054 6,637 4.40% Deferred tax asset net 22,657 27,143 (4,486) (1.652%) Financial & other Non-Current Assets 43,920 53,123 (9,205) (1.73%) Total Non-Current Assets P364,974 P345,461 P19,513 5.64% Current Asset 2022 2021 Amount % Cash & Cash E P55,832 P55,007 P825 1.49% Trade & other fee 54,683 45,013 9,670 2.14% Inventories 10,629 9,817 812 8.27% Financial & Other Current Asset 33,143 28,317 4,826 1.70% Total Current Asset 154,287 138,154 16,133 1.16% Total Assets P519,261 P483,615 P35,646 7.372% (Forward)

24. (Forward) Equity & Liabilities
Equity Attribute to E.H of the P. 2022 2021 Amount % Common Stock P11,273 P11,273 - -
Add Paid in Capital 4,111 4,111 - -
Equity Revenue (111) (116) 5 (4.32)
Employee Stock PP 1,049 1,049 - -
Unrealized FV 311 502 191 3.80%
Remeasurment 7,282 2,681 4,601 1.71%
Share in Rem. (16) (25) 9 3.6%
Cummulative TA OA (30) 306 276 9.1%
Cummulative TA OS 51 40 11 2.75%
Treasury Share (11) (11) - -
Retained Earnings 85,755 75,394 10,361 1.37%
Equity Attribute to EA of the plants 109,664 95,204 14,460 15.1%
Non Controlling Interest 14,495 10,124 4,321 4.26% Total Equity 124,109 105,328 18,781 17.8%

25. Noncurrent Liabilities 2022 2021 Amount % Interest Bearing P68,757 P52,720 P16,037 3.04% Customer Deposit 31,590 30,901 689 2.22% Long Term E.B 2,893 10,257 (7,364) 7.17% Provision 12,657 13,554 (897) (6.61%) Refundable 4,653 5,334 (681) (1.27%) Deferred Tax Liabilities –net 5,427 5,959 (532) (8.92%) Other Noncurrent Liabilities 63,450 97,981 (34,531) (3.52%) Total Noncurrent Liabilities 189,427 216,706 (27,279) (12.5%)

26. Current Liabilities 2022 2021 Amount % Notes Payables P24,491 P28,834 P657 2.27% Trade Payable & 163,902 119,067 44,835 3.76% Other current liabilities Customer Refund 2,905 2,929 (24) (81%) Income tax payable 92 1,637 (1545) (9.43%) Current portion of long-term Employee benefits 3,750 --- --- --- Current portion of interest- Bearing long term F. L. 5,585 9,114 (3,529) (3.87%) Total Current Liabilities 205,725 161,581 44,144 27.3% Total liabilities 395,152 378,287 16,865 4.45% Total liabilities and Equity 519,261 483,615 35,646 7.37% (Forward)

27. RATIO ANALYSIS It is auantitative method of gaining insight into compny’s liquidity , operational deffeciency, and profitability by studyig its financial statements such as the balance sheet and income statement . Ratio analysis is a cornerstone of fundmental equity

28. SOLVENCY RATIO Particulars 2022 2021 TA 519, 261 483,615 TL 395, 152 378, 287 TE 124, 109 105, 328 2022 2021 Debt Ratio = TL/TA = 395, 152/ 519, 261 378,287/ 483,615 = .761 = .782 Equity Ratio = TE/TA = 124,109/519,261 378,287/ 483,615 =.239 =.782 Debt to Equity Ratio = TL/TE = 395, 152/ 124, 109 378, 287/ 105, 328 = 3.184 = 3.591 Equity Multiplier = 519, 261/ 124, 109 483, 615/ 105, 328 = 4.184 = 4.591

29. PROFITABILITITY RATIO Particulars 2022 2021 2020 GP 91, 305 84, 323 63, 526 NS 413, 950 309, 238 267, 946 -- 28, 588 24, 083 16, 316 -- 501, 438 - - -- 114, 718.5 - - 2022 2021 2020 Gross Profit Ratio = GP/ NS= 91, 305/413, 950 84, 327/ 309, 238 63, 526/ 267, 946 = .2206 = .2727 .2371 Return On Sales = Income AT/ NS = 28, 588/ 413, 950 24, 083/ 309, 238 16, 316/ 267, 946 = .069 = 0. 779 = 0. 0609 Asset Turnover R= NS/ Avg. TA = 413, 950/ 501, 438 = .8255 Return of Assets = Profit AT/ AVG TA 28, 588/ 501, 438 =.249

30. 2022 2021 Current Ratio = CA/CL = 154,287/205,725 178,154/161,581 =.750 = .855 Quick Ratio = QA/CL 110,515/205,725 100,020/161,581 =.537 =.619 Receivable Turnover = NCS/Aug.Tr.Re.= 413,950/49848 =8.304 Ave. Age of Rec. = 360 days/RTO = 360/8.304 = 43.35 Working Capital = CA-CL = 154,287 – 205,725 = 138,154 – 161,581 = (51,438) = (23,427) Working Capital Turnover = NS/Average Working capital = 413,950/501,438 = .8255

31. CONCLUSION

32. RECOMDENDATION 2 1 3

33. DOES ANYONE HAVE ANY QUESTIONS? Raise your hand, please

34. THANK YOU for your attention