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  • I. Overview of the Conglomerate

I. Overview of the Conglomerate

Key People


Oscar M. Lopez Chairman Emeritus | Executive Director

Amb. Manuel M. Lopez

Chairman and Chief Executive Officer

Eugenio L. Lopez, III

Vice Chairman | Executive Director

Washington Z. Sycip

Independent Director


Salvador G. Tirona

Executive Director | President | COO and CFO

Cesar E.A. Virata

Independent Director

Monico V. Jacob

Independent Director

Oscar M. Lopez

Federico R. Lopez

Chairman Emeritus


Manuel M. Lopez

Miguel L. Lopez

Chairman and Chief Executive Officer

Senior Vice Presidet, Human Resources

Eugenio L. Lopez III

Enrique I. Quiason

Vice Chairman

Corporate Secretary

Salvador G. Tirona

Maria Amina O. Amado

President, Chief Operating Officer and Chief

Assitant Corporate Secretary, Compliance Officer

Finance Officer

and Vice-President, Legal


Macroeconomic Assessment

Robust economy of the Philippines sustains growth of industries in the country. And this robustness is largely driven by sound macroeconomic fundamentals, the growing knowledge process outsourcing industry, aggressive infrastructure spending by the incumbent Duterte administration, and the sustained private sector confidence. Macroeconomic factors are included in one of the bread-and-butter techniques of all business analysis. These drivers play a large part in deciding how a company makes its decision.

Consumer Confidence

It measures overall consumer optimism about the state of the economy. Confident consumers tend to be more willing to spend money than consumers with low confidence, which means businesses are more likely to prosper when consumer confidence is high.

Consumer confidence in the Philippines posted its record-high index of 13.1 percent in the second quarter of 2017, which respondents of the central bank survey attributed partly to improved peace and order situation.

20.0% -30.0% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 1 -8.1% -5.7% -6.4% 9.2%
-8.1% -5.7% -6.4%
9.2% 8.7%


Respondents of the survey cited additional family income due to higher salary and stronger business activity as well as the availability of more jobs and increase in the number of employed family members. They also mentioned the expected increase in remittances from overseas Filipinos as well as the anticipated good harvest.

Meanwhile, the millennials continue to dictate retail spending in the country since they have high disposable incomes and have overtaken the baby boomers in terms of demographic size.

Since Lopez Holdings Inc. is a property developer, this may be a good time to tap the opportunities presented by a periods of high consumer confidence and strong local economy.


Periods of high consumer confidence can present opportunities for new businesses to enter the market, while period of low confidence may force companies to cut costs to maintain profits.

Consumer Confidence in Philippines is expected to be 6.10 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, Consumer Confidence in Philippines is estimated to stand at 6.70 in 12 months-time. In the long-term, the Philippines Consumer Confidence is projected to trend around 7.00 in 2020.

6.0% 2020 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 0.0% 2.0% 4.0% 6.1% 8.0% 10.0% 12.0% 14.0% 13.1%


But with continued OFW remittances and millennials dominating the population, there’s no doubt real

estate and construction industry will sustain for the next 5 years.

Interest Rates and Inflation Rate (Fiscal Policy)

It is the amount that a lender charges an individual or business to borrow money. The Monetary Board

decided to maintain the interest rate on the BSP’s overnight reverse repurchase (RRP) facility at 3.0


Steady interest rates are good for the private sector like Lopez Holdings Inc. Accordingly, higher interest rates result in higher total business expenses for companies with debt. High interest rates can also reduce consumer spending, because high rates make it more expensive for consumers to take out loans to buy things like cars and homes.


Interest Rate in Philippines is expected to be 3.25 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Philippines to stand at 3.50 in 12 months time. In the long-term, the Philippines Interest Rate is projected to trend around 5.00 percent in 2020

3.0% Last 2020 Q3/17 Q4/17 Q2/18 Q1/18 0.0% 1.0% 2.0% 5.0% 4.0% 5.0% 6.0% 3.5% 3.5%


Taking advantage of lower interest rates and anticipation of rising demand due to government spending on infrastructure seem a plausible combination. However, economy may overheat if the government fails to match public spending with an appropriate rate hike.




Monetary Policy

The government’s thrust to intensify infrastructure development bodes well for the long-term growth of the economy and this should trickle down to various sectors including real estate. As of November 2016 one of the largest projects of “Build Build Build” program of the administration included the P17.5bn ($370m) Mactan-Cebu International Airport passenger terminal building which will boost tourism in Cebu where Lopez Holdings Inc. through Rockwell Land Corp. operates.

On the back of strong private real estate development activity, the construction sector remains a top growth contributor. Lopez Holdings Inc. is a player in both industries.

Another monetary policy is the reduction/increase of national taxes. The recent tax reform program seeks to shift the source of economic growth to investments from consumption, as the proposed tax reform program envisions massive investments in infrastructures and human resources.

Tax liabilities pose two issues for a business like Lopez Holdings Inc. First each and every tax required of a business is just another business expense. All businesses, after all, are there to make a profit.


Foremost of these developments would be the Duterte administration’s thrust to aggressively ramp up

infrastructure spending up to 2022. Other factorssuch as the ongoing manufacturing resurgence and tourism growthare also coming into play at what seems to be a most opportune time for the property sector.

Meanwhile, Corporate Tax Rate in Philippines is expected to be 30.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Philippines Corporate Tax Rate is projected to trend around 30.00 percent in 2020

No movement of corporate tax rate is expected therefore the same strategies employed by business to reduce tax expenses while earning profits are expected to continue for the next five years.


Gross Domestic Product

The growth of the economy drives the demand for electricity. As the country’s population and economy grow, an increase in demand for energy follows. The energy-to-GDP elasticity is estimated to vary from 0.8 for the transport sector to 1.0 for the industrial sector. This means that an economy with an annual rate of GDP growth of 6% will drive energy demand from 4.8% to 6%.

Lopez with power industry investments will definitely gain (holding all else equal) from this increasing demand for energy.

SWOT ANALYSIS Media and Telecommunication


Quick move towards digital space Pioneering innovation in digital television Employees, Talents, and Key people High Viewership Ratings


Funding the development of technology with industry

Opportunities Large Customer Base


‘Here today, gone tomorrow’



Real Estate and Construction


Abiding international standards in environment, safety and health, as well as in quality management Green architecture


Cross-ownership provision - This provision opens the possibility for a distribution company to enter into supply contracts with its generation subsidiaries and create hidden profits for the owners of the power conglomerate Falling Natural Gas Reserves


Growth of BPO Industry and OFW Remittances Millennials dominating the population


Competition Tourism threatened by War on Drugs, terrorism, and territorial disputes.

Power Generation and Distribution


Use of renewable sources Empowering communities by providing manpower to its endeavors Good conditions of natural resources


Falling Natural Gas Reserves High investment costs Public lack of awareness and education


Technological progress increasing efficiency of power generation Funding support, including government subsidies


Renewable sources of energy tend to be intermittent because they are subject to the vagaries of the weathersun, wind and rainwater. Promotion of Competition by the government Increasing subsidy requirement of government

Lopez Holdings Inc. have chosen natural gas for its plants because it is the most environment-friendly bridge fuel. FGEN’s natural gas-fired power plants are capable of serving baseload, mid-merit or peaking requirements of electricity consumers, with lower carbon dioxide emissions compared to power plants that use other kinds of fossil fuels.


Profit and Loss (Economy)

Effective management of risks:

(1) Customer (Stakeholder) wants/ satisfaction risk

Requirements of Lopez Holdings stakeholders vary and the company may be unable to meet all requirements in a timely manner. Regulators require compliance with rules and regulations; creditors require the settlement of all obligations; shareholders require a fair return on their investment; associated companies require financial and other forms of support; senior management requires current and accurate information on group-wide operations; employees require compensation and benefits.

(2) Business interruption risk

Prolonged interruption in operations may stem from disasters such as earthquake or fire that may damage office premises. As part of safety measures, employees regularly train in disaster risk reduction and emergency response (see section on Employee Wellness and Safety). Off-site information systems are in place to ensure continuous operations from remote or mobile locations, should the situation require.

(3) Capital availability or cash flow (liquidity) risk

This refers to the company’s exposure to the risk of lower returns on its investments or the necessity to

borrow due to shortfalls in cash or expected cash flows, or variances in their timing. There is risk that

cash flows from dividends and asset sales may not come in as expected. The level of outstanding obligations of Lopez Holdings is deemed manageable with respect to required interest payments.

(4) Foreign currency exchange risk and foreign currency revaluation risk

Volatility in foreign currency exchange rates may expose Lopez Holdings to economic and accounting losses related to direct and indirect obligations. Extraordinary fluctuations in foreign currency exchange rates may affect reported operational profits and deficit, potentially reducing the ability of associated companies to declare dividends. The company’s restructured foreign currency denominated debt of US$5 million is deemed manageable. It is also monitoring the mitigation plans of associated companies in relation to foreign currency exchange and foreign currency revaluation risk.

(5) Interest rate risk

Fluctuations in interest rates may affect the company’s capital availability or cash flow risk as they

expose the company to variable cash requirements in relation to debt with floating interest rates. This risk was considered less significant in 2016 given the manageable level of company debt, as well as the fixed rate on long-term debt.

(6)Credit risk

Lopez Holdings has advances in associated companies but these comprise less than 5% of assets. Trade receivables refer to accounts under ABS-CBN, which are managed at the ABS-CBN level. Lopez Holdings does not offer credit terms for the provision of services as a holding company.

People Account (Employees)

Employee Wellness and Safety Lopez Holdings treats employees as partners in the success of the company. Their health and well-being are of prime importance in sustaining productivity and company growth. Health benefits, including a generous hospitalization plan, constitute a significant component of

the company’s employment package. Regular employees undergo annual medical examinations and flu

vaccinations, as well as seminars on physical, emotional, financial and spiritual wellness.

The company also enrolled them in an emergency assistance program provided by a third party. It cosponsored a Walk-the-Talk activity and encouraged a sustainable lifestyle for employees. The rate of absences on account of sickness has been almost nil in 2016, 2015 and 2014.

Employee safety is also important to the company. The company ensures that employees are regularly trained in maintaining safety in the workplace and in preparing for and dealing with emergencies. They undergo building exit drills at least once a year. An ESH (environment, safety and health) committee leads the enforcement of emergency protocols and provides regular ESH updates. To-date, the company has had no incidents of injuries in the workplace.

Planet Account (Ecology)

Lopez Holdings Inc. investee FPH is continually exploring ways to meet our country’s energy requirements in a manner that will have the least impact on, or best conserve our natural resources, as well as empower the communities that provide manpower to its endeavors.


Launched in 1998, Bantay Kalikasan (BK), ABS-CBN Lingkod Kapamilya Foundations Incorpated’s environment advocacy arm, has propelled massive changes towards the protection and sustainability of

the country’s natural environment. Bantay Kalikasan paved the way for rehabilitating the sole watershed in Metro Manila the La Mesa Watershed. To date, from 9 species, the watershed now houses 100 endemic species. More than a hundred thousand seedlings are nurtured and cultivated. From only 20, there are now a total of 125 species of birds in the forest. More than 400,000 visitors from 27 companies have shown and expressed their support to restore the splendor of La Mesa.