Metro Pacific Investments : H1 2017 Press Release and FS

PRESSRELEASE

1H 2017 Core Net Income Up 17% to Record ₱7.8 Bln

Continuing to Exceed Targets

• 1H 2017 Core Net Income up 17% to ₱7.8 Bln from ₱6.6 Bln in 1H 2016
• Reported Net Income attributable to shareholders up 12% to ₱7.8 Bln
• System wide revenues including MERALCO up 10% to ₱184Bln
• Interim dividend per share increased 8% to 3.45 centavos
• Fully Diluted Core Net Income per share up 6% to 24.72 centavos
• MPIC Parent gearing ratio of 25.0% vs. 26.4% at year end
• MERALCO Core Net Income ₱10.1 Bln, Core EBITDA ₱17.2 Bln
• Global Power Core Net Income ₱0.9 Bln, Core EBITDA ₱4.2 Bln
• Tollways Core Net Income ₱2.1 Bln, Core EBITDA ₱4.2 Bln
• Maynilad Water Core Net Income ₱3.7 Bln, Core EBITDA ₱7.1 Bln
• Hospital Group Core Net Income ₱0.9 Bln, Core EBITDA ₱2.3 Bln
• Light Rail and Logistics - both new businesses contributed positively to Core Net Income
• MPIC Group wide CAPEX for 1H2017 amounted to ₱15.4 Bln excluding acquisitions

  MANILA, Philippines, 4thAugust 2017 - Metro Pacific Investments Corporation ("MPIC" or the "Company") (PSE: MPI) today reported a 17% rise in consolidated Core Net Income to ₱7.8 billion for the first six (6) months ended 30thJune 2017 from ₱6.6 billion in the first six (6) months of 2016 on the back of its expanded presence in the power industry.

  Core Net Income was lifted by: (i) robust traffic growth on each of the roads held by Metro Pacific Tollways Corporation ("MPTC"); (ii) an expanded power portfolio through increased investment in Beacon Electric Asset Holdings Inc.; and (iii) continuing growth in the Hospital Group.

  In terms of contribution to the Company's net operating income: Power (distribution and generation) accounted for ₱5.3 billion or 55% of the aggregate contribution; Tollroads contributed ₱2.0 billion or 21% of the total; Water (distribution, production and sewerage treatment) contributed ₱1.8 billion or 19% of the total; the Hospital Group contributed

  ₱308 million or 3% of the total; and the Rail, Logistics Systems Group contributed ₱104 million or 2% of the total.

  Consolidated Reported Net Income attributable to owners of the parent company rose 12% to ₱7.8 billion in the first six months of 2017 from ₱7.0 billion in the first six (6) months of 2016. Non-recurring income amounted to ₱21 million and was largely made up of a realized gain on sale of shares in MERALCO which was largely offset by refinancing expenses, project expenses and one-time separation expense as a result of Maynilad's redundancy program.

  Jose Ma. K. Lim, MPIC President and CEO said, "Our earnings growth reflects our increased investment in the power sector together with strong volume growth at our tollroads and hospitals businesses."

  He continued: "The combination of years of capital expenditures to enhance the reach and quality of our services together with the failure to date to implement tariff increases that our water, tollway & rail businesses are entitled to is a drag on growth in Core EPS."

  "Tariff delays are impacting investor sentiment", Lim said.

  "As expected, Maynilad won its arbitration claim in Singapore calling for compensation from the Philippine Government for payment of past due revenues, this now needs to be operationalized. However, the matter of the tariff to be charged to the public, as with our other businesses, remains unresolved and this is a continuing to constrain funding for new projects. This said, constructive discussions with the Administration are in progress and there is agreement that contracts will be honored," he said. "I have yet no immediate timetable for resolution of these issues although I believe them to be imminent. I expect continued volume growth from all our businesses for the remainder of the year."

  Regarding shareholder returns, Lim added, "I am pleased to say that our Board of Directors declared earlier today an interim dividend amounting to 3.45 centavos per common share, an increase of 8% over the last year."

  The record date for the interim dividend is September 1, 2017; the payment date is September 26, 2017.

  Operational Review POWER:

  In June 2017, MPIC further deepened its participation in the Philippine power sector as it acquired the remaining 25% ownership in Beacon Electric at an aggregate purchase price of ₱21.8 billion. Following this and related financing transactions MPIC's economic interest in MERALCO is 45.5% and in Global Power 62.4%.

  MPIC's power business contributed ₱5.3 billion for the first six (6) months of 2017, an increase of 26% driven by the various step-up investments in MERALCO and Global Power.

  MPIC is continuing its development of power related services and investments in the Philippines with its combination of distribution, generation and retail electricity sales across Luzon, Visayas and soon Mindanao.

  On 27thMarch 2017, an MPIC led consortium including Covanta Energy, LLC and Macquarie Group, Ltd. was granted Original Proponent Status by the Quezon City Government for a 42 MW energy from waste project. Work is now ongoing toward concession framing which we hope to formalize by the end of the year.

  In June 2017, MPIC and Global Power announced that Global Power had entered into an agreement with Alsons Consolidated Resources, Inc. ("ACR") to acquire 50% of ACR's coal generation portfolio holding company in Mindanao, subject to fulfilment of certain conditions.

  MERALCO

  MERALCO's Core Net Income for the first six months of 2017 fell by 3% to ₱10.1 billion. Distribution revenues rose by 3% in line with volume growth on flat tariffs but were more than offset by higher operating expenses from increased customer load growth, increased provisions and a decline in profit contribution from subsidiaries.

  The 3% growth in energy sales was led by the commercial sector which grew 4% on continued expansion of the Business Process Outsourcing industry and a 4.5% increase in MERALCO's customer base to 6.2 million.

  Total revenues rose by 9% to ₱141 billion due to higher pass-through generation charges owing to significantly higher fuel prices driven by the scheduled maintenance shutdown of the Malampaya gas facilities and higher prices in the Wholesale Electricity Spot Market.

  MERALCO spent ₱5.3 billion on capital expenditures in the first half of 2017 to address critical loading of existing facilities and to accommodate growth in demand and customer connections. MERALCO surpassed the previous year's operating performance for system loss, achieving a record best of 6.1% at the end of June 2017, 2.4 percentage

  points lower than the regulatory cap set by the Energy Regulatory Commission ("ERC") of 8.5%.

  MERALCO continues to increase the scope of its power projects through MERALCO PowerGen Corporation ("MGen"):

  • San Buenaventura Power Limited ("SBPL"), a joint venture between MGen and Thailand's New Growth B.V., a subsidiary of EGCO, is developing a 455 MW (net) supercritical coal-fired power plant in Mauban, Quezon. Construction progress is at 49% at the end of June 2017 and proceeding as scheduled, with commercial operation due in June 2019. The plant capacity is contracted under an ERC approved PSA with MERALCO.

  • Redondo Peninsula Energy, Inc. ("RP Energy"), a joint venture of MGen, Therma Luzon, Inc., and Taiwan Cogeneration International Corporation, is awaiting ERC approval of the Power Supply Agreement ("PSA") with MERALCO covering a substantial portion of its first 300 MW capacity coal-fired power plant. The power plant site is ready for construction activities and expected completion is by 2020.

  • Atimonan One Energy Corporation is awaiting review and approval of its PSA from the ERC for it to issue a Notice to Proceed for the Engineering, Procurement and Construction ("EPC") for its 2x600 MW coal-fired plant in Atimonan, Quezon. The PSA for the entire capacity is contracted by MERALCO.

  • MGen also has other joint venture power generation agreements for an additional 1,828 MW, the PSAs of which are awaiting approval of the ERC.

The full text of MERALCO's Earnings Press Release issued on 3rdAugust 2017 is available at http://www.meralco.com.ph.

Global Power

Global Power sold 2,027 GWH in the first six (6) months of 2017, an increase of 13% from a year earlier. Core Net Income for the first half of 2017 was ₱0.9 billion.

Global Power's subsidiary, Panay Energy Development Corporation, began operations of its 150 MW expansion plant during the first quarter of 2017. However, final plant acceptance is not due until December this year as work continues on reducing unacceptable downtime levels.

Global Power is looking at several projects to expand its energy portfolio:

• In Luzon, Global Power's main development project is a 670 MW super critical coal fired plant in Luna, La Union. Local Government endorsements and Land Conversion Certificates have been received. Transmission route surveys and EPC selection are continuing. This project is supported by a 600 MW Power Supply Agreement with