Meralco Financial Analysis

INTRODUCTION MERALCO is the Philippines largest electric forcefulness statistical dispersal participation, with franchise service scope cover song fire 9,337 squ be kilometres. It provides billet enterprise office to 4. 8 cardinal customers in 31 cities and 80 municipalities, which embarrass the whole of Metro Manila, the provinces of Rizal, Cavite and Bulacan, and parts of Pampanga, Batangas, lagune and Quezon. Business establishments in the franchise celestial orbit account for al well-nigh 46% of the republics Gross Domestic fruit or GDP.Through Clark Electric Distribution weed or CEDC, a 65%- appurtenant, it holds the ability distribution franchise for Clark Special scotch Z angiotensin converting enzyme in Clark, Pampanga. CEDC franchise atomic issuing 18a covers 32 squ ar kilometres and 1,611 customers. The confederacy is organised into ternary major operating segments, namely, fountain distribution, real state and contracts, function and separates. In 2010, MERALCO PowerGen batch or MPG (formerly Asian relate for Energy Management), a wholly possess subsidiary, was reorganized as the play a unyieldings vehicle for potential entry into power geneproportionn. COMPANY PROFILEMERALCO marches on to its 108th course of instruction of service in 2011. Consistently in the list of the Philippines bakshis five corpo balancens and cited among Asias finest, MERALCO today serves over 4. 8 jillion residential, commercial and industrial customers. It is strategic wholey placed to serve the unpolisheds centralize of commerce and industry and its hub of political science services and infrastructures. It services most 30 manufacturing scotch zones, which also compete in the worldwide market. Likewise, the Company caters to providers of outsourced business process, both domestic help and global. MERALCOs 9,337 sq. km. ranchise ara overs 31 cities and 80 municipalities including Metro Manila, the entire provinces of Bulacan, Rizal a nd Cavite parts of the provinces of lagoon, Quezon, Batangas and Pampanga. Electrification level in the franchise field of honor is 99%. MISSION to provide our customers the best shelter in postal code, products and services. VISSION to be a fore roughly participation and the service provider of extract. OBJECTIVES To cling to and enhance the hobby of its stakeholders by committing itself to the next principles. 1. The Customers are its reason for being, and therefore, they should always be interact with dignity.The Company mustiness be skilfuly responsive to their needs. The Company has the tariff to * Provide the customers with the high-pitchedest quality products and services, consistent with their requirements and with international standards * Treat the customers fairly, courteously and with integrity in altogether of its business transactions * make for promptly on their immediate concerns and be receptive to their long needs and involvement and * Make every effort to mark off that the health, safety and general well-being of its customers are enhanced by its products and services. 2.The Employees are its most re treasured plus, and therefore, they should always be treated with dignity and with full conside ration of their pursuance. The Company has the responsibility to * Provide its employees with incentives and opportunities for professional evolution and advancement * Provide its employees with just now and private-enterprise(a) compensation, and do reliables that improve their living conditions and incentives * Guarantee fairness, rival treatment and opportunity and avoid discriminative practices and * Provide suitable and safe works conditions to protect employees from avoidable injury and disease in the workplace. . Its Investors are its principals, and therefore, the trust they experience placed in the play along must be honoured. The club has the responsibility to * turn in professional and diligent management t o check up on the fiscal viability of the follow and maintain a fair and competitive return for its investors and * last out and enhance its investors assets, and fulfil and safeguard their stake. 4. The Suppliers and Creditors are its business partners and, therefore, the relationship with them must be based on interchangeable rate and benefit.The association has the responsibility to * Foster long-run stability, direct relation and continuous using with suppliers to attain quality, competitiveness, process efficiency and carrying into action reliability * Seek fairness, truthfulness, integrity and transparence in all of its business relations with them and * Seek encourage and prefer suppliers whose business practices respect human dignity and the environment. . The Competitors are its catalyst toward continuing service rightness and, therefore, the competition with them should be fair and honest, a basic requirement for national suppuration in the distribution of p roducts and services to the community. The Company has the responsibility to * Promote behaviour that demonstrates mutual respect among competitors and * Maintain the highest level of business ethics and integrity. . The Community is its business environment and the society it serves. The Company has the responsibility to * retain and maintain at all multiplication the highest standards of business ethics * Fulfil with committedness and commitment its social responsibilities * Undertake activities that check and contribute to the economic and social maturation of the country 7.Employ proactive measures and cooperate with the government activity and non-government institutions in activities to serve society towards a absorbive benefit. * Help the government in its efforts and programs in its efforts and programs towards raising investor office, developing the neat market, and ensuring high sustained economic maturation through just corporate governance. key and comply at a ll clock with the orders, rules and regulations of the government, its agencies and instrumentalities, in the pursuit of its proceeds objectives and different corporate endeavors * Institutionalize sound environmental practices in collaboration with the concerned government agencies and encourage opposite corporations/organizations to support all programs for an effective environmental management system. SUBSIDIARIES AND AFFILIATES * Meralco Powergen Corporation (MPG) * Clark Electric Distribution Corporation (CEDC) * wheel spoke Telecoms, Inc. * Meralco Financial Services Corporation (FINSERVE) beacon fire Overseas damages Limited (LOIL) * Meralco Energy, Inc. (MEI) * Rockwell gain Corporation (ROCKWELL) * Republic Surety and Insurance Company, Inc. (RSIC) CONSOLIDATED FINANCIAL STATEMENTS MANILA galvanizing COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL locate celestial latitude 31 2010 2009 (amounts in one billion jillion one one thousand thousand trillion gazillions) ASSETS flow rate Assets Cash and Cash equivalents Php 24,370. 00 Php 17,068. 00 cope and an otherwise(prenominal) referables plunder 25,609. 00 21,600. 0 Inventories at get round equal or winnings realizable value 2,043. 00 1,857. 00 Land and maturement cost at lower of cost or dough realizable value 1,708. 00 1,191. 00 new(prenominal) afoot(predicate) assets 2,027. 00 2,969. 00 get authoritative ASSETS 55,757. 00 44,685. 00 dead Assets Utility establish and others shekels 101,009. 00 98,231. 0 Construction in procession 2,241. 00 3,627. 00 Investments in associates and a articulatio venture 321. 00 1,203. 00 Investments properties pelf 8,037. 00 8,021. 00 Deferred pass through fuel cost 1,222. 00 3,161. 00 Deferred tax assets elucidate 42. 00 17. 00 other(a) obsolescent assets boodle 10,339. 0 13,184. 00 TOTAL obsolescent ASSETS 123,211. 00 127,444. 00 Php 178,968. 00 Php 172,129. 00 LIABILITIES AND EQUITY circulating(prenominal) Liabilities Notes Payable Php 149. 00 Php 513. 00 flip-flop collectibles and accrued put downs 31,138. 00 28,261. 00 Income tax allowanceable 413. 00 133. 00 Customers regress 7,131. 0 9,147. 00 contemporary service of interest bearing long-term monetary liabilities 5,574. 00 4,069. 00 TOTAL CURRENT LIABILITIES 44,405. 00 42,123. 00 Non contemporary Liabilities elicit-bearing long-term financial liabilities net of current portion 15,498. 00 17,234. 00 Customers deposits net of current portion 23,761. 00 25,063. 0 Deposits from pre-selling of condominium units 741. 00 343. 00 Deferred tax liabilities net 3,322. 00 4,230. 00 long employee benefits 9,547. 00 10,987. 00 groomings 12,875. 00 7,492. 00 Advances for construction net of current portion 3,271. 00 2,989. 00 Other back(prenominal) liabilities 2,352. 0 522. 00 TOTAL NONCURRENT LIABILITIES 71,367. 00 68,860. 00 TOTAL LIABILITIES 115,772. 00 110,983. 00 fair play Attributable to uprightness Holders of the get up normal Stock 11,273. 00 11,273. 00 Subscriptions receivable (738. 00) (960. 00) Additional paid-in cap 4,111. 0 4,112. 00 Excess of Acquisition cost over carrying value of non-controlling interest acquired (328. 00) (328. 00) Employee contributiond-based compensation plan 743. 00 569. 00 Unrealized fair value gains on available-for-sale coronations 96. 00 71. 00 Share in cumulative translation adjustment of a subsidiary and an associate 12. 00 684. 0 Retained remuneration Appropriated 6,000. 00 4,198. 00 Unappropriated 37,800. 00 37,750. 00 Equity Attributable to Equity Holders of the Parent 58,969. 00 57,369. 00 Non-controlling interests 4,227. 00 3,777. 00 TOTAL EQUITY 63,196. 00 61,146. 00 Php 178,968. 00 Php 172,129. 00 MANILA electric car COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Years cease decl ination 31 2010 2009 (amounts in megs, excerpt per share data) REVENUES tidy sum of electrical energy 239,077. 00 178,686. 00 change or real state 3,375. 00 2,877. 00 Sale of contracts, services and others 3,009. 00 2,987. 00 245,461. 0 184,550. 00 EXPENSES (INCOME) Purchased power 200,916. 00 150,928. 00 operations and maintenance 15,711. 00 13,611. 00 derogation and amortization 6,219. 00 5,064. 00 cooking for seeming criminates and put downs from claims 5,750. 00 3,351. 00 Cost of real state sell 2,640. 00 2,230. 0 Interest and other financial income (2,690. 00) (4,246. 00) Cost of services 1,996. 00 1,803. 00 Provision (reversal of prep) for probable losses from reelect net (1,632. 00) (1,179. 00) Interest and other financial charges 493. 00 3,328. 00 Equity in net shekels of associates and a joint venture (283. 00) (245. 0) Accretion of model value bear upon on customers refund 225. 00 555. 00 Foreign exchange loss es (gains) net 51. 00 (266. 00) Taxes, fees and permits 974. 00 421. 00 Others 654. 00 216. 00 231,024. 00 175,571. 00 INCOME BEFORE INCOME tax income 14,437. 00 ,979. 00 PROVISION FOR (BENEFIT FROM) INCOME TAX Current 5,233. 00 3,218. 00 Deffered (913. 00) (595. 00) 4,320. 00 2,623. 00 NET INCOME Php 10,117. 00 Php 6,356. 00 MANILA voltaic COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF money lead 2010 2009 (Amounts in Millions) coin menstruate FROM run ACTIVITIES Php 14,437. 0 Php 8,979. 00 Income in the beginning income tax Adjustments for Depreciation and amortization 6,219. 00 5,064. 00 Provision for probable charges and expenses from claims 5,750. 00 3,351. 00 Interest and other financial income (2,690. 00) (4,246. 00) Interest and other financial charges 493. 0 3,328. 00 Provision (reversal of provision) for probable losses from refund net (1,632. 00) (1,179. 00) bolshy on disposal of utility plant and others net 1,033. 00 Provision for indeterminate accounts, net of recoveries 982. 00 886. 00 Cost of guaranteed service levels pay-out 388. 00 216. 0 button from disposal of investing 46. 00 Equity in net clams of associates and a joint venture (283. 00) (245. 00) Present value impact on customers refund 225. 00 555. 00 Employee share-based defrayals 174. 00 301. 00 Reversal of lower of bloodline to net realizable value (3. 0) (41. 00) Gain on disposal of investment plaza (4. 00) Donation of investment post 2. 00 Foreign exchange loss (gain) 51. 00 (266. 00) direct income befor working gravid changes 25,412. 00 16,749. 00 Decrease ( enlarge) in Trade and other receivables (10. 0) 15,601. 00 Inventories (130. 00) (168. 00) Land and development costs (517. 00) (531. 00) Deferred pass-through fuel costs 1,939. 00 631. 00 Other current assets 955. 00 (1,854. 00) Increase (decrease) in Trade payables and accrued expenses 41. 0 8,798. 0 0 Customers refund (2,241. 00) (2,889. 00) Customers deposits 1,298. 00 2,913. 00 Deposits from pre-selling of condominium units 398. 00 307. 00 Long-term employee benefits (1,424. 00) (1,555. 00) Provisions (140. 0) (4,935. 00) realise money generated from operations 25,311. 00 33,067. 00 Income tax paid (4,953. 00) (3,797. 00) cyberspace exchange flows generated from operating activities 20,358. 00 29,270. 00 interchange FLOW FROM INVESTING ACTIVITIES Additions to Construction in progress (5,769. 00) (7,914. 0) Utility plant and others (2,741. 00) (187. 00) Intangibles (300. 00) (127. 00) Investments properties (110. 00) (662. 00) Interest and other financial income received 1,058. 00 1,332. 00 Proceeds from exceed of investment 752. 0 Disposal of utility plant and others 82. 00 Disposal of investment property 28. 00 Settlement of deliverable currency forth 5. 00 Dividends received from associates 96. 00 445. 00 Dividends paid by s ubsidiaries credited(predicate) to non-controlling interests (15. 00) Decrease ( affix) in Other noncurrent assets 622. 0 (1,657. 00) Other receivables sack up interchange used in investing activities (6,292. 00) (8,770. 00) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from interest-bearing long-term financial liabilities, net of discipline costs 10,528. 00 12,398. 00 Notes payable 380. 00 2,936. 00 Collection of subscriptions receivable 222. 0 445. 00 Payments of Interest-bearing long-term financial liabilities (10,748. 00) (8,295. 00) Dividends (6,187. 00) (2,820. 00) Interest and other financial charges (2,044. 00) (1,524. 00) Notes payable (744. 00) (12,251. 00) Stock transaction costs (1. 0) Increase(decrease) in other noncurrent liabilities 1,830. 00 277. 00 Net cash flow used in pay activities (6,764. 00) (8,834. 00) NET INCREASE IN CASH AND CASH EQUIVALENTS 7,302. 00 11,666. 00 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 17,068. 00 5,402. 00 CASH AND CASH EQUIVALENTS AT END OF YEAR Php 24,370. 0 Php 17,068. 00 MANILA ELECTRIC COMPANY AND SUBSIDIARIES dimension synopsis 2010 2009 taste OF LIQUIDITY A. Current Ratio = Current Assets Current Liabilities = 55757. 00 44685. 00 44405. 00 17234. 00 = 1. 26 1. 06 B. Acid-test Ratio = Cash + Short-term investments +receivables (net) Current Liabilities = 49979. 00 3048. 00 44405. 00 17234. 00 = 1. 13 0. 18 C. Receivables turnover = Net credit gross sales Average net receivables = 245461. 00 184550. 00 36409. 00 36409. 00 = 6. 74 5. 07 Average Collection hitch = 365 long time receivable turnover = 365 long time 365 long time 6. 74 5. 07 = 54. 15 days 72. 01 D. Inventory turnover = COGS Average inventory = 221263. 00 168572. 00 2971. 50 2971. 50 = 74. 46 quantify 56. 73 TEST OF SOLVENCY A. Debt to nitty-gritty assets ratio = supply debt total assets = 115772. 00 110,983. 00 178968. 00 172,129. 00 = 0. 65 0. 64 B. Times interest pull in = Income before income taxes and interest expense interest expense = 14,437. 0 8979. 00 493. 00 3328. 00 = 29. 28 2. 70 TEST OF PROFITABILITY A. Profit Margin = Net income Net sales = 10,117. 00 6356. 00 245,461. 00 184550. 00 = 4% 3% B. Asset Turnover = Net gross sales Average assets = 245,461. 00 175,548. 50 = 1. 40 C. turn in on assets = Net Income Average Assets = 10,117. 00 175,548. 50 = 6% D. Return on car park stockholders equity = Net income Average viridity stockholders equity = 10,117. 00 11,273. 00 = 90% E. Earnings per share = Net Income Weighted second-rate greenness shares outstanding = 10,117. 00 1,127. 00 = 8. 98 F. Price- wage ratio = trade price per share of stock earnings per share = 10 8. 62 = 1. 16 G. Pay-out Ratio = Cash Dividends Net income = 7,834. 00 10,117. 00 = 77. 43 ANALYSIS HORIZONTAL AND VERTICAL ANALYSIS REVENUES For the course of instruction end celestial latitude 31, 2010 MERALCO procured a Php245, 461 cardinal revenues, 33. 0% high than introductory course revenues worth Php184, 550 gazillion. Sales from the three major operating segments ontogenyd during the division 2010 with the power distribution as the top performing operating segments. Php178,686 cardinal sales from electricity was a 96. 82% of Php184,550 one thousand thousand. EXPENSES Expenses for the stratum 2010 amounted to Php231,024 one million million million was additiond by Php55,453 million or 31. 58% collect to high(prenominal) purchased power that was change magnitude by 33. 12%. In support to this, purchased power got 86. 97% of the total Php231,024 worth of expenses. NET INCOME Php10,117 million net worth of income of 2010 was 59. 7% high(prenominal) than 2009 its because of the higher(prenominal) sales of electric ity for the twelvemonth 2010. Eventhough the net income for the class 2010 is just a 4. 12% of the total sales the beau monde still achieved its higher net income compare to 2009. CURRENT ASSETS As of December 31, 2010, the Companys consolidated cash and cash equivalents amounted to Php24,370 million, Php7,302 million or 42. 78% higher compared with the balance of Php17,068 million of December 31, 2009. In addition, cash and cash equivalents achieved 13. 62% of its Php178,968 million total assets. This is due to a higher average out charm stream from 29 days to 24 days.Other increase in current assets whitethorn be due to higher sales for the year 2010. CURRENT LIABILITIES Current liabilities had change magnitude by 5. 42% or Php2,282 million by the year finish December 31, 2010 with trade payables and accrued expenses having the highest increase worth Php2,877 million, achieving 20. 52% of its total liabilities. Decreases in the current liabilities was due to payments of som e payables and some customers refund. NONCURRENT ASSETS Most of the noncurrent assets had decrease by the year 2010, this is due fulfilment of major electric projects and due to spending of fuel gas.NONCURRENT LIABILITIES A total of Php4,789 million increase in noncurrent liabilities of the company may due to issuance of long term obligations that could result in an increase in working capital. This increase was due to pre-termination of some loan deposits received from units sold on instalment contracts. EQUITY The employee shared-based payment plan had increased by 31% as of December 31, 2010. This is due to realization of the provisions of PFRS2, Shared-based Payments related to Employee Stock Puchase Plan. And a decrease of 98. 5% of the share in cumulative translation adjustment of a subsidiary and an associate was resulted from the return of capital related to the Companys investment in FPPC. ratio ANALYSIS CURRENT RATIO A total of Php55,757 million worth of current asse ts definitely substance a capability of the Company to pay its current liabilities worth Php44,045. This means a 1. 26 current ratio is an indication of a s send offly strong financial sit. ACID-TEST RATIO A 1. 131 acid-test ratio of the company solely portrays that its most liquid assets can settle its current liabilities. RECEIVABLE TURNOVERThe Company can collect its receivables 6. 74 times in a year with an average of 54. 15 days or less than two months collection period. This situation is favourable to the companys present position. INVENTORY TURNOVER As inventory is being concern, the company is effectual in managing its inventories. A 74. 46 times inventory turnover is a establishment of the latter statement. It is not too high nor too low indicating a reveal liquidity. DEBT TO TOTAL ASSET RATIO more(prenominal) than half of the companys assets are financed through the companys debts. This is proved by a 0. 65 ratio of debt to total asset.TIMES INTEREST EARNED Since t he earnings of the company, Php14,437, is higher than its total interest expense, Php493, the company has the capability to settle its debts. Getting a 30. 28 ratio means that the company is able to meet its interest obligations because its earnings is significantly greater than its annual interest obligations. PROFIT MARGIN Compare to 2009 remuneration margin of 3%, the company got 4% returns margin which indicates that the revenue earned, Php245, 461million by the company was effectively converted into existent profit, Php10,117 million, despite of Php231, 024 total expenses .ASSET TURNOVER The 1. 4 asset turnover ratio of 2010 is comparatively higher than 2009 core despite of Php178,968 million total assets the company still gained a total revenue of Php245,461 million with a total net profit of Php10,117 million meaning the company is efficiently utilizing its assets to crap a favourable profit. RETURN ON ASSETS The company has a total 6% return on assets of 2010 which is 2 % higher than 4% return on assets of 2009 indicates that the company can make an intelligent choice on how to spend its money on new assets. RETURN ON mutual STOCKHOLDERS EQUITYA 6% increase in return on park stockholders equity simply indicates that the company is generating profits on its common stock investment meaning it is generating an income for the benefit of common stockholders. EARNINGS PER SHARE With an 8. 62 earnings per share which is higher than the 2009 EPS, 5. 74, the company is getting a higher earnings, meaning a strong financial position. PRICE-EARNINGS RATIO The 1. 16 price-earnings mean that investors are limit to pay 10 times earnings. The company has a chance in getting numerous investors. PAY-OUT RATIO A 77. 3% of the total Php7834 can be paid back to shareholders. Investors will increase its confidence to the company. CONCLUSION MERALCO is the Philippines largest electric power distribution company, with franchise service area covering 9,337 square kilo meters. It provides power to 4. 8 million customers in 31 cities and 80 municipalities, which involve the whole of Metro Manila, the provinces of Rizal, Cavite and Bulacan, and parts of Pampanga, Batangas, Laguna and Quezon. Business establishments in the franchise area account for almost 46% of the countrys Gross Domestic harvest or GDP.The Company registered consolidated revenues for the year ended December 31, 2010 amounted to P=245,461 million, 33% higher compared with the P=184,550 million for the homogeneous period last year. Sales from all operating segments increased during the year with the highest registered by power distribution. The increase in electricity spending is attributable to (i) increased number of customers across all customer classes, (ii) reaping in various industries as restocking activities restore after the global economic crisis, (iii) unusually warmer temperature during the first half of the year and, (iv) election spendings.Sales from electricity amounted to P=239,077 million, an increase of P=60,391 million, or 34%, from P=178,686 million for the year ended December 31, 2009. Consolidated costs and expenses amounted to P=231,024 million for the year ended December 31,2010, P=55,453 million higher than the P=175,571 million last year, primarily due to higher purchased power costs, increased provision for doubtful accounts, accrual for compensation and employee benefits. The 2010 consolidated full year results reflect higher revenant net income compared with 2009 mainly as a result of increased volume of energy sold.Revenues generated from power distribution amounted to P=239,164 million for the year ended December 31, 2010, higher by 34% compared with P=178,752 million in 2009. Pass-through charges increased by P=48,442 million, or 33% to P=195,435 million compared with P=146,993 million in 2009, as a result of higher average generation charge during the year, partially equaliser by the decrease in the average recoverable system loss charge to P=11,567 million from P=16,108 million. be and expenses of the power distribution segment increased by P=55,211 million, or 32%, to P=225,905 million in 2010 compared with P=170,694 million in 2009.For the year ended December 31, 2010, purchased power costs amounted to P=200,916 million, an increase of 33% from P=150,928 million in 2009 brought about by the higher electricity consumption particularly from the industrial customers and increased in average purchased power cost per kWh. Operations and maintenance expense increased by P=2,100 million, or 15%, to P=15,711 million for the year ended December 31, 2010 compared with P=13,611 million for the year ended December 31, 2009 brought about by the increases in salaries and wages and provision for doubtful accounts.MERALCOs liquidity increased as the current and quick ratio rose in 2010. On the other hand, the companys collection of receivables had dropped down from 72 days of 2009 to 54 days of 2010. This mea ns the company is having a near(a) turnover when it comes to it receivables. in this connection, the company achieved the 74. 46 times of inventory turnover that resulted to a higher sales. 0. 65 debt to total asset ratio and 30. 28 times interest earned proved that the company is declaration and able to meet its interest obligations.Revenue earned was effectively converted into actual profit despite of a higher total cost of expenses still the company gained a 59% increase in net income. As far as asset is concern, the company is efficiently utilizing its asset that resulted to a favourable profit. And because of the increase, we can say that the company is profitable and this could gain the trust of shareholders and may attract investors. RECOMMENDATION MERALCOs total performance could be the basis of potential investors to invest and it could be the reason wherefore present stockholders will continue to do business with the company.A favourable increase in sales as well as th e increase in net income may not be an indicator of a total good performance of a company. The management should still preserve its good turnover on assets and inventories to preserve its stockholders and the bequest that MERALCO had started ever since. The company should sustain its good performance since its the number one electricity supplier here in the Philippines. The service should be enhanced and be improved as well. Customers refund should be minimized as well as the receivables.The company should take of a better way of trim refunds and receivables without sacrificing its service and trust of the customers. Assets should continue to increase and be utilized in the right manner. Acquiring of assets should be do in the right time so that the company will not nurture in paying its unwanted debts. never-ending improvement and innovation when it comes to service is super recommended for the company to hold its present position in the market. MERALCO should continue to giv e light and power to the entire archipelago.