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EDC 2014 Performance Report Report of the Chief Financial Officer Dear Stakeholders, I am happy to report to you our 2014 financial results. 2014 can be viewed as a banner year for your company both from an operational and financial performance standpoint. First, the completion of the long-awaited permanent fix on the rehabilitation of our Bacman plant is now fully behind us. That humbling episode, for some time, cast a big cloud of doubt on our project execution capability. Second, the full and rapid return to service of our facilities in our Leyte Geothermal Business Unit (LGBU) following the devastation brought about by Typhoon Yolanda in late 2013. The only remaining task now is the complete implementation of a massive engineering intervention across our fleet that will permanently address our typhoon-related vulnerabilities. Third, the completion and commercial operation of our 150MW Burgos Wind Project, currently the largest wind farm in the Philippines, and the 49.4MW Nasulo expansion project, both of which have been closely anticipated by our investing public. And while their contributions to our 2014 revenues are partial for now, these already serve as strong signals for healthier contributions in the coming years. Your company’s strong financial performance in 2014 has all the trimmings of a breakout year. As I will discuss below, the growth in our revenues, net earnings, and cash flows are all positive signs of a consistent and continuous growth of your company. 16
EDC 2014 Performance Report 2014 may be viewed as the year when your company started reaping the sweet fruits of the sensible investments that “it made through the years. ” 2014 Financial Highlights A number of events contributed to the phenomenal financial results for 2014. Among others is the full-year operation of our Bacman facility, which provided an additional ₱3.0 billion to this year’s revenues, the partial commercial operation of both our Nasulo and Burgos projects that added their combined revenues of ₱0.9 billion, with the Nasulo operation also resulting in the net impairment recovery of ₱1.8 billion from previously written-off values in Northern Negros. To add to that, we also included insurance proceeds amounting to ₱0.6 billion, representing the partial collection of our insurance claims that arose from past events that included Typhoons Yolanda, Sendong, and Glenda. Revenues in 2014 reached ₱30.9 billion, representing a 20% growth from last year’s ₱25.7 billion. With the exception of First Gen Hydro Power Corporation, whose revenues for 2014 of ₱1.6 billion were lower by ₱0.9 billion compared to the previous year, all our business units contributed positively to this year’s higher revenues. Starting with our Bacman Geothermal Business Unit (BGBU) that yielded revenues of ₱3.0 billion, 25.7 Revenues (in ₱ billion) 20% 30.9 our LGBU that increased its revenues from ₱13.9 billion a year ago to ₱15.6 billion in 2014, and our Negros Island Geothermal Business Unit (NIGBU) that likewise improved its revenues by ₱0.9 billion mainly on account of the operations of the Nasulo project. And for the first time in many years, our Mount Apo Geothermal Business Unit (MAGBU) in Mindanao has effectively addressed its steam production issues, which not only eliminated its perennial revenues shortfall but has, in fact, surpassed last year’s revenues by ₱0.5 billion, from ₱1.9 billion to ₱2.4 billion in 2014. Following the improving trend in our revenues, our recurring net income (RNI) attributable to EDC also showed 2013 2014 RNI attributable to EDC (in ₱ billion) 6.6 40% 9.2 a remarkable 40% jump from ₱6.6 billion in 2013, to ₱9.2 billion this year. Again, the biggest contributor to this year’s RNI is our BGBU at ₱1.9 billion, followed by LGBU with a ₱0.6 billion improvement on its RNI while our NIGBU and MAGBU contributed a combined ₱0.2 billion improvement in their respective RNIs. The 2014 operations also showed a stronger contribution margin from each of the business units—the yardstick by which we measure their individual financial performance. LGBU improved its contribution margin by ₱1.1 billion, from ₱9.0 billion last year to ₱10.1 billion this year while NIGBU and MAGBU increased their contribution margins 17
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