EDC 2014 SR (UPDATED)

EDC 2014 Performance Report
One investor went so far as to say:
“EDC Management has done really
well this year. They are able to
communicate their plans and strategy
and address the issues and concerns
that have come their way in the past
year. I would like to reinforce that they
are doing really well and I hope it
continues.”
With the confidence of the investors
gradually returning, our stock has
performed really well in 2014, ending
the year at ₱8.2 per share, up by
54%, which is understandable given
the 40% increase in RNI attributable
to EDC. This year though, we have
given some guidance that because
of the contract re-pricing and the
transmission constraints that are
being experienced by the Burgos
Wind project, the growth will not be
40%, as previously expected by the
market.
In addition to the improving
perception of our equity investors,
we are blessed by the confidence of
the debt capital markets. In a recent
re-financing effort for our subsidiary
GCGI, we received firm offers of ₱29.3
billion as we went to market with a
requirement of ₱8.5 billion. The 3.5x
of commitments allowed us to lower
the interest rate on the company by
close to 3% and will save us close
to ₱250 million a year in interest
expense. As we continue to pursue
growth locally and overseas, we will
need additional financing. We need
to nurture the continued interest and
support of the capital markets for our
company.
5
BUILDING A WORLD-CLASS ORGANIZATION
The fifth building block of our business
is our cadre of highly engaged
employees.
There are many, many changes that
have made the EDC of today a place
only for the most flexible and resilient
employees. To give you color and
context, the past seven years have
been a period of tumultuous change
for EDC’s employees. Through a
combination of early retirement
programs and management-initiated
restructuring programs, the total
PNOC-EDC headcount, including
contractuals, dropped from over
3,000 people to around 1,400.
As this was happening, we embarked
on a series of strategic acquisitions
starting from the 60% of FG Hydro, the
Tongonan Power Plant, the Palinpinon
Power Plants, and the Bacman Power
Plants for a combined capacity of
547MW. Since then, we have added
30MW through upgrades of Bacman
units and the relocation of the power
plant in Northern Negros to Nasulo.
We also made two international
acquisitions: 100% Hot Rock, Ltd. and
70% of Alterra Power Corporation’s
concessions and applications in Chile
and Peru. These acquisitions brought
up our headcount to today’s 2,400—
still below the original complement—
while our business has nearly doubled
its income.
Not surprisingly, when we first
measured employee engagement
in 2010, our overall score using
the Positive Engagement Index of
Surveys@Work was a poor 59%. This
was well below the Philippine norm
and global best benchmarks. This
provided us the impetus for change
in the way we manage promotions,
salary increases, apportion and
provide our training opportunities,
gather as leaders to set strategy, and
communicate. We made adjustments
and got rid of decades-old processes
from the old government way of
running things.
Employee engagement score
59%
70%
88%*
2010 2012 2014
(*3% higher than the Philippine national norm, 9% higher than 41 energy and utility companies
that make up global best benchmarks and 4% higher than the 27 highest performing companies
that make up global best benchmarks)
By 2012, our employee engagement
score climbed to 70%. While still
mediocre, we knew we were on
the right path. So we made further
adjustments in how we work with our
labor unions, which we do now with
transparency. I now hold an annual
meeting with the union presidents and
I share with them our priorities and
goals for the year. We also significantly
enhanced the flow of information and
continued to hold more site-based
Mancom meetings where senior
management would do a half-day of
highly visible safety walks. We keep
This page contains the following GRI indicator(s):
G4-1, G4-PR5
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