EDC COMPANY PRESENTATION JANUARY 2015

Transcription

1 EDC COMPANY PRESENTATION JANUARY 2015

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3 DISCLAIMER This presentation contains certain forward looking statements. These forward looking statements include words or phrases such as EDC or its management believes, expects, anticipates, intends, plans, foresees, or other words or phrases of similar import. Similarly, statements that describe EDC s objectives, plans or goals also are forward-looking statements. All such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Such forward looking statements are made based on management s current expectations or beliefs as well as assumptions made by, and information currently available to, management. EDC does not make expressed or implied representations or warranties as to the accuracy and completeness of the information contained herein and shall not accept any responsibility or liability (including any third party liability) for any loss or damage, whether or not arising from any error or omission in compiling such information or as a result of any party s reliance or use of such information. The information and opinions in this presentation are subject to change without notice. This presentation does not constitute a prospectus or other offering memorandum in whole or in part. Information contained in this presentation is a summary only and is prepared for discussion purposes and is not a complete record of the discussions. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any security. There shall be no sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification under securities laws of such state or jurisdiction. By receiving this presentation, each investor is deemed to represent that it is a sophisticated investor and possesses sufficient investment expertise to understand the risks involved. Prospective investors should undertake their own assessment with regard to their investment and they should obtain independent advice on any such investment s suitability, inherent risks and merits and any tax, legal and accounting implications which it may have for them.

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5 TABLE OF CONTENTS Power Industry Overview 8 Power Industry Restructuring, 9 Grid Profile Key Investment Highlights 12 Investment Summary, 13 Domaine Expertise, 14 Cornerstone investors, 15 Contract-based Cash Flows, 16 Track Record for Growth, 17 Favorable Industry Dynamics, 18 Financial and Operating Results, 19 Credit Profile Growth Projects Strategic Objectives, 23 Growth Agenda, 24 Domestic Expansion, 25 Indonesia Expansion, 26 Latin America Expansion, 27 Mariposa Prospect Review of YTD 9M 2014 Financial Results 30 9M 2014 Significant Events, 31 Consolidated Recurring Net Income

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7 POWER INDUSTRY OVERVIEW

8 INDUSTRY RESTRUCTURING USHERED IN COMPETITION, AS IT ALSO MOBILIZED PRIVATE SECTOR INVESTMENTS Pre-EPIRA NPC GENCO Post-EPIRA TRANSCO Suppliers Distributors DUs Customers Prior to the EPIRA, the industry was composed of NPC and the distribution utilities, e.g., Meralco, VECO, Davao Light and Power Company. NPC, at that time, controlled approximately 90% of the country s installed generating capacity and performed generation and transmission functions. Customers Today, the industry has transitioned into four sectors the deregulated generation and supply sectors and the regulated transmission and distribution sectors. 8 Power Industry Overview

9 EDC IS STRATEGICALLY POSITIONED WITH 64% OF ITS CAPACITY SITUATED IN THE VISAYAS 2013 GROSS POWER GENERATION, BY GRID 2013 GROSS POWER GENERATION, BY PLANT TYPE Visayas 11,100 15% Mindanao 9,347 12% Luzon 54,820 73% Oil Based 4,491 6% New Re 279 0% Hydro 10,019 13% Natural Gas 18,791 25% Geothermal 9,605 13% Coal 32,081 43% In Luzon Bulk of generation sources are located in the northern and southern parts of the Island while the load center is in the Metro Manila area. Posted an AACGR of 3.29% for the period In Mindanao Grid is composed of six districts with bulk of power generated in the northern part of the island and the load centers situated in the southeast (Davao provinces) and southwest (SOCKSARGEN) regions. Power demand from these areas account for ~50% of island s total. Posted an AACGR of 3.28% for In Visayas Grid is divided into five island sub-grids: Panay, Negros, Cebu, Bohol and Leyte-Samar. The island sub-grids are interconnected by submarine cables: Leyte- Cebu (2x185 MW), Cebu-Negros (2x90 MW), Negros-Panay (1x85 MW) and Leyte-Bohol (1x90 MW). These cables also provide the capability of sharing excess generation between islands to accommodate the Visayas growing demand. Posted an AACGR of 5.90% for , the highest among the three Grids. The fastest demand expansion has been recorded in DUs in Panay, Cebu and Bohol. In 2010, Visayas registered its highest single year increase in demand levels equivalent to 15.3% growth). VISAYAS GRID REGISTERED THE HIGHEST GROWTH RATE IN DEMAND FOLLOWED BY LUZON AND MINDANAO 9 Power Industry Overview

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11 KEY INVESTMENT HIGHLIGHTS

12 TOP REASONS FOR BUYING INTO EDC -- A DIVERSIFIED RENEWABLE ENERGY POWER COMPANY, NOW GOING GLOBAL 1 of 11 light bulbs EDC accounts for 9% of country s electricity production Into geothermal, hydro & wind and now diversifying into solar energy 92% Revenue derived from long-term contract agreements 13 Concessions acquired in Chile & Peru Geothermal is 11% of Installed capacity YTD 3Q 14 Highlights Revenues Php23.0 billon RNI Php8.0 billion EBITDA (TTM) Php17.2 billion Domaine Expertise Contract-based Cash Flows Track Record of Growth Favorable Industry Dynamics Strong Credit & Investment Profile Largest vertically integrated geothermal company globally 64% Revenue derived from contract tenors of greater than 6 years YEAR 2031 Concession agreements start expiring 100% Successfully acquired power plants inside its geothermal concessions RE Act of 2008 Provides regulatory support 10% Income Tax 7-year ITH Feed-in-Tariff (FIT) Geothermal provides 13% of electricity production Managing Financial Risks Interest rate on 81% of loans are fixed 44% of revenues are US$ indexed 4.9 yrs. loan life 6.6% Interest cost 12 Key Investment Highlights

13 Domaine Expertise LARGEST VERTICALLY INTEGRATED GEOTHERMAL COMPANY GLOBALLY TECHNOLOGY & GEOGRAPHICALLY DIVERSE TOP 5 GEOTHERMAL COMPANIES MW Burgos MW Pantabangan 12.0MW Masiway COMPANY MW Bacman I 20.0MW Bacman II 112.5MW Tongonan 112.5MW Palinpinon I 60.0MW Palinpinon II* 1 EDC 2 CAPACITY (in MW) STEAM PLANT 1,159 1,159 Comision Federal de Electricidad Enel Green Power Chevron 5 Ormat MW 232.5MW 180.0MW 50.9MW 2 Upper Mahiao Malitbog Mahanagdong Optimization 2 3 1, Source: Bertani, Ruggero, 2010: Geothermal Power Generation in the World Update Report Note: * Not included is the 442 MW operated by the Indonesian Government through PLN MW Nasulo 52.0MW Mindanao I 54.0MW Mindanao II Note: *20 MW Nasuji Power Plant placed on preservation EDC AT A GLANCE 13 Key Investment Highlights 1,441 MW 1,159MWGeothermal 150MWWind 132MWHydro * Wind Geothermal (EDC Subsidiary) Hydro Geothermal (Integrated) % share 7% of InstalledCapacity 9% of ElectricityProduced

14 GENERATES CASHFLOWS AT BOTH PARENT AND SUBSIDIARY LEVELS Contract-based Cash Flows Lopez Group IFC GIC Public E: % V: 50.59% 100% EDC Geothermal Corporation (EGC) (1) E: 1.69 % V: 1.12 % E: 4.99 % V: 3.33 % E: % V: % MW Power Plants MW Unified Leyte Power Project MW Mindanao Power Project 49.4 MW Nasulo Power Project 60% First Gen Hydro Power Corporation (FGHPC) 100% EDC Wind Energy Holdings Inc. 100% EDC Hong Kong Limited Revenues (2) as of Sept EGC 7,294 48% EGC 7,391 75% FGHPC 1,465 6% 22,982 FGHPC 1,084 11% EDC Parent (3) 6,646 44% EBITDA (2) as of Sept ,275 EDC Parent (3) 5,801 59% 100% Green Core Geothermal Inc. (GCGI) MW Palinpinon (2) MW Tongonan MW Pantabangan 12.0 MW Masiway Bac-Man Geothermal Inc. (BGI) MW Bac-Man I 20.0 MW Bac-Man II 100% EDC Burgos Wind Power Corp. (EBWPC) MW Burgos (Under Development) 100% 95/100% International Expansion Chile Peru Indonesia Net Income (2) as of Sept EGC 6,640 63% FGHPC 614 6% 10,544 EDC Parent (3) 3,290 31% (1) Formerly First Luzon Geothermal Energy Corporation (FLGEC) (2) 20 MW Nasuji Power Plant to be placed in preservation (2) All figures in PHP millions as of Sept. 30, 2014 (3) EDC Parent figures include the Company s other subsidiaries 14 Key Investment Highlights

15 ELECTRICITY CONCESSION LIMITED EXPOSURE TO VOLATILE SPOT MARKET Contract-based Cash Flows TERM STRUCTURE OF CONTRACTS (1) LONG-TERM CONTRACTUAL AGREEMENTS In PHP Millions Geothermal Renewable Energy Service Contract 2031 SPOT 8% >6 YRS 64% NPC, 10,111 22,983 DU, 10,370 WESM, 1,909 NGCP, YRS 21% Power Purchase Agreements (sovereign) Power Supply Agreements (commercial) / YRS 7% SPOT 1-2 YRS 3-5 YRS >6 YRS WESM 8% NGCP - 3% - - DU - 18% 7% 20% NPC % 2031 year concession agreements start expiring (1) Consolidated revenues as of Sept. 30, % revenue from long-term contracts 64% revenue from contract tenors of >6 yrs 45% expanded revenue base from non-npc clients 15 Key Investment Highlights

16 SIGNIFICANT PORTFOLIO EXPANSION SINCE PRIVATIZATION Track Record of Growth STEAMFIELD OPERATOR STEAMFIELD AND POWER PLANT OPERATOR Limited to steam field operations (+) MW Upper Mahiao (+) 49.4 MW N. Negros (+) MW Mahanagdong, Malitbog, and Optimization (+) MW Pantabangan Masiway (+) MW Mindanao I & II (+) MW Palinpinon & Tongonan (+) MW Bac-Man I & II (-) 49.4 MW N. Negros (-) 20.0 MW Botong Acquired geothermal concessions overseas (+) 49.4 MW Nasulo (-) 20.0 MW Nasuji 25, (CAGR) Revenues 5.1% EBITDA 7.2% Net Income 7.1% 19,007 10,324 8,768 15,641 5,633 current (MW) (69.4) cum. (MW) , , , , , , Key Investment Highlights

17 NOW PREVIOUS GEOTHERMAL ENERGY IS A STRATEGIC ENERGY RESOURCE FOR THE PHILIPPINES 2013 POWER STATISTICS OF THE PHILIPPINES Favorable Industry Dynamics RENEWABLE ENERGY ACT OF 2008 Natural Gas 18,791 25% Source: DOE Hydro 10,019 13% Hydro 20% Oil Based 4,491 6% Oil Based 19% New Re 279 0% 17 Key Investment Highlights New Re 1% Geothermal 11% Natural Gas 17% 11% Geothermal as a % of Installed Capacity Geothermal 9,605 13% Coal 32% Coal 32,081 43% Fuel Type Installed Capacity (MW) Coal 5,568 Hydro 3,521 Oil-based 3,353 Geothermal 1,868 Natural Gas 2,862 New RE 153 Total 17,325 13% Geothermal as a % of Electricity Production PRINCIPAL TAX BENEFITS o Income Tax Holiday ( ITH ) 6 years under Pioneer Status Plus one year bonus o 30% - Corporate income tax rate o Tax on carbon credits 30% income tax and 0% VAT o Income Tax Holiday ( ITH ) 7-year ITH from start of commercial operation o 10% - Corporate income tax rate Note: Subject to guidelines on pass-on savings for existing operations o Carbon credits tax exemption PRIMARY REVENUE & COST INCENTIVES o Royalties Steam: Government share is 60% of net proceeds o 0% duties for Imported materials & equipment o Net operating loss carryover ( NOLCO ): 3 years o Royalties Steam: Government share is 1.5% of gross margins o 0% duties for Imported materials & equipment o Net operating loss carryover ( NOLCO ): 3 years OTHER KEY INCENTIVES o Feed-in tariff (1) o Renewable Portfolio Standard (2) o Green Energy Option (3) (1) Feed-in Tariff - A policy designed to accelerate investment in renewable energy technologies by offering long-term contracts to renewable energy producers. (2) Renewable Portfolio Standard - A market-based policy which requires electricity suppliers to source an agreed portion of their energy supply from eligible renewable energy resources. (3) Green Energy Option - A mechanism that empowers end-users to choose renewable energy in meeting their energy requirements.

18 DELIVERING SUPERIOR FINANCIAL AND OPERATING RESULTS TO STAKEHOLDERS Strong Credit & Investment Profile CONSOLIDATED REVENUES RECURRING NET INCOME 36,000 30,000 24,000 20,678 24,153 24,551 28,369 25,656 19,783 90% of FY ,982 12,000 9,000 7,276 7,238 9,895 7,458 (2) 6, % of FY ,980 18,000 6,000 5,245 (1) 12,000 3,000 6, Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 9M'13 9M'14 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 9M'13 9M'14 1) P1.2 B forgone steam revenues resulting from EDC s acquisition of the Bacman power plants 2) P2.7 B lower revenues mainly from ancillary services 18 Key Investment Highlights

19 MAINTAINING A ROBUST CREDIT PROFILE (1) Strong Credit & Investment Profile NET DEBT TO MARKET CAPITALIZATION Deteriorated with increase in price per share NET DEBT TO EQUITY Allows for additional fund raising Dec-10 Dec-11 Dec-12 Dec-13 9M' 13 9M' x 0.33x 0.30x 0.43x 0.37x 0.29x Dec-10 Dec-11 Dec-12 Dec-13 9M' 13 9M' x 1.32x 1.06x 1.17x 1.03x 0.98x NET DEBT TO EBITDA (2) Well within our targeted 3.6x NET DEBT PER MW POWER (4) Increased with the pre-funding of Burgos Project Dec-10 Dec-11 Dec-12 Dec-13 9M '13 9M ' x 2.95x 2.17x 2.72x 2.26x 2.95x 3.6x Dec-10 Dec-11 Dec-12 Dec-13 9M' 13 9M' 14 PHP PHP PHP PHP PHP PHP DEBT SERVICE COVERAGE RATIO (3) Higher than the minimum covenanted 1.2x Dec-10 Dec-11 Dec-12 Dec-13 9M' 13 9M' x 1.58x 2.51x 2.14x 2.06x 2.20x 3.24x Notes: (1) Figures computed on a consolidated basis ending Sept. 30, 2014 (2) EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization, Trailing 12 months (3) Debt Service Coverage Ratio = Net Cashflow from Operating Activities / (Short Term Debt + Long Term Debt + Projected Interest Service for the next 12 months) (4) PHP Million per MW 19 Key Investment Highlights

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21 GROWTH PROJECTS

22 EDC SUCCESSFULLY DELIVERED ON ITS 2014 STRATEGIC OBJECTIVES Bacman Nasulo Burgos OUTPUT 968 GWH REVENUES Php4.8 B MW Bacman geothermal plants have returned to service OUTPUT 382 GWH OUTPUT 326 GWH REVENUES Php2.0 B REVENUES Php2.8 B 49.4 MW Nasulo geothermal plant declares commercial operations on July MW Burgos wind obtains DOE s Certificate of Endorsement (COE) for FIT Eligibility 22 Growth Projects

23 EDC S GROWTH AGENDA 2014 STATUS 305 MW Palinpinon- Tongonan acquired in MW Bacman acquired in 2010 Bid for Unified Leyte IPPA in 2014 Bid for Mindanao 1 & 2 IPPA in 2014 ACQUIRE 1 2 Win key government geothermal privatization projects DEVELOP Install 261MW of local geothermal capacity to address new demand MW Nasulo commissioned in Sept MW NNGP Plant development is on-going 100 MW for commissioning by MW Burgos Wind commissioned in 4Q 14 Wind measurement studies is on-going in 9 other concessions Potential 4MW solar DIVERSIFY 3 4 Build 200MW of wind capacity, while expanding RE portfolio CONQUER Establish viable operations in Asia, Latin America, and Africa Granted 13 concessions & 19 pending applications in Chile & Peru Established local offices in LatAm and Indonesia Drill wells in Mariposa, Chile by 2015 Continue to prospect prime geo sites 23 Growth Projects

24 LOCAL GEOTHERMAL PROJECTS WILL BE THE MAIN SOURCE OF GROWTH IN THE MEDIUM TERM 2 FRONTIER AREAS Beyond PROJECT (WIND) CAPACITY Bayog I (Burgos I) 1 Nasulo* 2 Pagali (Burgos II) 2 Burgos Wind Iloilo 1 1 No. Negros 6 MW X Burgos Solar 4 MW X Bacman 3** up to 30 MW X Nasuji up to 20 MW X Iloilo Matnog Matnog 2 Matnog 3 Negros 3 1 FRONTIER AREAS (GEOTHERMAL) 3 Mandalangan, Negros Occidental 4 Lakewood, Zamboanga del Sur 5 Ampiro, Misamis Occidental 6 Balingasag, Misamis Oriental 7 Mt. Zion, North Cotabato MW X Botong-Rangas** up to 40 MW X 3 Mindanao 3 X 4 Pagudpod Wind 50 MW Bacman 5 7 X MW X 10 MW X Tongonan ~12 MW X Palinpinon ~12 MW X 1 Kayabon 50 MW X 2 Dauin 40 MW X DONE EXECUTION ADVANCED EXPLORATION RESOURCE CONFIRMATION Note: *20 MW Nasuji Power Plant placed on preservation **Resource sustainability assessment is on-going 24 Growth Projects POWER PLANT RETROFIT

25 OVERSEAS EXPANSION - INDONESIA GRAHO NYABU GEOTHERMAL PROSPECT Results from EDC s completed survey activities for Graho Nyabu in Sumatra shall be used by Indonesian Ministry of Energy and Mineral Resources for its upcoming tender of the Graho Nyabu concession Currently, in partnership discussions with a geothermal concession holder for a JV in one of their geothermal sites (~ 220 MW at an ~ US 1.0 billion development cost) 25 Growth Projects

26 EDC SEIZED THE OPPORTUNITY AND NOW HOLDS STAKES IN UP TO 13 CONCESSIONS AND 39 APPLICATIONS Company (Entry into LatAm) Alterra Power Corp (2008) Hot Rock Ltd (2008) EDC Applied/Bid Sites (2009) Granted Sites Applications Peru Chile Peru Chile TOTAL Growth Projects

27 WE ARE NOW EXECUTING AN EXPLORATION DRILLING PROGRAM IN MARIPOSA, ONE OF THE MOST ADVANCED GEOTHERMAL PROJECTS IN CHILE MAP OF THE REGION GEOTHERMAL RESERVOIR AND DRILLING TARGETS CIVIL WORKS Santiago Drilling Materials Mariposa Base Camp 9 Road Rehab Q1 14 Q4 15 Q2 20 Site Development Budget: USD 15 MM Exploration Drilling Estimate: USD 30 MM Target COD ESTIMATES FOR MARIPOSA PUT THE POTENTIAL SIZE OF THE RESERVOIR BETWEEN 50 TO 300 MW 27 Growth Projects

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29 REVIEW OF YTD 9M 2014 FINANCIAL RESULTS

30 SIGNIFICANT EVENTS THAT AFFECTED YTD 9M 2014 FINANCIAL RESULTS Bacman Reported revenues generated by Units 1, 2 &3 (P2,146 million) NNGP NNGP s impairment recovery, net of 10% tax (P1,847 million) Nasulo Reported revenues following declaration of commerciality (P502 M) UL and Palinpinon Received insurance proceeds for property damage due to Typhoon Yolanda (P379 M) and Typhoon Sendong (P150 M) Palinpinon Nasuji s foregone NI due to Nasulo s operation (P263M) FG Hydro Adjusted FG Hydro revenues using the ERC mandated re-computation of Nov. and Dec billings (P250M) 30 Review of YTD 9M 2014 Financial Results

31 CONSOLIDATED RECURRING NET INCOME ATTRIBUTABLE TO EDC UP BY PHP1.6 BILLION +25.0% RNI 6.4B 2013 In PHP Billions 8.0B (0.47) (0.20) (0.17) RNI, Sept BGBU revenues partly offset by higher opex NIGBU Nasulo's commercial operation LGBU higher revenues MAGBU higher revenues partly offset by higher opex FG hydro lower sales, 2013 revenue adj. & higher opex Others int'l subs & Burgos' opex RNI, Sept NCI RNI Attributable to EDC Consolidated Recurring Net Income (RNI) increased mainly due to Bacman and Nasulo revenues, partially offset by higher operating expenses BGBU s revenues increased by P2.1 B, with the commercial operations of Bacman Units 1, 2 and 3 which was partially offset by higher power plant expenses (previously capitalized). NIGBU s (Palinpinon and Nasulo) higher revenues by P0.5 B due to commercial operations of Nasulo. MAGBU s revenues increased due to higher recorded energy sales and the absence of short fall adjustments partially offset by higher expenses related to steamfield workover drilling. Partially off-setting the increase are lower revenues from FG Hydro due to the 2013 WESM adjustment and higher operating expenses. RNI COMPUTATION 9M M 2013 NET INCOME (LOSS) 10,544 5,925 ADD (DEDUCT) NON-RECURRING ITEMS: Foreign Exchange (gain)/loss Reversal of impairment loss (2,053) 0 Capitalized borrowing cost 0 (192) Capitalized BGI s cost of testing 0 (401) Insurance proceeds on property damage due to typhoon Yolanda (529) 0 Gain on sale of PPE (362) 0 Gain on sale of inventory items (120) 0 Write-off of 2006 input VAT claims denied by the Court Income tax provision for (benefits from) non-recurring items 254 (70) Others RECURRING NET INCOME 7,980 6, Review of YTD 9M 2014 Financial Results

32 END OF PRESENTATION

33 BACK-UP SLIDES

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35 TABLE OF CONTENTS (Back-up) Macroeconomics 36 Philippines Macro Section, 37 Asean Macro Section Philippine Power Industry 38 Government Issued Regulations, 39 DOE Energy Forecast (Mar-Jun 2015), 40 Luzon-Visayas Supply-Demand Forecast ( ), 41 Mindanao Supply-Demand Forecast ( ) Key Investment Highlights 42 Ranking of Geothermal Companies, 43 Business Model, 44 Operational Statistics, 45 Manpower and Management Team, 46 CSR, 47 Loans Profile, 48 Financial Highlights, 49 Dividend Policy Typhoon Proofing Cooling Tower Units 50 Phases of Implementation, 51 Engineering Solutions, 52 Install Hurricane Grade CTs, 53 Design & Implement 300 kph Solution Growth Projects 54 Burgos Wind Project, 55 Latin America Expansion Review of YTD 9M 2014 Financial Results 56 Revenues, 57 Cash Balance, 58 Financial Ratios

36 PHILIPPINES MACRO SECTION 36 Capital Manila Population (2Q 14) 99.7 Million GDP per capita (2013) USD 1,581 GDP Growth (2Q 14) 6.4% Inflation Rate, Headline (Oct. 2014) 4.3% Unemployment Rate (July 2014) 6.7% Credit Ratings BBB - S&P Baa3 - Moody s Macroeconomics

37 ASEAN MACRO SECTION Countries 2010 Population (in 000s) Ave Growth Rate Singapore 5, % Brunei % Malaysia 28, % Thailand 69, % Indonesia 239, % Philippines 93, % Vietnam 87, % Laos 6, % Myanmar 47, % Cambodia 14, % Source: United Nations Population Division 2010 Countries S&P Moody s Singapore AAA AAA Brunei No Rating No Rating Malaysia A- A- Thailand BBB+ BBB+ Indonesia BB+ BBB- Philippines BBB Baa3 Vietnam BB- BB- Laos No Rating No Rating Myanmar No Rating No Rating Cambodia B B2 Source: Trading Economics 60,000 55,182 40,000 39,659 GDP per Capita (in USD) 20,000-10,457 5,676 3,510 2,791 1,902 1,594 1,113 1,028 Singapore Brunei Malaysia Thailand Indonesia Philippines Vietnam Laos Myanmar Cambodia Source: IMF World Economic Outlook Database 37 Macroeconomics

38 SINCE NOVEMBER 2013, THE GOVERNMENT ISSUED NEW REGULATIONS THAT AFFECT EDC PROJECTS Secondary WESM Price Cap SECONDARY OFFER PRICE CAP OF PHP 6.245/KWH WHEN THE 72-HOUR AVERAGE WESM PRICE EXCEEDS PHP8.186/KWH Revised RCOA 1 Rules LIMITS BUY-SELL OF ELECTRICITY BETWEEN AFFLIATED GENERATIO COMPANIES, RETAIL ELECTRICITY SUPPLIERS AND END-USER CUSTOMERS AT 50%; RESTRICTED ISSUANCE OF RES LICENSE FIT-ALL Provisional Approval FIT TARIFFS FOR SELECTED RENEWABLE ENERGY SOURCES FIT-ALL PROVISIONAL APPROVAL OF PHP PER KWH (1) Retail Competition and Open Access (RCOA) 38 Philippine Power Industry

39 DEPARTMENT OF ENERGY FORECASTS ELECTRICITY SHORTAGE BY SUMMER OF 2015 MW DOE SUPPLY-DEMAND FORECAST MAR-JUN 2015 DOE PROPOSED SEVERAL PLANS TO ADDRESS SHORTAGE 10,500 INTERRUPTIBLE LOAD PROGRAM (ILP) 10,000 9,500 Mandatory operation of end consumer gensets to unload the grid; 9,000 Additional cost of running gensets will be spread across electricity consumers; 8,500 Total of 438 MW of intending ILP participants as of 9/25/ ,000 7, MW PLANT/CONTRACT 7,000 Plant purchase/lease of from PHP700 M to PHP2.8 B per 100 MW; 6,500 CAPEX to be subsidized by Malampaya funds. 6,000 W-9 W-9 Mar Mar W-10 W-11 W-12 W-13 W-14 W-15 W-16 W-17 W-18 W-19 W-20 W-21 W-22 W-23 W-24 W-25 W-10 Mar W-11 Mar W-12 Mar W-13 Mar W-14 Apr W-15 Apr W-16 Apr W-17 Apr W-18 May W-19 May W-20 May W-21 May W-22 Jun W-23 Jun W-24 Jun W-25 Jun Mar Mar Mar Mar Apr Apr Apr Apr May May May May Jun Jun Jun Jun Available Capacity less FO Average FO Projeted Demand Regulating Reserve Req't FIT Increased FIT allocation for easy- to-setup power plants like solar. NOTE: Data sourced from DOE Presentation 39 Philippine Power Industry

40 COMMITTED CAPACITIES WILL NOT BE SUFFICIENT TO MEET THE REQUIRED RESERVE MARGIN FOR THE COMBINED LUZON-VISAYAS GRID Peak Demand growth: ~4.8% Oil-fired plants 2,691MW, or 18%, of country s capacity Php12.52/kwh(est d ave tariff) 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 MW 110MW Bacman 49MW Nasulo 150MW Burgos Luzon-Visayas Supply-Demand Forecast ( ) 1 194MW Avion 196 MW RE 300 MW Calaca 5MW NNGP 135MW Ayala 414MW 135MW 76MW 135MW 41MW 8MW San Gabriel Ayala Pasuquin PCPC Aklan Villasiga 40MW 364MW 400MW 300MW 300MW Bacman Pagbilao QPPL GN Power Toledo 414MW San Gabriel MW Green Mountain 2, actual Reqd Additional Capacity , ,081 1,177 Committed Capacity 854 1,004 1,834 2,643 2,643 4,047 4,461 4,711 Existing Capacity 11,244 11,244 10,881 10,594 10,594 10,594 10,231 10,594 Peak Demand 9,853 10,216 10,674 11,311 11,820 12,351 12,907 13,488 Peak Demand + Req'd Reserve Margin 12,040 12,484 13,044 13,822 14,444 15,093 15,772 16,482 Sources: 1. First Gen s internal estimates based on actual data submitted to DOE 2. DOE s list of Existing Power Plants % OF THE COUNTRY S POWER GENERATION CAPACITY IS 15 YEARS OR OLDER. UNEXPECTED OUTAGES IN THE AGING PLANTS COULD LEAD TO HIGH ELECTRICITY PRICES 2 40 Key Investment Highlights

41 WITH UNRELIABLE HYDRO CAPACITY, THE MINDANAO GRID IS EXPECTED TO EXPERIENCE TIGHT SUPPLY UNTIL THE COAL CAPACITIES COME IN MW Mindanao Supply-Demand Forecast ( ) 1 3,400 Peak Demand growth: 3.8% 3,100 2,800 35MW Green Power 8MW Minery Cabuhog 300MW 50MW Therma South Mindanao 3 225MW Lanao Hydro 200MW Conal Coal 5MW Camiguin Wind 30MW Puyo 23MW Bubunauan 9.75MW Cabadbaran 40.5MW 9MW Tagoloan Tumalaong 2,500 2,200 1,900 1,600 1,300 1, actual Reqd Additional Capacity Committed Capacity Existing Capacity 1,282 1,282 1,282 1,282 1,282 1,282 1,282 1,282 Peak Demand 1,332 1,383 1,435 1,490 1,546 1,605 1,666 1,729 Peak Demand + Req'd Reserve Margin 1,628 1,690 1,754 1,821 1,889 1,961 2,036 2,113 Source: 1. First Gen s internal estimates based on actual data submitted to DOE 41 Key Investment Highlights

42 LARGEST VERTICALLY INTEGRATED GEOTHERMAL COMPANY GLOBALLY Domaine Expertise COMPANY COUNTRY STEAM CAPACITY (in MW) PLANT CAPACITY (in MW) 1 EDC Philippines 1,159 1,159 2 Comision Federal de Electricidad Mexico Enel Green Power Italy Chevron USA 1, * 5 Ormat Israel Calpine USA 725 ** 725 ** 7 Mighty River Power New Zealand Terra Gen USA Contact Energy New Zealand Orkuveita Reykjavikur Iceland CalEnergy Generation USA Star Energy Ltd. Indonesia Northern California Power Agency USA Source: Bertani, Ruggero, 2010: Geothermal Power Generation in the World Update Report Note: * Not included is the 442 MW operated by the Indonesian Government through PLN ** Calpine Operating Power Plants 1Q 2014 Investor Update Conference Call May Key Investment Highlights

43 POSSESSES STABLE AND PREDICTABLE CASH FLOWS Contract-based Cash Flows Percentage of Consolidated Revenues (1) USD Linkage Cashflow Electricity Power Purchase Agreements National Power Corporation Power Purchase Agreements (PPAs) 44% Electricity 73% Sovereign off-take Cashflow or Dividends Steam Bac-Man Geothermal Cashflow Electricity Cashflow or Dividends Steam Dividends Steam Sales Agreements (SSA) Green Core Geothermal Geothermal Resources Sales Contracts (GRSC) FG Hydro Power Supply Agreements Cashflow Electricity Cashflow Electricity & Ancillary Svcs. Electric Cooperatives/ Third party customers 56% Electricity 0% Commercial off-take Power Supply Agreements (PSAs) Dividends Burgos Wind Cashflow Electricity NGCP 0% Electricity 0% Feed-in-Tariff (1) As of Sept.30, 2014 Subsidiaries of EDC 43 Key Investment Highlights

44 (%) (%) MAINTAINS A TRACK RECORD OF OPERATIONAL EXCELLENCE Track Record of Growth YTD 9M 2013 YTD 9M 2014 Availability Factor (1) 100% 80% 60% 40% 20% 0% 98% 96% 83% 99% 99% 99% 35% 43% 100% 93% 99% 85% 83% 80% 60% 40% 20% 0% 99% 96% 47% 82% YTD 9M 2013 YTD 9M 2014 Reliability Factor (2) 100% 80% 60% 40% 20% 0% 98% 99% 99% 99% 99% 94% 41% 44% 100% 90% 99% 99% 99% 99% 99% 80% 60% 40% 20% 0% 71% 98% Visayas Unified Leyte Tongonan Palinpinon I Palinpinon II Mindanao Mindanao I Mindanao II Luzon Bacman I Bacman II (1) Availability Factor - Fraction of time a unit is capable of providing service, considering both planned and unplanned outages. (2) Reliability Factor - Measure of ability of generating units to perform their intended function, considering unplanned outages only. Source: Company data as of the end of September 30, Key Investment Highlights

45 LED BY AN EXPERIENCED BOARD OF DIRECTORS AND MANAGEMENT TEAM THAT IS COMMITTED TO BEST IN CLASS CORPORATE GOVERNANCE PRACTICES Favorable Industry Dynamics TECHNICAL EXPERTISE (1) 56% 25% 14% Operations & Maintenance Others (2) Geosciences & Reservoir Engineering BOARD OF DIRECTORS Key authorities in the power industry Long-standing relationships with key industry stakeholders Advocates of good corporate governance 14+ Average Years of Management Experience RECENT AWARDS Sustainability Business Award, organized by Global Initiatives Singapore, PBE, Eco-Business, and Price Waterhouse Coopers Platinum Award for Corporate Governance from the Institute of Corporate Directors and Securities and Exchange Commission. 8 th Placer in Finance Asia s Best in Corporate Social Responsibility Four Philippine Quill Awards for HELEN, CAREERS & BINHI from the International Association of Business Communicators Three Seals of Approval for MGPF, LGPF & GCGI under DENR s Philippine Environment Partnership Program for voluntary self-regulation & improved environmental performance Five Anvil Awards for Corporate Sustainability Communications Program, annual report, BINHI and calendar & planner from Public Relations Society of the Philippines 45 Key Investment Highlights 4% 1% Engineering & Construction Drilling 13+ Average Years of Engineering Experience (1) As of July 31, 2014 (2) Includes Office of the President, Finance, HR, Business Development, Supply Chain, Corporate Affairs, Business Development, Health, Environment & Safety, Information Technology, Legal & Regulatory, Marketing & Sales CORPORATE GOVERNANCE Board works directly with President to determine strategy EDC s independent directors are active members of committees. Board Strategic Planning sessions are regularly conducted

46 Favorable Industry Dynamics EDC HAS VARIOUS CORPORATE SOCIAL RESPONSIBILITY PARTNERSHIPS AND PROGRAMS OUR SOCIAL AND ENVIRONMENTAL COMMITMENTS Livelihood Education ENvironment We believe that education is the most dependable way out of poverty new trainees admitted to Kananga EDC institute of Technology (KEITECH), with 95% employed students enrolled at the Leyte Schools for Excellence (SFE) project - Scholarships program: 21,875 (elementary), 1,154 (high school), 69 (college, with 41 in University of the Phils.) We believe in being a partner in progress of the communities in which we operate - 12,353 individuals served during medical, dental, surgical outreach activities across 5 project sites - Assisted in 16 major livelihood projects earning a total gross income of PHP14M - Numerous small scale contracts worth PHP224M awarded to local farmer cooperatives benefitting 3,565 members Health P342M Total CSR investment in 2013 We believe in protecting and nurturing our environment because failing this - our resources will suffer - BINHI Project 833,799 trees planted for specific modules (Tree for the Future, Tree for Life and Tree for Food) 46 Key Investment Highlights

47 DELIBERATELY MANAGING FINANCIAL RISKS Strong Credit & Investment Profile DEBT MATURITY PROFILE 1 Sculpted to support EDC s growth trajectory USD Debt PHP Debt LOANS BY STRUCTURE Predominantly fixed debt matches nature of energy projects Floating % USD1, yrs Average Loan Life (Years) 6.0% Average Interest Cost Fixed 1,141 79% LOANS Type Currency Outstanding (MM) Repayment Interest Tenor (Years) Maturity 175MM Club 2 USD Amortizing LIBOR+1.75% MM Club USD 77.0 Amortizing LIBOR+1.80% Reg S Bonds USD Bullet 6.50% PF ECA USD Amortizing LIBOR+0.90% PF USD Com USD 28.0 Amortizing LIBOR+0.90% IFC Loan 1 PHP 3,074.0 Amortizing 6.07% IFC Loan 2 PHP 2,886.0 Amortizing 6.66% PHP FXCN PHP 6,880.0 Amortizing 6.62% PHP Bonds PHP 12,000.0 Bullet 8.64%, 9.33% 5.5, , 2016 PHP Bonds PHP 7,000.0 Bullet 4.16%, 4.73% 7.0, , 2023 PF - PHP Com PHP 4,050.0 Amortizing PDST R1 +Margin (1) In USD Millions as of October 31, 2014 (4) Margin: 200 bps + (PDST-F minus RDST-R1). Re-pricing on the 10 th year (2) USD65 MM converted to PHP via Cross Currency Swap (3) Subject to re-pricing LOANS BY CURRENCY US$ indexed revenues provide natural hedge PHP Revenues % PHP % USD1,437 USD % USD Revenues % 47 Key Investment Highlights

48 DELIVERING SUPERIOR FINANCIAL AND OPERATING RESULTS TO STAKEHOLDERS Strong Credit & Investment Profile CONSOLIDATED REVENUES EBITDA MARGIN 36,000 30,000 24,000 18,000 12,000 6,000-28,369 24,551 25,656 24,153 22,982 20,678 19,783 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 9M'13 9M'14 18,000 15,000 12,000 9,000 6,000 3, ,712 50% 13,748 13,238 57% 54% 17,330 15,641 16,532 17,248 61% 61% 62% 60% Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 9M'13 (12 mos) 9M'14 (12 mos) 100% 80% 60% 40% 20% 0% CONSOLIDATED NET INCOME RECURRING NET INCOME 10,400 10,376 10,544 12,000 9,895 8,400 6,400 4,400 3,357 4,395 5,633 5,925 9,000 6,000 7,276 7,238 5,245 (1) 7,458 (2) 6,400 7,980 2, (1) 3, Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 9M'13 9M'14 - Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 9M'13 9M'14 1) Full provisioning for NNGP write-off amounting to P 5B in ) P1.2 B forgone steam revenues resulting from EDC s acquisition of the Bacman power plants 2) P2.7 B lower revenues mainly from ancillary services 48 Key Investment Highlights

49 DIVIDEND POLICY IS TO DECLARE 30% OF PRIOR YEAR S RNI Strong Credit & Investment Profile PHP Million 4,500 65% Dividends on Common Shares Payout Ratio 70% 4,000 3,500 3,000 2,500 2,000 1,500 1, % 1,485 58% 45% 33% 31% 2, ,000 2,250 1,875 1,863 1,875 36% 1,500 1,500 58% 1,875 1,875 60% 50% 40% 30% 20% 10% Special Regular 0% PHP/share Yield 1.7% 4.4% 3.3% 2.4% 2.7% 2.4% 2.6% 3.1% Dividend Policy Statement At or about 30% of previous year s Recurring Net Income subject to i) debt service requirements and loan covenants, and ii) the implementation of business plans, operating expenses, budgets, funding for new investments and acquisitions, appropriate reserves and working capital. 49 Key Investment Highlights

50 TASKS OBJECTIVE RETROFITTING OF COOLING TOWERS TO BE IMPLEMENTED IN 3 PHASES ON PRIORITY 1 AND 2 COOLING TOWERS PHASE 1 PHASE 2 PHASE 3 TRIAGE THE SITUATION* PROCURE & INSTALL HURRICANE GRADE CTs AVAILABLE IN THE MARKET DESIGN & IMPLEMENT A 300 KPH SOLUTION TO RESTORE AFFECTED CTs AS QUICKLY AS POSSIBLE TO TYPHOON PROOF CTs UP TO 232 KPH USING SPX MARLEY RTM STACKS AND SS316 ANCHORAGE RING TO DESIGN AND IMPLEMENT AN EXTERNAL STRUCTURE TO RAISE CT TYPHOON SURVIVABILITY TO 300 KPH Repair Bacman Units 1 and 2 cooling towers using in-country strategic spares, i.e., parts stocked precisely for contingencies of this nature Fan Stacks Replacement of wooden decks with FRP decks Replacement of 12 oz casings with 16 oz casings * Ranking an issue in order of importance First 7-30 RTM Fan Stacks Houston Gateway for transport to Manila by mid-november 2014 ; 2 nd 6-28 Fan Stacks Houston Gateway mid-december 2014 Fleet wide progressive replacement of Priority 1 Cooling Tower fan stacks using either the flexibility of N+1 feature or as opportunity shutdown works for units on scheduled major outage EDC and Marley are collaborating on options to increase to 300 kph or more a CT s design wind speed through an external structure Initial designs have been put forward by EDC for Marley s comments AT LEAST ONE COOLING TOWER WILL BE FITTED WITH RTM FAN STACK BY END Typhoon Proofing Cooling Tower Units

51 ENGINEERING SOLUTIONS WILL PROGRESSIVELY BE IMPLEMENTED TO TYPHOON PROOF OUR COOLING TOWERS 2 ZONE I B (V=250 KPH) 1 Bacman Geothermal PHILIPPINE WIND ZONE MAP ZONE III A (V=150 KPH) 6 Mindanao Geothermal 3 6 PRIORITY Location # of Units OEM Cell x Fan Stack Dia. # of Cells 1 Malitbog 3 SPX Marley 8 x Mahanagdong 3 SPX Marley 7 x Tongonan 3 SPX Marley 3 x 28 9 Malitbog Bottoming 1 SPX Marley 3 x 28 3 Upper Mahiao 1 SPX Marley 4 x 22 4 Bacman 2 Research Cottrell 6 x ICS 2 X 30 2 PRIORITY 1 Sub-total 73 Total Cost, Priority USD 100,00 PER CELL USD 7,300,000 2 Mt Apo 2 GEA 5 x Palinpinon 1 2 Hamon 3 x 28 6 Palinpinon 1 1 ICS 3 X 28 3 Palinpinon 2 4 Shinko 2 x 28 8 Nasulo 1 SPX Marley 6 x 26 6 PRIORITY 2 Sub-total 33 TOTAL 106 ZONE II (V=200 KPH) 2 Burgos Wind 3 Leyte Geothermal 4 5 No. Negros Geothermal So. Negros Geothermal PRIORITY 1: ALL BACMAN AND LEYTE COOLING TOWERS. PRIORITY 2: ALL PALINPINON & MINDANAO COOLING TOWERS. 51 Typhoon Proofing Cooling Tower Units

52 68 HURRICANE TOWER SETS ON ORDER TO RETROFIT EXISTING FLEET OF COOLING TOWERS SPX Marley Reflex RTM Fan Cylinder Anchorage Ring PHASE 2: Install Hurricane Grade CTs Fan stack is the nozzle through which the fan blade draws air through the cooling tower. SPX Marley USA is OEM for 76/108 or 70% The RTM (Resin Transfer Moulding ) cold molding process increases durability, ensures laminate thickness & weight consistency, allows no porosity for delamination or structural fracture, thereby enhancing the cylinder load capacity RTM fan stack is designed for 233 kph winds Anchorage ring is cold-rolled for increased tensile strength/stiffness and is made of SS 316 to be compatible with corrosive environment Marley has confirmed that the incremental weight of the RTM fan stack and anchorage ring is within the existing cooling tower s design weight limit To go beyond the 233 kph design of an additional structure is under evaluation. KNOWN AS HURRICANE TOWER THAT WAS DEVELOPED BY SPX MARLEY FOR CHEVRON S USE IN US GULF COAST RTM SEGMENTS ARE BOLTED TO THE ANCHORAGE RING WHICH IN TURN IS DIRECTLY BOLTED ONTO THE COOLING TOWER S PURLINS & JOISTS 52 Typhoon Proofing Cooling Tower Units

53 SPX MARLEY AND EDC ENGINEERING DESIGN GROUP ARE COLLABORATING ON OPTIONS THAT WILL RAISE CT TYPHOON SURVIVABILITY TO 300 KPH PHASE 3: Design & Implement 300 KPH Solution Concept 2 ( Spider Support System ) The structure will include an SS support ring at the top of the fan stack & a lower ring spread out from the base of the fan cylinder Intermediate tubes (2x2 FRP square tubes) will connect the 2 rings SS pins to attach tubes to belly band and anchorage rings RTM fanstacks and spider support system to be installed one by one using N+1 flexibility Priority is 1. Malitbog, 2. Bacman, 3. Mahanagdong, 4. Tongonan Design review meeting completed at Marley in Missouri & Kansas October 2-3, 2014 CONCEPT AGREED; MARLEY PLANS TO COMPLETE DETAILED STRUCTURAL DESIGN BY END OF OCTOBER AND SUBMIT DETAILED PROPOSAL TO EDC BY NOVEMBER 5 53 Typhoon Proofing Cooling Tower Units

54 DOE ISSUES CERTIFICATE OF ENDORSEMENT (COE) FOR FIT EIGIBILITY TO THE BURGOS WIND PROJECT FiT Rules: FiT Eligibility = Achievement of Successful Commissioning Successful Commissioning = RE Plant is physically connected to the grid DOE to validate commissioning results ERC to issue FiT COC to RE Developer Nov. 5 Nov. 12 RE Project informs DOE of date of successful commissioning (100%) Nov. 7-8 Pending DOE to issue Certification of Endorsement (COE), if MW (cum) is still within installation target Expected End-Nov Scenario: 200 MW Cutoff NW: 18 MW EDC: 150 MW UPC: 32 MW UPC: 49 MW TA: 54 MW 54 Growth Projects

55 LATIN AMERICA WILL BE A DRIVER OF LONG-TERM GROWTH FOR EDC Large portfolio of early-stage assets Development team with significant experience in both geothermal and Latin America Long-term commitment to bring projects to completion Presence in Latin America provides window to other RE opportunities 55 Growth Projects

56 REVENUES INCREASED BY PHP3.1 B DUE TO HIGHER CONTRIBUTIONS FROM THE COMMISSIONING OF BACMAN AND NASULO PLANTS +15.6% REVENUES 19.8B 2013 In PHP Billions B (0.4) 22.9 Bacman 19* YTD 9M 2013 REVENUES Palinpinon 5,227 Tongonan I 3,112 (P millions) Leyte 8,245 Pantabangan -Masiway 1, Mindanao 1,373 Revenues, YTD Sept BGI Nasulo Mindanao Pal-Tong Leyte FG Hydro Revenues, YTD Sept Bacman 2,146* YTD 9M 2014 REVENUES Nasulo 502 (P millions) Pantabangan- Masiway 1,465 Bacman s revenues increased by P2.1 B, due to the commercial operations of Bacman Units 1, 2 and 3 starting January 2014, June 2014 and October 2013, respectively. Fresh revenue contribution by P0.5 B from Nasulo power plant Higher revenue contribution by P0.4 M each from Mindanao and Palinpinon-Tongonan due to higher energy sales and the absence of adjustments covering prior year s shortfall in Mindanao. Revenues from FG Hydro decreased by P0.4 B, due to lower sales volume and the recomputation of electricity spot prices for Nov. and Dec billings as ordered by the ERC (P250). Palinpinon 5,327 Tongonan I 3,431 Leyte 8,374 Mindanao 1,737 Notes: * - Includes trading revenues amounting to P81 Million 56 Review of YTD 9M 2014 Financial Results

57 PROJECT FINANCING WILL PRETERMINATE THE BRIDGE LOAN AND REPLENISH CASH RESOURCES ADVANCED FOR BURGOS WIND PROJECT -15.6% CASH BALANCE 16.0B 13.5B In PHP Billions ( 3.6) 31.3 (2.5) 28.8 (15.3) Cash Balance, Dec Cash generated from operations Proceeds from bridge loans Debt Servicing Cash Dividends PPE Acquisition, Input VAT and Others Cash Balance, Sept For the first nine months of 2014, cash generated from operations reached P12.3 B and was used to service the following: P15.3 B property, plant and equipment acquisition, of which: P9.1 B was spent to Burgos Wind P2.5 B on capitalized cost of wells P1.0 B for Nasulo Project (N2N) P0.9 B for Bacman power plants rehab P0.7 B rehab due to typhoon Yolanda P3.6 B interest, financing charges paid and payment of long term debts P2.5 B payment for cash dividend 57 Review of YTD 9M 2014 Financial Results

58 DEBT-TO EQUITY IMPROVED WHILE BOTH CURRENT RATIO AND NET DEBT- TO-EBITDA WEAKENED Current Ratio Debt-to-Equity Net Debt-to-EBITDA* Sept Sept Sept Sept Sept Sept Decreased due to lower cash balance coupled with higher current liabilities due to the reclass of the P8.5B Peso Bonds which will mature on June Improved mainly due to equity from higher net income for the period. Increased mainly due to higher net debt. *Trailing 12 months 58 Review of YTD 9M 2014 Financial Results