EDC COMPANY PRESENTATION DECEMBER 2014
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.
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 22 2014 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
POWER INDUSTRY OVERVIEW
INDUSTRY RESTRUCTURING USHERED IN COMPETITION, AS IT ALSO MOBILIZED PRIVATE SECTOR INVESTMENTS Pre-EPIRA Post-EPIRA NPC GENCO TRANSCO Suppliers Distributors DUs Customers Customers • Prior to the EPIRA, the industry was composed of NPC and the • Today, the industry has transitioned into four sectors — the distribution utilities, e.g., Meralco, VECO, Davao Light and Power deregulated generation and supply sectors and the regulated Company. transmission and distribution sectors. • NPC, at that time, controlled approximately 90% of the country‘s installed generating capacity and performed generation and transmission functions. 8 Power Industry Overview
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 New Re 279 Oil Based 0% Mindanao 4,491 Geothermal 9,347 6% 9,605 13% 12% Visayas Hydro 10,019 11,100 Coal 13% 15% 32,081 Luzon 43% 54,820 Natural Gas 73% 18,791 25% In Luzon In Visayas • Grid is divided into five island sub-grids: Panay, Negros, Cebu, Bohol • Bulk of generation sources are located in the northern and southern parts of and Leyte-Samar. the Island while the load center is in the Metro Manila area. • The island sub-grids are interconnected by submarine cables: Leyte- • Posted an AACGR of 3.29% for the period 2001-2013. Cebu (2x185 MW), Cebu-Negros (2x90 MW), Negros-Panay (1x85 In Mindanao MW) and Leyte-Bohol (1x90 MW). These cables also provide the capability of sharing excess generation between islands to • Grid is composed of six districts with bulk of power generated in the accommodate the Visayas ’ growing demand. northern part of the island and the load centers situated in the southeast • Posted an AACGR of 5.90% for 2001-2013, the highest among the (Davao provinces) and southwest (SOCKSARGEN) regions. Power demand three Grids. The fastest demand expansion has been recorded in DUs from these areas account for ~50% of island’s total. in Panay, Cebu and Bohol. • Posted an AACGR of 3.28% for 2001-2013. • 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
KEY INVESTMENT HIGHLIGHTS
TOP REASONS FOR BUYING INTO EDC -- A DIVERSIFIED RENEWABLE ENERGY POWER COMPANY, NOW GOING GLOBAL 1 of 11 light bulbs YTD 3Q’14 Highlights 13 Concessions 92% Revenues EDC accounts for 9% acquired in of country’s electricity Php23.0 billon Chile & Peru Geothermal is production RNI Revenue derived from 11% Php8.0 billion long-term contract Into geothermal, hydro & EBITDA (TTM) wind and now diversifying agreements of Installed into solar energy Php17.2 billion capacity Domaine Contract-based Track Record of Favorable Industry Strong Credit & Expertise Cash Flows Growth Dynamics Investment Profile RE Act of 2008 Managing 64% 100% Revenue Provides Financial Risks derived regulatory support Interest rate on from contract tenors Successfully 10% Income Tax of greater than acquired power plants 81% of loans are 7-year ITH 6 years inside its geothermal fixed Feed-in-Tariff (FIT) concessions 44% of revenues YEAR Geothermal provides are US$ indexed 2031 13% Largest vertically 4.9 yrs. loan life integrated geothermal Concession agreements 6.6% Interest cost company globally of electricity production start expiring 12 Key Investment Highlights
Domaine Expertise LARGEST VERTICALLY INTEGRATED GEOTHERMAL COMPANY GLOBALLY TECHNOLOGY & GEOGRAPHICALLY DIVERSE TOP 5 GEOTHERMAL COMPANIES 1 CAPACITY (in MW) 1 150.0MW Burgos COMPANY STEAM PLANT 1 EDC 1,159 1,159 1 120.0MW Pantabangan 1 2 Comision Federal de Electricidad 958 958 12.0MW Masiway 3 Enel Green Power 915 915 110.0MW Bacman I 1 1 20.0MW Bacman II 4 Chevron 1,329 887 * 5 Ormat 689 749 1 2 112.5MW Tongonan 1 125.0MW Upper Mahiao 2 232.5MW Malitbog Source: Bertani, Ruggero, 2010: Geothermal Power Generation in the World 2005-2010 Update Report 180.0MW Mahanagdong 112.5MW Palinpinon I Note: * Not included is the 442 MW operated by the Indonesian 3 50.9MW Optimization 3 2 60.0MW Palinpinon II* Government through PLN 2 49.4MW Nasulo 3 52.0MW Mindanao I 3 54.0MW Mindanao II Wind Geothermal (EDC Subsidiary) Hydro Geothermal (Integrated) Note: *20 MW Nasuji Power Plant placed on preservation 1,441 MW % share EDC AT A 1,159MW Geothermal 7% of Installed Capacity 150MW Wind 9% of Electricity Produced GLANCE 132MW Hydro 13 Key Investment Highlights
Contract-based Cash Flows GENERATES CASHFLOWS AT BOTH PARENT AND SUBSIDIARY LEVELS Revenues (2) as of Sept. 2014 FGHPC 1,465 6% IFC GIC Public Lopez Group EDC Parent (3) E: 1.69 % V: 1.12 % E: 4.99 % V: 3.33 % E: 43.14 % V: 44.96 % 22,982 E: 50.18 % V: 50.59% EGC 6,646 7,294 44% 48% • 743.8 MW Power Plants 588.4 MW Unified Leyte Power Project 106.0 MW Mindanao Power EBITDA (2) as of Sept. 2014 Project FGHPC 49.4 MW Nasulo Power 1,084 Project 11% EDC 100% Parent (3) 14,275 5,801 EGC 60% 100% 100% 59% 7,391 75% EDC Hong Kong EDC Geothermal (1) First Gen Hydro Power EDC Wind Energy Corporation (EGC) Corporation (FGHPC) Holdings Inc. Limited 120.0 MW Pantabangan Net Income (2) as of Sept. 2014 12.0 MW Masiway FGHPC 614 6% EDC 100% 95/100% 100% 100% Parent (3) 3,290 EDC Burgos Wind Power International Green Core Geothermal Bac-Man Geothermal 10,544 31% Corp. (EBWPC) Inc. (GCGI) Inc. (BGI) Expansion EGC • Chile 6,640 150.0 MW Burgos 172.5 MW Palinpinon (2) 110.0 MW Bac-Man I • Peru 63% ( Under Development) 112.5 MW Tongonan 20.0 MW Bac-Man II • Indonesia (1) Formerly First Luzon Geothermal Energy Corporation (FLGEC) (2) All figures in PHP millions as of Sept. 30, 2014 (2) 20 MW Nasuji Power Plant to be placed in preservation (3) EDC Parent figures include the Company’s other subsidiaries 14 Key Investment Highlights
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