EDC Core Net Income Rises 26.5 Percent to P7.38 Billion in 2009

Geothermal leader Energy Development Corporation (EDC) registered positive income results in 2009 with its core net income rising 26.5 percent to P7.38 billion from P5.83 billion and net income up 150.4 percent to P3.37 billion from P1.34 billion in 2008.  The significant improvement in the core net income is largely attributable to the hike in total revenues, more favorable exchange rates and impact of the Renewable Energy (RE) Law on accounting treatment.

The resulting net income, meanwhile, is P2.02 billion higher primarily due to the P2.73 billion increase in revenues from electricity sales and drilling services, and the complete turnaround of the P9.4 billion foreign exchange loss in 2008 to a P1.3 billion foreign exchange gain in 2009.  These offset the write-down of P2.9 billion deferred tax assets arising under the RE Law, the P2.22 billion increase in operating expenses mainly due to steam augmentation activities, and the impact of the P3.1 billion one-time arbitration award in 2008 which reduced expenses and increased other income in said year.

“Although the one time write down in deferred tax assets affected our income, it was a necessary step before we can realize the fiscal benefits afforded by the RE law.  The long wait for the law’s implementation is well worth it.  With the assistance of the RE law’s incentives, we will push hard to develop new geothermal areas in the country and expand what we have in a sustainable manner,” EDC President and COO Richard Tantoco stated.

Tantoco is happy with the pace at which the company is proceeding with the redenomination of debt stock and upcoming retirement of its Miyazawa II and other on-lent loans. “Our loan currency mix is now predominantly peso denominated after the full payment of our Miyazawa I loan and the raising of P25.1 billion through fixed corporate notes and bonds last year.  After a decade, we are finally eliminating third currency risk by paying off our Yen loans and converting most of our debt to pesos,” he explained. 

EDC used a portion of the funds it raised to prepay the 7-year PSALM staple financing for the acquisition of Tongonan I and Palinpinon plants, purchase of state-of-the-art drilling rig, and repayment of JPY12B Miyazawa 1 loan in June 2009.  Last year’s revenue from drilling services increased by 16.8 percent to P848 million from P726 million in 2008. 

 “We are committed to deliver best value for our stockholders by improving further on operational efficiencies and sustaining robust profits and cash flows.  We will keep our balance sheet healthy to maintain the confidence of financial institutions as we expand our footprint both here and abroad,” Tantoco concluded.