Our Economic Performance

Bouncing back strong as consumers make the switch to renewable energy

Our SDG Commitments

AT A GLANCE

Php 0

Economic value generated

Php 0

Economic value distributed

Php 0

Economic value retained

0

avoided CO2e(based on EDC's 0.1 ton CO2/MWh intensity)

Php 0

Worth of small- and large-scale contracts to cooperatives and community associations

0

customer facilities supplied with clean power

Php 0

invested for our environment programs

Php 0

million invested in our strategic CSR programs

Responsible financial management is part and parcel of our unwavering commitment to sustainability. In 2018, as part of our overall business strategy, EDC was delisted from the Philippine Stock Exchange (PSE) to provide the company greater flexibility over its dividend policies, as well as to support its long-term business growth. While we are no longer a publicly listed company, we still uphold our responsibility to our investors and shareholders, and we remain committed to delivering healthy cash flows and returns. As such, we strive to maintain healthy cash flows through long-term contract agreements, which, in turn, strengthen our financial position to fund portfolio expansion, improve the profitability of our energy projects, and ensure regular strong returns for our shareholders. The continuous improvement of our treasury, financial, accounting, and budgeting systems not only enforces better fiscal control, but also promote good corporate governance and better risk management.


FEATURED STORY

Our Multiplier Effect

As a leading renewable energy company, EDC is committed to provide healthy financial returns to our shareholders. However, our responsibility to share value goes beyond our financial performance.

Given the scale and the footprint of our operations nationwide, we are cognizant of the fact that our business does not exist in a vacuum--we are but a part of a bigger community, and our primary resources come from the environment that we also share with others. Our sustainability framework demonstrates this relationship clearly: our business only grows and thrives when the society and environment wherein we operate grows and thrives as well.

Through our strategic operations, environmental stewardship, and corporate social responsibility, we are able to create and share value and extend the benefits of our business to a wider range of stakeholders. This multiplier effect shows how we are able to create greater positive impact from our business operations, and contribute to sustainable development in the long term.

One clear example of our multiplier effect at work is through our supply chain, and through our direct and indirect contributions to the local economies wherein we operate. Continued economic prosperity in the areas where we operate provides a meaningful indicator of how well we contribute to the local economy. As such, it is our policy to directly award the procurement of goods and services to local suppliers and contractors, and to prioritize qualified applicants from our primary partner barangays and host communities.

In 2018, we awarded PhP33.3 million worth of small- and large-scale contracts to cooperatives and community associations, which helps build their capabilities for economic conclusion. By employing local suppliers and contractors, we continue to boost the local economy and help create growth opportunities for local businesses.

EDC also supplies energy to 97 customer facilities supplied with clean power, and they, in turn, become part of a supply chain that not only helps power commercial and industrial business activities, but does so with clean and renewable energy. This working relationship has its inherent economic and environmental benefits as well.

We also recognize that our business is only made possible through the healthy and stable forest and watershed ecosystems that support our geothermal resources. In 2018, we invested around PhP43.6 million for our environmental programs geared towards reforestation, watershed management, waste management, and sanitation, among others.

Through our environmental programs, such as our BINHI Greening Legacy program, we not only help protect the natural resources, but also help generate significant environmental returns that have far-reaching benefits for the country like carbon sequestration, biodiversity conservation and mitigation of climate change impacts. .

Similarly, we also invest heavily on strategic corporate social responsibility programs, with a particular focus on education, health, and livelihood. In 2018, our community investments amounted to around PhP127 million. These community investments do not just benefit EDC in terms of strengthening its social license to operate, they also help create economic and social opportunities for our host communities, our 47 primary partner barangays (PPBs), thereby empowering them towards community resilience and self-sufficiency.

In 2018, prudent planning and proper management of costs enabled EDC to effectively maintain its strong financial position, bolstered by the excellent performance of its individual business units.

Following our strategic investments to build resilience into our operations, our business units not only met but exceeded our targets for power generation and recurring net income attributable (RNIA) in 2018.

In 2018, total core revenue amounted to PhP38 billion (with PRFRS 15 adoption), a 14.2% increase from the PhP33.3 billion in 2017. Had the Philippine Financial Reporting Standards (PFRS) 15 been applied in 2017, this would have resulted in a revenue of PhP34.5 billion. This strong financial performance is bolstered by a higher generated total energy sales of 8,945.3 gigawatt hours (GWh), a 12.5% increase from our 7,951.4 GWh generated total energy sales in 2017. If the PFRS 15 were applied, in 2017 energy sales would have amounted to 8,437.9 GWh. This increase in total company revenue is also attributable to our expanded customer base. In 2018, we saw an increase in both the number of our customers, and the number of customer facilities that we serve. The number of customer facilities served increased from 84 to 97, a 15.5% increase over 2017.

Our Management
Approach: Economic
Sustainability

EDC is a global diversified renewable power company. As the world's largest vertically integrated geothermal company, we maintain our leadership in the Philippine renewable energy industry with our portfolio of geothermal, hydropower, solar, and wind power assets. We anchor our growth agenda in a) the acquisition of key government geothermal privatization projects; b) development of existing geothermal capacity; c) diversification of its renewable energy portfolio; and d) the establishment of viable operations in Asia, Latin America, and Africa.

Economic Performance We maintain healthy cash flows from long-term contract agreements and a strong financial position to fund our portfolio expansion, improve the profitability of energy projects in the pipeline, and ensure regular strong

returns to shareholders. We continuously improve our treasury, financial, accounting and budgeting systems to tighten fiscal control, and promote corporate governance and better risk management. We have an extensive capital expenditure program for the optimum availability and reliability of all power generating assets, including the climate proofing of the cooling towers. EDC fully complies with the corporate governance rules and regulations of the Securities and Exchange Commission and the Philippine Stock Exchange (PSE), particularly with PSE's Trading Rules and Restrictions to protect the interest of all shareholders.

Market Presence Economic prosperity in areas where we operate is a meaningful indicator of how well we contribute to local economic development. It is our policy to directly award the procurement of goods and services to locally based

suppliers, continuously build the capabilities of community organizations and cooperatives for economic inclusion, and prioritize qualified applicants from our host communities.

Indirect Economic Impacts Our Community Partnerships program empowers stakeholders and partner communities to become agents of their own development. We help uplift the standard of living through focused initiatives on health, education,

livelihood, and environment; royalty payments for host communities of power projects; direct investments in community projects; and ecosystem services for the preservation of the watersheds in the project sites. Our bi-annual social acceptability survey and CSR key performance indicators monitor the effectiveness of these initiatives and ensure lasting inclusive growth for our partner communities.

ProcurementThe quality of suppliers plays a critical role in our success. Supply Chain Management allows EDC to undertake strategic sourcing for uninterrupted supply of goods and services, optimized inventory levels, vendor

accreditation, spend analysis and market studies, and warehousing and logistics, among others. Vendor selection is based on factors such as price, technical capability and expertise, compliance with accreditation requirements, financial capacity, safety practices, and long-term sustainability. Because Shared Economic Value is a sustainability focus area, sourcing strategy guidelines promote economic inclusion by providing for local purchasing and direct award to qualified locally based suppliers and contractors. We regularly communicate with our vendors through assemblies held at each SBU, including the Head Office. Regular monitoring and benchmarking are also conducted through internal and external auditing.

Our Environmental Performance

Our 2018 Sustainability Report

Our Performance Report tells the story of our efforts to achieve our business objectives, hand-in-hand with our sustainability aspirations.

Download the 2018 sustainability report