FIRST GEN 2014 Annual Report

FIRST GEN 2014 Annual Report

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A pioneer in providing natural gas energy in the Philippines, First Gen Corporation (First Gen) is now energizing the future of the country through a mix of power sources that supply our economy’s fast-growing needs. With a portfolio that encompasses natural gas, geothermal, hydro, wind, and — soon — solar energy, First Gen also manages the world’s largest vertically-integrated geothermal power plant, as well as Southeast Asia’s largest wind farm. Our cover represents the dynamic, visionary leader that we mold within each individual at First Gen. He has foresight and strategy; he gets things done; and he does so with stewardship and sustainability in mind. Here, our natural gas plant and the tanker we envision for our future LNG operations are shown to co-exist with nature, as they do in the ecosystems we’ve preserved at our plants. Graphic elements such as water, trees, and birds show how sustainability is at the core of our business, and how we value the planet as much as we do the bottomline. The scene uses the texture of recyclable paper to evoke care for the environment. Bright colors are used to convey the positivity of our outlook and the energy of our workforce.

Table of Contents

About the Cover

Vision / Mission 1

Why First Gen? 2

By the Numbers 3

Portfolio of Assets 4

Corporate Structure 5

Chairman’s Message 6

President’s Report 10

Natural Gas 18

Geothermal 22

Hydro 26

Wind 30

CSR 34

Board of Directors 42

Senior Management 46

Corporate Governance 50

Financial Statements 54

Corporate Directory 209

Shareholder Information 211

Credits 212


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First Gen desires to enhance its position as the leading world-class Filipino energy company. First Gen aims to deliver cost-effective and reliable energy services to customers. First Gen will rise to the challenges of world-class competition.

To Be the Preferred Provider

We are committed to be the preferred provider of energy services. In performing our role as the preferred provider, we will acquire, develop, finance, operate, and maintain our investments with the single-minded focus on delivering superior services to our customers.

To Be the Preferred Employer

We are a company of talented, dynamic, highly motivated, and fun-loving individuals. We provide a work environment that encourages innovative and entrepreneurial employees to build our business. We retain and attract talent by offering competitive benefits and compensation packages as well as professional development.

To Be the Preferred Investment

We strive to grow the business and enhance shareholder value by proactively pursuing opportunities and subjecting these to a diligent analysis of risks and rewards. We remain focused on our core power generation business while developing and seeking other viable energy-related business opportunities. We value our relationships with our investors and partners, and demonstrate this through good governance, transparency, and professionalism.

To Be the Preferred Partner

We aim to be the preferred partner in nation-building and community development. We are committed to the fulfillment of our social, ethical, environmental, and economic responsibilities.

Our

OurVision

Mission

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A formidable market playerFirst Gen is the leading clean and renewable energy company in the Philippines. We operate 19 power plants across Luzon, Visayas, and Mindanao, generating 2,942* megawatts (MW) of electricity — 17% of our entire national energy requirement.

Philippine natural gas pioneersOur 1,000-MW Santa Rita and 500-MW San Lorenzo plants constitute the country’s largest natural-gas-fired power plant facility, the largest offtaker of Malampaya natural gas, and one of the largest suppliers of the nation’s largest distribution facility.

Investment portfolio primed for growthOur First NatGas Power Corporation will soon complete the San Gabriel combined-cycle power plant, which promises to be the most modern natural-gas-fired plant in Southeast Asia. EDC is developing projects in Indonesia, Chile, and Peru, while our hydroelectricity sector is cultivating more sustainable run-of-river facilities.

Investment Merit

Why

Financial PerformanceAmounts in U.S. Dollars and in Thousands, except per share data

First Gen?Cleanest portfolio of power plantsOur power plants use clean, renewable, and indigenous fuels such as steam, water, wind and natural gas. Through our subsidiary Energy Development Corporation (EDC), we have helped make the Philippines the world’s second-largest geothermal energy producer, and we recently completed our Burgos Wind Project, Southeast Asia’s largest wind farm.

2014 2013Revenues from sale of electricity 1,902,630 1,904,919

Consolidated net income 318,098 167,595

Net income attributable to equity holders of the Parent Company 193,155 118,077

Recurring net income 153,348 151,191

Total assets 5,287,275 4,914,094

Total liabilities 3,374,669 3,184,227

Equity attributable to equity holders of the Parent Company 1,489,081 1,350,015

Non-controlling interests 414,525 379,852

Basic earnings per share 0.052 0.029

*As of December 31, 2014


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NumbersBy the

1,130.7-MW Indigenous and renewable energyBase load / Mid Merit

122.4-MW Indigenous and renewable energyBase load / Peak

1,590.8-MW Indigenous energyBase load

150-MWRenewable energy

38% Geothermal

GenerationMix

CarbonIntensity

Operated basis: Equity basis:

4% Hydro

53% Natural Gas

5% Wind

0.24 0.29tons tonsCO2eq/ MWh CO2eq/ MWh

Source: Energy Regulatory Commission Resolution 3 series of 2015. A Resolution Setting the Installed Generating Capacity Per Grid and National Grid and the Market Share Limitations Per Grid and National Grid for 2015.

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Ilocos NorteEDC Burgos Wind Power Corporation (EBWPC)150 MWBurgos Wind Project

AssetsPortfolio of

Geothermal Hydro Natural Gas Wind

BatangasFirst GasPower Corporation1,000 MWSanta Rita

FGP Corp500 MWSan Lorenzo

Nueva EcijaFirst Gen Hydro132 MWPantabangan-Masiway Hydroelectric Power Plant (PMHEP)

AlbayBacon - Manito Geothermal Production Field130 MWBacman I & II

LeyteLeyte GeothermalProduction Field700 MWMahanagdong, Malitbog, Optimization, Tongonan I, Upper Mahiao

BukidnonFG Bukidnon1.6 MW

Southern Negros222.4 MWNasuloPalinpinon IPalinpinon II(*20-MW Nasuji Power Plant placed on preservation)

CotabatoMindanaoGeothermal Production Field106 MWMindanao I & II


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CorporateStructure

As of December 31,2014

Allied Gen Power Corporation

First Gen Eco Solutions Holdings, Inc.

First Gen Ecopower Solutions Inc.

First Gen Mindanao Hydro Power

First Gen Visayas Hydro Power

First Gen Luzon Power Corp.

First Gen Visayas Energy Inc.

First Gen Prime Energy Corporation

Northern Terracota Power Corp.

First Gen Premier Energy Corporation

Blue Vulcan Holdings Corporation

FGen Northern Power Corp.

First Gen Meridian Holdings, Inc.

FGen Power Ventures, Inc.

FGen Casecnan Hydro Power Corp.

First Gen LNG Holdings Corporation

FGen LNG Corporation

FGen Power Holdings, Inc

FGen Prime Holdings, Inc.

FGen Liquefied Natural Gas Holdings, Inc.

FGen Vibrant Blue Sky Holdings, Inc.

FGen Reliable Energy Holdings, Inc.

FGen Power Solutions, Inc.

FGen Aqua Power Holdings, Inc.

Prime Terracota Holdings Corporation

Bauang Private Power Corporation

First Gen Northern Energy Corporation

ECONOMIC:

66.2%

First Gas Pipeline Corporation

FGLand Corporation

FGen Northen Mindanao Holdings, Inc.

FG Mindanao Renewables Corp.

FGen Puyo Hydro Corporation

FGen Bubunawan Hydro Corporation

FGen Cabadbaran Hydro Corporation

100.0%

100.0%

100.0%

40.0%

40.0%

FGen Tagoloan Hydro Corporation

FGen Tumalaong Hydro Corporation

100.0%

100.0%

Goldsilk Holdings Corp.

OneCore Holdings, Inc.

DualCore Holdings, Inc.

Prime Meridian PowerGen Corporation

Red Vulcan Holdings Corporation

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

73.4%

40.0%

37.3%

33.3%

60.0%

100.0%

100.0%

98.0%

99.1%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0% 100.0%

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Chairman’sMessage

to such extreme weather events, and it’s fundamental that we embark on measures that create a more robust and a more resilient First Gen in the coming years.

The years 2013 and 2014 clearly exposed the vulnerability of our operations to the “new normal” of climate change. The Philippines is ranked globally as among the most susceptible

Dear Fellow Stakeholders,


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“Future-proofing”At our geothermal subsidiary — Energy Development Corporation (EDC), we recognize that the most vulnerable of our structures are our cooling towers and control rooms. We have since begun exploring innovative and resourceful designs for these — as well as for our other plant facilities — uprating them to withstand more intense rainfall and higher wind speeds of up to 300kph. The planned upgrades are already underway for these facilities, making them more robust and more resilient in the years to come.

Also, given that our geothermal plants are situated in the most rugged landscapes, we’ve spent the last eight years identifying and addressing close to 150 critical geohazard-prone areas within our concession sites. By end-2014, we’ve completed all the mitigating measures necessary to ensure the safety of our people and our structures. But we remain vigilant to new geohazard threats posed by natural calamities.

In addition to the many innovative engineering solutions that we’ve already begun tapping, we are also building stronger emergency preparedness and response capabilities within the company by hiring some of the best full-time dedicated emergency teams

in the country. They are strategically being deployed throughout our various sites across the country — ready and capable to respond rapidly in case of emergency, and also to act as a resource in training our partner communities and local governments in disaster preparedness. We believe that, aside from being force-multipliers in times of crisis, all these activities will also increase the bonds of partnership and trust we have with our local communities.

In addition to the many innovative engineering

solutions that we’ve already begun tapping, we are also building stronger

emergency preparedness and response capabilities

within the Company...

Southeast Asia’s largest wind farm is also the fruit of collaboration among EDC, First Gen, and the FPH Group’s construction arm, First Balfour

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Energizing the FutureDespite some snags these past two years, First Gen continues the upward trajectory of its bottomline. For 2014, net income attributable to Parent is USD193.2 million — up significantly by more than 63.6% over the previous year, the highest in our 15-year history! We expect this, albeit more steady, rise to continue as we strengthen our earnings base with the steady execution of our new and existing projects.

The next few years should see First Gen capitalizing on its strengths to power the company and our nation’s energy needs. Our natural gas platform should see a firm strengthening as we complete our 97-MW Avion open-cycle plant within the third quarter 2015, and the 414-MW San Gabriel combined-cycle plant within the second quarter of 2016, to serve mid-merit requirements of the Luzon grid. These gas-fired additions to our Santa Rita and San Lorenzo plants will form the basis for the development of a Liquefied

Managing RisksIn July 2014, Typhoon Glenda caused heavy flooding in the First Gas Sta. Rita and San Lorenzo plants and halting operations for two days. The typhoon also caused damage when a wayward barge owned by a third party came loose from Balayan Bay during the storm and slammed onto our fuel jetty in Batangas. Although both incidents had no material effect on our operations at the time, the damage to the jetty severely constrained liquid fuel deliveries for six months until repairs were completed in January 2015.

In many ways, managing the risks that emanate from the “new normal” is key to keeping our operations humming and our cash flows steady. Although we have been sufficiently protected by insurance in many of

We believe that closely participating in... emergent technologies will not only allow us to contribute to the future from an environmental standpoint, but will also enable us to stay

technologically-agile and augment our corporate capabilities for the years ahead.

these instances, we must proactively manage our risks and prepare for contingencies so that we remain ahead of the curve and keep insurance and interruption costs down.

We have thus embarked on a “strategic spares” program — at EDC, we have begun stocking up on critical plant equipment onsite and in safe locations. At First Gas, we closely monitor the condition of our transformers, but we also have a spare 318-megavolt amperes (MVA) transformer ready within the First Gen Batangas complex that can be put to use at moment’s notice should there be a failure again of one of the transformers as happened with Units 40 and 60 these last two years.

First Gen’s Batangas complex: a model of sustainability, soon to be joined by the San Gabriel and the Avion power plants.


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FEDERICO R. LOPEzChairman and Chief Executive Officer

In many ways, managing the risks that emanate from

the ‘new normal’ is key to keeping our operations humming and our cash

flows steady.

Natural Gas (LNG) import terminal in Batangas, with enough demand to underpin its economic viability.

In the geothermal space, EDC will continue to optimize its steam and power resources locally, but we’re also eyeing exciting prospects in Latin America, which present major sources of growth potential for our geothermal business.

In Chile, for instance, we will be conducting our first major international drilling campaign in October 2015. We have laid the groundwork for this three-well campaign by putting together an experienced project team to execute the drilling program, beginning with the completion of the necessary civil works and infrastructure, as well as the installation of surface casings in each of the target wells. All of our studies point towards a viable geothermal resource, and we are optimistic that we can execute our plan to put up our very first overseas geothermal power plant.

Meanwhile, in Peru, we have finished our surface exploration surveys and are in the process of developing our most promising concessions there.

We also continue to be on the lookout for other geothermal opportunities in the Asia-Pacific region.

Locally, First Gen, through EDC, will continue to build up its portfolio of solar and wind energy projects, as opportunities arise in the country’s Feed-in-Tariff (FiT) regime. We believe that closely participating in these emergent technologies will not only allow us to contribute to the future from an environmental standpoint, but will also enable us to stay technologically-agile and augment our corporate capabilities for the years ahead.

In energizing the future, we will continue to work with the best alternatives that combine both the environmental and the economic needs of our consumers, our communities, and our stakeholders. First Gen is determined to see a nation “Powered by Good.”

The 150-MW Burgos Wind Farm was one of the first renewable energy projects to be considered FiT-eligible under the Philippine government’s Feed-in-Tariff program.

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successfully repaired our damaged facilities and placed them back to operations more quickly than anticipated. Concurrently, we progressed with our strategic thrust to grow our clean and renewable platform by further investing in new capacity and preparing ourselves for the future. Let me elaborate on these.

Dear Stakeholders,

We started 2014 determined to recover from the damage wrought by super-typhoon Yolanda in November 2013, particularly to our Leyte geothermal assets.

The year 2014, in fact, proved to be a strong turn-around story for our Company. We

President’sReport


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• Our500-MWSanLorenzogas-firedpowerplantreported a good year, with a notable increase in energy generation to 3,474.3 gigawatt-hours (GWh) from 2,745.6 GWh, thanks to the return of its Unit 60 to operation after its main transformer breakdown in 2013

• Our1,000-MWSantaRitagas-firedpowerplant,however, experienced an untimely setback in February when its Unit 40 main transformer

First Gen’s gas plants contributed USD1.2 billion, or 63%, of total revenues in 2014.

Operational Highlights

First Gen now operates across four clean energy platforms: natural gas, geothermal, hydro, and, just this year, wind.

suffered damage upon completion of its scheduled maintenance outage. A new 318-megavolt ampere (MVA) main transformer was quickly ordered and recommissioned in July. This was completed in only five months since the transformer incident occurred

• InMarch,wecommissionedthreelargecargoplanesto transport much-needed parts to bring EDC’s Leyte plants back to operation, again five months ahead of schedule

Financial Performance

The many positive developments we accomplished resulted in significantly-improved financial results for 2014.

• FirstGenreportedanimpressiveUSD75.1million,or 64%, increase, in net income attributable to the Parent to USD193.2 million from USD118.1 million in 2013. The much-improved financials were driven by higher earnings contributions from our natural gas and geothermal power plants. It was partially offset by lower hydro earnings due to lower water levels

• Ourconsolidatedelectricityrevenuesdecreasedby USD2.3 million to USD1.9 billion. The gas plants contributed USD1.2 billion, or 63%, of total revenues. The geothermal plants accounted for USD651.7 million, or 34%, of the total. The hydro plants contributed 2%, or USD36.6 million, of revenues

• Thegasplants,whichare100%-ownedbyFirstGen,contributed USD121.5 million to the Company’s attributable earnings for 2014 — higher than the previous year’s USD81.9 million

• Ourmajority-ownedsubsidiaryEnergyDevelopmentCorporation’s (EDC) revenues grew by USD81.3 million, mainly due to electricity generated by the newly rehabilitated Bacon-Manito (Bacman) and Nasulo power plants. Nasulo’s operation allowed for a partial reversal of a previous impairment provision. EDC, on a consolidated basis, contributed USD136.1

million in attributable earnings from USD76.6 million in 2013

• WesignedaUSD265.0millionlong-termexportcredit facility with the German Government-owned KfW-IPEX Bank to partially finance our new 414-MW San Gabriel gas-fired plant. KfW will be featuring this project in its own 2014 annual report, validating our world-class capability in developing and financing lower carbon-emitting projects

• EDC’sUSD315.0millionprojectfinanceloanforthe 150-MW Burgos Wind Project (BWP), backed by Danish export credit facility Eksport Kredit Fonden, was awarded Project Finance International’s (PFI) Asia-Pacific Renewables Deal of the Year — the only Philippine project to make it to PFI’s 2014 honor roll. This was among a number of recognitions given to this pioneering project.

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The 150-MW Burgos Wind Project is the largest wind farm in the Philippines and in Southeast Asia

• OnJuly16,TyphoonGlendadamagedtwocoolingtowers at EDC’s Bacman geothermal power plant in Albay. We were able to conduct repairs and return to operation on August 26

• AlsoinJuly,EDCcompleted the 49-MW Nasulo Geothermal Power Plant, transferring the existing non-operating power plant from the Northern Negros geothermal field in Bago City, Negros Occidental to the Southern Negros geothermal field in Valencia, Negros Oriental

• Wehavebegunimplementinga‘strategicspares’program that will better prepare us to replace old or damaged parts immediately and reduce outage time. For geothermal, we are looking at improved designs for the cooling towers to withstand stronger typhoons. For the gas plants, a spare transformer was ordered from Siemens and arrived in September to serve as immediate standby equipment

• ByNovember,wecompletedtheBWP,ourfirstforay into wind energy. Originally an 86-MW project, BWP is now a 150-MW wind farm, making it the largest in Southeast Asia. Through BWP — which

is a Feed-in-Tariff (FiT)-eligible project under the Philippine Government’s FiT program, we are breaking new ground, diversifying our production capacity, and asserting First Gen’s position as an international leader in clean and renewable energy

• Unfortunately,2014was a weaker year for our 132-MW Pantabangan-Masiway hydroelectric

plants in Nueva Ecija, simply because the water reservoir level was low. With less water available, the plants could not produce as much electricity


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Business Development

Corporate Social Responsibility

• Webegan2014withtheJanuarygroundbreakingof our new 414-MW San Gabriel gas-fired power plant, a project we have pursued on our own, without partners or pre-established contracts. San Gabriel will utilize the latest Siemens SGT6-8000H gas-turbine technology, which Siemens is claiming will make it the most efficient gas-fired plant in Southeast Asia. This plant will be well-suited for mid-merit operations by the time it is ready to operate in the second quarter of 2016. Two other similar units can be constructed adjacent to San Gabriel, to facilitate a more efficient expansion program in the future

• OnAugust1,weexecutedsupplyandconstructioncontracts with the Istroenergo Group of Slovakia for the 97-MW Avion open-cycle peaking power plant. Expected to be completed and operational by the second semester of 2015, this fast-track project will use General Electric LM6000 PC Sprint aeroderivative gas turbines and will burn natural gas or liquid fuel. With its flexible operability, this is a strategic asset that will give First Gen greater opportunities to participate in the less-regulated Wholesale Electricity Spot Market (WESM)

• InthespiritofoneofthekeyLopezValuesthatissocial justice and partnership, we are providing USD1.0 million of funding to build 30 classrooms in Yolanda-stricken areas of Leyte

• Ourmedicalmissionsbenefitedover17,000patientsacross the country. Moreover, First Gen Hydro Power Corporation, the operator of Pantabangan-Masiway, is constructing a Home for the Aged in Nueva Ecija to be completed by January 2015

• Weremainbullishindevelopingourhydroportfoliothrough a number of run-of-river hydroelectric plants. We are currently fine-tuning the detailed technical and commercial feasibility studies of our concessions and are discussing the proper contracting strategies to strengthen our confidence in our ability to execute these projects properly. Over time, we believe this platform will deliver increasing revenues and profits to the Company

• InOctober,constructioncommencedfora4.1-MWsolar power project in Burgos, Ilocos Norte. Solar could be an area of rapid expansion for our Company in the coming years

• AfterrehabilitatingtheBacmanunits,EDCwillnowfocus on expanding the capacity of this power plant by adding a new 30 MW unit in 2015 — for which we target to issue a Notice to Proceed by August 2015. Completion of what will be Bacman 3 is slated for the third quarter of 2017.

• Weprovidedlivelihoodtrainingforover80participants, as well as critical equipment and supplies for small businesses in our various host communities

• FirstGenplanted3,500newtreeseedlingsin2014,and maintained the 542 hectares of sites that are currently under our BINHI greening program. We also conducted regular coastal and creek clean-ups throughout the year, in Batangas and in Bukidnon

The Lopez Values keep us rooted and committed to the communities who grow symbiotically with us.

Our ongoing projects are proceeding apace to be able to supply much-needed additional capacity in the various grids that we serve.

Our CSR initiatives cover four areas — education, health, poverty alleviation and environment — and also engage our employees through the EmPOWER (Employee Power) volunteer programs.

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Super-typhoon Yolanda may have struck us hard in 2013, but that experience, along with many other calamities, made us a stronger Company. We saw our values at work and in action. We see even more clearly the urgent need to put sustainability at the forefront of our agenda.

At the recently-concluded United Nations Climate Change Conference (COP20), current Chairman of the Global Commission on the Economy and Climate and former Mexican president Felipe Calderón, said, “It is not necessary to decouple economic growth from energy use. What we need to do is decouple economic growth from carbon emissions.”

“If we start now,” he continued, “the investments needed for a low-carbon economy could cost about the same as those for a high-carbon, inefficient, and polluting economy. Either way, around USD90.0 trillion

Sustainability, Moving Forward

Through our subsidiary Energy Development Corporation (EDC), First Gen has established its global leadership in geothermal energy

First Gen’s plants co-exist with nature, demonstrating our commitment to environmental sustainability

KfW will be featuring [San Gabriel] in its own 2014

annual report, validating our world-class capability

in developing and financing lower carbon-emitting

projects.


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will need to be invested globally in infrastructure over the next fifteen years… It is up to us whether we choose low-carbon and climate-resilient infrastructure, or high-carbon business-as-usual.”

I fully support his message. Not only should we react to climate change with disaster preparedness; we should also be pro-active, embracing lower-carbon sources of energy.

We are actively exploring the potential of our planned Liquefied Natural Gas (LNG) regasification terminal that will allow us to import LNG from overseas. This will address the depletion of Malampaya gas, expected 10 years from now. The availability of natural gas has benefited key industries in other markets. We see the supply to power and industrial users as the growth of future market demand for LNG.

Currently, First Gen has an installed capacity of close to 3,000 MW, half of which is renewable, and the other half of which is natural gas — the cleanest form of fossil fuel. We produce about 17% of our national energy

output, yet the carbon intensity of our portfolio is the lowest among the largest industry players. We are proving that it is possible to provide for our country’s energy needs, generate jobs that power our economy, and run a profitable business without sacrificing the urgent need to protect our environment.

Everything we do is geared toward sustainability — not only in strict technological-operational terms, but also in the way we treat our stakeholders. We take pride in our Lopez Values and we operate based on those principles. We have built our reputation on our values. As a result, whenever we move into a new area for investment, we are able to proudly say to the local

community, “This is who we are and what we do. We’re here for the long-term. We want to be your partner. When your community flourishes, our business will flourish as well.”

After successfully overcoming the effects of disaster, we are now preparing our organization, the communities around us, and our country for growth.

We thank you for your continued support.

FRANCIS GILES B. PUNOPresident and Chief Operating Officer


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Natural GasOur people bring cleaner, greener energy to the grid through First Gen’s natural gas plants.


Companies

First Gas Power Corporation (FGPC)

FGP Corp. (FGP)

A model for sustainability, the 1,000-MW Santa Rita and 500-MW San Lorenzo power plants continue to provide natural gas energy to the grid while also operating adjacent to a nine-hectare mangrove

First NatGas Power Corporation (FNPC)

Prime Meridian PowerGen Corporation (PMPC)

Overall in 2014, FGPC and FGP posted:

The rise in net income was due to additional income from insurance, reduced interest and financing expenses through scheduled loan repayments, and the return to operation of San Lorenzo’s Unit 60. The revenue dip was attributable to lower average gas prices and lower plant dispatch.

A substantial increase in net income, to

USD139.2 million

USD1,205.2 million

from USD99.5 million; and

A slight decrease in revenue from electricity sales, to

from USD1,292.7 million

On July 10, FNPC signed a

export credit facility with project and export financing authority KfW IPEX-Bank of Germany — one of Germany’s largest banks and an adviser for European policymakers — to partially finance our San Gabriel project.

and an export credit guarantee from Euler Hermes, on behalf of the Federal Republic of Germany.

This facility has a tenor of

USD265 million

13.7 years


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Natural Gas

• InJune,SantaRitaandSanLorenzo’sMultipartiteMonitoring Team (MMT) achieved an audit score of 4.8, including bonus points — above the “perfect” score of 4.4 — the highest among 32 MMTs audited by the Department of Environment and Natural Resources-Environmental Management Bureau (DENR-EMB) across the country

• Our1,000-MWSantaRitaCombined-CycleNaturalGas-Fired Power Plant suffered damage to its Unit 40 main transformer on February 26, but we were able to restore operations by July 19. This turnaround of under five months was quick, considering that similar efforts have a typical lead time of 16 to 18 months

Operational Highlights• InSeptember,a318-megavoltamperespare

transformer FGP had ordered from Siemens Koncar arrived at our plant site, providing immediate standby equipment for Santa Rita or San Lorenzo, in keepingwithFirstGen’s‘strategicspares’program

• Our500-MWSanLorenzoCombined-CycleNatural Gas-Fired Power Plant showed a marked improvement in weighted average net dependable capacity (NDC) last year, which resulted in increased energy delivered, to 3,474.3 gigawatt-hours (GWh) in 2014 from 2,745.6 GWh in 2013. This was due to the return of Unit 60 to operation, after its main transformer breakdown in May 2013, which previously rendered the Unit 60 inoperable.

Business Development• OnJanuary14,webrokegroundonthe414-

MW San Gabriel Combined-Cycle Natural Gas-Fired Power Plant in Batangas. Expected to be completed by the second quarter of 2016, and with a total cost of USD600 million, San Gabriel will use the world’s most advanced gas turbine technology, the Siemens SGT6-8000H. This should make it Southeast Asia’s most efficient gas-fired combined-cycle power plant, with nearly 60% efficiency

• Ourwholly-ownedsubsidiaryPMPCexecutedsupply and construction contracts with the Istroenergo Group (IEG) for our 97-MW Avion Open-Cycle Natural Gas-Fired Power Plant. IEG is an engineering contractor from Slovakia, experienced in the construction of aeroderivative gas turbine power plants. The Avion Plant will use General Electric’s LM6000 PC Sprint aeroderivative gas turbines, and will have the capability to burn natural gas or liquid fuel. It will be located adjacent to our Santa Rita and San Lorenzo plants in

Batangas City, and is expected to be completed at a cost of approximately USD150 million. The Avion Plant, slated to be completed and operational by the third quarter of 2015, will help provide crucial incremental power supply to the grid

• OurproposedLiquefiedNaturalGas(LNG)regasification terminal is intended to receive, store, and regasify LNG from abroad, and address the expected depletion of the Malampaya gas field starting from 2022, approximately. Subject to a decision to proceed with the investment, we are completing technical studies, acquiring key permits, and finalizing all documents in preparation for the issuance of an Invitation to Tender for the turnkey engineering, procurement, and construction of the onshore LNG terminal by third-quarter 2015 at the earliest. We have also been in discussions with global LNG players that have expressed interest in partnering with First Gen for this project.


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Geothermal

Our Southern Negros Geothermal Project obtained its ISO 14001:2004 certification from SGS Philippines, under the UKAS (United Kingdom Accreditation Service) accreditation for its exemplary environmental management system.

Our people harness heat from within the earth to power First Gen’s geothermal plants.

EDC posted significantly-improved results, compared to our 2013 figures:

These were primarily driven by higher electricity sales — notably, due to the start of operations of our Bacon-Manito (Bacman) and Nasulo power plants — supplemented by the Php1.8 billion net recovery of impairment of our Northern Negros plants. Our Mindanao 1 and 2 power plants likewise posted a Php0.5 billion increase in revenues of Php2.4 billion in 2014 from Php1.9 billion in 2013 due to the absence of shortfall adjustments.


110%

20%40%

increase in consolidated net income, up to Php11.8 billion from Php5.6 billion

increase in consolidated recurring net income attributable to EDC, up to Php9.2 billion from Php6.6 billion

increase in consolidated revenues, up to Php30.9 billion from Php25.7 billion

Companies


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• AfterthedevastationwroughtbySuper-typhoonYolandain November 2013, we were able to get our Leyte assets back online by March 2014, bringing in three Boeing 747s to be able to complete restoration five months ahead of schedule and well under five months after the damage had occurred. EDC also partnered with ABS-CBN’s Sagip Kapamilya Foundation to repair five school buildings and begin building what will be an eventual total of close to 80 typhoon-resilient classrooms in Ormoc City, in Isabel, and in Palo, Leyte for almost 7,000 students

• Followingitscomplexrehabilitationfromthestatein which it was first purchased, Bacman faced more challenges on July 16, when Typhoon Glenda damaged two of its cooling towers. We were able to restore operations in just over a month, by August 26. Bacman Units 1, 2, and 3 have now been steadily in commercial operation, generating 130MW of energy, and contributing a healthy revenue increase of Php2.8 billion

• OurN2NRelocationProjectwasalsocompletedin July 2014. We inaugurated our 49.4-MW Nasulo Geothermal Project in Southern Negros on September

Operational Highlights26 after successfully completing the transfer of this power facility from our resource-limited steam field in Northern Negros

• 2014wasthesecondyearinarowthatEDCmadeittothe ASEAN Corporate Governance Scorecard’s Top 50 publicly-listed companies in the Philippines

• WealsoachievedISO9001:2008certificationfromglobalstandards authority TUV Rheinland Cert GmbH, having successfully met international resource management benchmarks across all our operating fields and head office. Our Southern Negros Geothermal Project likewise received the ISO 14001:2004 Environmental Management System certification

• 2014furthermarkedourfifthyearofsustainabilityreporting, based on more than a hundred key performance indicators under the Global Reporting Initiative (GRI) framework. This has enabled us to better manage natural and human resources, as part of our corporate responsibility and toward sustainability.

• EDC,throughitssubsidiaryGreenCoreGeothermalInc.(GCGI), signed an amendment to the current power supply agreement (PSA) with the following electric cooperatives and private distribution utilities (DUs):

• CapizElectricCooperative,Inc.(CAPELCO)• LeyteIIElectricCooperative,Inc.(LEYECOII)• LeyteIIIElectricCooperative,Inc.(LEYECOIII)• BoholIIElectricCooperative,Inc.(BOHECOII)• IloiloIElectricCooperative,Inc.(ILECOI)• IloiloIIElectricCooperative,Inc.(ILECOII)• IloiloIIIElectricCooperative,Inc.(ILECOIII)• NegrosOrientalIElectricCooperative,Inc.(NORECOI)• NegrosOrientalIIElectricCooperative,Inc.(NORECOII)• AklanElectricCooperative,Inc.(AKELCO)• BalambanEnerzoneCorporation(BEZ)• CentralNegrosElectricCooperative,Inc.(CENECO)• GuimarasElectricCooperative,Inc.(GUIMELCO)• VisayanElectricCooperative,Inc.(VECO)

• WeenvisionourIndonesiasitestocontribute220MWtoEDC’s portfolio by 2024, although development is presently slowed by the local political climate

• Wenowholdfiveconcessionsand19applicationsinChileand Peru. We are currently installing surface casing to gain time while reducing the risk in our deep drilling project in Mariposa, Chile. Our exploration drilling program there is considered one of the most advanced geothermal projects in the country

• InChileandPeru,wenowholdstakesinfiveconcessionsand 19 applications. We had acquired the local subsidiaries of Australian geothermal firm Hot Rock Ltd. and signed joint venture agreements with TSX–Listed and global renewable energy player Alterra Power Corporation. We had budgeted USD58 million for our exploration drilling campaign in Mariposa (Chile), and are on track to drill our first well overseas by fourth quarter of 2015.



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HydroOur people harness the abundance of water to power First Gen’s hydroelectric plants.


Companies

First Gen Hydro Power Corporation (FGHPC)

FG Bukidnon Power Corporation

The Pantabangan-Masiway Hydroelectric power plant (PMHEP), a multi-purpose hydro complex that supplies irrigation water for the vast rice fields of Nueva Ecija.

FGHPC posted a 17% decrease in total revenues, from Php2.25 billion in 2013 to Php1.87 billion in 2014, primarily due to exceptionally low water levels at the Pantabangan dam reservoir. Although revenues from energy delivered to the spot market and power customers declined — from Php1.6 billion in 2013 to Php1.2 billion in 2014 — this was somewhat offset by an improvement of

FG Bukidnon delivered Php5.6 million less than in 2013. Net income came in at Php12.2 million, compared to Php17.8 million in 2013. Gross revenue from the sale of electricity in 2014 was at Php44.7 million, well above the Php41.3 million earned in 2013.

11% 6%This is attributable to FG Bukidnon’s

improvement in net energy generation.

in our revenues from ancillary services, from Php0.65 billion in 2013 to Php0.72 billion in 2014. Net income for 2014 was 32% lower at Php811.5 million, compared to Php1.19 billion in 2013.


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•ThecontractforrehabilitationofFGHPC’sMasiwayhydro facility – including replacement of its circuit breaker; transformer; and governor, excitation, and protection systems – with Alstom Hydro China and Alstom Hydro Philippines was executed on June 30. The project is on track for 2015 completion

•InJuly,FGHPC’s132-MWPantabangan-Masiway

hydroelectric power plant (PMHEP) complex experienced its lowest dam elevation levels on record since before 2006, at 28% below those of 2013. This contributed to FGHPC’s 25% reduction in capacity factor and consequent revenue dip, as did 2014’s relatively-low spot market prices, along with power plant maintenance works and pre-works in expectation of the 2015 Masiway refurbishment. Curtailed water discharges — due to the National Irrigation Administration’s water conservation efforts toward year-end, in anticipation of the El Niño season — likewise impacted performance

Operational Highlights

•PMHEP’sreliabilityfactordidimprove,however,to99.9% from the prior year’s 98.0%, notably from a dramatic reduction in forced outages at Pantabangan – only 4.9 hours in 2014, compared to 96.4 hours in 2013. Masiway clocked only 6.5 hours of forced outage, also lower than the previous year’s 9.2 hours

•ByDecember,FGHPCachievedover3.5millionman-

hours without Lost-Time Incidents. The company also received a Lopez Achievement Award (LAA) in the Operations Management category, based on the entry titled‘RelentlessPursuittoRestorePantabanganUnit 1 Averts Php690 Million Revenue Loss’

•InJanuaryandJuly,respectively,bothFGBukidnon

and FGHPC were recommended for continuance of their certifications in terms of Quality (ISO 9001:2008), Environment (ISO 14001:2004), and Safety and Health (OHSAS 18001:2007) Management Systems, by the relevant international authorities.

First Gen Hydro Power Corporation (FGHPC)

FG Bukidnon Hydro Development

•InAugust,FGBukidnonreceivedcertificatesfromthe Department of Labor and Employment (DOLE), in recognition of the plant’s compliance with DOLE’s General Labor and Occupational Safety and Health Standards

•FGBukidnonenjoyedahigherinflowin2014,enabling

a net energy delivery of 11.96 GWh, equivalent to a net capacity factor of 85.62%, 6% higher than the 2013 capacity factor of 80.97%.

•OnMarch11,theDepartmentofEnergyissueda Certificate of Registration and Confirmation of Commerciality to FGEN Bubunawan for the development of the 23-MW Bubunawan Hydropower Project in Baungon and Libona, Bukidnon. The project’s design is nearing completion, and bidding for the main engineering, procurement, as well as construction components, should take place by the second half of 2015. Commercial operations are slated to begin in the fourth quarter of 2017.


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Wind

3-MW wind turbines dot the landscape in Burgos, Ilocos Norte overlooking Bangui Bay and, beyond that, the West Philippine Sea. The Burgos Wind Project (BWP) has a total generating capacity of 150 MW of clean, renewable energy.

Our people harness the flow of air to power First Gen’s premier foray into wind energy.


In October 2014, EDC inked a USD315-million project financing loan for the 150-MW Burgos Wind Project (BWP), backed by EKF, the Danish Export Credit Agency, with a group of foreign and local banks. This arrangement was recognized as the:

Deal of the Month for April 2014, by Acquisition International magazine

Asia-Pacific Renewables Deal of the Year, by Project Finance International (PFI). BWP was the only Philippine project to earn a place on PFI’s 2014 honor roll

Asia-Pacific Deal of the Year, by Euromoney’s Trade Finance magazine

Asia-Pacific Wind Deal of the Year, by Infrastructure Journal and Project Finance Magazine

Top Ten Global Deals of the Year – Best Export Credit Agency-backed Green Deal, by Trade and Export Finance

Companies

The BWP is a FiT-eligible project under the the Energy Regulatory Commission’s (ERC’s) Feed-in Tariff (FiT) program, guaranteeing priority grid access, long-term contracts, and payment commensurate to the amount of renewable energy produced – equivalent to cost-based compensation of Php8.53 per kilowatt-hour.


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Wind

• InApril2013,EDCbrokegroundata684-hectaresitecovering Barangays Saoit, Poblacion, and Nagsurot in Burgos, formally commencing early works development on the largest investment to date in Ilocos Norte

• ByJuneofthesameyear,constructionwasongoingin earnest, with Alstom and First Balfour lending their expertise to connect the Burgos substation to the National Grid Corporation of the Philippines’ Laoag substation, via a 115-kilovolt transmission line

• InOctober2013,ourfirstbatchofVestaswindturbines arrived in the Philippines. Vestas, the world’s leading wind turbine manufacturer, is the Engineering, Procurement, and Construction (EPC)Contractor for the wind farm. The Burgos Wind Farm features 50 units of the Vestas V90 turbines, each with a rated capacity of 3.0 MW.

• ByApril2014,amajorexpansionwasgreen-litforthe BWP, nearly doubling installed capacity from the initial 87 MW to a total of 150 MW, enabling it to provide 370 gigawatt-hours (GWh) of electricity, compared to the projected 233 GWh


BWP leveraged on expertise and synergy not only within First Gen an EDC, but also from parent First Philippine Holdings Corporation (FPH) and from FPH’s construction arm, First Balfour.

The Vestas V90 wind turbine has a rotor diameter of 90 meters (m). This is 10m longer than the wingspan of the Airbus A380, currently the world’s largest passenger airliner

• ByNovember2014,theBWPwassuccessfullycommissioned and commenced commercial operations

• InDecember2014,theBWPsecureditsProvisionalAuthority to Operate from the ERC, proudly ending the year with over four million safe man-hours after 18 months of construction

• The150-MWBWPisnowthelargestwindfarminSoutheast Asia, providing an estimated 370 GWh of electricity to power around 154,000 households (assuming average consumption of 200kWh/household/month), while displacing approximately 200,000 tons of carbon emissions annually

• InApril2015,theBWPsecureditsFiT-Certificateof Compliance (COC) stipulating that the 150 MW BWP is entitled to the Feed-In Tariff rate until 10 November 2034.


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CSRIn 2014, First Gen ranked No. 7 among FinanceAsia best-managed companies, in the Best in Corporate Social Responsibility category.

Eighty-four employee volunteers conducted a team-building activity for 30 marginalized youth from Addition Hills, Mandaluyong in partnership with Unang Hakbang Foundation.

A total of 116 employees contributed and distributed school supplies for 475 Aeta students from Nabuclod Elementary School and Camachile Elementary School both in Floridablanca, Pampanga, in partnership with the National Commission for Indigenous Peoples. Sixty volunteers also conducted structured learning exercises for the children.

Our EmPOWER (Employee Power) program led our

personnel to render 67.5 volunteer hours, in five activities benefiting two elementary schools, three college scholars, seven institutions, 30 impoverished youths,

and 475 Aeta students.


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• Thankstoourpartnerships,weraisedUSD1millionto build classrooms in the Super-typhoon Yolanda-stricken areas of Leyte. In 2014, the Lopez Group, through the ABS-CBN Sagip Kapamilya Foundation:• Completedfournewbuildingswith14typhoon-

resilient classrooms in Isabel, Palo, and Ormoc City; and

• Repairedfivebuildingswith10classroomsinOrmoc City

Nearly 7,000 students will benefit from these new and refurbished classrooms

• FirstGenparticipatedintheDepartmentofEducation’s (DepEd) annual Brigada Eskwela, ensuring clean, well-maintained, and disaster-ready learning environments

• Weprovidedschoolandteachingsuppliesto12,758students and 277 teachers from 50 host schools

At First Gen, we recognize that our businesses will flourish best when the communities in which we operate flourish as well. We are thus committed to lending our host communities our aid and support in various areas throughout the year, every year.

Education

• FirstGasandFGHPCgaveallowancesto327students at four host schools, including student-dependents of Bantay Dagat organizations

• FirstGasfacilitatedtheNationalAchievementTest (NAT) Review for 266 sixth-grade students, in partnership with the Batangas State University

• FGHPCsuppliedtrainingontheK+12approachto25teachers from four host schools

• TheFirstGenMindanaoHydrogroupinstalledKnowledge Channel learning packages at our five host schools in Agusan del Norte and Bukidnon

• FirstGasprovided229studentsfromtwohostschools with dental care, and partnered with the Asian Eye Institute to provide glasses for 101 students.

Subsidiaries of the First Gen group support the DepEd’s annual Brigada Eskwela. School bags with school supplies are distributed among the primary host schools in the areas of our operations at the start of the school year.

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• FirstGasandFGHPCconductedin-schoolfeedingprograms, benefiting 470 malnourished children from seven host schools

• TheFirstGengrouprananumberofhealthcareinitiatives, including:• Medicalmissionsthatbenefited9,057individuals• Opticalmissionsthatbenefited4,469individuals• Dentalmissionsthatbenefited1,753individuals• Freecataractoperationsfor13elderlycitizens,in

partnership with the Asian Eye Institute

• FirstGas’scommunityclinicservedatotalof2,024individuals. Moreover, FGHPC is constructing a Home for the Aged in Pantabangan, Nueva Ecija, to provide medical attention, rest, and recreation for the elderly.

Poverty Alleviation

Community Health & Safety

FGHPC Company Nurse, Leah Rios, dispenses medicines to a resident of Nueva Vizcaya, one of three host provinces of FGHPC.

Pre-elementary to Grade 6 teachers of Pantabangan West Central School prepare for their presentation during the 2014 Teacher Training.

• Forthesecondyearinarow,ourKananga-EDCInstitute of Technology (KEITECH) received the Technical Education and Skills Development Authority’s Kabalikat Award. Two FGHPC students graduated from KEITECH in 2014

• OurCenteroftheCenterprogramprovideda4DR5diesel engine for the Samahang Bantay Dagat ng Mabini’s ecotourism boat business, and equipment and initial ingredients for the Nagkakaisang Bantay Dagat ng Tingloy’s shing-a-ling and miki noodles business, which was able to earn a net profit of over Php16,000 in only its first four months of operation

• Oursubsidiariesconductedlivelihoodcoursesin:• BasicCosmetology,for41participants• Shielded Metal Arc Wielding, for 32 participants• ElectricalInstallationandMaintenance,fornine

participants

First Gas’s Tulong Upang Lumawak Angking Yaman (TULAY) and Ganda Mo Hanapbuhay Ko graduates also underwent values formation seminars.

• ThroughFirstGas,wecontinuedtoupholdtheCenter of the Center program, by:• Providingoperationalsupportandaccident

insurance to Bantay Dagat organizations, enabling them to conduct regular patrolling operations

Environment• SupportingtheBatangasEnvironmentResponse

Team’s Operational and Planning Workshop, in partnership with the Provincial Government – Environment and Natural Resources Office.


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Lush forests that surround our geothermal facilities attest to EDC’s comprehensive watershed management program.

This advocacy protects the Verde Island Passage from illegal and commercial fishers, preventing harmful fishing methods while safeguarding local industry

• Inpartnershipwithcommunityvolunteers,FirstGasand FG Bukidnon Power conducted regular coastal and creek clean-ups in their respective areas

• TheFirstGengroupplanted3,500seedlingsinmultiple locations, boosting the Department of Environment and Natural Resources’ (DENR) TreeVolution: Greening MindaNOW initiative, which

was recognized by the Guinness World Records for planting the most number of trees in multiple locations

• EDCestablishedarboretumsinSouthernLeyte–inpartnership with the Provincial Environment and Natural Resources Management Office – and at the UP Institute of Biology, to serve as seedling banks for threatened tree species

• FGHPCmaintainedits542hectaresofBINHIplantations. BINHI’s four Farmers’ Associations – comprising a sum of 298 members – were endowed with Php5.0 million in total contracts, and seminars on self-awareness, patrolling, firefighting, basic accounting, and related skills

• FirstGen–inpartnershipwiththeDilimanScienceResearch Foundation and the Makiling Center for Mountain Ecosystem – and FGHPC continued to conduct biodiversity studies, to better protect ecosystems in our host communities

• FirstGen–undertheauspicesoftheOscarM.LopezCenter for Climate Change Adaptation and Disaster Risk Management Foundation, and with the Office of the Presidential Assistant for Rehabilitation and Recovery (OPARR) – hosted a forum for international scientists to discuss strategies for the rehabilitation and rebuilding of Yolanda-stricken areas.

• OurEmPOWER(EmployeePower)programledourpersonnel to render 67.5 volunteer hours, in five activities benefiting two elementary schools, three college scholars, seven institutions, 30 impoverished youths, and 475 Aeta students

• ThroughEmPOWERdonations,ouremployeeshelped in the rehabilitation and repair of Candavid Elementary School - an earthquake-stricken school in Bohol - and the Eastern Visayas State Unviersity, a Yolanda-stricken school in Leyte

• Anewstudentwasaddedtothepairofscholarsalready being sponsored through college by our employees’ donations, through various fundraising activities

• FirstGenemployeesprovided475Aetastudentsfrom Pampanga’s Nabuclod Community with schoolbags and supplies. They held a team-building activity together with marginalized youth from the Unang Hakbang Foundation

EmPOWER

First Gen’s employee volunteering program, dubbed ‘EmPOWER’, provides the opportunity for our employees to express their creativity and give back to the community.

• OurannualRedBagscampaignhadpersonneldistribute Christmas food packs to hospitals, the Sagip Kapamilya Precious Heritage Foundation, Metro Manila Development Authority (MMDA) enforcers, and communities in Quezon City, Pasig, Mandaluyong, Batangas, and Manila.


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Board ofDirectors

OSCAR M. LOPEz, born April 19, 1930, Filipino, was First Gen’s Chairman since the company’s incorporation in December 1998 until January 2010, when the Board of Directors elected him Chairman Emeritus. He is also Chairman Emeritus of publicly-listed companies First Philippines Holdings Corporation (FPH), Energy Development Corporation (EDC), and Rockwell Land Corporation (Rockwell Land). He sits on the boards of publicly-listed companies Lopez Holdings Corporation (Lopez Holdings, formerly Benpres Holdings Corporation) and ABS-CBN Corporation. Mr. Lopez was conferred the degrees of Doctor of Humanities honoris causa by the De La Salle and Ateneo de Manila universities (2010), and Doctor of Laws honoris causa by the Philippine Women’s University (2009) and University of the Philippines (2012). He has a master’s degree in Public Administration from the Littauer School of Public Administration, Harvard University (1955). Mr. Lopez also earned his Bachelor of Arts (BA) degree from Harvard (cum laude, 1951).

FEDERICO R. LOPEz, born August 5, 1961, Filipino, has been a member of the Board since December 1998. He is Chairman and Chief Executive Officer (CEO) of publicly-listed companies First Gen, FPH, and EDC. He is a Director of ABS-CBN Corporation and Vice-Chairman of Rockwell Land, both of which are listed companies. He is also the Treasurer of Lopez Holdings. Mr. Lopez is Chairman of the Board of Trustees of the Oscar M. Lopez Center for Climate Change Adaptation and Disaster Risk Management Foundation, as well as the Sikat Solar Challenge Foundation. He is a member of the board of trustees of the Philippine Tropical Forest Conservation Foundation, World Wild Fund for Nature (WWF) - Philippines, and Philippine Disaster Recovery Foundation. He is a member of the World Presidents’ Organization, Asia Business Council, and the ASEAN Business Club. He is also President of Ang Misyon, Inc. and a member of the International Advisory Board of the New York Philharmonic. Mr. Lopez is a graduate of the University of Pennsylvania, with a BA in Economics and International Relations (cum laude, 1983).


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FRANCIS GILES B. PUNO, born September 1, 1964, Filipino, was first elected to the Board in August 2005. He is President and Chief Operating Officer (COO) of First Gen, and Executive Vice-President (EVP), Chief Finance Officer (CFO), and Treasurer of FPH. He sits on the boards of publicly-listed companies FPH, EDC, and Rockwell Land. Mr. Puno has a master’s degree in Management from the Kellogg Graduate School of Management of Northwestern University (1990) and a Bachelor of Science (BS) degree in Business Management from Ateneo de Manila University (1985).

RICHARD B. TANTOCO, born October 2, 1966, Filipino, has been a Director since August 2005. He is a Director and EVP of First Gen, and EVP of FPH, as well as President and COO of EDC, each of which is a listed company. Mr. Tantoco has a Master of Business Administration (MBA) degree in Finance from the Wharton School of Business of the University of Pennsylvania (1993), and a BS in Business Management from Ateneo de Manila (honors, 1988).

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ELPIDIO L. IBAÑEz, born September 30, 1950, Filipino, was first elected to the Board of Directors in December 1998. He is a member of the board of EDC, and serves as President and COO of FPH, both of which are publicly-listed companies. Mr. Ibañez obtained an MBA from the University of the Philippines (1975) and a BA in Economics from Ateneo de Manila University (1972).

EUGENIO L. LOPEz III, born August 13, 1952, Filipino, was first elected to the Board of Directors in September 2009. He is a director of FPH and Rockwell Land, Vice-Chairman of Lopez Holdings, and Chairman of ABS-CBN Corporation, all of which are listed companies. He is Chairman Emeritus of ABS-CBN Lingkod Kapamilya Foundation Inc. (formerly ABS-CBN Foundation, Inc.), Chairman of Sky Cable Corporation, and Chairman/President of Bayan Telecommunications. Mr. Lopez graduated with a BA in Political Science from Bowdoin College (1974), and has an MBA from Harvard Business School (1980).

PETER D. GARRUCHO, JR., born May 4, 1944, Filipino, has been a member of the Board since the company’s incorporation in December 1998. He sits on the Boards of publicly-listed companies FPH and EDC. Until his retirement in January 2008 as FPH’s Managing Director for Energy, Mr. Garrucho held the positions of Vice-Chairman and CEO of the company. Mr. Garrucho has an AB-BSBA degree from De La Salle University (1966) and an MBA from Stanford University (1971).


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TONY TAN CAKTIONG, born January 5, 1953, Filipino, has been an Independent Director of the Company since April 2005. He is the Chairman of Jollibee Foods Corporation and Co-Chairman of DoubleDragon Properties Corp., both of which are publicly-listed companies. He is a director of listed company Philippine Long Distance Telephone Company, and is at the helm of Chowking, Greenwich, Red Ribbon Bakeshop, and Mang Inasal in thePhilippines,alongwithYongheKingandHongZhuangYuan in China. He is a member of the board of trustees of the Asian Institute of Management (AIM), St. Luke’s Medical Hospital, Philippine Business for Education, and the Temasek Foundation of Singapore. He is an Agora Awardee for Outstanding Marketing Achievement, AIM Triple A Alumni Awardee, TOYM Awardee for Entrepreneurship, and a recipient of the World Entrepreneur of the Year award in 2004. Mr. Caktiong has a BS in Chemical Engineering from the University of Santo Tomas (1975) and management tutoring certifications from Harvard University, AIM, the University of Michigan Business School, and Harvard Business School.

JAIME I. AYALA, born March 24, 1962, Filipino, was elected Independent Director of the Company in May 2013. He is the Founder and CEO of Hybrid Social Solutions, a social enterprise focused on empowering rural villages through solar energy. He was recognized as Schwab Foundation Social Entrepreneur of the Year in 2013 and as the Ernst & Young Entrepreneur of the Year Philippines in 2012. Mr. Ayala was President and CEO of publicly-listed Ayala Land, Inc. and Senior Managing Director of Ayala Corporation. Prior to that, he was a director (global senior partner) at McKinsey & Company, where he played a number of global and regional leadership roles, including head of the firm’s Asian Energy Practice, and President of McKinsey’s Manila office. Mr. Ayala sits as a trustee on the Princeton University Board of Trustees, Stiftung Solarenergie – Solar Energy Foundation, and Philippine Tropical Forest Conservation Foundation. He earned his MBA from Harvard Business School (honors, 1988) and completed his undergraduate work in Economics at Princeton University (magna cum laude, 1984).

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SeniorManagement

FEDERICO R. LOPEzChairman and Chief Executive Officer

FRANCIS GILES B. PUNOPresident and Chief Operating Officer

ERNESTO B. PANTANGCOExecutive Vice President

RICHARD B. TANTOCOExecutive Vice President

JONATHAN C. RUSSELLExecutive Vice President


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EMMANUEL P. SINGSONSenior Vice President,

Chief Finance Officer andTreasurer

RENATO A. CASTILLOSenior Vice President

VICTOR B. SANTOS, JR.Senior Vice President,

Compliance Officer andCorporate Information Officer

FERDINAND EDWIN S. CO SETENGSenior Vice President

NESTOR H. VASAYSenior Vice President

COLIN J.D. FLEMINGSenior Vice President

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JULICER A. ALVISVice President and

O&M General Manager

DOMINADOR M. CAMUVice President

DENNIS P. GONzALESVice President

ERWIN O. AVANTEVice President

VALERIE Y. DY SUNVice President and

Head of Investor Relations

RAMON J. ARANETAVice President

TEODORICO R. DELFINVice President

SHIRLEY C. HOMBREBUENOVice President

JEROME H. CAINGLETVice President

ANNA KARINA P. GEROCHIVice President


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ARMAN V. LAPUSVice President

DANIEL H. VALERIANO, JR.Vice President

ALOYSIUS L. SANTOSVice President

MA. THERESA M. VILLANUEVAHead of Internal Audit

JORGE H. LUCASVice President

CHARLIE R. VALERIOVice President and

Chief Information Officer

RACHEL R. HERNANDEzVice President and

Corporate Secretary

ANNA MARIE M. SENCIOAssistant Corporate Secretary

CARMINA z. UBAÑAVice President and

Comptroller

VINCENT MARTIN C. VILLEGASVice President

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CorporateGovernanceThe corporate governance structures of First Gen are managed and driven by its Board of Directors, which is composed of individuals of proven competence and integrity. As the members of the Board are fully aware of their duties and obligations as Directors of a publicly-listed company, they make every effort to ensure that the Company is able to respond to the needs of its officers, employees, customers, and partners, as well as the government and the public in general. Having set forth the Company’s goals, the Board is responsible for guiding the Company in fulfilling its economic targets and governance aspirations.

The Board of Directors of First Gen consists of nine (9) members, which include two (2) Independent Directors, each of whom is elected by the Company’s qualified stockholders during the annual general meeting held every 2nd Wednesday of May of each year. Independent Directors Tony Tan Caktiong and Jaime I. Ayala have neither interest nor relationship with First Gen that may hinder their independence from the Company or its management, or interfere with the exercise of independent judgment in carrying out their responsibilities.

Pursuant to the Company’s Manual on Corporate Governance and in compliance with the principles of good corporate governance, the members of the Board have been selected also as members of the following standing committees: the Risk Management Committee, the Nomination and Governance Committee, the Compensation and Remuneration Committee, and the Audit Committee.

The Nomination and Governance Committee is composed of at least three (3) members, one (1) of whom shall be an Independent Director. It is presently composed of Chairman Federico R. Lopez, Director Richard B. Tantoco, and Independent Director Tony Tan Caktiong.

Under The Nomination and Governance Committee Charter, the committee exercises the principal function of selecting Directors and evaluating their qualifications as shall be consistent with the By-laws and Manual on Corporate Governance. The committee makes sure that a Board election will result in a mix of proficient Directors, each of whom will be able to add value and bring prudent judgment to the Board of Directors. It is also tasked to review the structure, size, and composition of the Board and make appropriate recommendations thereto. It shall likewise review with the Board, on an annual basis or as may be needed, the appropriate skills, characteristics, and training required by the Directors.

The committee also holds the responsibility of reviewing and evaluating the qualifications of persons nominated for positions that require Board approval. It likewise has the duty to assess the effectiveness of the Board’s processes and


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procedures in the election or replacement of Directors. It also reviews the recommendations of the Compliance Officer in relation to the Manual on Corporate Governance, as well as other corporate governance rules and regulations.

The Compensation and Remuneration Committee is composed of the Chairman of the Board and two (2) members, one (1) of whom shall be an Independent Director. The chairman of the committee is Independent Director Tony Tan Caktiong, and its members are Directors Federico R. Lopez and Peter D. Garrucho Jr.

Pursuant to the Compensation and Remuneration Committee Charter, the committee has the principal function of studying and recommending an appropriate compensation and/or rewards system. It shall exercise powers and functions over the compensation and remuneration of the corporate officers other than the Chairman, whose compensation and remuneration shall be determined by the President and two (2) Directors, one of whom shall be an Independent Director. The committee shall establish a policy on remuneration of Directors and officers, to ensure that their compensation is consistent with the Corporation’s culture, strategy, and the business environment in which it operates. Further, it is tasked to review the Corporation’s human resources development or personnel handbook, in order to strengthen provisions on conflict of interest, policies on salaries and benefits, and directives on promotion and career advancement.

The Audit Committee is headed by Independent Director Jaime I. Ayala, with Independent Director Tony Tan Caktiong and Directors Peter D. Garrucho and Elpidio L. Ibañez as members.

Under the provisions of The Audit Committee Charter, the committee’s primary function is to assist the Board of Directors in fulfilling its oversight responsibilities

for financial reporting, internal control systems, internal audit activities, compliance with key regulatory requirements, and enforcement of the Corporate Code of Conduct.

The committee is likewise tasked with the following functions:

• ProvideinputandperspectiveontheCompany’smanagement of credit, market, liquidity, operational, legal, and other risks

• Monitorandevaluatetheadequacyandeffectivenessof the Company’s internal control system, including financial reporting control and information technology security

• Receiveandreviewreportsofinternalandexternalauditors and regulatory agencies, where applicable, and ensure that management takes appropriate corrective actions to address regulatory issues

• Reviewandapprovetheannualinternalauditplan,including audit scope and frequency, and all major changes thereto

• Reviewthefinancialstatements,withparticularfocus on the following:

a) Accounting policies, practices, and reporting issues

b) Assumptions and estimates in major judgmental areas

c) Significant adjustments resulting from audit; andd) Recent professional and regulatory

pronouncements, along with their impact on the financial statements

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• Reviewanyunusualorcomplextransaction,andthe accuracy of disclosures of material information, including subsequent events and related-party transactions

• Recommendtheappointmentofanexternalauditorfor the Corporation, and manage relations between said auditor and the Company

• Reviewtheexternalauditor’sconductofitsactivitiesand engagements for and in the Company, in order to make sure such conduct is in accordance with generally-accepted auditing standards in the Philippines

• Ensuretheexistenceofaworkinginternalauditgroup which shall identify audit issues, propose resolutions to these issues, and provide reasonable assurance that key organizational and procedural controls as promulgated by management are effective, appropriate, and enforced

• Ensurethatmembersoftheinternalauditgrouphave free and full access to all the Company’s records, properties, and personnel which are relevant to and required by its functions, and that internal audit activities shall be free from interference and influence, and

• Reviewtheeffectivenessoftheinternalauditfunction, in accordance with applicable auditing standards and The Internal Audit Charter.

The committee shall conduct an annual self-assessment of its performance and effectiveness, and recommend, if necessary, changes to The Audit Committee Charter. The self-assessment activity shall be based on the completeness of The Audit Committee Charter as to its compliance with regulatory requirements and actual implementation.

The Audit Committee may likewise request information, data, and clarification from the officers of the Corporation, in the performance of its duties and responsibilities.

The Risk Management Committee was created by the Board of Directors in March 2010. The Risk Management Committee Charter provides that the committee shall be composed of at least three (3) members from the Board of Directors. In May 2013, the Board of Directors decided to elect an additional Director to sit on the committee, bringing its current Board membership to four (4) Directors.

The committee is chaired by Director Peter D. Garrucho Jr., with Independent Director Jaime I. Ayala and Directors Elpidio L. Ibañez and Francis Giles B. Puno as members.

The committee assists the Board of Directors in its oversight responsibility over management’s activities in managing physical, financial, operational, labor, legal, security, environmental, and other risks of the Corporation. It plays a vital oversight role and serves as an important liaison to the Board. Under its charter, the committee shall have the following duties and responsibilities:

• Provideguidancetomanagementthroughtheestablishment of the Company’s risk-management philosophy and risk appetite

• ApprovetheCompany’srisk-managementpolicyandprocesses, and any revision thereto

• RegularlyassesstheCompany’srisk-managementactivities

• Understandandsetcleardirectionsforthemanagement of the Corporation’s strategic and critical risks

• Providethenecessarysupportandresourcestomanagement in managing the risks to the Company

• Communicatetokeystakeholdersthestatusofstrategic and critical risks

• Recommendthereviewand/orchangeintheCompany’s risk-management policy, as may be deemed appropriate, and

• Requireperiodicreportsfrommanagement,toconfirm that the risk management system of the Company is operating correctly and consistently with its objectives.

To further ensure compliance with the principles and policies of good corporate governance, Senior Vice-President Victor B. Santos Jr. serves as the Company’s Compliance Officer. Mr. Santos is responsible for monitoring compliance by the Corporation with the Manual on Corporate Governance and the rules and regulations of regulatory agencies, including reporting the occurrence of any violation, reporting such violation to the Board, recommending the imposition of appropriate disciplinary actions on the responsible parties, and adopting measures to prevent


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a repetition of the violation; appearing before the SEC when summoned on matters relating to the Manual on Corporate Governance; and, if any deviations are found, explaining the reasons for such deviation; and recommending to the Board the review of the Manual on Corporate Governance.

First Gen has long recognized corporate governance as a necessary component of sound business management. As such, the Company, through its Board of Directors and senior management, continues to search for ways and means to further improve its corporate governance structures. The Company regularly reviews its existing policies and programs, with the intention of further elevating the level of accountability of the Company’s Directors, officers, and employees. Efforts to enhance and develop the Company’s corporate governance structures have resulted in earlier amendments to the Company’s By-laws and Manual on Corporate Governance.

In separate meetings held in March and May 2009, respectively, the Board of Directors and stockholders approved amendments to the Corporation’s By-laws, to comply with leading practices on good corporate governance. In August 2009, the Philippine SEC approved the amendments to the By-laws, which included a policy pronouncement for the Board of Directors to be governed by the Manual on Corporate Governance. Among other things, the amendments provide for the following:

• GeneralresponsibilityoftheBoardofDirectors

• ElectionandqualificationofIndependentDirectors

• AdditionalqualificationsanddisqualificationsofDirectors, such as disqualification on the grounds of

a) Violation of the Philippine Securities Regulation Code, the Corporation Code, and rules being administered by the Bangko Sentral ng Pilipinas and the SEC

b) Insolvencyc) Analogous acts committed in another jurisdictiond) Commission of other acts deemed prejudicial,

inimical, or causing undue injury to the Corporation, its subsidiaries, or affiliates; and

e) Gross negligence or bad faith committed as an officer or Director of another company.

The Company constantly updates its Manual on Corporate Governance to ensure that it meets the latest principles of good corporate governance. The latest of such updates was in July 2014, when the Company submitted to the Philippine SEC a further revised Manual on Corporate Governance, compliant with the latest SEC issuance on the Code of Corporate Governance.

During the third quarter of 2014, the Company reformatted its website to comply with the prescribed format of the SEC for publicly-listed companies.

As First Gen sets its sights on playing an even greater role in the power industry, it will continue to diligently exert every effort necessary to achieve its corporate governance goals and aspirations.

DIRECTORS FEB 27 MAR 19 MAY 12 JUN 16 JUL 28 OCT 1 NOV 13

O.M. Lopez

F.R. Lopez

R.B. Tantoco

F.G. B. Puno

P.D. Garrucho

E.L. Ibañez

E.L. Lopez III

T.T. Caktiong

J.I. Ayala

BOARD OF DIRECTORS ATTENDANCE IN BOARD MEETINGS FOR CALENDAR YEAR 2014

Legend: Present Absent


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CorporateDirectoryFIRST GEN CORPORATION3rd Floor Benpres BuildingExchange Road corner Meralco AvenuePasig City, Philippines 1600Tel No.: (632) 449-6400Fax Nos.: (632) 910-4846/635-2322

FIRST GAS POWER CORPORATIONCorporate Office3rd Floor Benpres BuildingExchange Road corner Meralco AvenuePasig City, Philippines 1600Tel No.: (632) 449-6286Fax Nos.: (632) 910-4846/635-2322

Plant SiteSta. Rita, Batangas CityBatangas, Philippines 4200Tel Nos.: (6343) 723-9526 to 28Fax Nos.: (6343) 723-7792/723-9048

FGP CORP.Corporate Office3rd Floor Benpres BuildingExchange Road corner Meralco AvenuePasig City, Philippines 1600Tel No.: (632) 449-6286Fax Nos.: (632) 910-0253/914-5146

Plant SiteSta. Rita, Batangas CityBatangas, Philippines 4200Tel Nos.: (6343) 723-9526 to 28Fax Nos.: (6343) 723-7792/723-9048

FIRST GEN HYDRO POWER CORPORATION3rd Floor Benpres BuildingExchange Road corner Meralco AvenuePasig City, Philippines 1600Tel No.: (632) 449-6400Fax No.: (632) 910-4846

Plant SiteBarangay West PoblacionPantabangan, Nueva EcijaPhilippines 3124TeleFax: (632) 449-6521

FIRST GEN RENEWABLES INC.3rd Floor Benpres BuildingExchange Road corner Meralco AvenuePasig City, Philippines 1600Tel No.: (632) 449-6458Fax No.: (632) 631-3103

FG BUKIDNON POWER CORPORATIONCorporate Office3rd Floor Benpres BuildingExchange Road corner Meralco AvenuePasig City, Philippines 1600Tel No.: (632) 449-6458Fax No.: (632) 631-3103

Plant SiteDamilag Manolo Fortich, BukidnonPhilippines 8705TeleFax: (6388) 223-3295

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ENERGY DEVELOPMENT CORPORATIONEDC Head Offices38th Floor One Corporate Center,Julia Vargas Ave corner Meralco AveOrtigas Center, Pasig City 1600Tel No.: (632) 755-2332Fax No.: (632) 840-1575www.energy.com.ph

Bacon-Manito Geothermal Production FieldPalayang Bayan, Manito, Albay 4514Tel No.: (632) 755-2332 loc 8711-14

Leyte Geothermal Production FieldTongonan, Kananga, Leyte 6531Tel No.: (632) 755-2332 loc 8751-54

Southern Negros Geothermal Production FieldTicala, Valencia, Negros Oriental 6215Tel No.: (632) 755-2332 loc 8721-23

Mindanao Geothermal Production FieldIlomavis, Kidapawan City, North Cotabato 9400Tel No.: (632) 755-2332 loc 8731-34

Northern Negros Geothermal ProjectBago City, Negros Occidental 6101Tel No.: (632) 755-2332 loc 8741-44

Wind Ilocos Norte Business UnitBrgy. Saoit, Burgos, Ilocos Norte 2724Tel No.: (6377)-676-1091

CorporateDirectory


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ShareholderInformationINDEPENDENT PUBLIC ACCOUNTANTS

SyCip Gorres Velayo & Co.SGV Building, 6760 Ayala AvenueMakati City, Philippines, 1226Tel. No.: (632) 891-0307Fax No. :(632) 819-0872

STOCK TRANSFER AGENT

Securities Transfer Services, Inc.Ground Floor, Benpres BuildingExchange Road corner Meralco AvenuePasig City, Philippines 1600Tel No.: (632) 490-0060 to 65Fax No.: (632) 631-7148

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©2014 First Gen Corporation

Cover conceptFPH Integrated Corporate Communications with BBDO Guerrero

Content design and layoutKestrel DDM

PhotographyErik Liongoren (Burgos Wind Farm)

PortraitsDenise Weldon

Cover and breakers employee talents

Cover Prince Jackson Dela Paz (First Gen)

Business Review Patricia Tirados (First Gen), Earl Dee (Rockwell), Eunice Anne Sy (First Gen), and Carlos Sebastian Gutierrez (First Gen)

Natural Gas Kevin Matthew Udasco (First Gen)

Hydro Michael Gregorio (First Gen)

Geothermal Brian Joseph Garcia (First Gen)

Wind Angeli Raizza Colocado (FPH) and Joseph Arnel Chavez (FPH)

Our People Esmer Amistad (FPH), Abegail Cabrera (FPH), Odilio Seth Maddatu (First Philec), Migo Antonio (First Balfour)

Our Values Nikki Alvarez and Hansel Alvarez (Rockwell)

ProductionABS-CBN Publishing Inc.

Credits

The cover and main section of the First Gen 2014 Annual Report are printed on Venus Lite, an FSC©-certified paper that is also made with Elemental Chlorine-Free processes. The financial statements of this report are printed on 9Lives Offset, which is an FSC©-certified uncoated paper with carbon-neutral quality, and made with 100% recycled fiber from post-consumer sources. It is produced by an ISO 14001-accredited manufacturer.

FIRST GEN 2014 Annual Report

Documents

Transcript of FIRST GEN 2014 Annual Report