2009 Annual Report - Aboitiz Equity Ventures

ANNUAL REPORT 2009 1
CONTENTS
02 Financial Highlights
Report to Stockholders
04 From your Chairman and President & CEO
08 Results of Operations
10 Power Generation
17 Power Distribution
20 Power Marketing and Trading
22 From your Chief Strategy & Regulation Officer
24 From your Chief Finance Officer
27 From your Chief Compliance Officer
Features
28 Unveiling the New AboitizPower and Cleanergy brands
30 Cleanergy powers San Fernando
32 SNAP’s Keeping it Green with Watershed Protection Initiatives
34 Sustainability Report
36 Corporate Social Responsibility
38 Board of Directors
40 Corporate Officers/Board Committees
43 Operating Unit Heads/Board Committees
44 Management Directory
45 Our Portfolio for 2010
46 Location of Assets
47 Corporate Governance
56 Directors and Executive Officers
62 Business and General Information
70 Management’s Discussion and Analysis or Plan of Action
84 Audit Committee Report
85 Statement of Management Responsibility
86 Consolidated Financial Statements

2
ABOITIZ POWER CORPORATION
FINANCIAL HIGHLIGHTS (In Million Pesos)
REVENUES
CASH DIVIDEND PAID TO COMMON
09
23,174
09
1,471
08
12,243
08
1,325
07
11,312
EBITDA
CASH AND CASH EQUIVALENTS
09
9,867
09
3,815
08
5,407
08
14,334
07
5,584
07
12,706
NET INCOME TO EQUITY HOLDERS
TOTAL ASSETS
09
2,208
08
1,471
07 1,325
Dividends paid in succeeding years.
5,659
4,334
4,161
09
08
07
111,341
47,272
36,176
CORE NET INCOME TO EQUITY HOLDERS
STOCKHOLDERS’ EQUITY NET OF MINORITY
09
5,291
09
34,476
08
4,665
08
30,155
07
3,375
07
26,741
EARNINGS PER SHARE (In Pesos)
MARKET CAPITALIZATION
09
0.77
09
63,284
08
0.59
08
27,963
07
0.66
07
38,095
AboitizPower STOCK PRICE
High
Low
2009 8.90 3.90
2008 6.00 3.25
2007 5.80 3.90
Outstanding Shares as of March 31, 2010 7,358,604,307
Source: Technistock
14.00
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
Jan-09
Feb-09
AP Price
PSE Index
AP Vol
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sept-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
175,000,000
150,000,000
125,000,000
100,000,000
75,000,000
50,000,000
25,000,000
Financial Highlights

ANNUAL REPORT 2009 3
FINANCIAL SUMMARY (In Million Pesos)
Beneficial
2007
Restated
2008 2009 % change
(‘09 vs ‘08)
For the Year
Revenues
Operating Profit
Operating profit from ordinary activities
Share in net earnings of associates
Other income (charges)
Income before income tax
Provision for income tax
Income before minority interest
Minority interest
Net Income Attributable to Equity Holders of the Parent
11,312
1,983
2,804
122
4,909
634
4,275
114
4,161
12,243
1,653
2,785
606
5,043
618
4,424
91
4,334
23,174
5,456
2,535
(1,590)
6,401
631
5,770
111
5,659
89%
230%
-9%
-362%
27%
2%
31%
23%
31%
At Year End
Total Assets
Total Liabilities
Minority Interest
Equity Attributable to Equity Holders of the Parent
36,176
8,816
619
26,741
47,272
16,580
536
30,155
111,341
76,294
571
34,476
136%
360%
7%
14%
EBITDA
5,584
5,407
9,867
82%
Per Share (in pesos)
Earnings
Book Value
Cash Dividend (Common)
0.66
3.63
-
0.59
4.10
0.18
0.77
4.69
0.20
31%
14%
11%
FINANCIAL RATIOS
Current Ratio
Debt-to-Equity Ratio
Net Debt-to-Equity Ratio
2.52
0.32
(0.29)
2.12
0.54
(0.13)
0.68
2.18
1.82
Income Contribution
PER BUSINESS SEGMENT (In Million Pesos)
Attributable Power Sales
(In GWh)
4,656
GENERATION
09
167%
4,619
2,779
08
07
1,728
1,018
1,569 1,479
76
09 08 09 08 09 08
(567)
DISTRIBUTION
09
08
6%
3,322
3,142
Generation Distribution Parent & Others
07
2,790
Financial Summary

4
ABOITIZ POWER CORPORATION
FROM YOUR CHAIRMAN
AND PRESIDENT & CEO
Dear Fellow Shareholders,
We started 2009 with concern of a potential economic
meltdown of 1930s-level proportions. While the Philippines
was not pummeled as badly as the more developed nations,
we saw certain industries, exports in particular, suffer business
contraction and even closures. GDP for 2009 grew by less than
1%. Throughout this period, OFW remittances and the service
sector have been surprisingly resilient and are expected to
remain that way.
While international credit markets tightened and withheld credit, effectively choking their
economies, our banks cranked up their lending with neither government prodding nor
funding, keeping the engines of our economy humming and maintaining a state of economic
normalcy within our shores.
The dark clouds that loomed over the global economy for the past year are clearing. The
world’s economies are showing signs of improvement with recent economic data suggesting
a gradual recovery thanks to the aggressive fiscal and monetary interventions of central
bankers across the globe. The Asian region is expected to benefit significantly from this
recovery. While we anticipate our export industries to recover, domestic demand is foreseen
to continue to be the key driver of GDP growth in the Philippines.
Our Results
It was an exciting year of acquisitions for AboitizPower as we grew our generation portfolio
by 237%, adding 1,367 MW of capacity inclusive of the two power barges in Mindanao which
we took over in the first quarter of 2010. Total winning bids in 2009 for additional capacity,
including the Pagbilao Independent Power Producer Administrator (IPPA) contract,
amounted to $1.3 billion. To fund these assets of the Power Sector Assets and Liabilities
Management Corporation (PSALM), we utilized our cash reserves and raised the balance
through domestic credit markets. As a result of this leverage, we ended the year with a more
optimized capital structure that will positively impact your return on equity.
We are very pleased with your Company’s 2009 performance as net income grew by 31%,
hitting π5.7 billion. The successful acquisition of assets for our generation business was
the main driver of this earnings growth. Our distribution business turned in a credible 6%
increase in kWh sales, experiencing healthy growth in all customer classes, with residential
consumption taking the lead.
In spite of the Company’s huge investment commitments, your Board has remained true
to its cash dividend policy of paying out one-third of the preceding year’s net income. Your
Board declared a cash dividend of π0.30 per share to shareholders on record as of March 24,
2010. On April 16, 2010, π2.21 billion worth of dividends, 50% more than the previous year,
were released to the shareholders.
It was an exciting year
of acquisitions for
AboitizPower as we grew
our generation portfolio
by 237%, adding 1,367
MW of capacity inclusive
of the two power barges
in Mindanao which we
took over in the first
quarter of 2010.
From your Chairman and President & CEO

ANNUAL REPORT 2009 5
Reshaping our Business
With government’s efforts to privatize and deregulate the power industry gaining traction,
we foresee a dramatic change in the sector’s landscape. The days of providing power,
collecting revenues and securing rate increases will be a thing of the past. We anticipate
operating in an environment of heightened competition, confronted with the realities of a
more empowered consumer with higher expectations and new demands.
With open access, new markets for our power will become available. We also see a consumer
with greater concerns for the environment. Deregulation and open access will redefine
the rules of the game simultaneously introducing new opportunities and threats. We have
therefore been reshaping AboitizPower to ensure we capitalize on these developments by
positioning our business and organization for a more challenging future.
As may be apparent, AboitizPower’s efforts have focused more on the two ends of the
electricity value chain: generation and supply. We anticipate more opportunities to build
scale in the generation sector. As we expand our generating portfolio, we think it is prudent
to hedge this capacity with supply contracts instead of remaining exposed to the volatile
prices of the electricity spot market. Ancillary to this strategy is the need to have a balance
of fuel types and technologies, and the capability to optimize our assets through deliberate
trading and branding initiatives.
Better Solutions for A Better Future
A major highlight in 2009 was the launching of your Company’s new corporate identity in
July. Apart from the visual changes as embodied by the new logo, the new identity also
streamlines the power sold by all AboitizPower-controlled generation assets under one
name - AboitizPower. Our brand promise of Better Solutions encompasses the scope of
what your Company stands for. The tagline, A Better Future, gives direction and a purpose
to our brand promise, as we meet the country’s energy needs and care for Earth’s resources
at the same time.
Cleanergy, your Company’s brand of clean and renewable energy, also debuted in July. We
feel the public, especially after Typhoons Ondoy and Pepeng, is becoming increasingly
aware about the environment, the effects of consumption on the planet and carbon footprint
reduction. The use of renewable energy, coupled with maintaining a certain lifestyle, is the
most practical way to reduce one’s carbon footprint.
Corporate Governance and Sustainability
As we continue pursuing bold moves for the Company’s growth, it is imperative that we
enliven your Board’s corporate governance initiatives. Board committees to handle issues
on corporate governance, strategy and risk management were created in 2009 ensuring
your Board’s oversight over these key management areas.
It is during the heady years of high growth when risk management and proper capital
allocation become even more crucial. An intensified Aboitiz Group-wide Enterprise Risk
We foresee a dramatic
change in the sector’s
landscape. The days
of providing power,
collecting revenues and
securing rate increases
will be a thing of the past.
We anticipate operating
in an environment of
heightened competition,
confronted with the
realities of a more
empowered consumer
with higher expectations
and new demands.

6
ABOITIZ POWER CORPORATION
Management (ERM) Program was recently launched with the end goal of instilling a culture
of risk awareness, understanding and mitigation.
We have also instituted risk-adjusted returns on capital that the Company expects on its
investments. We need to assure you, our shareholders, that we are not attaining our
business goals taking on unknown or irresponsible risks, and that we are not growing for
growth’s sake.
With the demise of Ernesto R. Aboitiz, a third independent director was added to the Board
in February 2010, broadening the Board’s viewpoint and diversity.
The responsibility to enhance shareholders’ value has taken on another dimension with
the challenge for sustainable development. While we acknowledge that business growth
is foremost among our goals, we also need to be accountable to carry this growth across
generations. It is this accountability that motivates us to consider measures that will make
us better stewards of the resources entrusted to us by nature and by our stakeholders.
We have therefore incorporated sustainability into our business strategy, aiming to create
a balance between economic success, social development and environmental stewardship.
Encouraging appreciation for and use of renewable energy is our biggest sustainability
effort. We took on this challenge, which has a strong educational component, because
we as a nation still have a lot of untapped renewable energy sources. We hope to be able
to channel resources towards projects with long-standing benefits to our already fragile
environment.
Our Next Steps
While we have taken major leaps in building AboitizPower to what it is today, opportunities
abound in the industry that will pave the way for more growth for your Company. There are
still attractive PSALM assets up for bidding in 2010, which we are targeting to add to our
portfolio.
The bulk of our expansion over the last three years has been the acquisition of existing
assets of National Power Corporation (NPC). Our country will demand more power in its
hunger for growth and progress. We are therefore ramping up our capabilities to develop
greenfield projects to help boost the country’s power requirements. AboitizPower remains
committed to provide available, affordable and acceptable energy to our consumers.
Your Company remains optimistic that it will realize substantial growth from its existing
distribution utilities. This will be achieved through healthy organic growth and widening
margins when we attain rate increases as we enter the new Performance Based Regulation
(PBR) regime. We will also continually seek efficiency improvements in our operations.
In 2009, AboitizPower’s share price shot up by 126%, ending the year at π8.60 per share.
As a result, your Company’s market capitalization for the year exceeded π63 billion, a π35
billion increase from the previous year. At the end of the first quarter of 2010, the share price
appreciated further to π12.25 per share, catapulting AboitizPower’s market capitalization to
π90 billion.
We would like to believe that the run up in your Company’s share price mirrors your
increased confidence in our ability to execute our business strategy. We sincerely thank you,
our valued shareholders, for your unfaltering trust and confidence over the years.
While we acknowledge that
business growth is foremost
among our goals, we also
need to be accountable to
carry this growth across
generations.
From your Chairman and President & CEO

ANNUAL REPORT 2009 7
We also thank our customers, business partners, suppliers, and host communities, for their
long-standing support and partnership.
To all our team members across AboitizPower and its different businesses, we owe the
Company’s success to your passion to deliver better solutions to all our stakeholders and
your steadfast commitment to attaining a better future for generations to come.
As we move forward to further strengthen your Company, we pay tribute to the vision,
stewardship, wise counsel and indefatigable efforts of the late Ernesto ”Ernie” Aboitiz, who
played a significant role in building your Company’s business and shaping AboitizPower
into what it is today. We thank him for all the years of valuable and dedicated service. We
commit to continue his legacy.
We owe the Company’s
success to your passion
to deliver better
solutions to all our
stakeholders and your
steadfast commitment
to attaining a better
future for generations to
come.
Enrique M. Aboitiz, Jr.
Chairman of the Board
Erramon I. Aboitiz
President & Chief Executive Officer

8
ABOITIZ POWER CORPORATION
RESULTS OF OPERATIONS
Select consolidated income statement items are shown below:
CONSOLIDATED (mn pesos) 2007 2008 2009
Revenues 11,312 12,243 23,174
EBITDA 5,584 5,407 9,867
Net Income 4,161 4,334 5,659
Core Net Income 3,375 4,665 5,291
% change
(’09 vs ‘08)
89%
82%
31%
13%
To further appreciate the Results of Operations, we are
presenting benefecial figures for revenues, earnings before
interest, taxes, depreciation and amortization (EBITDA),
power sales and capacity. All discussions that follow refer
to beneficial numbers or the sum of subsidiary and associate
figures multiplied by AboitizPower’s ownership in subsidiary
concerned.
BENEFICIAL (mn pesos) 2007 2008 2009
Revenues 20,465 24,548 35,820
EBITDA 6,041 7,661 11,740
% change
(’09 vs ‘08)
46%
53%
Your Company ended 2009 with revenues of π36 billion (bn), up by 46% from the previous
year. EBITDA improved by 53% to π11.7 bn while net income jumped by 31% to π5.7 bn.
Core net income, adjusting for non-recurring income, came in at π5.3 bn, 13% higher than
in 2008. Earnings per share ended the year at π0.77 against the previous year’s π0.59, an
increase of 31%.
The bottom line figure of π5.7 bn includes the effects of the accounting treatment for the
Pagbilao Independent Power Producer Administrator (IPPA) contract, which is treated as a
finance lease, and resulted in an earnings dilution of π1.5 bn. The addition of new generation
assets in 2009 was the main contributor to the top and bottom line growth.
Hard working AboitizPower Team
Members.
Results of Operations

ANNUAL REPORT 2009 9
Some AboitizPower
assets throughout the
country.

10
ABOITIZ POWER CORPORATION
Power Generation
BENEFICIAL
2007 2008 2009
% change
(’09 vs ‘08)
Revenues (mn pesos) 5,531 8,729 17,927 105%
EBITDA (mn pesos) 3,540 5,200 9,419 81%
Income contribution (mn pesos) 2,611 2,779 4,656 68%
Power sales (GWh) 1,018 1,728 4,619 167%
Capacity (MW) 490 578 1,745 202%
Renewable capacity (MW) 253 341 808 137%
1
For our generation business, revenues at yearend reached π18 bn, a 105% jump from 2008
figures. EBITDA rose by 81% to π9.4 bn while the generation group’s income contribution
to your Company increased by 68% to π4.7 bn. Power sales for the year soared by 167% to
4,619 gigawatt-hours (GWh), as a result of the significant increase in generation capacity
from 2009’s asset acquisitions.
Over the past four years, AboitizPower’s strategy has been focused on building its power
generation business by actively participating in the privatization of government assets as
mandated by the Electric Power Industry Reform Act (EPIRA). We have been successful
in our bids for assets that we believe present once-in-a-lifetime opportunities for us. We
have already identified assets of the Power Sector Assets and Liabilities Management
Corporation (PSALM) that we are targeting to add to our portfolio.
The growth in attributable generating capacity has been extraordinary in the last couple
of years; as of yearend 2009, our capacity was 1,745 megawatts (MW). In 2009 alone, your
Company’s generating capacity increased by 1,167 MW. Your Company submitted the
winning bid of US$447 million (mn) for the Tiwi-Makban geothermal assets, and for the
Pagbilao IPPA contract, monthly payments are being made with a present value of US$691
mn, using PSALM discount rates.
With this outstanding growth rate come the attendant challenges of integration. Fully
cognizant of this, we continue to focus on further strengthening our organization, and
have effectively managed to deal with the transition, staffing, and fuel procurement and
rehabilitation issues and turn in a stellar performance.
In May 2009, we took over the Tiwi-Makban facilities in Southern Luzon that recorded a
combined peak generation of 467 MW during the year. As our very first geothermal assets,
these plants are strategic acquisitions that diversify our fuel type mix and provide us with
base load capability. Over the next two years, we have programmed the rehabilitation
of all the geothermal generating units and other plant assets to increase availability,
reliability and efficiency.
In July, we concluded successful negotiations to acquire two 100-MW power barges in
Davao and Agusan, which were officially turned over to your Company in February and
March 2010. These bunker-fired facilities give significant capacity to the electricity-starved
Mindanao grid. In the long term, even when rainfall and water levels normalize, these
assets will provide stability and reliability to Mindanao in the form of ancillary services and
backup reserves.
2
1
The 100-MW Mobile 2 located
in Barangay Sta. Ana, Nasipit,
Agusan del Norte
2
The 100-MW Mobile 1 located in
Barangay San Roque, Maco,
Davao del Norte
The growth in attributable
generating capacity has
been extraordinary in the
last couple of years; as of
yearend 2009, our capacity
was 1,745 megawatts.
Results of Operations

ANNUAL REPORT 2009 11
1
2
1
The 700-MW Pagbilao power plant located
in Brgy. Ibabang, Pulo, Pagbilao, Quezon
2
The Tiwi-Makban geothermal plants are
located in Luzon.

12
ABOITIZ POWER CORPORATION
Your Company’s first IPPA contract for the 700-MW coal-fired Pagbilao plant in
Quezon province took effect in October 2009. As an IPPA, we procure the coal, then
sell the resultant energy produced at the coal generation facility that is managed and
operated by TEAM Energy.
The record speed – 28 days – by which the AboitizPower team went from bid award
to takeover is a testament to the team’s motivation and calibre. The Pagbilao plant
becomes the property of your Company in 2025 when the build-operate-transfer
contract of TEAM Energy ends.
In 2009, SN Aboitiz Power and the National Grid Corporation of the Philippines
(NGCP) signed an agreement for the 360-MW Magat hydro plant to provide ancillary
services to the Luzon grid. Ancillary services provide much-needed stability to
the network while acting as revenue enhancement measure for your Company to
cushion the effects of lower spot market prices in 2009.
The Ambuklao hydro plant,
which has been unable to
generate since 1999 due
to the collapse of its intake
and subsequent siltation,
effectively provides the Luzon
grid with 105 MW of new
capacity in view of Ambuklao’s
10 years of inactivity.
Rehabilitation work is ongoing at the Ambuklao hydro plant, which has been unable
to generate since 1999 due to the collapse of its intake and subsequent siltation.
The US$189-mn project will bring up the plant’s capacity from its original 75-MW
nameplate capacity to 105 MW by November 2010, effectively providing the Luzon
grid with 105 MW of new capacity in view of Ambuklao’s 10 years of inactivity.
Rehabilitation has also been programmed for the 100-MW Binga hydro plant. The
US$81-mn project will increase capacity of the plant to 120 MW. The works are
scheduled in such a way that only one unit is rehabilitated completely each year
starting in 2011. This minimizes the disruption of operations.
The 42-MW greenfield Sibulan hydro project in Davao, which began construction in
2007, began operating its 26-MW plant B in March 2010 with plant A expected to
become operational in May 2010. Hedcor Sibulan Corporation has a bilateral contract
with Davao Light & Power Co. (DLPC) to provide renewable power from the Sibulan
plant. This project is expected to provide an average of 212 GWh of energy annually,
which Mindanao really needs.
To augment its revenues, Sibulan hydro has Clean Development Mechanism
(CDM) approval that allows it to earn carbon credits for your Company. The
plant is the first CDM-registered hydro project in the Philippines. In late 2009,
the Ambuklao and Binga projects received approval from the Department of
Natural Resources for their CDM enlistment, a major milestone before both
plants are able to register as CDM facilities.
The 246-MW greenfield Cebu coal project, which began construction in
early 2008, started operating the first of its three 82-MW units in March
2010. The plant will initially provide Visayan Electric Co. (VECO) and
subsequently other customers with badly needed power as demand
growth and aging power plants in Cebu caused supply shortages in the
second half of 2009.
2010 should prove even better than last year as full-year contributions
from 2009 acquisitions and the entry of 2010 greenfield projects impact
positively on your Company’s results.
Antonio R. Moraza
Executive Vice President
& Chief Operating Officer
Power Generation Group
Results of Operations
Results of Operations

ANNUAL REPORT 2009 13

The Makban geothermal plant is part of our Cleanergy portfolio,
our brand of clean and renewable energy.

Davao Light linemen working to
ensure efficient power delivery to
customers.

ANNUAL REPORT 2009 17
Power distribution
BENEFICIAL 2007 2008 2009
Revenues (mn pesos) 14,832 15,685 17,812
EBITDA (mn pesos) 2,622 2,629 2,625
Income contribution (mn pesos) 1,520 1,478 1,569
Power sales (GWh) 2,790 3,142 3,322
% change
(’09 vs ‘08)
14%
0%
6%
6%
For the distribution business, revenues at yearend 2009 reached π18 bn, up by 14% from
the previous year. Ebitda remained flat at π2.6 bn while income contribution to your
Company increased by 6% to π1.6 bn. Peak demand was up by 11% to 857 MW with strong
hikes at DLPC and Subic Enerzone Corp. (SEZ).
Power sales increased by 6% for the year to 3,322 GWh with residential customers leading
the way at 7%.
Electricity Sales by Customer
(in GWh)
6%
5%
3,142 3,322
7%
2,265 2,387
877 935
Residential
Commercial & Industrial
Total Power Sales
2008
2009
Cotabato Light & Power Co. (CLPC), DLPC and VECO have either started or are about to
enter the Performance Based Regulation (PBR) regime. CLPC began its regulatory period
in April 2009 while DLPC and VECO, our two largest utilities, will start theirs in July 2010.
One important step taken under PBR is the updating of the utilities’ regulated asset base
(RAB) from, in some cases, year-2000 figures, to current levels. For CLPC, DLPC and VECO
combined, the RAB will increase from π9 bn before PBR to π15 bn with PBR for the first
regulatory year of these utilities.
The schedule of PBR implementation is as follows:
Distribution Utility
Cotabato Light
PBR SCHEDULE
Reset Process
October 2007 to March 2009
Visayan Electric, Davao Light January 2009 to June 2010
Subic Enerzone, San Fernando October 2009 to
September 2010
Regulatory Period
April 2009 to March 2013
July 2010 to June 2014
October 2011 to
September 2015
Note: Regulatory period was moved by the
ERC, originally from April 2011 to March 2015.
One important step taken
under PBR is the updating
of the utilities’ regulated
asset base from, in some
cases, year-2000 figures,
to current levels.

18
ABOITIZ POWER CORPORATION
At the end of 2009, all AboitizPower distribution utilities, except for CLPC, registered a
systems loss below the regulatory cap of 9.5%. The Energy Regulatory Commission (ERC)
lowered the cap to 8.5% in January 2010. We expect VECO’s systems loss to be below
the new cap in the second half of 2010. Only CLPC, which accounts for less than 4% of
attributable distribution power sales, is expected to remain above the cap by end-2010.
New substations were commissioned in almost all our utilities last year, enabling them
to be better equipped in dealing with inevitable growth in the coming years. The pilot
for automated meter reading commenced in 2009, enhancing accuracy and speed in
this vital step in the customer service cycle. An ambitious integrated Customer Care and
Billing system was procured from Oracle for all our utilities. Work began in 2009 and the
first installation was online in March 2010. The system incorporates the best practices
in handling every aspect of utility customer care for all of our utilities’ customers across
the country. Total beneficial capital expenditure for the distribution group in 2009 was
π1.3 bn.
Power supply shortfalls affected VECO in 2009. These shortages would have resulted in
6.3 GWh of lost sales but the Interruptible Load Program (ILP), which VECO pioneered in
2009, managed to cover 3.3 GWh of that deficit. That same year, the ILP provided up to
30 MW of embedded generation capacity owned by participating VECO customers, who
agreed to reduce their load on the VECO grid by using their own generator sets thereby
sparing other customers from being hit by rotational power outages.
Your Company’s distribution
business is in the midst of
an exciting transformation
that will change the face of
the industry forever.
VECO recently switched on its substation located inside the Cemex APO Cement plant in
the City of Naga, Cebu. It is the first VECO-owned substation that directly synchronizes
with a generating plant. The utility buys power from Cemex during peak hours and sells
power to them during off-peak hours. The substation supplies electricity for VECO’s
residential, commercial and industrial clients. This novel arrangement helps lessen both
the power shortage in VECO’s franchise area and Cemex’s production costs. VECO should
be able to provide Cemex’s full power requirements in the near future.
In 2009, collective bargaining agreements were completed and signed in DLPC and
CLPC, ensuring labor continuity in the coming years for these utilities.
Your Company’s distribution business is in the midst of an exciting transformation
that will change the face of the industry forever. In the very near future, our utilities
will have a wires business as well as a retail business. The former is the traditional
“lines and poles”, and substations and transformers, while the latter is about
customer service and related and unbundled services like meter reading and bill
delivery. Competition in retail should ensue, with the customer as the direct
beneficiary.
Jaime Jose Y. Aboitiz
Executive Vice President
& Chief Operating Officer
Power Distribution Group
Results of Operations

ANNUAL REPORT 2009 19
1
2
3
1
The 33-MVA VECO mobile substation is useful during scheduled
substation maintenance activities.
2
A Cotabato Light lineman
inspecting a transformer.
3
Subic EnerZone linemen
conducting regular inspection.

20
ABOITIZ POWER CORPORATION
Power marketing and trading
The AboitizPower sales and marketing team was established in 2009 in order to bring into
fruition your Company’s focus on generation and supply as the adequate response to open
access. Closing power supply deals are complex transactions that often take up months of
presentation and negotiation. Energy almost always comprises a major part of any business’
cost structure, adding to the difficulty of signing this type of deals.
In 2009, Wholesale Energy Spot Market (WESM) prices were lower than what we had
expected. This had to do with:
• High rainfall and reservoir water levels, particularly in 3Q 2009, forced
hydroelectric generators to bid at low prices as opposed to spilling water.
• Impact of must-run units on demand side.
• Lower fuel costs on average, allowing fuel-based plants to bid lower.
WESM Prices
(in π/MWh)
SOURCE: WESM, SNAP
8,500
7,500
6,500
5,500
4,500
3,500
2,500
1,500
500
-500
Peak
Off-Peak
All Hours
-1,500
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Dec-09
Note: Calculated based on raw data downloaded from the WESM website.
July 26-October 25, 2008 prices are reflective of NPC TOU rates.
Given that in 2009, 31% of your Company’s total power sold was sold in the WESM, and
the current expectation is that spot prices will improve with increased demand growth
and no change in supply, overall selling price should improve over the next three years. As
spot prices increase there will also be less instances of steam venting at the Tiwi-Makban
facilities, thereby improving overall profitability. It is worthwhile to note that 2009 results
only included seven months of generation from Tiwi-Makban and three months from
Pagbilao.
Your Company’s strategy on the supply side of open access is backed up by a diversified
yet balanced collection of generation assets. In the coming years, as your Company’s
generation portfolio broadens, we would like to see a higher percentage of power sold via
supply contracts. Our portfolio allows us to offer a wide array of solutions to customers’
differentiated energy requirements.
2,848
1,937
881
2009 Generation Profile
(in MW)
513 MW
Without Off-taker 29%
1,055 MW
177 MW
With Off-taker
Capacity-based 10%
With Off-taker
Generation-based 60%
71% contracted
Your Company’s strategy
on the supply side of
open access is backed
up by a diversified yet
balanced collection of
generation assets.
Results of Operations

ANNUAL REPORT 2009 21
2009 Uncontracted Capacity
(in MW)
Coal
Geothermal
Hydro
513 MW
184
98
231
36%
19%
45%
We believe that the best way
to encourage investment
in renewable energy is for
consumers to realize that this
type of energy adds value
to business, society, the
national economy, and the
environment.
We are pleased to see the public’s growing interest in clean and renewable energy. Our
sales and marketing team works closely with customers to ensure that they are able
to communicate the merits of renewable energy to their own customers and other
stakeholders, thereby obtaining goodwill to boost their businesses. This is the rationale
for Cleanergy, our brand for power emanating from our hydroelectric and geothermal
generation assets. We believe that the best way to encourage investment in renewable
energy is for consumers to realize that this type of energy adds value to business, society,
the national economy, and the environment.
Our trading unit is another competitive strength of your Company. One of the roles of
this talented team of individuals is to optimize the returns from the sale of uncontracted
energy to the spot market. Markets like these are very useful in pointing out weaknesses
in the electricity industry and allow players like us to both benefit from and participate in
rectifying said weaknesses.
Looking to A Better Future
The power industry has evolved the way it was envisioned by those who crafted
and signed the EPIRA into law, and it is still evolving. When deregulation is
completed, all market players will have to respond by offering empowered
customers products that satisfy their expectations.
Today, with Cleanergy, we already offer a practical solution to leave a
lighter impact on the environment without diminishing the quality of
one’s lifestyle. With your Company’s generation portfolio still growing,
we are confident that we will have the right solution for every energy
requirement. Together, we can all look forward to A Better Future.
Luis Miguel Aboitiz
Senior Vice President
Power Marketing and Trading

22
ABOITIZ POWER CORPORATION
FROM YOUR CHIEF STRATEGY
& REGULATION OFFICER
Dear Shareholders,
The Energy Regulatory Commission (ERC) has overcome all the legal and logistical
challenges that led to long delays in rolling out the Performance Based Ratemaking (PBR)
tariffs for the first group of private electricity distributors covered by the new regime.
Evidence of this is that the second group had their PBR rates in place by May 2009, only a
month behind schedule. The third group also started the rate reset process in 2009, with the
expectation of having the new rates by July 2010, as scheduled. A counterpart program for
electric cooperatives, based on benchmarking by peer groups, is also under way.
For AboitizPower, this meant the rates for its Cotabato Light & Power Co. (CLPC) were finally
updated from a 2000 test year to more current levels, and resulted in a modest increase,
with subsequent adjustments to be made over the 4-year reset period. It also means that
AboitizPower’s largest utilities, Visayan Electric Co. (VECO), and Davao Light & Power Co.
(DLPC), who are in the 3rd group, can expect similar changes by July 2010. By November
of 2009, the Draft Determinations showing indicative rates for the third group were already
published.
Two of the AboitizPower utilities took an interim step ahead of PBR, as VECO and San
Fernando Electric Light & Power Co. (SFELAPCO) both filed applications for rates under the
old Return on Rate Base or RORB ratemaking rules. Major changes in the customer mix as
well as asset base made it necessary to establish an updated base for these utilities prior to
entry into the PBR process. For VECO the updated RORB rates were approved in the 3rd
quarter of 2009, while the SFELAPCO application was only approved in April, 2010.
The general rules covering electric service are being updated, along with metering rules.
So while this is a constantly evolving regulatory landscape, the major rules are in place, and
there is at least a fair amount of stability to the regulation of electricity distribution.
The generation side of the industry is another matter. What was envisioned as a competitive,
unregulated segment of the industry continues to go through an extended transition period
where it is partly private, partly government-owned. Some transition issues we raised last
year remain, but it may be more productive to focus on the changes. For one, the privatization
of generation assets accelerated in 2009, and included the bidding out and awarding of some
Independent Power Producer Administrator (IPPA) contracts which privatizes the output of
IPPs with live long term contracts with the government. This development is significant
because privatizing these contracts is the remaining precondition to the start of Open
Access. The regulator also approved in 2009 an automatic cost adjustment mechanism for
the regulated government-owned generators to recover their costs in a more timely manner,
which National Power Corporation (NPC) started implementing only in March, 2010.
The trading results in 2009 in the Wholesale Electricity Spot Market (WESM) proved that
the radical changes to the Philippine electric power industry were achieving its goals.
More competition among private generators coupled with weak demand early in the
year pushed WESM prices well below the regulated prices of National Power Corporation
(NPC) on average. This was helped along by the arbitrary use of must-run plants, which
The Energy Regulatory
Commission has
overcome all the legal
and logistical challenges
that led to long delays
in rolling out the
Performance Based
Ratemaking tariffs for
the first group of private
electricity distributors
covered by the new
regime.
From your Chief Strategy & Regulatory Affairs Officer

ANNUAL REPORT 2009 23
effectively reduced demand further. This, together with credit issues among customers,
the settlement of prior cost adjustments for contracts assigned to private generators
from NPC, and the default wholesale supplier role no one wants, all highlight the need to
re-visit the market rules. In any case, smart distribution utilities and some large end-use
customers, in Luzon where the market operates, took advantage of the supply-demand
situation to lock up medium term contracts at attractive rates. Generators like SN Aboitiz
Power’s Magat plant augmented revenues by providing ancillary services, a role previously
dominated by NPC.
More recently, market conditions have changed, and supply shortfalls began to crop up in
various parts of the country. This shortage had been around in the Visayas for a while, and
power plants were being constructed that would cover the requirements over the next few
years. But elsewhere, especially in Mindanao, very little new capacity was being added.
Privatization and regulation have both been unfairly blamed for the lack of greenfield
plants.
The regulator does not initiate applications for new capacity, but merely evaluates and
approves applications to pass on the cost of these contracts. And the regulatory process
is constrained by the fact that all the ERC decisions are appealable to the higher courts,
and foremost among the requirements for a decision to be upheld is that due process was
accorded to all stakeholders concerned. Due process, like it or not, takes time. The only
way to deal with it is to plan ahead and allow for the time it takes to ensure the requirement
is met.
In Mindanao, very little new capacity was
being added. Privatization and regulation
have both been unfairly blamed for the
lack of greenfield plants.
Juan Antonio E. Bernad
Executive Vice President
Strategy & Regulation
From your Chief Strategy
& Regulatory Affairs Officer

24
ABOITIZ POWER CORPORATION
FROM YOUR
CHIEF FINANCE OFFICER
Dear Shareholders,
2009 was another banner year for AboitizPower.
Net income for the year set yet another record at π5.7 billion (bn) as the acquisition and
expansion strategy most evident during the last two years begins to bear fruit. When
adjusted for non-recurring gains, core net income still set a new all-time high for your
Company at π5.3 bn.
The income figures for the year include the earnings-dilutive though non-cash accounting
treatment of the Pagbilao Independent Power Producer Administrator (IPPA) contract which
your Company assumed in October 2009. The IPPA arrangement places responsibility of fuel
procurement, energy dispatch and sale for the 700-MW Pagbilao power plant in the hands
of your Company, along with the turnover of the physical asset in 15 years. Payment to the
Private Sector Asset & Liabilities Management Corp. (PSALM) are in the form of escalating
dollar- and peso-denominated monthly payments over 15 years with no up-front cash.
Pursuant to current accounting standards, especially PAS-17-Accounting for Leases, the
transaction is booked as a finance lease, with the monthly payments discounted and the
resulting present value used to recognize the capitalized asset and related liability. The asset
is depreciated over 40 years while a theoretical interest accretion is charged on the liability
and amortized over the 15-year payment period.
The sum of the depreciation and interest accretion will be significantly larger than the
actual cash monthly payments at the onset of the payment period and reverses towards the
middle of the payment period as the monthly payments steadily increase while the interest
lessens as the liability reduces.
The inverse relationship between the accounting expenses and the monthly payments will,
in the opinion of management, understate the earnings potential and, more importantly,
cash generation capability of this unique asset structure in the early portion of the payment
period. If the sum of these non-cash expenses was removed and the cash monthly payments
Net income for the year
set yet another record
at π5.7 billion as the
acquisition and expansion
strategy most evident
during the last two years
begins to bear fruit.
From your Chief Finance Officer

ANNUAL REPORT 2009 25
Evolution of Pagbilao cash and accounting expenses
(in mn pesos)
12,000
10,000
8,000
6,000
4,000
2,000
Cash Expense
Accounting Expense
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
treated as expense, resulting net income and core net income would have stood at π7.2 bn
and π6.8 bn, respectively.
2009 consolidated ebitda posted remarkable growth, registering a record π9.9 bn versus
the π5.4 bn of 2008. Adjusted for AboitizPower’s proportionate EBITDA share in all its
subsidiaries and associate companies, this figure increases to π11.7 bn, a 54% increase over
2008’s π7.7 bn. In 2009, cash upstreamed to AboitizPower by business units stood at π4.4
bn.
This phenomenal growth in profitability was driven by the expansion of your generation
business in the form of the seven-month contribution of the Tiwi-MakBan geothermal
assets and the three-month contribution of Pagbilao. Attributable capacity increased to
1,745 MW in 2009 from 578 MW in 2008. 2009 energy sales soared to 4.6 bn kWh from the
1.7 bn kWh in 2008.
Your distribution business posted moderate growth in net income despite a reduction in
gross margin per kWh, brought about by a significant under-recovery in generation charges.
The said under-recovery was partially offset by the upward rate adjustments at Cotabato
Light & Power Co. (CLPC) under Performance Based Ratemaking (PBR) regime in May 2009
and Visayan Electric Co. (VECO) under the Return on Rate Base mechanism in September
2009. The under-recovery was further offset by a respectable 6% growth in kWh sold.
Management likewise succeeded in controlling operating expenses, lowering the same
against the prior year.
As discussed in last year’s annual report, the prudent structuring of your Company’s balance
sheet with efficient leverage levels continued with a follow-up on the successful retail bond
of April 2009. An additional π5 bn was raised through a well-received five-year fixed rate
corporate note issuance in September 2009. The deployment of these debt-raising proceeds
into investments yielding favorable returns has resulted in 2009 return on equity at 17%
versus 15% last year. Adjusted for non-recurring items and the non-cash accounting effects
of the Pagbilao IPPA, return on equity would have come in at 21%. This is despite only sevenand
three-month earnings contribution from Tiwi-Makban and Pagbilao, respectively, and
the negative carry of the debt-raising exercises taken on in late 2008 and early 2009.
The prudent structuring of
your Company’s balance
sheet with efficient leverage
levels continued with a
follow-up on the successful
retail bond of April 2009.

26
ABOITIZ POWER CORPORATION
Your Company’s balance sheet remains strong and healthy with ample flexibility to further
expand its asset portfolio as the last leg of the heretofore successful privatization of the
government-owned generation assets is carried out and the need for new, reliable and
cost-efficient capacity is addressed:
• Acquisitions completed in 2009 resulted in assets rising to π111 bn from π47 bn last year.
• These acquisitions were funded with the deployment of the 2008 year-end cash balance,
the 2009 debt raising exercises and the π44 bn liability to PSALM for the Pagbilao IPPA.
As a result, total liabilities reached π76 bn against P17 bn last year.
• Shareholder’s equity likewise contributed to the funding of the said acquisitions, rising
to π35 bn as against π30 bn in the prior year.
The generation business
is expected to outpace
the stellar growth and
performance of 2009.
• The resulting net debt-to-equity ratios at both the parent and on a consolidated basis
were at very manageable levels of 0.65 and 1.82, respectively.
Again, your company looks to 2010 with even more excitement and optimism.
For the distribution business, the prospects are good due to stringent cost control
mechanisms in place and the impending rate adjustments for Davao Light & Power Co.
and VECO under PBR, expected in July 2010.
The generation business is expected to outpace the stellar growth and performance of
2009 due to the:
• Full year effects of Tiwi-Makban and Pagbilao.
• Contributions of the two 100-MW Mindanao power barges, Mobile 1 and 2, which were
acquired by means of a negotiated sale with PSALM and taken over in 1Q 2010.
• Contributions from the Sibulan hydroelectric power plant and the Cebu coal plant, both
greenfield and coming on-stream in 2010. Both assets will meet the desperate need for
new capacity in both the Mindanao and Visayas grids.
• Rehabilitation of the Ambuklao hydroelectric power plant which is expected to be
completed and feeding into the Luzon Grid by 4Q 2010.
• Expected rebound of spot prices in 2010 due to more rational bidding patterns in the
WESM and the tightening of supply in the Luzon grid.
Iker M. Aboitiz
First Vice President
Chief Finance Officer
From your Chief Finance Officer

ANNUAL REPORT 2009 27
FROM YOUR
CHIEF COMPLIANCE OFFICER
Dear Shareholders,
Corporate governance takes on a whole new meaning when infused with genuine
commitment and passion---commitment to be compliant and passion to take that
commitment to a higher level.
At AboitizPower, we take our corporate governance duty to heart, knowing that how we
manage our businesses plays a vital role in achieving our goal of providing a better future for
the communities we operate in.
It is in carrying out this responsibility where the need for competent and trustworthy
Directors is important. Through the Board, the Company gets clear guidance and the
support to pursue business endeavors so that AboitizPower can achieve its vision of being a
leader in the power industry.
The Board is our heart and driving force, our employees - our tireless cadres of professionals,
our stakeholders - our valuable partners. With our stakeholders in mind, we continue
to strengthen our corporate governance infrastructure and our commitment to the
communities in which we do business.
As your Chief Compliance Officer, it is my honor to inform you that in 2009, your Company
was able to do more than just comply with the mandates in our Manual on Corporate
Governance. AboitizPower has successfully achieved the goals it set out for 2009 without
compromising these corporate governance covenants.
M. Jasmine S. Oporto
Corporate Secretary
Chief Compliance Officer
1
At vero eos et accusamus et
iusto opraesentium

28
ABOITIZ POWER CORPORATION
FEATURES
Better Solutions for A Better Future
In cadence with its continued growth, AboitizPower launched its new brand in July 2009,
marking another milestone in the company’s 90-year history.
AboitizPower showcased its new brand position as a company that offers Better Solutions
for A Better Future. AboitizPower is committed to not only supply energy to the country
more efficiently, but also to provide it in a way that sustains the Earth’s resources. The
company currently represents one of the largest private renewable energy producers in the
Philippines.
AboitizPower’s change in logo reflects its new brand promise of “Better Solutions”. This
communicates the company’s vision to continuously find better ways to meet the energy
demands of the Philippines and be more responsible in caring for the environment.
The symbol of AboitizPower is called “The Power Spiral.” Its identity is derived from ancient
spiral symbols, which represent renewal, continuous movement and energy. The three
spirals symbolize Earth, Air and Water. As a power company, these are essentially sources
from which energy can be accessed. Along with the symbol, AboitizPower’s new, fresh blue
color palette conveys a positive and vibrant approach.
Simultaneous with the launch of the new AboitizPower brand and logo was the unveiling
of Cleanergy, the company’s brand of clean and renewable energy. By offering Cleanergy,
AboitizPower gives its clients the opportunity to buy energy from renewable sources that
leave a lighter impact on the Earth’s climate, and help sustain its energy resources.
To make Cleanergy available to every Filipino is how AboitizPower President & CEO Erramon
Aboitiz describes the company vision.
Through Cleanergy, AboitizPower envisages a future wherein business and people power
their activities with cleaner and renewable power; where companies that have chosen
Cleanergy receive recognition for making a responsible choice; and where customers can
be part of a community of like-minded people who champion sustainable energy use, from
businesses to households.
It is also a future that sees Cleanergy contributing to sustainability projects that promote
the development of new sources of clean and renewable power and participate in more
activities that encourage the use of efficient energy.
AboitizPower believes that the customer is key to creating a market that encourages clean
energy, its efficient use and its conservation. Only by demonstrating a distinct preference
for renewable energy can the consumer play a vital role in driving companies to develop and
efficiently use more sustainable and cleaner energy solutions.
AboitizPower’s change
in logo reflects its
new brand promise
of ‘Better Solutions’.
This communicates
the company’s vision
to continuously find
better ways to meet the
energy demands of the
Philippines and be more
responsible in caring for
the environment.
Better Solutions for A Better Future

ANNUAL REPORT 2009 29
Discover the Key to
A Better Future.
Features : The AboitizPower cleanergy brand

30
ABOITIZ POWER CORPORATION
Cleanergy powers San Fernando
The City of San Fernando in Pampanga is assured of a greener future, with AboitizPower
supplying renewable energy to San Fernando Electric Light and Power Company
(SFELAPCO).
Cleanergy, the AboitizPower brand of clean and renewable energy sourced from the
company’s Tiwi-Makban geothermal facilities and Irisan hydroelectric plant in Benguet, has
been energizing the progressive Pampanga capital since December 26, 2009.
Until September 25, 2010, when SFELAPCO’s contract with the National Power Corporation
expires, its power demand will be around 70 megawatts (MW), 25 MW of which is being
supplied by AboitizPower. In the succeeding 27 months until September 25, 2012,
AboitizPower will be SFELAPCO’s exclusive bilateral energy supplier, during which the
maximum contract demand is expected to reach 90 MW.
A privately owned distribution utility, SFELAPCO has a total energy requirement average
of 35 million kilowatt hours (kWh) per month for its residential, commercial and industrial
customers. Its franchise area covers barangays in San Fernando City and in the municipalities
of Floridablanca, Bacolor, Guagua, Lubao and Santo Tomas.
The AboitizPower-SFELAPCO supply contract is in line with the Renewable Energy Act of
2008 (RE Law), a landmark legislation that encourages and develops the use of the country’s
renewable energy resources. “AboitizPower supports the RE Law with Cleanergy,” said
AboitizPower SVP for Power Marketing and Trading Luis Miguel Aboitiz. “We are actively
developing and offering effective energy solutions that not only meet our nation’s energy
demands, but equally important is our commitment to sustain Earth’s resources.”
He added, “Energy from renewable sources are also effectively VAT zero-rated so power
from these sources can be sold to distribution utilities at prices that are competitive with
coal plants.”
The contract not only assures SFELAPCO of clean and reliable energy but also of cheaper
rates. It will lead to approximately a 40-centavo reduction in rates charged to consumers on
the average per kWh once the San Fernando utility’s bilateral contracts are supplied with
renewable energy, which is VAT-exempt.
“We believe that as a distribution utility, it is our primary duty to serve our customers well
and at the same time to treat our environment well. By going green, we achieve both goals
simultaneously,” said SFELAPCO President Michael L. Escaler.
The City of San Fernando
in Pampanga is assured
of a greener future, with
AboitizPower supplying
renewable energy to San
Fernando Electric Light and
Power Company
AboitizPower and SFELAPCO
executives shake hands after
the contract signing. From
left, Austin Herrick, President
& CEO of AP Renewables,
Inc., Luis Miguel Aboitiz, SVP
Power Trading & Marketing of
AboitizPower, Jose Lazatin, SVP
& General Manager of SFELAPCO,
and Michael Escaler, SFELAPCO
President.
Cleanergy powers San Fernando

ANNUAL REPORT 2009 31
SFELAPCO crew doing maintenance work in
their distribution network.
Features : SFELAPCO

32
ABOITIZ POWER CORPORATION
SNAP’s Keeping it Green with Watershed Protection Initiatives
From a nursery in Barangay Koliwong, Lagawe, Ifugao to a grocery store inside a huge Metro
Manila mall, Lagawe coffee has certainly gone a long way.
Lagawe Blends is a coffee brand of the Ifugao capital produced through a program that
advocates watershed protection by promoting Arabica farming in watershed territories and
erosion-prone areas.
Under the SN Aboitiz Power (SNAP) Partnership for Environment and Equitable
Development for Unity and Progress in Lagawe or SPEED-UP Lagawe established in 2008,
SNAP helped establish a coffee nursery and coffee roasting facility for coffee farmers. Since
then, the program has produced at least 772 beneficiaries and dispersed 50,000 seedlings.
Planting coffee trees is not only a source of income for the farmers but also a way of
preserving forests in the watershed territories.
By way of several presidential proclamations, National Power Corporation (NPC)
administers the watershed areas in the Ambuklao and Binga hydroelectric power plants that
cover 123,000 hectares (has.) located in Bokod, Kabayan, La Trinidad, Tublay, Buguias and
portion of Atok and Itogon in Benguet. It also encompasses the catchments basin of the
Ambuklao and Binga reservoirs. The Magat reservation covering 412,000 has. is under the
administrative jurisdiction of the National Irrigation Administration but 4,300 has. was given
to NPC for its management and development. This area is located within the immediate
vicinities of the Magat Reservoir in Ifugao and Ramon, Isabela.
A watershed is defined as a region of land within which water flows down into a specified
body, such as a river or lake thus, what happens on the land affects communities living
downstream. Its ecological values range from biodiversity conservation, soil erosion control,
water yield improvement and flood control.
As a corporate citizen of the communities where its Magat, Ambuklao, and Binga plants are
located, SNAP supports watershed management under environment protection, one of the
pillars of its corporate social responsibility program.
As a corporate citizen
of the communities
where its Magat,
Ambuklao, and
Binga plants are
located, SNAP
supports watershed
management
under environment
protection, one of the
pillars of its corporate
social responsibility
program.
1
Coffee seedlings for
SNAP Partnership for
Environment and Equitable
Development for Unity and
Progress in Lagawe.
2
NPC watershed tree planting
In March 2010, SNAP-Magat signed a Memorandum of Understanding (MOU) with the
Social Action Development Center (SADC) for the protection of the watershed areas of the
province. The partnership is called SNAP-SADC Livelihood, Enterprise and Agro-Forestry
Development (SNAP-SADC LEAD) and it will be the vehicle for implementing the Protection
of the Watershed through Community and Resource-based Agro Forestry Development
or PRO-WATERSHED CRADLE program. This program will provide viable alternatives to
unsustainable practices and protect watershed areas from further denudation.
SNAP and NPC are also negotiating for a MOA on technical cooperation for watershed
management and protection in Ambuklao and Binga. The project will align the goals and
objectives in implementing environmental protection projects with host communities
located in watershed areas. It also involves the sharing of technical expertise in watershed
management, the conduct of sustained information and education program for watershed
protection, as well as support in forest fire protection and concerted tree planting/
reforestation activities for greater impact.
1
SNAP also implements business-wide environment projects such as the Aboitiz 1-Million
Trees Challenge to offset the company’s carbon footprint. In November 2009, close to 1,300
seedlings of narra, tuai, mahogany, bangkok santol and anonas were planted in the Magat
Dam Watershed Area in Brgy. Sto. Domingo, Alfonso Lista, Ifugao while around 1,000 coffee
seedlings were planted in Sitio Binga in Brgy. Tinongdan, Itogon, Benguet.
Only recently, SNAP participated in a Watershed Management Conference organized
under the Aboitiz Sustainability Initiative aimed at developing a roadmap for managing
watersheds in the Aboitiz field sites.
2
SNAP’s Keeping it Green with Watershed Protection Initiatives

ANNUAL REPORT 2009 33
1
1
2 3
1
Ambuklao Dam located
in Benguet
3
Kabayan, Benguet is one of
the 7 municipalities
with watershed areas.
(Photo by Jon P. Ave)
2
Binga Dam also located in
Benguet (Photo by Jon P. Ave)
4
Magat crest watershed
tree planting
2
4

34
ABOITIZ POWER CORPORATION
SUSTAINABILITY REPORT
Ever-Increasing Sustainability Commitment
The union between growth and accountability will help propel your Company to deliver
above-average results consistently over time. Both are compatible and recent events have
shown that, for instance, caring for the environment is essential in order for our business to
prosper in the coming years.
As a result, we have formally incorporated sustainability into our business strategy. In a
nutshell, sustainability strives for a balance between economic success, social development
and environmental stewardship.
AboitizPower has been in the power business since the 1930s and through all these decades
sustainability projects of various types have always been hallmarks of the business units.
However, it is only recently that the collective activities have been labeled as “sustainability”
and it is a priority for the sustainability teams throughout AboitizPower to measure the
effectiveness of these efforts in order to manage and prioritize them.
As an example of recent projects, in 2008, your Company began a greenhouse gas inventory
in some business units, which initially covered emissions due to fuel use of company vehicles,
emissions from purchased electricity and process emissions for energy generation (mainly
from standby power of our distribution utilities). The scope was later expanded and in
2009, an overall reduction in measured emissions was achieved as a result. Emissions from
fuel consumption decreased by 2%, from purchased electricity by 18%, and from process
emissions by 18%.
In 2009, your Company participated fervently in the simultaneous tree planting of the
Aboitiz Group nationwide. Watershed management programs of various types are in place
in the communities and surrounding areas where our hydro power plants are located. We
are coordinating the watershed management effort in order to derive the best practices that
the different units have experienced through the years.
Cleanergy, your Company’s brand of clean and renewable energy, is the first mover in this
arena in the Philippines and is AboitizPower’s biggest contribution to sustainability. Using
Sustainability strives
for a balance between
economic success,
social development
and environmental
stewardship.
1
AboitizPower distributes durian
seedlings to Sibulan Hydro host
communities.
2
AboitizPower official checks
bamboo seedlings purchased
from a barangay nursery in
support of their livelihood.
1 2
Ever-Increasing Sustainability Commitment

ANNUAL REPORT 2009 35
Cleanergy is the best way for individuals and groups to lower their environmental footprint
without sacrificing the quality of their lifestyle. The use of Cleanergy also propagates
Cleanergy, encouraging investment in more renewable energy projects.
Your Company’s business units are known for their operational efficiency. This means that
the generation companies keep the plants running efficiently and use the very latest in
environmental mitigation measures. The distribution utilities, as a whole, keep purchased
power to levels lower than the mandatory cap, meaning it is preventing, through its
efficiency, the need to construct unnecessary generation capacity.
The greenfield Sibulan hydro power plant in Davao, which began operating in March 2010, is
the first Clean Development Mechanism (CDM) registered power project in the Philippines.
Typhoons Ondoy and Pepeng wrought devastation in 2009. They brought to life the
disastrous impacts of climate change as lives and property were carried away by
floodwaters. Climate change has never been more tangible to Filipinos than when these
two floods happened. Yet, just a few months later, the extreme water level rise became but
a distant memory as El Niño set in. In a matter of a few months the water supply went from
too much to too little. Our vulnerability to the whims of nature never became so clearly
manifested.
Another component of sustainability are CSR projects as these address the social
development requirement. In 2009, your Company and its subsidiaries built classrooms,
donated computers, sent scholars to school at various locations in the Philippines.
When typhoons Ondoy and Pepeng struck, your Company responded resoundingly and
immediately by distributing relief goods to affected areas.
We are cognizant that sustainability practices are not cast in stone and the balance we
aim for requires dynamism and proactivity. We remain excited at discovering alternative
avenues through which we can advocate for even greater sustainability at AboitizPower.
We are cognizant that sustainability
practices are not cast in stone and the
balance we aim for requires dynamism
and proactivity.
Team members of the different
Aboitiz companies working
together in the Ondoy and
Pepeng relief operations.

36
ABOITIZ POWER CORPORATION
CORPORATE SOCIAL RESPONSIBILITY
Powering up CSR
2009 was a significant year for AboitizPower as more companies and
affiliates powered up its involvement in various CSR activities in their areas
of operation.
A total of π70 million was appropriated for social development projects, π21
million through the Aboitiz Foundation, and π49 million was allocated for
their own company-initiated projects.
Most of the projects focused on education but attention was also given to
skills and enterprise development, health and nutrition care, socio-cultural
projects, and environment protection activities.
AboitizPower is
committed to ensure that
all its facilities operate
efficiently, with stringent
systems in place to ensure
mandated safety and
environmental standards
are met.
Knowing fully well that operating a power business has an impact on the
environment, AboitizPower is committed to ensure that all its facilities
operate efficiently, with stringent systems in place to ensure mandated
safety and environmental standards are met.
AboitizPower is likewise committed to the sustainable development of
its host communities. The company’s subsidiaries sponsor sustainable
community development projects in partnership with local government
units and other stakeholders. Community infrastructure projects such as
roads and water systems were also built in 2009.
Powering up CSR

AboitizPower’s various
CSR initiatives in 2009
ANNUAL REPORT 2009 37

38
ABOITIZ POWER CORPORATION
BOARD OF DIRECTORS
Enrique M. Aboitiz, Jr.
Chairman
Jon Ramon Aboitiz
Vice Chairman
Erramon I. Aboitiz
Director
Antonio R. Moraza
Director
Board of Directors

ANNUAL REPORT 2009 39
Mikel A. Aboitiz
Director
Jaime Jose Y. Aboitiz
Director
Jakob Disch
Independent Director
Jose R. Facundo
Independent Director
Romeo L. Bernardo
Independent Director
Board of Directors

40
ABOITIZ POWER CORPORATION
CORPORATE OFFICERS
Erramon I. Aboitiz
President & Chief
Executive Officer
Juan Antonio E. Bernad
Executive Vice President
Strategy & Regulation
Jaime Jose Y. Aboitiz
Executive Vice President
& Chief Operating Officer
Power Distribution Group
Antonio R. Moraza
Executive Vice President
& Chief Operating Officer
Power Generation Group
Luis Miguel Aboitiz
Senior Vice President
Power Marketing
and Trading

ANNUAL REPORT 2009 41
Iker M. Aboitiz
First Vice President
Chief Finance Officer
Corporate Information
Officer
Gabriel T. Mañalac
First Vice President
Treasurer
Raymond E. Cunningham
First Vice President
Business Development
Wilfredo R. Bacareza, Jr.
Vice President
Anastacio D. Cubos, Jr.
Vice President
Special Projects
Corporate Officers

42
ABOITIZ POWER CORPORATION
CORPORATE OFFICERS
Alvin S. Arco
Vice President
Regulatory Affairs
Manuel R. Lozano
First Vice President &
Chief Finance Officer
Power Generation Group
Ma. Chona Y. Tiu
Vice President &
Chief Finance Officer
Power Distribution Group
Raul C. Lucero
Vice President
Engineering
Power Distribution Group
COMMITTEES
Board Corporate Governance Committee
Jon Ramon Aboitiz (Chairman)
Enrique M. Aboitiz, Jr.
Jose R. Facundo (Independent Director)
Romeo L. Bernardo (Independent Director)
M. Jasmine S. Oporto
(ex-officio member, Chief Compliance Officer)
Sebastian R. Lacson
(ex-officio member, AEV Chief Reputation Officer)
Xavier J. Aboitiz
(ex-officio member, AEV Chief Human Resource & Quality Officer)
Board Audit Committee
Jose R. Facundo (Chairman, Independent Director)
Romeo L. Bernardo (Independent Director)
Mikel A. Aboitiz
Juan Antonio E. Bernad
(ex-officio member - Chief Strategy &
Regulation Officer)

ANNUAL REPORT 2009 43
OPERATING UNIT HEADS
Rene B. Ronquillo
President & Chief
Operating Officer
Hedcor, Inc.
Manny R. Rubio
President & Chief
Executive Officer
SN Aboitiz Power, Inc.
Austin Herrick
President & Chief
Executive Officer
AP Renewables, Inc.
Jovy P. Batiquin Benjamin A. Cariaso, Jr.
Executive Vice Executive Vice
President & Chief President & Chief
Operating Officer Operating Officer
Therma Marine, Inc. Therma Luzon, Inc.
Art M. Milan
Senior Vice
President &
Chief Operating
Officer
Davao Light &
Cotabato Light
Dante T. Pollescas
Senior Vice
President & Chief
Operating Officer
Subic, Balamban
& Mactan
Enerzones
Board Strategy Committee
Enrique M. Aboitiz, Jr. (Chairman)
Erramon I. Aboitiz (President & Chief Executive Officer)
Mikel A. Aboitiz
Ernesto R. Aboitiz
Jon Ramon Aboitiz
Juan Antonio E. Bernad
(ex-officio member - Chief Strategy &
Regulation Officer)
Board Risk Management Committee
Antonio R. Moraza (Chairman)
Erramon I. Aboitiz (President & Chief Executive Officer)
Jose R. Facundo (Independent Director)
Juan Antonio E. Bernad
(ex-officio member - Chief Strategy &
Regulatory Affairs Officer)
Rolando C. Cabrera
(ex-officio member - AEV Chief Risk Management Officer)

44
ABOITIZ POWER CORPORATION
MANAGEMENT DIRECTORY
BOARD
OF DIRECTORS
Enrique M. Aboitiz, Jr.
Chairman
Antonio R. Moraza
Director
Jakob Disch
Independent Director
Jon Ramon Aboitiz
Vice Chairman
Mikel A. Aboitiz
Director
Jose R. Facundo
Independent Director
Erramon I. Aboitiz
Director
Jaime Jose Y. Aboitiz
Director
Romeo L. Bernardo
Independent Director
CORPORATE OFFICERS
Erramon I. Aboitiz
President
Chief Executive Officer
Antonio R. Moraza
Executive Vice President
Chief Operating Officer
Power Generation Group
Gabriel T. Mañalac
First Vice President
Treasurer
Juan Antonio E. Bernad
Executive Vice President
Strategy & Regulation
Luis Miguel Aboitiz
Senior Vice President
Power Marketing & Trading
Raymond E. Cunningham
First Vice President
Business Development
Jaime Jose Y. Aboitiz
Executive Vice President
Chief Operating Officer
Power Distribution Group
Iker M. Aboitiz
First Vice President
Chief Finance Officer
Corporate Information Officer
Wilfredo R. Bacareza, Jr.
Vice President
Anastacio D. Cubos, Jr.
Vice President
Special Projects
Alvin S. Arco
Vice President
Regulatory Affairs
Manuel R. Lozano
First Vice President
Chief Finance Officer
Power Generation Group
Ma. Chona Y. Tiu
Vice President
Chief Finance Officer
Power Distribution Group
Raul C. Lucero
Vice President
Engineering
Power Distribution Group
Clovis B. Racho
Assistant Vice President
Procurement and Logistics
Power Distribution Group
Aladino Borja, Jr.
Assistant Vice President
Information Services
Power Distribution Group
Katrina M. Platon
Assistant Vice President
Legal and Regulatory Affairs
Carlos Copernicus S. Payot
Assistant Vice President & Controller
Power Distribution Group
Ronald Enrico V. Abad
Assistant Vice President
Project Development
Crisanto R. Laset, Jr.
Assistant Vice President
Power Economics & Distribution
System Planning
Ma. Kristina C.V. Rivera
Assistant Vice President
Human Resource & Quality
Power Generation Group
Ana Liza M. Aleta
Assistant Vice President
IT Director
Power Generation Group
Arazeli L. Malapad
Assistant Vice President
Accounting – Luzon
Power Generation Group
Paquita S. Tique-Rafols
Assistant Vice President
Accounting – Mindanao
Power Generation Group
Cristina B. Beloria
Assistant Vice President &
Controller
M. Carmela N. Franco
Assistant Vice President
Investor Relations
Susan S. Policarpio
Assistant Vice President
Government Relations
M. Jasmine S. Oporto
Corporate Secretary
Joseph Trillana T. Gonzales
Assistant Corporate Secretary
OPERATING
UNIT HEADS
Rene B. Ronquillo
President & Chief Operating Officer
Hedcor, Inc.
Jovy P. Batiquin
Executive Vice President &
Chief Operating Officer
Therma Marine, Inc.
Austin Herrick
President & Chief Executive Officer
AP Renewables, Inc.
Benjamin A. Cariaso, Jr.
Executive Vice President &
Chief Operating Officer
Therma Luzon, Inc.
Manny R. Rubio
President & Chief Executive Officer
SN Aboitiz Power, Inc.
Art M. Milan
Senior Vice President & Chief
Operating Officer
Davao Light & Cotabato Light
Dante T. Pollescas
Senior Vice President &
Chief Operating Officer
Subic, Balamban &
Mactan EnerZones
Management Directory

ANNUAL REPORT 2009 45
OUR PORTFOLIO FOR 2010
Renewable
Plant Plant capacity
(MW)
%
ownership
Attributable
capacity (MW)
Renewable Hydro Magat 360 50 180 SNAP
Geo
Ambuklao 105 50 52 SNAP
Binga 100 50 50 SNAP
Benguet 1- 10 34 100 34 HEDCOR
Davao 1- 5 4 100 4 HEDCOR
Sibulan 42 100 42 HEDCOR
Bakun 70 50 35 Luzon Hydro
Management
Company
Tiwi
Makban
467 100 467 AP Renewables
Total 1,182 864
Notes
Attributable Capacity is Plant Capacity multiplied by % Ownership
Ambuklao Plant Capacity of 105 MW is after completion of expansion in 2010
Tiwi and Makban Plant Capacity is based on steam availability
Non
Renewable
Non
Renewable
Plant
Plant capacity
(MW)
%
ownership
Attributable
capacity (MW)
Management
Company
Coal Pagbilao 700 100 700 Therma Luzon
Toledo 246 26 64 CEDC
Mindanao 232 34 79 STEAG State Power
Oil Cebu 70 60 42 Cebu Private Power
Mactan 50 50 25 East Asia Utilities
Zamboanga 100 20 20 Western Mindanao Power
General
Santos
55 20 11 Southern Philippines Power
Mobile 1 100 100 100 Therma Marine
Mobile 2 100 100 100 Therma Marine
Davao 53 100 53 Davao Light
Cotabato 7 100 7 Cotabato Light
Total 1,713 1,201
Summary
Total Plant
capacity (MW)
Total Attributable
capacity (MW)
Renewable Hydro 715 397
Geo 467 467
Non Coil 1,178 843
Renewable
Oil 535 358
Total 2,895 2,065
58%
42%
Non Renewable
Renewable
Our Portfolio for 2010 - Renewable & Non Renewable

46 ABOITIZ POWER CORPORATION
A diversified portfolio with assets
located all over the country (with plant capacities)
Renewable
Non Renewable Distribution Sales and Retail
Ambuklao-Binga Hydro (175 MW)
Bakun Hydro (70 MW)
Benguet Hydro (1-10) (34 MW)
Magat Hydro (360 MW)
San Fernando Electric Light & Power Company
Subic EnerZone Corporation
Tiwi - Makban Geothermal (467MW)
Pagbilao (700 MW)
Luzon
MANILA
visayas
cebu
mindanao
davao
Visayan Electric Company
Aboitiz Energy Solutions
Cebu (70 MW)
Mactan (50 MW)
Mactan Enerzone Corporation
Balamban Enerzone Corporation
Toledo (246 MW in 2010)
Mobile 2 (100 MW in 2010)
Mindanao (232 MW)
Mobile 1 (100 MW in 2010)
Davao Hydro (1-5) (4 MW)
Davao Light & Power Company
Sibulan (42 MW in 2010)
Davao (53 MW)
Cotabato (7 MW)
Cotabato Light & Power Company
Zamboanga (100 MW)
General Santos (55 MW)
Location of Operations

ANNUAL REPORT 2009 47
2009 CORPORATE GOVERNANCE REPORT
Our Board of Directors understands that a well-entrenched corporate culture of good governance is indispensable for building and retaining
investor confidence and interest, ensuring continued support from all stakeholders, and promoting the sustained growth of our Company, Aboitiz
Power Corporation, for generations to come. The Board consistently reaffirms its commitment to the principles of corporate governance through
compliance with statutory requirements and other legal benchmarks and best practices to strengthen relations with its investors, shareholders
and all stakeholders.
In 2009, we manifested our commitment to continuously seek ways to serve you better by consolidating existing committees and creating new
ones to adapt to changing governance climate. By doing so, we believe that your Company and your Board will be able to better address issues
and concerns that may arise
We at AboitizPower are committed to fulfill our promise of playing a vital role in securing for you a better future. Your Company deems it imperative
to be resilient to challenges—both internal and external—and still emerge as your preferred partner in development.
BOARD RESPONSIBILITY
AboitizPower believes that compliance with the principles of good corporate governance begins with the Board of Directors. Your Board of
Directors ensures the observance of high standards and adoption of best practices for AboitizPower as well as compliance with all relevant laws,
regulations and codes of business practice.
Board Composition
Each director is selected through a process that ensures a mix of competent directors and officers with extensive experiences in and intimate
knowledge of the Philippine electric power industry. Their collective expertise in the electric power business make them highly qualified to guide
AboitizPower through the many growth opportunities and risks brought about by the ongoing deregulation and privatization of the Philippine
electric power industry.
Each member of the Board holds office for one year until his successor is elected at the next annual shareholders’ meeting.
AboitizPower complies with the requirement that public companies have independent directors constituting 20% of the total number of directors
pursuant to the Securities Regulation Code. The independent directors are not encumbered with any management responsibility and are free
from any business or other relationship with the Company that could materially interfere with their exercise of unfettered judgment as members
of the Board.
In May 18, 2009, you elected the following Board members.
Enrique M. Aboitiz, Jr.
Jon Ramon Aboitiz
Erramon I. Aboitiz
Ernesto R. Aboitiz
Antonio R. Moraza
Mikel A. Aboitiz
Jaime Jose Y. Aboitiz
Jose R. Facundo
Romeo L. Bernardo
DIRECTORS
Chairman of the Board
Vice Chairman
President and Chief Executive officer
Member
Member
Member
Member
Independent Director
Independent Director
Your Board recognizes that, for an effective corporate governance system, senior executives must study and live the principles of corporate
governance in unison with Board of Directors. All board members and senior management executives have completed accredited corporate
governance seminars.
Your Board also regularly assesses its performance as well as the performance of its members through the AboitizPower Board Survey, which was
developed with formal criteria specific to the discharge of a board member’s responsibilities.
SEC FORM 20 - IS (INFORMATION STATEMENT)

48 ABOITIZ POWER CORPORATION
Attendance in Board Meetings
Attendance performance of the board members of AboitizPower has been very consistent. For 2009, there were five regular meetings plus four
special meetings. A summary of the attendance of board members is outlined below.
DIRECTORS
Enrique M. Aboitiz, Jr.
(Chairman of the Board)
Jon Ramon Aboitiz
(as Chairman of the Board)
SPECIAL AND REGULAR BOARD MEETINGS 2009
11-Feb 31-March 15-April 18-May 25-June 16- July 16-Sept 12-Nov 14-Dec
N.A N.A N.A N.A
N.A N.A N.A N.A N.A
(as Vice Chairman) N.A N.A N.A N.A
Erramon I. Aboitiz
Ernesto R. Aboitiz
Antonio R. Moraza
Mikel A. Aboitiz
Juan Antonio E. Bernad
(Director until May 18)
N.A N.A N.A N.A N.A
Jaime Jose Y. Aboitiz N.A N.A N.A N.A
Jose R. Facundo
(Independent Director)
Romeo L. Bernardo
(Independent Director)
Total No. of Directors Present 8 8 7 8 5 9 9 9 9
Statutory Compliance
The Office of the Chief Compliance Officer regularly monitors AboitizPower’s statutory compliance. For the year 2009, your company fully
complied with the Philippine Stock Exchange (PSE), and the Securities & Exchange Commission’s (SEC) regulatory requirements. Below is the
Company’s PSE and SEC Reportorial Compliance Report.
Monitoring and Control
The Company adopted a Corporate Governance Manual (Manual) pursuant to AboitizPower’s value system, vision, mission and strategies. The
Manual clearly defines the responsibilities and corporate governance policy of the company and is revisited and regularly reviewed for relevance to
changing business practices. It includes policies and procedures by which the Company will operate, by-laws to ensure their continued adequacy
and relevance, and terms of reference for Board Committees.
The Board approved amendments to the Manual in September 2009 to update it to current best practices.
AboitizPower’s Amended Manual encapsulates the Company’s revised compliance structure. The Amended Manual designates the Chief
Compliance Company Officer and defines her duties as well as outlines a Plan of Compliance revolving around the Board of Directors, its
composition, qualifications, roles and responsibilities, the delineation of the roles of the Chairman and the CEO, conflict of interest and business
interests disclosures, board meetings and quorum requirements, adequate and timely information and accountability of audits. The Company’s
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 49
Amended Manual also specifies the composition and duties of newly created or restructured board committees, the qualifications of the
Corporate Secretary, an information security management policy, a sustainability policy, communication process and training process, reportorial
or disclosure system of the Company’s corporate policies, shareholders’ benefit statement and a monitoring and assessment system.
Board Committees
In February 2009, the Board of Directors of AboitizPower reorganized and created additional Board committees into the following: Board
Corporate Governance Committee, the Board Audit Committee, Board Strategy committee and Board Risk Management Committee.
A new committee, the Board Corporate Governance Committee consolidates Board oversight responsibility over corporate governance principles
and guidelines, nomination and compensation of persons into the Board and AboitizPower Group’s senior leadership roles. The Board Corporate
Governance Committee was fully constituted in mid 2009. Its current composition is as follows:
BOARD CORPORATE GOVERNANCE COMMITTEE
Jon Ramon Aboitiz
Chairman
Enrique M. Aboitiz, Jr.
Member
Jose R. Facundo (Independent Director)
Member
Romeo L. Bernardo (Independent Director)
Member
M. Jasmine S. Oporto Ex-Officio Member
Sebastian R. Lacson
Ex-Officio Member
Xavier J. Aboitiz
Ex-Officio Member
Independent Directors comprise 50% of the voting members of the Board Corporate Governance Committee. No resolution of the Board Corporate
Governance Committee can be approved without the vote of an Independent Director.
The Board Corporate Governance Committee held its first meeting last February 3, 2010 at which meeting the following matters were discussed:
Nominees for the 2010- 2011 Board of Directors, Proposed Agenda for the 2010 AGM, timetable for the preparation and proposed content of the
Information Statement for the 2010 AGM/2009 Annual Report, Directors’ per diem for 2010, salary increase guidance for 2010, investor concerns
and investor relations schedules program, status of the amended Manual on Corporate Governance, proposed Corporate Governance Report for
the Annual Report, review of senior leadership appointments, 2009 Statutory Compliance Report, Board and management annual performance
assessment and proposed PSE Corporate Governance Guidelines
The annual performance assessment of the Chief Executive Officer and Board of Directors is now being conducted and overseen by the Board
Corporate Governance Committee. The Board meeting attendance of individual directors is reported through the Corporate Governance Report
on Board Performance and Certificate of Attendance submitted to the SEC at year-end.
The Board Strategy Committee is a newly created committee created to represent the Board in the oversight or direction of Aboitiz Power’s
business strategies, especially in those enterprises where AboitizPower is a direct investor.
The Board Strategy Committee composition is as follows:
BOARD STRATEGY COMMITTEE
Enrique M. Aboitiz Jr.
Chairman
Erramon I. Aboitiz (CEO)
Member
Mikel A. Aboitiz
Member
Jon Ramon Aboitiz
Member
Juan Antonio E. Bernad
Ex-Officio Member
Another new Board Committee, the Board Risk Management Committee, reviews business risk exposures across the Aboitiz Power Group,
including risks categorized as strategic, reputational, operational, financial, compliance related, environmental and regulatory.
The Board Risk Management Committee is composed of the following:
BOARD RISK MANAGEMENT COMMITTEE
Antonio R. Moraza
Chairman
Erramon I. Aboitiz (CEO)
Member
Jose R. Facundo (Independent Director)
Member
Juan Antonio E. Bernad
Ex-Officio Member
Iker M. Aboitiz
Ex- Officio Member
Rolando C. Cabrera
Ex-Officio Member
(Aboitiz Equity Ventures Inc’s (AEV) Chief Risk Management Officer)
SEC FORM 20 - IS (INFORMATION STATEMENT)

50 ABOITIZ POWER CORPORATION
2009 was quite a busy year for the Board Risk Management Committee as it reviewed and developed the Company’s Enterprise Risk Management
(ERM) roadmap. The Committee organized the Corporate Business Risk Management Team, defined Aboitiz Power’s desired future plan for risk
management content and process, developed an ERM framework for Aboitiz Power and its business units, planned the ERM implementation,
designed a Risk Governance Process and established the Risk Management policies for the Aboitiz Power Group.
It has proposed an AboitizPower Risk Management Structure, which, in broad strokes, creates the following general scope of responsibilities.
Board of Director
Risk Management
Steering
Committe
(Adhoc)
Risk Management Oversight
Committee
Risk Management Council
(Group Mancom)
BU Risk Management Team
BU Risk Management Team
BU Risk Management Team
Business Units & AboitizPower Functional
Units/Support Services
The Company’s Chief Finance Officer also actively participates in the AEV Corporate Center Legal Excom where group wide issues on labor and
employment, corporate compliance, tax compliance, legal issues, legal liabilities, risks and policies are reviewed, assessed and adopted as part of
the general Aboitiz Group risk management infrastructure.
Lastly, the Board Audit Committee is the committee that oversees the optimization of effective financial management, as well as compliance with
regulatory reporting requirements.
The Board Audit Committee follows a clear set of guidelines outlined in the Amended Manual for management rules and procedures on
financial reporting and internal control. The Board Audit Committee assists the Board in fulfilling its responsibility to the shareholders, potential
shareholders and investment community relating to the integrity of Aboitiz Power’s financial statements, compliance with legal or regulatory
requirement, the independent auditor’s qualifications and independence and the performance of Aboitiz Power’s internal audit function and
independent auditors. The Committee ensures that corporate accounting and reporting practices of the Company are in accordance with all legal
requirements international financial accounting and are of the highest accuracy and reliability. Each committee member must exercise the care,
diligence and skills that a reasonably prudent person would exercise in comparable circumstances.
The Board Audit Committee is composed of at least three directors, two of whom are independent directors, and two non-voting members in
the persons of the Chief Financial Officer and Chief Risk Management Officer. The Chairman of the Board Audit Committee is an independent
director. Each member, preferably with accounting and finance backgrounds, has adequate understanding, familiarity and competence at most
of AboitizPower’s financial management systems and environment.
The 2009-2010 Board Audit Committee membership as follows:
BOARD AUDIT COMMITTEE
Jose R. Facundo (Independent Director)
Romeo L. Bernardo (Independent Director)
Mikel A. Aboitiz
Juan Antonio E. Bernad
Iker M. Aboitiz
Rolando C. Cabrera
Chairman
Member
Member
Ex-Officio Member
Ex-Officio Member
(AEV Chief Risk Management Officer) Ex-Officio Member
Your Board Audit Committee held four meetings in 2009 and one meeting in March 2010 at which meetings the Committee reviewed and approved
the Company’s 2008 Consolidated Audited Financial Statements prepared by the external auditors as well as the Company’s unaudited financial
statements for the first to the third quarters of the year. The Board Audit Committee also reviewed the annual audit programs and internal auditor’s
reports. A Financial Report review is included in the Board Audit Committee Report to the Board of Directors. The Board Audit Committee Report
also informs the Board of Company’s legal compliance with accounting standards.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 51
Effective Exercise of Shareholders’ Rights
The Company recognized the importance of an unhampered and genuine exercise of shareholders’ rights as granted by the Corporation Code of
the Philippines, by other related laws and by its corporate covenants under the Company’s By-Laws and enshrined in the Company’s Amended
Manual. Foremost among corporate governance principles established by AboitizPower is its assurance that shareholders enjoy all the rights
granted by the Corporation Code, with Aboitiz Power directors and key officers directed to promote these rights, to remove impediments to their
effective exercise and to provide avenues for a redress of any violation of these rights.
Right to Vote
Your Directors are mandated to encourage the exercise of shareholder’s voting rights and have committed to take steps to ensure the meaningful
participation of shareholders in meetings by removing excessive costs and other administrative or practical impediments.
Voting methods and vote-counting systems applied by AboitizPower are clearly explained to shareholders to ensure the effective exercise of their
right to vote. AboitizPower follows the system of cumulative voting for the election of directors, which allows shareholders to elect each member
of the Board of Directors individually. Other matters are decided through voting by shares of stock. AboitizPower adheres to the one-shareone-vote
policy for the same class of shares. Proxy voting is allowed at all meetings and is facilitated through proxy voting forms. The written
and legally acknowledged proxy as required by its By-Laws and by the Philippine rules on judicial and legal forms are presented to the Corporate
Secretary at least seven days before a shareholders’ meeting. Any doubt on the validity of a proxy is resolved in the shareholder’s favor.
The counting of shareholders’ votes is done in accordance with the general provisions of the Corporation Code. The Office of the Corporate
Secretary supervises the counting of votes.
Pre-emptive rights
Pre-emptive rights to subscribe to the capital stock of AboitizPower are granted to stockholders in accordance with the rules governing publicly
listed companies, and instances where it is denied are clearly set forth in AboitizPower’s Articles of Incorporation or in documents signed by
shareholders. Generally, the Articles of Incorporation lay down the specific rights and powers of shareholders with respect to the particular shares
they hold, and all such rights and powers are protected, insofar as they do not conflict with the Corporation Code.
Right to Inspect Corporate Books and Records
AboitizPower shareholders enjoy the right to inspect corporate books and records, including minutes of Board and Stockholders’ meetings and
the stock and transfer registry records affecting their shares. The Office of the Corporate Secretary ensures that all minutes of annual and special
meetings of shareholders clearly and satisfactorily reflect all matters taken up at these meetings. The issues and motions raised, resolution and
corporate acts approved or disapproved by shareholders or board are concisely recorded as stated in the minutes. The Corporate Secretary
dutifully records the minutes of the meetings and notes the attendance of the members of the Board of Directors and other key officers (who are
identified at meetings).
Right to Information on the Corporation
AboitizPower shareholders may effectively exercise their right to information, pursuant to the corporate governance principle of disclosure
and transparency. Upon proper request reasonably made, a shareholder can obtain periodic reports with information about the directors and
key officers of AboitizPower, including their personal and professional information, their current share holdings of AboitizPower’s shares, and
their dealings with AboitizPower, the relationships among directors and key officers, and their aggregate compensation. AboitizPower’s Annual
Reports and its financial statements may be secured without cost or restrictions and these are also available at the Company’s websites.
Right to Participate in Shareholders’ Meetings
AboitizPower strives for the transparent and fair conduct of the annual and special shareholders’ meetings and believes that accurate and timely
information should be made available to the shareholders to enable them to make a sound judgment on all matters brought to their attention for
consideration or approval. The Annual Report distributed prior to and during the annual stockholders meeting and available from the Company’s
website includes the highlights and summary of the financial condition of AboitizPower. The Information Statement filed with the SEC is prepared
with the objective of providing accurate information enabling stakeholders to make informed decisions. Shareholders are provided with individual
profiles of new and returning directors, as well as a summary of the Board meeting attendance and performance of AboitizPower directors.
AboitizPower’s policy on directors’ compensation is disclosed to shareholders, and the proposed directors’ compensation is presented for
shareholder approval at every annual stockholders meeting. For 2009, AboitizPower shareholders approved the monthly allowances of π80,000
for its directors, and π120,000 for the Chairman of the Board.
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52 ABOITIZ POWER CORPORATION
In addition a per diem for every Board or Committee meeting attended was approved:
Type of Meeting Directors Chairman of the Board
Board Meeting P50,000 π75,000
Type of Meeting Committee Members Chairman of the Committee
Committee Meeting P30,000 π30,000
Information on SGV, the External Auditor’s of AboitizPower, is also disclosed to all shareholders, together with the name of the current audit
partner and the engagement fees charged by SGV. SGV has been Aboitiz Power’s external auditors for the last 11 years.
AboitizPower shareholders are also afforded ample opportunity to directly address the Chairman of the Board of Directors, the Chief Executive
Officer and the chairmen of the various Board Committees of the Company, who all conscientiously attend annual shareholders’ meetings. For
the past two annual shareholders’ meetings, all the members of the Board of Directors and key officers of Aboitiz Power were present and on hand
to answer questions and address issues raised by shareholders. Every year a separate investors briefing in Makati City is also held two days after
the annual shareholders’ meeting to give shareholders who cannot attend the Annual Shareholders’ Meeting in Cebu City an opportunity to listen
to the presentation on state of the Company’s business and affairs and to ask any question from the members of the Board and top Management.
AboitizPower strives to send out notices of its Annual Shareholders Meetings as early as possible to allow participants the utmost opportunity
to attend. Individual notices and newspaper published notices clearly state the date, time and place of the annual shareholders’ meeting and
investors’ briefing. During the last shareholders’ meeting, notices were sent out 23 days before the annual shareholders and investors’ meeting.
Right to Receive Dividends
Aboitiz Power consistently discloses its dividend policy to its shareholders in its Operational and Financial Information in the Information
Statement and in the Report of its Chief Financial Officer. Aboitiz Power maintains an annual cash dividend payment ratio of approximately onethird
of its consolidated net income from the preceding fiscal year, subject to the requirements of applicable laws and regulations and the absence
of circumstances that may restrict the payment of cash dividends. These circumstances include major projects and developments requiring
substantial cash expenditures or restrictions on cash dividend payments under its loan covenants. Cash dividends declared by Aboitiz Power to
common stockholders from 2008 to 2009 are shown in the table below:
Year Cash Dividend Per Share Total Declared Record Date
2009 π0.20 π1.47 Billion February 26, 2009
2008 π0.18 π1.32 Billion February 21, 2008
Appraisal Right
Shareholders enjoy the appraisal right or the right to dissent and demand payment of the fair value of their shares. The right is exercised under
circumstances provided in the constitutive documents of AboitizPower and within the statutory requirements of Section 82 of the Corporation
Code, which disallows payment of such shares if the company has no unrestricted retained earnings in its books to cover a payment.
EQUITABLE TREATMENT OF SHAREHOLDERS
Voting rights for Shareholders
AboitizPower understands the value of building a sustainable and long-term relationship with its shareholders and other stakeholders and ensures
that the Company’s minority shareholders are equitably treated. As mentioned, AboitizPower adheres to the one-share-one-vote policy for
matters requiring shareholder approval and, through the cumulative voting system, allows minority shareholders the ability to influence Board
composition. However, the removal of a director will not be allowed if this will result in a denial of minority shareholders representation in the
Board
Other rights enjoyed by minority shareholders include the right to propose the holding of a meeting and the right to propose items in the agenda
of the meeting, provided that these items are for legitimate business purposes. The minority shareholders have access to any and all information
relating to matters for which Management is accountable for and other information that is necessary. If certain information is not included, then
the minority shareholders can propose to include such matters in the agenda of shareholders’ meeting, being within the definition of “legitimate
purposes.”
Fair Dealings for all Shareholders
AboitizPower Directors and Officers act in the best interest of shareholders and have not been involved in any case of insider trading. Legal
proceedings involving directors and officers that may affect their ability and integrity are duly disclosed in reports to the shareholders. No
complaints or issues on related-party transactions have been raised in the past two years.
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ANNUAL REPORT 2009 53
The Company’s Code of Ethics and Business Conduct Code outlines the general expectations of, and sets standards for employee behavior and
ethical conduct. Board members, Management and all other employees are informed of the Code and strict adherence is enjoined.
AboitizPower also strictly enforces its Policy on Trading of Company securities, which imposes a trading blackout on AboitizPower securities
beginning ten (10) trading days before and until two full trading days after the release of the quarterly or annual earnings of the Company. The
Chief Compliance Officer sends out notices requiring the strict observance of the trading blackout via various media (email and short messaging
services) to all the Directors, Officers and identified key employees of the Company during any relevant blackout period.
Insider trading is strictly prohibited under the Code and every member of the AboitizPower organization is obligated to prevent the misuse of
inside information.
AboitizPower employees and officers owe a duty to advance AboitizPower’s interest. No employee, officer or director may use their position or
corporate property or information for personal gain; and no employee, officer or director may take for themselves Company opportunities for
sales or purchases of products, services or interests. Protection of proprietary and confidential information generated and gathered in the conduct
of business is considered the obligation of every member of the Aboitiz Power organization. Everyone is also expected to respect the property
rights of other companies and individuals.
Employees and officers are required to promptly report any potential relationship, action or transaction that may give rise to a conflict of interest
to the Human Resources Department. Directors are under obligation to disclose any actual or potential conflicts of interest to the Chairman of the
Board and the Chief Compliance Officer. All Directors are also required to inhibit themselves from any Board discussion or decision affecting their
personal, business or professional interests.
DISCLOSURE AND TRANSPARENCY
AboitizPower is committed to the high standards of disclosure and transparency to enable the investing community to understand the true
financial condition of AboitizPower and the quality of its corporate governance. Through the Investor Relations Office, the Annual Report, the
Company website, the Company’s Information Statement and all disclosures to the PSE and SEC, Aboitiz Power communicates to its shareholders
and investors in a timely manner material information on its business.
Disclosure of Material Information
AboitizPower periodically submits to the PSE its public ownership report detailing the extent of ownership of controlling shareholders, including
the shareholdings of their subsidiaries and affiliates, and that of Directors and Management. It submits to the PSE a list of its top 100 shareholders
every quarter. It also makes disclosures of its top 20 shareholders, including shareholders of record and beneficial owners owning more than 5%
of AboitizPower’s outstanding capital stock, as well as the shareholdings of the Directors and Officers in the Company’s Definitive Information
Statement sent out to shareholders annually. The Company however, has no control over outside shareholders who may choose to put their
shares under nominees, holding companies and the PCD Nominee Corporation, and is thus unable to make any disclosures on that ownership.
As of December 31, 2009, AEV owns 5,622,113,063 common shares of AboitizPower, representing 76.40% of the outstanding capital stock of
AboitizPower. AEV has a free float of 47%. Accounting for the free float of the Company in AEV, 59% of the outstanding shares are considered free
float or publicly owned. Other record holders holding more than 5 % of Aboitiz Power’s outstanding capital stock are PCD Nominee Corporation
(Filipino), which holds a total of 940,883,364 common shares, and PCD Nominee Corporation (Foreign) which holds a total of 522,174,940 common
shares, representing 12.79% and 7.10%, respectively of the total outstanding capital stock of Aboitiz Power.
AboitizPower circulates a clear, comprehensive and informative Annual Report. Portions on Management’s Discussion, Analysis or Plan of Action,
the Audited Financial Statements and Results of Operations discuss in detail the financial and operating results of the Company. Other nonfinancial
matters are discussed in the Shareholders’ Report and Results of Operations portion. Operating risks, particularly major risks, are also
discussed in the Audited Financial Statements, which also include discussions on the Financial Risk Management Objectives and Policies of the
Company.
The Company adopts a formal transparent policy on compensation for its Directors and key executives. Information on the basis of Board
remuneration is readily accessible through AboitizPower’s Board Corporate Governance Committee minutes. The Committee ensures that the
AboitizPower Directors and executives’ remuneration is consistent with the AboitizPower culture, strategy and business policies at a level sufficient
to attract and retain directors and officers who are needed to run the Company successfully. AboitizPower rewards its individual Directors and
Officers based on ability to execute his duties and responsibilities. It is the Company’s philosophy to reward based on individual performance
measured through Success Factors and all Human Resources management metrics. Performance is evaluated and compensation is reviewed
on an annual basis. AboitizPower ensures that it pays its directors and officers competitively by comparing rates with other Philippine-based
companies through participation in and access to market salary surveys.
AboitizPower is compliant with the requirement for the members of the Board of Directors and management to report or disclose to the SEC
and the PSE, within five trading days from the disclosed transaction, any acquisition, disposal or change in their beneficial shareholdings in
AboitizPower. This is to monitor and ensure a proper relationship between Directors and the Company. Under its Amended Manual, Directors
have a duty at all times to avoid conflicts of interest. Thus, a Director must not do anything for and on behalf of Aboitiz Power where his motivation
and loyalties would be divided in that his own self-interest, or someone connected or related to him, may be given equal or higher stature to that
of the Company. Directors have a duty to account to the Company any profit or gain he may have had as a result of such. In consequence thereof,
AboitizPower may exercise certain rights against the director for acting in circumstances such as conflict of interest.
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54 ABOITIZ POWER CORPORATION
Transparency of the Audit Process
The Company’s Corporate Audit Team and the Board Audit Committee conduct the Company’s internal audit operation. The Corporate Audit Team
conducts its own internal audit, providing an independent review of the Company’s organizational and operational controls and risk management
policies to ensure its effectiveness and appropriateness, and that they are complied with. The Corporate Audit Team reports to the Board Audit
Committee.
With an independent audit function, the Corporate Audit Team provides reasonable assurance that the Company’s key organizational and
procedural controls are effective, appropriate and complied with. The team is also responsible for identifying and evaluating significant risk
exposures and contributes to the improvement of risk management and control systems. They do this by assessing adequacy and effectiveness of
controls covering the organization’s governance, operations and information systems.
The Corporate Audit Team adheres to established professional standards and such standards promoted by the Institute of Internal Auditors’ Code
of Ethics.
The Board Audit Committee oversees the Company’s internal control, financial reporting and risk management processes on behalf of the Board of
Directors. The Audit Committee reviews and monitors, among others, the integrity of all financial reports and ensures their compliance with both
the internal financial management manual and pertinent accounting standards, including regulatory requirements. The role and responsibilities
of the Board Audit Committee are clearly defined in the Company’s Amended Manual, specifically the Audit Committee Charter.
Aside from an internal audit, an annual external audit of the Company is conducted by SGV, which has been Aboitiz Power’s external auditor for
the last 11 years. Mr. J. Carlitos G. Cruz, who is the current audit partner of AboitizPower, has served as such since 2009. The external auditors
are invited to attend the Board Audit Committee meetings and respond to appropriate questions during the meeting. They are also given the
opportunity to make a statement if they so desire. In instances when the external auditor suspects fraud or error during its conduct of audit, they
are required to disclose and express their findings on the matter.
Linkages to the Company
AboitizPower’s company website contains up-to-date corporate information on the Company, including details on its business operations. The
Investor Relations page of the company website provides financial highlights, recent press releases, and information on the shareholding structure
and organizational structure of the Company, among others. An electronic copy of the Annual Report can also be downloaded from the website.
In addition, Management regularly provides updated news on the company website.
The contact details of the Aboitiz Power Investor Relations Office is available on the website, together with that of the AboitizPower point person
for shareholder enquires.
Related Parties Transaction Disclosure
The nature and extent of transactions with affiliated and related parties are communicated annually to AboitizPower shareholders through its
Information Statement, Annual Report and Audited Financial Statements. AboitizPower and its subsidiaries in the Aboitiz Power Group, enter
into transactions with its parent, associates and other related parties, principally involving advances, professional fees and office rental fees. These
are made on an arm’s length basis and at current market prices pegged at the time of the transactions. AboitizPower also enters into service and
management contracts with its parent company, its subsidiaries and affiliates for corporate center services, such as human resources, internal
audit, legal and corporate services, treasury and corporate finance services and information technology infrastructure services. To enable the
Aboitiz Group to realize cost synergies, the Company obtains these services from the AEV Corporate Center. Through these services, it gains
access to a pool of highly qualified professionals with business expertise specific to the businesses of the Company. Transactions are priced on a
cost recovery basis, where costs are always benchmarked against third party rates to ensure competitive pricing. To ensure quality of service, the
Company enters into Service Level Commitments for these services.
THE ROLE OF STAKEHOLDERS IN CORPORATE GOVERNANCE
AboitizPower recognizes that corporate governance principles revolve around relationships between and among the many stakeholders and the
goals for which a corporation is governed. AboitizPower does not stand-alone in its marketplace. Its principal stakeholders, the shareholders,
management teams, employees, Board of Directors, financing providers, regulators and the community, all work together on the road to
AboitizPower’s success. This is why AboitizPower makes sure that its various stakeholders are dealt with fairly and honestly, consistent with its
commitment to service.
Employee Relations
Consistent with AboitizPower’s core values, including respect for individuals and diverse cultural background, the Company is committed to a
workplace in which all individuals are treated with dignity and respect in accordance with the law, with the Code and with its corporate culture.
The Company promotes a safe and healthy working environment, one that provides equal employment opportunities and prohibits discriminatory
practices, such as harassment. AboitizPower also provides a healthy balance between financial and non-financial rewards by offering fair and
competitive compensation. A performance-based compensation scheme has been adopted for AboitizPower Directors and Officers, in accordance
with the Company’s long-standing philosophy to reward officers and employees based on performance. Other non-monetary benefits are also
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 55
provided, including financing plans for employees who wish to acquire shares of the Company (especially when the Company went public).
AboitizPower likewise maintains a funded, non-contributory, defined benefit plan administered by Trustees, which covers all regular and full-time
employees.
AboitizPower believes in inspiring its employees, developing their talents and recognizing their value as business partners. The Company has a
well-entrenched commitment to its employees’ growth, both professionally and personally, and finds opportunities to deepen their understanding
of the Company’s value-creating proposition. It cultivates life-long learning through high-impact, quality training programs designed to support
employee career development path and personal growth. Exemplary performers are developed through a talent management program, which is
designed for the next generation of corporate leaders.
Management has started a practice of linking the Board of Directors with key officers of the AboitizPower group providing informal settings for
exchanges between the Board and the Management Team of its Business Units. The Office of the Chairman organizes an annual dinner attended
by the member of the Board and Aboitiz Power Group key Officers and the rest of the Management Team.
Relations with Shareholders, Customers, Suppliers, Business Partners and Financing Providers
AboitizPower understands the value of its shareholders and ensures that its shareholders and investors receive timely, relevant, balanced, highquality
and understandable information about the Company. The Investor Relations Office assures shareholders and investors of an easy and
direct access to officially designated spokespersons for clarifying information and issues as well as dealing with investor concerns. AboitizPower’s
commitment to its shareholders is reiterated annually through its comprehensive reports on its operations, particularly the Company’s Report to
Stockholders in the Annual Report and through its investor’s briefing.
The Investor Relations Office conducted investors’ briefings in May 8, 2009, August 12, 2009 and November 4, 2009 as a forum for investors to
discuss the First Quarter 2009 Financial and Operating Results, First Half 2009 Financial and Operating Results and Third Quarter 2009 Financial
and Operating Results.
In dealings with its customers, suppliers and business partners, AboitizPower abides by the Fair Dealing Policy found in its Code of Ethics and
Business Conduct. The basis of the policy is the Company’s objective to out-perform its competition fairly and honestly through superior
performance. Every employee, officer and director therefore always prioritizes the best interests of the Company’s clients and endeavors to deal
fairly with suppliers, competitors, the public and one another. No one should take unfair advantage of anyone through manipulation, abuse of
privileged information, misrepresentation of facts or any other unfair dealing practice.
The Company discloses its various financial responsibilities and strives to assure its shareholders of their timely performance through the Annual
Report of the Company. The Annual Report includes a Report by the Chief Financial Officer, highlighting efforts to assure its shareholders of
continued economic value. The Audited Financial Statements of AboitizPower also gives a clear view of AboitizPower’s financial condition. All
pending legal and tax proceedings, tax assessment notices and voluntary assessment program or availments that are potentially material to
AboitizPower’s business are disclosed through the Legal Proceedings portion of the Information Statement of AboitizPower.
Relations with the Community and the Environment
The Company’s broader obligations to society and the community are addressed by the Company’s continued compliance with its Amended Manual,
the relevant laws and regulations of the power industry and the principles of sustainable development. AboitizPower recognizes that as an energy
company, its operations have an impact on society and on the environment. There is more to its business activities than just building and operating
power plants and generating and selling electricity. Aside from ensuring that its generation and distribution facilities are operated efficiently and
meeting government’s environmental standards, AboitizPower is committed to sharing benefits of its success to its host communities so that
the host communities develop alongside the Company. The Company’s subsidiaries sponsor sustainable and relevant community development
projects in partnership with local government units and other local stakeholders to help address economic, socio-cultural, education, health, and
environmental concerns of their host communities.
The Company’s concrete efforts to address environmental issues are regularly reported through the company website, its Information Statement
and Annual Report. The Company’s Cleanergy Brand, adopted by the Company to concretize its commitment to sustainability, has been developed
and expanded as an entrenched corporate value. For 2009, AboitizPower refreshed its commitment to sustainability with the Cleanergy Manager
organizing a climate change briefer road show for the Aboitiz Power group of companies to increase, on a group level, awareness on climate
change issues. The Cleanergy Manager is currently creating an inventory of the Company’s collective carbon emissions as a baseline for an
ambitious group-wide carbon emission reduction program. This long-term commitment to sustainability is now a cornerstone of the Company’s
corporate governance culture for future generations.
SEC FORM 20 - IS (INFORMATION STATEMENT)

56 ABOITIZ POWER CORPORATION
Directors and Executive Officers
(1) Directors for 2009-2010
Below is a list of AP’s directors for 2009-2010 with their corresponding positions and offices held for the past five years. Except for Mr.
Jakob Disch who was elected last March 10, 2010 to serve the unexpired term of the late Mr. Ernesto R. Aboitiz, the directors assumed their
directorship during AP’s annual stockholders’ meeting in 2009 for a term of one year.
ENRIQUE M. ABOITIZ, JR.,
Chairman of the Board of Directors
Chairman - Board Strategy Committee
Member - Board Corporate Governance
Committee
JON RAMON ABOITIZ
Vice Chairman of the Board of Directors
Chairman - Board Corporate Governance
Committee
Member - Board Strategy Committee
ERRAMON I. ABOITIZ
President & Chief Executive Officer;
Member – Board Strategy Committee, Board
Risk Management Committee
MIKEL A. ABOITIZ
Director;
Member – Board Strategy Committee, Board
Audit Committee
JAIME JOSE Y. ABOITIZ
Director; Executive Vice President & Chief
Operating Officer - Power Distribution Group
ANTONIO R. MORAZA
Director; Executive Vice President & Chief
Operating Officer - Power Generation
Group; Chairman – Board Risk Management
Committee;
JOSE R. FACUNDO
Independent Director; Chairman- Board Audit
Committee;
Member – Board Risk Management Committee,
Board Corporate Governance Committee
Mr. Aboitiz, Filipino, 56 years old, has served as Director and Chairman of the Board of AP since 2009. He is also Director and Senior
Vice President of Aboitiz and Company, Inc. (ACO); Director of Aboitiz Equity Ventures, Inc. (AEV), Aboitiz One, Inc. (AOI), AP
Renewables, Inc. (APRI) and Manila Oslo Renewable Enterprise (MORE); President and Chief Executive Officer of Aboitiz Transport
System (ATSC) Corporation; President of Aboitiz Jebsen Bulk Transport Corporation (ABOJEB), EMS Crew Management Philippines,
Inc.; President and Chairman of Jebsens Maritime, Inc.; Chairman of the Board of Filscan Shipping Inc., General Charterer Inc.,
Overseas Bulk Transport, Inc. and Viking International Carriers, Inc. He graduated with a degree of Bachelor of Science in Business
Administration (Major In Economics) from Gonzaga University, Spokane, Washington, U.S.A.
Mr. Aboitiz, Filipino, 61 years old, has been a Director of AP since 1998. He served as Chairman of AP from 1998 until 2008. He
had served in various capacities in Davao Light & Power Company, Inc. (DLP) since 1972: Director from 1972 to present, Chairman
of the Board from 1986 to 1987, President and Chairman of the Board from 1988 to 2001, President and Chief Executive Officer in
2002 and Chairman and Chief Executive Officer from 2003 until March 2009. He also served in Cotabato Light & Power Company,
Inc. (CLP) in the following capacities: Chairman of the Board from 1980 to 1987, President and Chairman of the Board from 1988 to
1990, Chairman of the Board and Chief Executive Officer from 1991 to 1997, Chairman of the Board from 1998 to 1999. He was also
Director of San Fernando Electric Light and Power Company, Inc. (SFELAPCO) from 2002 to 2008. He is also Chairman of the Board
of Directors of AEV, ACO, ABOJEB and ATSC; Vice Chairman of the Board of Directors of Union Bank of the Philippines (UBP) and
City Savings Bank (CSB); President and Trustee of Aboitiz Foundation, Inc.; and Trustee and Vice President of the Ramon Aboitiz
Foundation, Inc. He holds a degree in Commerce from the University of Santa Clara in California, U.S.A.
Mr. Aboitiz, Filipino, 53 years old, has been a Director and the President/Chief Executive Officer of AP since 1998. He is presently
Chairman of the Board of DLP, which he has served in various capacities since 1983: as Treasurer from 1983 to 1987, as Executive
Vice President/Treasurer from 1988 to 1989, and as Executive Vice President from 1990. He has been a Director of SFELAPCO
since 2002 and its Chairman of the Board from 2003 to the present. He is also Chairman of the Board of CLP, which he also
served in the following capacities since 1980 up to the present: Executive Vice President/Treasurer from 1988 to 1990, President
and Chief Operating Officer from 1991 to 1999, Chairman of the Board from 2000 to present. He is also currently the President
and Chief Executive Officer of AEV and ACO. He is Chairman of the Board of Directors of Subic Enerzone Corporation (SEZ),
Balamban Enerzone Corporation (BEZ), Mactan Enerzone Corporation (MEZ), SN Aboitiz Power-Magat, Inc. (SNAP-Magat),
SN Aboitiz Power-Benguet, Inc. (SNAP-Benguet), MORE, Abovant Holdings, Inc. (ABOVANT), CLP, Aboitiz Renewables, Inc.
(ARI) (formely Philippine Hydropower Corporation), Therma Power, Inc. (TPI), Therma Marine, Inc. (Therma Marine), Visayan
Electric Company, Inc. (VECO), SFELAPCO, CSB and DLP; Director of Pilmico Foods Corporation (PFC), Aboitiz Land, Inc.
(AboitizLand), UBP, Southern Philippines Power Corporation (SPPC), STEAG State Power, Inc. (STEAG Power) and Aboitiz
Energy Solutions, Inc. (AESI); and Chairman of the Board of Trustees of Aboitiz Foundation. He received a Bachelor of Science
degree in Business Administration, major in Accounting and Finance from Gonzaga University, Spokane, Washington, U.S.A.
Mr. Aboitiz, Filipino, 55 years old, has been a Director of AP since 1998. He has also been a Director of CLP since 1980 and DLP since
1993. He is also a Director and Senior Vice President, Chief Information Officer and Chief Strategy Officer of AEV; Director and Senior
Vice President for Strategy of ACO; President & Chief Executive Officer of CSB; Director of DLP, AboitizLand, Inc., FBMA Marine,
Inc., PFC, Pilmico Animal Nutrition Corporation (PANC), Cebu Praedia Development Corporation, Aboitiz Construction Group, Inc.
(ACGI), AP Renewables, Inc. (APRI), AEV Aviation, Inc., Metaphil International, Inc., TPI, Therma Marine, and CLP. He holds a degree
in Bachelor of Science major in Business Administration from Gonzaga University, Spokane, U.S.A.
Mr. Aboitiz, Filipino, 48 years old, was a Director of AP from 2004 to April 2007. He was again elected as Director of AP in 2009. He is
also the Executive Vice President and Chief Operating Officer of VECO; President and Chief Executive Officer of CLP, SEZ, DLP and
Cotabato Ice Plant. Inc. (CIPI); MEZ, BEZ; Director of ARI, Hedcor Sibulan, Inc. (Hedcor Sibulan), Cebu Private Power Corporation
(CPPC), SFELAPCO, Hedcor, Inc. (Hedcor) and AESI. He holds a degree in Mechanical Engineering from Loyola Marymount
University in California and a master’s degree in Management from the Asian Institute of Management.
Mr. Moraza, Filipino, 53 years old, has been a Director of AP since 1999. He is a Director of AEV, Metaphil International, Inc., (Metaphil,
Inc.), STEAG Power, Western Mindanao Power Corporation (WMPC), Luzon Hydro Corporation (LHC), VECO; President and CEO of
ARI and ABOVANT; Chairman of the Board of Directors of APRI, East Asia Utilities Corporation (EAUC), PFC and PANC; Chairman and
CEO of Hedcor Sibulan, and Hedcor; Chairman and President of CPPC; Vice-Chairman of ACGI and AboitizLand; President of TPI,
Therma Marine, SNAP-Magat, SNAP-Benguet, MORE; Director and Senior Vice President of ACO, Chairman of Terminal Facilities &
Services Corporation. From 1982 to 1992, he was Vice President for Administration and Finance of Metaphil, Inc., an ACO subsidiary
engaged in industrial construction. He holds a degree in Business Management from the Ateneo de Manila University and attended
the Asian Institute of Management.
Mr. Facundo, Filipino, 71 years old, has been an Independent Director of AP since 2008. He currently serves as a member of the Board of
Directors of Security Bank Corporation. He is also a member of the Board of Directors of Siemens Philippines, Inc., and an Independent
Director of Alaska Milk Corp. Mr. Facundo has an extensive career in banking. He had served as a member of the Board of Directors
and Executive Committee and as President of BPI Capital Corporation. He was also a member of the Board of Directors and Executive
Committee of the Bank of the Philippine Islands (BPI). Prior to BPI’s merger with CityTrust Banking Corp. (CityTrust), Mr. Facundo served
as President and CEO of CityTrust and was a member of its board and executive committees. He was also a Senior Managing Director of
Ayala Corporation and formerly a Senior Officer of Citibank Manila. He also served as member of the Board of Directors of Temic Phil.
Inc, and Chairman and member of the Board of Directors of the Philippine Clearing House. He is likewise a member of the Philippine
Business for Social Progress, Junior Achievement of the Philippines and the Rotary Club. He holds a degree in B. S. Engineering and a
postgraduate degree in Mathematics and Statistics.
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ANNUAL REPORT 2009 57
ROMEO L. BERNARDO
Independent Director;
Member – Board Audit Committee, Board
Corporate Governance Committee
JAKOB DISCH
Independent Director
Mr. Bernardo, Filipino, 55 years old, has been an Independent Director of AP since 2008. He is currently the President of
Lazaro Bernardo Tiu and Associates (LBT), a boutique financial advisory firm based in Manila. He is also GlobalSource
economist in the Philippines. He does World Bank and Asian Development Bank-funded policy advisory work, Chairman of
ALFM Peso, Dollar and Euro Bond Funds, and Philippine Stock Index Fund, the largest mutual fund family in the country. He is
likewise a Director of several companies and organizations including Globe Telecom, BPI, NASDAQ-listed PSi Technologies
Holdings, Inc., RFM Corporation, Philippine Investment Management, Inc., Philippine Institute for Development Studies
(PIDS), Ayala Life Assurance Incorporated/Ayala Plans, Inc., National Reinsurance Corporation of the Philippines and
Institute for Development and Econometric Analysis. He previously served as Undersecretary of Finance and as Executive
Director of the Asian Development Bank. He was an Advisor of the World Bank and the IMF (Washington D.C.), and served as Deputy
Chief of the Philippine Delegation to the GATT (WTO), Geneva. He was formerly President of the Philippine Economics Society;
Chairman of the Federation of ASEAN Economic Societies and a Faculty Member (Finance) of the University of the Philippines. Mr.
Bernardo holds a degree in Bachelor of Science in Business Economics from the University of the Philippines (magna cum laude)
and a Masters degree in Development Economics at Williams College (top of the class) from Williams College in Williamstown,
Massachusetts.
Mr. Disch, a Swiss national, 55 years old, has been an Independent Director of AP since March 2010. He is the Chairman, Chief
Executive Officer and Founder of Convergence GmbH, an energy consulting and trading firm located at Wintherthur, Switzerland.
He gained extensive experience in the energy business from serving in various capacities in the ABB group of companies, among
others as President for Global Responsibility of ABB Enertech Ltd.; Executive Vice President of Power Generation and Member of
the Asia Pacific Regional Management of ABB Asia Pacific Ltd.; Chairman of the Board of ABB India and Singapore; President of ABB
Power Generation Sdn. Bhd in Malaysia; and Vice President for Marketing, Sales and Project Management of ABB Kraftwerke AG of
Baden, Germany.
Nominations for Independent Directors and Procedure for Nomination
The procedure for the nomination and election of the independent directors is in accordance with SRC Rule 38 of the Securities Regulation Code
(SRC Rule 38) and AP’s “Guidelines for the Constitution of the Nomination Committee and the Nomination and Election of Independent Directors”
(the Guidelines). These Guidelines were duly approved by the AP Board.
Nominations for independent directors were accepted starting January 1, 2010 as provided for in Section 2 of the Guidelines and the table for
nominations was closed on February 15, 2010 as provided for in Section 3 of the Guidelines.
SRC Rule 38 and the Guidelines further require that the Board Corporate Governance Committee shall meet to pre-screen all nominees and
submit a Final List of Candidates to the Corporate Secretary no later than February 22, 2010. Such Final List will be included in the Corporation’s
Preliminary and Definitive Information Statements. Only nominees whose names appear on the Final List shall be eligible for election as
independent directors. No other nominations shall be entertained after the Final List of nominees has been prepared. The name of the person or
group of persons who recommend the nomination of an independent director shall be identified in such report, including any relationship with the
nominee. All these procedures were complied with.
In approving the nominations for Independent Directors, the Board Corporate Governance Committee considered the guidelines on the
nominations of Independent Directors prescribed in SRC Rule 38, the Guidelines and AP’s Revised Manual on Corporate Governance.
No nominations for independent director shall be accepted at the floor during the stockholders’ meeting at which such nominee is to be elected.
However, independent directors shall be elected in the stockholders’ meeting during which other members of the Board are to be elected.
Messrs. Jose R. Facundo, Romeo L. Bernardo and Jakob Disch are the nominees for Independent Directors of AP. They are neither officers nor
employees of AP or its affiliates, and do not have any relationship with AP which would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. Attached as annexes “A-1”, “A-2” and “A-3” are the Certifications of Qualification of the Nominees
for Independent Directors.
AP stockholders Esmeralda Dano, Joanna Abay and Maricar Le have respectively nominated Messrs. Facundo, Bernardo and Disch as AP’s
independent directors. Neither nominating stockholder has any relation to Mr. Facundo, Mr. Bernardo or Mr. Disch.
Other Nominees for Election as Members of the Board of Directors
As conveyed to the Corporate Secretary, the following have also been nominated as members of the Board of Directors for the ensuing year (2010-
2011):
Jon Ramon Aboitiz
Erramon I. Aboitiz
Antonio R. Moraza
Mikel A. Aboitiz
Enrique M. Aboitiz Jr.
Jaime Jose Y. Aboitiz
Pursuant to Sec. 7, Art. I of the Amended By-Laws of AP, nominations for members of the Board of Directors other than Independent Directors for
the ensuing year must be received by the Corporate Secretary no less than 15 working days prior to the regular annual stockholders’ meeting on
May 17, 2010
Except for the information regarding which are found hereunder, information regarding the positions and offices held by the abovementioned
nominees are integrated in Item 5 (a)(1) hereof.
SEC FORM 20 - IS (INFORMATION STATEMENT)

58 ABOITIZ POWER CORPORATION
Officers for 2009-2010
Below is a list of AP’s officers for 2009-2010 with their corresponding positions and offices held for the past five years. The officers assumed their
positions during AP’s annual organizational meeting in 2009 for a term of one year.
ERRAMON I. ABOITIZ
President & Chief Executive Officer;
Member – Board Strategy Committee, Board
Risk Management Committee
ANTONIO R. MORAZA
Director; Executive Vice President & Chief
Operating Officer - Power Generation
Group; Chairman – Board Risk Management
Committee;
JAIME JOSE Y. ABOITIZ
Director; Executive Vice President & Chief
Operating Officer - Power Distribution Group
JUAN ANTONIO E. BERNAD
Executive Vice President - Strategy and
Regulation
Ex-Officio Member - Board Audit Committee,
Board Strategy Committee, Board Risk
Management Committee
LUIS MIGUEL O. ABOITIZ
Senior Vice President – Power Marketing and
Trading
IKER M. ABOITIZ
First Vice President/Chief Financial Officer/
Corporate Information Officer
GABRIEL T. MAÑALAC
First Vice President-Treasurer
RAYMOND E. CUNNINGHAM
First Vice President – Business Development
MA. CHONA Y. TIU
Vice President and Chief Financial Officer -
Power Distribution Group
MANUEL R. LOZANO
First Vice President & Chief Financial Officer,
AP Generation
Mr. Aboitiz, Filipino, 53 years old, has been a Director and the President/Chief Executive Officer of AP since 1998. He is presently
Chairman of the Board of DLP, which he has served in various capacities since 1983: as Treasurer from 1983 to 1987, as Executive Vice
President/Treasurer from 1988 to 1989, and as Executive Vice President from 1990. He has been a Director of SFELAPCO since 2002
and its Chairman of the Board from 2003 to the present. He is also Chairman of the Board of CLP, which he also served in the following
capacities since 1980 up to the present: Executive Vice President/Treasurer from 1988 to 1990, President and Chief Operating Officer
from 1991 to 1999, Chairman of the Board from 2000 to present. He is also currently the President and Chief Executive Officer of
AEV and ACO. He is Chairman of the Board of Directors of SEZ, BEZ, MEZ, SNAP-Magat, SNAP-Benguet, MORE, ABOVANT, CLP,
ARI, TPI, Therma Marine, VECO, SFELAPCO, CSB and DLP; Director of PFC, AboitizLand, UBP, SPPC, STEAG Power, and AESI; and
Chairman of the Board of Trustees of Aboitiz Foundation. He received a Bachelor of Science degree in Business Administration, major
in Accounting and Finance from Gonzaga University, Spokane, Washington, U.S.A.
Mr. Moraza, Filipino, 53 years old, has been a Director of AP since 1999. He is a Director of AEV, Metaphil International, Inc.,
STEAG Power, WMPC, LHC, VECO; President and CEO of ARI and ABOVANT; Chairman of the Board of Directors of APRI,
EAUC, PFC and PANC; Chairman and CEO of Hedcor Sibulan, and Hedcor; Chairman and President of CPPC; Vice-Chairman
of ACGI and AboitizLand; President of TPI, Therma Marine, SNAP-Magat, SNAP-Benguet, MORE; Director and Senior Vice
President of ACO, Chairman of Terminal Facilities & Services Corporation. From 1982 up to 1992, he was Vice President
for Administration and Finance of Metaphil, Inc., an ACO subsidiary engaged in industrial construction. He holds a degree
in Business Management from the Ateneo de Manila University and attended the Asian Institute of Management.
Mr. Aboitiz, Filipino, 48 years old, was AP Director from 2004 to April 2007. He was again elected as Director of AP in 2009. Between
2000 and 2005, he served as CLP Director, Executive Vice President and Chief Operating Officer. He is also President and Chief
Executive Officer of SEZ, CLP, DLP and CIPI; President of AESI, MEZ and BEZ. He is the Executive Vice President and Chief Operating
Officer of VECO. He is also the Director of ARI, Hedcor Sibulan, CPPC, SFELAPCO and Hedcor. He holds a degree in Mechanical
Engineering from Loyola Marymount University in California and a master’s degree in Management from the Asian Institute of
Management.
Mr. Bernad, Filipino, 53 years old, has been AP’s Executive Vice President for Strategy and Regulation since 2009. He served as AP
Director since 1998 until May 18, 2009. He was AP Executive Vice President/Chief Financial Officer/Treasurer from 1998 to 2003
and has been AP’s Executive Vice President for Regulatory Affairs/Chief Financial Officer from 2004 to 2007. He was Senior Vice
President – Electricity Regulatory Affairs of AEV since 2004 to May 2007 and mainly as AEV’s Senior Vice President effective May 21,
2007. From 1995 to 2004, he was Senior Vice President and Chief Financial Officer of AEV. From 1992 to 1995, he was Vice President/
Treasurer of DLP, and a DLP Director and its Senior Vice President/Chief Financial Officer from 1996 to 2008. He is now Executive Vice
President-Regulatory Affairs of DLP. He was also Vice President/Treasurer of CLP between 1992 and 1997 and Senior Vice President/
Chief Operating Officer from 1998 to 2008. He is also the Senior Vice President of VECO; Director of CLP, Southeast Asia Orient
Corporation, AEV Aviation, Inc., APRI, SFELAPCO, UBP; He is also the Director and Executive Vice President for Regulatory Affairs
of DLP; Director and Vice President of CPDC and Vice President and Treasurer of CIPI; Chairman of the Board of Trustees of ACO
Retirement Fund and Trustee of Aboitiz Foundation. He has a degree in Economics from the Ateneo de Manila University and a
master’s degree in Business Administration at The Wharton School, University of Pennsylvania, U.S.A.
Mr. Aboitiz, Filipino, 45 years old, has been AP Senior Vice President - Power Marketing and Trading since 2009. He was Director and
Vice President for Power Generation from 1998 to April 2007. Between 1990 and 1992, he was Assistant Vice President of DLP, and
Director since 1996. He was also a Director of CLP from 1998 to 2001; First Vice President of AEV and ACO; Director and Senior Vice
President – Business Development of Hedcor; Director and Vice President/Treasurer of ARI; Director of SEZ, APRI, PANC, PFC, SNAP-
Benguet, SNAP-Magat, MORE, DLP, ABOVANT, Hedcor Sibulan, SFELAPCO, STEAG Power, and WMPC. He is also the Director and
Treasurer of Hedcor Tamugan, Inc. (Hedcor Tamugan); Director and Vice President of TPI and Therma Marine; Vice President for
Open Market Operations of AESI and Treasurer of LHC. He holds a degree in Computer Science and Engineering from Santa Clara
University, California, U.S.A. and a masters degree in Business Administration from the University of California in Berkeley, U.S.A.
Mr. Aboitiz, Filipino, 37 years old, has been AP’s First Vice President and Chief Financial Officer since August 29, 2007. He likewise acts
as AP’s Corporate Information Officer. He is currently a Director and Chief Financial Officer of ABOVANT, and CPPC; Chief Financial
Officer of EAUC, Chief Financial Officer and Treasurer of Hijos de F. Escaño; Director of FBMA; CLP; SPPC; Hedcor Benguet, Inc.
(Hedcor Benguet); TPI; Therma Marine; and ARI. He has an extensive professional experience in corporate finance within and outside
the Aboitiz Group. Prior to his appointment as Chief Financial Officer, he was the Chief Financial Officer of ACGI and a member of the
Board of Directors and Chief Financial Officer of FBMA Marine, Inc. He graduated cum laude from Boston College with a degree in
Bachelor of Science in Business Management major in Finance.
Mr. Mañalac, Filipino, 53 years old, has been the Treasurer of AP since 2004 and is now its First Vice President-Treasurer. He was
Treasurer of DLP from 1999 to 2001 and DLP Vice President-Treasurer since 2002. He has been Treasurer of CLP since 2000. He
is also Senior Vice President - Group Treasurer of AEV. He is also a Trustee of ACO Retirement Fund. He graduated cum laude
from the De La Salle University with degrees in Bachelor of Science in Finance and Bachelor of Arts in Economics. He obtained his
Masters of Business Administration in Banking and Finance from the Asian Institute of Management and was awarded the Institute’s
Scholarship for Merit.
Mr. Cunningham, American, 67 years old, has been AP’s First Vice President - Business Development since 2009. He has extensive
experience in the power industry in the Philippines and the US, especially in power project planning, regulatory approvals, financing,
design, construction and operations. He was previously Business Development, Acquisitions and Special Projects Manager of
CalEnergy International Services, Senior Vice President and Project Director of San Roque Power Corporation, Vice President of
AT&T Capital Corporation and Vice President for Engineering & Operations of Consolidated Power Company. He earned his Bachelor
of Science in Engineering degree from the US Coast Guard Academy. He also earned a Naval Engineering degree and a Masters of
Science in Mechanical Engineering from the Massachusetts Institute of Technology.
Ms. Tiu, Filipino, 52 years old, has been Vice President and Chief Financial Officer for the Power Distribution Group since 2009. She
joined the Aboitiz Group in 1977 as Research Assistant of the Corporate Staff Department of ACO. She rose from the ranks and
held various finance positions in different companies within the Aboitiz Group, including ACGI and AboitizLand. She joined the AP
Group when she was appointed as Vice President – Administration and Chief Finance Officer of AP affiliate, VECO, in 2007. She is
now a Director, Vice President/Chief Financial Officer/ Treasurer of BEZ; Vice President – Chief Financial Officer of CLP and DLP; and
Director, Vice President and Treasurer of CSB Land, Inc.
Mr. Lozano, Filipino, 39 years old, has been Chief Financial Officer for AP Generation since 2009. He is concurrently Chief Financial
Officer of APRI. He was the CFO and Director of Paxy’s Inc., a PSE-listed company focused on BPO industry and other IT-related
courses within Asia Pacific region before he joined the Aboitiz Group. He has a wide range of experience working in several
management institutions. He earned his Bachelor of Science in Business Administration from the University of the Philippines -
Diliman and his MBA from The Wharton School, University of Pennsylvania.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 59
ALVIN S. ARCO
Vice President- Regulatory Affairs
WILFREDO R. BACAREZA, JR.
Vice President
RAUL C. LUCERO
Vice President for Engineering -Power
Distribution Group
ANASTACIO D. CUBOS, JR.
Vice President, Special Projects
CRISTINA BRIONES- BELORIA
Assistant Vice President-Controller
PAQUITA S. TIGUE- RAFOLS
Assistant Vice President for Accounting of AP
Generation - Mindanao
ARAZELI L. MALAPAD
Assistant Vice President for Accounting of AP
Generation - Luzon
CARLOS COPERNICUS S. PAYOT
Assistant Vice President – Controller for
Distribution
CLOVIS B. RACHO
Assistant Vice President for Procurement and
Logistics -Power Distribution Group
ALADINO D. BORJA JR.
Assistant Vice President for Information
Services-Power Distribution Group
RONALD ENRICO V. ABAD
Assistant Vice President –
Project Development
MA. KRISTINA C.V. RIVERA
Assistant Vice President – HRQ,
AP Generation
ANA LIZA M. ALETA
Assistant Vice President –
IT Director, AP Generation
CRISANTO R. LASET JR.
Assistant Vice President for Power Economics &
Distribution System Planning
Mr. Arco, Filipino, 49 years old, has been Vice President for Regulatory Affairs of AP since April 2007. He was Accounting Manager of
AP from 1998 to 1999, Assistant Vice President – Finance from 2000 to 2004 and promoted to Vice President – Finance since 2005.
He was Chief Accountant of DLP in 1997, Accounting Manager from 1998 to 1999, Assistant Vice President – Finance from 2000 to
2004 and Vice President – Finance since 2005. He served as Assistant Vice President – Finance of CLP between 2002 and 2005 and
Vice President – Finance since 2006. He is also Assistant Vice President for Finance of AESI and Vice President - Regulatory Affairs
of DLP. He is a Certified Public Accountant. He holds a degree in Accountancy from the University San Jose-Recoletos, Cebu City.
Mr. Bacareza, Filipino, 32 years old, has been Vice President of AP since 2008. He was formerly the President and Chief Executive
Officer of the Philippine National Oil Company-Development Management Corporation (PNOC-DMC) from 2006 to 2007 and
President and Chairman of the Land Equity Assets Development Corporation (LEAD Corp.) and Baclands Properties Corporation
from 2003 to 2007. In 2005, he served as legal adviser of the Philippine National Construction Corporation (PNCC) and Metropolitan
Waterworks and Sewerage System (MWSS). He was also a Government Corporate Attorney II in the Office of the Government
Corporate Counsel from 2004 to 2005 and Legal Consultant of National Power Corporation from 2003 to 2004. He is a graduate of
the Ateneo Law School with a degree of Juris Doctor.
Mr. Lucero, Filipino, 41 years old, has been Vice President for Engineering - Power Distribution Group of AP since
2009. He joined the Aboitiz Group in 1990 via DLP. He became Vice President for Engineering of DLP in 2000. He was
involved in the successful bid by AEV for the management of Subic Bay Metropolitan Authority’s (SBMA) distribution
system in the Subic Bay Freeport Zone (SBFZ) in 2003. He was promoted to Senior Vice President of DLP in 2004.
In the same year, he was brought into VECO to help transform VECO’s engineering group. He was officially transferred to VECO in
2008. He is a graduate of Bachelor of Science in Electrical Engineering from the University of San Jose-Recoletos.
Mr. Cubos, Filipino, 58 years old, has been Vice President for Special Projects of AP since 1998. From 1989 to 1997, he was Assistant
Vice President – Engineering of DLP. He was also DLP Vice President – Engineering from 1998 to 2000 and DLP Senior Vice President
– Special Projects since 2001. He is a Consultant of Hedcor and is a member of the Technical Executive Committee of CLP. He acts
as a consultant to the Republic of Palau for its generation projects. His experience in the power industry dates back to 1972 when he
joined DLP as an engineer. He holds a degree in electrical engineering from the Cebu Institute of Technology and a master’s degree
in Business Administration from the Ateneo de Davao University.
Ms. Beloria, Filipino, 47 years old, has been Assistant Vice President and Controller of AP since June 10, 2008. She was the Plant
Controller of EAUC and CPPC from 2000 to 2008. She held various consulting engagements in Tokyo, Japan from 1999 to 2000. She
also served as Senior Auditor in the E.C. Ortiz and Co., CPAs in Chicago, Illinois, USA. She holds a degree in Bachelor of Science in
Commerce, Major in Accounting from the University of San Jose-Recoletos. She passed on first sitting the Philippine CPA Licensure
Exam and Uniform CPA Licensure Examination given in Chicago, Illinois, USA.
Ms. Rafols, Filipino, 45 years old, has been Assistant Vice President for Accounting of AP Generation - Mindanao since 2009. She
joined the Aboitiz Group as Finance and Accounting Manager of the Aboitiz shipbuilding company, FBMA Marine, Inc. She was
Assistant Vice President - Finance and Controller of FBMA prior to her appointment in AP. She was also connected with Trans-Asia
Shipping Lines, Inc. and Price Waterhouse/Joaquin Cunanan & Co. before she joined the Aboitiz Group. She is a Certified Public
Accountant. She holds degrees in Bachelor of Science in Commerce, Major in Accounting from St. Theresa’s College (magna cum
laude) and Bachelor of Laws from the University of San Carlos.
Ms. Malapad, Filipino, 41 years old, has been Assistant Vice President for Accounting of AP Generation - Luzon since 2009. She has
16 years of extensive experience performing finance and accounting managerial functions in various private companies. She is a
Certified Public Accountant and a member of the Philippine Institute of Certified Public Accountants. She earned her Bachelor of
Science in Commerce, major in Accounting, from Immaculate Conception College.
Mr. Payot, Filipino, 45 years old, has been Assistant Vice President - Controller for AP Distribution since 2009. He joined the Aboitiz
Group in 1991 where he rose through the ranks in the Audit and Accounting Departments of ACO. He transferred to VECO in 2004
as Assistant Vice President for Accounting until his appointment to AP. He finished his bachelor’s degree in Commerce major in
Accounting, cum laude, from the University of San Carlos.
Mr. Racho, Filipino, 45 years old, has been Assistant Vice President for Procurement and Logistics - AP Distribution Group since 2009.
He joined the Aboitiz Group in 1989 as an Assistant Systems Analyst of DLP, where he subsequently held various positions until his
promotion as Department Manager of Technical Services in 2000. He was promoted as Assistant Vice President for Procurement and
Logistics of VECO in 2004. He is currently the Assistant Vice President for Technical Services of DLP. He is a graduate of Bachelor of
Science in Industrial Engineering from Cebu Institute of Technology.
Mr. Borja, Filipino, 46 years old, has been Assistant Vice President for Information Services - AP Distribution Group since 2009. He
started his career with the Aboitiz Group when he was hired as Computer Programmer of Davao Computer Services, Inc., an affiliate
of DLP, in 1997. He later joined DLP in 1990 as Junior Programmer where he rose from the ranks, becoming Head of Information
Service Group in 2000. He was later assigned to VECO as Assistant Vice President for Information Service Group in 2004. He
graduated from the Cebu Institute of Technology.
Mr. Abad, Filipino, 39 years old, has been Assistant Vice President - Project Development of AP since 2009. He was Manager of Team
Energy Corporation prior to his appointment in AP. He was also Manager of ABB handling sales, marketing and project management.
He is a graduate of Bachelor of Science in Electrical Engineering from the University of Sto. Tomas.
Ms. Rivera, Filipino, 39 years old, has been Assistant Vice President - HRQ, AP Generation since 2009. She was Assistant Vice
President-HRQ of APRI prior to her appointment in AP. She has 13 years of experience in human resources management with diverse
background in human resources strategic planning, implementation and administration in a manufacturing setting (energy and
food). Before she joined the Aboitiz Group in 2003. She was with PNOC-Energy Development Corporation. She holds Bachelor of
Science and Masters degrees in Psychology from the University of the Philippines.
Ms. Aleta, Filipino, 41 years old, has been Assistant Vice President - IT Director, AP Generation since 2009. She joined the Aboitiz
Group in 1991 as a marketing assistant of ACO. She rose from the ranks and held various positions relating to information technology
in PFC, an affiliate of AP. She was Assistant Vice President - Information Technology of APRI, before she joined AP. She has 20 years
of experience in information infrastructure & systems management with diverse background in Corporate and IT strategic planning,
domestic operations, implementation, project management and technical marketing. She is a graduate of Bachelor of Science
in Electronics & Communication Engineering from the University of San Carlos and earned her Masters in Management from the
University of the Philippines.
Mr. Laset, Filipino, 51 years old, has been Assistant Vice President for Power Economics and Distribution System Planning of AP
since 2009. He was Assistant Vice President - Technical Assistant to the Chairman of Cagayan Electric Power & Light Company, Inc.
before he joined AP. He was also connected with ATOM Industrial Sales as Technical Assistant to the President. He is a graduate of
Bachelor of Science in Electrical Engineering from Mapua Institute of Technology and has units in MS Electrical Engineering from the
University of the Philippines.
SEC FORM 20 - IS (INFORMATION STATEMENT)

60 ABOITIZ POWER CORPORATION
JUAN MANUEL J. GATMAITAN
Assistant Vice President for Power Marketing
SUSAN S. POLICARPIO
Assistant Vice President – Government
Relations
M. CARMELA N. FRANCO
Assistant Vice President-Investor Relations
KATRINA M. PLATON
Assistant Vice President for Legal and
Regulatory Affairs
M. JASMINE S. OPORTO
Corporate Secretary/ Compliance Officer
Ex-Officio Member - Board Corporate
Governance Committee
JOSEPH TRILLANA T. GONZALES
Assistant Corporate
Secretary
Mr. Gatmaitan, Filipino, 38 years old, has been Assistant Vice President for Power Marketing of AP since February 2010. He was
the Assistant Vice President for Power Sales and Marketing of APRI prior to his appointment in AP. He earned his degree in AB
Management Economics from the Ateneo de Manila University and had his Masters of Business Administration in General
Management from the Rotterdam School of Management, Erasmus University, Rotterdam, The Netherlands.
Ms. Policarpio, Filipino, 53 years old, has been AP’s Assistant Vice President for Government Relations since 2009. Prior to her stint
in AP, she was Assistant Vice President for Government Relations of ATSC since 2003. She was also Executive Director of Domestic
Shipping Association from 2001 to 2003 and Executive Director Honorary Investments and Trade Representative of the Department
of Trade and Industry from 1998 to 2001. She is currently a Director of the Port Users Confederation, Inc. and is a member of the
Philippine Chamber of Commerce and Industry. She is a graduate of Bachelor of Arts in Communication Arts from St. Paul College.
Ms. Franco, Filipino, 38 years old, has been AP’s Assistant Vice President for Investor Relations since March 26, 2008. She is also
Assistant Vice President for Investor Relations of AEV. Ms. Franco’s professional experience in investment analysis and corporate
finance includes working with various corporations in different capacities prior to her stint in AP. She was previously a Trader,
Associate and Credit Analyst of Capital One Equities Corporation & Multinational Investment Bancorporation from 1992 to 1994 and
was formerly an Investment Analyst of ING Barings (Phils), Inc. & Kim Eng Securities (Phils), Inc. from 1994 to 1997. She also served as
Investment Officer of Standard Chartered Bank from 1998 to 2000 and went on to serve as Project Analyst of Newgate Management,
Inc. from 2000 to August 2002. Immediately prior to her stint with AP, she was connected with San Miguel Corporation as Investor
Relations Officer of its Corporate Finance Group and later as Senior Project Analyst of its Corporate Planning Group. She holds a
degree in Bachelor of Science in Business Economics (cum laude) from the University of the Philippines.
Ms. Platon, Filipino, 43 years old, has been Assistant Vice President for Legal and Regulatory Affairs of AP since 2009. She was Senior
Associate General Counsel of AP’s parent company, AEV, before she moved to AP in May 2007. Prior to joining the Aboitiz Group,
she served as legal consultant in the Office of the Vice Mayor of the City of Muntinlupa. She was also Corporate Legal Manager of
the regional headquarters of e-Room Corporation and Associate Legal Officer of the United Nations Compensation Commission in
Geneva, Switzerland. She started her law practice as an associate of the Ponce Enrile Reyes & Manalastas Law Offices where she
specialized in corporate law and litigation. She is a graduate of the Ateneo de Manila University-School of Law. She took her LL.M in
International Banking and Finance Law from the Boston University - School of Law in Boston, MA. She finished her bachelor’s degree
in Business Administration from the University of the Philippines.
Ms. Oporto, Filipino, 50 years old, has been the Corporate Secretary of AP since 2007. She is also First Vice President-Legal, Corporate
Secretary and Compliance Officer of AEV; and the Corporate Secretary of LHC, and CPPC. She is also General Counsel and First Vice
President for Legal and Corporate Services of ACO since 2004. She is also Vice President for Legal Affairs of DLP and Trustee and
Secretary of the ACO Retirement Fund. Prior to joining AP, she worked in various capacities with the Hong Kong office of Kelley Drye
& Warren, LLP, a New York-based law firm and the Singapore-based consulting firm Albi Consulting Pte. Ltd. A member of both the
Philippine and New York bars, she obtained her Bachelor of Laws from the University of the Philippines.
Mr. Gonzales, Filipino, 43 years old, has been the Assistant Corporate Secretary of AP since August 29, 2007. He is also Vice President
for Legal and Corporate Services of AEV. He is also the Corporate Secretary of APRI. He was previously Special Counsel of Sycip
Salazar Hernandez & Gatmaitan Law Offices until he joined the Aboitiz Group in May 2007 as Assistant Vice President of the
Corporate and Legal Services of ACO. He is a graduate of Bachelor of Arts in Economics and Bachelor of Laws from the University of
the Philippines. He also has a Master of Laws degree from the University of Michigan.
Period in which the Directors and Executive Officers Should Serve
The directors and executive officers should serve for a period of one year.
Terms of Office of a Director
Pursuant to the amended By-laws of AP, the directors are elected at each annual stockholders’ meeting by stockholders entitled to vote. Each
director holds office until the next annual election and until his successor is duly elected unless he resigns, dies or removed prior to such election.
The nine directors, who must be stockholders of AP, are elected annually by the stockholders during the annual stockholders’ meeting, where at
least a majority of the outstanding capital stock should be present in person or by proxy. The directors shall serve for a term of one year and until
the election and qualification of their successors.
Any vacancy in the Board of Directors other than by removal or expiration of term may be filled by a majority vote of the remaining members
thereof at a meeting called for that purpose, if they still constitute a quorum. The director so chosen shall serve for the unexpired term of his
predecessor in office.
(2) Significant Employees
AP considers the contribution of every employee important to the fulfillment of its goals.
(3) Family Relationships
Messrs. Jaime Jose Y. Aboitiz and Luis Miguel Aboitiz are first cousins. Messrs. Jon Ramon Aboitiz and Mikel A. Aboitiz are brothers. Messrs.
Enrique M. Aboitiz, Jr., Erramon I. Aboitiz and Iker M. Aboitiz are brothers as well. Messrs. Jon Ramon Aboitiz and Mikel A. Aboitiz are second
cousins of Messrs. Enrique M. Aboitiz, Jr., Erramon I. Aboitiz, Iker M. Aboitiz, Jaime Jose Y. Aboitiz and Luis Miguel Aboitiz.
(4) Involvement in Certain Legal Proceedings as of February 28, 2010
People of the Philippines vs. Renato Francisco et. al.
(c/o Fuller O’ Brien Paint Company, Inc., Reliance St., Mandaluyong City)
Criminal Case No. 35-5784
MTC Branch 66, Makati City
July 19, 2007
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 61
On July 23, 2008, the Metropolitan Trial Court (MTC) of Makati issued an Order finding probable cause to hold the alleged directors/stockholders
of Fuller O’Brien Paint Company, Inc. (Fuller O’Brien), including Erramon I. Aboitiz, liable for violation of PD No. 1752 or the Pag-Ibig Fund Law, as
amended.
Upon motion by Mr. Aboitiz, the MTC reconsidered its order finding probable cause against him. The MTC also directed the Office of the City
Prosecutor of Makati to conduct a preliminary investigation against Mr. Aboitiz.
In the preliminary investigation, Mr. Aboitiz alleged that he should be exonerated from the charges filed against him as he was no longer a director
of Fuller O’Brien when the alleged violations of the Pag-Ibig Fund Law occurred.
The case is still pending resolution before the Office of the City Prosecutor of Makati.
To the knowledge and/or information of AP, other than as disclosed above, none of its nominees for election as directors, its present members of
the Board of Directors or its executive officers, is presently or during the last five years, involved in any legal proceeding in any court or government
agency in the Philippines or elsewhere, which would put to question their ability and integrity to serve AP and its stockholders. To the knowledge
and/or information of AP, the above-said persons have not been convicted by final judgment of any offense punishable by the laws of the Republic
of the Philippines or by the laws of any other nation or country.
(5) Certain Relationships and Related Transactions
AP and its subsidiaries and associates (the Group), in their regular conduct of business, have entered into related party transactions consisting
of professional fees, advances and rental fees. These are made on an arm’s length basis and at the current market prices as of the time of the
transactions.
The Group has existing service contracts with its parent company AEV, as well as with AEV’s parent company, ACO, for corporate center services,
such as human resources, internal audit, legal, IT, treasury and corporate finance, among others. These services are obtained from these companies
to enable the Group to realize cost synergies. Both AEV and ACO maintain a pool of highly qualified professionals with business expertise specific
to the businesses of the AP Group. Transactions are priced on a cost recovery basis. In addition, transaction costs are always benchmarked on third
party rates to ensure competitive pricing. Service Level Agreements are in place to ensure quality of service.
During the year, the Company has extended interest-bearing advances to certain AEV subsidiaries and associates namely, Pilmico, PANC and
Aboitiz One Inc., for working capital requirements. These are made to enhance AP’s yield on its cash balances. Interest rates are determined by
comparing prevailing market rates at the time of the transaction.
AP and certain subsidiaries and associates are leasing office spaces from CPDC, a subsidiary of AEV. Rental rates are comparable with prevailing
market prices. These transactions are covered with lease contracts for a period of three years.
No other transaction, without proper disclosure, was undertaken by the Company in which any director or executive officer (whether current or
former), any nominee for election as director, any beneficial owner (direct or indirect) or any member of his immediate family was involved or had
a direct or indirect material interest.
AP employees are required to promptly disclose any business and family-related transactions with the Company to ensure that potential conflicts
of interest are brought to the attention of management.
(a)
Parent Company
AP’s parent company is AEV. As of February 28, 2010, AEV owns 76.40% of AP, while ACO owns, as of February 28, 2010,
43.88% of AEV.
(b)
Resignation or Refusal to Stand for Re-election by Members of the Board of Directors
No director has resigned or declined to stand for re-election to the Board of Directors since the date of AP’s last annual
meeting because of a disagreement with AP on matters relating to its operations, policies and practices.
SEC FORM 20 - IS (INFORMATION STATEMENT)

62 ABOITIZ POWER CORPORATION
Business and General Information
(1) Business Development
Incorporated in 1998, AP is a publicly listed holding company that, through its subsidiaries and affiliates, is a leader in the Philippine power industry
and has interests in a number of privately owned generation companies and distribution utilities. AEV owns 76% of the outstanding capital stock
of AP as of February 28, 2010.
The Aboitiz Group’s involvement in the power industry began when members of the Aboitiz family acquired a 20% ownership interest in VECO
in the early 1900s. The Aboitiz Group’s direct and active involvement in the power distribution industry can be traced to the 1930s, when ACO
acquired the Ormoc Electric Light Company and its accompanying ice plant, the Jolo Power Company and CLP. In July 1946, the Aboitiz Group
strengthened its position in power distribution in the Southern Philippines when it acquired DLP, which is now the third largest privately owned
electric utility in the Philippines in terms of customers and annual gigawatt-hour (GWh) sales.
In December 1978, ACO divested its ownership interests in the Ormoc Electric Light Company and the Jolo Power Company to allow these
companies to be converted into electric cooperatives, which was the policy being promoted by the government of then president Ferdinand
Marcos. ACO sold these two companies and scaled down its participation in the power distribution business in order to focus on the more lucrative
franchises held by CLP, DLP and VECO.
In response to the Philippines’ pressing need for adequate power supply, the Aboitiz Group became involved in power generation, becoming a
pioneer and industry leader in hydroelectric energy. In 1978, the Aboitiz Group incorporated Hydro Electric Development Corporation (HEDC).
HEDC carried out feasibility studies (including hydrological and geological studies) and hydroelectric power installation and maintenance and also
developed hydroelectric projects in and around Davao City. The Aboitiz Group also incorporated Northern Mini Hydro Corporation (now Cleanergy,
Inc.) on June 26, 1990, which focused on the development of mini-hydroelectric projects in Benguet province in northern Luzon. By 1990, HEDC
and Cleanergy had commissioned and were operating 14 plants with a combined installed capacity of 36 megawatts (MW). In 1996, the Aboitiz
Group led the consortium that entered into a BOT agreement with the NPC to develop and operate the 70-MW Bakun AC hydroelectric plant in
Ilocos Sur province.
AP was incorporated on February 13, 1998 as a holding company for the Aboitiz Group’s investments in power generation and distribution. However,
in order to prepare for growth in the power generation industry, AP was repositioned in the third quarter of 2003 as a holding company that owned
power generation assets only. The divestment by AP of its power distribution assets was achieved through a property dividend declaration in the
form of AP’s ownership interests in the different power distribution companies. The property dividend declaration effectively transferred direct
control over the Aboitiz Group’s power distribution business to AEV. Further, in 2005, AP consolidated its investments in mini-hydroelectric plants
in a single company by transferring all of HEDC’s and Cleanergy’s mini-hydroelectric assets into Hedcor, Inc.
In December 2006, the Company and its partner, SN Power Invest AS (SN Power), through SNAP-Magat, Inc., submitted the highest bid for the
360-MW Magat hydroelectric plant auctioned by PSALM. The price offered was U.S.$530 million. PSALM turned over possession and control of
the Magat Plant to SNAP-Magat on April 26, 2007.
In a share swap agreement with AEV last January 20, 2007, AP issued a total of 2,889,320,292 of its common shares in exchange for AEV’s ownership
interests in the following distribution companies, as follows:
• An effective 55% ownership interest in VECO, which is the second largest privately owned distribution utility in the Philippines in terms
of customers and annual GWh sales and is the largest distribution utility in the Visayas region;
• A 100% equity interest in each of DLP and CLP. DLP is the third largest privately owned distribution utility in the Philippines in terms of
customers and annual GWh sales;
• An effective 64% ownership interest in SEZ, which manages the Power Distribution System (PDS) of the SBMA; and
• An effective 44% ownership interest in SFELAPCO, which holds the franchise to distribute electricity in the city of San Fernando,
Pampanga, in Central Luzon, and its surrounding areas.
In February 2007, the Company entered into a memorandum of agreement with Taiwan Cogeneration International Corporation to collaborate in
the building and operation of an independent coal-fired power plant in the SBFZ. In May 2007, RP Energy was incorporated as the project company
that will undertake the Subic Coal Project.
On April 20, 2007, the Company acquired 50% of the outstanding capital stock of EAUC from El Paso Philippines Energy Company, Inc. (El Paso).
EAUC operates a Bunker C-fired plant with a capacity of 50 MW within the MEPZ I in Mactan Island, Cebu. On the same date, the Company also
acquired from EAUC 60% of the outstanding common shares of CPPC, which operates a 70-MW Bunker C-fired plant in Cebu City.
On June 8, 2007, as part of the reorganization of the power-related assets of the Aboitiz Group, the Company agreed to acquire from its affiliate,
AboitizLand, a 100% interest in MEZ, which owns and operates the PDS in the MEPZ II in Mactan Island in Cebu, and a 60% interest in BEZ, which
owns and operates the PDS in the West Cebu Industrial Park-Special Economic Zone (WCIP-SEZ) in Balamban town in the western part of Cebu.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 63
The Company also consolidated its ownership interest in SEZ by acquiring the combined 25% interest in SEZ held by AEV, SFELAPCO, Okeelanta
Corporation (Okeelanta) and Pampanga Sugar Development Corporation (PASUDECO). These acquisitions were made through a share swap
agreement which involved the issuance of a total of 170,940,307 common shares of the Company issued at the initial public offering price of π5.80
per share in exchange for the foregoing equity interests in MEZ, BEZ and SEZ.
In August 2007, the Company, together with Vivant Energy Corporation of the Garcia Group, signed a memorandum of agreement with Global
Business Power Corporation (Global Power) of the Metrobank Group for the construction and operation of a 3x82-MW coal-fired power plant in
Toledo City, Cebu. The Company, together with the Garcia Group, formed ABOVANT. The Company owns 60% of ABOVANT. The project, which is
being undertaken by CEDC, a joint venture company among Global Power, Formosa Heavy Industries and ABOVANT, broke ground last January
2008 and is expected to be completed by the second half of 2010. The Company has an effective participation of 26% in the project.
On November 15, 2007, AP closed the sale and purchase of a 34% equity ownership in STEAG Power, owner and operator of a 232-MW coal-fired
power plant located in the PHIVIDEC Industrial Estate in Misamis Oriental, Northern Mindanao. The Company won the competitive bid to buy
the 34% equity from Evonik Steag GmbH (formerly known as Steag GmbH) in August 2007. The total purchase price for the 34% equity in STEAG
Power is U.S.$102 million, inclusive of interests.
On November 28, 2007, SNAP-Benguet, a consortium between AP and SN Power, submitted the highest bid for the Ambuklao-Binga Hydroelectric
Power Complex consisting of the 75-MW Ambuklao Hydroelectric Power Plant located at Bokod, Benguet and the 100-MW Binga Hydroelectric
Power Plant located in Itogon, Benguet. The price offered amounted to U.S.$325 million.
On December 17, 2007, AP entered into an agreement to buy the 20% equity of Team Philippines in SEZ for π92 million. Together with the 35%
equity in SEZ of AP’s subsidiary DLP, this acquisition brings AP’s total equity in SEZ to 100%.
On March 7, 2008, AP bought the 40% equity ownership of Tsuneishi Holdings (Cebu), Inc. (Tsuneishi) in BEZ for approximately π178 million. The
acquisition brought AP’s total equity in BEZ to 100%.
Last May 26, 2009, APRI, a wholly owned subsidiary of AP, took over the ownership and operations of the 289-MW Tiwi geothermal power plant
facility in Albay and the 458-MW Makiling-Banahaw geothermal power plant facility in Laguna (collectively referred to as the “Tiwi-MakBan
geothermal facilities”) after winning the competitive bid conducted by PSALM on July 30, 2008. The Tiwi-MakBan geothermal facilities recorded
peak generation of 467 MW in 2009.
Therma Luzon, a wholly owned subsidiary of AP, won the competitive bid for the appointment of the IPPA of the 700-MW Contracted Capacity of
the Pagbilao Coal Fired Power Plant (the Pagbilao IPPA) last August 28, 2009. It assumed dispatch control of the Pagbilao power plant last October
1, 2009, becoming the first IPP Administrator in the country. As IPPA, Therma Luzon is responsible for procuring the fuel requirements of, and for
selling the electricity generated by, the Pagbilao power plant. The Pagbilao power plant is located in Pagbilao, Quezon.
AP, through its wholly owned subsidiary, Therma Marine, assumed ownership over Power Barge (PB) 118 and PB 117 last February 6, 2010 and
March 1, 2010, respectively, after acquiring the two power barges from PSALM for U.S.$30 million through a negotiated bid concluded last July
31, 2009. Each of the barge-mounted, diesel-powered generation plants has a generating capacity of 100 MW. PB 117 and PB 118 are moored in
Nasipit, Agusan del Norte and Barangay San Roque, Maco, Compostela Valley, respectively.
Ownership in AP was opened to the public through an initial public offering of its common shares in July 2007. Its common shares were officially
listed in the Philippine Stock Exchange (PSE) on July 16, 2007.
The Company is in the process of implementing a corporate reorganization that will put all its renewable energy assets under ARI (formerly
Philippine Hydropower Corporation), and all its non-renewable generation assets under TPI.
Neither AP nor any of its subsidiaries has ever been the subject of any bankruptcy, receivership or similar proceedings.
(2) Business of Issuer
With investments in power generation and distribution companies throughout the Philippines, AP is considered one of the leading Filipino-owned
companies in the power industry. (Please see Annex “C” hereto for AP’s Corporate Structure).
(i)
Principal Products
GENERATION OF ELECTRICITY
Since its incorporation in 1998, AP has accumulated interests in both renewable and non-renewable generation plants (the Generation Companies).
As of December 31, 2009, approximately 82% of AP’s net income is derived from its power generation business. AP conducts its power generation
activities through the following subsidiaries and affiliates:
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64 ABOITIZ POWER CORPORATION
The table below summarizes the Generation Companies’ operating results as of December 31, 2009.
Generation Companies
SEC FORM 20 - IS (INFORMATION STATEMENT)
Energy Sold
Generation
2009
Energy Sold
Generation
2008
(in GWh)
Energy Sold
Generation
2007
Revenue
2009
Revenue
2008
(in Million Pesos)
Revenue
2007
APRI (1) 1,886 N/A N/A 6,843 N/A N/A
Hedcor Inc. 171 170 162 703 618 743
LHC 324 301 279 1,223 1,088 1,836
SNAP-Magat (2) 1,150 1,036 717 3,971 4,604 3,632
SNAP-Benguet (3) 413 208 N/A 1,063 885 N/A
Therma Luzon (4) 767 N/A N/A 2,801 N/A N/A
WMPC 220 107 157 1,207 1,284 1,238
SPPC 226 164 175 688 691 658
CPPC (5) 318 296 241 2,119 2,367 1,755
EAUC (6) 202 202 264 1,382 1,579 1,569
STEAG Power (7) 1,384 1,330 1,405 6,206 6,265 4,774
DLP (8) 7 6 3 Revenue neutral Revenue neutral Revenue neutral
CLP (8) 1 0 0 Revenue neutral Revenue neutral Revenue neutral
TOTAL 7,069 3,820 3,403 28,206 19,381 16, 205
(1) The Tiwi-MakBan geothermal plants was turned over to APRI on May 26, 2009.
(2) The Magat plant was turned over to SNAP-Magat by PSALM on April 26, 2007.
(3) The Ambuklao-Binga plants were turned over to SNAP-Benguet by PSALM on July 10, 2008.
(4) TLI assumed dispatch control of the Pagbilao plant last October 1, 2009.
(5) AP acquired 60.0% ownership interest last April 20, 2007.
(6) AP acquired 50.0% ownership interest last April 20, 2007.
(7) AP acquired 34.0% ownership interest last November 15, 2007.
(8) Plants are operated as stand-by plants and are revenue neutral, with costs for operating each plant recovered by DLP and CLP, as the case may be, as approved by
the ERC.
Aboitiz Renewables, Inc. (ARI)
AP, one of the leading providers of renewable energy in the country, holds all its investments in renewable energy through its wholly owned
subsidiary, ARI. ARI owns equity interests in the following generation companies:
• 100% equity interest in APRI which owns the Tiwi-MakBan geothermal facilities.
• 100% equity interest in Hedcor, which operates 15 mini-hydroelectric plants (plants with less than 10 MW in installed capacity) in
Benguet province in Northern Luzon and in Davao City in southeastern Mindanao with a total installed capacity of 38.2 MW.
• 50% equity interest in LHC which operates the 70-MW Bakun AC hydroelectric plant in Ilocos Sur province in northern Luzon.
• 50% effective interest in SNAP-Magat, which operates the 360-MW Magat hydroelectric plant in Isabela in northern Luzon.
• 50% effective interest in SNAP-Benguet, which operates the 175-MW Ambuklao-Binga Hydroelectric Power Plant Complex in northern
Luzon.
• 100% equity interest in Hedcor Sibulan, which is currently constructing the 42.5-MW Sibulan hydropower project in Santa Cruz, Davao
del Sur.
• 100% equity interest in Hedcor Tamugan, which proposes to build a 10- to 15-MW Tamugan hydropower project along the Tamugan
River in Davao City.
Since beginning operations in 1998, the Company has been committed to developing expertise in renewable energy technologies. The Company’s
management believes that due to growing concerns on the environmental impact of power generation using traditional fossil fuel energy
sources, greater emphasis will be placed on providing adequate, reliable, and reasonably priced energy through innovative and renewable energy
technologies such as hydroelectric and geothermal technologies. As such, a significant component of the Company’s future projects are expected
to focus on those projects that management believes will allow the Company to leverage its experience in renewable energy and help maintain the
Company’s position as a leader in the Philippine renewable energy industry.
AP Renewables, Inc. (APRI)
APRI, a wholly owned subsidiary of AP, owns and operates the 289 MW Tiwi Geothermal Power Plant located at Tiwi, Albay and the
458.53 MW Makiling-Banahaw (MakBan) Geothermal Power Plant located at Laguna and Batangas Provinces (collectively the “Tiwi-MakBan
geothermal complex”). While the aggregate installed capacity of Tiwi-MakBan is 767 MW, its maximum capacity is only 467 MW due to
limitations in steam supply and plant condition. APRI assumed ownership and operation of the Tiwi-MakBan geothermal complex from PSALM
on May 26, 2009.
Among the rights and obligations assigned to APRI under the Asset Purchase Agreement (APA) with PSALM are supply contracts with various
expiring terms and covering an estimate of 480 MW capacity at combined peak. Included among the supply contracts assigned, while not a

ANNUAL REPORT 2009 65
transition supply contract (“TSCs”), is the obligation to supply 9.63% of the monthly load of Meralco. Rates for most of the TSCs were pegged
to NPC Time-of-Use Rates at an annual simple average of π4.16/kwh.
The APA likewise requires APRI to rehabilitate Units 5 and 6 of the MakBan Geothermal Power Plant at its own cost and expense, which must
be accomplished and completed within four years from Closing Date. APRI is currently in the midst of the rehabilitation and refurbishment
process. Based on initial estimates, the rehabilitation and refurbishment costs could reach U.S.$140-150 million over a period of 2-3 years.
This rehabilitation and refurbishment plan is expected to improve the geothermal plants’ operating capacities.
APRI is a Board of Investment (“BOI”) registered enterprise as New Operator of the Tiwi-MakBan geothermal complex, on a pioneer status with 6
years income tax holiday starting June 19,2009.
SN Aboitiz Power-Magat Inc. (SNAP-Magat)
SNAP-Magat is ARI’s joint venture company with SN Power, a leading Norwegian hydropower company with projects and operations in Asia,
Africa and Latin America. On December 14, 2006, SNAP-Magat participated in and won the bid for the 360-MW Magat hydroelectric power plant
(the Magat Plant) conducted by PSALM for a bid price of U.S.$530 million.
The Magat Plant, which is located at the border of Isabela and Ifugao provinces in northern Luzon, was completed in 1983. As a hydroelectric
facility that can be started up in a short period of time, the Magat Plant is ideally suited to act as a peaking plant with opportunities to capture the
significant upside potential that can arise during periods of high demand.
The Magat Plant has the ability to store water equivalent to one month of generating capacity, allowing for the generation and sale of electricity
at the peak hours of the day, which command premium prices. Magat’s source of upside water as a source of fuel and the ability to store it, is
also its source of limited downside. This hydroelectric asset has minimal marginal costs, granting it competitive advantage in terms of economic
dispatch order versus other fuel-fired power plants that have significant marginal cash costs. SNAP-Magat sells most of the electricity generated
by the Magat Plant through the Wholesale Electricity Spot Market (WESM). It is also a provider of much needed ancillary services to the Luzon grid.
SNAP-Magat obtained Board of Investments (BOI) approval of its application as new operator of the Magat plant with a pioneer status, which
entitles it to an income tax holiday.
A portion of the land underlying the Magat plant is in the name of the National Irrigation Administration (NIA). This portion is being leased by
SNAP-Magat from NIA under terms and conditions provided under the O&M Agreement. On March 23, 2007, President Arroyo issued a presidential
proclamation reserving and granting NPC ownership over certain parcels of public land in Isabela province and instructing the Department of
Environment and Natural Resources to issue a special patent over the untitled public land on which a portion of the Magat plant is situated. This
portion of land, which was titled in 2007, was eventually bought by SNAP-Magat.
In September 2007, SNAP-Magat obtained a U.S.$380 million loan from a consortium of international and domestic financial institutions which
include the International Finance Corporation, Nordic Investment Bank, BDO–EPCI, Inc., BPI, China Banking Corporation, Development Bank of
the Philippines, The Hong Kong and Shanghai Banking Corporation Limited, Philippine National Bank and Security Bank Corporation. The U.S.
$380-million loan consists of a dollar tranche of up to U.S.$152 million, and a peso tranche of up to π10.1 billion. The financing agreement was
hailed as the region’s first-ever project finance debt granted to a merchant power plant. It won Project Finance International’s Power Deal of the
Year and Asset’s Best Project Finance Award as well as Best Privatization Award.
The loan was used to partially finance the deferred balance of the purchase price of the Magat Plant under the Asset Purchase Agreement with
PSALM. Part of the loan proceeds was also used to refinance SNAP-Magat’s U.S. $159-million loan from AEV and its advances from its shareholders
used to acquire the Magat Plant.
After 25 years of operations without any major rehabilitation works done on the generating units and considering the age and results of technical
assessments, SNAP-Magat has embarked a four-year refurbishment program for all major plant equipment starting 2009 to 2013. The main
objective is to put back the lost efficiency and address operational difficulties due to obsolescence. The project will preserve the remaining life and
the continuance of its availability for the next 25 years.
SN Aboitiz-Benguet, Inc. (SNAP-Benguet)
On November 28, 2007, SNAP-Benguet, also a consortium between ARI and SN Power, submitted the highest bid to PSALM for the Ambuklao-
Binga Hydroelectric Power Complex, which consists of the 75-MW Ambuklao Hydroelectric Power Plant (Ambuklao Plant) located in Bokod,
Benguet and the 100-MW Binga Hydroelectric Power Plant (Binga Plant) located in Itogon, Benguet. The price offered amounted to U.S.$325
million.
The Ambuklao-Binga Hydroelectric Power Complex was turned over to SNAP-Benguet on July 10, 2008. In August 2008, SNAP-Benguet signed
a U.S. $375-million loan agreement with a consortium of local and foreign banks where U.S. $160 million was taken up as U.S. dollar financing
and U.S. $215 million as peso financing. Proceeds from the facility were used to partially finance the purchase price, rehabilitate the power plant
complex and refinance SNAP-Benguet’s existing advances from shareholders with respect to the acquisition of the assets.
SNAP-Benguet obtained BOI approval of its application as new operator of the Ambuklao and Binga plants with a pioneer status which entitles it
to an income tax holiday commencing from date of registration.
SEC FORM 20 - IS (INFORMATION STATEMENT)

66 ABOITIZ POWER CORPORATION
Ambuklao Plant has been under preservation since 1999 due to damage from the 1990 earthquake. Rehabilitation of the Ambuklao Plant
commenced in late 2008 and is expected to be completed by end of 2010. The refurbishment of the Binga Plant is also scheduled to commence in
2010. The projects are expected to increase the capacity of the Ambuklao Plant to 105 MW and of the Binga Plant to 120 MW.
Hedcor, Inc. (Hedcor)
Hedcor was originally incorporated on October 10, 1986 by ACO as the Baguio-Benguet Power Development Corporation. ARI acquired its 100%
ownership interest in Hedcor in 1998. In 2005, ARI consolidated all of its mini-hydroelectric generation assets, including those developed by
HEDC and NORMIN, in Hedcor. Hedcor currently owns, operates and/or manages 15 mini–hydro plants of the run–of–river type in northern
Luzon and Davao City in southeastern Mindanao with a combined installed capacity of 38.2 MW. All the electricity generated from Hedcor’s minihydro
plants are taken up by NPC, APRI, DLP, Philex Mining Corporation (Philex) and Benguet Electric Cooperative (BENECO) pursuant to power
purchase agreements with the said offtakers.
During the full years 2008 and 2009, Hedcor’s mini-hydroelectric plants generated a total of 170 GWh and 171 GWh of electricity, respectively.
Northern Luzon’s climate is classified as having two pronounced season--dry from November to April and wet for the rest of the year. Due to this
classification, generation levels of Hedcor’s plants, particularly those located in northern Luzon, are typically lower during the first five months of
each year.
Hedcor used to have a 50% equity interest in LHC until it transferred its equity stake to its parent company, ARI, through a property dividend
declaration in September 2007.
Luzon Hydro Corporation (LHC)
LHC is ARI’s joint venture company with Pacific Hydro Pty Ltd. of Australia, a privately owned Australian company that specializes in developing
and operating power projects that use renewable energy sources, principally water and wind power.
LHC operates and manages the 70-MW Bakun AC hydro project, which is located within the 13,213-hectare watershed area of the Bakun River in
Ilocos Sur province in northern Luzon. The project is a run–of–river power plant which taps the flow of the neighboring Bakun River to provide
the plant with its generating power. The U.S. $150-million project was constructed and is being operated under the government’s build–operate–
transfer scheme. Energy produced by the plant is delivered and taken up by NPC pursuant to a power purchase agreement (the Bakun PPA) and
dispersed to NPC’s Luzon Power Grid. Under the terms of the Bakun PPA, all of the electricity generated by the Bakun plant will be purchased by
NPC for a period of 25 years from February 2001. The Bakun PPA also requires LHC to transfer the Bakun plant to NPC in February 2026, free from
liens and without the payment of any compensation by NPC.
PSALM recently conducted a competitive bid for the appointment of the IPPA of the 70-MW contracted capacity of the Bakun plant.
Hedcor Sibulan, Inc. (Hedcor Sibulan)
Hedcor Sibulan, a wholly owned subsidiary of ARI, is the project company of the Sibulan hydropower project. The project, which started
construction on June 25, 2007, entails the construction of two run-of-river hydropower generating facilities tapping the Sibulan and Baroring rivers
in Sibulan, Santa Cruz, Davao del Sur. The total project cost is approximately π5.1 billion, which includes capital expenditures needed to construct
access roads and transmission facilities. The Sibulan project’s first unit, a 26 MW run-of-river plant, started commercial operations in March 2010.
The second unit, or 16.5 MW, is expected to commence commercial operations within second quarter of 2010.
Hedcor Sibulan is part of a consortium that won the competitive bidding for the 12-year power supply agreement to supply 400,000,000 kWh per
annum of new capacity to DLP. The bid price for the contracted energy was π4.0856/kWh delivered, subject to adjustment based on changes to
the Philippine consumer price index. All the energy generated by the Hedcor Sibulan power plants will be supplied to DLP pursuant to the power
supply agreement signed on March 7, 2007.
The Sibulan Project is registered as a clean development mechanism project with the United Nations Framework Convention on Climate Change
under the Kyoto Protocol. This allows Hedcor Sibulan to sell the Sibulan project’s carbon credits.
Hedcor Tamugan, Inc. (Hedcor Tamugan)
Hedcor Tamugan, a wholly owned subsidiary of ARI, is the project company which proposes to build the Tamugan hydropower project. Hedcor,
the holder of the Tamugan water rights, entered into a compromise agreement with the Davao City Water District (DCWD) in connection with
the Tamugan water rights dispute. The compromise paves the way for the eventual construction of a 10- to 15-MW hydroelectric plant along
the Tamugan River. A 27.5-MW hydroelectric plant was originally proposed to be built along the Tamugan River. Given the new project scheme,
Hedcor Tamugan will have to conduct studies for engineering design, which is expected to take about a year. The two-year construction period will
commence once the design is approved and permits are secured.
Hedcor Tamugan is part of a consortium that won the competitive bidding for the 12-year power supply agreement to supply 400,000,000 kWh
per annum of new capacity to DLP. The bid price for the contracted energy was π4.0856/kWh delivered, subject to adjustment based on changes
to the Philippine consumer price index. All the energy generated by the Hedcor Tamugan power plant will be supplied to DLP pursuant to the
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ANNUAL REPORT 2009 67
power supply agreement signed on March 7, 2007. Despite the lower generating capacity, the required amount of energy under a power supply
agreement between the Hedcor consortium and DLP will be met.
Therma Power, Inc. (TPI)
TPI, a wholly owned holding company of AP, owns equity interests in the following generation companies:
• 100% equity interest in Therma Luzon, the IPP Administrator of the 700-MW contracted capacity of the Pagbilao power plant.
• 100% equity interest in Therma Marine, owner and operator of PB 117 and PB 118, barge-mounted power plants, each with a generating
capacity of 100 MW.
• 26% effective interest in CEDC, which is currently constructing a 3x82-MW coal-fired power plant in Toledo City, Cebu.
• 50% equity interest in RP Energy, the project company that proposes to build and operate a 300-MW coal-fired power plant in Redondo
Peninsula in the SBFZ.
AP is in the process of implementing a corporate reorganization that will put all its non-renewable generation assets under TPI. If completed, TPI
will hold AP’s ownership interest in STEAG Power, EAUC, CPPC, SPPC and WWMPC.
Therma Luzon, Inc. (Therma Luzon)
Therma Luzon, Inc. (“TLI”), a wholly owned subsidiary of AP, submitted the highest offer in the competitive bid conducted by PSALM for
appointment as the IPP Administrator (“IPPA”) of the 700 MW Contracted Capacity of the Pagbilao Coal Fired Thermal Power Plant, located in
Pagbilao, Quezon.
The offer by Therma Luzon resulted in a bid price of U.S.$691 million as calculated in accordance to bid rules. This value represents the present
value of a series of monthly payments to PSALM from October 2009 to August 2025 using PSALM discount rates.
As part of IPPA contract, TLI was assigned the obligation to supply 22.039% of the monthly load of Meralco.
On October 1, 2009, Therma Luzon, Inc. became the first IPPA in the country when it assumed dispatch control of the said contracted capacity
of the Pagbilao Plant. As IPP Administrator, Therma Luzon is responsible for procuring the fuel requirements of the Pagbilao Plant and selling
the electricity generated by the plant. The Pagbilao Plant is being operated by TEAM Energy under a build-operate-transfer scheme.
Therma Marine, Inc. (Therma Marine)
Therma Marine, a wholly owned subsidiary of AP, owns and operates PB 117 and PB 118, two power barges each with a generating capacity of 100
MW. Therma Marine assumed ownership of PB 118 and PB 117 from PSALM last February 6, 2010 and March 1, 2010, respectively. The acquisition
followed the successful conclusion of a U.S.$30 million negotiated bid for the two power barges last July 31, 2009. PB 118 is moored in Bgy. San
Roque, Maco, in Compostella Valley, while PB 117 is moored in Nasipit, Agusan del Norte.
Therma Marine signed Ancillary Services Procurement Agreements (ASPA) with the National Grid Corporation of the Philippines (NGCP) for a
supply by each of PB 117 and PB 118 of 50 MW of ancillary services consisting of contingency reserve, dispatchable reserve, reactive power support
and blackstart capacity for the Mindanao Grid. Therma Marine has been operating the power barges prior to receiving the written provisional
authority of the ERC of the ASPAs. ERC approval for the ASPAs is needed before NGCP can charge customers for the ancillary services.
The ERC issued a provisional authority for the PB 118 ASPA on March 8, 2010 and made it retroactive to February 6, 2010 in consideration of the
ongoing power crisis in Mindanao. PB 117 is currently operating without a provisional authority from the ERC as its application is still pending
before the ERC. However, Therma Marine has applied for retroactive effectivity of PB 117’s provisional authority so as not to intensify the power
situation in Mindanao.
Therma Marine also has a non-firm commitment to supply 100 MW of ancillary services to NGCP.
STEAG State Power Inc. (STEAG Power)
AP closed the sale and purchase of the 34% equity ownership in STEAG Power from Evonik Steag last November 15, 2007, following a successful
bid in August 2007. The total purchase price for the 34% equity in STEAG Power was U.S.$102 million, inclusive of interests.
Incorporated on December 19, 1995, STEAG Power is the owner and operator of a 232-MW (gross) coal-fired power plant located in the PHIVIDEC
Industrial Estate in Misamis Oriental, Northern Mindanao. The coal plant was built under a BOT arrangement and started commercial operations on
November 15, 2006. The coal plant is subject of a 25-year power purchase agreement with the NPC, which agreement is backed by a Performance
Undertaking issued by the Republic of the Philippines. STEAG Power currently enjoys a six-year income tax holiday from the BOI.
With its 34% stake in STEAG Power, AP is equity partner with majority stockholder Evonik Steag, Germany’s fifth largest power generator, which
currently holds 51% equity in STEAG Power. La Filipina Uy Gongco Corporation holds the remaining 15% equity in STEAG Power.
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68 ABOITIZ POWER CORPORATION
East Asia Utilities Corporation (EAUC)
On April 20, 2007, AP acquired a 50% ownership interest in EAUC from El Paso Philippines, which still owns the other 50% of EAUC. EAUC was
incorporated on February 18, 1993 and since 1997 has operated a Bunker C-fired power plant with an installed capacity of 50 MW within the MEPZ I
in Mactan Island, Cebu. Pursuant to the Power Supply and Purchase Agreement (PSPA), as amended, with the Philippine Economic Zone Authority
(PEZA), the EAUC plant is the sole provider of electricity to MEPZ I―delivering reliable, high quality power to meet the stringent requirements
of semiconductor firms, electronics manufacturers and other locators within the economic zone. The PSPA is for a term of 15 years beginning
December 31, 1997.
Cebu Private Power Corporation (CPPC)
Incorporated on July 13, 1994, CPPC owns and operates a 70-MW Bunker-C fired power plant in Cebu City, one of the largest power plants in the
island of Cebu. Commissioned in 1998, the CPPC plant was constructed pursuant to a BOT contract to supply 62 MW of power to VECO. The CPPC
plant will revert to VECO in November 2013.
On April 20, 2007, AP acquired from EAUC 60% of the outstanding common shares of CPPC. The remaining 40% of the outstanding common
shares is owned by Vivant Energy Corporation of the Garcia family of Cebu, who, together with AP, are the major shareholders of VECO. VECO
owns all of the outstanding preferred shares of CPPC, which comprises approximately 20% of the total outstanding capital stock of CPPC.
Abovant Holdings, Inc. (Abovant) and Cebu Energy Development Corporation (CEDC)
Incorporated on November 28, 2007, Abovant is a joint venture company formed by TPI, a wholly owned subsidiary of AP, and Vivant Integrated
Generation Corporation (VIGC) of the Garcia Group, to hold their investments in a new power plant being built in Sangi, Toledo City, Cebu. Abovant
is 60% owned by AP, through TPI, and 40% owned by VIGC.
Abovant and Global Formosa, a joint venture between Global Power and Formosa Heavy Industries, formed CEDC. CEDC is in the process of
constructing a new 3x82 MW coal-fired power plant in the existing Toledo Power Station complex in Sangi, Toledo City, Cebu. With Abovant’s 44%
stake in the project (Global Formosa owns the remaining 56%), AP’s effective interest in the new power plant, which broke ground in January 2008,
is approximately 26%.
The power plant, which will cost approximately U.S. $450 million, is expected to be completed by 2010. The first 82 MW unit was commissioned
in March 2010, while the second and third units by the second and fourth quarter of 2010, respectively. The power to be generated from the new
power plant will provide much needed security to the power supply of the province of Cebu in the coming years. Additional power will be needed
with the influx of business process outsourcing companies and new hotels in the province and the presence in the Toledo-Balamban area of large
industries such as Atlas Mining Corporation, the shipbuilding facility of Tsuneishi Heavy Industries (Cebu) Inc. (THICI) and the modular fabrication
facility of Metaphil International.
CEDC had signed a Power Purchase Agreement (PPA) with VECO for the supply of 105 MW for 25 years. It also has a PPA with Mactan Electric
Company, Inc. (MECO). It also plans to enter into PPAs, which will provide contracted minimum energy offtake with fuel as pass through, with
other possible offtakers.
Southern Philippines Power Corporation (SPPC)
SPPC is a joint venture among AP, Alsing Power Holdings, Inc. and Tomen Power (Singapore), Pte Ltd. AP has a 20% equity interest in SPPC, which
owns and operates a 55-MW bunker-C fired power plant in Alabel, Sarangani just outside General Santos City in southern Mindanao.
The SPPC power plant was developed on a build-own-operate basis by SPPC under the terms of an Energy Conversion Agreement (ECA) with
the NPC. Under the ECA, NPC is required to deliver and supply to SPPC the fuel necessary to operate the SPPC power plant during an 18-year
cooperation period, which ends in 2016. NPC is also required to take all the electricity generated by the SPPC power plant during the cooperation
period and pay SPPC on a monthly basis capital recovery, energy, fixed operations and maintenance (O&M) and infrastructure fees as specified
in the ECA. During this cooperation period, SPPC is responsible, at its own cost, for the management, operation, maintenance and repair of the
SPPC power plant.
Aside from providing much needed capacity to the southwestern Mindanao area, the SPPC power plant also performs the role of voltage regulator
for General Santos City, ensuring the availability, reliability, and quality of power supply in the area.
Western Mindanao Power Corporation (WMPC)
Like SPPC, WMPC is also a joint venture among AP, Alsing Power Holdings, Inc. and Tomen Power (Singapore), Pte Ltd. AP has a 20% equity
interest in WMPC, which owns and operates a 100-MW bunker-C fired power station located in Zamboanga City, Zamboanga del Sur in western
Mindanao. The WMPC power plant was developed on a build-own-operate basis by WMPC under the terms of an ECA with NPC. Under the ECA,
NPC is required to deliver and supply to WMPC the fuel necessary to operate the WMPC Plant during an 18-year cooperation period which ends
in 2015. NPC is also required to take all the electricity generated by the WMPC Plant during the cooperation period and pay WMPC on a monthly
basis capital recovery, energy, fixed O&M and infrastructure fees as specified in the ECA. During this cooperation period, WMPC is responsible, at
its own cost, for the management, operation, maintenance and repair of the WMPC Plant.
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ANNUAL REPORT 2009 69
Aside from providing much needed capacity to the Zamboanga Peninsula, the WMPC power plant also performs the role of voltage regulator for
Zamboanga City, ensuring the availability, reliability, and quality of power supply in the area.
Redondo Peninsula Energy, Inc. (RP Energy)
Incorporated on May 30, 2007, RP Energy is a joint venture company owned equally by AP and TCIC. It is the project company that proposes to
build and operate a 300-MW coal-fired power plant in Redondo Peninsula in the SBFZ.
In April 2008, RP Energy issued a letter of award to Formosa Heavy Industries for the supply of the boiler, steam turbine, generator, and related
services that will be used for the construction of the power plant. The award serves to fix the price and delivery time of the equipment amidst an
environment of rising prices and longer delivery period of raw materials. The project is estimated to cost approximately U.S.$500 million. The
construction of the coal plant is being deferred pending further review of the power supply and demand requirements in the Luzon Grid.
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70 ABOITIZ POWER CORPORATION
MANAGEMENT’S DISCUSSION AND
ANALYSIS OR PLAN OF ACTION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the Company’s consolidated financial condition and results of operations and certain trends, risks
and uncertainties that may affect its business. The critical accounting policies section discloses certain accounting policies and management
judgments that are material to the Company’s results of operations and financial condition for the periods presented in this report. The discussion
and analysis of the Company’s results of operations is presented in three comparative sections: the year ended December 31, 2009 compared with
the year ended December 31, 2008, the year ended December 31, 2008 compared with the year ended December 31, 2007.
Prospective investors should read this discussion and analysis of the Company’s consolidated financial condition and results of operations in
conjunction with the consolidated financial statements and the notes thereto set forth elsewhere in this report.
KEY PERFORMANCE INDICATORS
Management uses the following indicators to evaluate the performance of the Company and its subsidiaries:
1. Share in Net Earnings (Losses) of associates. This represents the Group’s share in the undistributed earnings or losses of its associates
for each reporting period after the acquisition of said investments, net of goodwill impairment cost, if any. Goodwill is the difference
between the purchase price of an investment and the investor’s share in the value of the net identifiable assets of investee at the date
of acquisition. Share in net earnings (losses) of associates indicate the profitability of the investments and the investees’ contribution to
the Group’s net income.
Manner of Computation:Associates Net Income (Loss) x Investor’s Percentage Ownership less Impairment Loss.
2. Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA). EBITDA is calculated as net income before minority interest,
net interest expense, income tax expense, amortization and depreciation. It provides management and investors with a tool for
determining the ability of the Group to generate cash from operations to cover financial charges and income taxes. It is also a measure
to evaluate the Group’s ability to service its debts.
3. Cash Flow Generated. Using the Consolidated Statement of Cash Flows, management determines the sources and usage of funds for
the period, and analyzes how the group manages its profit and uses its internal and external sources of funds. This aids management in
identifying the impact on cash flow when the Group’s activities are either in a state of growth or decline, and in evaluating management’s
efforts to control the impact.
4. Current Ratio. This is a measurement of liquidity, calculated by dividing total current assets by the total current liabilities. It is an
indicator of the Group’s short–term debt paying ability. The higher the ratio, the more liquid is the Group.
5. Debt–to–Equity Ratio. This gives an indication of how leveraged the Group is. It compares assets provided by creditors to assets provided
by shareholders. It is determined by dividing total liabilities by total equity.
The table below shows the comparative figures of the top five (5) key performance indicators for 2009 and 2008.
DISCUSSION ON KEY PERFORMANCE INDICATORS:
Key Performance Indicators 2009 2008
Amounts in thousands of πs, except for financial ratios
SHARE IN NET EARNINGS OF ASSOCIATES 2,535,386 2,784,511
EBITDA 9,866,532 5,406,974
CASH FLOW GENERATED:
Net cash flows from operating activities
Net cash flows (used in) investing activities
Net cash flows from financing activities
5,873,633
(23,953,482)
7,721,594
1,905,394
(5,787,844)
5,049,159
Net Increase (Decrease) in Cash & Cash Equivalents (10,358,255) 1,166,709
Cash & Cash Equivalents, Beginning 14,333,676 12,706,103
Cash & Cash Equivalents, End 3,814,906 14,333,676
CURRENT RATIO 0.68 2.12
DEBT-TO-EQUITY RATIO 2.18 0.54
Above key performance indicators are within management expectations.
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ANNUAL REPORT 2009 71
The Company’s Share in Net Earnings of Associates is slightly behind last year’s results primarily due to the lower contributions from STEAG
Power, operator of a 232-MW coal plant in Misamis Oriental, as it felt the impact of the decrease of a major index in its pricing formula which
went down this year versus last year.
The positive effects brought about by the income contribution of the Company’s new acquisitions during the year has vastly improved the
Company’s EBITDA which is up 82% versus the prior year. The EBITDA contributions from the geothermal assets under APRI starting May 2009
and the EBITDA contributions arising from the Therma Luzon IPPA for the coal plants in Pagbilao which started in October 2009 were the main
drivers of the increase in EBITDA.
Current ratio decreased due to the decrease in the Company’s Consolidated Cash as capital got invested into various acquisitions made during the
year.
To further augment the capital needed for its investment activities, the Company entered into various capital raising activities which increased
its debt to equity ratio.
Financial Results of Operations
The Company’s net income for 2009 grew by 31% to π5.77 billion from π4.42 billion for the same period last year. This lifted earnings per share to
π0.77 for the year ending December 31, 2009 versus an earnings per share of π0.59 ending December 31, 2008.
The power generation business improved its contributions by 68% from prior year as it shored in a net income contribution of π4.66 billion from
last year’s π2.78 billion. The primary contributor to this year’s impressive earnings is APRI, as it took over in May 2009 the geothermal facilities
in Tiwi-MakBan from PSALM. On its first year of operations APRI manage to contribute 44% of the total income contribution of the generation
group.
Total power sold by the Generation Companies for the period grew by 167% year-on-year (YOY) from 1,728 GWh to 4,619 GWh. As of end-2009,
AP’s power generation group had an attributable capacity of 1,745 MW, a 202% YOY increase from end-2008. It is this increase in attributable
capacity resulting from the acquistions of APRI (467 MW) and the IPPA of Therma Luzon for Pagbilao (700 MW) which has led to the surge in
generation sold by the Generation companies.
The Distribution Companies’ income contribution improved by 6% or π1.57 billion, from last year’s π1.48 billion. The Distribution Companies’
kilowatt-hour electricity sales for the period grew by 6% YOY, from 3,142 GWh to 3,322 GWh. The healthy growth―particularly that of AP’s major
distribution utilities, DLP and VECO―was observed to be coming from both its residential and commercial/industrial customers.
Material Changes in Line Items of Registrant’s Income Statement
Consolidated net income attributable to equity holders grew by π1.32 billion or 31%. Below is a reconciliation of growth in the consolidated
net income:
Consolidated Net Income Attributable to Equity Holders of the Parent for 2008
π4,333,613
Increase in Operating Revenues 10,931,285
Increase in Operating Expenses (7,127,623)
Decrease in Share in Net Earnings of Associates (249,126)
Decrease in Interest Income (197,568)
Increase in Interest Expense (2,435,442)
Increase in Other Income 436,719
Higher Provision for Income Taxes (12,806)
Increase in Minority Interests (20,471)
Total Growth 1,324,968
Consolidated Net Income Attributable to Equity Holders of the Parent for 2009
π5,658,581
Consolidated Operating Revenues increased by 89% versus last year. The increase in consolidated revenue is accounted for by the new revenue
contributions by Therma Luzon since the turnover of dispatch control of the 700-MW Pagbilao plant in October 2009 and the revenue contributions
from APRI geothermal plants that were turned over in May 2009. The revenues from these plants combined make up close to 90% of the increase
in consolidated revenue. The remaining increase is attributable to the higher revenue brought about by growth and higher passed on generation
costs by the distribution utilities.
As expected, as the operations of the new acquisitions are folded in, a corresponding increase in costs and expenses followed which increased
operating expenses by 67% over last year. The costs and expenses of Therma Luzon and APRI, account for 83% of the increase while 11% of the
increase was brought about by higher operating expenses at DLP due to higher purchased power costs.
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72 ABOITIZ POWER CORPORATION
The decrease in the share in equity earnings for the year is due to the lower contributions from STEAG Power, operator of a 232-MW coal plant in
Misamis Oriental, as it felt the impact of the decrease of a major index in its pricing formula which went down this year versus last year. Share in
net earnings of associates fell by 9% compared to last year or a total of π249 million.
As the Company’s cash is deployed to various investing activities, the interest income compared to prior years has gone down by 33% or π197.57
million.
Interest expense also increased by 643% due to the various debt raising acitivites entered into by the Company namely: 1) Fixed Rate Note of
five-year peso-denominated corporate fixed rate notes (“Notes”) in the aggregate amount of π5 billion. The Notes were issued in September
2009, 2) a total of π3 billion worth of peso-denominated fixed rate retail bonds issued last April 2009, 3) π3.89 billion in five-year and seven-year
peso-denominated corporate fixed rate notes issued last December 2008, 4) higher short-term bank loans. Another transaction that led to the
increase of the interest expense for the year is the effect of Therma Luzon’s IPPA which was accounted for as a finance lease. As a finance lease,
incremental borrowing rates were used in order to recognize the asset and liability relating to the long-term obligation. Correspondingly, the
discount determined at the inception of the agreement is amortized and recognized as interest expense. Although the recognition of the interest
is a non-cash transaction, the interest expense recognized by Therma Luzon on its statement of income for the year on the finance lease was π1.23
billion.
Other Income increased by π436.72 billion mainly due to the unrealized forex gains recognized by Therma Luzon on future minimum dollar
payments to PSALM as part of its IPPA agreement.
As a result of the foregoing, income before income tax increased by π1.36 billion or 27% from π5.04 billion in the previous year to π6.40 billion in
the current year. Provision for taxes ending 2009 increased by 2% to π631.19 million from a prior period provision of π618.38 million.
Changes in Registrant’s Resources, Liabilities and Shareholders Equity
Assets
Compared to year-end 2008 levels, consolidated assets increased by 136%, from π47.27 billion in December 2008 to π111.34 billion in
December 2009 due to the following:
Liabilities
a. Cash & Cash Equivalents was at π3.81 billion, down by 73% from year-end 2008 level of π14.33 billion (as restated). Through the debtraising
activities entered into by AP Parent, total cash raised reached close to π11 billion. A significant portion of the Company’s cash
was then deployed to APRI thru PHC to fund the full payment for the geothermal assets from PSALM. The total purchase price for these
assets totalled close to π21 billion. In 2009, cash was also used to pay shareholder dividends totalling π1.47 billion.
b. Trade & Other Receivables increased by 125%, from π1.99 billion to π4.48 billion due to the consolidated trade and other receivables of
both Therma Luzon and APRI totalling π2.53 billion.
c. Inventories increased by 234% due to APRI’s supplies and materials as well as coal inventory held by Therma Luzon.
d. The asset account for Property, Plant and Equipment considerably increased by 1065% from π6.26 billion in 2008 to π72.90 billion.
APRI’s newly acquired geothermal property, plant and equipment account for π19.91 billion, while Therma Luzon’s finance lease
recognition of the power plant and equipment on the Pagbilao assets added another π44.52 billion. The balance of the increase is due
to the construction in progresss of the hydro plants being built by Hedcor Sibulan.
e. Investments in and Advances to Associates increased by 17% or a total of π3.55 billion due to additional investments in associates of
π1.34 billion for a coal plant being constructed in Toledo, Cebu, and the recognition of equity earnings of π2.54 billion.
f. Increase of 283% in Pension Assets resulting from actuarial adjustments for DLP and CPPC which lead to the increase.
g. Deferred Income Tax Assets increased by π183.43 million or 276% primarily due to unrealized foreign exchange losses on dollar cash
holdings and Net Operating Loss Carryover (NOLCO) recognized by AP Parent during the year.
h. Other Noncurrent Assets increased by 132% or π879.62 million due to prepaid rent of π460.87 million mostly on advance payment of
land rental to PSALM by APRI and the build up of Input Vat Receivable due to the construction of a hydropower plant by Hedcor Sibulan.
Consolidated liabilities increased to a total of π76.29 billion, a 360% increase over year-end 2008 level. The following were the reasons for the
increase:
a) Bank Loans increased by 21% or π1.03 billion due to AP Parent’s availment of a short-term bank loan to support its investment activities.
b) Trade and Other payables increased by 91% from π3.15 billion in 2008 to π6.02 billion ending 2009 due to the first-time consolidation
of both APRI and Therma Luzon trade payables and accruals.
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ANNUAL REPORT 2009 73
Equity
c) The first-time recognition of Derivative Liabilities of π16.48 million represents the booking of marked to market losses on foreign
currency forwards entered into by AP Parent and Therma Marine.
d) Income Tax Payable increased by 349% or π283.79 million due to TLI’s recognition of income tax payable for the year.
e) Long-term Debts were increased by 149% or π9.73 billion versus year-end 2008 level by the following: 1) Fixed Rate Note of five-year
peso-denominated corporate fixed rate notes (“Notes”) in the aggregate amount of π5 billion. The Notes were issued in September
2009 2) a total of π3 billion worth of peso-denominated fixed-rate retail bonds issued last April 2009. The proceeds from these debtraising
activities were invested into the acquisition of the geothermal assets of APRI. The remaining increase is because of additional
loan drawdowns made by Hedcor Sibulan to finance the construction of its Sibulan hydropower project.
f) A new liability account this year is the account - Finance Lease Obligation. The Pagbilao IPPA agreement between PSALM and Therma
Luzon was deemed a finance lease. As a finance lease the lease is conceived to be a purchase of an asset requiring the recognition of an
asset (booked under property, plant and equipment) and a corresponding liability. The amount recognized as of end 2009 as Finance
Lease Obligation is π45.59 billion.
g) An increase in Customers’ Deposits of 13% or π210.02 million was due to new connections mainly in the franchise areas of DLP as it
continues to see robust growth in its customer base. DLP’s increase in customer deposits makes up 83% of the total increase. The
balance is coming from increased customer deposits from CLP, SEZ and APRI.
h) Payable to Preferred Shareholder of a Subsidiary went down by 9% as annual payments were timely made to preferred shareholders.
i) Pension liability increased by 95% or π13.69 million due to the recognition of pension obligations of newly consolidated company APRI
and an increase in pension liabilities at Hedcor, Inc., CLP and AP Parent.
j) Deferred Income Tax Liability decreased by 36% or π21.02 million due to the realization of forex transactions in 2009 for AP parent that
previously warranted the booking of the deferred tax liability in the previous year.
Equity attributable to equity holders of the parent increased by 14% from π30.16 billion as of December 2008 to π34.48 billion as of December
2009. This was mainly due to the consolidated net income of π5.77 billion, an upward adjustment in share in cumulative translation adjustments of
associates of π133.67 million and after a cash dividend payment of π1.47 billion in the first quarter of 2009.
The Company declared dividends of π0.20 per share to all shareholders of record as of February 26, 2009. This was paid on March 23, 2009.
Material Changes in Liquidity and Cash Reserves of Registrant
As of December 31, 2009, the Group’s cash reserves ended with a balance of π3.81 billion a 73% decrease from its balances as of December 31, 2008
of π14.33 billion (as restated). This was after major investing and financing activities conducted during most of the year.
Net cash from operating activities brought in π5.87 billion this year compared to net cash inflow of only π1.91 billion for the same period last year.
The higher income before income tax of π6.40 billion is the primary driver of the increase.
Net cash used in investing activities was π23.95 billion compared to π5.79 billion for the same period last year. The primary investing activity for
the period was the purchase of the geothermal assets of Tiwi-MakBan from PSALM, for π20 billion. The construction in progress by Hedcor Sibulan
for its hydro plant in Mindanao is still ongoing adding another π1.91 billion in cash used for investing activities. Another π1.34 billion went to the
construction of a coal plant in Toledo, Cebu.
Net cash from financing activities for the period in review was π7.72 billion, which was mainly the net result of inflows of long-term debt in the
amount of π9.76 billion, of which AP Parent raised fixed rate notes of π5 billion and π3 billion in corporate bonds. There was also an increase in
long term debt relating to the Hedcor Sibulan project as more draw downs were made in 2009. Short-term loans from banks of π1.14 billion were
availed of by AP parent as part of the purchase for the geothermal assets, and by subsidiaries to fund working capital requirements. There were
also cash outflows for the π1.47 billion dividend payout in the first quarter of 2009 as well as interest paid during the period totalling another π1.47
billion.
The Company finished the year with net cash outflows of π10.36 billion. The cash and cash equivalents for the period ending December 31, 2009
was π3.81 billion versus cash and cash equivalents as of December 31, 2008 of π14.33 billion (as restated). This is consistent with management’s
plan of raising capital and to deploy cash raised from these activities to acquire existing power facilities and develop Greenfield projects as well as
to improve its generation and distribution facilities.
Financial Ratios
Current ratio decreased by 1.44, from 2.12x as of December 2008 (as restated) to 0.68x in December 2009. This was due to the marked decrease
in cash used to finance investment activities although the recognition of trade receivables and inventory buffered the decrease in cash. This was
also brought down by the increase in current liabilities due to higher bank loans incurred in 2009 to fund working capital requirements and due to
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74 ABOITIZ POWER CORPORATION
higher trade and other payables as well as the recognition of the current portion of the Finance Lease Obligation. The use of the cash raised from
the capital raising activities during the year is consistent with the Company’s long-term plan of improving shareholder value by deploying capital
into high yielding investments.
Debt-to-equity ratio increased from 0.54 as of December 31, 2008 to 2.18 as of December 31, 2009 as AP raised debt to fund its various investing
activities.
Known Trends, Events, Uncertainties, which may have Material Impact on Registrant
Except for the developments disclosed in this report and the attached financial statements, there are, as of the date of this report, no known events
or uncertainties that have had or are reasonably expected to have a material impact on the financial condition and operations of the Company.
Outlook for the Upcoming Year/Known Trends, Events, Uncertainties, which may have Material Impact on Registrant
Notwithstanding external and uncontrollable economic and business factors that affect its businesses, the Company believes that it is in a good
position to benefit from the foreseen opportunities that will arise in the year 2010. Its sound financial condition, coupled with a number of industry
and company specific developments, should bode well for AP and its investee companies. These developments are as follows:
Generation Business
1. Continued Growth in the Company’s attributable capacity
AP ended the year 2009 with a total attributable generating capacity of 1,745 MW, recording a 202% YOY expansion from end-2008 level of 578
MW. The capacity growth was mainly due to the following:
- In May 2009, the Tiwi-MakBan geothermal plants were turned over to APRI. The facilities are the Company’s first geothermal assets.
Based on 2009 operations, the Tiwi-MakBan geothermal plants’ peak generation was recorded at 467 MW.
- On August 28, 2009, Therma Luzon, a wholly owned subsidiary of AP, submitted the highest offer in the competitive bid for the
appointment as the IPPA of the 700-MW Contracted Capacity of the Pagbilao Coal-Fired Thermal Power Plant located in Pagbilao,
Quezon (the “Pagbilao IPPA”) conducted by PSALM. The bid price amounted to U.S.$691 million as calculated in accordance with
PSALM bid rules. This value represents the present value of a series of monthly payments to PSALM from October 2009 to August 2025
using PSALM discount rates. On October 1, 2009, Therma Luzon assumed dispatch control of the 700-MW Contracted Capacity of the
Pagbilao Plant following the successful completion by Therma Luzon of the conditions precedent required in the IPP Administration
Agreement with PSALM. As IPPA, Therma Luzon is responsible for procuring the coal requirements of the Pagbilao Plant and for selling
the electricity generated by the plant.
In 2010 and moving forward, AP’s attributable capacity is seen to further increase as the following events take place:
- Takeover of the two barge-mounted diesel powered generation plants, each with a generating capacity of 100 MW.
AP, through wholly owned subsidiary Therma Marine assumed ownership of PB 118 and PB 117 on February 6, 2010 and March 1, 2010, respectively.
PB 118 is a power barge with a 100-MW bunker-fired generating facility moored in Bgy. San Roque, Maco, in Compostella Valley, Mindanao, while
PB 117 is a power barge with a 100-MW bunker-fired generating facility moored in Bgy. Sta. Ana, Nasipit, Agusan del Norte, Mindanao.
AP acquired both power barges on July 31, 2009 via a successfully concluded negotiated bid with PSALM. The total purchase price for both barges
is U.S.$30 million. Therma Marine has ASPAs with the NGCP involving 100 MW (out of the total 200 MW) of generating capacity.
- Completion of Greenfield and Brownfield projects
Construction work on the 42.5-MW run-of-river hydropower plant in Bgy. Sibulan, Sta. Cruz, Davao del Sur by AP’s 100%-owned subsidiary
Hedcor Sibulan is expected to be completed in 2010. The facilities, which comprise two cascading hydropower generating facilities tapping the
Sibulan and Baroring rivers, are expected to generate an estimated 212 million kWh of clean and emissions-free energy annually. The commercial
operation of the first plant, which has a capacity of 26 MW, started in March 2010, while the second plant, with a capacity of 16.5 MW, is expected
to commence in May 2010.
The 3x82-MW coal-fired power plant in Toledo City, Cebu, which is a joint venture with Metrobank Group’s Global Business Power Corporation
and Cebu-based Vivant Energy Corporation of the Garcia Group, is scheduled for completion in 2010. The first 82-MW unit started to generate and
deliver power to the Visayas grid in March 2010. The second and third 82-MW units are expected to commence commercial operations by second
and fourth quarters of 2010, respectively. AP has an effective participation of 26% in the project.
The Company, together with its partner SN Power Invest AS (SN Power), is pursuing the programmed rehabilitation of both the 75-MW Ambuklao
and 100-MW Binga hydro facilities. Rehabilitation of the former is expected to be completed by 2010, with the first unit coming on stream by third
quarter of 2010, while the second and third units by the last quarter of 2010. Total capacity is expected to increase to 105 MW. Rehabilitation works
on Binga will commence after, performing works on one unit per year. Completion of rehabilitation of all four units is expected by 2014, which
should enhance generating capacity by 20% to 120 MW.
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ANNUAL REPORT 2009 75
2. Greenfield Projects
Wholly owned subsidiary Hedcor Tamugan is planning to build a 10 to 15 MW hydro plant along the Tamugan River following the compromise
between Hedcor and DCWD on the Tamugan water rights dispute. Further discussion with the DCWD led to the revision of the project’s design and
plant size. Hedcor Tamugan has submitted a proposal for a 15-MW hydropower plant, in lieu of the contested proposal for a 27.5-MW hydropower
plant. Given the new project scheme, Hedcor Tamugan will have to conduct studies for engineering design (one year). Once approved and permits
are secured, the two-year construction period will commence. Despite the lower generating capacity, the required amount of energy under a
power supply agreement between the Hedcor consortium (of which Hedcor Tamugan is a part of) and DLP will be met.
On February 17, 2007, AP entered into a memorandum of agreement with Taiwan Cogeneration International Corporation (Taiwan Cogen), a
Taipei-based generation company, to collaborate in the building and operation of a 300-MW coal-fired power plant in the SBFZ. On May 30, 2007,
RP Energy was incorporated as the 50:50 joint venture company for this project. The project is estimated to cost U.S.$500 million. AP, together
with its partner Taiwan Cogen, has put the Subic coal project on hold for further review as the Company continues to assess the changes to the
demand in the Luzon Grid following the global financial crisis.
100%-owned subsidiary Hedcor, Inc. is conducting feasibility studies for potential hydropower projects located in both Luzon and Mindanao.
Based on current findings, Hedcor sees the potential of building 5-50 MW plants in the identified areas. The feasibility studies are expected to be
completed in two years. Once permits are secured, another two years will be needed for the actual construction of the hydro facilities.
3. Participation in the Government’s Privatization Program for its Power Assets
With more than 70% of NPC’s assets bidded out and awarded, the Company continues to closely evaluate the investment viability of the remaining
power generation assets that PSALM intends to auction off.
AP is also keen on participating in PSALM’s public auction for the IPP Administrator contracts, which involves the transfer of the management and
control of total energy output of power plants under contract with NPC to the IPPA.
Distribution Business
As the impact of the global financial crisis to the local economy unfolds, the Company remains optimistic it will realize modest growth on its
existing distribution utilities. It continually seeks efficiency improvements in its operations to maintain healthy margins.
The implementation of the rate adjustment formula for the distribution companies under the PBR is on a staggered basis. In addition to annual
adjustments, PBR allows for rate adjustments in between the reset periods to address extraordinary circumstances. There is also a mandatory
rate-setting every four years where possible adjustments to the rate take into account current situations.
On May 1, 2009, CLP implemented its final approved rate structure, which was released by the ERC on April 15, 2009. This rate structure was based
on the approved annual revenue requirement and performance incentive scheme under the PBR. CLP is the first distribution utility in the AP group
to implement this incentive-based scheme.
VECO and DLP are part of the third group (Group C) of private distribution utilities expected to enter PBR. Both VECO and DLP entered their
respective reset periods in end 2008 and are expected to enter the four-year regulatory period by July 1, 2010.
SFELAPCO and SEZ are part of the fourth batch (Group D) of private distribution utilities to enter PBR. They are expected to enter their respective
four-year regulatory period by October 1, 2011.
In April 2009, VECO also applied for a petition with the ERC under the RORB ratemaking regime for the adjustment and realignment of its current
distribution charge. After the conclusion of the application process, which included a series of public consultations, the ERC granted VECO’s
petition last August 7, 2009 with modifications on the sound value of assets and the revenue requirement. After taking the adjustments into
consideration, the average rate adjustment was π0.2267 per kWh. The rate adjustment was implemented starting September 10, 2009.
In September 2009, SFELAPCO filed a rate increase application with the ERC under the RORB rate-making methodology, which is still pending at
present. The average rate adjustment applied for is π0.3980/kilowatt-hour.
The Company’s strategy in running its utilities is one of providing world-class service at the least possible cost. Providing value to its customers
allows the Company credibility and the ability to successfully implement justified rate increases. This, along with a transparent and open
relationship of over 70 years with the regulators, ensures the Company’s continued ability to successfully apply and implement rate increases.
AP will participate in the bid to privatize the Olongapo Public Utilities Department (Olongapo PUD), which is tasked with the operation and
maintenance of the electric, light and power systems of Olongapo City, Zambales. The bidding is scheduled to take place in May 2010. In 2008, the
Olongapo PUD sold 139 GWh of electricity to approximately 41,000 customers. Average peak demand in 2008 was at 28.6 MW.
SEC FORM 20 - IS (INFORMATION STATEMENT)

76 ABOITIZ POWER CORPORATION
Market and Industry Developments
1. Power Supply Option Program and the Open Access and Retail Competition
On March 1, 2010, the Power Supply Option Program (PSOP) for the Luzon grid was implemented, particularly in the franchise areas of distribution
utilities that have volunteered participation in the said program. Under the PSOP, an eligible contestable customer, which is defined as an end-user
with a monthly average peak demand of at least 1 MW for the preceding 12 months, will have the option to source their electricity from eligible
suppliers that have secured a Retail Electricity Supplier (RES) license from the ERC. Eligible suppliers shall include the following:
- Generation companies that own, operate or control 30% or less of the installed generating capacity in a grid and/or 25% or less of the
national installed capacity
- NPC-IPPs with respect to capacity which is not covered by contracts
- IPP Administrators with respect to the uncontracted energy which is subject to their administration and management
- RES duly licensed by the ERC
The PSOP will end upon the implementation of the Open Access and Retail Competition (Open Access), which will take effect once NPC is
able to privatize 70% of its IPP contracts. All contracts entered into by entities participating in the PSOP shall be terminated. The industry
participants, in accordance with the rules and policies of the Open Access scheme, shall enter into new contracts.
This development presents a big opportunity for AP, as it has two wholly owned subsidiaries, AESI and Adventenergy, Inc., that are licensed retail
suppliers, which can enter into contracts with the eligible contestable customers, both under the PSOP and the Open Access regime. Moreover,
AP’s generation assets that have uncontracted capacity will be able to have direct access to eligible contestable customers through AP’s licensed
RES. These assets are the Magat, Ambuklao and Binga hydropower plants, Tiwi-MakBan geothermal facilities and the Pagbilao coal plant, via its
IPPA contract. However, some of these plants have Transition Supply Contracts with Meralco, a participating entity under the PSOP. Any capacity
that will be contracted through the PSOP with existing Meralco customers could result to volume reductions in these generation assets’ Transition
Supply Contracts.
Capital Raising and Refinancing Activities
On April 30, 2009, AP issued a total of π3 billion worth of peso-denominated fixed rate retail bonds under the following terms:
MATURITY INTEREST RATE AMOUNT
Five-year bonds to mature on May 1, 2014 8.7% p.a. π2,294,420,000
Three-year bonds to mature on April 30, 2012 8.0% p.a. π705,580,000
The issue was 2.5 times oversubscribed and had to be upsized from π1.5 billion to π3 billion. The Philippine Rating Services Corporation (PhilRatings)
issued a “PRS Aaa” rating for this bond issue in February 2009. Obligations rated “PRS Aaa,” the highest possible rating by PhilRatings, are of the
highest quality with minimal credit risk―an indication of the extremely strong capacity of the obligor to meet its financial commitment on the
obligation.
On September 18, 2009, AP signed a Notes Facility Agreement with First Metro Investment Corporation as Issue Manager, MBTC – Trust Banking
Group as Notes Facility Agent and a consortium of primary institutional lenders for the issuance of five-year peso-denominated corporate fixed
rate notes (“Notes”) in the aggregate amount of π5 billion. The Notes were issued in September 2009 in a private placement to not more than 19
primary institutional investors pursuant to Section 9.2 of the Securities Regulation Code (SRC) and Rule 9.2(2)(B) of the SRC Rules.
DISCUSSION ON KEY PERFORMANCE INDICATORS:
Key Performance Indicators
Amounts in thousands of πs, except for financial ratios
2008
(As restated)
2007
(As restated)
EQUITY IN NET EARNINGS OF ASSOCIATES 2,784,511 2,803,833
EBITDA 5,406,974 5,584,406
CASH FLOW GENERATED:
Net cash flows from operating activities
Net cash flows (used in) investing activities
Net cash flows from financing activities
1,905,394
(5,787,844)
5,049,159
4,040,389
(8,644,866)
16,613,532
Net Increase in Cash & Cash Equivalents 1,166,709 12,009,055
Cash & Cash Equivalent, Beginning 12,706,103 912,564
Cash & Cash Equivalent, End 14,333,676 12,706,103
CURRENT RATIO 2.12 2.43
DEBT-TO-EQUITY RATIO 0.54 0.32
Above key performance indicators are within management expectations.
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ANNUAL REPORT 2009 77
Earnings contributions of power assets acquired in 2007 remained significant contributors to the equity net earnings compared to amounts
recorded in the same period last year. The year 2008 ended with incremental contributions from the full year contributions of these companies
with the largest incremental contribution coming from STEAG Power, which contributed π1.09 billion. From the full year income of EAUC, also a
recent acquisition, came an incremental contribution of π112 million. LHC, an existing investment, also contributed π540.25 million in additional
earnings, most of which came from the reversal of accrued costs and tax provision following the settlement of the dispute with Transfield, the
turnkey contractor of LHC’s Bakun Plant. The incremental contributions mentioned above were offset by the effects of the weakening currency
leading to non-recurring forex losses on some other investees. Both SNAP-Magat and SNAP-Benguet were impacted by the weaker peso, which
resulted in a huge swing from unrealized forex gains for the two companies in 2007 to unrealized forex losses in 2008. Notwithstanding the effects
of the exchange rate fluctuations on its bottom line, SNAP-Benguet managed to contribute in operating terms following the turnover of the
Ambuklao-Binga plants in July 2008.
The Company’s EBITDA is lower by 3% YOY. The positive effects brought about by the income contribution of the Company’s new acquisitions as
well as its prudent spending failed to translate into a higher EBITDA due to non-recurring forex losses from the effects of a weakened peso.
The decrease in the current and other financial ratios was a consequence of improved utilization of capital. This is apparent in the increase in the
investments made by the Company during the year versus investments made as of year-end 2007. This is consistent with the Company’s long-term
plan of improving shareholder value by deploying capital into high-yielding investments.
The Company continues to evaluate the investment viability of the remaining power generation assets that the PSALM intends to auction off.
The financial figures presented are in compliance with the requirements/comments made by the SEC’s Office of the General Accountant in its
letter to AP dated February 3, 2009 and which letter AP replied to on February 18, 2009.
To address the SEC’s comments on the completeness of the Segment Reporting Disclosure in the December 2007 financial statements, Note 25
in the accompanying audited financial statements as of December 31, 2008 has endeavored to disclose the basis of inter-segment revenues. As
disclosed in the notes to the financial statements, inter-segment revenues, are in the form of management fees as well as inter-segment sales of
electricity which are eliminated in consolidation. The transfers are accounted for at competitive market prices on an arms length transaction basis.
The Company has not allocated or transferred revenues or expenses among its segments.
On the disclosure relating to Business Combination, Note 7 on the accompanying audited financial statements as of December 31, 2008, the
Company has disclosed the profit or loss on companies acquired in 2007 from date of acquisition that is included in the Company’s profit or loss
for the period. On the accompanying audited financial statements, the Company has disclosed that from the date of acquisition in April 2007 to
December 31, 2007, CPPC contributed π162.6 million to the net income of the Group. Another acquisition in 2007, EAUC contributed π61.6 million.
STEAG Power, which was acquired in the last quarter of 2007 contributed π94.8 million.
In the December 31, 2007 financial statements of the Company, Note 29 referred to a DLP refund obligation as a result of an adverse decision
rendered by the Supreme Court. The amounts were disclosed in DLP’s financial statements as immaterial. The estimated amount due for refund
to DLP’s customers is π4.08 million, which is disclosed under Note 31 Other Matters on the accompanying audited financial statements for the
year ending December 31, 2008.
Financial Results of Operations
The Company’s net income for 2008 grew by 3% to π4.42 billion from π4.28 billion for the same period last year. This translates to an earnings per
share of π0.59 for the year ending December 31, 2008 versus an earnings per share of π0.66 ending December 31, 2007. Earnings per share fell by
11% due to the higher number of outstanding shares as of ending 2008 compared to year ending 2007.
The Distribution Companies brought in an income contribution of π1.48 billion, which was lower by 3% from last year’s π1.52 billion. The drop
in income contribution is due to higher operating costs on the larger distribution utilities which outpaced any increases brought in by the slower
growth. The Distribution Companies’ kilowatt-hour electricity sales for the period grew by 13% year-on-year, from 2,789 GWh to 3,142 GWh. The
growth mostly came from the contributions arising from the 2007 acquisitions and the expansion of SEZ’s industrial segment, mainly due to the
operation of the Hanjin shipyard in SBFZ.
The power generation business shored in a net income contribution of π2.78 billion, recording an 6% YOY growth from last year’s π2.61 billion.
The growth is attributed to the incremental earnings contributions from the 2007 acquisitions, with a major contribution coming from the 232-MW
STEAG coal power plant.
Total power sold by the Generation Companies for the period recorded a 70% YOY expansion, from 1,018 GWh to 1,728 GWh. As of end-2008, AP’s
power generation group had an attributable capacity of 578 MW, an 18% YOY increase from 2007. The increase was due to the turnover of the
175-MW Ambuklao-Binga hydro power plants in July 2008. Moreover, improved capacity factors of the hydroelectric plants due to higher rate of
rainfall also led to the improvement in the power generation for the period.
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78 ABOITIZ POWER CORPORATION
Material Changes in Line Items of Registrant’s Income Statement
Consolidated net income attributable to equity holders grew by π172.97 million or 4%. Below is a reconciliation of growth in the consolidated
net income:
Consolidated Net Income Attributable to Equity Holders of the Parent for 2007
π4,160,645
Increase in Operating Revenues 930,989
Increase in Operating Expenses (1,261,818)
Growth from Share in Net Earnings of Associates (19,321)
Increase in Interest Income 276,627
Increase in Interest Expense (181,034)
Increase in Other Income 387,844
Lower Provision for Income Taxes 15,949
Decrease in Minority Interests 23,732
Total Growth 172,968
Consolidated Net Income Attributable to Equity Holders of the Parent for 2008
π4,333,613
Total consolidated operating revenues grew by 8% versus the same period last year. The distribution subsidiaries’ consolidated revenues increased
by π430.19 million, a 5% increase for the period. The combined revenues of the Enerzone companies ―recent acquisitions MEZ and BEZ as well
as SEZ―as a group grew by 36%.
On the other hand, the consolidated revenues of the power generation business recorded a strong growth of 19% or π485.9 million. As in the
year 2007, CPPC’s contribution to 2008 consolidated revenue is the sole reason for the increase in this segment’s increased revenue. The increase
in CPPC’s revenue contribution is attributed to its full-year contribution compared to only seven months revenue contribution for the year 2007.
CPPC’s revenue contribution for 2008 also rose as against 2007 level due to the higher cost of fuel which is passed on as part of its tariffs.
The 14% or π1.26 billion increase in consolidated costs and expenses was primarily due to the additional cost of CPPC’s generated power. The
higher cost of power purchased by SEZ, MEZ and BEZ also added to the increase.
Share in net earnings of associates came in almost flat for the full year 2008 at π2.79 billion versus π2.80 billion in 2007. The π1.09 billion income
contribution of STEAG Power cushioned the impact of the decrease in MORE’s consolidated net income as a result of the decreased contribution
of its subsidiaries, SNAP-Magat and SNAP-Benguet. Both SNAP-Magat and SNAP-Benguet were impacted by the weaker Peso, which resulted
in a huge swing from unrealized forex gains for the two companies in 2007 to unrealized forex losses in 2008. Notwithstanding the effects of the
exchange rate fluctuations on its bottom line, SNAP-Benguet managed to contribute in recurring operating terms following the turnover of the
Ambuklao-Binga plants in July 2008. EAUC, another recent acquisition, made a full-year contribution of π112.19 million.
Interest income increased by 84%. The increase in interest income was due to the income earned on interest on the significant cash balances
carried by parent through most of the year compared to 2007 where interest income from cash raised during the IPO proceeds came in for only
half of the year.
Interest expense also increased by 92% due to the full-year effect of a short-term loan versus only two months of interest expense on this loan for
2007.
Other Income increased by π387.84 million mostly due to the unrealized forex gains from the AP Parent’s dollar-denominated cash balances.
As a result of the foregoing, income before income tax increased by π133.29 million or 3% over the same period a year ago. Provision for taxes
decreased by almost 3% to π618.39 million from a prior period provision of π634.33 million.
Changes in Registrant’s Resources, Liabilities and Shareholders Equity
Assets
Compared to year-end 2007 levels, consolidated assets increased by 31%, from π36.18 billion in December 2007 to π47.27 billion in December
2008, due to the following:
a. Cash & Cash Equivalents was at π14.33 billion (as restated), up by 31% from year-end 2007 level of π12.71 billion (as restated). This
was due to additional cash brought in by short-term loans of π949 million and the proceeds from the fixed-rate notes offering of the
Company which amounted to π3.89 billion. The increase in cash brought about by the capital-raising activities mentioned above were
expended for additional investments totaling π3.78 billion as well as for payment of dividends in the first quarter of the year amounting
to π1.32 billion. The rest of the cash deployment was made for the capital expenditures during the year. Cash also increased due to
dividends of π1.93 billion from associates.
b. Trade & Other Receivables increased by 20%, from π1.66 billion to π1.99 billion due to dividends receivable from an associate as well as
interest bearing advances made to related parties.
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ANNUAL REPORT 2009 79
c. Inventories decreased by 11% due to the purchase of inventories before yearend 2007 for purposes of conducting programmed schedule
of maintenance and use in Capex projects in 2008.
d. Other Current Assets increased by 59%, to π501.15 million from π314.89 million due to input VAT arising from construction in progress
as well as higher taxes withheld.
e. Property, Plant and Equipment increased by 53% from π4.10 billion (as restated) in 2007 to π6.26 billion mainly due to the consolidation
of the plant and equipment of Hedcor Sibulan, which is currently undertaking the construction of a 42.5-MW hydropower project in
Davao del Sur into ARI.
f. Intangible Assets-Service Concession Rights increased by π192 million or 29% primarily due to new capital expenditures by SEZ and
MEZ which were booked as intangible assets following their adoption of IFRIC 12.
g. Investments in and Advances to Associates increased by 46% or a total of π6.65 billion due to additional or new investments in associates
with the significant investment/advances as follows:
I. π3.39 billion for additional equity into MORE, which was in turn invested into the acquisition of the Ambuklao-Binga hydropower
complex;
II.
III.
π278.89 million in equity into RP Energy;
π1.47 billion in investments/advances of subsidiary Abovant into CEDC, the project company for a 3X82-MW coal plant in Toledo
City, Cebu.
Liabilities
h. Decrease of 58% in available for sale investments deemed to have decreased in value.
i. Decrease in Pension Assets by 66% resulting from the decreased contributions on retirement fund.
j. Deferred tax assets increased by 10% primarily due to the recording of deferred tax asset of subsidiary PHC on dollar-denominated
advances from AP Parent and some incremental deferred tax asset increase.
k. Other Noncurrent Assets increased by 20% and is mainly representing the unamortized portion of remittances made by a subsidiary,
SEZ, on various lease agreements with SBMA.
Consolidated liabilities increased to a total of π16.58 billion, an 88% increase over year-end 2007 level. The following were the reasons for the
increase.
Equity
a) Bank Loans increased by 44% or π1.45 billion due to the availment of credit lines by some of the companies subsidiaries for their
working capital requirements as well as due to the increase in dollar-denominated debt as a result of the weakening of the peso.
b) Trade and Other payables increased by 17% due to advances payable by subsidiary Abovant to shareholders to fund infusions into CEDC.
c) Income Tax Payable was lower by 27% due to lower income tax provision recorded during the period under review.
d) Long-term debt increased by 678% or by π5.68 billion versus year-end 2007 level. This is due to the π3.89 billion in fixed rate notes of AP
Parent availed of last December 2008 as well as Hedcor Sibulan’s availment of π1.72 billion long-term debt to finance the construction
of its 42.5-MW hydropower project and SEZ’s refinancing of its long-term debt.
e) An increase in customers’ deposit of 14% or π197.16 million was mainly due to new connections in the franchise areas of CLP, DLP and
SEZ.
f) Payable to preferred shareholder of a subsidiary went down by 7% as annual payments were timely made to preferred shareholders.
g) Pension liability decreased by 6% as a result of lower pension obligations of AP Parent and PHC.
h) Deferred Income Tax Liability increased by 52% due to unrealized forex gains on cash and dollar advances to a related party.
Equity attributable to equity holders of the parent increased by 13% from π26.74 billion as of December 2007 to π30.16 billion as of December
2008. This was mainly due to consolidated net income of π4.33 billion, an upward adjustment in share in cumulative translation adjustments of
associates of π557.55 million and after a cash dividend payment of π1.33 billion in the first quarter of 2008.
The Company declared dividends of π0.18 per share to all stockholders as of record date February 21, 2008. This was paid on March 3, 2008.
SEC FORM 20 - IS (INFORMATION STATEMENT)

80 ABOITIZ POWER CORPORATION
Material Changes in Liquidity and Cash Reserves of Registrant
As of December 31, 2008, the Group’s cash reserves posted a balance of π14.33 billion (as restated) after major investing and financing activities.
The excess cash will be used to fund its programmed capital expenditures and to finance planned asset acquisitions for the remainder of the year.
Net cash from operating activities was only π1.90 billion this year compared to the net cash inflow of π4.04 billion for the same period last year.
The seemingly lower cash from operations in 2008 versus 2007 is actually due to the inflow in 2007 from AEV payment of its advances to AP. This
year’s cash from operations was mostly from cash flows from higher income before income tax in 2008.
Net cash used in investing activities was π5.79 billion compared to π8.64 billion for the same period last year. Out of the amounts used, π3.78
billion is accounted for by additional or new investments, acquisitions of and or capital expenditures for property, plant and equipment of π2.62
billion and payments of advances to associates of π1.69 billion. These outflows were met partially through interest received in the amount of π595
million, dividends received from associates in the amount of π1.93 billion and collections of advances from affiliates and interest income received.
Net cash from financing activities for the period in review was π5.05 billion, which was mainly the net result of inflows of long-term debt in the
amount of π5.71 billion, of which fixed-rate notes came in at π3.89 billion and π1.7 billion in Hedcor loans. Short-term loans of π949 million were
availed of by subsidiaries to fund working capital requirements. There were also cash outflows for the π1.32 billion dividend payout in the first
quarter of 2008.
The Company finished the year with net cash inflows of π1.17 billion. The cash and cash equivalents of π14.33 billion (as restated) for the period
ending December 31, 2008 was 13% higher than the cash balance of π12.71 billion in December 31, 2007. With the significant cash balances
management will be able to continue with its plan to deploy cash raised to improve its generation and distribution facilities, acquire existing power
facilities and develop Greenfield projects.
Financial Ratios
Current ratio decreased by 0.31, from 2.43x as of December 2007 to 2.12x in December 2008 (as restated). This was due to the increase in current
liabilities due to higher bank loans incurred in 2008 to fund working capital requirements and translation impact of the weaker peso. Current
liabilities also went up due to higher trade and other payables. The cash raised from capital raising activities of the Company in 2007 and 2008 was
deployed into investments made by the Company during the year. This is consistent with the Company’s long-term plan of improving shareholder
value by deploying capital into high-yielding investments.
Debt-to-equity ratio increased from 0.32 as of December 31, 2007 versus 0.54 as of December 31, 2008 as AP raised debt to fund its various
investing activities.
Key Performance Indicators for 2007 (as restated) and 2006 (as restated) are as follows:
Key Performance Indicators
Amounts in thousands πs, except for financial ratios
2007
As restated
2006
As restated
EQUITY IN NET EARNINGS OF INVESTEES 2,803,833 1,075,844
EBITDA 5,584,406 2,936,982
CASH FLOW GENERATED:
Net cash flows from operating activities
Net cash flows (used in) investing activities
Net cash flows from financing activities
3,998,435
(8,694,912)
16,705,532
825,509
931,005
(1,239,883)
Net Increase (Decrease) in Cash & Cash Equivalents 12,009,055 516,631
Cash & Cash Equivalent, Beginning 1,494,272 985,188
Cash & Cash Equivalent, End 13,287,811 1,494,272
CURRENT RATIO 2.52 3.15
DEBT TO EQUITY RATIO 0.32 0.46
Above key performance indicators exceeded management expectations.
Earnings contributions of power assets acquired during the year accounted for the increase in equity in net earnings of investees. Income
contributions generated by MORE, STEAG Power and EAUC offset the decline in LHC’s earnings. The decline in LHC’s earnings was foreseen as
capacity fee rates were already known to be lower during the period in review. LHC follows a fee schedule that is stipulated in its contract with the
NPC. The other reason for the decline in LHC’s net income was the strengthening of the peso against the U.S. Dollar.
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ANNUAL REPORT 2009 81
The new additions and more importantly the strong showing of AP’s subsidiaries resulted in the 90% YOY growth in EBITDA. Strong revenue growth
due to increased volume sales, coupled with improved operating efficiencies, led to robust operating margins. The fresh earnings contribution of
recently acquired CPPC was also another source of growth.
With controls in place, the Company managed to keep and even raise the levels of cash it accumulated from the capital-raising activity it set out
during the year. Improved utilization of capital should enable AP to enhance shareholder value as it explores and takes advantage of growth
opportunities in its businesses.
The government, through NPC and the PSALM, is expected to continue to auction off power generation assets. The Company is currently
evaluating the investment viability of these assets and intends to participate in the upcoming bidding process.
Year Ended December 31, 2007 (as restated) compared to year ended December 31, 2006 (as restated)
Results of Operations
AP’s consolidated net income for 2007 was π4.28 billion for the year, a hefty 126% increase over the 2006 net income of π1.89 billion. Earnings per
share improved to π0.66 from π0.37 for the comparative period in review.
The power generation business’ contribution to net income to equity holders of AP Parent was π2.61 billion, recording an increase of 210% from
last year’s π842.53 million. The increase was mainly due to the increment in AP’s attributable generating capacity by 291% as a result of the
acquisition of 50% of the 360-MW Magat hydropower plant, 60% of the 70-MW thermal power plant owned and operated by CPPC, 50% of the
50-MW thermal power plant owned and operated by EAUC and 34% of the 232-MW coal-fired plant owned and operated by STEAG Power. The
four facilities started contributing to AP’s results in the second half of 2007.
The power distribution business, as a whole, contributed π1.52 billion to net income to equity holders of the parent, up 52% YOY from π999.85
million. This was at the back of electricity sales growth of 11% YOY by all subsidiaries and associates, from 2,507 GWh in 2006 to 2,790 GWh in 2007.
The increase in the income contribution of the power distribution business was also due to an improvement in the gross profit per kWh.
Material Changes in Line Items of AP’s Income Statement
Consolidated net income attributable to equity holders of the parent increased by 123% due to the following:
a. Operating revenues net of operating expenses at year-end 2007 registered at π1.98 billion, up by 55% or an increase of π699 million over
the gross profit the previous year. Consolidated revenues grew by 30.0% to π11.31 billion while operating expenses were up by 26% to
π9.33 billion from π7.40 billion. Fresh contribution from CPPC accounted for 52% of the increase in gross profit.
The power distribution subsidiaries finished the year with an increase of 11% in operating revenues, mainly due to higher kWh sold that
grew by 26% YOY. The power generation group’s consolidated revenues, on the other hand, recorded a notable 244% YOY increase.
CPPC accounted for 67% of the total increase in consolidated revenues.
Operating expenses were composed mainly of generated power and purchased power cost. The generated power cost component
increased by 990% during the year due to the consolidation of CPPC. Purchased power cost also increased by 11%, primarily due to
higher amount of electricity purchased as kWh sold by the distribution group increased.
b. Share in net earnings of associates increased by 161% principally due to the income contribution of the newly acquired associates.
MORE, STEAG Power, and EAUC contributed π1.62 billion, π94 million and π62 million, respectively.
Meanwhile, LHC posted a decline in earnings contribution as revenues were reduced due to the reduction in contracted capacity fee
rates and the strengthening of the Philippine peso versus the U.S. Dollar.
c. Interest income increased by 524% due to higher placements coming from IPO proceeds of the Company. Interest expense dropped by
11% due to a decline in interest rates. As of December 31, 2007, 80% of the Group’s long-term debt had floating interest rates ranging
from 6.21% to 6.89%, and 20.0% of the debts had fixed rates ranging from 8.78% to 9.50%. As of December 31, 2006, 56.0% of the
Group’s long-term debt had floating interest rates ranging from 7.48% to 9.23%, and 44.0% had fixed rates ranging from 8.78% to
11.20%.
d. Other Income net of other expenses decreased by π119.36 million or 110% mainly due to higher foreign exchange loss recorded at the
Company and PHC.
As a result of the foregoing, income before income tax increased by 114% YOY. Correspondingly, provision for income tax increased by
57% as a result of higher taxable income reported by the Company.
SEC FORM 20 - IS (INFORMATION STATEMENT)

82 ABOITIZ POWER CORPORATION
Material Changes in AP’s Resources, Liabilities and Shareholders Equity
Assets
Compared to year-end 2006 levels, the Company’s consolidated assets grew by 195%, from π12.28 billion in December 2006 to π36.18 billion in
December 2007, due to the following:
Liabilities
a. Cash & Cash Equivalents were at π13.29 billion, up by 789% from year-end 2006 level of π1.49 billion. This is mainly attributed to the
higher cash balance at the parent company level. The increase was due to excess funds from the capital raised during the IPO.
b. Trade & Other Receivables decreased by 36%, from π2.60 billion to π1.66 billion. This is mainly due to the payment by AEV of its
advances from the Company.
c. Inventories were higher by 73%, from π217.12 million to π374.63 million. Current balance includes the π88 million materials and supplies
of CPPC. The increase was also due to DLP’s inventory build up for use in future capex projects.
d. Other Current Assets increased by 141% to π314.89 million from π184.20 million, 44% of which came from input VAT of newly acquired
CPPC. Remaining amounts also relate to net input VAT of PHC.
e. Property, Plant and Equipment-net increased by 33% or π4.10 billion versus π3.09 billion, mainly due to the consolidation of the plant
and equipment of newly acquired CPPC, MEZ and BEZ, the additional ownership in SEZ and the ongoing construction of the Hedcor
Sibulan project.
f. Investments in and Advances to Associates increased by 272%, from π3.92 billion in December 2006 to π14.60 billion in December 2007.
Acquisitions made during the year in review accounted for the increase. Moreover, the carrying values of existing equitized investments
also increased as AP recognized its share in the earnings of associates amounting to π2.80 billion, net of the π581.79 million cash
dividends received.
g. AP recorded an increase in Goodwill of 352%, from π220.23 million to π996 million. This was mainly goodwill of newly acquired utilities
BEZ and MEZ.
h. Deferred Income Tax Assets increased by π50.81 million, attributable mainly to deferred tax on unrealized foreign exchange loss of the
subsidiaries’ advances to related party.
i. Other Noncurrent Assets were up by 105%, from π33.95 million to π69.64 million. This was principally due to SEZ’s prepaid rent to
SBMA.
Consolidated bank loans and long-term debts increased by 249%, or π2.98 billion, compared to 2006 year-end level. The significant increase is
mainly due to the π3.31 billion short-term bank loan of the Company that arose out of the STEAG Power acquisition.
Trade and other payables were up 132%, π2.69 billion versus π1.16 billion, mainly attributable to subsidiaries’ advances to the Company.
Customers’ deposits grew by 22% due to the increase in the power distribution group’s customer base and the recording of customers’ deposits
of new acquisitions MEZ and BEZ.
Income tax payable was up 85% principally due to higher income tax provision recorded during the period under review.
Equity
Equity attributable to equity holders of the Company grew by 222%, from π8.31 billion as of December 2006 to π26.74 billion as of December 2007,
largely due to the issuance of new shares during the IPO. This brought in additional equity of π11.36 billion. AP also issued new shares to existing
shareholder, AEV, before the IPO, resulting in additional capital contributions of π4.07 billion.
Retained earnings grew by 126% to π7.48 billion against π3.32 billion in 2006. This was brought about mainly by the π4.28 billion net income
recorded for the year 2007.
The π681.88 million decline in share in cumulative translation adjustments of associates was due to the further appreciation of the Philippine
peso against the U.S. dollar to π41.28 as of December 31, 2007 from π49.05 as of December 31, 2006. The power generating associates, which
adopt the U.S. dollar functional currency financial reporting, recorded foreign exchange adjustments during the year. This resulted out of the
translation of their financial statements to Philippine peso currency reporting format. These foreign exchange adjustments are booked under
Share in Cumulative Translation Adjustments of Associates’ account.
A reduction in acquisition of minority interests of π107.16 million represents excess of purchase price over carrying value of SEZ as a result of the
acquisition by the Company of the minority shares of AEV, SFELAPCO and Team Philippines.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 83
Financial Ratios
Current assets increased by π11.20 billion, largely due to higher cash and cash equivalents arising out of the capital raising activities of AP. This
more than offsets the π4.81 billion increase in current liabilities resulting from additional debt incurred by the Company in its acquisition of EAUC
and STEAG Power.
However, the resultant current ratio is lower by 0.64, from 3.15:1 as of year-end 2006 to 2.52:1 as of December 2007. Debt-to-equity ratio on the
other hand, improved in comparison to last year’s figures, from 0.46:1 and 0.32:1 as of December 31, 2006 and December 2007, respectively. The
improved performance was due also to the additional capital raised by AP.
Material Changes in Liquidity and Cash Reserves of AP
The Company managed to carry out its investing and capital raising initiatives successfully during the year that it ended up very liquid. The cash it
accumulated will be used to fund its programmed capital expenditures and to finance planned asset acquisitions.
Net cash from operating activities increased by 384%, from π825.50 million as of December 31, 2006 to π4 billion in 2007. The increase can be
attributed to higher earnings contributions by subsidiaries and the collection of advances.
Net cash used in investing activities at year-end of 2007 stood at π8.69 billion versus π931 million cash provided in the comparative period in 2006.
The net usage was mainly due to the new investments in MORE, STEAG Power and EAUC.
Net cash from financing activities for the period in review was at π16.71 billion as opposed to net cash usage for financing activities of π1.24 billion
in 2006. The π17.94 billion increase is primarily a capital infusion by the Company during the second quarter of 2007 as well as from the excess of
the IPO proceeds.
With well-managed cash, improved operating efficiencies and controls, the Group ended the year 2007 with net cash inflows exceeding the cash
outflows resulting to an increase in cash and cash equivalents of π11.80 billion, from π1.49 billion in 2006 to π13.29 billion in the year under review.
Information on Independent Accountant and Other Related Matters
External Audit Fees and Services
The following table sets out the aggregate fees billed to the Company for each of the last two years for professional services rendered by SGV &
Co.
Fee Type 2009 2008
Audit Fees 300,000 4,650,000
Other Fees
Total 300,000 4,650,000
Of the total audit fees incurred in 2008, approximately π4.2 million was incurred by AP in connection with the requirements of the bond offering.
As a matter of policy, the Company’s Audit Committee recommends to the Board of Directors regarding the selection of the Company’s external
auditor. The Audit Committee also pre–approves audit plans, scope and frequency before any audit is conducted.
Audit services of SGV & Co. for the 2008 and 2009 were pre–approved by the Audit Committee. The Audit Committee also reviewed the extent and
nature of these services to ensure that the independence of the external auditors was preserved.
SGV & Co. does not have any direct or indirect interest in the Company.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
The SGV accounting firm has been AP’s Independent Public Accountant for the last 11 years. Mr. J. Carlitos G. Cruz served as audit partner of AP for
2009. He replaced Mr. Ladislao Z. Avila who served as audit partner for five years from 2004 to 2008. AP shall comply with the requirements of Sec.
3(b)(iv) of SRC Rule 68 on the rotation of external auditors or signing partners. Representatives of SGV will be present during the annual meeting
and will be given the opportunity to make a statement if they so desire. They are also expected to respond to appropriate questions if needed.
There was no event in the past 11 years where AP and SGV or the handling partner had any disagreement with regard to any matter relating to
accounting principles or practices, financial statement disclosured or auditing scopes or procedures.
In its regular meeting last March 3, 2010, the Audit Committee of AP resolved to submit for the approval of the stockholders during the Annual
Stockholders’ Meeting a proposal to delegate to the Board of Directors the authority to appoint the Company’s external auditors for 2010. The
proposal is intended to give the Audit Committee sufficient time to evaluate the different auditing firms who have submitted engagement
proposals to act as AP’s external auditor for 2010.
SEC FORM 20 - IS (INFORMATION STATEMENT)

84 ABOITIZ POWER CORPORATION
THE AUDIT COMMITTEE REPORT
TO THE BOARD OF DIRECTORS
The Audit Committee’s roles and responsibilities are embodied in the Audit Committee Charter approved by the Board of Directors. It provides
assistance to the Board of Directors in fulfilling the Board’s oversight responsibility to the shareholders relating to: (a) the quality and integrity
of the Company’s accounting, auditing, legal, ethical and regulatory compliance; (b) risk management; (c) financial reporting practices; and (d)
corporate governance. Any proposed changes to the Audit Committee Charter are referred to the Board for approval.
Membership
As of December 31, 2009, the Audit Committee is composed of four members, two of whom are Independent Directors.
Jose R. Facundo (Independent Director) chairs the Committee and is ably assisted by Romeo L. Bernardo (Independent Director), Mikel A. Aboitiz
and Jose Antonio Bernad. Ex-officio members are Iker M. Aboitiz, AP Chief Finance Officer, and Rolando C. Cabrera, Chief Risk Management Officer.
Meetings
Four regular meetings were held during the year: March 5, May 4, July 29, and October 29, 2009. In these meetings, the Chief Financial Officer,
Chief Risk Management Officer, Controller and Corporate Audit head were also present.
Financial Reports
On a high level basis, the Committee reviewed, discussed and endorsed for the approval of the Board the quarterly unaudited consolidated financial
statements and the annual audited consolidated financial statements of the Company and its subsidiaries, including the results of operations upon
prior review and discussion with management, internal auditors and SGV & Co., the independent auditor of the Company. These activities were
performed in the following context:
o
o
Independent Auditors
That Management has the primary responsibility for the financial statements and the financial reporting process; and
That SGV & Co. is responsible for expressing an opinion on the conformity of the Company’ audited consolidated financial
statements with the Philippine Financial Reporting Standards.
The overall scope and audit plan of SGV & Co. was reviewed and approved. The terms of engagement were also reviewed.
The Committee also discussed with SGV & Co. the results of SGV’s audits and its assessment of the overall quality of the financial reporting
process. SGV & Co. also presented the effects of changes in relevant accounting standards and presentation of financial statements that impact
the reported results.
The Committee also approved the delegation of the appointment of the Company’s external auditors for 2010 to the Board of Directors.
Internal Auditors
The Committee also reviewed and approved the annual audit program of the Internal Audit Team of the Company. Included in this review is the
adequacy of resources, competencies of staff and effectiveness of the internal audit function.
Further, the Committee reviewed the reports of the internal auditors. The internal auditors reported that internal controls were adequate and
satisfactory. In their assessment, there is already a natural awareness within business units to continually improve on the culture of accountability
and control ownership.
It is also the Internal Audit Team’s assessment that the control design is effective and aligned with business needs and with the Company’s goals
and objectives. Operational efficiency and timeliness of information, on the other hand, remain the focus of its recommendations.
As scheduled, the Committee likewise reviewed, approved, and endorsed the revised Internal Audit Charter, focusing mainly on internal audit’s
commitment to quality via its Quality Assurance and Improvement Program.
Risk Management
In keeping with its charter, the Committee reviewed and discussed the rollout and implementation of the Enterprise Risk Management (ERM)
initiative and internal audit’s role in ERM in strengthening governance, risk management and control. The hiring of the Chief Risk Management
Officer and the creation of a Risk Management team and its sub-teams, Business Risk and Insurance Risk Management, under Aboitiz Equity
Ventures, Inc. started the initiative.
In behalf of the Committee,
Jose R. Facundo
Chairman
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 85
SECURITIES AND EXCHANGE COMMISSION
SEC Building, EDSA Greenhills
Mandaluyong, Metro Manila
STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of Aboitiz Power Corporation is responsible for all information and representations contained in the Consolidated financial
statements for the years ended December 31, 2009 and 2008. The financial statements have been prepared in conformity with generally accepted
accounting principles in the Philippines and reflect amounts that are based on the best estimates and informed judgment of management with
an appropriate consideration to materiality.
In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that
transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.
The management likewise discloses to the company’s audit committee and to its external auditor: (i) all significant deficiencies in the design or
operation of internal controls that could adversely affect its ability to record, process, and report financial data (ii) material weaknesses in the
internal controls; and (iii) any fraud that involves management or other employees who exercise significant roles in internal controls.
The Board of Directors reviews the financial statements before such statements are approved and submitted to the stockholders of the Company.
SyCip, Gorres, Velayo & Co., the independent auditors appointed by the stockholders, has examined the financial statements of the Company in
accordance with generally accepted auditing standards in the Philippines and has expressed their opinion on the fairness of presentation upon
completion of such examination, in its report to the Board of Directors and stockholders.
ENRIQUE M. ABOITIZ, JR.
Chairman of the Board
ERRAMON I. ABOITIZ
President & Chief Executive Officer
IKER M. ABOITIZ
First Vice President/Chief Finance Officer/
Corporate Information Officer
Republic of the Philippines)
City of Cebu
) S.S.
Before me, a notary public in and for the city named above, personally appeared:
Name Passport No. Date/Place Issued
ENRIQUE M. ABOITIZ, JR. ZZ133335 May 9, 2005, Manila
ERRAMON I. ABOITIZ XX1560733 July 7, 2008, Manila
IKER M. ABOITIZ XX3643697 May 6, 2009, Cebu City
who are personally known to me and to me known to be the same persons who presented the foregoing instrument and signed the instrument in
my presence, and who took an oath before me as to such instrument.
Witness my hand and seal this _______________________.
Doc. No. 116 ;
Page No. 24 ;
Book No. XIII ;
Series of 2010
SEC FORM 20 - IS (INFORMATION STATEMENT)

86 ABOITIZ POWER CORPORATION
INDEPENDENT AUDITOR’S REPORT
The Stockholders and the Board of Directors
Aboitiz Power Corporation
Aboitiz Corporate Center
Gov. Manuel A. Cuenco Avenue
Cebu City
We have audited the accompanying financial statements of Aboitiz Power Corporation and Subsidiaries, which comprise the consolidated balance
sheets as of December 31, 2009 and 2008, and the consolidated statements of income, consolidated statements of comprehensive income,
consolidated statements of changes in equity and consolidated statements of cash flows for each of the three years in the period ended December
31, 2009, and a summary of significant accounting policies and other explanatory notes. We did not audit the 2008 and 2007 financial statements of
the following subsidiaries: Philippine Hydropower Corporation (PHC) and Subsidiaries, Aboitiz Energy Solutions, Inc. (AESI), Balamban Enerzone
Corporation (BEZC) and Mactan Enerzone Corporation (MEZC); and the 2009 financial statements of five subsidiaries of PHC, AESI, BEZC and
MEZC, which statements reflect total assets of 6.40% and 13.12% of the consolidated assets as of December 31,2009 and 2008, respectively;
and total revenues of 7.74%, 13.21% and 11.94% of the consolidated revenues in 2009, 2008 and 2007, respectively. Also, we did not audit the
2009, 2008 and 2007 financial statements of the following associates: East Asia Utilities Corporation, Hijos de F. Escaño, Inc., Pampanga Energy
Ventures, Inc. and STEAG State Power, Inc. the investments in which represent 7.53% and 15.34% of the total consolidated assets as of December
31, 2009 and 2008, respectively, and the Group’s share in net earnings represents 17.55%, 29.19% and 6.42% of the consolidated net income for
2009, 2008 and 2007, respectively. Those financial statements were audited by other auditors whose reports thereon have been furnished to us,
and our opinion, in so far as it relates to the amounts included for those entities, is based solely on the reports of the other auditors.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial
Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine
Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained and the reports of the other auditors are sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements present fairly, in all material
respects, the financial position of Aboitiz Power Corporation and Subsidiaries as of December 31, 2009 and 2008, and their financial performance
and their cash flows for each of the three years in the period ended December 31, 2009 in accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
J. Carlitos G. Cruz
Partner
CPA Certificate No. 49053
SEC Accreditation No. 0072-AR-2
Tax Identification No. 102-084-648
PTR No. 2087522, January 4, 2010, Makati City
March 31, 2010
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 87
INDEPENDENT AUDITOR’S REPORT
on supplementary schedules
The Stockholders and the Board of Directors
Aboitiz Power Corporation and Subsidiaries
Aboitiz Corporate Center
Gov. Manuel A. Cuenco Avenue, Cebu City
We have audited in accordance with Philippines Standards on Auditing, the consolidated financial statements of Aboitiz Power Corporation and
Subsidiaries included in this Form 17-A and have issued our report thereon dated March 31, 2010 Our audits were made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The schedules listed in the Index to Financial Statements and Supplementary
Schedules are the responsibility of the Company’s management. These schedules are presented for purposes of complying with the Securities
Regulation Code (SRC) Rule 68 and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
SYCIP GORRES VELAYO & CO.
J. Carlitos G. Cruz
Partner
CPA Certificate No. 49053
SEC Accreditation No. 0072-AR-2
Tax Identification No. 102-084-648
PTR No. 2087522, January 4, 2010, Makati City
March 31, 2010
SEC FORM 20 - IS (INFORMATION STATEMENT)

88 ABOITIZ POWER CORPORATION
ABOITIZ POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
ASSETS
Current Assets
Cash and cash equivalents (Note 4)
Trade and other receivables (Note 5)
Derivative asset (Note 31)
Inventories (Note 6)
Other current assets (Note 7)
π3,814,906
4,476,028
846
1,110,639
512,684
December 31
2009 2008
π14,333,676
1,991,074
–
332,042
501,150
Total Current Assets 9,915,103 17,157,942
Noncurrent Assets
Property, plant and equipment (Note 11)
Intangible asset - service concession rights (Note 12)
Investment property
Investments in and advances to associates (Note 9)
Available-for-sale (AFS) investments - net of impairment of π5,254
Goodwill (Note 10)
Pension assets (Note 26)
Deferred income tax assets (Note 27)
Other noncurrent assets (Note 13)
72,901,029
882,308
10,000
24,800,301
3,744
996,005
37,186
250,009
1,545,032
6,257,643
854,193
10,000
21,250,901
3,744
996,005
9,720
66,576
665,412
Total Noncurrent Assets 101,425,614 30,114,194
TOTAL ASSETS π111,340,717 π47,272,136
LIABILITIES AND EQUITY
Current Liabilities
Bank loans (Note 15)
Trade and other payables (Note 14)
Derivative liabilities (Note 31)
Income tax payable
Current portion of:
Long-term debts (Note 16)
Finance lease obligation (Note 34)
Payable to preferred shareholder of a subsidiary (Note 18)
Long-term obligation on power distribution system (Note 12)
5,828,100
6,022,537
16,476
365,209
101,200
2,270,994
11,263
40,000
4,798,120
3,145,311
–
81,422
16,145
–
9,194
40,000
Total Current Liabilities 14,655,779 8,090,192
Noncurrent Liabilities
Long-term debts - net of current portion (Note 16)
Finance lease obligation - net of current portion (Note 34)
Long-term obligation on power distribution system - net of current portion (Note 12)
Customers’ deposits (Note 17)
Payable to preferred shareholder of a subsidiary - net of current portion (Note 18)
Pension liabilities (Note 26)
Deferred income tax liabilities (Note 27)
16,151,335
43,315,170
247,460
1,781,116
76,767
28,158
38,005
6,505,852
–
251,816
1,571,092
88,030
14,467
59,024
Total Noncurrent Liabilities 61,638,011 8,490,281
Total Liabilities 76,293,790 16,580,473
Equity Attributable to Equity Holders of the Parent
Capital stock (Notes 1 and 19)
Additional paid-in capital (Notes 1 and 19)
Share in cumulative translation adjustments of associates (Note 9)
Acquisition of minority interests (Note 1)
Retained earnings (Note 19)
7,358,604
12,588,894
115,246
(259,147)
14,672,262
7,358,604
12,588,894
(18,422)
(259,147)
10,485,401
34,475,859 30,155,330
Minority Interests 571,068 536,333
Total Equity 35,046,927 30,691,663
TOTAL LIABILITIES AND EQUITY π111,340,717 π47,272,136
See accompanying Notes to Consolidated Financial Statements.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 89
ABOITIZ POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Earnings Per Share Amounts)
Years Ended December 31
2009 2008 2007
OPERATING REVENUES
Sale of power (Notes 20 and 29)
Generation
Distribution
Services
Technical, management and other fees (Note 30)
π12,359,479
10,734,427
61,598
18,761
π2,880,719
9,227,696
61,065
73,500
π2,412,393
8,797,504
56,110
45,984
23,174,265 12,242,980 11,311,991
OPERATING EXPENSES
Cost of purchased power (Note 21)
Cost of generated power (Note 22)
General and administrative expenses (Note 23)
Operations and maintenance (Note 24)
Depreciation and amortization (Notes 11 and 12)
Cost of services
8,032,562
5,030,277
1,902,428
1,336,987
1,412,900
2,944
6,625,385
1,695,894
1,102,574
653,104
511,154
2,364
6,303,902
1,064,551
900,450
563,748
492,142
3,864
17,718,098 10,590,475 9,328,657
FINANCIAL INCOME (EXPENSES)
Interest income (Notes 4, 13 and 30)
Interest expense and other financing costs (Notes 30 and 31)
409,972
(2,813,978)
607,540
(378,536)
330,913
(197,502)
(2,404,006) 229,004 133,411
OTHER INCOME (EXPENSES)
Share in net earnings of associates (Note 9)
Others - net
2,535,386
813,411
2,784,511
376,692
2,803,833
(11,152)
3,348,797 3,161,203 2,792,681
INCOME BEFORE INCOME TAX
6,400,958
5,042,712
4,909,426
PROVISION FOR INCOME TAX - Net (Note 27)
631,190
618,384
634,333
NET INCOME π5,769,768 π4,424,328 π4,275,093
Attributable to:
Equity holders of the parent
Minority interests
π5,658,581
111,187
π4,333,613
90,715
π4,160,645
114,448
π5,769,768 π4,424,328 π4,275,093
EARNINGS PER COMMON SHARE (Note 28)
Basic and diluted, for income for the year attributable to ordinary equity holders of the parent π0.77 π0.59 π0.66
See accompanying Notes to Consolidated Financial Statements.
SEC FORM 20 - IS (INFORMATION STATEMENT)

90 ABOITIZ POWER CORPORATION
ABOITIZ POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)
Years Ended December 31
2009 2008 2007
NET INCOME ATTRIBUTABLE TO:
Equity holders of the parent
Minority interests
π5,658,581
111,187
π4,333,613
90,715
π4,160,645
114,448
5,769,768 4,424,328 4,275,093
OTHER COMPREHENSIVE INCOME (LOSS)
Share in movement in cumulative translation adjustments of associates (Note 9)
Income tax effect on other comprehensive income
133,668
–
557,554
–
(681,879)
–
Total other comprehensive income, net of tax 133,668 557,554 (681,879)
TOTAL COMPREHENSIVE INCOME π5,903,436 π4,981,882 π3,593,214
Attributable to:
Equity holders of the parent
Minority interests
π5,792,249
111,187
π4,891,167
90,715
π3,478,766
114,448
π5,903,436 π4,981,882 π3,593,214
See accompanying Notes to Consolidated Financial Statements.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 91
ABOITIZ POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
(Amounts in Thousands, Except Dividends Per Share Amounts)
Attributable to Equity Holders of the Parent
Capital
Stock
(Note 19)
Subscriptions
Receivable
Additional
Paid-in-
Capital
(Note 19)
Share in
Cumulative
Translation
Adjustments
of Associates
(Note 9)
Acquisition of
Minority
Interests
(Note 1)
Retained
Earnings
(Note 19)
Minority
Interests Total
Balances at January 1, 2009 π7,358,604 π– π12,588,894 (π18,422) (π259,147) π10,485,401 π536,333 π30,691,663
Total comprehensive income for the year – – – 133,668 – 5,658,581 111,187 5,903,436
Cash dividends - π0.20 a share – – – (1,471,720) – (1,471,720)
Change in minority interests (Note 36) – – – – – – (76,452) (76,452)
Balances at December 31, 2009 π7,358,604 π– π12,588,894 π115,246 (π259,147) π14,672,262 π571,068 π35,046,927
Balances at January 1, 2008 π7,358,604 π– π12,588,894 (π575,976) (π107,163) π7,476,337 π619,427 π27,360,123
Total comprehensive income for the year – – – 557,554 – 4,333,613 90,715 4,981,882
Cash dividends - π0.18 a share (Note 19) – – – – – (1,324,549) – (1,324,549)
Change in minority interests (Note 36) – – – – – – (147,847) (147,847)
Acquisition of minority interests (Note 1) – – – – (151,984) – (25,962) (177,946)
Balances at December 31, 2008 π7,358,604 π– π12,588,894 (π18,422) (π259,147) π10,485,401 π536,333 π30,691,663
Balances at January 1, 2007 π5,000,000 (π110,680) π– π105,903 π– π3,315,692 π87,497 π8,398,412
Collection of subscriptions receivable (Note 19) – 110,680 – – – – – 110,680
Total comprehensive income (loss) for the year – – – (681,879) – 4,160,645 114,448 3,593,214
Issuance of capital stock (Notes 1 and 19) 2,338,776 – 12,493,722 – – – – 14,832,498
Change in minority interests (Note 36) – – – – – – 518,078 518,078
Acquisition of minority interests (Note 1) 19,828 – 95,172 – (107,163) – (100,596) (92,759)
Balances at December 31, 2007 π7,358,604 π– π12,588,894 (π575,976) (π107,163) π7,476,337 π619,427 π27,360,123
See accompanying Notes to Consolidated Financial Statements.
SEC FORM 20 - IS (INFORMATION STATEMENT)

92 ABOITIZ POWER CORPORATION
ABOITIZ POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
Years Ended December 31
2009 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Depreciation and amortization (Notes 11 and 12)
Interest expense (Notes 30 and 31)
Net unrealized foreign exchange losses (gains)
Unrealized fair valuation loss on derivatives
Dividend income
Gain on sale of property, plant and equipment
Interest income (Notes 4, 13 and 30)
Share in net earnings of associates (Note 9)
Write-off (reversal of write-off) of project costs and assets
Operating income before working capital changes
Decrease (increase) in:
Trade and other receivables
Inventories
Other current assets
Other noncurrent assets (Note 34)
Increase (decrease) in:
Trade and other payables
Customers’ deposits
Net cash generated from operations
Income and final taxes paid
Service fees paid (Note 12)
π6,400,958
1,412,900
2,813,978
(27,468)
15,630
–
(2,865)
(409,972)
(2,535,386)
–
7,667,775
(2,608,352)
(547,968)
(20,600)
(922,143)
2,651,669
210,024
6,430,405
(516,772)
(40,000)
π5,042,712
511,154
378,536
49,084
–
(33)
(2,965)
(607,540)
(2,784,511)
5,254
2,591,691
42,128
42,579
(136,977)
13,008
(169,543)
197,162
2,580,048
(634,654)
(40,000)
π4,909,426
492,142
197,502
98,614
–
(11)
(80)
(330,913)
(2,803,833)
(2,540)
2,560,307
1,118,661
(74,693)
379,038
41,954
346,334
245,138
4,616,739
(536,350)
(40,000)
Net cash flows from operating activities 5,873,633 1,905,394 4,040,389
CASH FLOWS FROM INVESTING ACTIVITIES
Cash dividends received (Note 9)
Interest received
Proceeds from sale of property, plant and equipment
Additions to property, plant and equipment - net (Notes 11 and 34)
Acquisition of Tiwi-MakBan Geothermal Power Plants (Note 8)
Additional investments in associates (Notes 8 and 9)
Net collection of (additional) advances to associates (Note 9)
Additions to intangible assets - service concession rights (Note 12)
Acquisition of a subsidiary, net of cash acquired (Note 8)
833,187
451,683
18,604
(3,274,390)
(20,198,774)
(2,526,754)
813,221
(70,259)
–
1,930,244
595,220
5,995
(2,623,993)
–
(3,779,977)
(1,687,932)
(227,401)
–
581,804
290,038
3,151
(1,074,786)
–
(8,338,227)
70,465
(77,101)
(100,210)
Net cash flows used in investing activities (23,953,482) (5,787,844) (8,644,866)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt - net of transaction costs (Note 16)
Net proceeds from availment of bank loans (Note 15)
Changes in minority interests (Note 36)
Payments to preferred shareholders of a subsidiary (Note 18)
Interest paid
Cash dividends paid (Note 19)
Payments of long-term debt (Note 16)
Proceeds from issuance of capital stock (Notes 1 and 19)
Acquisitions of minority interests (Note 1)
Collection of subscriptions receivable (Note 19)
9,762,893
1,136,900
(158,142)
(31,070)
(1,468,820)
(1,471,721)
(48,446)
–
–
–
5,712,664
949,000
221,278
(31,070)
(299,216)
(1,324,549)
(1,000)
–
(177,948)
–
–
3,460,938
(313,216)
(31,070)
(147,822)
(330,023)
–
13,956,045
(92,000)
110,680
Net cash flows from financing activities 7,721,594 5,049,159 16,613,532
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
(10,358,255)
(160,515)
14,333,676
1,166,709
460,864
12,706,103
12,009,055
(215,516)
912,564
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) π3,814,906 π14,333,676 π12,706,103
See accompanying Notes to Consolidated Financial Statements.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 93
ABOITIZ POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Share and Exchange Rate Data and When Otherwise Indicated)
1. Corporate Information
General Information
Aboitiz Power Corporation (the Company) and its subsidiaries (collectively referred to as “the Group”) were incorporated in the Republic
of the Philippines. The Company is a 76.40% owned (76.03% in 2008) subsidiary of Aboitiz Equity Ventures, Inc. (AEV, also incorporated
in the Philippines) and is the holding company of the entities engaged in power generation and power distribution in the Aboitiz Group.
The Company’s ultimate parent is Aboitiz & Company, Inc. (ACO).
The registered office address of the Company is Aboitiz Corporate Center, Gov. Manuel A. Cuenco Avenue, Cebu City.
The consolidated financial statements of the Group as of December 31, 2009 and 2008 and for each of the three years in the period
ended December 31, 2009, were authorized for issue by the Board of Directors (BOD) of the Company on March 31, 2010.
Initial Public Offering
In January 2007, the BOD of both AEV and the Company approved the Initial Public Offering (IPO) of the Company’s shares subject
to the approval of the Philippine Stock Exchange (PSE), Securities and Exchange Commission (SEC) and all other required regulatory
authorities. The BOD of AEV also approved the consolidation of all AEV’s power assets and the transfer of AEV’s interests in various
power distribution companies to the Company in exchange for the Company’s shares, subject to the approval of the PSE, SEC, Bureau
of Internal Revenue (BIR) and all other required regulatory authorities.
The public offering of the Company is consistent with the spirit of the Electronic Power Industry Reform Act (EPIRA) for broader public
ownership of electricity distribution and generation assets. The offering will also enhance the Company’s position as a participant in the
privatization of National Power Corporation (NPC) assets as well as in the development and acquisition of additional power projects.
On July 16, 2007, the Company successfully completed the IPO of 1,787,664,000 common shares including the exercised greenshoe
options of 48,533,565 common shares, in the Philippines. The proceeds from the IPO, net of related expenses of π412,406, amounted
to π9,956,045. The common shares of the Company became listed and traded on the First Board of the PSE. The Company became a
public company under Section 17.2 of the Securities Regulation Code. As a result of the IPO, the equity interest of AEV in the Company
was reduced from 100% to 73.44%.
Reorganization
Prior to the Reorganization as discussed in more detail below, the Company and its subsidiaries and associates were primarily engaged
in power generation and the sale of their generated power to their various customers.
On January 16, 2007, the Company entered into a share exchange (Exchange) arrangement with AEV wherein AEV transferred its
ownership shares in the following power distribution companies in exchange for approximately 2,889 million shares of the Company
(herein referred to as Reorganization):
Acquired
% Ownership Number of Shares
Davao Light & Power Company, Inc. (DLPC) 99.91% 299,729,524
Cotabato Light & Power Company (CLPC) 99.91% 150,689,118
Pampanga Energy Ventures, Inc. (PEVI) 42.84% 12,996,191
Visayan Electric Company, Inc. (VECO) 43.03% 3,291,719
Aboitiz Energy Solutions, Inc. (formerly Aboitiz
Powersolutions, Inc.) (AESI)
100.00% 3,000,000
Subic Enerzone Corporation (SEZC) 20.00% 2,000,000
San Fernando Electric Light & Power Co., Inc. (SFELAPCO) 20.29% 540,809
Hijos de F. Escano, Inc. (HIJOS) 46.66% 13,340
The Reorganization was undertaken by the Group to consolidate its power generation and distribution assets and operations and allow
the Group to enhance efficiencies and competitiveness.
The Exchange was approved by the SEC on May 3, 2007.
As a result of the above Reorganization, all the power distribution companies as mentioned above have been transferred to the
Company. Accordingly, after the Reorganization, the Group is now engaged in power generation and power distribution.
SEC FORM 20 - IS (INFORMATION STATEMENT)

94 ABOITIZ POWER CORPORATION
The above transaction was treated as a reorganization of companies under common control and was accounted for at historical cost in
a manner similar to pooling-of-interests method.
Additional acquisition of investments in the distribution companies amounting to π26,976 in 2007 were reflected in the consolidated
financial statements in the period of acquisition.
On June 8, 2007, as part of the reorganization of the power segment, the Company agreed to acquire from Aboitiz Land, Inc. (ALI),
an affiliate, a 100% ownership interest in Mactan Enerzone Corporation (MEZC) and a 60% ownership interest in Balamban Enerzone
Corporation (BEZC). MEZC and BEZC were incorporated in 2007. The transaction was treated as a business combination involving
entities under common control of ACO, and such control is not transitory. The acquisition involves issuance of 151,112,722 Company’s
shares of stock in exchange for shares of stock of MEZC and BEZC owned by ALI. This share exchange transaction wasapproved by SEC
on January 10, 2008. Acquisition costs of MEZC and BEZC amounted to π609,532 and π266,921, respectively.
On March 7, 2008, the Company purchased Tsuneishi Holdings (Cebu), Inc.’s 40% equity in BEZC for a cash consideration of π177,948 or
an excess of π151,984 over the book value of the share of the net assets acquired. In 2008, the excess was recognized as an acquisition
of minority interests (presented as a separate line item of equity in the balance sheets). As a result of the acquisition, BEZC became a
wholly owned subsidiary of the Group.
On various dates in 2007, the Company acquired from the minority, 40% interest in SEZC. As a result, SEZC became a wholly owned
subsidiary of the Group through direct and indirect ownership of the Company. The cost of acquisition of the minority amounted to
π207,000 or an excess of π107,163 over the book value of the share of the net assets acquired. In 2007, the excess was recognized as an
acquisition of minority interests. The said acquisition was effected through the issuance of 19,827,585 shares of stock of the Company
and cash consideration of π92,000.
2. Summary of Significant Accounting Policies
Basis of Preparation
The consolidated financial statements of the Group have been prepared on a historical cost basis, except for derivative financial
instruments and AFS investments which are measured at fair value. The consolidated financial statements are presented in Philippine
Peso which is the Company’s functional currency and all values are rounded to the nearest thousand except for earnings per share and
exchange rate and otherwise indicated.
Statement of Compliance
The consolidated financial statements of the Group have been prepared in compliance with Philippine Financial Reporting Standards
(PFRS).
Restatement of 2008 and 2007 Financial Statements
In 2008 and 2007, the Group presented the restricted cash amounting to US$12.2 million held to secure its long-term loan of an
associate under “Cash and cash equivalents”. For 2009 financial statements, the restricted cash is reclassified to “Other noncurrent
assets” section of the balance sheet (see Note 13). The restatement led to decrease in current assets and increase in noncurrent assets
in the consolidated balance sheets and decrease in cash and cash equivalents at beginning and ending of the year in the consolidated
statement of cash flows.
Certain accounts in the 2008 and 2007 cost of generated power, general and administrative expenses and operations and maintenance
were reclassified to conform with 2009 presentation. The reclassification has no impact in the Group’s financial position, financial
performance and cash flows.
Such reclassification was made because management believes that this presentation will provide a more reliable and relevant
information to the users of the financial statements.
The reclassification is considered immaterial in relation to the consolidated financial statements. As such, the Company did not present
consolidated balance sheet as of January 1, 2008.
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of the following new,
amended and improved PFRS and Philippine Interpretations effective beginning January 1, 2009:
• Amendments to PFRS 7, Financial Instruments: Disclosures
This amended standard requires additional disclosures about fair value measurement and liquidity risk. Fair value measurements
are to be disclosed by source of inputs using a three-level hierarchy for each class of financial instrument. Fair value measurement
under Level 1 is based on quoted prices in active markets for identical financial assets or financial liabilities; Level 2 is based on
inputs other than quoted prices included within Level 1 that are observable for the financial asset or financial liability, either directly
or indirectly; and Level 3 is based on inputs for the financial asset or financial liability that are not based on observable market data.
In addition, a reconciliation between the beginning and ending balance for Level 3 fair value measurements is now required as
well as significant transfers between Level 1 and Level 2 fair value measurements. The amendments also clarify the requirements
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 95
for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value
measurement and liquidity risk disclosures are presented in Notes 31 and 32 to the consolidated financial statements.
• PFRS 8, Operating Segments
PFRS 8 replaced PAS 14, Segment Reporting, upon its effective date. The Group concluded that the operating segments determined
in accordance with PFRS 8 are the same as the business segments previously identified under PAS 14. PFRS 8 disclosures are
shown in Note 29.
• Amendments to PAS 1, Presentation of Financial Statements
This amended standard separates owner and non-owner changes in equity. The consolidated statement of changes in equity
includes only details of transactions with owners, with non-owner changes in equity presented as a single line. In addition, the
standard introduces the consolidated statement of comprehensive income. It presents all items of recognized income and expenses,
either in one consolidated single statement (a consolidated statement of comprehensive income), or in two linked consolidated
statements (a separate consolidated statement of income and a consolidated statement of comprehensive income). The Group
has elected to present two statements, a consolidated statement of income and a consolidated statement of comprehensive
income. The consolidated financial statements have been prepared under the revised disclosure requirements.
Adoption of the following changes in PFRS and Philippine Interpretations did not have any significant impact on the Group’s consolidated
financial statements except where additional disclosures are required:
• Amendments to PFRS 1, First-time Adoption of Philippine Financial Reporting Standards - Cost of an Investment in a Subsidiary,
Jointly Controlled Entity or Associate
• Amendments to PFRS 2, Share-based Payment - Vesting Condition and Cancellations
• Amendments to PAS 27, Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly Controlled
Entity or Associate
• Revised PAS 23, Borrowing Costs
• Amendment to PAS 32, Financial Instruments: Presentation, and PAS 1, Presentation of Financial Statements - Puttable Financial
Instruments and Obligations Arising on Liquidation
• Philippine Interpretation IFRIC 13, Customer Loyalty Programmes
• Philippine Interpretation IFRIC 16, Hedges of a Net Investment in a Foreign Operation
• Philippine Interpretation IFRIC 18, Transfers of Assets from Customers
Improvements to PFRS
• PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations
• PAS 1, Presentation of Financial Statements
• PAS 16, Property, Plant and Equipment
• PAS 18, Revenue
• PAS 19, Employee Benefits
• PAS 20, Accounting for Government Grants and Disclosures of Government Assistance
• PAS 23, Borrowing Costs
• PAS 28, Investments in Associates
• PAS 29, Financial Reporting in Hyperinflationary Economies
• PAS 31, Interest in Joint Ventures
• PAS 36, Impairment of Assets
• PAS 38, Intangible Assets
• PAS 39, Financial Instruments: Recognition and Measurement
• PAS 40, Investment Property
• PAS 41, Agriculture
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of December 31 of each
year.
Aboitiz Energy Solutions, Inc. (formerly Aboitiz
Powersolutions, Inc.) (AESI)
Nature of
Business
Energy related
service provider
Percentage of Ownership
2009 2008 2007
Direct Indirect Direct Indirect Direct Indirect
100.00 – 100.00 – 100.00 –
Davao Light & Power Company, Inc. (DLPC) Power distribution 99.93 – 99.92 – 99.92 –
Cotabato Light & Power Company (CLPC) Power distribution 99.93 – 99.91 – 99.91 –
Subic Enerzone Corporation (SEZC) Power distribution 65.00 34.97 65.00 34.97 65.00 34.97
Mactan Enerzone Corporation (MEZC) Power distribution 100.00 – 100.00 – 100.00 –
Balamban Enerzone Corporation (BEZC) Power generation 100.00 – 100.00 – 60.00 –
Philippine Hydropower Corporation (PHC) and
Subsidiaries **
Power generation 100.00 – 100.00 – 100.00 –
Cleanergy Inc. *** Power generation – 100.00 – 100.00 – 100.00
SEC FORM 20 - IS (INFORMATION STATEMENT)

96 ABOITIZ POWER CORPORATION
Nature of
Business
Percentage of Ownership
2009 2008 2007
Direct Indirect Direct Indirect Direct Indirect
Hedcor Sibulan, Inc. (HSI)*** Power generation – 100.00 – 100.00 – 100.00
Hydro Electric Development Corporation*** Power generation – 99.97 – 99.97 – 99.96
AP Renewables, Inc. (APRI) Power generation – 100.00 – 100.00 – –
Hedcor Benguet, Inc. (HBI)* Power generation – 100.00 – – – –
Therma Power, Inc. (TPI) and Subsidiaries Power generation 100.00 – 100.00 – – –
Therma Power-Vis, Inc.(TPVI)* Power generation – 100.00 – 100.00 – –
Therma Luzon, Inc. (TLI)* Power generation – 100.00 – – – –
Therma Marine, Inc. (Therma Marine) * Power generation – 100.00 – – – –
Therma Mobile, Inc. (Therma Mobile)* Power generation – 100.00 – – – –
Therma Pagbilao, Inc. (Therma Pagbilao)* Power generation – 100.00 – – – –
Abovant Holdings, Inc. (AHI) Holding company – 60.00 – 60.00 – –
Cebu Private Power Corporation (CPPC) Power generation 60.00 – 60.00 – 60.00 –
Adventenergy, Inc.***
Retail electricity
supplier
100.00 – 100.00 – – –
*TPVI, TLI, Therma Marine, Therma Mobile and Therma Pagbilao were incorporated in 2008. HBI was incorporated in 2009. Except for TLI,
these companies have not yet started their commercial operations as of December 31, 2009.
** On March 23, 2010, SEC approved the c hange in corporate name of PHC to Aboitiz Renewables, Inc.
*** No commercial operations as of December 31, 2009.
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries (all are incorporated in the
Philippines) as at December 31 of each year. The financial statements of the subsidiaries are prepared for the same reporting year as the
Company using consistent accounting policies.
All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are
recognized in assets, are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be
consolidated until the date that such control ceases. The results of subsidiaries acquired or disposed of during the year are included in
the consolidated statement of income from the date of acquisition or up to the date of disposal, as appropriate.
Minority Interests
Minority interests represent the portion of net income or loss and net assets in the subsidiaries not held by the Group and are presented
separately in the consolidated statement of income and within equity in the consolidated balance sheet, separately from the equity
attributable to equity holders of the parent. Transactions with minority interests are accounted for using the entity concept method,
whereby, transactions with minority interest are accounted for as transactions with equity holders. On acquisitions of minority interests,
the difference between the consideration and the book value of the share of the net assets acquired is reflected as being a transaction
between owners and recognized directly in equity. Gain or loss on disposals to minority interest is also recognized directly in equity.
Business Combination and Goodwill
Business combinations are accounted for using the purchase accounting method. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. This involves recognizing identifiable assets (including previously unrecognized intangible assets) and
liabilities (including contingent liabilities and excluding future restructuring) of the acquired business at fair value.
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. If the cost of the acquisition is
less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statement
of income.
When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are not reassessed on
acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows
that would otherwise be required under the contract.
Business combination of entities under common control is accounted for using a method similar to pooling of interest. Under the
pooling of interest method, any excess of acquisition cost over the net asset value of the acquired entity is recorded in equity.
When subsidiaries are sold, the difference between the selling price and the net assets plus cumulative translation adjustments and
goodwill is recognized in the consolidated statement of income.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 97
Impairment of goodwill
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment,
annually or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units
to which the goodwill is so allocated:
• represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
• is not larger than a segment based on either the Group’s primary or the Group’s secondary reporting format determined in
accordance with PFRS 8, Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit or group of cash-generating units, to which
the goodwill relates. Where the recoverable amount of the cash-generating unit or group of cash-generating units is less than the
carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed for subsequent increases
in its recoverable amount in future periods. The Group performs its annual impairment test of goodwill every December 31. Where
goodwill forms part of a cash-generating unit or group of cash-generating units and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain
or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation
disposed of and the portion of the cash-generating unit retained.
Investments in Associates
The Group’s investments in associates are accounted for under the equity method of accounting. An associate is an entity in which the
Group has significant influence and which is neither a subsidiary nor a joint venture.
Under the equity method, the investment in the associate is carried in the consolidated balance sheet at cost plus post-acquisition
changes in the Group’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the
investment and is not amortized. After application of the equity method, the Group determines whether it is necessary to recognize
any additional impairment loss with respect to the Group’s net investment in the associates. The consolidated statement of income
reflects the share of the results of operations of the associates. Where there has been a change recognized directly in the equity of the
associate, the Group recognizes its share of any changes and discloses this, when applicable, in the consolidated statement of changes
in equity.
The share of profit of associates is shown on the face of the consolidated statement of income. This is the profit attributable to equity
holders of the associate and therefore is profit after tax and minority interest in the subsidiaries of the associates.
The reporting dates of the associates and the Group are identical, and the associates’ accounting policies conform to those used by the
Group for like transactions and events in similar circumstances.
Foreign Currency Translation
Each entity in the Group determines its own functional currency and items included in the consolidated financial statements of each
entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency
at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the consolidated statement of
income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
The functional currency of Luzon Hydro Corporation (LHC), Western Mindanao Power Corporation (WMPC), Southern Philippines
Power Corporation (SPPC) and STEAG State Power, Inc. (STEAG), associates, is the United States (US) Dollar. As at the reporting date,
the assets and liabilities of these entities are translated into the presentation currency of the Group (the Philippine peso) at the rate of
exchange ruling at the balance sheet date and their statements of income are translated at the weighted average exchange rates for
the year. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of the
associate, the deferred cumulative amount recognized in other comprehensive income relating to that particular entity is recognized in
the consolidated statement of income.
Cash and Cash Equivalents
Cash and cash equivalents in the consolidated balance sheet consist of cash in banks and on hand and short-term deposits with an
original maturity of three months or less from dates of placements and that are subject to insignificant risk of changes in value.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined
above.
SEC FORM 20 - IS (INFORMATION STATEMENT)

98 ABOITIZ POWER CORPORATION
Inventories
Materials and supplies are valued at the lower of cost or net realizable value (NRV). Cost is determined on weighted average method.
NRV is the current replacement cost. An allowance for inventory obsolescence is provided for slow-moving, defective or damaged
goods based on analyses and physical inspection.
Financial Instruments
Financial instruments are recognized initially at fair value. Transaction costs, if any, are included in the initial measurement of all
financial instruments, except for financial instruments measured at FVPL.
The Group recognizes a financial instrument in the consolidated balance sheet when it becomes a party to the contractual provisions
of the instrument.
All regular way purchases and sales of financial assets are recognized on the trade date, which is the date that the Group commits to
purchase the asset. Regular way purchases or sales are purchases and sale of financial assets that require delivery of assets within the
period generally established by regulation or convention in the marketplace.
Financial instruments are classified into the following categories: Financial asset or financial liability at FVPL, loans and receivables,
held-to-maturity (HTM) investments, AFS financial assets and other financial liabilities. The classification depends on the purpose for
which the investments were acquired and whether they are quoted in an active market. The Group determines the classification at
initial recognition and re-evaluates this designation at every reporting date, where appropriate.
(a)
Financial asset or financial liability at FVPL
Financial assets and financial liabilities at FVPL include financial assets and liabilities held for trading purposes and financial assets
and liabilities designated upon initial recognition as at FVPL. Financial assets and liabilities are classified as held for trading if they
are acquired for the purpose of selling and repurchasing in the near term. Derivatives, including separated embedded derivatives,
are also classified as held for trading unless they are designated and considered as hedging instruments in an effective hedge.
Gains or losses on financial assets held for trading are recognized in the consolidated statement of income.
Financial assets and liabilities may be designated at initial recognition at FVPL if the following criteria are met: (i) the designation
eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or recognizing
gains or losses on them on a different basis; (ii) the assets and liabilities are part of a group of financial assets which are managed
and their performance evaluated on a fair value basis, in accordance with a documented risk managing strategy; or (iii) the financial
instruments contains an embedded derivative that would need to be separately recorded, unless the embedded derivative does
not significantly modify the cash flow or it is clear, with little or no analysis, that it would not be separately recorded.
Where a contract contains one or more embedded derivatives, the entire hybrid contract may be designated as financial asset or
financial liabilities at FVPL, except where the embedded derivative does not significantly modify the cash flows or it is clear that
separation of the embedded derivative is prohibited.
The Group’s derivative asset and derivative liabilities are classified as financial asset and financial liabilities at FVPL.
(b)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are not entered into with the intention of immediate or short-term resale and are not classified or designated as AFS
financial assets or financial assets at FVPL. Loans and receivables are carried at cost or amortized cost in the consolidated balance
sheet. Amortization is determined using the effective interest rate method. Loans and receivables are included in current assets
if maturity is within twelve months of the balance sheet date. Otherwise, these are classified as noncurrent assets.
Included under this category are the Group’s cash and cash equivalents, trade and other receivables, amounts owed by related
parties and restricted cash.
(c)
HTM investments
HTM investments are quoted non-derivative financial assets which carry fixed or determinable payments and fixed maturities
and which the Group has the positive intention and ability to hold to maturity. After initial measurement, HTM investments
are measured at amortized cost using the effective interest method. This method uses an effective interest rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial
asset. Where the Group sells other than an insignificant amount of HTM investments, the entire category would be tainted and
reclassified as AFS investments. Gains and losses are recognized in the consolidated statement of income when the investments
are derecognized or impaired, as well as through the amortization process.
The Group does not have any HTM investment at December 31, 2009 and 2008.
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ANNUAL REPORT 2009 99
(d)
AFS investments
AFS investments are non-derivative financial assets that are either designated as AFS or not classified in any of the other categories.
They are purchased and held indefinitely, and may be sold in response to liquidity requirements or changes in market conditions.
Quoted AFS investments are measured at fair value with gains or losses being recognized as other comprehensive income, until
the investments are derecognized or until the investments are determined to be impaired at which time, the accumulated gains
or losses previously reported in other comprehensive income are included in the consolidated statement of income. Unquoted
AFS investments are carried at cost, net of impairment. These financial assets are classified as noncurrent assets unless there is an
intention to dispose such assets within twelve months from the balance sheet date.
The Group’s AFS investments at December 31, 2009 and 2008 include investments in unquoted shares of stock.
(e)
Other financial liabilities
This category pertains to financial liabilities that are not held for trading or not designated as at FVPL upon the inception of the
liability. These include liabilities arising from operations or borrowings.
Other financial liabilities are recognized initially at fair value and are subsequently carried at amortized cost, taking into account
the impact of applying the effective interest method of amortization (or accretion) for any directly attributable transaction costs.
Gains and losses are recognized in consolidated statement of income when liabilities are derecognized, as well as through
amortization process.
Included under this category are the Group’s trade and other payables, due to related parties, customers’ deposits, bank loans,
payable to preferred shareholder of subsidiary, finance lease obligation, long-term obligation on power distribution system, and
long-term debts.
Determination of fair value
The fair value for financial instruments traded in active markets at the balance sheet date is based on their quoted market price or
dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. When
current bid and asking prices are not available, the price of the most recent transaction provides evidence of the current fair value as
long as there has not been a significant change in economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair value is determined by using appropriate valuation techniques.
Valuation techniques include net present value techniques, comparison to similar instruments for which market observable prices exist,
options pricing models, and other relevant valuation models.
Derivative financial instruments
Derivative financial instruments, including embedded derivatives, are initially recognized at fair value on the date in which a derivative
transaction is entered into or bifurcated, and are subsequently re-measured at FVPL, unless designated as effective hedge. Derivatives
are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
The Group assesses whether embedded derivatives are required to be separated from host contracts when the Group first becomes
party to the contract.
An embedded derivative is separated from the host financial or non-financial contract and accounted for as a derivative if all of the
following conditions are met:
• the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics of the
host contract;
• a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and,
• the hybrid or combined instrument is not recognized as at FVPL.
Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise
be required.
Embedded derivatives that are bifurcated from the host contracts are accounted for either as financial assets or financial liabilities at
FVPL. Changes in fair values are included in the consolidated statement of income.
As of December 31, 2009, the Group has freestanding derivatives in the form of non-deliverable foreign currency forward contracts
entered into to hedge its foreign currency risks (see Note 31). The Group, however, has no embedded derivatives as of December 31,
2009.
‘Day 1’ difference
Where the transaction price in a non-active market is different from the fair value of other observable current market transactions in the
same instrument or based on a valuation technique whose variables include only data from observable market, the Group recognizes
the difference between the transaction price and fair value (a ‘Day 1’ difference) in the consolidated statement of income unless it
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100 ABOITIZ POWER CORPORATION
qualifies for recognition as some other type of asset. In cases where use is made of data which is not observable, the difference between
the transaction price and model value is only recognized in the consolidated statement of income when the inputs become observable
or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of recognizing the ‘Day
1’ difference amount.
Classification of financial instruments between debt and equity
A financial instrument is classified as debt if it provides for a contractual obligation to:
• deliver cash or another financial asset to another entity; or
• exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Group;
or
• satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of own
equity shares.
If the Group does not have an unconditional right to avoid delivering cash or another financial asset to settle its contractual obligation,
the obligation meets the definition of a financial liability.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest,
dividends, gains and losses relating to a financial instrument or a component that is a financial liability, are reported as expense or
income. Distributions to holders of financial instruments classified as equity are charged directly to equity net of any related income
tax benefits.
The components of issued financial instruments that contain both liability and equity elements are accounted for separately, with
the equity component being assigned the residual amount after deducting from the instrument as a whole the amount separately
determined as the fair value of the liability component on the date of issue.
Derecognition of Financial Assets and Liabilities
Financial Assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized where:
• the rights to receive cash flows from the asset expires;
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material
delay to a third party under a ‘pass-through’ arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks
and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all
the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Group’s continuing
involvement in the asset.
Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and
the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of
income.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and only if, there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle
the liability simultaneously. This is not generally the case with master netting agreements whereby the related assets and liabilities are
presented gross in the consolidated balance sheet.
Impairment of Financial Assets
The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. A financial asset or a
group of financial assets is deemed to be impaired if and only if, there is an objective evidence of impairment as a result of one or more
events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the
estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment
may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in
interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable
data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions
that correlate with defaults.
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ANNUAL REPORT 2009 101
Assets carried at amortized cost
If there is an objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the
amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash
flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e.
the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through
use of an allowance account. The amount of the loss shall be recognized in the consolidated statement of income.
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant,
and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial
assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are
individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective
assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of
an impairment loss is recognized in the consolidated statement of income, to the extent that the carrying value of the asset does not
exceed its amortized cost at the reversal date.
AFS investments
For AFS investments, the Group assesses at each balance sheet date whether there is objective evidence that an investment or group
of investment is impaired.
In the case of equity investments classified as AFS, objective evidence of impairment would include a significant or prolonged decline in
the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss (measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in the
consolidated statement of income) is removed from other comprehensive income and recognized in the consolidated statement of
income. Impairment losses on equity investments are not reversed through the consolidated statement of income. Increases in fair
value after impairment are recognized directly in other comprehensive income.
In the case of debt instruments classified as AFS, impairment is assessed based on the same criteria as financial assets carried at
amortized cost. Future interest income is based on rate of interest used to discount future cash flows for measuring impairment loss.
Such accrual is recorded as part of “Interest income” in the consolidated statement of income. If, in subsequent period, the fair value of
a debt instrument increased and the increase can be objectively related to an event occurring after the impairment loss was recognized
in the consolidated statement of income, the impairment loss is reversed through the consolidated statement of income.
Property, Plant and Equipment
Except for land, property, plant and equipment are stated at cost, excluding the cost of day-to-day servicing, less accumulated
depreciation and accumulated impairment in value. Such cost includes the cost of replacing parts of such property, plant and equipment
when that cost is incurred if the recognition criteria are met. Repairs and maintenance costs are recognized in the consolidated
statement of income as incurred. Land is stated at cost less any accumulated impairment in value.
Except for the power plant machinery and equipment of CPPC, which is depreciated over the shorter of its Co-operation Period of 15
years (see Note 20) or the estimated useful lives of the assets, depreciation of the other property, plant and equipment is computed
using the straight-line method over the estimated useful lives of the assets as follows:
Category
Buildings, warehouses and improvements
Power plant equipment
Transmission and distribution equipment
Power transformers
Poles and wires
Other components
Distribution transformers and substation equipment
Power transformers
Other components
Transportation equipment
Office furniture, fixtures and equipment
Electrical equipment
Meters and laboratory equipment
Tools and others
Steam field assets
Estimated Useful Life (in
years)
20
9-40
30
30
12
30
12
3-5
2-5
5
12
3
20-25
Leasehold improvements are amortized over the shorter of the lease term or the life of the asset.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate
that the carrying values may not be recoverable.
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102 ABOITIZ POWER CORPORATION
Fully depreciated assets are retained in the accounts until these are no longer in use. When assets are retired or otherwise disposed
of, both the cost and related accumulated depreciation and amortization and any allowance for impairment losses are removed from
the accounts and any resulting gain or loss is credited or charged to current operations. An item of property, plant and equipment is
derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the consolidated statement of income in the year the asset is derecognized.
The assets’ residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each financial year-end.
When each major inspection is performed, its cost is recognized in the carrying amount of the property, plant and equipment as a
replacement if the recognition criteria are satisfied. Construction in progress represents structures under construction and is stated
at cost. Borrowing costs that are directly attributable to the construction of property, plant and equipment are capitalized during the
construction period. Construction in progress is not depreciated until such time that the relevant assets are completed and put into
operational use.
Arrangement Containing a Lease
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies:
(a)
(b)
(c)
(d)
there is a change in contractual terms, other than a renewal or extension of the arrangement;
a renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the
lease term;
there is a change in the determination of whether fulfillment is dependent on a specific asset; or
there is a substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gives rise
to the reassessment for scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b).
Finance lease
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are
capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease
payments. Obligations arising from plant assets under finance lease agreement are classified in the balance sheets as finance lease
obligation.
Lease payments are apportioned between financing charges and reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Financing charges are charged directly against income.
Capitalized leased assets are depreciated over the estimated useful life of the assets when there is reasonable certainty that the Group
will obtain ownership by the end of the lease term.
Service Concession Arrangements
Public-to-private service concession arrangements where: (a) the grantor controls or regulates what services the entities in the Group
must provide with the infrastructure, to whom it must provide them, and at what price; and (b) the grantor controls-through ownership,
beneficial entitlement or otherwise-any significant residual interest in the infrastructure at the end of the term of the arrangement are
accounted for under the provisions of Philippine Interpretation IFRIC 12, Service Concession Arrangements. Infrastructures used in a
public-to-private service concession arrangement for its entire useful life (whole-of-life assets) are within the scope of this Interpretation
if the conditions in (a) are met.
This Interpretation applies to both: (a) infrastructure that the entities in the Group constructs or acquires from a third party for the
purpose of the service arrangement; and (b) existing infrastructure to which the grantor gives the entity in the Group access for the
purpose of the service arrangement.
Infrastructures within the scope of this Interpretation are not recognized as property, plant and equipment of the Group. Under the
terms of contractual arrangements within the scope of this Interpretation, an entity acts as a service provider. An entity constructs or
upgrades infrastructure (construction or upgrade services) used to provide a public service and operates and maintains that infrastructure
(operation services) for a specified period of time.
An entity recognizes and measures revenue in accordance with PAS 11, Construction Contracts, and PAS 18, Revenue, for the services
it performs. If an entity performs more than one service (i.e. construction or upgrade services and operation services) under a single
contract or arrangement, consideration received or receivable shall be allocated by reference to the relative fair values of the services
delivered, when the amounts are separately identifiable.
When an entity provides construction or upgrade services, the consideration received or receivable by the entity is recognized at its
fair value. An entity accounts for revenue and costs relating to construction or upgrade services in accordance with PAS 11. Revenue
from construction contracts is recognized based on the percentage-of-completion method, measured by reference to the percentage
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ANNUAL REPORT 2009 103
of costs incurred to date to estimated total costs for each contract. The applicable entities account for revenue and costs relating to
operation services in accordance with PAS 18.
An entity recognizes a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial
asset from or at the direction of the grantor for the construction services. An entity recognizes an intangible asset to the extent that it
receives a right (a license) to charge users of the public service.
When the applicable entities have contractual obligations it must fulfill as a condition of its license (a) to maintain the infrastructure to
a specified level of serviceability or (b) to restore the infrastructure to a specified condition before it is handed over to the grantor at
the end of the service arrangement, it recognizes and measures these contractual obligations in accordance with PAS 37, Provisions,
Contingent Liabilities and Contingent Assets, i.e., at the best estimate of the expenditure that would be required to settle the present
obligation at the balance sheet date.
In accordance with PAS 23, Borrowing Costs, borrowing costs attributable to the arrangement are recognized as an expense in the period
in which they are incurred unless the applicable entities have a contractual right to receive an intangible asset (a right to charge users
of the public service). In this case, borrowing costs attributable to the arrangement are capitalized during the construction phase of the
arrangement.
Intangible Asset - Service Concession Right
The Group’s intangible asset - service concession right pertains mainly to its right to charge users of the public service in connection with
the service concession and related arrangements. This is recognized initially at the fair value of the construction services. Following
initial recognition, the intangible asset is carried at cost less accumulated amortization and any accumulated impairment losses.
The intangible asset - service concession right is amortized using the straight-line method over the estimated useful economic life which
is the service concession period, and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
The estimated useful life is 25 years. The amortization period and the amortization method are reviewed at least at each financial
yearend. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset
is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
The amortization expense is recognized in profit or loss in the expense category consistent with the function of the intangible asset.
Gains or losses arising from derecognition of an intangible asset - service concession right are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.
Investment Property
Investment property, which pertains to land, is measured initially at cost, including transaction costs. The carrying amount includes the
cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes
the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment property is carried at cost less
accumulated depreciation and accumulated impairment in value.
Investment property is derecognized when either they have been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of
an investment property are recognized in the consolidated statement of income in the year of retirement or disposal.
Impairment of Nonfinancial Assets
Other current assets, property, plant and equipment, intangible asset, investment property and investment in and advances to associates
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups
of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down
to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment
losses of continuing operations are recognized in the consolidated statement of income in those expense categories consistent with the
function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses
may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized
impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount.
That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of income unless the asset
is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation
charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over
its remaining useful life.
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104 ABOITIZ POWER CORPORATION
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognized:
Sale of power
Revenue from power distribution is recognized upon supply of power to the customers. Revenue from power generation is recognized
in the period actual capacity is generated and earned.
Dividend income
Dividend income is recognized when the Group’s right to receive payment is established.
Services
Service fees which are primarily earned from the installation of electrical power-saving devices are recognized when the Group’s share
of power-saving income is determined.
Technical, management and other fees
Technical, management and other services fees are recognized when the related services are rendered.
Interest income
Interest is recognized as it accrues taking into account the effective interest method.
Expenses
Expenses are decreases in economic benefits during the accounting period in the form of outflows or decrease of assets or incurrence
of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. Expenses are recognized
when incurred.
Pension Benefits
The Group has defined benefit pension plans which require contributions to be made to separately administered funds. The cost of
providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit actuarial
valuation method. Actuarial gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial
gains and losses for each individual plan at the end of the previous reporting year exceeded 10% of the higher of the defined benefit
obligation and the fair value of plan assets at that date. These gains or losses are recognized over the expected average remaining
working lives of the employees participating in the plans.
The past service cost is recognized as an expense on a straight-line basis over the average period until the benefits become vested. If
the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past service cost is recognized
immediately.
The defined benefit liability is the aggregate of the present value of the defined benefit obligation and actuarial gains and losses not
recognized reduced by past service cost not yet recognized and the fair value of plan assets out of which the obligations are to be
settled directly. If such aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative
unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds
from the plan or reductions in the future contributions to the plan.
If the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past service cost and the present value of
any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan, net actuarial
losses of the current period and past service cost of the current period are recognized immediately to the extent that they exceed any
reduction in the present value of those economic benefits. If there is no change or an increase in the present value of the economic
benefits, the entire net actuarial losses of the current period and past service cost of the current period are recognized immediately.
Similarly, net actuarial gains of the current period after the deduction of past service cost of the current period exceeding any increase
in the present value of the economic benefits stated above are recognized immediately if the asset is measured at the aggregate of
cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form
of refunds from the plan or reductions in the future contributions to the plan. If there is no change or a decrease in the present value of
the economic benefits, the entire net actuarial gains of the current period after the deduction of past service cost of the current period
are recognized immediately.
Borrowing Costs
Borrowing costs generally are expensed as incurred. Borrowing costs, including foreign exchange differences arising from foreign
currency borrowings that are regarded as an adjustment of interest costs, are capitalized if they are directly attributable to the acquisition
or construction of a qualifying asset. Capitalization of borrowing costs commences when the activities to prepare the asset are in
progress and expenditures and borrowing costs are being incurred. Borrowing costs are capitalized until the assets are substantially
ready for their intended use. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.
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ANNUAL REPORT 2009 105
Income Taxes
Current Income Tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted as of the balance sheet date.
Deferred Income Tax
Deferred income tax is provided using the balance sheet liability method on temporary differences at the balance sheet date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences, except:
• where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures,
where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the
carryforward of unused tax credits and unused tax losses can be utilized except:
• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred income tax assets are recognized only to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized
deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that
future taxable profit will allow the deferred income tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted as of the balance sheet date.
Income tax relating to items recognized directly in other comprehensive income is also recognized in other comprehensive income and
not in profit or loss.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current income
tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation
authority.
Sales tax
Revenues, expenses and assets are recognized net of the amount of sales tax except:
• where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the
sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
balance sheet.
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the consolidated statement of income net of any reimbursement. If the effect of the time value
of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a borrowing cost.
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106 ABOITIZ POWER CORPORATION
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements
but disclosed when an inflow of economic benefits is probable.
Events after the Balance Sheet Date
Post year-end events that provide additional information about the Group’s position at balance sheet date (adjusting events) are
reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed when material.
Earnings Per Common Share
Basic earnings per common share are computed by dividing net income for the year attributable to the common shareholders of the
Company by the weighted average number of common shares issued and outstanding during the year, after giving retroactive effect for
any stock dividends declared and stock rights exercised during the year.
Diluted earnings per share amounts are calculated by dividing the net income for the year attributable to the common shareholders
of the parent by the weighted average number of common shares outstanding during the year plus the weighted average number of
common shares that would be issued for outstanding common stock equivalents. The Group does not have dilutive potential common
shares.
Dividends on Common Shares
Dividends on common shares are recognized as a liability and deducted from retained earnings when approved by the respective
shareholders of the Group and subsidiaries. Dividends for the year that are approved after the balance sheet date are dealt with as an
event after the balance sheet date.
Business Segments
For management purposes, the Group is organized into two major operating segments (power generation and distribution) according
to the nature of the services provided, with each segment representing significant business segment. The Group’s identified operating
segments, which are consistent with the segments reported to the BOD which is the Group’s Chief Operating Decision Maker (CODM).
Financial information on the operating segment is presented in Note 29.
New Accounting Standards, Interpretations, and Amendments to Existing Standards Effective
Subsequent to December 31, 2009
The Group will adopt the following standards and interpretations, when these become effective, and as these are applicable. Except as
otherwise indicated, the Group does not expect the adoption of these new and amended PFRS and Philippine Interpretations to have
significant impact on its consolidated financial statements.
Effective in 2010
• Amendments to PFRS 2, Share-based Payments - Group Cash-settled Share-based Payment Transactions, clarify the scope and the
accounting for group cash-settled share-based payment transactions effective for annual periods beginning on or after January 1,
2010.
• Revised PFRS 3, Business Combinations, and PAS 27, Consolidated and Separate Financial Statements, introduce a number of changes
in the accounting for business combinations that will impact the amount of goodwill recognized, the reported results in the period
that an acquisition occurs, and future reported results. The revised PAS 27 requires, among others, that (a) change in ownership
interests of a subsidiary (that do not result in loss of control) will be accounted for as an equity transaction and will have no impact
on goodwill nor will it give rise to a gain or loss; (b) losses incurred by the subsidiary will be allocated between the controlling
and noncontrolling interests (previously referred to as “minority interests”); even if the losses exceed the noncontrolling equity
investment in the subsidiary; and (c) on loss of control of a subsidiary, any retained interest will be remeasured to fair value and this
will impact the gain or loss recognized on disposal. The changes introduced by the revised PFRS 3 must be applied prospectively
and the revised PAS 27 must be applied retrospectively subject to certain exceptions.
• Amendment to PAS 39, Financial Instruments: Recognition and Measurement - Eligible Hedged Items, addresses only the designation
of a one-sided risk in a hedged item, and the designation of inflation as a hedged risk or portion in particular situations. The
amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial
instrument as a hedged item.
• Philippine Interpretation IFRIC 17, Distributions of Non-cash Assets to Owners, provides guidance on how to account for non-cash
distributions to owners. The interpretation clarifies when to recognize a liability, how to measure it and the associated assets, and
when to derecognize the asset and liability.
Improvement to PFRS Effective 2010
The omnibus amendments to PFRSs issued in 2009 were issued primarily with a view of removing inconsistencies and clarifying
wording. The amendments are effective for annual periods beginning on or after January 1, 2010, unless otherwise stated. The Parent
Company has not yet adopted the following amendments and anticipates that these changes will have no material effect on the
financial statements.
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ANNUAL REPORT 2009 107
• PFRS 2, Share-based Payments, clarifies that the contribution of a business on formation of a joint venture and combinations under
common control are not within the scope of PFRS 2 even though they are out of scope of PFRS 3 (Revised). The amendment is
effective for financial years beginning on or after July 1, 2009.
• PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations, clarifies that the disclosures required with respect to
noncurrent assets and disposal groups classified as held for sale or discontinued operations are only those set out in PFRS 5. The
disclosure requirements of other PFRS only apply if specifically required for such noncurrent assets or discontinued operations.
• PFRS 8, Operating Segments, clarifies that segment assets and liabilities need only be reported when those assets and liabilities are
included in measures that are used by the chief operating decision maker (CODM).
• PAS 1, Presentation of Financial Statements, clarifies that the terms of a liability that could result, at anytime, in its settlement by
the issuance of equity instruments at the option of the counterparty do not affect its classification.
• PAS 7, Statement of Cash Flows, explicitly states that only expenditure that results in a recognized asset can be classified as a cash
flow from investing activities.
• PAS 17, Leases, removes the specific guidance on classifying land as a lease. Prior to the amendment, leases of land were classified
as operating leases. The amendment now requires that leases of land are classified as either “finance” or “operating” in accordance
with the general principles of PAS 17. The amendments will be applied retrospectively.
• PAS 36, Impairment of Assets, clarifies that the largest unit permitted for allocating goodwill, acquired in a business combination,
is the operating segment as defined in PFRS 8 before aggregation for reporting purposes.
• PAS 38, Intangible Assets, clarifies that if an intangible asset acquired in a business combination is identifiable only with another
intangible asset, the acquirer may recognize the group of intangible assets as a single asset provided the individual assets have
similar useful lives. Also clarifies that the valuation techniques presented for determining the fair value of intangible assets
acquired in a business combination that are not traded in active markets are only examples and are not restrictive on the methods
that can be used.
• PAS 39, Financial Instruments: Recognition and Measurement, clarifies that a prepayment option is considered closely related to
the host contract when the exercise price of a prepayment option reimburses the lender up to the approximate present value of
lost interest for the remaining term of the host contract; the scope exemption for contracts between an acquirer and a vendor in
a business combination to buy or sell an acquiree at a future date applies only to binding forward contracts, and not derivative
contracts where further actions by either party are still to be taken; and gains or losses on cash flow hedges of a forecast transaction
that subsequently results in the recognition of a financial instrument or on cash flow hedges of recognized financial instruments
should be reclassified in the period that the hedged forecast cash flows affect comprehensive income.
• Philippine Interpretation IFRIC 9, Reassessment of Embedded Derivatives, clarifies that it does not apply to possible reassessment
at the date of acquisition, to embedded derivatives in contracts acquired in a business combination between entities or businesses
under common control or the formation of joint venture.
• Philippine Interpretation IFRIC 16, Hedges of a Net Investment in a Foreign Operation, states that, in a hedge of a net investment
in a foreign operation, qualifying hedging instruments may be held by any entity or entities within the group, including the
foreign operation itself, as long as the designation, documentation and effectiveness requirements of PAS 39 that relate to a net
investment hedge are satisfied.
Effective in 2012
• Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate, covers accounting for revenue and associated
expenses by entities that undertake the construction of real estate directly or through subcontractors. This interpretation
requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies
as construction contract to be accounted for under PAS 11, Construction Contracts, or involves rendering of services in which case
revenue is recognized based on stage of completion. Contracts involving provision of services with the construction materials and
where the risks and reward of ownership are transferred to the buyer on a continuous basis, will also be accounted for based on
stage of completion.
3. Significant Judgments, Estimates and Assumptions
The preparation of the Group’s consolidated financial statements require management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosures of contingent liabilities. However,
uncertainty about these assumptions could result in outcomes that require a material adjustment to the carrying amount of the asset
or liability affected in the future periods.
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108 ABOITIZ POWER CORPORATION
Judgments
In the process of applying the Group’s accounting policies, management has made judgments, apart from those involving estimations,
which have the most significant effect on the amounts recognized in the consolidated financial statements:
Determining functional currency
Based on the economic substance of the underlying circumstances relevant to the companies in the Group, the functional currency of
the companies in the Group has been determined to be the Philippine Peso except for certain associates whose functional currency is
the US Dollar. The Philippine Peso is the currency of the primary economic environment in which the companies in the Group operates
and it is the currency that mainly influences the sale of power and services and the costs of power and of providing the services. The
functional currency of the Group’s associates is the Philippine Peso except for LHC, STEAG, SPPC and WMPC whose functional currency
is the US Dollar.
Service concession arrangements - Companies in the Group as Operators
Based on management’s judgment, the provisions of IFRIC 12 apply to the SEZC’s Distribution Management Service Agreement (DMSA)
with Subic Bay Metropolitan Authority (SBMA) and MEZC’s Built-Operate-Transfer agreement with Mactan Cebu International Airport
Authority. SEZC and MEZC’s service concession agreements were accounted for under the intangible asset model. The Company’s
associates, LHC and STEAG, have also determined that the provisions of IFRIC 12 apply to their power purchase agreements with NPC.
LHC and STEAG’s service concession agreements were accounted for under the intangible and financial asset model, respectively. Refer
to the accounting policy on service concession arrangements for the discussion of intangible asset and financial asset models.
Determining fair value of customers’ deposits
In applying PAS 39, Financial Instruments: Recognition and Measurement, on transformer and lines and poles deposits, the Group has
made a judgment that the timing and related amounts of future cash flows relating to such deposits cannot reasonably and reliably be
estimated for purposes of alternative valuation technique in establishing their fair values since the expected timing of customers’ refund
or claim for these deposits cannot be reasonably estimated. These customers’ deposits, which are therefore stated at cost, amounted
to π1,781,116 and π1,571,092 as of December 31, 2009 and 2008, respectively (see Note 17).
Finance lease - Company in the Group as the lessee
In accounting for its Independent Power Producer (IPP) Administration Agreement with Power Sector Asset and Liabilities Management
Corporation (PSALM), the Group’s management has made a judgment that the IPP Administration Agreement is an arrangement that
contains a lease. The Group’s management has made a judgment that it has substantially acquired all the risks and rewards incidental to
ownership of the power plant. Accordingly, the Group accounted for the agreement as a finance lease and recognized the power plant
and finance lease obligation at the present value of the agreed monthly payments to PSALM (see Notes 8 and 34).
The power plant is depreciated over its estimated useful life as there is reasonable certainty that the Group will obtain ownership by
the end of the lease term. As of December 31, 2009 and 2008, the carrying value of the power plant amounted to π44,520,331 and nil,
respectively (see Notes 11 and 34).
Estimation Uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
Acquisition accounting
The Group accounts for acquired businesses using the purchase method of accounting which requires that the assets acquired and the
liabilities assumed be recorded at the date of acquisition at their respective fair values.
The application of the purchase method requires certain estimates and assumptions especially concerning the determination of the
fair values of acquired intangible assets and property, plant and equipment as well as liabilities assumed at the date of the acquisition.
Moreover, the useful lives of the acquired intangible assets, property, plant and equipment have to be determined.
The judgments made in the context of the purchase price allocation can materially impact the Group’s future results of operations.
Accordingly, for significant acquisitions, the Group obtains assistance from third party valuation specialists. The valuations are based
on information available at the acquisition date.
Estimating allowance for impairment losses on investments in and advances to associates
Investments in and advances to associates are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. There are no impairment indicators in 2009, 2008 and 2007 based on management’s
assessment. The carrying amounts of the investments in and advances to associates amounted to π24,800,301 and π21,250,901 as of
December 31, 2009 and 2008, respectively. No allowance for impairment losses was recognized in 2009, 2008 and 2007 (see Note 9).
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the
cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the
expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present
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ANNUAL REPORT 2009 109
value of those cash flows. The carrying amount of goodwill as of December 31, 2009 and 2008 amounted to π996,005 (see Note 10). No
impairment of goodwill was recognized in 2009, 2008 and 2007.
Estimating useful lives of property, plant and equipment
The Group estimates the useful lives of property, plant and equipment based on the period over which assets are expected to be available
for use. The estimated useful lives of property, plant and equipment are reviewed periodically and are updated if expectations differ
from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the
assets. In addition, the estimation of the useful lives of property, plant and equipment is based on collective assessment of internal
technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially
affected by changes in estimates brought about by changes in the factors and circumstances mentioned above. As of December 31,
2009 and 2008, the aggregate net book values of property, plant and equipment amounted to π72,901,029 and π6,257,643, respectively
(see Note 11).
Estimating residual value of property, plant and equipment
The residual value of the Group’s property, plant and equipment is estimated based on the amount that would be obtained from
disposal of the asset, after deducting estimated costs of disposal, if the asset is already of the age and in the condition expected at the
end of its useful life. Such estimation is based on the prevailing price of property, plant and equipment of similar age and condition.
The estimated residual value of each asset is reviewed periodically and updated if expectations differ from previous estimates due to
changes in the prevailing price of a property, plant and equipment of similar age and condition.
Estimating useful lives of intangible asset - service concession rights
The Group estimates the useful lives of intangible asset arising from service concessions based on the period over which the asset is
expected to be available for use which is 25 years. The Group has not included any renewal period on the basis of uncertainty, as of
balance sheet date, of the probability of securing renewal contract at the end of the original contract term.
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for non-financial assets at each reporting date. These nonfinancial
assets (property, plant and equipment, intangible asset - service concession rights, investment property, and other current and
noncurrent assets) are tested for impairment when there are indicators that the carrying amounts may not be recoverable.
Certain impairment indicators are present. Determining the recoverable amount of property, plant and equipment and intangibles asset
- service concession rights, which require the determination of future cash flows expected to be generated from the continued use and
ultimate disposition of such assets, requires the Group to make estimates and assumptions that can materially affect its consolidated
financial statements. Future events could cause the Group to conclude that the property, plant and equipment and intangible asset
- service concession rights are impaired. Any resulting impairment loss could have a material adverse impact on the consolidated
balance sheet and statement of income. As of December 31, 2009 and 2008, the aggregate net book values of these assets amounted
to π72,280,630 and π7,205,540, respectively (see Notes 7, 11, 12 and 13). No impairment losses were recognized in 2009, 2008 and 2007.
Estimating allowance for impairment of trade and other receivables
The Group maintains allowance for impairment of trade and other receivables at a level considered adequate to provide for potential
uncollectible receivables. The level of this allowance is evaluated by management on the basis of the factors that affect the collectibility
of the accounts. These factors include, but are not limited to, the Group’s relationship with its clients, client’s current credit status and
other known market factors. The Group reviews the age and status of receivables and identifies accounts that are to be provided with
allowance either individually or collectively. The amount and timing of recorded expenses for any period would differ if the Group made
different judgment or utilized different estimates. An increase in the Group’s allowance for impairment of trade and other receivables
will increase the Group’s recorded expenses and decrease current assets. As of December 31, 2009 and 2008, allowance for impairment
amounted to π106,170 and π8,098, respectively. Trade and other receivables, net of allowance for impairment, amounted to π4,476,028
and π1,991,074 as of December 31, 2009 and 2008, respectively (see Note 5).
Estimating allowance for inventories obsolescence
The Group estimates the allowance for inventories obsolescence based on the age of inventories. The amounts and timing of recorded
expenses for any period would differ if different judgments or different estimates are made. An increase in allowance for materials and
supplies obsolescence would increase recorded expenses and decrease current assets. No allowance for inventory obsolescence was
recognized in 2009 and 2008. The carrying amount of the inventories amounted to π1,110,639 and π332,042 as of December 31, 2009
and 2008, respectively (see Note 6).
Recognition of deferred income tax assets and liabilities
The Group reviews the carrying amounts of deferred income tax assets at each balance sheet date and reduces deferred income tax
assets to the extent that it is no longer probable that sufficient income will be available to allow all or part of the deferred income tax
assets to be utilized. The Group has gross deferred income tax assets amounting to π250,009 as of December 31, 2009 and π66,897 as
of December 31, 2008. As of December 31, 2009, the Group has nil deferred income and tax asset and liability on temporary difference
amounting to π27.8 million and π441.8 million, respectively (see Note 27).
Pension benefits
The determination of the Group’s obligation and cost of pension is dependent on the selection of certain assumptions used by actuaries
in calculating such amounts. Those assumptions are described in Note 26, Pension Benefit Plans, and include, among others, discount
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110 ABOITIZ POWER CORPORATION
rates, expected rates of return on plan assets and rates of future salary increase. In accordance with PAS 19, Employee Benefits, actual
results that differ from the Group’s assumptions are accumulated and amortized over future periods and therefore, generally affect
the Group’s recognized expenses and recorded obligation in such future periods. While management believes that its assumptions are
reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially
affect the Group’s pension and other post-employment obligations. Retirement benefit income amounted to π4,792 in 2009 and
retirement benefit expense amounted to π22,205 and π5,451 in 2008 and 2007, respectively. The Group’s pension liabilities amounted
to π28,158 and π14,467 as of December 31, 2009 and 2008, respectively. Pension assets amounted to π37,186 and π9,720 as of
December 31, 2009 and 2008, respectively (see Note 26).
Legal Contingencies
The estimate of probable costs for the resolution of possible claims has been developed in consultation with outside counsels handling
the Group’s defense in these matters and is based upon an analysis of potential results. No provision for probable losses arising from
legal contingencies was recognized in the Group’s consolidated financial statements as of December 31, 2009 and 2008.
4. Cash and Cash Equivalents
Cash on hand and in banks
Short-term investments
π2,255,660
1,559,246
2009 2008
π622,301
13,711,375
π3,814,906
π14,333,676
Cash in banks earn interest at floating rates based on daily bank deposit rates. Short-term investments are made for varying periods of
between one day and three months depending on the immediate cash requirements of the Group and earn interest at the respective
short-term deposit rates.
Interest income earned from cash and cash equivalents including restricted cash (see Note 13) amounted to π348,855 in 2009, π458,973
in 2008 and π326,952 in 2007.
5. Trade and Other Receivables
2009 2008
Trade receivables - net of allowance for impairment of π106,170 in 2009 and
π8,098 in 2008 (see Note 31)
Due from related parties (see Note 30)
Other receivables
π3,606,224
–
869,804
π4,476,028
π782,043
396,600
812,431
π1,991,074
Trade receivables are non-interest bearing and are generally on 10 - 30 day term.
Other receivables substantially comprise of outstanding claims.
The roll forward analysis of allowance for impairment of receivables, which pertains to trade receivables of the power distribution
segment, is presented below:
January 1
Provisions (see Note 23)
Write-off/reversals
2009 2008
π8,098
136,474
(38,402)
π7,560
1,076
(538)
December 31 π106,170 π8,098
Trade receivables of the power distribution segment that was written off but not covered by the allowance for impairment amounted to
π1,121 and π66,261 (see Note 23) in 2009 and 2008, respectively.
Allowance for impairment as of December 31, 2009 and 2008 pertain to receivables that are individually determined to be impaired at
balance sheet date. These relate to debtors that are in significant financial difficulties and have defaulted on payments and accounts
under dispute and legal proceedings. These receivables are not secured by any collateral or credit enhancements.
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ANNUAL REPORT 2009 111
6. Inventories - at cost
Fuel inventories
Plant spare parts and supplies
Transmission and distribution supplies
Other parts and supplies
2009 2008
π541,759
316,745
179,082
73,053
π18,908
90,273
189,798
33,063
π1,110,639 π332,042
7. Other Current Assets
Input value-added tax (VAT)
Prepaid tax
Others
2009 2008
π385,889
87,446
39,349
π307,620
88,664
104,866
π512,684 π501,150
Others substantially comprise of other deferred input VAT, current portion of prepaid rent (see Note 34) and other prepaid expenses.
8. Business Combinations and Asset Acquisitions
a. Acquisition of the 747 Megawatt (MW) Tiwi-MakBan Geothermal Power Plant (“Tiwi-MakBan Power Plant”)
In August 2008, PSALM issued the Notice of Award and Certificate of Effectivity to APRI, a subsidiary, officially declaring it as the
winning bidder for the 289 MW Tiwi Geothermal Power Plant located in Tiwi, Albay and the 458 MW Makiling-Banahaw (MakBan)
Geothermal Plant located in Laguna and Batangas Provinces.
On May 25, 2009 (the “Closing Date”), all the closing terms and conditions for the execution of the Asset Purchase Agreement
(APA) between the APRI and PSALM were satisfied and the purchase was completed. Following the completion of the conditions
precedent and the execution of the respective Certificates of Closing of the Company and PSALM, the control and possession
of the purchased assets were successfully turned-over and transferred to APRI on May 25, 2009. APRI started the commercial
operations of the Tiwi-MakBan Power Plant on May 26, 2009.
APRI accounted for the purchase of the Tiwi-MakBan Power Plant as acquisition of a business using purchase method.
The provisional fair value of the identifiable assets of the Tiwi-MakBan Power Plant as of the date of acquisition follows:
Property, plant and equipment
Steam field assets
Machinery and equipment
Electrical equipment
Other land improvements
Buildings
Inventories
Deferred income tax liability
Total consideration
π11,910,223
6,106,985
1,290,397
150,779
509,858
237,774
(7,242)
π20,198,774
No complete comparable information is available with respect to the carrying amounts of each of the assets acquired in the books
of PSALM immediately before the acquisition.
The accounting for the business combination that was effected during the period was determined provisionally as APRI has
incomplete information as of report date with respect to possible recognition of intangible assets and deferred income tax assets
arising from the acquisition. The accounting for the business combination will be finalized within the one-year period from
acquisition as allowed by PFRS 3.
Included in the APA is the transfer of bilateral power supply contract quantities (BCQs) to APRI from NPC (see Note 20). These
BCQs were initially identified as potential source of intangible assets, however, there is no history or evidence of exchange
transactions for the same or similar assets, and otherwise estimating fair value would be dependent on immeasurable variables.
The management provisionally did not recognize the intangible assets from the BCQs as it is not possible to measure reliably the
fair value of the intangible assets.
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112 ABOITIZ POWER CORPORATION
The total cost of the business combination was π20,198,774, consisting of the purchase price of π19,900,270 and costs directly
attributable to the acquisition of π298,504.
The APA originally required APRI to deliver at least 40% of the US$435.4 million purchase price as upfront payment payable on or
before the closing date. The balance of 60%, comprising the deferred payments, will be paid in 14 equal semi-annual payments
with an interest of 12% per annum compounded semi-annually. On closing date, APRI paid PSALM π8.29 billion representing the
40% upfront payment.
The payment of the 60% balance of π11.61 billion was accelerated on September 30, 2009 using proceeds from advances from
PHC. APRI paid interest amounting to π514,135 covering the period May 26 to September 30, 2009.
No segment of the Tiwi-MakBan Power Plant operation has been disposed as a result of the acquisition. From the date of
acquisition up to December 31, 2009, the Tiwi-MakBan Power Plant has contributed π2,072,730 to the net income of the Group.
b. Pagbilao IPP Administration Agreement
In August 2009, TLI, a subsidiary, was declared by PSALM as the winning bidder for the IPP Administrtation Agreement with a
discounted bid price of US$691 million representing the present value of accumulated monthly payments of US$2.5 billion using
PSALM’s discount rates. In September 2009, TLI and PSALM executed the IPP Administration agreement where PSALM appointed
TLI to manage the 700MW contracted capacity of NPC in the coal-fired power plant in Pagbilao, Quezon. TLI assumed dispatch
control of the contracted capacity on October 1, 2009.
The IPP Administration Agreement includes the following obligations TLI would have to perform until the transfer date of the
power plant (or the earlier termination of the IPP Administration Agreement):
a. Supply and deliver all fuel for the power plant in accordance with the specifications of the original Energy Conversion
Agreement (ECA); and
b. Pay to PSALM the monthly payments (based on the bid) and energy fees (equivalent to the amount paid by NPC to the IPP).
TLI has the following rights, among others, under the IPP Administration Agreement:
a. The right to receive, manage and control the Capacity of the power plant for its own account and at its own cost and risk;
b. The right to trade, sell or otherwise deal with the Capacity (whether pursuant to the spot market, bilateral contracts with third
parties or otherwise) and contract for or offer related ancillary services, in all cases for its own account and its own risk and
cost. Such rights shall carry the rights to receive revenues arising from such activities without obligation to account therefore
to PSALM or any third party;
c. The right to receive the transfer of the power plant at the end of the IPP Administration Agreement (which is technically the
end of the ECA) for no consideration; and
d. The right to receive an assignment of NPC’s interest to existing short-term bilateral Power Supply Contract from the ffective
date of the IPP Administration Agreement to November 2011 only (see Note 20).
In view of the nature of the IPP Administration Agreement, the arrangement has been accounted for as a finance lease (see Note
34).
From the date of assumption of dispatch control under the IPP Administration Agreement up to December 31, 2009, TLI has
contributed loss of π78,896 to the Group’s consolidated net income.
c. Acquisition of Power Barge (PB) 117 and 118
On July 31, 2009, Therma Marine and Therma Mobile, subsidiaries, won the negotiated bid with PSALM for the 100 MW PB 118 and
100 MW PB 117 with a bid price of US$16.0 million and $14.0 million, respectively. PB 118 is moored in Barangay San Roque, Maco,
Compostela Valley in Mindanao. PB 117 is moored in Barangay Sta. Ana, Nasipit, Agusan Del Norte.
Under the terms of the APA, Therma Marine is required to deliver at least 40% of the purchase price upon closing of the acquisition.
The remaining 60% is payable over a period not to exceed seven years.
On February 16, 2010, Therma Marine entered into an Assignment Agreement (the Agreement) with Therma Mobile. Under the
agreement, Therma Mobile transferred all of its rights and obligations under the APA as buyer of PB 117. Therma Marine shall now
be deemed, for all intents and purposes as the buyer of PB 117.
The control and possession of PB 118 and PB 117 was successfully turned-over and transferred to Therma Marine on February 6,
2010 and March 1, 2010, respectively.
Therma Marine will account for the purchase of PB 117 and PB 118 as acquisition of a business using the purchase method.
As of December 31, 2009, Therma Marine has yet to finalize the purchase price allocation.
d. Acquisitions of CPPC, East Asia Utilities Corporation (EAUC) and STEAG
On April 20, 2007, the Company acquired 60% ownership in CPPC from EAUC and 50% ownership in EAUC from El Paso Philippines
Energy Company, Inc. The total cost of the CPPC combination was cash consideration of π178,066. Net cash outflow from
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 113
the acquisition amounted to π100,210. The total cost of the EAUC acquisition amounted to π1,009,143, composed of a cash
consideration of π130,765 and assumption of liabilities of π878,378.
On November 15, 2007, the Company acquired 34% ownership in STEAG from Evonik Industries, Inc. The total cost of the STEAG
acquisition amounted to π4,400,611, which is composed of cash consideration of π4,378,783 (US$101,561 at US$1 = π43.12) and
costs directly attributed to the acquisition amounting to π21,828.
From the dates of acquisition up to December 31, 2007, CPPC, EAUC and STEAG have contributed π162,623, π61,638 and π94,781,
respectively, to the consolidated net income of the Group.
e. Business acquisitions of associates
• Acquisition of Ambuklao-Binga Plant
On November 28, 2007, SN Aboitiz Power-Benguet, Inc. (SNAP B, formerly SN Aboitiz Power Hydro, Inc.), an associate, won
the auction for the 175 MW Ambuklao-Binga hydropower facilities with a bid of US$325.0 million.
The APA originally required SNAP B to deliver at least 40% of the purchase price as upfront payment payable on or before
the closing date. The balance of 60% may be paid in fourteen (14) equal semi-annual payments with an interest of 12%
per annum compounded semi-annually. On July 10, 2008, PSALM turned over the possession and control of the 175 MW
Ambuklao-Binga Hydroelectric Power Plant Complex (Ambuklao-Binga HEPPC) to SNAP B, following payment by SNAP B of
70% of the purchase price to PSALM. SNAP B started the commercial operations of the Binga Power Plant on July 11, 2008.
The Ambuklao Power Plant is currently undergoing rehabilitation.
On August 8, 2008, SNAP B signed a US$375.0 million loan agreement with a consortium of international and domestic
financial institutions. The loan facility was used to pay the 30% balance of the purchase price and will partially finance the
rehabilitation and refurbishment of the 175 MW Ambuklao-Binga HEPPC and refinance SNAP B’s advances from shareholders
with respect to the acquisition of the Ambuklao-Binga HEPPC.
SNAP B accounted for the purchase of the Ambuklao-Binga plant as an acquisition of a business using the purchase method.
The final fair values of the identifiable assets of the power plants as of the date of acquisition follow:
Property, plant and equipment
Buildings
Machinery and equipment
Electrical equipment
Furniture and office equipment
Materials and supplies
Deferred income tax asset
Goodwill arising on acquisition
Total consideration
π2,569,187
632,464
339,876
198
16,240
590,569
4,148,534
10,767,563
π14,916,097
The total cost of the business combination was π14.92 billion, consisting of the purchase price of US$325.0 million with a peso
equivalent of π14.82 billion and costs directly attributable to the acquisition of π100.0 million. The exchange rate was π45.59
per US$1.00 at July 10, 2008.
In 2008, the amount of the power plants’ net income since acquisition date that is included in the Group’s consolidated net
income through share in net earnings in associates is π21,971.
• Acquisition of Magat Plant
In January 2007, SN Aboitiz Power - Magat, Inc. (SNAP M, formerly SN Aboitiz Power, Inc.), an associate, won the bid for the
360 MW Magat Hydroelectric Power Plant (Magat Power Plant) in Ramon, Isabela. The APA originally required SNAP M to
deliver at least 40% of the purchase price as upfront payment payable on or before the closing date. The balance of 60% may
be paid in 14 equal semi-annual payments with an interest of 12% per annum compounded semi-annually. On April 25, 2007,
SNAP M paid 70% of the US$530.0 million purchase price for the Magat Power Plant, which was turned over to SNAP M on
April 26, 2007. The payment of the 30% balance was likewise accelerated in October 2007 using proceeds from a common
term loan obtained from consortium of foreign and local banks.
The final asset valuation resulted in the recognition of goodwill of π10.29 billion.
The total cost of the acquisition amounted to π25.22 billion, comprised of the purchase price of π25.20 billion (US$530.0
million at US$1 = π47.54) and π20.7 million in costs directly attributed to the acquisition.
From the date of acquisition up to December 31, 2007, the Magat Power Plant has contributed π1,615,140 to the net income
of the Group through share in net earnings in associates.
SEC FORM 20 - IS (INFORMATION STATEMENT)

114 ABOITIZ POWER CORPORATION
9. Investments in and Advances to Associates
Acquisition cost:
Balance at beginning of the year
Additions during the year
π16,387,915
2,526,754
2009 2008
π12,607,938
3,779,977
Balance at end of year 18,914,669 16,387,915
Accumulated equity in net earnings:
Balance at beginning of the year
Share in net earnings
Cash dividends
3,263,941
2,535,386
(833,187)
2,638,702
2,784,511
(2,159,272)
Balance at end of year 4,966,140 3,263,941
Share in cumulative translation adjustments of associates
Investments in associates at equity
Advances to associates - net (Note 30)
23,880,809
115,246
23,996,055
804,246
π24,800,301
19,651,856
(18,422)
19,633,434
1,617,467
π21,250,901
The Group’s associates and the corresponding equity ownership are as follows:
Percentage of Ownership
Nature of Business 2009 2008 2007
Manila-Oslo Renewable Enterprise Inc. (MORE) Holding company 83.33 83.33 83.33
Visayan Electric Company, Inc. (VECO) Power distribution 55.18 55.11 55.05
Luzon Hydro Corporation (LHC) Power generation 50.00 50.00 50.00
East Asia Utilities Corporation (EAUC) Power generation 50.00 50.00 50.00
Bakun Power Line Corporation*
Energy related
service provider 50.00 50.00 50.00
Redondo Peninsula Energy, Inc. (RP Energy)** Power generation 50.00 50.00 –
SN Aboitiz Power - Magat, Inc. (SNAP M) Power generation 50.00 50.00 50.00
SN Aboitiz Power - Benguet, Inc. (SNAP B) Power generation 50.00 50.00 50.00
SN Aboitiz Power - Pangasinan, Inc. (SNAP P)* Power generation 50.00 – –
Hijos de F. Escano, Inc. (HIJOS) Holding company 46.73 46.66 46.66
San Fernando Electric Light and Power Co., Inc. (SFELAPCO) Power distribution 43.78 43.78 43.78
Pampanga Energy Ventures Inc. (PEVI) Holding company 42.84 42.84 42.84
Cordillera Hydro Corporation* Power generation 35.00 35.00 35.00
STEAG State Power, Inc. (STEAG) Power generation 34.00 34.00 34.00
Cebu Energy Development Corporation (CEDC)** Power generation 26.40 26.40 –
Southern Philippines Power Corporation (SPPC) Power generation 20.00 20.00 20.00
Western Mindanao Power Corporation (WMPC) Power generation 20.00 20.00 20.00
*No commercial operations.
**Has not yet started commercial operations as of December 31, 2009.
All ownership percentages presented in the table above are direct ownership of the Group except for the following:
• SNAP M and SNAP B – MORE has direct ownership in SNAP M and SNAP B of 60% each since 2007 while the Group’s direct
ownership in MORE is 83% resulting to the Group’s effective ownership in SNAP M and SNAP B of 50% each since 2007.
• VECO – HIJOS has direct ownership in VECO of 25.15% in 2009 and 2008 while the Group’s direct ownership in VECO is 43.43%
in 2009 and 43.37% in 2008 resulting to the Group’s effective ownership in VECO of 55.18% and 55.11% in 2009 and 2008,
respectively.
• SFELAPCO – PEVI has direct ownership in SFELAPCO of 54.83% in 2009 and 2008 while the Group’s direct ownership in
SFELAPCO is 20.29% resulting to the Group’s effective ownership in SFELAPCO of 43.78% in 2009 and 2008.
The Group does not consolidate MORE because of absence of control resulting from the shareholders agreement, which among
others stipulate the management and operation of MORE. Management of MORE is vested in its BOD and the affirmative vote of
the other shareholder is required for the approval of certain corporate actions which include financial and operating undertakings.
The Group also does not consolidate VECO as the other shareholders’ group have the control over the financial and operating
policies of VECO.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 115
The carrying values of investments in associates (including embedded goodwill), which are accounted for under the equity method
follows:
MORE
STEAG
CEDC
EAUC
LHC
VECO
HIJOS
WMPC
SPPC
PEVI
SFELAPCO
RP Energy
Others
π10,109,764
5,909,444
2,417,898
1,375,712
1,232,222
962,627
871,571
421,960
251,256
226,106
177,491
2,118
37,886
2009 2008
π8,823,278
4,973,051
–
1,182,972
1,322,173
982,204
875,907
445,573
325,558
221,423
169,456
278,886
32,953
π23,996,055
π19,633,434
The investments in associates, SFELAPCO and VECO, include embedded goodwill with an aggregate amount of π976,530.
Following is the summarized financial information of significant associates:
2009 2008 2007
MORE
LHC
VECO*
WMPC
SPPC
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest income- net
Income tax - net
Net income
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest expense - net
Income tax expense (benefit) - net
Net income
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest expense - net
Income tax - net
Net income
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest expense (income) - net
Income tax - net
Net income
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest expense - net
Income tax - net
Net income
π278,313
12,037,113
276,057
490
1,270,474
1,096,944
9,571
325
1,941
1,102,475
π332,448
4,496,366
1,593,142
771,228
1,223,189
749,635
280,022
123,999
158,373
467,264
π1,424,236
7,532,706
1,902,036
2,546,256
10,830,879
140,657
433,387
15,101
124,936
315,082
718,455
1,792,574
192,535
181,783
1,206,970
558,505
468,476
(3,260)
55,171
548,359
π491,448
1,305,583
105,383
427,259
687,843
229,501
302,145
9,323
46,312
248,749
π125,849
10,685,237
238,040
253
832,142
723,172
7,033
220
–
716,448
π364,594
4,954,809
456,638
2,218,420
1,088,083
682,124
262,123
147,113
(97,876)
1,080,494
π1,602,279
6,775,561
1,340,521
2,434,584
9,899,115
396,922
370,382
42,886
269,690
509,527
819,909
2,043,482
277,785
357,740
1,283,784
670,579
441,171
13,382
318,255
415,925
π321,885
1,614,027
147,627
160,496
691,420
241,364
277,586
9,992
139,646
128,069
π53,170
6,664,421
281,536
–
1,986,557
1,938,003
3,095
147
–
1,938,170
π1,294,061
4,442,141
1,427,660
2,190,979
1,836,412
1,311,700
274,543
224,087
138,085
990,397
π1,981,972
3,453,827
1,350,698
1,403,978
9,388,743
428,050
345,283
31,434
252,982
490,049
π400,547
2,138,617
362,663
173,546
1,237,761
627,571
452,919
76,915
102,580
501,123
π270,257
1,580,349
282,222
150,592
657,996
223,806
279,656
42,294
14
212,660
SEC FORM 20 - IS (INFORMATION STATEMENT)

116 ABOITIZ POWER CORPORATION
2009 2008 2007
SFELAPCO *
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest income - net
Income tax - net
Net income
STEAG
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest expense - net
Income tax – net
Net income
EAUC
Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Gross revenue
Operating profit
Depreciation and amortization
Interest income - net
Income tax - net
Net income
π454,647
1,064,917
406,246
349,027
2,564,866
43,169
141,855
1,175
11,932
72,024
π8,029,261
10,924,231
2,307,605
6,880,704
6,205,924
3,118,338
79,064
473,298
154,223
2,602,400
π697,187
3,122,061
255,217
9,565
1,381,633
186,597
120,619
5,005
11,570
286,577
π360,099
1,109,581
346,871
350,541
2,327,357
74,617
113,350
2,047
31,739
33,472
π7,081,353
12,129,785
3,189,506
8,573,835
6,265,242
3,850,860
85,511
667,937
90,705
3,216,793
π428,112
3,128,757
282,265
8,160
1,579,424
106,568
120,055
10,597
9,244
126,927
π411,271
913,029
386,666
285,884
2,830,017
107,811
108,628
6,566
38,471
105,762
π4,277,143
10,803,396
1,875,742
8,343,813
4,774,325
2,560,406
45,767
816,299
100,301
1,672,614
π625,444
2,937,571
415,017
1,562
1,568,888
62,973
121,462
8,416
8,222
66,913
*Amounts are based on appraised values which are adjusted to historical amounts upon equity take-up of the Group. Using cost
method in accounting for property, plant and equipment, depreciation and amortization amounted to π216,941, π290,746 and
π291,554, in 2009, 2008 and 2007, respectively, for VECO; and π73,888, π62,661 and π57,717 for 2009, 2008 and 2007, respectively,
for SFELAPCO. Under the same method, net income amounted to π467,793, π565,273 and π530,333 in 2009, 2008 and 2007,
respectively, for VECO; and π119,621, π66,420 and π138,854 for 2009, 2008 and 2007, respectively, for SFELAPCO.
10. Impairment Testing of Goodwill
Goodwill acquired through business combinations have been attributed to individual cash-generating units.
The carrying amount of goodwill follows:
HI
MEZC
BEZC
2009 2008
π220,228
538,373
237,404
π220,228
538,373
237,404
π996,005 π996,005
The recoverable amounts of the investments have been determined based on a value-in-use calculation using cash flow projections
based on financial budgets approved by senior management covering a five-year period.
Key assumptions used in value-in-use calculation for December 31, 2009
The following describes each key assumption on which management has based its cash flow projections to undertake impairment
testing of goodwill.
Discount rates and growth rates
The discount rate applied to cash flow projections are from 9.58% to 18.87% in 2009 and from 11.46% to 16.05% in 2008, and cash flows
beyond the five-year period are extrapolated using a zero percent growth rate.
Revenue assumptions
Revenues assumptions are based on the expected electricity to be generated and sold. Revenue growth of 17% in year 1, 11% in year 2
and 2% from years 3 to 5 was applied to MEZC; 8% in year 1, 10% in year 2, 9% in year 3, no growth in year 4 and 4% in year 5 for BEZC;
and -6% in year 1, -2% in year 2 and no growth in years 3 to 5 for HI.
Materials price inflation
The assumption used to determine the value assigned to the materials price inflation is 3% in 2010, which then increases by 200, 50 and
50 basis points on the second, third and fourth year, respectively, and remains steady on the fifth year. The starting point of 2010 is
consistent with external information sources.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 117
Based on the impairment testing, no impairment was recognized in 2009 and 2008.
With regard to the assessment of value-in-use of HI, MEZC and BEZC, management believes that no reasonably possible change in any
of the above key assumptions would cause the carrying value of the goodwill to materially exceed its recoverable amount.
Specific borrowing costs capitalized as part of construction in progress amounted to π227.3 million and π48.7 million in 2009 and 2008,
respectively (see Note 16). The reclassifications made in 2009 and 2008 pertain mostly to completed projects of the Group.
Property, plant and equipment with carrying amounts of π4,937.7 million and π3,220.0 million as of December 31, 2009 and 2008,
respectively, are used to secure the Group’s long-term debts (see Note 16).
Fully depreciated transmission, distribution and substation equipment with gross carrying amount of π1,363.7 million and π1,398.1
million as of December 31, 2009 and 2008 are still in use.
12. Intangible Asset - Service Concession Rights
Cost:
At January 1
Additions (see Note 36)
Disposals
Accumulated amortization:
At January 1
Amortization
Disposals
2009 2008
π973,532
71,522
–
π747,384
227,149
(1,001)
1,045,054 973,532
119,339
43,407
–
85,195
35,397
(1,253)
162,746 119,339
π882,308 π854,193
Service concession arrangements entered into by the Group are as follows:
• On May 15, 2003, the SBMA, AEV and DLPC entered into a DMSA for the privatization of the SBMA PDS on a rehabilitate-operateand-transfer
arrangement; and to develop, construct, lease, lease out, operate and maintain property, structures, and machineries
in the SBFZ.
Under the terms of the DMSA, SEZC was created to undertake the rehabilitation, operation and maintenance of the PDS (the
Project), including the provision of electric power service to the customers within the Subic Bay Freeport Secured Areas of the SBFZ
as well as the collection of the relevant fees from them for its services and the payment by SBMA of the service fees throughout the
service period pursuant to the terms of the DMSA.
In compliance with the terms of the DMSA, the SBMA shall turn over to SEZC full possession of the Project and any and all
improvements, spare parts, inventories, vehicles, works and structures constructed, improved and introduced by the SBMA in the
Project and land, roads and any land rights of any description including, without any limitations, easements, access, rights-of-way,
leases, licenses and covenants belonging to the SBMA or otherwise appertaining to the Project, or to be acquired by or granted
to SEZC by the SBMA or any relevant Governmental Instrumentalities for purposes of implementing the Project on, through,
above or below the ground on which any part of the Project is located, maintained and managed, including, without limitation to,
arrangements for the disposal of waste materials. The SBMA shall also turnover all records, files and/or contracts pertinent to the
PDS. The SBMA shall remain the owner of the Project including all its assets and improvements.
The DMSA shall be effective for a 25-year period commencing on the turnover date and consisting of two phases: (a) the 5-year
rehabilitation period and (b) the 20-year operation, management and maintenance period. Total estimated rehabilitation costs
committed by SEZC under the DMSA amounted to π368.6 million.
SEZC is subject to the rate making regulations and regulatory policies of the ERC. The DMSA provides that there will be no change
in the basic power supply and power distribution rates for the first 5 years from the turnover date. For and in consideration of the
services and expenditures of SEZC for it to undertake the rehabilitation, operation, management and maintenance of the Project,
it shall be paid by the SBMA the service fees in such amount equivalent to all the earnings of the Project, provided, however, that
SEZC shall remit the amount of π40.0 million to the SBMA at the start of every 12-month period throughout the service period
regardless of the total amount of all earnings of the Project. The said remittance may be reduced by the outstanding power
receivables from the SBMA, including streetlights power consumption and maintenance, for the immediately preceding year.
Since SBMA controls ownership of the equipment at the end of the agreement, the power distribution system are treated as
intangible assets and are amortized over a period of twenty five years up to year 2028, in accordance with IFRIC 12.
SEC FORM 20 - IS (INFORMATION STATEMENT)

118 ABOITIZ POWER CORPORATION
• MEZC, a subsidiary, is registered with the Philippine Economic Zone Authority (PEZA) as an Ecozone Utilities Enterprise and
distributes power to locators inside the Mactan Economic Zone II - SEZ (MEZ II - SEZ). AboitizLand, Inc., the Developer-Operator
of MEZ II, entered into a Build-Operate-Transfer (BOT) agreement with Mactan Cebu International Airport Authority (MCIAA).
Under the terms of the agreement, MCIAA will provide the land, while AboitizLand, Inc. will undertake the development of MEZ
II. The project has a term of 25 years, with an option to extend the lease for another 25 years. Under the agreement, ownership of
permanent structures within MEZ II will be transferred to MCIAA after termination of the agreement.
The transmission and distribution equipment of MEZC are located within MEZ II. Since MCIAA controls ownership of the equipment
at the end of the agreement, the equipment are treated as intangible assets and are amortized over a period of twenty one years
up to year 2028, in accordance with IFRIC 12.
Management believes that, based on the assessment performed, the intangible asset - service concession rights are not impaired.
Specific borrowing costs amounting to π2.6 million and π23.0 million that were directly attributable to the rehabilitation of the PDS
were capitalized in 2009 and 2008, respectively.
13. Other Noncurrent Assets
Restricted cash
Prepaid rent - net of current portion
Deferred input VAT and tax credit receivable
Others
2009 2008
π560,423
532,830
433,486
18,293
π581,708
62,355
12,088
9,261
π1,545,032 π665,412
Cash equivalents, presented as “Restricted cash”, pertains to a US$12.2 million amount held to secure a long-term loan of an associate
that will mature in 2014. Interest income from these cash equivalents is reported as part of interest income in the consolidated
statements of income (see Note 4).
14. Trade and Other Payables
Trade payables (see Note 31)
Related parties - non trade (see Note 30)
Other liabilities
π2,573,507
2,272,072
1,176,958
2009 2008
π985,630
1,567,100
592,581
π6,022,537
π3,145,311
Trade payables are generally on 30-day terms.
Other liabilities include output VAT and accrued expenses.
15. Bank Loans
Interest Rate 2009 2008
Peso loans - financial institutions - unsecured
Company
DLPC
CLPC
BEZC
AESI
Dollar loans - financial institutions - unsecured Company
5.10% to 5.50%
5.10% to 8.75% in 2009; 8.25% to
8.75% in 2008
5.10% to 5.75% in 2009; 8.25% to
9.00% in 2008
5.10% to 5.75%
5.38% to 6.75%
π1,059,500
794,100
184,300
40,000
8,000
π–
774,300
174,700
–
–
2,085,900 949,000
5.10% to 5.75% in 2009; 8.25% to
9.00% in 2008 3,742,200 3,849,120
π5,828,100
π4,798,120
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 119
Bank loans represent unsecured interest-bearing short-term loans obtained from various local banks to meet the Group’s working
capital requirements.
As of March 31, 2010, P2.08 billion of the outstanding peso loans as of December 31, 2009, was renewed, while those outstanding as of
December 31, 2008 were fully paid on February 17, 2009.
As of March 31, 2010, US$16.7 million of the US dollar loan was renewed for another month maturing in April 2010.
16. Long-term Debts
Company
Financial and non-financial institutions - unsecured
2008 5-year corporate note
2008 7-year corporate note
2009 5-year corporate note
Retail bonds - unsecured
3-year bonds
5-year bonds
Interest Rate 2009 2008
8.78%
9.33%
8.23%
8.00%
8.70%
π3,330,000
554,400
5,000,000
705,580
2,294,420
π3,330,000
560,000
–
–
HSI
HI
Financial institutions - secured
Financial institution - secured
SEZC
Financial institution - secured
Total
Less deferred financing costs
8.52%
8.36% in 2009
2.25% over
the applicable
3-month Treasury
Securities rate in
2008
8.26% - 10.02%
3,570,000
613,700
331,454
16,399,554
147,019
16,252,535
101,200
1,715,796
647,000
341,000
6,593,796
71,799
6,521,997
16,145
Less current portion
π16,151,335
π6,505,852
Company
Retail Bonds
On April 30, 2009, the Company registered and issued unsecured bonds worth π3.0 billion, the proceeds were used to partially finance
APRI’s acquisition of the Tiwi-MakBan Geothermal Power Plant. As provided in the Underwriting Agreement, the three-year bonds bear
interest on its principal amount from and including issue date at 8.0% per annum. The five-year bonds bear interest on its principal
amount from and including issue date at 8.7% per annum.
The bonds have been rated PRS Aaa by the Philippine Rating Services Corporation. The rating is subject to regular annual reviews, or
more frequently as market developments may dictate, for as long as the bonds are outstanding.
Prior to the maturity date, the Company may redeem in whole the relevant outstanding notes on the 12th interest payment date. The
amount payable in respect of such early redemption shall be the accrued interest on the principal amount, the principal amount and a
prepayment penalty of 2% on the outstanding principal amount.
Unless previously redeemed, the principal amount of the bonds shall be payable on a lump sum basis on the respective maturity date
at its face value.
Under the bond trust agreement, the Company shall not permit its Debt-to-Equity (DE) ratio to exceed 2:1 calculated based on the
Company’s year-end audited parent company financial statements. For the purposes of determining compliance with the required
ratio, the outstanding preferred shares and contingent liabilities of the Company, including but not limited to the liabilities in the form
of corporate guarantees in favour of any person or entity shall be included in the computation of debts. The Company is in compliance
with the debt covenant as of
December 31, 2009.
Unamortized deferred debt issuance cost reduced the carrying amount of long-term debt by π32.1 million in 2009.
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120 ABOITIZ POWER CORPORATION
2009 Fixed Rate Corporate Notes
On September 28, 2009 (issue date), the Company availed a total of π5.00 billion from the Notes Facility Agreement it signed on
September 18, 2009, with First Metro Investment Corporation as Issue Manager, the proceeds of which were used by the Company to
finance its investments in various projects including capital expenditures and acquisitions. The Notes Facility Agreement provided for
the issuance of 5-year corporate notes in a private placement to not more than 19 institutional investors pursuant to Section 9.2 of the
Securities Regulation Code (SRC) and Rule 9.2(2) (B) of the SRC Rules.
Prior to the maturity date, the Company may redeem in whole the relevant outstanding notes on the 12th interest payment date. The
amount payable in respect of such early redemption shall be the accrued interest on the principal amount, the principal amount and a
prepayment penalty of 2% on the outstanding principal amount.
Unless previously redeemed, the notes shall be redeemable on a lump sum basis on the respective maturity date at its face value.
Under the notes facility agreement, the Company shall not permit its DE ratio to exceed 2:1 calculated based on the Company’s yearend
audited parent company financial statements. For the purposes of determining compliance with the required ratio, the outstanding
preferred shares and contingent liabilities of the Company, including but not limited to the liabilities in the form of corporate guarantees
in favour of any person or entity shall be included in the computation of debts. The Company is in compliance with the debt covenant
as of December 31, 2009.
Unamortized deferred debt issuance cost reduced the carrying amount of long-term debt by π47.7 million in 2009.
2008 Fixed Rate Corporate Notes
On December 18, 2008 (issue date), the Company availed a total of π3.89 billion from the Notes Facility Agreement it signed on
December 15, 2008, with BDO Capital & Investment Corporation, BPI Capital Corporation, First Metro Investment Corporation, ING
Bank N.V., Manila Branch as Joint Lead Managers, the proceeds of which were used by the Company to finance its acquisitions as well
as for other general corporate purposes. The Notes Facility Agreement provided for the issuance of 5-year and 7-year corporate notes
in a private placement to not more than 19 institutional investors pursuant to Section 9.2 of the Securities Regulation Code (SRC) and
Rule 9.2(2) (B) of the SRC Rules.
Prior to the maturity date, the Company may redeem in whole the relevant outstanding notes on the 12th interest payment date for the
5-year note and on the 16th interest payment date for the 7-year note. The amount payable in respect of such early redemption shall
be the accrued interest on the outstanding principal amount, the outstanding principal amount and a prepayment penalty of 2% of the
outstanding principal amount.
Unless previously redeemed, the notes shall be redeemable on a lump sum basis on the respective maturity date at its face value.
Under the notes facility agreement, the Company shall not permit its DE ratio to exceed 2:1 calculated based on the Company’s yearend
parent company audited financial statements. For the purposes of determining compliance with the required ratio, the outstanding
preferred shares and contingent liabilities of the Company, including but not limited to the liabilities in the form of corporate guarantees
in favour of any person or entity shall be included in the computation of debts. The Company is in compliance with the debt covenant
as of December 31, 2009.
Unamortized deferred debt issuance cost reduced the carrying amount of long-term debt by π41.0 million in 2009 and π42.0 million in
2008.
HSI
On May 21, 2008, HSI and PHC entered into an agreement with local banks for a loan facility in the aggregate principal amount of up
to π3.57 billion to partially finance the design, development, procurement, construction, operation and maintenance of the 42.5-MW
Sibulan hydro-electric power plant.
Repayment terms of the loan are as follows:
• 70% of the principal amount of the loan is payable in semi-annual installments within 12 years commencing on the 30th month
from September 1, 2008.
• A balloon payment equivalent to 30% of the loan principal on the final principal amortization date.
HSI has the option to prepay the loan at par without premium or penalty beginning on the fourth year from the initial advance.
Interest on the loan for the first five years is fixed at 8.52%. For the remaining seven-year period interest rate will be fixed at the
prevailing seven-year PDST- F interest rate for the day immediately preceding the fixed interest setting date plus 1.125%.
Loan covenants include among others, the establishment and maintenance of certain project accounts depositories under the control
of appointed trustees of the lenders, submission of certain reports and others.
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ANNUAL REPORT 2009 121
The loan is secured by a real estate and chattel mortgages on real assets and all machineries, equipment and other properties, actually
located at the project site or plant site used in the project with carrying value of π4.28 billion and π2.37 billion as of December 31, 2009
and 2008, respectively.
Interest on the loan capitalized as construction in progress amounted to π227.3 million in 2009 and π37.6 million in 2008 (see Note 11).
Unamortized deferred debt issuance cost reduced the carrying amount of long-term debt by π25.6 million in 2009 and π28.0 million in
2008.
HI
The loan availed by HI from Banco de Oro is a five-year loan of which π450.0 million is payable at π1.0 million per year starting 2006
with the remaining balance fully payable on January 28, 2010, and π200.0 million is subject to a balloon payment on October 20, 2010.
It bears interest at 2 1/4 % over the applicable three-month treasury securities as displayed on MART 1 page of Bloomberg of the rate
setting day plus gross receipts tax, reviewable and payable quarterly.
On February 28, 2009, HI, amended the terms of its long-term loans with BDO. Maturity dates of the loans were changed from January
31, 2010 to February 28, 2016 for the π450.0 million long-term loans and from October 20, 2010 to February 28, 2016 for the π200 million
long-term loans. The amended terms also changed interest rates from floating to fixed.
The loan is secured by a chattel mortgage over the machineries and improvements of the Benguet and Davao hydropower plants of HI
and a suretyship of the PHC.
Carrying value of machineries and improvements of the Benguet and Davao hydropower plants mortgaged with BDO to secure loans
amounted to π489.3 million and π554.9 million as of December 31, 2009 and 2008, respectively (see Note 11).
Loan covenant includes, among others, maintenance of debt service cover ratio of at least 1.1x and DE ratio of 75:25, and restrictions
such as not declare or pay dividends to its stockholders if debt service cover ratio is less than 1.2x nor shall it redeem or repurchase or
retire or otherwise acquire for value any of its capital stock. HI is in compliance with the debt covenant as of December 31, 2009.
SEZC
The loan availed of by SEZC in 2007 pertains to a term loan for assistance in the financing of the Phase 1 rehabilitation of the SBMA PDS.
The π185.0 million clean loan fully drawn from the facility in 2007 was refinanced on June 26, 2008, with a term loan facility of up to a
total amount of π285.0 million. As of October 31, 2008, SEZC has drawn π210.0 million from the facility. The refinanced loan is payable
in twelve years (inclusive of a one year grace period on principal repayment) in twenty-two equal semi-annual installments commencing
on December 26, 2009. It bears an interest of 10.02%, which is fixed for the first seven years. For the succeeding five years, the interest
will be fixed based on the applicable five-year PDST-R1 on the first day of the eighth year plus 100 basis points.
On September 24, 2008, SEZC availed a term loan of π131.0 million to finance the acquisition of subtransmission assets and to enhance
the rehabilitation and expansion of the SBMA PDS. The loan is payable in twelve years (inclusive of a one-year grace period on principal
repayment) in twenty-two equal semi-annual installments commencing on March 24, 2010. It bears an interest of 8.26%, which is fixed
for the first seven years. For the succeeding five years, the interest will be fixed based on the applicable five-year PDST-R1 on the first
day of the eighth year plus 100 basis points.
The π131.0 million loan is secured by surety of the stockholders and assignment of rights and benefits of SEZC related to revenue
receivable and new equipment and assets to be purchased and used in the SBMA PDS. The term loan agreement prohibits SEZC to make
or permit a material change in the character, ownership or control of its business, to secure any indebtedness, to sell, lease, transfer
or dispose of all or substantially all of its properties, assets and investments. The agreement also does not permit SEZC to exceed the
allowed DE ratio nor be less than the allowed ratio of current assets to current liabilities. The adoption of Philippine Interpretation
IFRIC 12 in 2008 caused its DE ratio to exceed the maximum 3:1 limit as required by the above term loans. Prior to adopting and upon
assessing the financial impact of the Interpretation on its financial statements, SEZC’s management initiated talks and negotiations
with creditor bank on securing a waiver on the DE requirement as contained in the loan agreements. In December 2008, the creditor
bank agreed to revise the DE ratio. On January 30, 2009, the creditor bank confirmed that the DE ratio of SEZC for the year 2008 may go
up to 4:1. On January 14, 2010, the creditor bank approved and allowed the DE ratio for the year 2009 up to 2011 to go up to a maximum
of 3.5:1.
SEZC is in compliance with the debt covenant as of December 31, 2009.
17. Customers’ Deposits
Transformer deposits
Lines and poles deposits
Bill and load
2009 2008
π751,317
692,427
337,372
π609,545
656,937
304,610
π1,781,116
π1,571,092
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122 ABOITIZ POWER CORPORATION
Transformers and lines and poles deposits are obtained from certain customers principally as cash bond for their proper maintenance and
care of the said facilities while under their exclusive use and responsibility. These deposits are non-interest bearing and are refundable
only after their related contract is terminated and the assets are returned to the Group in their proper condition and all obligations and
every account of the customer due to the Group shall have been paid.
Bill deposit serves to guarantee payment of bills by a customer which is estimated to equal one month’s consumption or bill of the
customer.
With regard to the interest rate on customer deposits, while the Implementing Guidelines of the Magna Carta provided that the interest
rate on meter deposits shall be at 6% for contracts of service entered into prior to the effectivity of the Energy Regulatory Board (ERB)
Resolution No. 95-21, it was silent on the corresponding interest rate for bill deposits of residential customers for the same period. ERB
Resolution No. 95-21 was issued by the then ERB on August 3, 1995 adopting a 10% interest on customers’ deposits. Pursuant to the
Magna Carta, the rate of interest on bill deposits shall be equivalent to the interest incorporated in the power distribution companies’
weighted average cost of capital, otherwise, the rate shall be “based on the prevailing interest rate on savings deposit as approved by the
Bangko Sentral ng Pilipinas (BSP)”. In the case of non-residential customers, the Distribution Services and Open Access Rules (DSOAR)
likewise provides that the power distribution companies shall pay interest on bill deposits at the rate equivalent to the prevailing interest
rate for savings deposits as approved by the BSP. The DSOAR superseded ERB Resolution No. 95-21, as amended, in its entirety.
Both the Magna Carta and DSOAR also provide that residential and non-residential customers, respectively, must pay a bill deposit to
guarantee payment of bills equivalent to their estimated monthly billing. The amount of deposit shall be adjusted after one year to
approximate the actual average monthly bills. A customer who has paid his electric bills on or before due date for three consecutive
years, may now apply for the full refund of the bill deposit, together with the accrued interests, prior to the termination of his service;
otherwise, bill deposits and accrued interests shall be refunded within one month from termination of service, provided all bills have
been paid.
In cases where the customer has previously received the refund of his bill deposit pursuant to Article 7 of the Magna Carta, and later
defaults in the payment of his monthly bills, the customer shall be required to post another bill deposit with the distribution utility and
lose his right to avail of the right to refund his bill deposit in the future until termination of service. Failure to pay the required bill deposit
shall be a ground for disconnection of electric service.
Interest on customers’ deposits amounted to π5,712, π5,462 and π3,626 in 2009, 2008 and 2007, respectively (see Note 31).
In cases where the customers has previously received the refund of his bill deposit pursuant to Article 7 of the Magna Carta, and later
defaults in the payment of his monthly bills, the customer shall be required to pose another bill deposit with the distribution utility and
lose his right to avail of the right to refund his bill deposit in the future until termination of service. Failure to pay the required bill deposit
shall be a ground for disconnection of electric service.
The Group classified customers’ deposit under noncurrent due to the uncertainty of timing of refund of these deposits.
18. Payable to Preferred Shareholder of a Subsidiary
The preferred shares of CPPC, a subsidiary, are voting, non-convertible, cumulative, non-participating and have no preemptive rights.
The preferred shares shall be issued only to VECO who, as holder of the preferred shares, shall be entitled to receive cash dividends
thereon at an annual rate of 20.713% and, payable out of available surplus or net profits of CPPC before any dividend shall be declared,
set apart for or paid upon the common stock of CPPC. The guaranteed minimum amount of annual dividends on these preferred shares
is π31.1 million, which is payable within 60 days from end of a contract year (i.e. November 25). Any unpaid dividends shall be subject to
interest equivalent to the rate of a 91-day Treasury Bill plus 5% per annum prevailing as of the preferred dividends accrual date.
After payment of the cumulative cash dividends on the preferred shares, the said preferred shares shall have no further right to
participate in any dividends which may be declared to the common shareholders unless and until the aggregate of all cash dividends
already declared and paid to the common shares has resulted in the holders of the common shares having recovered the agreed
internal rate of return on their total equity investment in common shares. The common shareholders and VECO shall then be entitled
to participate in such residual dividends at 77% and 23%, respectively.
PAS 32 and 39 require reclassification of the preferred shares amounting to π150.0 million as a financial instrument containing a liability
and an equity component. The liability component was remeasured at present value by discounting the minimum guaranteed dividend
payments.
The discounted liability is accreted to maturity values using the effective interest method. Accretions are recognized in the consolidated
statements of income as part of interest expense.
Total interest expense arising from the accretion amounted to π21.9 million and π23.6 million in 2009 and 2008.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 123
Future minimum guaranteed dividend payments are as follows:
2009 2008
Due within one year
More than one year but not more than five years
More than five years
Future minimum guaranteed dividends
Less accrued interest expense
Future minimum guaranteed dividends - net
Less current portion
π31,070
124,280
–
155,350
67,320
88,030
11,263
π31,070
124,280
31,070
186,420
89,196
97,224
9,194
Noncurrent portion π76,767 π88,030
19. Equity
a. Capital Stock
2009 2008
Authorized - π1 par value
Preferred shares - 1,000,000,000 shares
Common shares - 16,000,000,000 shares
Issued
Common shares - 7,358,604,307 shares π7,358,604 π7,358,604
On January 16, 2007, the BOD and stockholders representing at least two-thirds of the Company’s outstanding capital stock approved
the increase in the Company’s authorized capital stock, subject to the approval of SEC, from π5,000,000, divided into 4,000,000,000
common and 1,000,000,000 preferred shares both with par value of π1 per share to π17,000,000 divided into 16,000,000,000 common
and 1,000,000,000 preferred shares both with par value of π1 per share. Out of the increase in the authorized capital stock of
π12,000,000, the amount of π3,000,000 was subscribed by AEV and of such subscription, the amount of π2,889,320 was actually paid
by AEV by way of assignment of its shares of stock in various power distribution companies (see Note 1). SEC approved the increase in
the authorized capital stock on May 3, 2007.
In 2007, an additional 400,000,000 common shares was subscribed by AEV, and paid for in cash amounting to π4.0 billion.
There are no preferred shares issued and outstanding as of December 31, 2009 and 2008.
Preferred shares are non-voting, non-participating, non-convertible, redeemable, cumulative, and may be issued from time to time
by the BOD in one or more series. The BOD is authorized to issue from time to time before issuance thereof, the number of shares
in each series, and all the designations, relative rights, preferences, privileges and limitations of the shares of each series. Preferred
shares redeemed by the Company may be reissued. Holders thereof are entitled to receive dividends payable out of the unrestricted
retained earnings of the Company at a rate based on the offer price that is either fixed or floating from the date of the issuance to final
redemption. In either case, the rate of dividend, whether fixed or floating, shall be referenced, or be a discount or premium, to marketdetermined
benchmark as the BOD may determine at the time of issuance with due notice to the SEC.
In the event of any liquidation or dissolution or winding up of the Company, the holders of the preferred stock shall be entitled to be paid
in full the offer price of their shares before any payment in liquidation is made upon the common stock.
b. Retained Earnings
On February 6, 2008, the BOD approved the declaration of cash dividends of π0.18 a share (π1.32 billion) to all stockholders of record
as of February 21, 2008. The cash dividends were subsequently paid on March 3, 2008.
On February 11, 2009, the BOD approved the declaration of cash dividends of π0.20 a share (π1.47 billion) to all stockholders of record
as of February 26, 2009. The cash dividends were subsequently paid on March 23, 2009.
On March 10, 2010, the BOD approved the declaration of cash dividends of π0.30 a share (π2.21 billion) to all stockholders of record as
of March 24, 2010. The cash dividends are payable on April 16, 2010.
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124 ABOITIZ POWER CORPORATION
20. Sale of Power
Sale from Distribution of Power
• The Uniform Rate Filing Requirements (UFR) on the rate unbundling released by the ERC on October 30, 2001, specified that the
billing for sale and distribution of power and electricity will have the following components: Generation Charge, Transmission
Charge, System Loss Charge, Distribution Charge, Supply Charge, Metering Charge, the Currency Exchange Rate Adjustment and
Interclass and Lifeline Subsidies. National and local franchise taxes, the Power Act Reduction (for residential customers) and the
Universal Charge are also separately indicated in the customer’s billing statements (see Note 36).
• Agreement with Hanjin Heavy Industries Corporation Philippines, Inc. (HHIC)
On May 16, 2007, the SEZC signed a Memorandum of Agreement with HHIC to supply electricity in HHIC’s shipyard located
at Redondo Peninsula. As stipulated in the contract, the SEZC will charge generation, transmission and service charges at the
following rates:
• generation charge - prevailing preferential electricity rate for Subic Bay Freeport Zone (SBFZ)/SEZC or another special rate to
be given by NPC to HHIC;
• transmission charge - prevailing transmission charges of National Grid Corporation of the Philippines (NGCP) within SBFZ;
• service charge - π0.20/kilowatt hour (kWh) subject to any increase or decrease upon approval by the ERC.
Total revenue from supply of electricity to HHIC amounted to π666.4 million, π383.3 million and π48.1 million in 2009, 2008 and
2007, respectively.
• SEZC applied for the rate unbundling on April 6, 2006 through the ERC and was approved on February 6, 2008. The implementation
of the unbundled rates schedule started on October 26, 2008.
Sale from Generation of Power
• Energy Trading through the Philippine Wholesale Electricity Spot Market (WESM)
As approved by the Philippine Electricity Market Corporation (PEMC), effective on various dates in 2009, certain companies in
the Group are trading participants and direct members under the generator sector of the WESM. The companies are allowed to
access the WESM Market Management System through its Market Participant Interface (MPI). The MPI is the facility that allows
the trading participants to submit and cancel bids and offers, and to view market results and reports. Under its price determination
methodology as approved by the ERC, locational marginal price (LMP) method is used in computing prices for energy bought and
sold in the market on a per node, per hour basis. In the case of bilateral power supply contracts, however, the involved trading
participants settle directly with their contracting parties. Total sale of power at WESM amounted to π1.96 billion in 2009 and nil
in 2008 and 2007.
Power Supply Contracts
• Power Supply Contracts assumed under APA and IPP Administration Agreement
Revenue recognition for customers under the power supply contracts assumed under the APA and IPP Administration Agreements
are billed based on the contract price which is calculated based on the pricing structure approved by the ERC. Rates are calculated
based on the time-of-use pricing schedule with corresponding adjustments using the Generation Rate Adjustment Mechanism
(GRAM) and the Incremental Currency Exchange Rate Adjustment (ICERA).
• Power Purchase/Supply Agreement (PPA/PSA)
On February 7, 1997, VECO, an associate, entered into a PPA for the purchase of electric energy from CPPC, a subsidiary, effective
for a period of 15 years from the commercial operations of the latter (November 25, 1998), unless terminated in accordance
with the provisions of the PPA but in no event to extend beyond the term of the present franchise of VECO. The PPA may be
renewed or extended subject to the mutual agreement of the parties to the terms and conditions applicable to any such renewal.
Upon expiration of the 15-year cooperation period, CPPC shall transfer, convey and assign the power plant to VECO without cost,
except for applicable taxes thereon which shall be for the account of VECO. Among the salient features of the contract is that the
electricity price shall not exceed 98% of the effective NPC billing rate to VECO based on contracted demand and energy. VECO
shall also be entitled to a prompt payment discount equal to 3% of any amount paid to CPPC on or before the 15th day of the
calendar month following the preceding billing period.
On September 1, 2006, a Supplement to the 1997 PPA was executed by VECO and CPPC. Some of the salient provisions of the
Supplement included the removal of the prompt payment discount, removal of the minimum off-take, and a pricing arrangement
that changed CPPC’s billing to VECO from an energy based, NPC pegged rate to Demand-Energy Pricing Scheme. This in effect
allows CPPC to bill capacity-based fees based on CPPC’s guaranteed contractual capacity. The Energy Pricing of this Supplement
allows CPPC to pass on risks related to fuel prices. While waiting for the ERC approval on the Supplement to the 1997 PPA, VECO
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 125
filed a motion to extend its cash cost arrangement with CPPC which was approved by the ERC in the latter’s decision dated August
10, 2008. On December 28, 2007, the ERC approved the Supplement to the 1997 PPA, which was implemented on the billing period
ending January 26, 2008, the first billing cycle immediately after the approval of the ERC.
• Certain subsidiaries of PHC have PSAs with various corporations to supply or sell power and energy produced by the mini
hydroelectric power plants. The maturities of these agreements vary from one taker to another with the nearest to mature on
calendar year 2011 and farthest on 2021. All agreements provide for renewals or extensions subject to mutually agreed terms and
conditions by both parties
Total sale of power under power supply contracts amounted to π10.40 billion, π2.88 billion and π2.41 billion in 2009, 2008 and
2007, respectively.
21. Purchased Power
Distribution
• DLPC, CLPC and SEZC entered into contracts with NPC for the purchase of electricity. Pursuant to Section 8 of RA No. 9136,
National Transmission Corporation (TransCo) was created and assumed the electrical transmission functions of the NPC. The
TransCo concession contract was bid out on December 12, 2007, and the functions of TransCo were assumed by NGCP starting
January 15, 2009.
The material terms of the contract are as follows:
DLPC
CLPC
SEZC
Term of Agreement
with NPC
Ten years; expiring in December 2015
Ten years; expiring in December 2015
Two-and-a-half years; renewed in March 2008 expiring in March
2011
Contract Energy
(megawatt hours/year)
1,238,475
116,906
90,000
Total power purchases from the NPC and TransCo, net of discounts, amounted to π7.12 billion in 2009, π5.83 billion in 2008 and
π5.53 billion in 2007. The outstanding payable to the NPC and TransCo on purchased power, presented as part of the “Trade and
other payables” account in the consolidated balance sheets amounted to π601.1 million and π532.1 million as of December 31,
2009 and 2008, respectively (see Note 14).
• On June 26, 2006, DLPC entered into a Transitory Supply Agreement with TransCo under the terms of which TransCo agreed to
provide transmission services in support of the Supply Contract between NPC and DLPC, whereby NPC agreed to provide, and
DLPC agreed to take and pay for 237,696 kilowatts (kW) and 1,300,000,000 kWh of capacity and energy, respectively.
Generation
Purchased power takes place during periods when power generated from power plants are not sufficient to meet customers’ required
power as stated in the power supply contracts. Insufficient supply of generated energy results from the shutdowns due to scheduled
maintenance or emergency situation. The Group purchases power from WESM to ensure uninterrupted supply of power and meet the
requirements in the power supply contracts. Total purchases from WESM in 2009, 2008 and 2007 amounted to π32.5 million, nil and nil,
respectively.
22. Cost of Generated Power
Fuel costs
Steam supply costs (see Note 34)
Energy fees
Ancillary charges
Wheeling expenses
Back-up power
Rent
π2,645,484
2,207,504
112,835
51,545
6,098
4,262
2,549
2009 2008 2007
π1,615,971
–
–
46,366
6,220
25,277
2,060
π1,000,405
–
–
40,194
4,695
17,105
2,152
π5,030,277 π1,695,894 π1,064,551
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126 ABOITIZ POWER CORPORATION
23. General and Administrative Expenses
Personnel costs (see Note 25)
Outside services
Provision for impairment and write-off of trade receivables - net of reversal (see
Note 5)
Professional fees
Corporate social responsibility (CSR) (Note 36g)
Taxes and licenses
Repairs and maintenance
Information technology and communication
Transportation and travel
Market service and administrative fees
Insurance
Research and development
Rent
Training
Guard services
Advertisements
Entertainment, amusement and recreation
Gasoline and oil
Freight and handling
Others
2009 2008 2007
π369,216
469,439
137,595
131,264
130,249
104,246
92,805
91,466
77,051
50,717
29,732
28,175
10,942
8,038
6,111
5,126
4,846
2,172
1,404
151,834
π262,202
146,728
67,398
121,400
16,698
99,093
55,564
51,331
59,921
–
7,322
29,723
4,931
5,053
4,648
3,919
3,559
2,736
1,831
158,517
π229,491
136,441
5,527
112,579
27,305
95,138
51,793
48,541
39,349
–
8,423
18,096
2,578
8,074
4,867
3,694
1,568
1,600
2,445
102,941
π1,902,428 π1,102,574 π900,450
24. Operations and Maintenance Expenses
Personnel costs (see Note 25)
Taxes and licenses
Repairs and maintenance
Materials and supplies
Outside services
Insurance
Fuel and lube oil
Rent
Transportation and travel
Others
2009 2008 2007
π334,509
295,730
212,090
174,701
120,448
93,006
47,588
12,024
11,081
35,810
π249,759
136
175,339
74,366
32,403
4,391
77,040
270
11,681
27,719
π215,057
766
92,876
126,490
26,615
6,436
43,177
134
12,812
39,385
π1,336,987 π653,104 π563,748
25. Personnel Costs
Salaries and wages
Employee benefits (see Note 26)
2009 2008 2007
π553,695
150,030
π345,945
166,016
π316,052
128,496
π703,725 π511,961 π444,548
26. Pension Benefit Plans
Each of the companies in the Group has a funded defined benefit pension plan covering all regular and permanent employees. The
benefits are based on employees’ projected salaries and number of years of service.
The following tables summarize the components of net benefit expense recognized in the consolidated statements of income and the
funded status and amounts recognized in the consolidated balance sheets.
Net benefit expense (income) (recognized as part of costs of generated power, operations and maintenance and general and
administrative)
Current service cost
Interest cost on benefit obligation
Past service cost
Net actuarial gain recognized
Expected return on plan assets
Net pension asset in excess of limit
2009 2008 2007
π7,669
32,787
230
(2,672)
(22,626)
(20,180)
π14,829
17,237
230
(608)
(17,676)
8,193
π19,326
15,154
–
(10,246)
(18,783)
–
(π4,792) π22,205 π5,451
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 127
Actual return on plan assets is π65,566 in 2009, π1,553 in 2008 and π12,522 in 2007. The Group expects to contribute π7,129 on their
retirement fund in 2010.
The overall expected return on plan assets is determined based on the market expectations prevailing on that date, applicable to the
period over which the obligation is to be settled.
DLPC, SEZC, AESI and CPPC are in net pension asset position as of December 31, 2009 and including CLPC as of December 31, 2008. The
rest of the companies in the Group are in pension liability position.
Pension assets
Fair value of plan assets
Defined benefit obligation
Over (under) funded defined benefit obligation
Unrecognized past service cost
Unrecognized net actuarial losses (gains)
Limit on defined benefit asset
2009 2008
π137,466
(203,243)
(65,777)
2,074
100,889
–
π112,484
(22,350)
90,134
2,304
(62,539)
(20,179)
π37,186 π9,720
Pension liabilities
Defined benefit obligation
Fair value of plan assets
Unrecognized actuarial losses (gains)
2009 2008
π224,246
(107,756)
(88,332)
π101,757
(92,568)
5,278
π28,158 π14,467
Changes in the present value of the defined benefit obligation are as follows:
2009 2008
Opening defined benefit obligation
Interest cost
Current service cost
Fund transfers to affiliates
Actuarial gains (losses)
Benefits paid
Employee transfers
π124,107
32,787
7,669
2,105
280,159
(19,338)
–
π191,777
17,237
14,829
(3,037)
(59,085)
(38,072)
458
Closing defined benefit obligation π427,489 π124,107
Changes in the fair value of plan assets are as follows:
Opening fair value of plan assets
Contribution by employer
Expected return on plan assets
Fund transfer to affiliates
Actuarial gains (losses)
Benefits paid
2009 2008
π205,052
8,982
22,626
2,105
25,795
(19,338)
π228,609
16,080
17,676
(2,580)
(16,661)
(38,072)
Closing fair value of plan assets π245,222 π205,052
The principal assumptions used in determining the pension obligations for the Group’s plans are shown below:
2009 2008
Discount rate
Expected rate of return on assets
Future salary increase
As of December 31, 2009, the discount rate has decreased to 9% - 11%.
11% - 16%
9% - 11%
8% - 11%
7% - 12%
8% - 11%
8% - 9%
SEC FORM 20 - IS (INFORMATION STATEMENT)

128 ABOITIZ POWER CORPORATION
Amounts for the current and previous four periods are as follows:
2009 2008 2007 2006 2005
Defined benefit obligation
Plan assets
Surplus (deficit)
Experience adjustment on
plan liability
Experience adjustment on
pension asset
π427,489
245,222
(182,267)
23,911
22,256
π124,107
205,052
80,945
(8,408)
(16,123)
π191,777
228,609
36,832
(7,143)
(6,231)
π179,652
153,019
(26,633)
(56,688)
18,381
π122,604
115,709
(6,895)
(338)
594
The major categories of plan assets as a percentage of the fair value of the total plan assets are as follows:
2009 2008 2007
Commercial papers
Marketable securities
Others
58%
35%
7%
67%
26%
7%
54%
38%
8%
27. Income Tax
The provision for income tax account consists of:
Current
Deferred
2009 2008 2007
π840,222
(209,032)
π631,190
π577,071
41,313
π618,384
π594,063
40,270
π634,333
Reconciliation between the statutory income tax rate and the Group’s effective income tax rates follows:
Statutory income tax rate
Tax effects of:
Nontaxable share in net earnings of
associates
Interest income subjected to final tax at
lower rates - net
Income under income tax holiday
Others
2009 2008 2007
30.00%
(11.88)
(0.71)
(9.99)
2.44
35.00%
(19.85)
(1.88)
–
(1.62)
35.00%
(19.99)
(1.09)
–
(1.00)
9.86% 11.65% 12.92%
Deferred income taxes of the companies in the Group that are in deferred income tax assets and liabilities position consist of the
following at December 31:
Deferred income tax assets:
Net operating loss carryover (NOLCO)
Allowances for impairment and probable losses
Minimum corporate income tax (MCIT)
Pension cost liability
Unamortized past service cost
Unrealized foreign exchange losses
Others
2009 2008
π137,867
5,950
1,589
82,172
2,487
19,074
870
π15,260
4,244
40,182
1,041
4,663
1,507
(321)
Net deferred income tax assets π250,009 π66,576
2009 2008
Deferred income tax liabilities:
Unamortized customs duties and taxes capitalized
Pension asset
Capitalized interest expense
Unamortized streetlight donations capitalized
MCIT
Unrealized foreign exchange gains
Unamortized past service cost
Allowances for doubtful accounts and probable losses
π17,015
860
4,195
10,702
3,869
(361)
(444)
2,169
π15,859
39,394
2,726
1,393
3,648
1,686
(3,039)
(2,643)
Net deferred income tax liabilities π38,005 π59,024
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 129
In computing for deferred income tax assets and liabilities in 2008, the rates used were 30% and 10%, which are the rates expected to
apply to taxable income in the years in which the deferred income tax assets and liabilities are expected to be recovered or settled and
considering the tax rate for renewable energy developers as allowed by the Renewable Energy Act of 2008.
As of December 31, 2009, the Group has nil deferred income tax asset and (liability) on the temporary difference of π27.8 million and
π441.8 million, respectively, as the management expects that the temporary difference will be realized or will reverse during the income
tax holiday (ITH) period (see Note 35).
There are no income tax consequences to the Group attaching to the payment of dividends to its shareholders.
28. Earnings Per Common Share
Earnings per common share amounts were computed as follows:
2009 2008 2007
Net income attributable to equity holders of the
parent (a)
Weighted average number of common shares issued
and outstanding (b)
π5,658,581
7,358,604,307
π4,333,613
7,358,604,307
π4,160,645
6,279,302,154
Earnings per common share (a/b)
π0.77
π0.59
π0.66
There are no dilutive potential common shares as of December 31, 2009, 2008 and 2007.
29. Business Segment Information
Operating segments are components of the Group that engage in business activities from which they may earn revenues and incur
expenses, whose operating results are regularly reviewed by the Group’s CODM to make decisions about how resources are to be
allocated to the segment and assess their performances, and for which discrete financial information is available.
For purposes of management reporting, the Group’s operating businesses are organized and managed separately according to services
provided, with each segment representing a strategic business segment. The Group identified operating segments, which are consistent
with the segments reported to the BOD, which is the Group’s CODM, are as follows:
• “Power Generation” segment, which is engaged in the generation and supply of power to various customer under power supply
contacts and for trading in WESM;
• “Power Distribution” segment, which is engaged in the distribution and sale of electricity to the end-users; and
• “Parent Company and Others”, which includes the operations of the Company and electricity-related services of the Group such as
installation of electrical services.
The Group has only one geographical segment as all of its assets are located in the Philippines. The Group operates and derives
principally all of its revenue from domestic operations. Thus, geographical business information is not required.
Management monitors the operating results of its segments separately for the purpose of making decisions about resource allocation
and performance assessment. Segment revenue and segment expenses are measured in accordance with PFRS. The presentation and
classification of segment revenue and segment expenses are consistent with the consolidated statement of income. Interest expense
and financing charges, depreciation and amortization expense and income taxes are managed on a per segment basis.
The Group has inter-segment revenues in the form of management fees as well as inter-segment sales of electricity which are eliminated
in consolidation. The transfers are accounted for at competitive market prices on an arms length transaction basis.
Segment assets do not include deferred income tax assets, pension asset and other noncurrent assets. Segment liabilities do not
include deferred income tax liabilities, income tax payable and pension liability. Capital expenditures consist of additions of property,
plant and equipment and intangible asset - service concession rights. Adjustments as shown below include items not presented as part
of segment assets and liabilities.
Revenue is recognized to the extent that it is probable that economic benefits will flow to the Group and that the revenue can be reliably
measured. 44% and 25% of the power generation segment revenues of the Group are derived from Manila Electric Company (Meralco)
and VECO, respectively.
Financial information on the operations of the various business segments are summarized as follows:
SEC FORM 20 - IS (INFORMATION STATEMENT)

130 ABOITIZ POWER CORPORATION
2009
Power
Generation
Power
Distribution
Parent
Company/
Others
Eliminations and
Adjustments
Consolidated
REVENUE
External
Inter-segment
π12,359,479
106,364
π10,734,427
–
π80,359
215,503
π–
(321,867)
π23,174,265
–
Total Revenue π12,465,843 π10,734,427 π295,862 (π321,867) π23,174,265
Segment results
Unallocated corporate income -net
π4,362,774
379,117
π1,196,104
369,535
(π102,711)
64,759
π–
–
π5,456,167
813,411
INCOME FROM OPERATIONS
Interest expense
Interest income
Share in net earnings of associates
Provision for (benefit from) income tax
4,741,891
(1,884,802)
47,656
2,227,256
(413,892)
1,565,639
(106,097)
12,583
308,130
(376,376)
(37,952)
(852,759)
379,413
6,021,174
159,078
– 6,269,578
29,680 (2,813,978)
(29,680)
409,972
(6,021,174) 2,535,386
– (631,190)
NET INCOME π4,718,109 π1,403,879 π5,668,954 (π6,021,174) π5,769,768
OTHER INFORMATION ASSETS
Investments in Associates π21,725,730 π2,270,325 π28,446,450 (π28,446,450) π23,996,055
Capital Expenditures π22,833,453 π691,660 π18,310 π – π23,543,423
Segment Assets π99,782,249 π7,944,648 π52,147,029 (π48,533,209) π111,340,717
Segment Liabilities π76,463,801 π4,481,135 π17,832,473 (π22,483,619) π76,293,790
Depreciation and amortization π1,069,904 π330,696 π12,300 π– π1,412,900
2008
Power
Generation
Power
Distribution
Parent
Company/
Others
Eliminations and
Adjustments
Consolidated
REVENUE
External
Inter-segment
π2,880,719
104,059
π9,227,696
–
π134,565
194,131
π–
(298,190)
π12,242,980
–
Total Revenue π2,984,778 π9,227,696 π328,696 (π298,190) π12,242,980
Segment results
Unallocated corporate income (expenses)
π513,914
(85,677)
π1,121,082
338,121
π17,509
124,248
π–
–
π1,652,505
376,692
INCOME FROM OPERATIONS
Interest expense
Interest income
Share in net earnings of associates
Provision for income tax
428,237
(91,234)
149,810
2,437,729
(101,011)
1,459,203
(89,198)
15,550
346,782
(401,848)
141,757
(242,166)
486,242
4,079,893
(115,525)
–
2,029,197
44,062
(378,536)
(44,062)
607,540
(4,079,893) 2,784,511
– (618,384)
NET INCOME π2,823,531 π1,330,489 π4,350,201 (π4,079,893) π4,424,328
OTHER INFORMATION
Investments in Associates
Capital Expenditures
π17,352,127
1,945,959
π2,281,307
869,773
π21,123,160
35,662
(π21,123,160)
–
π19,633,434
2,851,394
Segment Assets π25,484,606 π7,388,753 π39,284,087 (π24,885,310) π47,272,136
Segment Liabilities π8,262,870 π4,029,890 π9,050,953 (π4,763,241) π16,580,473
Depreciation and amortization π179,349 π324,726 π7,079 π– π511,154
2007
Power
Generation
Power
Distribution
Parent
Company/
Others
Eliminations and
Adjustments
Consolidated
REVENUE
External
Inter-segment
π2,412,393
86,446
π8,797,504 π102,094
233,405
π–
(319,851)
π11,311,991
–
Total Revenue π2,498,839 π8,797,504 π335,499 (π319,851) π11,311,991
Segment results
Unallocated corporate income (expenses)
π1,231,810
302,633
π648,994
(289,632)
π102,530
(24,153)
π–
–
π1,983,334
(11,152)
INCOME FROM OPERATIONS
Interest expense
Interest income
Share in net earnings of associates
Provision for income tax
1,534,443
(78,005)
13,106
395,473
(468,484)
359,362
(86,251)
13,386
2,408,360
(78,599)
78,377
(33,246)
304,421
3,916,292
(87,250)
–
1,972,182
–
(197,502)
–
330,913
(3,916,292) 2,803,833
– (634,333)
NET INCOME π1,396,533 π2,616,258 π4,178,594 (π3,916,292) π4,275,093
OTHER INFORMATION ASSETS
Depreciation and amortization π291,187 π193,553 π7,402 π– π492,142
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 131
30. Related Party Disclosures
The Group enters into transactions with its parent, associates and other related parties, principally consisting of the following:
a. Up until December 31, 2008, the Group had service contracts with ACO, the ultimate parent company, for corporate center
services rendered, such as human resources, internal audit, legal, treasury and corporate finance, among others. With the transfer
of all ACO employees to AEV in January 2009, AEV is now providing these same services and shares with the member companies
the business expertise of its highly qualified professionals. Transactions are priced on a cost recovery basis, and billed costs are
always benchmarked on third party rates to ensure competitive pricing. Service Level Agreements are in place to ensure quality
of service. This arrangement enables the Group to maximize efficiencies and realize cost synergies. Management, professional,
legal and other service fees paid by the Group to AEV and ACO amounted to π409,405 in 2009, π362,607 in 2008, and π366,565 in
2007, respectively.
b. Management and other service contracts of certain subsidiaries with ACO at fees based on agreed rates. Management and other
service fees paid by the Group to ACO amounted to nil, π40,727 and π27,154 in 2009, 2008 and 2007, respectively.
c. The Company also obtained standby letters of credit (SBLC) and is acting as surety for the benefit of certain subsidiaries and
associates in connection with loans and credit accommodations. The Company provided SBLC for STEAG, LHC, and SNAP B in the
amount of π1.80 billion in 2009 and 2008.
d. Energy fees billed by HI to SFELAPCO amounted to π19,630 in 2009, π17,339 in 2008 and π17,768 in 2007.
e. Energy fees billed by CPPC to VECO amounted to π2,104,267 in 2009,π2,345,106 in 2008 and π1,645,655 in 2007.
f. Aviation services rendered by AEV Aviation to the Group. Total expenses from associate amounted to π24,820 in 2009, π19,856 in
2008 and π12,655 in 2007. AEV Aviation is a subsidiary of AEV.
g. Lease of commercial office units by the Group from Cebu Praedia Development Corporation (CPDC) for a period of three years.
Rental expense amounted to π48,172 in 2009, π32,239 in 2008, and π28,190 in 2007. CPDC is a subsidiary of AEV.
h. The Company provides services to certain subsidiaries and associates such as technical and legal assistance for various projects,
trainings, and other services. Total technical and service fee income amounted to π2,170 in 2009, π9,441 in 2008 and π1,540 in
2007.
i. Cash deposits with Union Bank of the Philippines (UBP) and City Savings Bank, both associates of AEV (see Note 4).
j. Advances to/from related parties, both interest and noninterest-bearing, payable on demand. Interest-bearing advances are based
on annual interest rates ranging from 3.00% to 9.25% in 2009, 3.00% to 10.40% in 2008, and 5.13% to 8.25% in 2007. Net interest
income (expense) incurred on these advances amounted to π55.8 million in 2009, π142.7 million in 2008, and (π29.9 million) in 2007
(see Notes 4 and 30).
Significant outstanding account balances with related parties (see Notes 5 and 14) as of December 31, 2009 and 2008 are as follows:
Ultimate Parent and Parent
ACO
AEV
Amounts Owed by Related Parties
Amounts Owed to Related Parties
2009 2008 2009 2008
π–
–
π–
–
π10,124
20,645
π10,124
4,844
Associates
CEDC
STEAG
RP Energy
MORE
SNAP M
SFELAPCO
EAUC
377,576
225,002
296,611
123,888
4,860
–
–
1,468,977
225,002
–
143,630
4,860
4,058
–
–
–
–
–
–
–
1,145,253
–
–
–
–
–
–
1,100,253
Other Related Parties
Aboitiz One, Inc. (AOI)
Pilmico Foods Corporation (PFC)
Pilmico Animal Nutrition Corporation (PANC)
Vivant Energy Corporation (VEC)
–
–
–
–
321,000
40,200
35,400
–
–
–
–
1,126,819
–
–
–
466,847
AOI, PFC and PANC are under common ownership with the Company. VEC is one of the minority stockholders of the Group.
SEC FORM 20 - IS (INFORMATION STATEMENT)

132 ABOITIZ POWER CORPORATION
Compensation of BOD and key management personnel of the Group follows:
Short-term benefits
Post-employment benefits
2009 2008 2007
π125,451
3,832
π70,642
3,634
π25,788
2,863
π129,283 π74,276 π28,651
31. Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise cash and cash equivalents and long-term debts. The main purpose of these
financial instruments is to raise finances for the Group’s operations. The Group has various other financial instruments such as trade and
other receivables, derivative asset, AFS investments, restricted cash, bank loans, trade and other payables, derivative liabilities, finance
lease obligation, payable to preferred shareholder of a subsidiary, long-term obligation on power distribution system and customers’
deposits, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are liquidity risk, interest rate risk, foreign exchange risk, and credit risk.
The BOD reviews and agrees policies for managing each of these risks and they are summarized below.
Liquidity risk
Liquidity risk is the risk of not meeting obligations as they become due because of an inability to liquidate assets or obtain adequate
funding. The Group maintains sufficient cash and cash equivalents to finance its operations. Any excess cash is invested in short-term
money market placements. These placements are maintained to meet maturing obligations and pay dividend declarations.
In managing its long-term financial requirements, the Group’s policy is that not more than 25% of long term borrowings should mature
in any twelve-month period. 3.74% of the Group’s debt will mature in less than one year at December 31, 2009 (2008: 0.31%). For its
short-term funding, the Group’s policy is to ensure that there are sufficient working capital inflows to match repayments of short-term
debt.
The financial assets that will be principally used to settle the financial liabilities presented in the following table are from cash and cash
equivalents and trade and other receivables that have contractual undiscounted cash flows amounting to π3,814,906 and π4,476,028
as of December 31, 2009 and π14,333,676 and π1,991,074 as of December 31, 2008, respectively (see Notes 4 and 5). Cash and cash
equivalents can be withdrawn anytime while trade and other receivables are expected to be collected within one year.
The following table summarizes the maturity profile of the Group’s financial liabilities as of December 31, 2009 and 2008 based on
contractual undiscounted payments:
December 31, 2009
Total
carrying
value
Total
Contractual undiscounted payments
On
demand 5 years
Trade and other payables π3,750,465 π3,750,465 π– π 3,750,465 π– π–
Due to related parties 2,272,072 2,272,072 2,272,072 – – –
Customers' deposits 1,781,116 1,789,335 – 59,164 27,270 1,702,901
Bank loans 5,828,100 5,845,599 – 5,845,599 – –
Payable to preferred shareholders of
subsidiary 88,030 155,350 – 31,070 124,280 –
Finance lease obligation 45,586,164 115,387,464 – 1,130,400 25,897,464 88,359,600
Long-term obligation on power
distribution system 287,460 720,000 – 40,000 200,000 480,000
Long-term debts 16,252,535 23,904,868 – 1,449,483 17,580,706 4,874,679
Derivative liabilities 16,476 16,476 – 16,476 – –
Total π75,862,418 π153,841,629 π2,272,072 π12,322,657 π43,829,720 π95,417,180
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 133
December 31, 2008
Total
carrying
value
Total
Contractual undiscounted payments
On
demand 5 years
Trade and other payables π1,578,211 π1,546,150 π– π1,546,150 π– π–
Due to related parties 1,567,100 1,567,100 980,407 586,693 – –
Customers' deposits 1,571,092 1,571,092 – 89,212 9,759 1,472,121
Bank loans 4,798,120 4,815,073 – 4,815,073 – –
Payable to preferred shareholders of
subsidiary 97,224 186,420 – 31,070 124,280 31,070
Long-term obligation on power
distribution system 291,816 760,000 – 40,000 200,000 520,000
Long-term debt 6,521,997 9,532,211 – 556,230 6,964,069 2,011,912
Total π16,425,560 π19,978,046 π980,407 π7,664,428 π7,298,108 π4,035,103
Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to its long-term debt obligations. To manage this
risk, the Group determines the mix of its debt portfolio as a function of the level of current interest rates, the required tenor of the loan,
and the general use of the proceeds of its various fund raising activities. As of December 31, 2009, all of the Group’s long-term debt
had fixed rates ranging from 8.23% to 10.02%. As of December 31, 2008, 11% of the Group’s long-term debt had floating interest rates
ranging from 6.29% to 9.47%, and 89% had fixed rates ranging from 8.26% to 10.02%.
The following tables set out the carrying amounts, by maturity, of the Group’s financial instruments that are exposed to interest rate
risk:
As of December 31, 2009
5 years Total
Floating rate - payable to preferred shareholder of
a subsidiary π11,263 π76,767 π– π88,030
As of December 31, 2008
Floating rate - long-term debt
Floating rate - payable to preferred shareholder of
a subsidiary
5 years Total
π1,000
π646,000
π–
π647,000
9,194
88,030
–
97,224
π10,194 π734,030 π– π744,224
Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial instruments
classified as fixed rate is fixed until the maturity of the instrument. The other financial instruments of the Group that are not included in
the above tables are noninterest-bearing and are therefore not subject to interest rate risk. The Group’s derivative asset and liabilities
are subject to fair value interest rate risk.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant,
of the Group’s income before tax (through the impact on floating rate borrowings).
December 2008
December 2007
Increase
(decrease) in
basis points
100
(50)
100
(50)
Effect on income
before tax
(π6,470)
3,235
(6,480)
3,240
The Group’s sensitivity to an increase/decrease in interest rates pertaining to floating rate borrowings is expected to be insignificant in
2009 due to the immateriality of payable to preferred shareholder of a subsidiary relative to the total liabilities of the Group.
The Group’s sensitivity to an increase/decrease in interest rates pertaining to derivative instruments is expected to be insignificant in
2009 due to their short-term maturities and immateriality relative to the total assets and liabilities of the Group.
There is no other impact on the Group’s equity other than those already affecting the consolidated statements of income.
SEC FORM 20 - IS (INFORMATION STATEMENT)

134 ABOITIZ POWER CORPORATION
The sources of interest expense and other finance charges recognized during the period are as follows:
Bank loans and long-term debt
(see Notes 15 and 16)
Customers’ deposits (see Note 17)
Finance lease obligation (see Note 34)
Long-term obligation on power distribution
system (see Note 34)
Payable to preferred shareholder of
subsidiary (see Note 18)
Advances from related parties (see Note 30)
π1,515,519
5,712
1,234,905
2009 2008 2007
35,644
21,876
322
π307,515
5,462
–
36,128
23,564
5,867
π105,771
3,626
–
36,558
17,673
33,874
π2,813,978 π378,536 π197,502
Foreign exchange risk
The foreign exchange risk of the Group pertains significantly to its foreign currency denominated obligations. To manage its foreign
exchange risk, stabilize cash flows and improve investment and cash flow planning, the Group enters into foreign currency forward
contracts aimed at reducing and/or managing adverse impact of changes in foreign exchange rates on financial performance and
cash flows. As of December 31, 2009 and December 31, 2008, foreign currency denominated borrowings account for 17% and 34%,
respectively, of total consolidated borrowings.
Presented below are the Group’s foreign currency denominated financial assets and liabilities as of December 31, 2009 and 2008,
translated to Philippine Peso.
Loans and receivables
Cash
Trade and other receivables
Advances to associates
Restricted cash
December 31, 2009 December 31, 2008
US Dollar
US$8,270
3,510
1,402
12,131
Philippine Peso
US Dollar Philippine Peso
equivalent 1 equivalent 2
π382,089
162,175
64,767
560,423
US$49,093
––
12,243
π2,332,908
––
Total financial assets 25,313 1,169,454 61,336 2,914,665
581,757
Other financial liabilities
Bank loans
Trade and other payables
Finance lease obligation
81,000
4,176
521,455
3,742,200
192,925
24,091,225
81,000
––
3,849,120
––
Total financial liabilities 606,631 28,026,350 81,000 3,849,120
(US$581,318) (π26,856,896) (US$19,664) (π934,455)
1
$1 = π46.2000
2
$1 = π47.5200
The following table demonstrates the sensitivity to a reasonably possible change in the US dollar exchange rates, with all other variables
held constant, of the Group’s income before tax as of December 31, 2009 and 2008.
December 31, 2009
US dollar denominated accounts
US dollar denominated accounts
Increase/(decrease) in US dollar
US Dollar strengthens by 5%
US Dollar weakens by 5%
Effect on income
before tax
(π1,342,845)
1,342,845
December 31, 2008
US dollar denominated accounts
US dollar denominated accounts
US Dollar strengthens by 5%
US Dollar weakens by 5%
(π46,723)
46,723
The increase in US Dollar rate represents the depreciation of the Philippine Peso while the decrease in US Dollar rate represents
appreciation of the Philippine Peso.
There is no other impact on the Group’s equity other those already affecting the consolidated statement of income.
Credit risk
For its cash investments (including restricted portion), AFS investments and receivables, the Group’s credit risk pertains to possible
default by the counterparty, with a maximum exposure equal to the carrying amount of these investments. With respect to cash
investments and AFS investments, the risk is mitigated by the short-term and or liquid nature of its cash investments mainly in bank
deposits and placements, which are placed with financial institutions of high credit standing. With respect to receivables, credit risk
is controlled by the application of credit approval, limit and monitoring procedures. It is the Group’s policy to enter into transactions
with credit-worthy parties to mitigate any significant concentration of credit risk. The Group ensures that sales are made to customers
with appropriate credit history and has internal mechanism to monitor the granting of credit and management of credit exposures. The
Group has no significant concentration risk to counterparty or group of counterparties.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 135
Credit risk concentration of the Group’s receivables according to the customer category as of December 31,2009 and 2008 is summarized
in the following table:
Power distribution
Residential
Commercial
Industrial
City street lighting
Power generation
Spot market
Power supply contracts
2009 2008
π228,942
96,799
296,444
10,465
975,729
2,104,015
π190,543
95,795
278,214
13,717
–
203,774
π3,712,394 π782,043
The credit quality per class of financial assets that were neither past due nor impaired is as follows:
December 31, 2009
Cash and cash equivalents
Cash on hand and in banks
Short-term investments
Trade receivables
Residential
Commercial
Industrial
City street lighting
Spot market
Power supply contracts
Advances to suppliers, officers and employees
Other receivables
AFS investments
Derivative asset
Other noncurrent asset*
Neither past due nor impaired
High Grade Standard Sub- standard
π2,255,660
1,559,246
Past due
or individually
impaired
Total
π–
–
π–
–
π–
–
π2,255,660
1,559,246
3,814,906 – – – 3,814,906
26,864
13,519
230,247
3,247
–
826,685
34,016
37,380
16,957
3,829
967,268
1,034,897
101,736
28,614
27,259
3,071
–
42,462
66,326
17,286
21,981
318
8,461
199,971
228,942
96,799
296,444
10,465
975,729
2,104,015
1,100,562 2,094,347 203,142 314,343 3,712,394
π158,050
144,591
3,744
846
560,423
π–
π–
π2,227 π160,277
81,039 6,771 477,126 709,527
––– ––– ––– 3,744
846
560,423
Total π5,783,122 π2,175,386 π209,913 π793,696 π8,962,117
*“Other noncurrent asset” represents restricted cash in bank.
December 31, 2008
Cash and cash equivalents
Cash at hand and in banks
Short-term investments
Trade receivables
Residential
Commercial
Industrial
City street lighting
Power distribution utilities/off-takers
Advances to suppliers, officers and employees
Advances to related parties
Other receivables
AFS investments
Other noncurrent asset*
Neither past due nor impaired
High Grade Standard Sub- standard
π622,301
13,711,375
Past due
or individually
impaired
Total
π–
–
π–
–
π–
–
π622,301
13,711,375
14,333,676 – – – 14,333,676
38,472
15,260
214,190
4,504
196,336
38,494
61,428
52,149
3,626 5,375 212
– – 7,438
38,996
15,148
21,968
26,228
19,571
22,648
190,543
95,795
278,214
13,717
203,774
468,762 96,264 114,999 102,018 782,043
382,054
396,600
370,851
3,744
581,708
–
–
–
–
–
–
–
–
–
–
5,095 387,149
–
396,600
54,431 425,282
–– 3,744
581,708
Total π16,537,395 π96,264 π114,999 π161,544 π16,910,202
*“Other noncurrent asset” represents restricted cash in bank.
SEC FORM 20 - IS (INFORMATION STATEMENT)

136 ABOITIZ POWER CORPORATION
High grade receivables pertain to receivables from customers with good favorable credit standing. Receivables from customers that
slide beyond the credit terms but pay a week after being past due are classified under standard. Sub-standard are accounts with
payment habits extend beyond the approved credit terms because their funds are not sufficient to conduct their operations.
Trade and other receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in
significant financial difficulties and have defaulted on payments and accounts under dispute and legal proceedings.
The Group evaluated its cash and cash equivalents and restricted cash as high quality financial assets since these are placed in financial
institutions of high credit standing.
With respect to advances to suppliers, officers and employees, advances to related parties, other receivables, AFS investment and
derivative asset, the Group evaluates the counterparty’s external credit rating in establishing credit quality.
The table below shows the Group’s aging analysis of past due but not impaired financial assets:
December 31, 2009
Cash and cash equivalents
Cash on hand and in banks
Short-term investments
Trade receivables
Residential
Commercial
Industrial
City street lighting
Spot market
Power supply contracts
Advances to suppliers, officers and
employees
Other receivables
AFS investments
Derivative asset
Other noncurrent asset*
Total
π2,255,660
1,559,246
Neither past
due nor
impaired
π2,255,660
1,559,246
Less than
30 days
Past due but not impaired
π–
–
31 days to
60 days
π–
–
Over 60
days
π–
–
Individually
impaired
3,814,906 3,814,906 – – – –
228,942
96,799
296,444
10,465
975,729
2,104,015
162,616
79,513
274,463
10,147
967,268
1,904,044
41,300
9,350
12,170
22
122
111,124
5,264
1,597
2,139
21
36
588
15,041
5,595
1,531
92
187
2,688
π–
–
4,721
744
6,141
183
8,116
85,571
3,712,394 3,398,051 174,088 9,645 25,134 105,476
160,277
709,527
3,744
846
560,423
158,050
232,401
3,744
846
560,423
161
147,466
–
–
–
1,877
73,079
–
–
–
189
255,887
–
–
–
Total π8,962,117 π8,168,421 π321,715 π84,601 π281,210 π106,170
*“Other noncurrent asset” represents restricted cash in bank.
December 31, 2008
Cash and cash equivalents
Cash in banks
Short-term investments
Trade receivables
Residential
Commercial
Industrial
City street lighting
Power supply contracts
Advances to suppliers, officers and
employees
Advances to related parties
Other receivables
AFS investments
Other noncurrent asset*
Total
π622,301
13,711,375
Neither past
due nor
impaired
π622,301
13,711,375
Less than
30 days
Past due but not impaired
π–
–
31 days to
60 days
π–
–
Over 60
days
π–
–
–
694
–
–
–
Individually
impaired
14,333,676 14,333,676 – – – –
190,543
95,795
278,214
13,717
203,774
138,394
76,224
255,566
13,505
196,336
30,491
10,800
10,580
130
7,400
2,458
3,133
3,041
4
30
19,200
5,638
9,027
78
8
782,043 680,025 59,401 8,666 33,951 –
387,149
396,600
425,282
3,744
581,708
382,054
396,600
370,851
3,744
581,708
280
–
18,310
–
–
3,715
–
7,233
–
–
1,100
–
28,888
–
–
Total π16,910,202 π16,748,658 π77,991 π19,614 π63,939 π–
*“Other noncurrent asset” represents restricted cash in bank.
π–
–
-
-
-
-
-
–
–
–
–
–
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 137
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios
in order to support its business and maximize shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust
the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
The Group is not subject to any externally imposed capital requirements.
No changes were made in the objectives, policies or processes during the years ended December 31, 2009 and 2008.
The Group monitors capital using a gearing ratio, which is net debt divided by equity plus net debt. The Group’s policy is to keep
the gearing ratio at 70% or below. The Group determines net debt as the sum of interest-bearing short-term and long-term loans
(comprising long-term debt, finance lease obligation and payable to preferred shareholders of a subsidiary) less cash and short-term
deposits and temporary interest bearing advances to related parties.
Gearing ratios of the Group as of December 31, 2009 and 2008 are as follows:
Bank loans
Long-term debt
Cash and cash equivalents
Temporary advances to related parties
Net debt (a)
Equity
Equity and net debt (b)
π5,828,100
61,926,729
(3,814,906)
–
63,939,923
35,046,927
π98,986,850
2009 2008
π4,798,120
6,619,221
(14,915,384)
(396,600)
(3,894,643)
30,691,663
π26,797,020
Gearing ratio (a/b) 64.59% (14.53%)
32. Financial Instruments
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments that are carried
in the financial statements at other than fair values (amounts in millions).
FINANCIAL ASSETS
Loans and Receivables
Cash and cash equivalents
Cash on hand and in banks
Short-term investments
Trade and other receivables
Trade receivables
Due from related parties
Other receivables
Carrying
Amounts
π2,256
1,559
2009 2008
Fair
Values
π2,256
1,559
Carrying
Amounts
π622
13,712
Fair
Values
π622
13,712
3,815 3,815 14,334 14,334
3,606
–
870
3,606
–
870
782
397
812
782
397
812
4,476 4,476 1,991 1,991
Other noncurrent asset* 560 560 581 581
8,851 8,851 16,906 16,906
Financial Assets at FVPL
Derivative asset 1 1 – –
AFS Financial Assets 4 4 4 4
π8,856 π8,856 π16,910 π16,910
SEC FORM 20 - IS (INFORMATION STATEMENT)

138 ABOITIZ POWER CORPORATION
FINANCIAL LIABILITIES
Other Financial Liabilities
Bank loans
Long-term debt
Floating - long-term debt
Fixed rate - long-term debt
Floating rate - payable to preferred shareholder
of a subsidiary
Fixed rate - finance lease obligation
Customers’ deposits
Bill deposits
Transformers, lines and poles
Long-term obligation on power
distribution system
Trade and other payables
Related parties
Trade payables
Others
Carrying
Amounts
π5,828
–
16,253
88
45,586
2009 2008
Fair
Values
π5,828
–
17,411
88
52,947
Carrying
Amounts
π4,798
647
5,875
97
–
Fair
Values
π4,798
647
5,917
61,927 70,446 6,619 6,661
337
1,444
337
1,444
305
1,266
97
–
305
1,266
1,781 1,781 1,571 1,571
287
2,272
2,574
1,177
292
2,272
2,574
1,177
292
1,567
986
592
367
1,567
986
592
6,023 6,023 3,145 3,145
75,846 84,370 16,425 16,542
Financial Liability at FVPL
Derivative liabilities 16 16 – –
π75,862 π84,386 π16,425 π16,542
*“Other noncurrent asset” represents restricted cash in bank.
Fair Value of Financial Instruments
Fair value is defined as the amount for which an asset could be exchanged or a liability settled between knowledgeable willing parties in
an arm’s-length transaction, other than in a forced liquidation or sale. Fair values are obtained from quoted market prices, discounted
cash flow models and option pricing models, as appropriate.
A financial instrument is regarded as quoted in an active market if quoted prices are readily available from an exchange, dealer,
broker, pricing services or regulatory agency and those prices represent actual and regularly occurring market transactions on an
arm’s length basis. For a financial instrument with an active market, the quoted market price is used as its fair value. On the other
hand, if transactions are no longer regularly occurring even if prices might be available and the only observed transactions are forced
transactions or distressed sales, then the market is considered inactive. For a financial instrument with an active market, its fair value
is determined using a valuation technique (e.g. discounted cash flow approach) that incorporates all factors that market participants
would consider in setting a price.
The following methods and assumptions are used to estimate the fair value of each class of financial instruments:
Cash and cash equivalents, trade and other receivables, bank loans and trade and other payables. The carrying amounts of cash and cash
equivalents, trade and other receivables and trade and other payables approximate fair value due to the relatively short-term maturity
of these financial instruments.
Restricted cash. The carrying value of the restricted cash approximates their fair value as they earn interest based on prevailing bank
deposit rates.
Derivative asset and liabilities. The fair value is calculated by reference to prevailing interest rate differential and spot exchange rate as
of valuation date, taking into account its remaining term to maturity.
Fixed-rate borrowings. The fair value of fixed rate interest-bearing loans is based on the discounted value of future cash flows using the
applicable rates for similar types of loans. Interest-bearing loans were discounted using discount rates ranging from 7.34% to 9.84% in
2009 and 5.67% to 6.73% in 2008.
Floating-rate borrowings. Since repricing of the variable-rate interest bearing loan is frequent (i.e., three-month repricing), the carrying
value approximates the fair value.
Finance lease obligation. The fair value of the finance lease obligation was calculated by discounting future cash flows using discount
rates of 5% to 9% for dollar payments and 9% to 14% for peso payments.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 139
Long-term obligation on PDS. The fair value of the long-term obligations on power distribution system is calculated by discounting
expected future cash flows at prevailing market rates. Discount rates used in discounting the obligation ranges from 5.67% to 8.34% in
2008 and 6.22% to 10.77% in 2009.
Customers’ deposits. The fair value of bill deposits approximates the carrying values as these deposits earn interest at the prevailing
market interest rate in accordance with regulatory guidelines. The timing and related amounts of future cash flows relating to
transformer and lines and poles deposits cannot be reasonably and reliably estimated for purposes of establishing their fair values using
an alternative valuation technique.
AFS investments. The fair values of AFS investments are based on cost since fair values are not readily determinable.
Derivative financial instruments
The Company enters into non-deliverable short-term forward contracts with counterparty banks to manage foreign currency risks
associated with foreign currency-denominated liabilities and purchases.
As of December 31, 2009, the Group has outstanding non-deliverable buy Dollar and sell Peso forward exchange contracts with
counterparty banks with an aggregate notional amount of $78.5 million and remaining maturities of 1 month to 10 months. As at
December 31, 2009, the forward rates related to the forward contracts range from π46.40 to π47.14 per US$1. The Group recognized
derivative asset and derivative liabilities relating these contracts amounting to π846 and π15,286, respectively.
As of December 31, 2009, the Group also has outstanding non-deliverable sell US Dollar buy EURO short-term forward exchange
contracts with a counterparty bank with an aggregate notional amount of $1.83 million and remaining maturities of less than 1 month
to 3 months. As at December 31, 2009, the forward rates related to the forward contracts range from €1.4347 to €1.4381 per US$1. The
Group recognized derivative liability relating to these contracts amounting to π1,190.
The net fair value changes from forward contracts amounted to π223,968 loss in 2009. These are included under “Others - net” presented
under “Other Income (Expenses)” in the consolidated statements of income.
Fair Value Hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or
indirectly
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market
data.
Only the Group’s derivative instruments, which are classified under Level 2, are measured at fair value. During the reporting period
ending December 31, 2009, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out
of Level 3 fair value measurements.
33. Registration with the Department of Energy (DOE)
In accordance with its registration with the Department of Energy (DOE) under RA 7156 known as “Mini Hydro Electric Power Incentives
Act” as mini hydro electric power developer HI is entitled to certain incentives among which are the special privilege tax at the rate of
2% on power sales, tax and duty free importation of machinery, equipment and materials, tax credit on domestic capital equipment
and income tax holiday. Income tax holiday, tax and duty free importation and tax credit on domestic capital equipment on all minihydroelectric
power plants expired in 2000, except for the four (4) power plants located in Mintal, Tugbok, Davao City, acquired from
PSALM, which were transferred on January 18, 2005 and started commercial operations on January 19, 2005. Income tax holiday on the
four (4) plants started on September 28, 2005.
34. Agreements
Lease Agreements
• TLI was appointed by PSALM as Administrator under the IPP Administration Agreement, giving TLI the right to receive, manage
and control the capacity of the power plant for its own account and at its own cost and risk; and the right to receive the transfer of
the power plant at the end of the IPP Administration Agreement for no consideration.
In view of the nature of the IPP Administration Agreement, the arrangement has been considered as a finance lease. Accordingly,
TLI recognized the capitalized asset and related liability of π44.79 billion (equivalent to the present value of the minimum lease
payments using TLI’s incremental borrowing rates of 10% and 12% for dollar and peso payments, respectively) in the financial
SEC FORM 20 - IS (INFORMATION STATEMENT)

140 ABOITIZ POWER CORPORATION
statement as “power plant” and “finance lease obligation” accounts, respectively. This is a non-cash acquisition of property, plant
and equipment of the Group. The discount determined at inception of the agreement is amortized over the period of the IPP
Administration Agreement and is recognized as interest expense in the consolidated statement of income. Interest expense in
2009 amounted to π1.23 billion (see Note 31).
Future minimum monthly dollar and peso payments under the IPP Administration Agreement and their present value as of
December 31, 2009 are as follows:
Within one year
After one year but not
more than five years
More than five years
Total contractual payments
Unamortized discount
Dollar payments
$12,000
274,920
938,000
1,224,920
703,465
Peso
equivalent
of dollar
payments Peso payments Total
π554,400
12,701,304
43,335,600
56,591,304
32,500,079
π576,000
13,196,160
45,024,000
58,796,160
37,301,221
π1,130,400
25,897,464
88,359,600
115,387,464
69,801,300
Present value $521,455 π24,091,225 π21,494,939 π45,586,164
• On May 25, 2009, APRI entered into a lease agreement with PSALM for a parcel of land owned by the latter on which a portion
of the assets purchased under the APA is situated. The lease term is for a period of twenty-five (25) years commencing from the
Closing Date as defined in the APA which falls on May 25, 2009. The rental fees for the whole term of 25 years amounting to π492.0
million were paid in full after the receipt by APRI of the Certificate of Effectivity on the lease. Total lease charged to operations in
2009 amounted to π11.5 million.
• HI and HSI entered into contracts with various lot owners for lease of land where their power plants are located. Terms of contract
are for a period of 1 to 25 years renewable upon mutual agreement by the parties. Future minimum rental contract provisions are
as follows (amounts in millions):
Not later than one year
Later than 1 year but not later than 5 years
Later than 5 years
2009 2008
π6.0
25.4
106.6
π6.1
25.8
112.1
Total lease charged to operations in 2009, 2008 and 2007 related to these contracts amounted to π2,549, π2,060 and π2,152,
respectively.
Agreements with Contractors and Suppliers
• Among the assumed contracts that APRI received from APA is the Service Contract with Chevron Geothermal Philippines Holdings,
Inc. (CGPHI) which provides for the following:
• The Service Contract is to provide for the exploration and exploitation to APRI of Geothermal Resources in the Area of Interest
described in the Service Contract.
• CGPHI shall be the sole contractor responsible to APRI for the execution of services for the exploration and exploitation
operations in accordance with the provisions of Service Contract and, in accordance with the terms hereof, is hereby
appointed as the sole contractor of NPC for such purposes in connection with the Area of Interest.
• CGPHI shall furnish technical assistance required for the exploration for and exploitation of Geothermal Resources in order
to make geothermal steam available for utilization into electric power, and shall recover its operating costs and realizes its
return solely from the sale of power produced from the Geothermal Energy.
• APRI shall provide and defray Philippine currency expenses to the extent hereinafter set forth necessary in the exploration for
and exploitation of Geothermal Resources and Utilization of geothermal steam for electric power.
• APRI shall provide and install as its own expense and the with technological assistance of CGPHI as hereinafter provided, such
plants, machineries and auxiliary works as may be necessary for the conversion of geothermal steam into electric power and
distribution of such power.
In 2009, total steam cost incurred by APRI, reported as part of “Cost of generated power” amounted to
22).
π2.21 billion (see Note
• In connection with the Sibulan hydropower project, the Company entered into agreements with various contractors and suppliers.
Major agreements entered into as of December 31, 2009 included those for the construction of civil works and electro-mechanical
works and project management. Total purchase commitments entered into by the HSI from their contracts as of December 31,
2009 amounted to π2,745,958,869 and $24,093,625 of which π2,565,868,119 and $19,757,896 had been paid. These amounts are
presented as part of “Other receivable” and “Construction in progress” in the consolidated balance sheets.
SEC FORM 20 - IS (INFORMATION STATEMENT)

ANNUAL REPORT 2009 141
• TLI entered into short-term coal supply agreements. Outstanding coal supply agreements as of December 31, 2009 have
aggregate supply amounts of 202,112 MT (equivalent dollar value is $12.5 million) which are due for delivery from January 30, 2010
to March 3, 2010. Terms of payment are by letter of credit where payment is due at sight against presentation of documents, and
by telegraphic transfer where payment is due within 7 days from receipt of original invoice.
Other Power Supply Agreements
Aside from those mentioned in Notes 20 and 21, the Group has the following power supply agreements:
• In February 2007, PHC, in consortium with subsidiaries, HI, HTI and HSI successfully bid for an agreement to supply DLPC a total
of 400 million kWh of energy supply per year for a 12-year period beginning 2009. The delivery of the contracted energy under
the agreement is in two phases: Phase I Supply, whereby 200 million kWh per year of net Expected Energy will be delivered, has a
target completion date of August 1, 2009; and Phase II Supply, whereby the additional 200 million kWh per year of Net Expected
Energy will be delivered, has a target completion date of August 1, 2010. Net Expected Energy refers to the quantity of electricity
generated by the respective projects of the parties of the consortium, net of electricity used by the project, site usage, and step up
transformer and transmission losses up to the delivery per meter points, which points are to be agreed upon by the parties. The
bid price of the contracted energy is π4.0856/kWh delivered, subject to adjustment based on changes to the Philippine consumer
price index.
Agreements with the Government
• On October 29, 2007, HTI, a subsidiary, entered into agreements with various barangays in Davao City wherein each barangay gives
its consent to HTI to manage, administer, regulate and undertake the construction of HTI’s hydroelectric power plants and other
related activities in their respective areas. In consideration thereof, HTI shall pay each of the barangay an annual royalty fee in an
amount equivalent to π0.01 per kwh of electricity sales of the power plant located within their area to be paid annually beginning
the first anniversary date of the commencement of HTI’s commercial operations and on every anniversary date thereafter to
be increased by π0.001 every 5 years. In addition to the royalty fee, HTI shall make donations for the undertaking of certain
infrastructure projects and provide financial assistance for the various needs of the community. The agreement likewise provides
that HTI shall comply with Sec. 5(i) of RA No. 7638 as implemented by ER No. 1-94 as amended, prescribing the following annual
benefits during the operation of the power stations: a) electrification fund to be distributed to the relevant host LGU equivalent
to π0.0075 per kwh of the total electricity sales; b) development and livelihood fund to be shared by the province, municipality,
barangay and region equivalent to π0.00125 per kwh of the total electricity sales; and c) reforestation, watershed management,
health and/or environmental enhancement fund to be shared by the resettlement area, barangay, municipality, province and
region equivalent to π1.00125 per kwh of the total electricity sales.
The duration of the agreements is for a period of 25 years and renewable for another 25 years as agreed by the Barangay Council
of Wines and HTI.
Significant Agreements of Associates
• On November 19, 2002, VECO and Toledo Power Company (TPC) executed an Electric Power Purchase Agreement (EPPA), pursuant
to which TPC agreed to supply to VECO, and VECO agreed to accept and purchase from TPC, electricity sourced from TPC’s Toledo
Power Station consisting of two power plants located at Sangi and Carmen, Toledo City. The effectivity of the agreement shall be
for 12 years.
On February 25, 2003, VECO and TPC entered into an agreement, pursuant to which VECO requested TPC to defer the
implementation of the EPPA by postponing the commencement of the Cooperation Period, subject to the interim supply and
other arrangements. The EPPA was restated and amended on November 11, 2003.
TPC issued a notice to VECO on November 16, 2004 indicating that TPC has been incurring losses based on the Electricity Tariff
in effect, and pursuant to Article 6.1(a) of the amended EPPA, which entitles TPC to request for amendments to preserve and/
or restore its interests and to terminate the amended EPPA if no agreement is reached. As a result, VECO and TPC agreed to
further restate and clarify the amended EPPA by executing an Amendment Agreement, effective on May 16, 2006. Pursuant to
the Amendment Agreement, TPC shall supply and VECO shall purchase a Minimum Energy Off-take of 18 million kWh per billing
month. The price for the electricity shall be equivalent to NPC’s ERC-approved unbundled total generation tariff rates and charges
for the Visayas Grid, provided that if there are ERC-approved NPC rates and charges for the customer class and/or under the
appropriate sub-grid in the Visayas Grid to which utilities such as VECO belongs, then the ERC-approved NPC rates and charges for
such customer class and/or sub-grid shall be the applicable electricity price.
On February 19, 2009, TPC proposed to charge VECO an interim rate while it continues the negotiation with all its off-takers for
an independent tariff, to partially compensate for its continuing operating losses arising from the non-competitiveness of the
generation rate of NPC to which its rate is based on. On February 27, 2009, VECO and TPC jointly filed a petition for the approval
of their agreement on interim, with prayer for a provisional authority, which was approved with modification by the ERC on August
10, 2009 where TPC is authorized to collect the difference between the approved interim rate and the EPPA rate for the period
February 2008 to August 25, 2009. Such interim rate took effect on August 26, 2009 and the same shall be valid until VECO and
TPC are able to file an application or petition for the approval of a new independent tariff rate.
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142 ABOITIZ POWER CORPORATION
On December 14, 2009, ERC ruled on the joint application of VECO and TPC pursuant to the ERC order to apply for the approval
of a new independent tariff rate, where VECO is directed to refund to TPC the amount of π187.5 million, equivalent to an average
rate of π0.0204/kwh, within four years from the receipt of the order or until such time said amount has been fully refunded. In
connection with the ERC directive, VECO is also authorized to collect from its customers the same amount within the above -
prescribed period.
• On October 11, 2007, SNAP M entered into a lease agreement with National Irrigation Administration (NIA) for a parcel of land
owned by the latter on which a portion of the assets purchased under the APA is situated. The lease term is for a period of twentyfive
(25) years commencing from the Closing Date as defined in the APA which falls on April 25, 2008. The amount of lease for the
whole term of 25 years was paid in full after the receipt by SNAP M of the Certificate of Effectivity of the lease.
• As part of the Ambuklao-Binga Rehabilitation Project, SNAP B entered into following contracts with, among others, various
suppliers and contractors:
a. Civil works for the Ambuklao and Binga power plants rehabilitation to McConell Dowell Philippines, Inc. (MDPI) for a total
contract price of US$79.7 million.
b. Contract with VA Tech Hydro GmbH (VTHG) for the supply of the electro-mechanical equipment for the rehabilitation of
Ambuklao and a minor portion of the refurbishment of Binga Power Plants for a total contract price of US$72.9 million.
c. Engineering Contract, under which Norconsult AS as the Engineer shall provide engineering services for the Project, including
inter alia, the preparation of plans, specifications and detailed working drawings.
d. In 2009, SNAP B entered into contracts with various suppliers for the refurbishment of the Binga electro-mechanical
components. Total price for the contracts amounted to US$29.5 million.
• On December 27, 2007, SNAP B entered into an Operations and Maintenance (O & M) Agreement with the PSALM/NPC for the
management, operation, maintenance, preservation and rehabilitation of the Ambuklao and Binga Dams and other pertinent nonpower
components in accordance with appropriate standards for purposes of power generation to allow SNAP B continued and
uninterrupted full beneficial use of the Power Plants in accordance with and subject to the conditions imposed by Philippine Law.
The O & M Agreement shall be effective for twenty-five (25) years commencing on Closing Date, as defined in the APA, and
renewable for another 25 years under such terms and conditions as may be mutually agreed upon by the parties.
All costs, expenses, fees, and taxes arising out of or related to the performance by SNAP B of the O&M Duties, Rehabilitation
Activities, Emergencies and all other obligations of SNAP B under this Agreement shall be for the sole account of SNAP B.
• On December 13, 2006, SNAP M entered into an O & M Agreement with the NIA for the management, operation and maintenance
of the Magat Dam and other pertinent non-power components in accordance with appropriate standards for purposes of power
generation to allow SNAP M continued and uninterrupted full beneficial use of the Power Plant in accordance with and subject to
the conditions imposed by Philippine Law.
The O & M Agreement shall be effective for twenty-five (25) years commencing on closing date, as defined in the APA between
SNAP M and PSALM, and renewable for another 25 years under such terms and conditions as may be mutually agreed upon by
the parties. For the services rendered or performed by NIA for the operation and maintenance of the non-power components and
other appurtenant structures, SNAP M shall pay NIA, on a monthly basis, an amount (O & M fee) ranging from π0.0310 to π0.0620
per cubic meter of water used by SNAP M for power generation of the Power Plant.
• The Ambuklao and Binga hydroelectric power plants, which SNAP B acquired on July 10, 2008, are situated in public lands declared
as protected areas under the National Integrated Protected Areas System Act of 1992. On June 19, 2008, SNAP B entered into a
Special Use Agreement in Protected Areas (SAPA) with the Department of Environment and Natural Reaources (DENR) for the use
of these lands. The SAPA is effective for twenty-five (25) years commencing on June 19, 2008 and renewable for a similar period
subject to the review and approval of the Secretary of the DENR. In 2008, SNAP B paid one-time upfront fees amounting to π10.6
million and π10.8 million for the Ambuklao and Binga plants, respectively.
35. Registration with the Board of Investments (BOI)
APRI
On June 19, 2009, the BOI approved APRI’s application as a new operator of the Tiwi-MakBan Power Plant and granted APRI a pioneer
status under the Omnibus Investments Code of 1987. The following are the incentives granted by BOI to APRI:
• ITH for six (6) years from June 2009 or actual start of commercial operations/selling, whichever is earlier but in no case earlier than
the date of registration. The ITH shall be limited only to sales/revenue generated from the sales of electricity of the Tiwi-MakBan
Power Plant. Revenues generated from the sales of carbon emission reduction credits are also entitled to ITH.
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ANNUAL REPORT 2009 143
• For the first five (5) years from date of registration, APRI shall be allowed an additional deduction from taxable income of fifty
percent (50%) of the wages corresponding to the increment in the number of direct labor for skilled and unskilled workers in the
year of availment as against the previous year if the project meets the prescribed ratio of capital equipment to the number of
workers set by BOI of $10 to one worker and provided that this incentive shall not be availed of simultaneously with the ITH.
• Employment of foreign nationals. This may be allowed in supervisory, technical or advisory positions for five (5) years from date of
registration.
• Importation of consigned equipment for a period of ten (10) years from the date of registration, subject to the posting of re-export
bond.
• APRI may qualify to import capital requirement, spare parts and accessories at zero (0%) duty rate from the date of registration to
June 16, 2011 pursuant to Executive Order No. 528 and its Implementing Rules and Regulations.
The following are the significant specific terms and conditions for the availment of the ITH:
• APRI shall start commercial operations in June 2009.
• APRI shall increase its authorized, subscribed and paid-up capital stock to at least π5.70 billion and shall submit proof of compliance
prior to availment of ITH. This condition was superseded by a BOI letter dated September 18, 2009 clarifying that for the purposes
of BOI registration, the BOI has redefined the term equity such that, it shall now cover not only the paid-up capital stock but also
other items in the Balance Sheet of the Audited Financial Statements’ i.e., additional paid in capital stock, retained earnings.
Hence, if APRI has at least 25% stockholders equity as shown in the Audited Financial Statements, it is deemed complied with the
25% equity requirement and is no longer required to increase its capital stock.
• APRI shall secure a Certificate of Compliance from ERC prior to start of commercial operations.
• APRI is enjoined to undertake Corporate Social Responsibility Projects/Activities.
TLI
On December 23, 2009, the BOI pre-approved TLI’s application for registration as a new operator of the power plant on a non-pioneer
status. Once approved, TLI will be entitled with the following incentives:
a. ITH for a period of four (4) years without extension from January 1, 2010 or actual start of operation, whichever is earlier but in no
case earlier than the date of registration. The ITH incentives shall be limited only to the sales/revenue generated from the sale of
electricity of the power plant.
b. For the first five (5) years from date of registration, TLI shall be allowed an additional deduction from taxable income of 50% of the
wages corresponding to the increment in number of direct labor for skilled and unskilled workers in the year of availment as against
the previous year if the project meets the prescribed ratio of capital equipment to the number of workers set by the Board of US$10
to one (1) worker and provided that this incentive shall not be availed of simultaneously with the ITH.
c. Employment of foreign nationals may be allowed in supervisory, technical or advisory positions for five (5) years from date of
registration. The president, general manager and treasurer of foreign-owned registered firms or their equivalent shall not be
subject to the foregoing limitations.
d. Importation of consigned equipment for a period of ten (10) years from date of registration, subject to the posting of re-export
bond.
On February 26, 2010, TLI submitted to BOI all its requirements with a commitment to comply with the 25% minimum equity requirement
of π490.0 million prior to the availment of ITH incentives.
36. Other Matters
a. CPPC and EAUC Cases
On August 20, 1999, CPPC and EAUC (the Complainants); a subsidiary and an associate, respectively, filed a complaint before the
Energy Regulatory Board (ERB) against NPC for a refund/credit and/or collection of inapplicable/unauthorized tariffs with prayer
for a cease and desist order and or preliminary injunction. The Complainants contended, among others, that they need not pay
Power Delivery Services because their facilities are embedded in the power distribution network of VECO. The Power Delivery
Service charges are applicable to IPPs using the transmission facilities in transporting power. Consequently, an IPP need not pay
Power Delivery Service if its facilities are embedded in the distribution network.
On June 28, 2001, the ERB rendered a decision directing, among others, NPC to cease and desist from charging the Complainants
the Power Delivery Services and to refund all amounts collected by reason thereof to NPC who, if they so desire, may opt to
credit or apply the same to their future billings from the Complainants. NPC filed a motion for reconsideration with the ERC
which replaced the then ERB. On March 28, 2003, the ERC issued decisions affirming the June 28, 2001 decisions with certain
modifications on some decisions.
NPC filed a petition for review with the Court of Appeals. On December 14, 2005, the Court of Appeals rendered a Decision
affirming in toto the Decision dated June 28, 2001 of the ERB as modified by the Order dated March 28, 2003 of the ERC. Further,
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144 ABOITIZ POWER CORPORATION
on December 14, 2006, the Supreme Court upheld in toto, the Decision dated June 28, 2001 of the ERB as modified by the Order
dated March 28, 2003 of the ERC. Further, the instant Petition for Review was denied for lack of merit.
Pursuant to Section 8 of RA No. 9136, EPIRA of 2001, TransCo was created and assumed the electrical transmission functions of the
NPC. TransCo also assumed the legal responsibilities relative to the aforementioned case.
CPPC and EAUC applied the total contested amounts against TransCo billings from November 26, 2004 to February 25, 2006.
However, pending Supreme Court’s final and irrevocable decision, CPPC and EAUC continued to accrue its liabilities to NPC for
these billing periods. Total accruals for these billing periods amounted to π98.9 million as of December 31, 2008 and 2007 and are
presented as part of trade payables.
On October 29, 2008, the Supreme Court issued a Notice of Judgment that denied NPC’s petition and affirmed the decision of the
Court of Appeals.
As of January 23, 2009, CPPC has completed the process of reconciliation with NGCP, which tool over the operations of TransCo,
the first claim of π49.5 million. As of March 31, 2010, NGCP and the CPPC are still in the process of reconciling the second claim
amounting to π49.4 million. Although no formal agreement as to the amount for the second claim has been reached yet between
the CPPC and NGCP, since the results of the reconciliation process of the first claim did not result to any significant difference, it
is expected that the full amount of the second claim can be substantially recovered. With this, as of December 31, 2009, CPPC
applied both claims totaling to π97.3 million against the PDS accruals presented as part of “Trade and other payables” account and
recognized other income of the same amount.
b. DLPC Case
On December 7, 1990, certain customers of DLPC filed before the then Energy Regulatory Board (ERB) a letter-petition for recovery
claiming that with the Supreme Court’s (SC) decision reducing the sound appraisal value of DLPC’s properties, DLPC exceeded the
12% Return on Rate Base (RORB). The ERB’s order dated June 4, 1998, limited the computation coverage of the refund from
January 19, 1984 to December 14, 1984. No amount was indicated in the ERB order as this has yet to be recomputed.
The Court of Appeals (CA), in Court of Appeals General Register Special Proceeding (CA-GR SP) No. 50771, promulgated a decision
dated February 23, 2001 which reversed the order of the then ERB, and expanded the computation coverage period from January
19, 1984 to September 18, 1989.
The SC in its decision dated November 30, 2006 per GR150253 reversed the CA’s decision CA-GR SP No. 50771 by limiting the period
covered for the refund from January 19, 1984 to December 14, 1984, approximately 11 months. The respondent/customers filed a
Motion for Reconsideration with the SC, which was denied with finality by the SC in its Order dated July 4, 2007.
The SC, following its decision dated November 30, 2006, ordered the ERC to proceed with the refund proceedings instituted by the
respondents with reasonable dispatch.
The refund proceedings (ERC Case No 2001-154, formerly ERB Case No. 91-18) have now resumed at the ERC and DLPC is required
to submit a computation. DLPC’s computation based on the Return on Rate Based Methodology shows an allowable deficiency
revenue of π15.0 million , resulting in a zero refund for the period January 19, 1984 through December 14, 1984. This computation
is subject to review and final decision by the ERC.
c. Impact of the GRAM case of Manila Electric Company, Inc. (Meralco)
The ERC promulgated an Order dated February 24, 2003 in ERC Case No. 2003-44 adopting the Implementing Rules for the
Recovery of Fuel and IPP Costs or GRAM. The GRAM Implementing Rules provide, among others, that before any generation cost
is passed on to consumers by the distribution utilities, a petition must be filed at the ERC for approval. Meralco filed its application
docketed as ERC Case No. 2004-112 for approval of actual generation costs for the period November 2003 to January 2004. In
the Order dated June 2, 2004, the ERC approved the adjustment of Meralco’s Generation Charge in accordance with the GRAM
Implementing Rules.
The National Association of Electricity Consumers for Reforms (NASECORE) filed a Petition with the SC questioning the approval.
In a decision promulgated on February 2, 2006, the SC declared as void the ERC Order dated June 2, 2004 on the ground that the
application and the GRAM Implementing Rules failed to satisfy the requirements on publication. Both the ERC and Meralco filed
their respective motions for reconsideration of the SC decision. However, through a resolution promulgated last August 16, 2006,
the resolution for reconsideration filed by the ERC and Meralco were denied with finality by the SC. Meralco was thereby directed
to refund the affected customers.
The ERC has approved the GRAM applications of DLPC after compliance to the legal requirements. DLPC, however, believes that
the decision should not have a material impact to DLPC since the above SC decision did not order the refund of the collections
under the GRAM. In addition, generation costs for the period covered by the GRAM have all been confirmed for recovery from
customers. If recovery is not allowed through the GRAM, it will be through some other methods that the ERC may allow.
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ANNUAL REPORT 2009 145
d. LHC Arbitration
LHC is a party to a dispute with a contractor regarding the delay in the completion of its Power Station. Under the Turnkey
Contract, the contractor shall pay liquidated damages for each day of delay on the following day without the need of demand from
LHC. LHC may, without prejudice to any other method of recovery, deduct the amount of such damages from any monies due or
to become due to the contractor and/or by drawing on the irrevocable and confirmed standby letters of credit amounting to US$18
million (the Security).
In 2000 and 2001, due to the delay in the completion of the Power Station, LHC withdrew the Security. In November 2000, the
contractor and LHC elevated their claims and counterclaims to an Arbitration Tribunal operating under the Rules of International
Chamber of Commerce sitting in Australia (ICC International Australian Case No. 11264/TE/MW). The Arbitration Tribunal delivered
the final award on August 9, 2005.
LHC was successful in certain claims concerning the design and construction of the lined and unlined tunnel. However, the
Arbitration Tribunal also found that the contractor is entitled to certain money claims and refund of the liquidating damages that
LHC has drawn from the Security.
LHC has recognized provisions for arbitration for the full financial effects of the final award delivered by the Arbitration Tribunal for
the claims and counterclaims filed by the contractor and LHC for the construction of the Power Station.
In November 2006, the Court of Appeals (CA) granted LHC’s petition for permanent injunction against the enforcement of the Final
Award on the ground of, among others, forum shopping by the contractor. Furthermore, the CA declared the Final Award null
and void due to being contrary to Philippine public policy. The contractor has filed a motion with the SC asking for until January
19, 2007 to appeal the CA’s decision. On January 19, 2007, the contractor filed its Petition for Review with the SC appealing the
decision of the appellate court. After an exchange of pleadings by the parties, the SC directed them to submit their respective
closing memoranda. LHC submitted its memorandum on September 5, 2007 and the contractor submitted its memorandum on or
about October 11, 2007.
LHC believes that the accounting entries made for the full financial effects of US$24.5 million in 2006 of the final award do not
reflect its admission of any obligation under the award and that the ultimate amounts of liabilities to be paid or settled, if any,
depend upon the final outcome of other court cases that would affect enforcement of said final award.
In April 2008, LHC entered into a Settlement Deed (the Settlement) with Transfield Philippines, Inc. (TPI) for the purpose of settling
all claims and disputes related to the Turnkey Contract, including the Final Award. The Settlement required the payment by LHC as
a partial return of the securities posted by TPI. As a result of the Settlement, all related cases were dismissed following the parties’
Joint Motion to Dismiss filed with relevant courts.
e. EPIRA of 2001
RA No. 9136 was signed into law on June 8, 2001 and took effect on June 26, 2001. The law provides for the privatization of National
Power Corporation (NPC) and the restructuring of the electric power industry. The Implementing Rules and Regulations (IRR) were
approved by the Joint Congressional Power Commission on February 27, 2002.
R.A. No. 9136 and the IRR impact the industry as a whole. The law also empowers the ERC to enforce rules to encourage competition
and penalize anti-competitive behavior.
R.A. Act No. 9136, the EPIRA, and the covering IRR provides for significant changes in the power sector, which include among
others:
i. The unbundling of the generation, transmission, distribution and supply and other disposable assets of a company,
including its contracts with IPPs and electricity rates;
ii. Creation of a WESM; and
iii. Open and non-discriminatory access to transmission and distribution systems.
The law also requires public listing of not less than 15% of common shares of generation and distribution companies within 5 years
from the effectivity date of the EPIRA. It provides cross ownership restrictions between transmission and generation companies
and a cap of 50% of its demand that a distribution utility is allowed to source from an associated company engaged in generation
except for contracts entered into prior to the effectivity of the EPIRA.
There are also certain sections of the EPIRA, specifically relating to generation companies, which provide for a cap on the
concentration of ownership to only 30% of the installed capacity of the grid and/or 25% of the national installed generating
capacity.
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146 ABOITIZ POWER CORPORATION
f. Renewable Energy Act of 2008
On January 30, 2009, R.A. No. 9513, An Act Promoting the Development, Utilization and Commercialization of Renewable Energy
Resources and for Other Purposes, which shall be known as the “Renewable Energy Act of 2008” (the Act), became effective. The
Act aims to (a) accelerate the exploration and development of renewable energy resources such as, but not limited to, biomass,
solar, wind, hydro, geothermal and ocean energy sources, including hybrid systems, to achieve energy self-reliance, through the
adoption of sustainable energy development strategies to reduce the country’s dependence on fossil fuels and thereby minimize
the country’s exposure to price fluctuations in the international markets, the effects of which spiral down to almost all sectors of the
economy; (b) increase the utilization of renewable energy by institutionalizing the development of national and local capabilities in
the use of renewable energy systems, and promoting its efficient and cost-effective commercial application by providing fiscal and
non-fiscal incentives; (c) encourage the development and utilization of renewable energy resources as tools to effectively prevent
or reduce harmful emissions and thereby balance the goals of economic growth and development with the protection of health
and environment; and (d) establish the necessary infrastructure and mechanism to carry out mandates specified in the Act and
other laws.
As provided for in the Act, renewable energy (RE) developers of RE facilities, including hybrid systems, in proportion to and to the
extent of the RE component, for both power and non-power applications, as duly certified by the Department of Energy (DOE), in
consultation with the Board of Investments (BOI), shall be entitled to incentives, such as, income tax holiday, duty-free importation
of RE machinery, equipment and materials, zero percent VAT rate on sale of power from RE sources, and tax exemption of carbon
credits, among others.
The Group expects that the Act may have significant effect on the operating results of some of its subsidiaries and associates that
are RE developers. Impact on the operating results is expected to arise from the effective reduction in taxes.
g. CSR Projects
The Group has several CSR projects in 2009 and 2008 which are presented as part of “General and administrative expenses” (see
Note 23).
h. Minority interests
Changes in minority interests as presented in the consolidated statement of changes in equity is composed of the following:
• 2009 - Dividends paid to minority interests
• 2008 - Investment of minority interests in subsidiaries and dividends paid to minority interests
• 2007 - Dividends paid to minority interests
Accordingly, amounts totaling π158,142, π221,278 and π313,216 representing dividends paid to minority interests and investments
of minority interests in subsidiaries have been presented as changes in minority interests in the consolidated statements of cash
flows in 2009, 2008 and 2007, respectively.
37. Events after the Balance Sheet Date
Aside from the turn-over of power barges and dividends declaration as mentioned in Notes 8 and 19, respectively, events after the
balance sheet date include the Company’s BOD approval on March 10, 2010 of the possible issuance of up to π5.0 billion retail bonds
and syndicated loans of up to π5.0 billion.
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