2007 ANNUAL REPORT Power Corporation - Aboitiz Equity Ventures
2007 ANNUAL REPORT Power Corporation - Aboitiz Equity Ventures 2007 ANNUAL REPORT Power Corporation - Aboitiz Equity Ventures
F R O M Y O U R C H A I R M A N A N D P R E S I D E N T & C E O Jon Ramon M. Aboitiz CHAIRMAN Consolidated revenues of Aboitiz Power Corporation of 11.3 billion increased by 30% from the previous year, a growth spurred by the robust performance of both our generation and distribution businesses. Dear Shareholders, We are very pleased to report that your company performed exceptionally well in 2007, exceeding expectations of the investment community. Consolidated revenues of Aboitiz Power Corporation (AP) of 11.3 billion increased by 30% from the previous year, a growth spurred by the robust performance of both our generation and distribution businesses. Your company ended 2007 with a net income of 4.1 billion, a 124% year-on-year bottomline growth. Power Generation Driven by its successful bidding for government assets and the active acquisition of other projects, AP ended the year with investments in 1,035 megawatts (MW) of generating assets. Accounting for its proportionate ownership, the company increased its attributable President Gloria Macapagal-Arroyo rings the bell to officially start the trading of AP shares at the Philippine Stock Exchange. generating capacity by 200%, ending the year with 490 MW compared to 164 MW at the end of 2006. Consequently, power sales of 1,018 gigawatt hours (GwH) in 2007 grew by 176% year-on-year. As a result, the power generation business for the first time accounted for a larger share of the company’s earnings contributing 63% of AP’s net income for 2007, equivalent to 2.6 billion, up by 213% from the previous year. We are also pleased to report that the debut year for the Magat hydro plant and our involvement in the Wholesale Electricity Spot Market (WESM) resulted in very encouraging results. Following our strategy of concentrating the generation of power during peak hours resulted in our attaining premium prices for our power resulting to an average price of 5.28 per kilowatt-hour (kwh) for sales to the WESM for the eight months of operations in 2007. • ABOITIZ POWER CORPORATION ANNUAL REPORT 2007
R E P O R T T O O U R S T O C K H O L D E R S Power Distribution Riding on strong economic growth and acquisitions in 2007, our distribution business ended the year with a peak demand of 780 MW, 15% higher than the previous year. Our distribution utilities sold 3,915 GwH of electricity to 637,000 customers. Adjusting for the company’s ownership in various utilities, AP’s beneficial sales showed strong kwh sales growth of 11% in its franchise areas, reaching 2,790 GwH. Stripping off sales from the acquisitions in 2007, organic electricity sales was still strong improving by 7%. Average margins in our distribution business also showed improvement, increasing by 6% to 1.32 per kwh. This was a result of improved efficiencies, reduced system losses and controlled costs. Consequently, income from the power distribution group grew by 52% hitting 1.5 billion, accounting for 37% of AP’s net income. Strategic Initiatives Electricity sales by customer (GwH) 819 4% 853 1,688 15% 1,937 2,507 It was an eventful year for AP, marked by major strategic initiatives, acquisitions, and partnerships. 11% 2,790 06 07 06 07 06 07 Residential Commercial & Industrial Total Power Sales 678 06 15% 780 07 Peak Demand (MW) The most significant of these initiatives was the consolidation of the distribution businesses of Aboitiz Equity Ventures, Inc. (AEV) and the other power-related assets of the Aboitiz Group into AP in preparation of its Initial Public Offering (IPO). We listed AP on July 16, 2007, offering 1,787,664,000 shares to the public at 5.80 per share representing 24% of the company. We were overwhelmed by the market’s acceptance of the IPO. It was oversubscribed, raising over 10 billion with demand coming from Asia (39%), United States (30%), Europe (24%), and the Middle East (7%). This strategic initiative put AP in a position to participate in the privatization of National Power Corporation (NPC) assets being sold by the Power Sector Assets and Liabilities Management Corporation (PSALM). We considered this a once-in-a-lifetime opportunity and something that we were not going to miss out on. It was also a strategic move that put us in a position to capitalize on the many exciting opportunities available in the power sector, including the development of greenfield projects to augment the country’s needed power supply. As disclosed during its IPO, AP acquired stakes in three utilities via a share swap on June 8, 2007. The company acquired 100% of Mactan EnerZone Corporation (MEZ) and 60% of Balamban EnerZone Corporation (BEZ) from AboitizLand, Inc. for 610 million and 267 million, respectively. On March 7, 2008, AP acquired the 40% balance of BEZ from Tsuneishi Holdings (Cebu), Inc. for approximately 178 million. MEZ, the owner and operator of the power distribution system at the Mactan Export Processing Zone II in Cebu, delivers power to semiconductor firms, electronics manufacturers and other exporters operating within the zone. BEZ owns and operates the power distribution system at the West Cebu Industrial Park (WCIP), a special economic zone for light and heavy industries. It is home to shipbuilding and ship repair facilities, steel fabrication yards and supporting suppliers such as industrial gas plants and other subcontractors. Erramon I. Aboitiz PRESIDENT & CHIEF EXECUTIVE OFFICER Aboitiz Power’s strategic initiative of going public put the company in a position to participate in the privatization of Napocor assets being sold by the Power Sector Assets and Liabilities Management Corporation. ABOITIZ POWER CORPORATION ANNUAL REPORT 2007 •
- Page 1 and 2: Power Corporation Powering New Fron
- Page 3 and 4: P o w e r i n g New Frontiers ABOIT
- Page 5: FINANCIAL SUMMARY For the Year (In
- Page 9 and 10: h Powering New Frontiers With deman
- Page 11 and 12: Results of Operations POWER D I S T
- Page 13 and 14: R E S U L T S O F O P E R A T I O N
- Page 15 and 16: A SFELAPCO crew does live line work
- Page 17 and 18: Results of Operations POWER G E N E
- Page 19 and 20: POWER G E N E R A T I O N Hedcor si
- Page 21 and 22: STEAG State Power Inc. (SPI) contri
- Page 23 and 24: We expect our distribution companie
- Page 25 and 26: The strong and stable financial per
- Page 27 and 28: DIRECTORS SPECIAL AND REGULAR BOARD
- Page 29 and 30: Director and Senior Executive Compe
- Page 31 and 32: The Office of the Chief Compliance
- Page 33 and 34: Employee Relations In AP, people ar
- Page 35 and 36: P o w e r i n g New Frontiers F E A
- Page 37 and 38: The rest of its capacity is traded
- Page 39 and 40: The annual energy requirement will
- Page 41 and 42: Gone are the long queues at VECO’
- Page 43 and 44: The three utilities aim to provide
- Page 45 and 46: CPPC, meanwhile, is situated on a 1
- Page 47 and 48: and reliable supply of electricity.
- Page 49 and 50: The fulfillment of sharing the frui
- Page 51 and 52: Board of Directors Jon Ramon M. Abo
- Page 53: Corporate Officers Benjamin A. Cari
F R O M Y O U R C H A I R M A N A N D P R E S I D E N T & C E O<br />
Jon Ramon M. <strong>Aboitiz</strong><br />
CHAIRMAN<br />
Consolidated<br />
revenues of<br />
<strong>Aboitiz</strong> <strong>Power</strong><br />
<strong>Corporation</strong> of<br />
11.3 billion<br />
increased by 30%<br />
from the<br />
previous year,<br />
a growth spurred<br />
by the robust<br />
performance<br />
of both our<br />
generation and<br />
distribution<br />
businesses.<br />
Dear Shareholders,<br />
We are very pleased to report that your company performed<br />
exceptionally well in <strong>2007</strong>, exceeding expectations of the<br />
investment community.<br />
Consolidated revenues of <strong>Aboitiz</strong> <strong>Power</strong> <strong>Corporation</strong> (AP) of 11.3<br />
billion increased by 30% from the previous year, a growth spurred<br />
by the robust performance of both our generation and distribution<br />
businesses. Your company ended <strong>2007</strong> with a net income of 4.1<br />
billion, a 124% year-on-year bottomline growth.<br />
<strong>Power</strong> Generation<br />
Driven by its successful bidding for government assets and the active<br />
acquisition of other projects, AP ended the year with investments<br />
in 1,035 megawatts (MW) of generating assets. Accounting for its<br />
proportionate ownership, the company increased its attributable<br />
President Gloria<br />
Macapagal-Arroyo rings<br />
the bell to officially start<br />
the trading of AP shares<br />
at the Philippine Stock<br />
Exchange.<br />
generating capacity by 200%, ending the year with 490 MW compared<br />
to 164 MW at the end of 2006. Consequently, power sales of 1,018<br />
gigawatt hours (GwH) in <strong>2007</strong> grew by 176% year-on-year.<br />
As a result, the power generation business for the first time accounted<br />
for a larger share of the company’s earnings contributing 63% of AP’s<br />
net income for <strong>2007</strong>, equivalent to 2.6 billion, up by 213% from the<br />
previous year.<br />
We are also pleased to report that the debut year for the Magat hydro<br />
plant and our involvement in the Wholesale Electricity Spot Market<br />
(WESM) resulted in very encouraging results. Following our strategy<br />
of concentrating the generation of power during peak hours resulted<br />
in our attaining premium prices for our power resulting to an average<br />
price of 5.28 per kilowatt-hour (kwh) for sales to the WESM for the<br />
eight months of operations in <strong>2007</strong>.<br />
• ABOITIZ POWER CORPORATION <strong>ANNUAL</strong> <strong>REPORT</strong> <strong>2007</strong>
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