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Financial Capital
Performance

First Gen’s financial capital is crucial for the Company’s operations and investments in the power sector. It plays a key role in enabling the Company to pursue its growth and expansion strategies by providing access to funding and capital markets, managing financial risks, and optimizing its capital structure.


Financial Capital Management

Financial capital consists of operational funds that are managed to achieve the best possible economic and social outcomes that can increase stakeholder value. We prioritize stakeholder interests and ensure the efficient use of resources.

We utilize financial models to determine the cash and income generated by our subsidiaries and the Company as a whole, and to evaluate potential returns on new projects against the Company’s hurdle rates. The company negotiates with lenders to secure debt with favorable terms tailored to our needs, while meeting leverage ratios and debt service coverage ratios to ensure our ability to meet debt obligations.

We are committed to maximizing shareholder value by optimizing the use of our financial capital. We pay dividends while also strategically allocating cash for debt payments and growth projects that can sustainably increase company value.

Investor Relations

At First Gen, maintaining investor trust and transparency is a top priority. The Investor Relations team is responsible for communicating the Company’s message, strategy, and objectives to all financial stakeholders, while also ensuring timely updates and providing a platform for concerns. Building trust and aligning ESG initiatives with stakeholders’ goals are also key objectives.

The team holds meetings with existing and potential shareholders regularly and responds to inquiries promptly. It also issues press releases, announcements, and public disclosures to keep stakeholders informed. Feedback from stakeholders is reported to Senior Management.

Financial Highlights & Capital Usage

At First Gen, maintaining investor trust and transparency is a top priority. The Investor Relations team is responsible for communicating the Company’s message, strategy, and objectives to all financial stakeholders, while also ensuring timely updates and providing a platform for concerns. Building trust and aligning ESG initiatives with stakeholders’ goals are also key objectives.

The team holds meetings with existing and potential shareholders regularly and responds to inquiries promptly. It also issues press releases, announcements, and public disclosures to keep stakeholders informed. Feedback from stakeholders is reported to Senior Management.

Financial Capital Distribution (in USD Millions)

In 2022, 94% of First Gen’s total generated economic value was invested into the economy in the form of operating costs, employee wages and benefits, payments to providers of capital, payments to the Government, and investments in the community by implementing health, education, livelihood, environment, emergency response and relief, and socio-cultural programs.

First Gen increased its investments in natural capital, manufactured capital, human capital and social and relationship capital in 2022.

We directed investment efforts towards natural capital, which represents 76.1% of operational expenses and investments, to secure power supply in the grid. This was accomplished through land procurement and upkeep, obtaining permits, complying with environmental regulations, implementing corporate social responsibility (CSR) projects and initiatives, enhancing resource efficiency, and implementing water and waste management practices.

In addition, we invested 16.8% of operational costs and investments in manufactured capital. This was used for constructing the LNG Interim Offshore Terminal (IOT) Project to address the depletion of the Malampaya gas field, building the Palayan Bayan, Mindanao 3, and Tanawon geothermal plants, procuring and installing new equipment, operating and maintaining power plants, improving buildings towards resiliency, and enhancing shelter-in-place programs. EDC inaugurated the 3.6-MW Mindanao 3 binary plant on April 27, 2022, while the LNG IOT is set to be completed in 2023 to ensure grid security.

First Gen prioritizes its employees, allocating 5.8% of total operational costs and investments for their welfare. The company provides occupational health and safety training, medical and psychosocial programs, and invested in the procurement of COVID-19 vaccines in 2021. Additionally, the company invests in the growth of its employees by providing skills development, training programs, and subscriptions to learning platforms like Udemy.

First Gen also invests 0.9% of its total operational costs and investments in social and relationship capital to strengthen its relationships with local communities and other stakeholders. The company adheres to community and LGU regulations, conducts CSR activities, donates to social causes, networks with associations, sponsors events, and pays membership fees.

Lastly, the remaining 0.4% is invested in intellectual capital, which includes IT software and tools, branding and marketing, cybersecurity measures, research and studies, and securing ISO certifications.

Financial Outcomes

In 2022, First Gen reported a Recurring Net Income Attributable to Equity Holders of the Parent of USD 265.4 million, USD 13.0 million or 5.2% higher than the previous year. This was primarily driven by the geothermal platform’s increased revenues from higher average selling prices and higher generation volumes. Consolidated revenues also increased by 23.1% to USD 2.7 billion in 2022 due to increased sales volumes from the natural gas platform resulting from higher electricity production. However, a lower revenue contribution from Burgos Wind partially offset the growth.


Hydro

Pantabangan-Masiway’s revenues decreased by 17.7% or PHP 0.9 billion to PHP 4.1 billion in 2022, compared to PHP 4.9 billion in 2021. This decline is attributed to reduced revenues from power supply agreements. In particular, FG Hydro transferred its contract with Meralco to EDC in August 2022 as part of a previous arrangement. There were also decreased revenues from WESM and ancillary services caused by a decline in generation resulting from low reservoir elevation. This decline in revenues was partially offset by less purchases of replacement power from the WESM, due to lower volumes required by the contract with Meralco. This resulted in a higher operating income of PHP 356.1 million in 2022, a 19.9% increase from the same period last year.

FG Bukidnon’s revenues decreased by 16.3% to PHP 42.6 million in 2022 from PHP 50.9 million in 2021. This is due to lower dispatch at 10.6 MWh in 2022, compared to 12.2 MWh in 2021, resulting from lower actual water inflow. The decline in revenues from FG Bukidnon resulted in a higher net loss.


Geothermal

In 2022, the geothermal platform recorded a substantial increase in revenue amounting to PHP 42.7 billion, a growth of 24.9% from the previous year’s PHP 34.2 billion. This growth can be attributed to higher total volume sales, which increased from 7,726 GWh in 2021 to 7,845 GWh in 2022, as well as higher average selling prices to both the WESM and for its power supply contracts. This was partly offset by a decrease in revenue contribution from Mt. Apo due to the expiration of its Power Purchase Agreement (PPA) with NPC in February 2022, resulting in the plant’s lower contracted capacity. Nevertheless, the higher availability of plants and an increase in average sales price led to a positive growth in both operating and net income.


Natural Gas

The natural gas platform reported a decrease in net income by 8.7% or USD 17.3 million from USD 199.3 million in 2021 to USD 182.0million in 2022, despite an increase in operating income. This was due to Avion’s lower income contribution resulting from higher fuel cost driven by higher average fuel prices, as well as higher interest expenses from the Php 2.8 billion loan it availed in December 2021. However, San Gabriel’s net income increased due to better net dependable capacity and fewer forced outages in 2022.


Wind & Solar

Burgos Wind’s net income declined by 68.3%, or PHP 1.2 billion from PHP 1.8 billion in 2021 to PHP 0.6 billion in 2022, due to a weaker wind regime, lower FiT rates in 2022, as well as a higher current income tax provision resulting from the expiry of its income tax holiday in November 2021. Meanwhile, Burgos Solar’s net income decreased by 13.6%, or PHP 6.9 million from PHP 50.9 million in 2021 to PHP 44.0 million in 2022, due to lower generation sales and lower FiT rates in 2022.

EDC Siklab’s net income increased by 5.6% or PHP0.4 million from PHP7.1 million in 2021 to PHP7.5 million in 2022. This increase was attributed to the higher volume of generated sales.


To know more how First Gen’s Financial Capital is contributing to the effort to forge collaborative pathways for a decarbonized and regenerative future, please see our Strategic Positioning section.