Lopez Holdings


 First Gen 1H09 net income at US.3 million

First Gen Corporation (First Gen) reported net income attributable to parent of US.3 million in the first half of 2009, marginally lower than the US.7 million net income in the same period of 2008.

First Gen's higher interest expenses incurred mainly from the refinancing of First Gas Power Corporation -- the company that owns and operates the 1,000MW Santa Rita natural gas-fired power plant, lower net income from geothermal steam and power provider Energy Development Corporation (EDC), and derivative losses from its convertible bond, were fully offset by lower administrative expenses, favorable foreign exchange movements, and deferred income tax benefits from the depreciation of the Philippine Peso against the U.S. dollar.

First Gen's consolidated net income of US.4 million, however, was 17.7% lower than the previous year's US.4 million, primarily due to lower income from EDC given the effect of incremental costs on the company's steam augmentation projects that were implemented in Unified Leyte.

In May 2009, Prime Terracota Holdings Corp. (Prime Terracota) issued Class B preferred shares to Lopez Inc. Retirement Fund and Quialex Realty Corporation, With the preferred share issuance, First Gen's voting interest in Prime Terracota was reduced to 45% resulting in the deconsolidation of Prime Terracota and its subsidiaries, which include Red Vulcan Holdings Corporation (Red Vulcan). Red Vulcan is the entity that holds a 60% voting and 40% economic stake in EDC. The deconsolidation now allows First Gen's 40% economic interest in EDC to be accurately reflected in its financial statements.

As a result of the deconsolidation of EDC's numbers from the Company's Financials, the consolidated financial statements present a more precise picture of First Gen's financial position. Though First Gen's consolidated revenues in the first semester of 2009 declined by 16.1% to US0.7 million from the same period last year of US2.8 million, the decrease was mainly attributable to the lower fuel charges resulting from lower natural gas prices during the period. Operating costs and expenses were consistently lower with the decline in fuel expenses. First Gen's operating income also remained virtually unchanged.

"The financials now correctly reflect our ownership in each of the generating companies. Though EDC's income is lower than last year's, we fully expect the capital expenditures that we are pouring into the company to pay off in the coming years. Moreover, the Company is already beginning to reap the benefits of the economy's improving fundamentals, the group's hedging strategy, and the fruits of our refinancing efforts. Despite the difficult environment, First Gen has succesfully achieved the normalization of its financials," First Gen Chief Finance Officer Giles Puno said.

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Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

  • Trunkline: (632) 8878 0000
  • Fax: (632) 8878 0000 ext 2009
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