....

SMC GLOBAL POWER HOLDINGS CORP.
(incorporated with limited liability in the Republic of the Philippines)
U.S.$300,000,000 Undated Subordinated Capital Securities

Issue Price: 100%
The U.S.$300,000,000 undated subordinated capital securities (the Securities) are issued by SMC Global Power Holdings Corp. (SMC
Global Power, the Issuer or the Company). The Securities confer a right to receive distributions (each, a Distribution) at the
applicable rate described below for the period from and including August 26, 2015 or from and including the most recent Distribution
Payment Date (as defined below) to, but excluding, the next Distribution Payment Date or any redemption date. Subject to Condition 4.5
(Optional Deferral of Distributions), Distributions are payable semi-annually in arrear on the Distribution Payment Dates in each year.
Distribution Payment Dates are defined as August 26 and February 26 of each year, commencing on February 26, 2016. Unless
previously redeemed in accordance with the Terms and Conditions of the Securities and subject to Condition 4.4 (Increase in Rate of
Distribution), Distributions (i) from and including August 26, 2015 to, but excluding, February 26, 2021 (the Step Up Date) shall accrue
on the outstanding principal amount of the Securities at 6.750% per annum (the Initial Rate of Distribution) and (ii) from and including
each Reset Date (as defined below) (including the Step Up Date) to, but excluding, the immediately following Reset Date, shall accrue on the
outstanding principal amount of the Securities at the relevant Reset Rate of Distribution (as defined below).
The Issuer may, in its sole and absolute discretion, on any day which is not less than five Business Days (as defined below) prior to any
Distribution Payment Date, resolve to defer payment of any or all of the Distribution which would otherwise be payable on that Distribution
Payment Date unless, during the six months ending on that scheduled Distribution Payment Date (i) a discretionary dividend, distribution,
interest or other payment has been paid or declared on or in respect of any Junior Securities or (except on a pro rata basis) Parity Securities
(each as defined below) of the Issuer, other than a dividend, distribution or other payment in respect of an employee benefit plan or similar
arrangement with or for the benefit of employees, officers, directors and consultants of the Issuer or (ii) at the discretion of the Issuer, any
Junior Securities or (except on a pro rata basis) Parity Securities have been redeemed, repurchased or otherwise acquired by the Issuer or any
of its subsidiaries, other than a redemption, repurchase or other acquisition in respect of an employee benefit plan or similar arrangement with
or for the benefit of employees, officers, directors and consultants of the Issuer. Any such deferred Distribution will constitute Arrears of
Distribution and will not be due and payable until the relevant Payment Reference Date (as defined below). Distributions will accrue on
each Arrears of Distribution for so long as such Arrears of Distribution remains outstanding at the same Rate of Distribution (as defined
below) as the principal amount of the Securities bears at such time and will be added to such Arrears of Distribution (and thereafter bear
Distributions accordingly) on each Distribution Payment Date.
The Securities are undated securities in respect of which there is no fixed redemption date. Subject to applicable law, the Issuer may redeem
the Securities (in whole but not in part) on the Step Up Date or any subsequent Distribution Payment Date at the Redemption Price (as defined
below), on the giving of not less than 30 and not more than 60 calendar days irrevocable notice of redemption to the Securityholders in
accordance with Condition 12.1 (Notices to Securityholders). The Securities may also be redeemed (in whole but not in part) at the option of
the Issuer at the Redemption Price upon the occurrence of certain changes in Philippine tax law requiring the payment of Additional Amounts
(as defined below). In addition, the Securities may be redeemed (in whole but not in part) at the option of the Issuer (A) upon the occurrence
of a Change of Control Event (as defined below) (i) at any time prior to (but excluding) the Step Up Date at the Special Redemption Price (as
defined below) or (ii) on or at any time after the Step Up Date at the Redemption Price, (B) upon the occurrence and continuation of a
Reference Indebtedness Default Event (as defined below) at any time at the Redemption Price, (C) upon the occurrence and continuation of an
Accounting Event (as defined below) (i) at any time prior to (but excluding) the Step Up Date at the Special Redemption Price or (ii) on or at
any time after the Step Up Date at the Redemption Price or (D) in the event less than 25% of the aggregate principal amount of the Securities
originally issued remain outstanding (i) at any time prior to (but excluding) the Step Up Date at the Special Redemption Price or (ii) on or at
any time after the Step Up Date at the Redemption Price, in each case on the giving of not less than 30 and not more than 60 calendar days
irrevocable notice of redemption to the Securityholders in accordance with Condition 12.1 (Notices to Securityholders).
Investing in the Securities involves certain risks. See Risk Factors beginning on page 17.
The Securities are being offered only outside the United States in offshore transactions in compliance with Regulation S under the Securities
Act. The Securities have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction. Unless
they are so registered, the Securities may be offered only in transactions that are exempt from or not subject to registration under the
Securities Act or the securities laws of any other jurisdiction. For further details, see Subscription and Sale.
Approval-in-principle has been obtained from the Singapore Exchange Securities Trading Limited (the SGX-ST) for the listing and
quotation of the Securities on the Official List of the SGX-ST.
The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions or reports contained in this Offering
Circular. Admission of the Securities to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Securities or
SMC Global Power or its subsidiaries. Investors are advised to read and understand the contents of this Offering Circular before investing. If
in doubt, investors should consult their advisers.
The Securities will be evidenced by a global certificate (the Global Certificate) in registered form, which will be registered in the name of
a nominee of, and deposited with a common depositary for, Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, socit
anonyme (Clearstream, Luxembourg). Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be
effected only through, records maintained by Euroclear and Clearstream, Luxembourg and their respective accountholders. Except in the
limited circumstances set out herein, definitive certificates for Securities will not be issued in exchange for beneficial interests in the Global
Certificate. See The Global Certificate. It is expected that delivery of the Global Certificate will be made on or about August 26, 2015.
Joint Lead Managers and Joint Bookrunners

ANZ
BofA Merrill Lynch
DBS Bank Ltd.
Deutsche Bank
HSBC
Co-Manager
China Banking Corporation
Offering Circular dated August 19, 2015.
ING
Mizuho Securities
UBS
TABLE OF CONTENTS
Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
TERMS AND CONDITIONS OF THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
THE GLOBAL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54
EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
CAPITALIZATION OF SMC GLOBAL POWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
SELECTED FINANCIAL INFORMATION AND OTHER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS . . . . . . . . . . . . .
63
INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79
REGULATION AND ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
PRINCIPAL SHAREHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
CLEARANCE AND SETTLEMENT OF THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139
GLOSSARY OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-1
In this Offering Circular, SMC Global Power, the Issuer and the Company refer to SMC Global Power
Holdings Corp. and, as the context requires, its consolidated subsidiaries. However, for the avoidance of doubt,
please note that the Issuer does not have any direct rights or obligations under the provisions of the IPPA
Agreements for the administration of the Sual, Ilijan and San Roque Power Plants which were executed by such
consolidated subsidiaries. References to the administration by, or ownership of, the Issuer of any power plant in
any section of this Offering Circular should be understood to refer to the administration or ownership of the
consolidated subsidiaries of the Issuer. The term Joint Lead Managers refers to Australia and New Zealand
Banking Group Limited, DBS Bank Ltd., Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai
Banking Corporation Limited, ING Bank N.V., Singapore Branch, Merrill Lynch (Singapore) Pte. Ltd., Mizuho
Securities Asia Limited and UBS AG, Hong Kong Branch.
Prospective investors should rely only on the information contained in this Offering Circular. The Issuer and the
Joint Lead Managers have not authorized anyone to provide prospective investors with information that is
different. The information in this document may only be accurate on the date of this Offering Circular. Nothing
in this Offering Circular should be relied upon as a promise or representation as to future results or events, and
neither the delivery of this Offering Circular nor any offering or sale of the Securities shall under any
circumstances imply that there has been no change in the affairs of the Issuer or that the information herein is
correct as of any date subsequent to the date hereof.
This Offering Circular is being furnished by the Issuer in connection with an offering exempt from the
registration requirements under the Securities Act solely for the purpose of enabling a prospective investor to
consider whether to purchase the Securities. The information contained herein has been provided by the Issuer
and other sources identified herein. None of the Joint Lead Managers, the Trustee (as defined below) or the
Agents (as defined below) has independently verified the information contained herein. No representation or
warranty, express or implied, is made by the Joint Lead Managers, the Trustee or the Agents as to the accuracy or
completeness of such information, and nothing contained herein is, or may be relied upon as, a promise or
representation by the Joint Lead Managers, the Trustee or the Agents as to the past or the future. To the fullest
extent permitted by law, none of the Joint Lead Managers, the Trustee or the Agents accepts any liability in
relation to the information contained in this Offering Circular or any other information provided by the Issuer, or
for any other statement made or purported to be made by the Joint Lead Managers, the Trustee or the Agents or
on any of their behalf in connection with the Issuer or in connection with the offering of the Securities. The Joint
Lead Managers, the Trustee and the Agents accordingly disclaim all and any liability whether arising in tort or
contract or otherwise that any of them might otherwise have in respect of this Offering Circular or any such
statement.
References to U.S.$ and U.S. dollars in this Offering Circular are to United States dollars, the lawful
currency of the United States of America, references to P, Philippine Peso and Peso are to the lawful
currency of the Philippines. The Issuer publishes its financial statements in Philippine Pesos. This Offering
Circular contains translations of certain Philippine Peso amounts into U.S. dollar amounts at specified rates
solely for the convenience of the reader. These translations should not be construed as representations that the
Philippine Peso amounts represent such U.S. dollar amounts or could be, or could have been, converted into
U.S. dollars at the rates indicated or at all. Unless otherwise indicated, all translations from Philippine Pesos to
U.S. dollars have been made at a rate of P45.09 = U.S.$1.00, being the closing rate on June 30, 2015 for the
purchase of U.S. dollars with Philippine Pesos under the Philippine Dealing System (PDS). On
August 11, 2015, the closing spot rate quoted on the PDS was P45.93. See Exchange Rates for further
information regarding the rates of exchange between the Philippine Peso and the U.S. dollar.
All references in this Offering Circular to the Philippines are to the Republic of the Philippines. Certain
acronyms, technical terms and other abbreviations used are defined in the Glossary of Terms of this Offering
Circular. The financial information included in this Offering Circular has been derived from the consolidated
financial statements of SMC Global Power and its subsidiaries. Unless otherwise indicated, the description of the
business activities of the Issuer in this Offering Circular is presented on a consolidated basis.
All discrepancies in the tables included herein between the amounts listed and the totals thereof are due to
rounding.
The distribution of this Offering Circular and the offering and sale of the Securities in certain jurisdictions may
be restricted by law. Persons into whose possession this Offering Circular comes must inform themselves about
ii
and observe any such restrictions. There are restrictions on the distribution of this Offering Circular and the offer
and sale of the Securities in certain jurisdictions, including the United States, the United Kingdom, Singapore,
Hong Kong, Japan, the European Economic Area and the Philippines. This Offering Circular does not constitute,
and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in any
circumstance in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make
such offer or solicitation.
Each person investing in the Securities shall be deemed to acknowledge that:
it has been afforded an opportunity to request from the Issuer and to review, and has received, all additional
information considered by such person to be necessary to verify the accuracy of, or to supplement, the
information contained herein;
it has had the opportunity to review all of the documents described herein;
it has not relied on the Joint Lead Managers, the Trustee, the Agents or any person affiliated with the Joint
Lead Managers, the Trustee or the Agents in connection with its investigation of the accuracy of the
information contained in the Offering Circular or its investment decision; and
no person has been authorized to give any information or to make any representation concerning the
Securities other than those contained in this Offering Circular and, if given or made, such other information
or representation should not be relied upon as having been authorized by the Issuer, the Joint Lead
Managers, the Trustee or the Agents.
Prospective investors should not construe the contents of this Offering Circular as investment, legal or tax advice
and should consult with their own counsel, accountant and other advisors as to legal, tax, business, financial and
related aspects of receiving the Securities.
In making an investment decision, prospective investors must rely on their own examination of the Issuer and the
terms of the Securities, including, without limitation, the merits and risks involved. None of the Issuer, the Joint
Lead Managers, the Trustee or the Agents is making any representation to any prospective investor regarding the
legality of an investment in the Securities by such investor under any legal investment or similar laws or
regulations. The offering of the Securities is being made on the basis of this Offering Circular. Any decision to
invest in the Securities must be based on the information contained in this Offering Circular. Each purchaser of
the Securities must comply with all applicable laws and regulations in force in each jurisdiction in which it
purchases, offers or sells such Securities or possesses or distributes this Offering Circular and must obtain any
consent, approval or permission required by it for the purchase, offer or sale by it of such Securities under the
laws and regulations in force in any jurisdictions to which it is subject or in which it makes such purchases,
offers or sales, and none of the Issuer, the Joint Lead Managers, the Trustee or the Agents shall have any
responsibility therefor.
Each person receiving this Offering Circular is advised to read and understand the contents of this Offering
Circular before investing in the Securities. If in doubt, such person should consult his or her advisors. This
Offering Circular has been prepared on the basis that all offers of the Securities will be made pursuant to an
exemption under the Prospectus Directive (as defined below), as implemented in the member states of the
European Economic Area, from the requirement to produce a prospectus for offers of the Securities.
Accordingly, any person making or intending to make any offer within the European Economic Area of the
Securities which are the subject of the placement contemplated in this Offering Circular should only do so in
circumstances in which no obligation arises for the Issuer or any of the Joint Lead Managers to produce a
prospectus for the offer. Neither the Issuer nor the Joint Lead Managers have authorized, nor do they authorize
the making of any offer of the Securities through any financial intermediary, other than offers made by the Joint
Lead Managers which constitute the final placement of the Securities contemplated in this Offering Circular.
Each person in a Member State of the European Economic Area which has implemented the Prospectus
Directive (each a Relevant Member State) who receives any communication in respect of, or who acquires
iii
any Securities under, the offers contemplated in this Offering Circular will be deemed to have represented,
warranted and agreed to and with each of the Joint Lead Managers and the Issuer that:
it is a qualified investor within the meaning of the law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive; and
in the case of any Securities acquired by it as a financial intermediary, as the term is used in Article 3(2) of
the Prospectus Directive: (i) the Securities acquired by it in the offer have not been acquired on behalf of,
nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State
other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in
which the prior consent of the Joint Lead Managers has been given to the offer or resale; or (ii) where the
Securities have been acquired by it on behalf of persons in any Relevant Member State other than qualified
investors, the offer of those Securities to it is not treated under the Prospectus Directive as having been
made to such persons.
For the purposes of this representation, the expression Prospectus Directive means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant
Member State) and includes any relevant implementing measure in the Relevant Member State, and the
expression 2010 PD Amending Directive means Directive 2010/73/EU.
This Offering Circular is only being distributed to and is only directed at (i) persons who are outside the
United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth companies, and other
persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such
persons together being referred to as relevant persons). The Securities are only available to, and any
invitation, offer or agreement to subscribe, purchase or otherwise acquire such Securities will be engaged in only
with, relevant persons. Any person who is not a relevant person should not act or rely on this Offering Circular or
any of its contents.
The Issuer reserves the right to withdraw this offering of the Securities at any time. The Issuer and the Joint Lead
Managers also reserve the right to reject any offer to purchase the Securities in whole or in part for any reason
and to allocate to any prospective investor less than the full amount of Securities sought by such investor. This
Offering Circular does not constitute an offer to sell, or a solicitation of an offer to buy, any securities offered
hereby in any circumstances in which such offer is unlawful.
The Securities have not been approved or disapproved by the U.S. Securities and Exchange Commission, any
state securities commission in the United States or any other United States, Philippine or other regulatory
authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the
Securities or the accuracy or adequacy of this Offering Circular. Any representation to the contrary is a criminal
offense in the United States.
The Securities are subject to restrictions on transferability and resale and may not be transferred or resold except
as permitted under the Securities Act and other applicable state, Philippine or other securities laws pursuant to
registration thereunder or exemption therefrom. See Subscription and Sale. Prospective investors should thus
be aware that they may be required to bear the financial risks of this investment for an indefinite period of time.
FORWARD-LOOKING STATEMENTS
This Offering Circular contains forward-looking statements that are, by their nature, subject to significant risks
and uncertainties. These forward-looking statements include, without limitation, statements relating to:
known and unknown risks;
uncertainties and other factors that may cause the actual results, performance or achievements of SMC
Global Power to be materially different from any future results; and
performance or achievements expressed or implied by forward-looking statements.
iv
Such forward-looking statements are based on numerous assumptions regarding the present and future business
strategies of SMC Global Power and the environment in which SMC Global Power will operate in the future.
Important factors that may cause some or all of the assumptions not to occur or cause actual results, performance
or achievements to differ materially from those in the forward-looking statements include, among other things:
the ability of SMC Global Power to successfully implement its strategies;
the ability of SMC Global Power to anticipate and respond to market trends;
changes in availability and prices of fuel used in the power plants of SMC Global Power;
unexpected shutdowns of the power plants of which SMC Global Power acts as the Independent Power
Producer Administrator (IPPA) for the Sual, Ilijan and San Roque Power Plants and as owner for the
Limay Cogeneration Plant, Davao and Limay Greenfield Power Plants and the Angat Hydroelectric Power
Plant (the AHEPP);
adverse weather patterns and natural disasters;
the ability of SMC Global Power to successfully manage its growth;
the ability of SMC Global Power to successfully implement and manage its power portfolio;
the condition of and changes in, the Philippine, Asian or global economies;
any political instability in the Philippines;
the ability of SMC Global Power to secure additional financing;
changes in interest rates, inflation rates and the value of the Peso against the U.S. dollar and other
currencies;
price volatility in the wholesale energy spot market;
changes in laws, rules and regulations, including tax laws and licensing requirements, in the Philippines;
changes in power supply and demand dynamics in the Philippines; and
competition in the Philippine power industry.
Additional factors that could cause the actual results, performance or achievements of SMC Global Power to
differ materially from forward-looking statements include, but are not limited to, those disclosed under Risk
Factors and elsewhere in this Offering Circular. These forward-looking statements speak only as of the date of
this Offering Circular. SMC Global Power, the Joint Lead Managers, the Joint Bookrunners, the Trustee and the
Agents expressly disclaim any obligation or undertaking to release, publicly or otherwise, any updates or
revisions to any forward-looking statement contained herein to reflect events or circumstances, or to reflect any
change in the expectations of SMC Global Power with regard thereto or any change in events, conditions,
assumptions or circumstances on which any statement is based or to reflect that SMC Global Power became
aware of any such events or circumstances, that occur after the date of this Offering Circular. The Issuer, the
Joint Lead Managers, the Trustee and the Agents assume no obligation to update any of the forward-looking
statements after the date of this Offering Circular to conform those statements to actual results, subject to
compliance with all applicable laws.
This Offering Circular includes statements regarding the expectations and projections of the Company for future
operating performance and business prospects. The words believe, plan, expect, anticipate, estimate,
project, intend, will, shall, should, may, would and similar words identify forward-looking
statements. In addition, all statements other than statements of historical facts included in this Offering Circular
are forward-looking statements. Statements in the Offering Circular as to the opinions, beliefs and intentions of
SMC Global Power accurately reflect in all material respects the opinions, beliefs and intentions of its
management as to such matters as of the date of this Offering Circular, although SMC Global Power gives no
assurance that such opinions or beliefs will prove to be correct or that such intentions will not change. This
Offering Circular discloses, under the section Risk Factors and elsewhere, important factors that could cause
actual results to differ materially from expectations of the Company. All subsequent written and oral forwardlooking statements attributable to SMC Global Power or persons acting on behalf of SMC Global Power are
expressly qualified in their entirety by the above cautionary statements.
Should one or more of such risks and uncertainties materialize, or should any underlying assumptions prove
incorrect, actual outcomes may vary materially from those indicated in the applicable forward-looking
statements. Any forward-looking statement or information contained in this Offering Circular speaks only as of
the date the statement was made.
All of the forward-looking statements of SMC Global Power made herein and elsewhere are qualified in their
entirety by the risk factors discussed in Risk Factors and Industry Overview. These risk factors and
statements describe circumstances that could cause actual results to differ materially from those contained in any
forward-looking statement in this Offering Circular.
INDUSTRY AND MARKET DATA
Market data and certain industry forecasts used throughout this Offering Circular were obtained from internal
surveys, market research, publicly available information and industry publications. Industry publications
generally state that the information they contain has been obtained from sources believed to be reliable but that
the accuracy and completeness of that information are not guaranteed. Similarly, internal surveys, industry
forecasts and market research, while believed to be reliable, have not been independently verified, and none of
the Issuer, the Joint Lead Managers, the Trustee nor the Agents makes any representation as to the accuracy or
completeness of that information.
Information relating to the Aboitiz Group, Aboitiz Power, Business Monitor, Calaca High Power Corporation,
Department of Energy (DOE), Economist Intelligence Unit, Energy Development Corporation (EDC),
Energy Regulatory Commission (ERC), First Gen Corporation (First Gen), Lopez Group, Manila Electric
Company (Meralco), Monte Oro Grid Resources, National Grid Corporation of the Philippines (NGCP),
National Power Corporation (NPC), Philippine National and Statistical Coordination Board (NSCB),
Philippine Electricity Market Corporation (PEMC), Power Sector Assets and Liabilities Management
Corporation (PSALM), the State Grid Corporation of China, National Transmission Corporation (TransCo),
Visayan Electric Company and Wholesale Electricity Spot Market (WESM) set forth in this Offering Circular
was obtained from publicly available sources that are believed to be reliable but such information has not been
independently verified. Neither the Issuer nor the Joint Lead Managers makes any representation as to the
accuracy of such information regarding the Aboitiz Group, Aboitiz Power, Business Monitor, Calaca High Power
Corporation, DOE, Economist Intelligence Unit, EDC, ERC, First Gen, Lopez Group, Meralco, Monte Oro Grid
Resources, NGCP, NPC, NSCB, PEMC, PSALM, the State Grid Corporation of China, TransCo, Visayan
Electric Company or WESM.
STANDARDS FOR OPERATING STATISTICS
The power plant operating statistics included in this Offering Circular are based on the power plant operating
data that have been provided by the independent power producer of the relevant power plant and grid system
operators. SMC Global Power believes these have been measured in accordance with internationally recognized
power plant operation standards set by the American Society of Mechanical Engineers, Power Test Code,
Institute of Electrical and Electronics Engineering, Energy Power Research Institute or equivalent
internationally-accepted standards. SMC Global Power has not independently verified the power plant operating
data provided by the independent power producers and grid system operators.
vi
PRESENTATION OF FINANCIAL INFORMATION

The consolidated financial statements of SMC Global Power are reported in Pesos and are prepared based on its
accounting policies, which are in accordance with the Philippine Financial Reporting Standards (PFRS) issued
by the Financial Reporting Standards Council of the Philippines (FRSC). PFRS include statements named
PFRS and Philippine Accounting Standards, and Philippine Interpretations from International Financial
Reporting Interpretations Committee.
Unless otherwise stated, all financial information relating to SMC Global Power contained herein is stated in
accordance with PFRS.
Figures in this Offering Circular have been subject to rounding adjustments. Accordingly, figures shown in the
same item of information may vary, and figures which are totals may not be an arithmetic aggregate of their
components.
NON-PFRS FINANCIAL MEASURES
This Offering Circular contains references to EBITDA. EBITDA is a supplemental measure of the performance
and liquidity of the Company that is not required by, or presented in accordance with, PFRS. Further, EBITDA is
not a measurement of the financial performance or liquidity of the Company under PFRS and should not be
considered as an alternative to net income, gross revenues or any other performance measure derived in
accordance with PFRS or as an alternative to cash flow from operations or as a measure of the liquidity of the
Company. The calculation of EBITDA by SMC Global Power may be different from the calculations used by
other companies, and, as a result, the EBITDA of SMC Global Power may not be comparable to other similarly
titled measures of other companies.
The Company believes that EBITDA facilitates operating performance comparisons from period to period and
from company to company by eliminating potential differences caused by variations in capital structures, tax
positions and the age and book depreciation of tangible assets. The Company presents EBITDA because it
believes it is frequently used by securities analysts and investors in the evaluation of companies in its industry.
ENFORCEABILITY OF CIVIL LIABILITIES
SMC Global Power is established in the Philippines and all of its assets are located in the Philippines.
Substantially all of its directors and senior management reside in the Philippines and all or a substantial portion
of their assets are located in the Philippines. The Company has been advised by its Philippine legal counsel,
Picazo Buyco Tan Fider & Santos, that a final and conclusive judgment on the merits rendered against the
Company and these persons by courts outside the Philippines obtained in an action predicated upon the civil
liability provisions of laws other than Philippine laws would be recognized and enforced by the courts in the
Philippines through an independent action filed to enforce such judgment, and without re-trial or re-examination
of the issues, provided the following conditions are satisfied, namely: (i) the court rendering such judgment had
jurisdiction in accordance with its jurisdictional rules, (ii) such persons had notice of the proceedings, (iii) such
judgment was not obtained by collusion or fraud or based on a clear mistake of law or fact and (iv) such
judgment was not contrary to public policy or good morals in the Philippines.
vii
SUMMARY
The following summary is qualified in its entirety by, and is subject to, the more detailed information and the
consolidated financial statements of SMC Global Power that appear elsewhere in this Offering Circular. The
meaning of terms not defined in this summary can be found elsewhere in this Offering Circular.
BUSINESS
SMC Global Power is one of the largest power companies in the Philippines, controlling 2,903 MW of combined
contracted capacity as of June 30, 2015 and which benefits from diversified fuel sources, including natural gas,
coal and hydroelectric. Based on ERC Resolution No. 03, Series of 2015, SMC Global Power had a 16.5%
market share of the power supply of the national grid, and a 22.2% market share of the Luzon grid, in each case
as of June 30, 2015. The principal activity of SMC Global Power is the sale of power generated by power plants
in the Philippines that are owned and operated by third-party independent power producers (IPPs), owned
through joint ventures with third parties or greenfield power plants. SMC Global Power entered the power
industry in 2009 following the acquisition of IPPA rights in privatization auctions conducted by the government
of the Philippines (Government). Under the IPPA business model, SMC Global Power gained the right to sell
electricity generated by the power plants owned and operated by the IPPs without having to, bear any of the large
upfront capital expenditures for power plant construction or maintenance. As an IPPA, SMC Global Power also
has the ability to manage both market and price risk by entering into bilateral contracts with offtakers while
capturing potential upside from the sale of excess capacity through the WESM.
SMC Global Power controls the 2,545 MW combined contracted capacity of the Sual, Ilijan and San Roque
Power Plants through the IPPA Agreements of its subsidiaries, San Miguel Energy Corporation (SMEC),
South Premiere Power Corp. (SPPC) and Strategic Power Devt. Corp. (SPDC), respectively. SMEC
acquired the IPPA rights for the Sual Power Plant in November 2009, SPDC for the San Roque Power Plant in
January 2010 and SPPC for the Ilijan Power Plant in June 2010. The Sual Power Plant is a coal-fired thermal
power plant, the San Roque Power Plant is a hydro-electric power plant, and the Ilijan Power Plant is a natural
gas-fired combined cycle power plant.
In September 2013, SMC Global Power acquired 100% of the 140 MW Limay Cogeneration Power Plant (the
Limay Cogeneration Plant) from Petron Corporation through SMC PowerGen, Inc. (SPI). In November
2014, SMC Global Power acquired a 60% stake in Angat Hydropower Corporation (AHC), the owner and
operator of the 218 MW Angat Hydroelectric Power Plant, through its subsidiary, PowerOne Ventures Energy
Inc. (PVEI). As at June 30, 2015, the capacity of SMC Global Power is 2,903 MW including the entire
capacity of the AHEPP.
SMC Global Power sells power through offtake agreements directly to customers, including Meralco and other
distribution utilities, electric cooperatives and industrial customers, or through the WESM. The majority of the
sales of SMC Global Power are through long-term take-or-pay offtake contracts which have provisions for
passing on fuel costs and certain other fixed costs.
In April 2013, SMC Global Power acquired a 35% equity stake in Olongapo Electricity Distribution Company,
Inc. (OEDC). In October 2013, SMC Global Power entered into a 25-year concession agreement with Albay
Electric Cooperative, Inc. (ALECO). It became effective upon the confirmation of the National Electrification
Administration of the Philippines (NEA) in November 2013. SMC Global Power organized and established a
fully-owned and controlled subsidiary, Albay Power and Energy Corp. (APEC), which assumed, as the
concessionaire, all the rights and interests and performs the obligations of SMC Global Power under the
concession agreement with ALECO.
During the years ended December 31, 2012, 2013 and 2014 and the six months ended June 30, 2014 and 2015,
respectively, SMC Global Power sold 14,487 GWh, 13,316 GWh, 14,891 GWh, 7,667 GWh and 7,216 GWh of
power pursuant to offtake agreements and 1,474 GWh, 2,847 GWh, 2,110 GWh, 1,123 GWh and 937 GWh of
power through the WESM. In contrast, during the years ended December 31, 2012, 2013 and 2014 and the six
months ended June 30, 2014 and 2015, respectively, SMC Global Power purchased 675 GWh, 517 GWh, 477
GWh, 229 GWh and 187 GWh of power from the WESM.
For the year ended December 31, 2014, the total revenue, net income and EBITDA of SMC Global Power were
P84.3 billion (U.S.$1.9 billion), P10.6 billion (U.S.$235.7 million) and P10.2 billion (U.S.$225.1 million),
respectively, and for the six months ended June 30, 2015, the total revenue, net income and EBITDA of
SMC Global Power were P40.5 billion (U.S.$897.2 billion), P3.9 billion (U.S.$87.4 million) and P3.9 billion
(U.S.$85.9 million), respectively, while as of December 31, 2014 and June 30, 2015, SMC Global Power had
total assets of P313.7 billion (U.S.$7.0 billion) and P319.4 billion (U.S.$7.1 billion), respectively.
The experience of SMC Global Power in acting as an IPPA and its ownership of the Limay Cogeneration Plant
and the AHEPP have enabled SMC Global Power to gain expertise in the Philippine power generation industry.
With this experience, SMC Global Power believes it has a strong platform to participate in the expected future
growth of the Philippine power market, through both the development of greenfield power projects and the
acquisition of existing power generation capacity. SMC Global Power initiated two greenfield power projects in
July 2013 and October 2013 with the construction of the 2 x 150 MW Davao coal-fired power plant (the Davao
Greenfield Power Plant) and the 2 x 150 MW Limay coal-fired power plant (the Limay Greenfield Power
Plant), respectively. SMC Global Power is considering the further expansion of its power portfolio of additional
capacity nationwide through greenfield power projects over the next few years, depending on market demand.
With the increased development of greenfield power projects from 2016 onwards, an increasing portion of the
portfolio of SMC Global Power is expected from Company-owned and -operated IPPs. In order to continue its
strategic acquisitions of existing power generation capacity, SMC Global Power intends to participate in the
bidding of selected NPC-owned power generation plants that are scheduled for privatization as asset sales or
under the IPPA framework. SMC Global Power also intends to pursue vertical integration of its power business
by expanding into businesses along the power sector value chain that complement its current power generation
operations. Such vertical integration would encompass both upstream vertical integration (integration of power
generation with fuel suppliers) and downstream vertical integration (integration of power generation with
distribution and supply operations). SMC Global Power also intends to pursue downstream vertical integration by
capitalizing on changes in the Philippine regulatory structure to expand its sales of power to a broader range of
customers, including retail customers. In August 2011, as part of the reorganization of the power-related assets of
San Miguel Corporation, SMC Global Power acquired from San Miguel Corporation a 100% equity interest in
San Miguel Electric Corp. (SMELC), which holds a retail electricity supplier license from the ERC. With open
access and retail competition already implemented, the retail electricity supplier license will allow SMC Global
Power to enter into retail supply contracts (RSCs) with customers with power requirements of at least 1 MW,
which will be lowered to 750 KW by June 2016. SMC Global Power also owns coal exploration, production and
development rights over approximately 17,000 hectares of land in Mindanao. SMC Global Power expects that
these assets will potentially serve as a source of coal fuel supply for its planned and contemplated greenfield
power projects.
SMC Global Power is a wholly-owned subsidiary of San Miguel Corporation and is the holding company for the
power businesses of San Miguel Corporation. San Miguel Corporation is a diversified conglomerate founded in
1890 that is listed on the Philippine Stock Exchange (the PSE) and has interests in the food, beverage,
packaging, fuel and oil, infrastructure, telecommunications, banking and property businesses. The relationship of
SMC Global Power with San Miguel Corporation allows it to draw on the extensive business networks, local
business knowledge, relationships and expertise of senior key executive officers of San Miguel Corporation.
STRENGTHS
SMC Global Power believes its competitive strengths are the following:
leading power company in the Philippines with a strong growth platform;
stable and predictable cash flows underpinned by long-term offtake agreements;
flexible and diversified power portfolio;
established relationships with world class partners;
strong parent company support;
experienced management, operating, trading and marketing teams; and
well-positioned to capitalize on the anticipated growth of the Philippine electricity market.
STRATEGIES
The principal business strategies of SMC Global Power are set out below:
optimize the generation capacity of its power portfolio;
grow its power portfolio through development and acquisition of power generation capacity;
vertically integrate complementary businesses; and
leverage operational synergies.
CORPORATE INFORMATION
SMC Global Power is incorporated under the laws of the Philippines. The registered office and principal place of
business of SMC Global Power is located at SMC Global Power Holdings Corp., 155 EDSA, Wack-Wack,
Mandaluyong City, Philippines. The telephone number of SMC Global Power is +63-2-702-4500.
The investor relations officer of SMC Global Power is Reyna-Beth De Guzman, who can be reached at
rdeguzman@smg.sanmiguel.com.ph.
SUMMARY FINANCIAL INFORMATION AND OTHER DATA

The summary historical consolidated statement of financial position data as of December 31, 2012,
December 31, 2013 and December 31, 2014 respectively and summary historical consolidated statement of
income and cash flow data for the year ended December 31, 2012, December 31, 2013 and December 31, 2014,
respectively set forth below, have been derived from, and should be read in conjunction with, the audited
consolidated financial statements of SMC Global Power, including the notes thereto, included elsewhere in this
Offering Circular. The summary historical consolidated statement of financial position data as of June 30, 2015
and summary historical consolidated statement of income and cash flow data for the six months ended June 30,
2014 and June 30, 2015, respectively set forth below, have been derived from, and should be read in conjunction
with, the unaudited condensed consolidated interim financial statements of SMC Global Power, including the
notes thereto, included elsewhere in this Offering Circular. The consolidated financial statements of SMC Global
Power as of and for the year ended December 31, 2012, 2013 and 2014 respectively, were audited by R.G.
Manabat & Co., formerly Manabat Sanagustin & Co., a member firm of KPMG (KPMG). The consolidated
financial statements of SMC Global Power as of and for the six months ended June 30, 2014 and June 30, 2015
were reviewed by KPMG.
Unless otherwise stated, SMC Global Power has presented its consolidated financial results under PFRS.
Potential investors should read the following data together with the more detailed information contained in
Managements Discussion and Analysis of Results of Operations and the consolidated financial statements
and related notes included elsewhere in this Offering Circular. The following data is qualified in its entirety by
reference to all of that information.
CONSOLIDATED STATEMENT OF INCOME DATA
For the years ended
December 31,
2013
2014
2012
(in millions of Q)
For the six months ended

June 30,
2014
2015
2015
2014
(in millions (in millions of Q) (in millions

of U.S.$)
of U.S.$)
Sale of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,656.2 74,043.8 84,293.6

Costs and Expenses
Cost of power sold:
Energy fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,149.8 31,269.3 30,775.9
Coal, fuel oil and other consumables . . . . . . . . . . . . . 13,057.0 11,179.3 11,945.3
Depreciation and amortization . . . . . . . . . . . . . . . . . . 5,186.4 5,382.4 6,143.9
Power purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,452.3 3,929.2 6,045.5
Plant operations and maintenance fees . . . . . . . . . . .
173.5
575.6
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,683.2 1,568.6 2,911.9
1,869.5 43,754.3 40,454.5
11,651.3
6,224.5
3,232.5
3,444.5
235.1
2,070.4
258.4
138.0
71.7
76.4
5.2
45.9
57,528.7 53,502.4 58,398.1
1,295.1 28,827.2 26,858.3
595.7
17,127.5 20,541.4 25,895.5
574.3 14,927.2 13,596.2
301.5
Gain on sale of investment . . . . . . . . . . . . . . . . . . . .

106.6 2,587.0
Equity in net earnings (losses) of associates

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,053.4
795.0
(22.3)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
880.6
447.8
550.0
Interest expense and other financing charges . . . . (12,726.5)(12,673.9)(13,168.5)
Other income (charges) net . . . . . . . . . . . . . . . . 9,206.8 (8,491.1)
68.2
682.5
264.9
136.3
134.1
12.8
64.6
15,603.6
6,580.4
2,985.9
2,493.7
280.0
883.4
897.2
(0.5)
(11.4) (94.0)
12.2
176.7
289.8
(292.0) (6,553.3) (6,542.4)
1.5 2,120.9 (1,265.1)
(2.1)
6.4
(145.1)
(28.1)
Income before income tax . . . . . . . . . . . . . . . . . . . . 15,648.3

Income tax expense (benefit) net . . . . . . . . . . . . 1,439.0
3,206.4 13,322.9
(836.3) 2,693.4
295.5 10,660.1 5,984.6

59.7 1,716.5 2,041.5
132.7
45.3
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,209.3
4,042.7 10,629.5
235.7 8,943.5 3,943.1
87.4
Basic/diluted earnings per share . . . . . . . . . . . . . . . . .
P11.37
P3.23
P8.50 U.S.$0.19
P7.15
P3.15 U.S.$0.07
CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA

As of December 31,
2013
2014
2012
(in millions of Q)
2014
As of June 30,
2015
2015
(in millions (in millions (in millions

of U.S.$)
of Q)
of U.S.$)
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . .
Trade and other receivables net . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . .
23,555.4
17,788.1
1,185.0
7,168.5
29,125.2
31,540.4
1,499.1
7,234.9
38,304.3
18,208.3
1,365.0
9,137.2
Total Current Assets . . . . . . . . . . . . . . . . . . .
49,697.0
69,399.6
67,014.9 1,486.2
849.5
403.8
30.3
202.6
30,596.4
20,183.0
1,156.6
11,442.3
678.6
447.6
25.7
253.8
63,378.3 1,405.6
Noncurrent Assets
Property, plant and equipment net . . . . . . . . 203,303.2 217,021.5 228,133.3 5,059.5 237,426.2 5,265.6
Investments and advances . . . . . . . . . . . . . . . . 13,421.0
6,011.8 10,612.3
235.4 11,405.3
252.9
Deferred exploration and development
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
325.2
526.0
671.8
14.9
680.9
15.1
Goodwill and other intangible assets . . . . . . . .
1,728.6
1,728.6
2,322.2
51.5
2,334.3
51.8
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . .
1,683.4
2,909.1
2,779.4
61.6
2,487.3
55.2
Other noncurrent assets net . . . . . . . . . . . . .
396.2
3,506.3
2,215.4
49.1
1,679.1
37.2
Total Noncurrent Assets . . . . . . . . . . . . . . . . 220,857.6 231,703.3 246,734.4 5,472.0 256,013.1 5,677.8
270,554.6 301,103.0 313,749.3 6,958.3 319,391.4 7,083.4
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses . . . . . 18,523.3 22,971.9 28,117.8
Finance lease liabilities current portion . . . . 15,436.7 15,630.4 16,205.2
Current maturities of long term debt net of
debt issue costs . . . . . . . . . . . . . . . . . . . . . . .
142.4
1,330.0
Income tax payable . . . . . . . . . . . . . . . . . . . . . .
218.5
151.4
Total Current Liabilities . . . . . . . . . . . . . . . .
33,959.9
38,963.3
623.6
359.4
28,313.7
16,216.7
627.9
359.7
29.5
3.4
15,024.7
492.3
333.2
10.9
45,804.4 1,015.8
60,047.4 1,331.7
Noncurrent Liabilities
Long-term debt net of current maturities
and debt issue costs . . . . . . . . . . . . . . . . . . . . 20,393.9 46,946.5 47,383.2 1,050.9 42,259.9
937.2
Finance lease liabilities net of current
portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,664.9 179,372.3 170,098.5 3,772.4 165,025.1 3,659.9
Deferred tax liabilities . . . . . . . . . . . . . . . . . . .
2,385.0
2,088.1
3,043.5
67.5
3,475.5
77.1
Other noncurrent liabilities net of current
portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
670.5
14.9
105.8
2.3
Total Noncurrent Liabilities . . . . . . . . . . . . . 202,443.8 228,406.8 221,195.7 4,905.6 210,866.3 4,676.6
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 236,403.7 267,370.1 267,000.1 5,921.5 270,913.7 6,008.3
Equity
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undated Subordinated Capital Securities . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . .
1,062.5
2,490.0
746.0
29,852.4
1,062.5
2,490.0
785.3
29,395.1
1,062.5
2,490.0
785.3
13,110.1
29,301.3
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,150.9
33,732.8
46,749.2 1,036.8
23.6
55.2
17.4
290.8
649.8
1,062.5
2,490.0
785.3
13,110.1
31,029.8
23.6
55.2
17.4
290.8
688.2
48,477.7 1,075.1
270,554.6 301,103.0 313,749.3 6,958.3 319,391.4 7,083.4
CONSOLIDATED STATEMENT OF CASH FLOWS DATA

For the years ended
December 31,
2013
2014
2012
Net cash flows provided by operating

activities . . . . . . . . . . . . . . . . . . . . .
Net cash flows provided by (used in)
investing activities . . . . . . . . . . . . . .
financing activities . . . . . . . . . . . . .
Effect of exchange rate changes on
cash and cash equivalents . . . . . . . .
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . .
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . .
Cash and cash equivalents at end of
period . . . . . . . . . . . . . . . . . . . . . . . .
2014

June 30,
2014
2015
2015
(in millions of Q)
(in millions
of U.S.$)
(in millions of Q)
(in millions
of U.S.$)
20,077.9 25,664.0 32,855.8
728.7
17,989.3 10,493.9
232.7
(6,084.2) (20,764.8) (6,432.7) (142.7) 10,064.6 (13,401.1) (297.2)

(23,062.0)
(309.0)
(9,377.2)
837.7 (16,430.3) (364.4) (1,906.4) (4,966.3) (110.1)

(167.2)
5,569.7
(813.6)
(18.0)
(306.4)
165.5
3.7
9,179.1
203.6
25,841.1
(7,707.9) (170.9)
32,932.7 23,555.4 29,125.2
645.9
29,125.2 38,304.3
849.5
23,555.4 29,125.2 38,304.3
849.5
54,966.2 30,596.4
678.6
ADDITIONAL FINANCIAL AND OPERATING DATA

The table below provides selected additional financial and operating data for the periods indicated.
2012
For the years ended

December 31,
2013
2014
(in millions of Q, unless

indicated otherwise)
Net income . . . . . . . . . . . . . . . . . . . . . .
EBITDA(1) . . . . . . . . . . . . . . . . . . . . . .
Electricity sold (GWh) . . . . . . . . . . . . .
of which: bilateral offtake
agreements . . . . . . . . . . . . . . . .
of which: WESM sales . . . . . . . . .
Electricity bought on WESM
(GWh) . . . . . . . . . . . . . . . . . . . . . . . .
Average realized/paid electricity prices
(P/MWh)
For electricity sold under bilateral
offtake agreements . . . . . . . . . .
For electricity sold on WESM . . .
For electricity purchased from
WESM . . . . . . . . . . . . . . . . . . .
Net debt(3) . . . . . . . . . . . . . . . . . . . . . . .
Ratio of net debt to EBITDA(4) . . . . . . .
2014

June 30,
2014
2015
2015
(in millions (in millions of Q, unless

of U.S.$,
unless
indicated
otherwise)
14,209.3 4,042.7 10,629.5

7,512.2 8,051.9 10,150.2
15,961.5 16,162.7 17,001.4
235.7
225.1
14,487.2 13,315.5 14,891.4

1,474.3 2,847.3 2,110.0
7,666.6
1,122.8
7,215.9
937.0
476.8
228.5
187.1
4,658.0 4,752.0 5,014.4

4,871.0 3,783.0 4,560.5
111.2
101.1
5,023.7
4,670.9
5,046.7
4,309.4
111.9
95.6
674.9
517.1
8,943.5
3,943.1
6,994.9(2) 3,875.5(2)
8,789.5
8,152.9
(in millions
of U.S.$,
unless
indicated
otherwise)
4,669.0 4,150.0 4,704.8 104.3

5,061.4
5,972.9
(3,161.5) 6,058.3 (2,419.7) (53.7) (20,405.7) 13,978.5
(0.42)
0.75
(0.24) (0.24)
(2.16)(5)
1.99(5)
87.4
85.9(2)
132.5
310.0
1.99(5)
(1)
Calculated as (a) net income plus (b) income tax expense (benefit), finance cost (less interest income) and depreciation, in each case
excluding amounts attributable to ring-fenced subsidiaries less (c) foreign exchange gain (loss), gain on sale of investment and
aggregate fixed payments made to PSALM. EBITDA should not be viewed in isolation or as an alternative to financial measures
calculated in accordance with PFRS. See Presentation of Financial Information and Non-PFRS Financial Measures.
(2)
EBITDA for the most recent four quarterly periods ended June 30, 2014 and 2015 is P9,461.8 million and P7,030.8 million
respectively.
(3)
Net debt represents the sum of long-term debt net of current maturities and debt issue costs and current maturities of long-term debt
net of debt issue costs less cash and cash equivalents and excluding PSALM finance lease liabilities, in each case, excluding
amounts attributable to ring-fenced subsidiaries.
(4)
Ratio of Net Debt to EBITDA is computed using net debt and EBITDA, in each case excluding amounts attributable to ring-fenced
subsidiaries.
(5)
Ratio of Net Debt to EBITDA is computed using for the most recent four quarterly periods ended June 30, 2014 and 2015.
CALCULATION OF EBITDA
The following table presents a reconciliation of EBITDA to net income for each of the periods indicated.
For the years ended
December 31,
2013(1)
2014(1)
2012
(in millions of Q)
2014(1)
(in millions
of U.S.$)

June 30,
2014(1)
2015(1)
2015(1)
(in millions of Q)
(in millions
of U.S.$)
Net income . . . . . . . . . . . . . . . . . . . . . . 14,209.3 3,921.6 9,833.1

Add:
Income tax expense (benefit) . . . . 1,439.0
(888.1) 2,352.0
Finance cost . . . . . . . . . . . . . . . . . . 12,726.5 12,557.7 12,582.8
Interest income . . . . . . . . . . . . . . .
(880.6) (446.9) (539.0)
Depreciation . . . . . . . . . . . . . . . . . 5,194.2 5,206.4 5,236.9
Less:
Foreign exchange gains (loss) . . . . 7,707.6 (9,434.2) (808.3)
Aggregate fixed payments made to
PSALM(2) . . . . . . . . . . . . . . . . . 17,362.0 19,146.0 20,124.0
Gain on Sale of Investment . . . . . .
106.6 2,587.0
218.1
8,669.7
52.2
279.1
(12.0)
116.1
1,597.9 1,775.7
6,321.0 6,165.7
(172.8) (287.6)
2,609.3 2,622.6
39.4
136.7
(6.4)
58.2
(17.9)
1,984.3 (1,266.5)
(28.1)
446.3
10,046.0 10,990.2
243.7
EBITDA . . . . . . . . . . . . . . . . . . . . . . . .
225.1
7,512.2
8,051.9 10,150.2
3,322.7
6,994.9(3) 3,875.5(3)
73.7
85.9
(1)
Excludes amounts from ring-fenced subsidiaries. A subsidiary with a project debt was nominated as a ring-fenced subsidiary in 2013. If
the amounts from ring-fenced subsidiaries were to be included, the EBITDA would amount to P8.5 billion and P12.8 billion
(U.S.$284.3 million) for the years ended December 31, 2013 and 2014, respectively, and P8.0 billion and P5.8 billion (U.S.$128.1
million) for the six months ended June 30, 2014 and 2015, respectively.
(2)
Aggregate fixed payments made to PSALM is reflected in the Statement of Cash Flows as Payments of Finance Lease Liabilities.
(3)
respectively, excluding amounts attributable to ring-fenced subsidiaries.
SUMMARY OF THE OFFERING

The following is a brief summary of certain terms of the Securities. For a more complete description of the terms
of the Securities, see Terms and Conditions of the Securities Capitalized terms not otherwise defined herein
shall have the meanings set forth under Terms and Conditions of the Securities.
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . SMC Global Power Holdings Corp., a company incorporated under
the laws of the Republic of the Philippines.
Securities Offered . . . . . . . . . . . . . . . . . . U.S.$300,000,000 undated subordinated capital securities.
Status of the Securities . . . . . . . . . . . . . . The Securities will constitute direct, unconditional, unsecured and
subordinated capital securities of the Issuer and will at all times rank
pari passu without any preference among themselves and in priority
of claims of holders of Junior Securities.
The claims of the Holders in respect of the Securities, including in
respect of any claim to Arrears of Distribution, will, in the event of
the Winding-Up of the Issuer (subject to and to the extent permitted
by applicable law), rank:
(a) junior to all unsubordinated obligations of the Issuer (other than
Parity Securities) and any obligation assumed by the Issuer
under any guarantee of, or any indemnity in respect of, any
obligation or commitment which rank or are expressed to rank
senior to the Securities;
(b) pari passu with each other and with any Parity Securities of the
Issuer; and
(c) senior only to the Junior Securities of the Issuer.
No Set-off . . . . . . . . . . . . . . . . . . . . . . . . To the extent and in the manner permitted by applicable law, no
Securityholder may exercise, claim or plead any right of set-off,
counterclaim, compensation or retention in respect of any amount
owed to it by the Issuer in respect of, or arising from, the Securities
and each Securityholder will, by virtue of his holding of any Security,
be deemed to have waived all such rights of set-off, counterclaim,
compensation or retention.
Covenant . . . . . . . . . . . . . . . . . . . . . . . . . The Issuer will undertake not to issue any Preferred Stock which
ranks, or is expressed to rank, by its terms or by operation of law,
senior to the Securities.
Initial Rate of Distribution . . . . . . . . . . . 6.750%
per
annum
plus any increase
Condition 4.4 (Increase in Rate of Distribution).
pursuant
to
Issue Price . . . . . . . . . . . . . . . . . . . . . . . . 100%

Form and Denomination . . . . . . . . . . . . . The Securities are issued in registered form in amounts of
U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.
Distributions . . . . . . . . . . . . . . . . . . . . . . Subject to Condition 4.4 (Increase in Rate of Distribution) and

Condition 4.5 (Optional Deferral of Distributions), the Securities will
confer a right to receive distributions (Distributions):
(a) from the period commencing on (and including) the Issue Date
to (but excluding) February 26, 2021 (the Step Up Date), at
the Initial Rate of Distribution; and
(b) from (and including) each Reset Date (including the Step Up
Date) to (but excluding) the immediately following Reset Date,
at the relevant Reset Rate of Distribution (determined by the
Calculation Agent on the relevant Reset Determination Date
and notified to the Holders, the Principal Paying Agent and the
Registrar),
payable semi-annually in arrear on August 26 and February 26 of
each year (each a Distribution Payment Date) commencing on
February 26, 2016.
Reset Date means the Step Up Date and any subsequent date which
is the fifth anniversary of any Reset Date.
Increase in Rate of Distribution . . . . . . . Following the earlier to occur of:
(a) the date which is the 61st day, or if such day is not a Business
Day the first Business Day thereafter, following a Change of
Control Event; and
(b) the date on which a Reference Indebtedness Default Event
occurs,
and the Issuer does not elect to redeem the Securities pursuant to
Condition 5.4 (Early redemption due to a Change of Control Event,
Reference Indebtedness Default Event, or Accounting Event), the Rate
of Distribution will increase by 2.50% per annum with effect from the
next Distribution Payment Date (or, if the relevant event occurs on or
after the date that is five Business Days prior to the next Distribution
Payment Date, the next following Distribution Payment Date). For the
avoidance of doubt, an increase (if any) in the Rate of Distribution
pursuant to Condition 4.4 (Increase in Rate of Distribution) shall not
occur more than once.
A Change of Control Event means San Miguel Corporation
ceasing to, whether directly or indirectly, have control in respect of
more than 50% of the outstanding Voting Stock of the Issuer.
Reference Indebtedness Default Event means an event of default
occurs pursuant to Condition 10(c) of the Issuers outstanding
U.S.$300 million 7.0% Notes due 2016 (ISIN: XS0579034223) (the
Senior Notes) or similar condition of any U.S. dollar-denominated
debt security issued in exchange for, or the net proceeds of which are
used to refinance or refund, replace, exchange, renew, repay, defease
or discharge the Senior Notes prior to their maturity (the
Refinancing Securities), as a result of the Issuers default in, noncompliance with or non-performance of Condition 4 (Covenants) of
the Senior Notes or similar condition of the Refinancing Securities, as

the case may be, as such Senior Notes or Refinancing Securities are
amended from time to time in accordance with Condition 15 of the
Senior Notes or similar condition of the Refinancing Securities, as the
case may be.
Voting Stock means, with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election
of directors, managers or other voting members of the governing body
of such Person.
Optional Deferral of Distributions . . . . . The Issuer may, in its sole and absolute discretion, on any day which
is not less than five Business Days prior to any Distribution Payment
Date, resolve to defer payment of any or all of the Distribution which
would otherwise be payable on that Distribution Payment Date
unless, during the six months ending on that scheduled Distribution
Payment Date a Compulsory Distribution Payment Event has
occurred (the Deferral Election Event). Any such deferred
Distribution will constitute Arrears of Distribution and will not be
due and payable until the relevant Payment Reference Date.
Distributions will accrue on each Arrears of Distribution for so long
as such Arrears of Distribution remains outstanding at the same Rate
of Distribution as the Principal Amount of the Securities bears at such
time and will be added to such Arrears of Distribution (and thereafter
bear Distributions accordingly) on each Distribution Payment Date.
The Issuer will notify the Securityholders (in accordance with
Condition 12.1 (Notices to Securityholders)), the Trustee and the
Principal Paying Agent of any deferral of Distribution not less than
five Business Days prior to the relevant Distribution Payment Date
(the Deferral Election Notice). Deferral of a Distribution pursuant
to Condition 4.5(a) (Optional Deferral of Distributions) will not
constitute a default by the Issuer or any other breach of its obligations
under the Securities or the Trust Deed or for any other purpose.
The Issuer is not subject to any limit as to the number of times
Distributions and Arrears of Distributions may be deferred pursuant
to the provisions of Condition 4.5(a) (Optional Deferral of
Distributions).
Compulsory Distribution Payment Event means (a) a
discretionary dividend, distribution, interest or other payment has
been paid or declared on or in respect of any Junior Securities or
(except on a pro rata basis) Parity Securities of the Issuer, other than
a dividend, distribution or other payment in respect of an employee
benefit plan or similar arrangement with or for the benefit of
employees, officers, directors and consultants of the Issuer; or (b) at
the discretion of the Issuer, any Junior Securities or (except on a
pro rata basis) Parity Securities of the Issuer have been redeemed,
repurchased or otherwise acquired by the Issuer or any of its
Subsidiaries, other than a redemption, repurchase or other acquisition
in respect of an employee benefit plan or similar arrangement with or
for the benefit of employees, officers, directors and consultants of the
Issuer.
10
Restrictions in the case of Deferral . . . . . If on any Distribution Payment Date, payment of all Distributions
scheduled to be made on such date is not made in full by reason of the
Issuer deferring such Distributions in accordance with the terms of
the Securities, the Issuer shall not, and shall procure that none of its
Subsidiaries will:
(a) declare or pay any discretionary dividends, distributions or
make any other discretionary payment on, and will procure that
no discretionary dividend, distribution or other payment is made
on any class of Junior Securities or (except on a pro rata basis)
Parity Securities of the Issuer, other than a dividend,
distribution or other payment in respect of an employee benefit
plan or similar arrangement with or for the benefit of
employees, officers, directors and consultants of the Issuer; or
(b) redeem, reduce, cancel, buy-back or acquire for any
consideration any of the Junior Securities or (except on a
pro rata basis) Parity Securities of the Issuer, other than a
redemption, reduction, cancellation, buy-back or acquisition in
respect of an employee benefit plan or similar arrangement with
or for the benefit of employees, officers, directors and
consultants of the Issuer,
unless and until (i) the Issuer has satisfied in full all outstanding
Arrears of Distribution; or (ii) the Issuer is permitted to do so with the
consent of the Securityholders of at least a majority in aggregate
principal amount of the Securities then outstanding. For the avoidance
of doubt, nothing in these restrictions shall restrict the ability of any
Subsidiary of the Issuer to declare and pay dividends, advance loans
or otherwise make payments to the Issuer.
Payments of Arrears of Distribution . . . . The Issuer may elect to pay Arrears of Distribution (in whole or in
part) at any time on the giving of at least five Business Days prior
notice to Securityholders (in accordance with Condition 12.1 (Notices
to Securityholders)), the Trustee and the Principal Paying Agent. If
Arrears of Distribution have not been paid in full earlier, all
outstanding Arrears of Distribution will become due and payable, and
the Issuer must pay such outstanding Arrears of Distribution
(including any amount of Distribution accrued thereon in accordance
with Condition 4.5(a) (Optional Deferral of Distributions)), on the
relevant Payment Reference Date (in accordance with Condition 6
(Payments)). Any partial payment of outstanding Arrears of
Distribution by the Issuer shall be made on a pro rata basis between
the Securityholders.
Payment Reference Date means the date which is the earliest of:
(a) the date on which the Securities are redeemed in accordance
with Condition 5 (Redemption and Purchase);
(b) the date on which an order is made for the Winding-Up of the
Issuer; and
(c) the date on which the Issuer is in violation of Condition 4.6
(Restrictions in the case of Deferral) or on the occurrence of a
Compulsory Distribution Payment Event.
11
Expected Closing Date . . . . . . . . . . . . . . August 26, 2015.

Redemption . . . . . . . . . . . . . . . . . . . . . . . The Securities have no fixed redemption date. Unless previously
redeemed or purchased and cancelled as provided below, the
Securities will mature on the date on which the corporate term of the
Issuer expires in accordance with its constituent documents (including
its articles of incorporation, which currently provide for the corporate
term of the Issuer to expire on January 23, 2058). If the corporate
term of the Issuer is extended, the term of the Securities will
automatically and correspondingly be extended.
As of the date of this Offering Circular, the articles of incorporation
of the Issuer provide that its corporate term will expire on
January 23, 2058 and the Issuer intends to extend its corporate term
prior to such expiry.
Redemption at the Option of the
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . Subject to applicable law, the Issuer may redeem the Securities (in
whole but not in part) on:
(a) the Step Up Date; or
(b) any Distribution Payment Date falling after the Step Up Date,
in each case, at the Redemption Price, on the giving of not less
than 30 and not more than 60 calendar days irrevocable notice of
redemption to the Securityholders in accordance with Condition 12.1
(Notices to Securityholders).
Early Redemption due to a Gross-up
Event . . . . . . . . . . . . . . . . . . . . . . . . . . If a Gross-up Event occurs, the Issuer may redeem the Securities (in
whole but not in part) at the Redemption Price, on the giving of not
less than 30 and not more than 60 calendar days irrevocable notice of
redemption to the Securityholders in accordance with Condition 12.1
(Notices to Securityholders).
No such notice of redemption may be given earlier than 45 calendar
days prior to the earliest calendar day on which the Issuer would be
for the first time obliged to pay the Additional Amounts in question
on payments due in respect of the Securities.
Prior to the giving of any such notice of redemption, the Issuer will
deliver or procure that there is delivered to the Trustee:
(a) a certificate signed by any two executive officers of the Issuer
stating that the Issuer is entitled to effect such redemption and
setting out a statement of facts showing that a Gross-up Event
has occurred and that the obligation to pay Additional Amounts
cannot be avoided by the Issuer taking reasonable measures
available to it; and
(b) an opinion of an independent legal or tax adviser of recognized
standing to the effect that the Issuer has or will become obliged
to pay the Additional Amounts in question as a result of a
12
Gross-up Event, and the Trustee shall be entitled to accept the

above certificate and opinion as sufficient evidence of the
satisfaction of the conditions precedent set out above, in which
event it shall be conclusive and binding on the Securityholders.
For the avoidance of doubt, a change of jurisdiction or domicile of the
Issuer shall not be considered a reasonable measure.
Gross-up Event means that as a result of any change in, or
amendment to, the laws or regulations or rulings promulgated
thereunder of the Relevant Jurisdiction, or any change in or
amendment to any official interpretation or application of those laws
or regulations or rulings promulgated thereunder, which change or
amendment becomes effective on or after August 26, 2015, the Issuer
has or will become obliged to pay Additional Amounts; provided that
the payment obligation cannot be avoided by the Issuer taking
reasonable measures available to it; provided further that where any
Additional Amounts due in accordance with Condition 7 are in
consequence of any change in the laws or regulations or rulings
promulgated thereunder of the Relevant Jurisdiction, or any change in
or amendment to any official interpretation or application of those
laws or regulations or rulings promulgated thereunder after
August 26, 2015, a Gross-Up Event shall have occurred only in the
event that the rate of withholding or deduction required by such law,
regulation or rulings promulgated thereunder, or such official
interpretation or application thereof, is in excess of 30.0%.
Early Redemption due to a Change of
Control Event . . . . . . . . . . . . . . . . . . . If a Change of Control Event occurs, the Issuer may redeem the
Securities (in whole but not in part) (a) at any time prior to but
excluding the Step Up Date at the Special Redemption Price or (b) on
or at any time after the Step Up Date at the Redemption Price, in each
case on the giving of not less than 30 and not more than 60 calendar
days irrevocable notice of redemption to the Securityholders in
accordance with Condition 12.1 (Notices to Securityholders).
Early Redemption due to a Reference
Indebtedness Default Event . . . . . . . . . If a Reference Indebtedness Default Event occurs and is continuing,
the Issuer may redeem the Securities (in whole but not in part) at any
time at the Redemption Price, on the giving of not less than 30 and
not more than 60 calendar days irrevocable notice of redemption to
the Securityholders in accordance with Condition 12.1 (Notices to
Securityholders).
Early Redemption due to an Accounting
Event . . . . . . . . . . . . . . . . . . . . . . . . . . If an Accounting Event occurs and is continuing, the Issuer may
redeem the Securities (in whole but not in part) (a) at any time prior
to but excluding the Step Up Date at the Special Redemption Price or
(b) on or at any time after the Step Up Date at the Redemption Price,
in each case on the giving of not less than 30 and not more than
60 calendar days irrevocable notice of redemption to the
Securityholders in accordance with Condition 12.1 (Notices to
Securityholders).
13
Redemption of Securities in the case of

Minimal Outstanding Amounts . . . . . . In the event that the Issuer and/or any of its Subsidiaries has,
individually or in aggregate, purchased (and not resold) or redeemed
Securities equal to or in excess of 75% of the aggregate Principal
Amount of the Securities issued on the Issue Date, the Issuer may
redeem the remaining Securities (in whole but not in part):
(a) at any time prior to the Step Up Date, at the Special
Redemption Price; or
(b) on or at any time after the Step Up Date, at the Redemption
Price,
on the giving of not less than 30 and not more than 60 calendar days
irrevocable notice of redemption to the Securityholders in accordance
with Condition 12.1 (Notices to Securityholders).
Taxation and Additional Amounts . . . . . All payments in respect of the Securities by or on behalf of the Issuer
will be made without withholding or deduction for, or on account of,
any present or future taxes, duties, assessments or governmental
charges of whatever nature (Taxes) imposed or levied by or on
behalf of the Relevant Jurisdiction, unless the withholding or
deduction of the Taxes is required by law. In the event where such
withholding or deduction is made by the Issuer, the Issuer shall pay
such additional amount (Additional Amounts) as will result in
receipt by the Securityholders of such amounts as would have been
received by them had no such withholding or deduction been
required, except in certain circumstances. See Condition 7 (Taxation
and Gross-up).
Limited Rights to Institute
Proceedings . . . . . . . . . . . . . . . . . . . . . Notwithstanding any of the provisions in Condition 10 (NonPayment), the right to institute Winding-Up proceedings is limited to
circumstances where payment has become due. In the case of any
Distributions, such Distributions will not be due if the Issuer has
elected to defer Distributions in accordance with Condition 4.5
(Optional Deferral of Distributions). In addition, nothing in
Condition 10 (Non-Payment), including any restriction on
commencing proceedings, shall in any way restrict or limit any rights
of the Trustee or any of its directors, officers, employees or agents to
claim from or to otherwise take any action against the Issuer, in
respect of any actual, reasonable and documented costs, charges, fees,
expenses or liabilities incurred by such party pursuant to or in
connection with the Trust Deed or the Securities.
Proceedings for Winding-Up . . . . . . . . . If (a) an order is made or an effective resolution is passed for the
Winding-Up of the Issuer or (b) the Issuer fails to make payment in
respect of the Securities for a period of 10 calendar days or more after
the date on which such payment is due, the Issuer shall be deemed to
be in default under the Trust Deed and the Securities and the Trustee
may, subject to the provisions of Condition 10.4 (Entitlement of
Trustee) and, subject to and to the extent permitted by applicable law,
institute proceedings for the Winding-Up of the Issuer, and/or prove
in the Winding-Up of the Issuer, and/or claim in the liquidation of the
Issuer, for such payment.
14
Provision of Financial Statements . . . . . . So long as any of the Securities remain outstanding and the equity
securities of the Issuer are not quoted, listed or dealt in or traded on
the Philippine Stock Exchange or any nationally or internationally
recognized stock exchange or other securities market the Issuer will
furnish to the Trustee and, upon request, any Securityholder:
(i) as soon as they are available, but in any event within
120 calendar days after the end of the financial year of the
Issuer, copies of its financial statements (on a consolidated
basis) in respect of such financial year (including at least a
statement of income, balance sheet and cash flow statement)
audited by a member firm of an internationally recognized
firm of independent accountants;
(ii) as soon as they are available, but in any event within
60 calendar days after the end of each quarterly period (other
than the final period of a financial year) of the Issuer, copies
of its unaudited financial statements (on a consolidated
basis) in respect of such quarterly period or (in the case of
the second quarter of each financial year) the relevant
semiannual period (including at least a statement of income,
balance sheet and cash flow statement); and
(iii) (A) with each set of financial statements in accordance with
clauses (i) and (ii) above and at any other time within
30 calendar days of the written request of the Trustee; and
(B) as soon as possible and in any event within 14 calendar
days after the Issuer becomes aware of a Reference
Indebtedness Default Event, in each case accompanied by an
Officers Certificate, in the case of (A) above, confirming
compliance with all of the Issuers obligations under these
Conditions and the Trust Deed, and, in the case of (B) above,
setting forth the details of the Reference Indebtedness
Default Event and the action which the Issuer proposes to
take with respect thereto, and the Trustee shall be entitled to
accept such certificate as sufficient evidence thereof, in
which event it shall be conclusive and binding on the
Securityholders.
Further Issues . . . . . . . . . . . . . . . . . . . . . The Issuer may from time to time, without the consent of the
Securityholders, create and issue further Securities or bonds either
(a) ranking pari passu in all respects (or in all respects save for the
first payment of Distributions thereon) and so that the same will be
consolidated and form a single series with the Securities or (b) upon
such terms as to ranking, distributions, conversion, redemption and
otherwise as the Issuer may determine at the time of the issue. Any
further Securities which are to form a single series with the Securities
will be constituted by a deed supplemental to the Trust Deed.
Listing and Trading . . . . . . . . . . . . . . . . . Approval-in-principle has been obtained from the SGX-ST for the
listing and quotation of the Securities on the Official List of the
SGX-ST. The Securities will be traded on the SGX-ST in a minimum
board lot size of U.S.$200,000 for so long as the Securities are listed
on the SGX-ST and the rules of the SGX-ST so require.
15
Use of Proceeds . . . . . . . . . . . . . . . . . . . . The net proceeds from the issue of the Securities, which will be
approximately U.S.$298,500,000 (after the deduction of
commissions, but before expenses), shall be applied towards
financing investments in power-related assets, including its greenfield
power projects and general corporate purposes.
Selling Restrictions . . . . . . . . . . . . . . . . . The Securities have not been and will not be registered under the
Securities Act and, subject to certain exceptions, may not be offered
or sold within the United States. The Securities may be sold in other
jurisdictions (including the United Kingdom, Singapore, Hong Kong,
Japan, the European Economic Area and the Philippines) only in
compliance with applicable laws and regulations. See Subscription
and Sale.
ISIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XS1277512775
Common Code . . . . . . . . . . . . . . . . . . . . . 127751277
Governing Law . . . . . . . . . . . . . . . . . . . . English law, except that the provisions relating to subordination in
Condition 3.2 (Subordination) and any corresponding provisions in
the Trust Deed are governed by the laws of the Philippines.
Joint Lead Managers and Joint
Bookrunners . . . . . . . . . . . . . . . . . . . . Australia and New Zealand Banking Group Limited, DBS Bank Ltd.,
Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai
Banking Corporation Limited, ING Bank N.V., Singapore Branch,
Merrill Lynch (Singapore) Pte. Ltd., Mizuho Securities Asia Limited
and UBS AG, Hong Kong Branch.
16
RISK FACTORS
Prospective investors should carefully consider the risks described below, in addition to the other information
contained in this Offering Circular, including the audited financial statements of SMC Global Power and notes
relating thereto included in this Offering Circular, before making any investment decision relating to the
Securities. The occurrence of any of the events discussed below and any additional risks and uncertainties not
currently known to SMC Global Power or that are currently considered immaterial could have a material
adverse effect on the business, results of operations, financial condition and prospects of SMC Global Power and
prospective investors may lose all or part of their investment.
RISKS RELATING TO SMC GLOBAL POWER
Increased competition in the Philippine power industry.
The Government has sought to implement measures designed to enhance the competitive landscape of the power
market, particularly for the unregulated sectors of the industry. These measures include the privatization of NPCowned and -controlled power generation assets, the establishment of the WESM and the start of the Retail
Competition and Open Access (RCOA). Further, Republic Act No. 10667 or the Philippine Competition Act
was enacted to enhance economic efficiency and promote free and fair competition in trade, industry and all
commercial economic activities, prevent economic concentration which will manipulate or constrict the
discipline of free markets, and penalize all forms of anti-competitive agreements, abuse of dominant position and
anti-competitive mergers and acquisitions, with the objective of protecting consumer welfare and advancing
domestic and international trade and economic development.
The move towards a more competitive environment could result in the emergence of new and numerous
competitors. These competitors may have greater financial resources, and may have more extensive experience
than SMC Global Power, giving them the ability to respond to operational, technological, financial and other
challenges more quickly than SMC Global Power. These competitors may therefore be more successful than
SMC Global Power in acquiring existing power generation facilities or in obtaining financing for and the
construction of new power generation facilities. The type of fuel that competitors use for their generation
facilities may also allow them to produce electricity at a lower cost and to sell electricity at a lower price. SMC
Global Power may therefore be unable to meet the competitive challenges it will face.
As a result of increased competition, SMC Global Power could also come under pressure to review or renegotiate
the terms of offtake agreements with customers, which may lead to a downward adjustment of tariffs, and the
business, financial performance and results of operations of SMC Global Power could be adversely affected. To
the extent that distribution utilities or industrial offtakers agree to purchase from other generation companies
instead of purchasing from SMC Global Power, the ability of SMC Global Power to increase its sales and sell
additional electricity to distribution utilities or industrial offtakers through its generation facilities would be
adversely affected.
Suspension of issuance and renewal of Retail Electricity Supplier (RES) licenses.
In December 2014, the ERC through Resolution No. 17, Series of 2014 suspended the issuance of RES licenses
pending issuance of the revised rules. In June 2015, the DOE through its Department Circular DC2015-06-0010
enjoined the ERC to immediately issue the supporting guidelines including the revised rules for issuance of RES
licenses. As of June 30, 2015, the ERC has not lifted the moratorium for the issuance of new RES licenses and
renewal of existing RES licenses.
On July 13, 2015, the ERC released the first drafts of the Rules Governing the Issuance of Licenses or
Authorization to Retail Electricity Suppliers and Prescribing the Requirements and Conditions Therefor and the
Revised Rules for Contestability for review of the industry stakeholders. A public consultation is scheduled on
August 14, 2015 for both drafts.
Delays in the lifting of the suspension of issuance of the RES licenses may limit the capability of future
greenfield power projects of SMC Global Power upon commercial operations to directly contract with
contestable customers which could have a material adverse effect on the business, financial condition and results
of operations of SMC Global Power.
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Disruptions in fuel supply.

The operations of the Sual Power Plant, Limay Cogeneration Plant, and Ilijan Power Plant depend on the
availability of fuel, in particular coal and natural gas. SMC Global Power is responsible, at its cost, for supplying
the fuel requirement of the Sual Power Plant and Limay Cogeneration Plant. SMC Global Power has entered into
fuel supply agreements for its power plants. For example, SMC Global Power has existing coal supply
agreements with internationally recognized coal suppliers, such as Bayan Resources TBK (Bayan) and Kaltim
Prima Coal (KPC).
There is no assurance that there will not be any interruption or disruption in, or change in terms of, the fuel
supplies to these power plants, or that there will be sufficient fuel in the open market or sufficient transportation
capacity available to ensure that these power plants receive sufficient fuel supplies required for their operations
on a timely basis or at all. There is also no assurance that SMC Global Power will be able to purchase all of its
required fuel supplies from its regular suppliers that produce fuel of acceptable and known quality.
Consequently, SMC Global Power could experience difficulties ensuring a consistent quality of fuel, which could
negatively affect the stability and performance of these power plants. Such factors, which may include events
which are beyond the control of SMC Global Power, could affect the normal operation of these power plants
which could have material adverse effect on the business, financial condition and results of operations of SMC
Global Power.
Reliance on Independent Power Producers for the operation and maintenance of the IPPA power plants.
Power generation involves the use of highly complex machinery and processes and the success of SMC Global
Power depends on the effective maintenance of equipment for its power generation assets. IPPs associated with
the respective IPPA power plants are responsible for the operation and maintenance of the IPPA power plants.
Although the energy conversion agreements (ECAs) with the IPPs or power purchase agreements (PPAs)
with NPC in respect of the IPPA power plants contain bonus and penalty provisions, these do not eliminate the
risk of failure on the part of the IPPs to satisfactorily perform their respective operations and maintenance
obligations. Any failure on the part of such IPPs to properly operate and/or adequately maintain their respective
power plants could have a material adverse effect on the business, financial condition and results of operations of
SMC Global Power.
In addition, if SMC Global Power fails to generate or deliver electricity beyond contractually agreed periods due
to the failure of the IPPs to operate and maintain the power facilities, the counterparties of SMC Global Power in
its power supply contracts (PSCs) and RSCs may have a right to terminate those contracts, and replacement
contracts may not be entered into on comparable terms or at all. Any of the foregoing could have a material
adverse effect on the financial and operating performance of SMC Global Power.
Market limitations under the Electric Power Industry Reform Act of 2001 (EPIRA).
As of June 30, 2015, SMC Global Power had a 22.2% market share of the Luzon grid and a 16.5% market share
of the national grid in terms of installed capacity based on industry data from the ERC. The EPIRA limits the
market share of a participant to 30.0% per grid and 25.0% of the national grid by installed capacity. SMC Global
Power may not receive permission to increase its capacity and market share if this would result in exceeding the
permitted capacity or market share prescribed by the EPIRA. An inability to expand and grow the power business
could materially and adversely affect the business and prospects of SMC Global Power.
Development of greenfield power projects.
The development of greenfield power projects involves substantial risks that could give rise to delays, cost
overruns, unsatisfactory construction or development or the total or partial loss of the interest of SMC Global
Power in the project. Such risks include the inability to secure adequate financing, inability to negotiate
acceptable offtake agreements, and unforeseen engineering and environmental problems, among others. In
particular, the suspension of the issuance and renewal of RES licenses may limit the capability of future
greenfield power projects to directly contract with contestable customers. See Suspension of issuance and
renewal of Retail Electricity Supplier (RES) licenses.
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Any such delays, cost overruns, unsatisfactory construction or development or the total or partial loss of the
interests in its projects could have a material adverse effect on the business, financial condition, results of
operation and future growth prospects of SMC Global Power.
Adverse effect of WESM price fluctuations.
From the time the WESM for Luzon began operating in June 2006, market prices for electric power have
fluctuated substantially. Unlike many other commodities, electric power can only be stored on a very limited
basis and generally must be produced concurrently with its use. As a result, power prices are subject to
significant volatility from supply and demand imbalances. Long-term and short-term power prices may also
fluctuate substantially due to other factors outside of the control of SMC Global Power, including:
increases and decreases in generation capacity in the markets of SMC Global Power, including the addition
of new supplies of power from existing competitors or new market entrants as a result of the development
of new generation power plants, expansion of existing power plants or additional transmission capacity;
changes in power transmission or fuel transportation capacity constraints or inefficiencies;
electric supply disruptions, including power plant outages and transmission disruptions;
changes in the demand for power or in patterns of power usage, including the potential development of
demand-side management tools and practices;
the authority of the ERC to review and, if warranted under applicable circumstances, adjust the prices on
the WESM;
climate, weather conditions, natural disasters, wars, embargoes, terrorist attacks and other catastrophic
events;
availability of competitively priced alternative power sources;
development of new fuels and new technologies for the production of power; and
changes in the power market and environmental regulations and legislation.
On March 3, 2014, the ERC issued an order (the ERC Order) declaring the prices in the WESM for the
November and December 2013 billing months as null and void. SMC Global Power filed a motion for
reconsideration of the ERC Order and this motion is currently pending. See Business Legal Proceedings.
These factors could have a material adverse effect on the business, financial condition and results of operations
of SMC Global Power.
Non-renewal of or non-compliance with offtake agreements.
SMC Global Power has offtake agreements with various distribution utilities, electric cooperatives and large
industrial and commercial users. Some offtake agreements will expire before the termination of the applicable
IPPA Agreement, although they may be renewed by mutual agreement of the parties. The IPPA Agreements
provide that the amounts of payment obligations of SMC Global Power will increase over time. While SMC
Global Power intends to renew the offtake agreements upon expiration to provide stable and predictable revenue
streams to meet its obligations under the IPPA Agreements, there is no assurance that SMC Global Power will be
able to enter into new offtake agreements for similar volumes or at similar prices, or that SMC Global Power will
be able to enter into new offtake agreements or at all. If SMC Global Power is unable to enter into new offtake
agreements, SMC Global Power will be further exposed to fluctuations in electricity prices in the WESM, which
could materially and adversely affect the profitability of SMC Global Power.
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In particular, sales to Meralco in 2014 under the respective Power Supply Agreements (PSA) in relation to the
Ilijan and Sual Power Plants comprised approximately 56.03% of the revenue of SMC Global Power from sales
of power from the IPPA power plants. The Ilijan Power Plant PSA will expire in 2019 and can be extended up to
the end of the IPPA period in 2022 while the Sual Power Plant PSA will expire in 2019 and can be extended up
to the end of the IPPA period in 2024, in each case upon mutual agreement of the parties. When the current
offtake agreements with Meralco expire or are otherwise renegotiated, they may be renewed for lower electricity
volumes than in the past or on different terms, including under different pricing terms. Meralco is preparing to
enter the power generation business and is expected to become a direct competitor of SMC Global Power.
In addition, there can be no assurance that Meralco and other offtakers will be able to meet their future payment
obligations under their agreements with SMC Global Power.
The business, cash flows, earnings, results of operations and financial condition of SMC Global Power could be
materially and adversely affected if Meralco does not renew its offtake agreements with SMC Global Power
under favorable terms or at all or if Meralco and other offtakers are unable to meet their payment obligations
under existing agreements, and SMC Global Power is unable to find new customers to replace Meralco and other
offtakers.
Operating capacities of its power portfolio.
The administration of the output of the power generation plants involves significant risks, including:
breakdown or failure of power generation equipment, transmission lines, pipelines or other equipment or
processes, leading to unplanned outages and operational issues;
flaws in the equipment design or in power plant construction;
issues with the quality or interruptions in the supply of key inputs, including fuel or water;
material changes in legal, regulatory or licensing requirements;
operator error;
performance below expected levels of output or efficiency;
industrial actions affecting power generation assets owned or managed by SMC Global Power or its
contractual counterparties;
pollution or environmental contamination affecting the operation of power generation assets;
planned and unplanned power outages due to maintenance, expansion and refurbishment;
inability to obtain or the cancellation of required regulatory, permits and approvals;
opposition from local communities and special interest groups; and
force majeure and catastrophic events including fires, explosions, earthquakes, volcanic eruptions, floods
and terrorist acts that could cause forced outages, suspension of operations, loss of life, severe damage and
plant destruction.
There is no assurance that any event similar or dissimilar to those listed above will not occur or will not
significantly increase costs or decrease or eliminate sales derived by SMC Global Power from its power
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generation assets. While the IPPA Agreements of the Company provide certain reliefs in the event the IPPA
power plants cannot produce or dispatch electricity, if any of the power generation assets of the Company is
unable to generate or deliver electricity to customers for an extended period of time, its customers may be
exempt from making certain payments so long as any such events continue. In addition, if SMC Global Power
fails to generate or deliver electricity beyond contractually agreed periods, its counterparts in its power supply
contracts may have a right to terminate those contracts, and replacement contracts may not be entered into on
comparable terms or at all. Any of the foregoing could have a material adverse effect on the financial and
operating performance of SMC Global Power.
Insurance coverage for IPPA Plants.
The IPPs of the IPPA power plants are responsible for maintaining insurance for all of the facilities, equipment
and infrastructure for those power plants, with the exception of the dam and spillway of the San Roque Power
Plant, for which NPC is obligated to maintain insurance. SMC Global Power is not, however, a beneficiary of
any of these insurance policies. SMC Global Power has no business interruption insurance coverage and is
therefore uninsured for liabilities or any direct or indirect costs and losses which may be incurred, as a result of
any business interruption that the Company may experience. SMC Global Power believes that there is no
business interruption insurance available for the IPPA business model under which the Company is currently
operating. Accordingly, any uninsured liabilities or direct or indirect losses, including any third party claims that
result from an interruption to the business of SMC Global Power could have a material adverse effect on its
financial condition and results of operations.
Insurance coverage for generation plants.
The power generation plants owned by SMC Global Power may not be fully insured against, and insurance may
not be available for, unexpected losses caused by natural disasters, breakdowns or other events that could affect
the facilities and processes used by its businesses.
Any unexpected losses caused by such events against which it is not fully insured could have a material adverse
effect on its businesses, financial condition and results of operations.
Any accident at the facilities of the SMC Global Power could result in significant losses.
SMC Global Power could suffer a decline in production, receive adverse publicity and be forced to invest
significant resources in addressing such losses. Such events could materially and adversely affect the financial
condition and results of operations of SMC Global Power.
No direct contractual and operational relationship.
SMC Global Power is dependent on the IPPA power plants to generate power, and for the IPPs to comply with
their contractual obligations to NPC under their IPP agreements. SMC Global Power does not have a direct
contractual relationship with the IPPs and cannot directly enforce the IPP agreements against the IPPs. Failure by
an IPP to comply with its obligations under its IPP agreement may significantly reduce or eliminate power
generation volumes or increase costs, thereby decreasing or eliminating revenues that SMC Global Power can
derive from selling the power generated by the IPPA power plants. Any claims for damages for breach, or other
entitlement, benefit or relief under the IPPA Agreement arising from the breach, by the IPP, of its IPP agreement
obligations must be claimed by SMC Global Power against PSALM through specified claim mechanisms. The
IPPA Agreements do not permit set-off of claims, and SMC Global Power is only entitled to payment of its claim
after PSALM has received payment from the IPP of its corresponding claim. Accordingly, SMC Global Power
bears the risks associated with the lack of direct recourse against the IPPs, delays in the enforcement of its claims
and other risks related to pursuing claims or legal proceedings against a state-owned entity such as PSALM. Any
of these factors could have a material adverse effect on the business, financial condition and results of operations
21
Foreign exchange risk.

While most of the offtake agreements of SMC Global Power allow adjustments for foreign exchange rate
fluctuations, SMC Global Power remains subject to foreign exchange risk. A substantial amount of revenue from
sales of power by SMC Global Power is denominated in Pesos, while a portion of its expenses and obligations
are denominated in U.S. dollars. The scheduled payment obligations to PSALM pursuant to the IPPA
Agreements of the Company with PSALM are denominated in both U.S. dollars and Pesos. The proportion of
U.S. dollars to Pesos payable under the IPPA Agreements was approximately 50% at the exchange rates
prevailing as of the dates of the respective IPPA Agreements. SMC Global Power also purchases coal as fuel for
the Sual Power Plant and its greenfield power projects using U.S. dollars. In addition, a significant portion of the
capital expenditures required for its greenfield power projects are denominated in U.S. dollars.
SMC Global Power issued bonds with an aggregate principal amount of U.S.$300 million in January 2011 and
has fully drawn its U.S.$700 million loan facility as of March 2015. Moreover, in May 2014, SMC Global Power
issued U.S.$300 million of undated subordinated capital securities. A depreciation of the Peso, particularly with
respect to the U.S. dollar, increases the Peso equivalent value of the foreign currency-denominated costs and
obligations of SMC Global Power. This could adversely affect the results of operations of SMC Global Power
and its ability to service its foreign currency-denominated liabilities.
There can be no assurance that the Peso will not depreciate significantly against the U.S. dollar or other
currencies in the future or that such depreciation will not have an adverse effect on the growth of the Philippine
economy or the financial condition of SMC Global Power.
Variations in hydrological conditions and irrigation requirements.
Hydro-electric generation is dependent on the amount and location of rainfall and river flows, which vary widely
from quarter to quarter and from year to year. NPC owns and operates the dam and the dam-related facilities of
the San Roque Power Plant and has obtained a water permit allowing it to use the water flow from the Agno
River to generate power from the San Roque Power Plant with an allowable volume dictated by downstream
irrigation requirements set by the National Irrigation Administration.
The facilities of AHEPP are located within the Angat Watershed Reservation, which is managed by and is under
the jurisdiction of NPC. AHC now holds a water certification from NPC, which allows AHC to use water from
the Angat dam for power generation. In an authorization dated October 29, 2014, the National Water Resources
Board (NWRB) authorized NPC to allow AHC to use the water permit of AHC until October 30, 2015, subject
to review and renewal by the NWRB. The water discharged by the AHEPP is used for the following two
purposes: (i) the water outflow of the auxiliary units flows to the Ipo Dam and is conveyed by MWSS to Metro
Manila for domestic use; and (ii) the water outflow of the main units flows to the Bustos Dam and is conveyed by
National Irrigation Administration (NIA) to the province of Bulacan for irrigation purposes.
The levels of hydro-electric production can therefore vary from period to period depending on the water levels in
the reservoir and downstream irrigation and water supply requirements. In years of less favorable hydrological
conditions, such as periods of drought or when the El Nio weather phenomenon occurs, the reservoir has low
water levels, which reduces the amount of power that the San Roque Power Plant and the AHEPP are able to
generate. This could reduce the revenues from the sale of power from the San Roque Power Plant and the
AHEPP, which could have a material adverse effect on SMC Global Powers business, financial condition and
results of operations. Conversely, if too much rainfall occurs at any one time, such as during a typhoon, water
may flow too quickly and at volumes in excess of the water intake capacity of the San Roque Power Plant and
AHEPP, which may cause release of water using the spillway.
Challenges in successfully implementing its growth strategy.
Implementing the growth strategy of SMC Global Power involves: (i) substantial investments in new power
generation facilities; (ii) acquisitions of existing power generation capacity; and (iii) entering into alliances with
strategic partners. The success in implementing the strategy of the Company will depend on, among other things,
22
its ability to identify and assess investment and acquisition opportunities as well as potential partners, its ability
to successfully finance, close and integrate investments, acquisitions and relevant technologies for the production
of power, its ability to manage construction of planned greenfield power projects within technical, cost and
timing specifications, its ability to control costs and maintain sufficient operational, financial and internal
controls, the strength of the Philippine economy (including overall growth and income levels) and the overall
levels of business activity in the Philippines.
SMC Global Power is also contemplating several additional potential investments and acquisitions, but has not
entered into any definitive commitment or agreement for any such contemplated investment or acquisition. If
general economic and regulatory conditions or market and competitive conditions change, or if operations do not
generate sufficient funds or other unexpected events occur, SMC Global Power may decide to delay, modify or
forego some of its planned or contemplated projects or alter aspects of its growth strategy, and its future growth
prospects could be materially and adversely affected.
The growth strategy of SMC Global Power will also place significant demands on its management, financial and
other resources. In particular, continued expansion will increase the challenges for financial and technical
management, recruitment, training and retention of sufficient skilled technical and management personnel and
developing and improving its internal administrative infrastructure. Any inability to meet these challenges could
disrupt the business of SMC Global Power, reduce its profitability and adversely affect its results of operations
and financial condition.
Interest rate risk.
While SMC Global Power intends, whenever appropriate, to enter into hedging transactions which may mitigate
its interest rate exposure, any such hedging policy may not adequately cover its exposure to interest rate
fluctuations and such fluctuations may result in a high interest expense and an adverse effect on its business,
financial condition and results of operations.
Availability of financing.
SMC Global Power expects to fund its expansion and growth plans through a combination of internally generated
funds and external financing. The continued access to debt and equity financing of the Company is subject to
factors, many of which are outside of the control of SMC Global Power: political instability, economic downturn,
social unrest, or changes in the Philippine regulatory environment could increase the cost of borrowing, decrease
the price of its securities, or restrict the ability of SMC Global Power to obtain debt or equity financing. In
addition, recent disruptions in global capital and credit markets may continue indefinitely or intensify. Other
factors affecting the ability of SMC Global Power to borrow include (i) Philippine regulations limiting bank
exposure (including single borrower limits) to a single borrower or related group of borrowers, (ii) compliance
by the Company with existing debt covenants, which include leverage ratio covenants, and (iii) the ability of
SMC Global Power to service new debt. The inability of SMC Global Power to obtain financing from banks and
other financial institutions or from capital markets would adversely affect its ability to execute its expansion and
growth strategies and have a material adverse effect on the business, financial condition, and results of operations
Significant finance lease obligations and level of long-term debt.
SMC Global Power has significant finance lease obligations and substantial long-term debt obligations.
Each of the IPPA Agreements requires SMC Global Power to make monthly payments consisting of two separate
components: a fixed payment, the amount of which in any given month is specified by the IPPA agreement
itself, and a variable payment, the amount of which in any given month depends on the amount of power
delivered by the IPPA power plant, subject to certain adjustments. Through the IPPA Agreements, SMC Global
Power has acquired substantially all of the risks (except for the operations and maintenance) and rewards
incidental to ownership of the IPP power plants, therefore SMC Global Power accounts for the IPPA Agreements
as finance leases. Accordingly, upon entry into each IPPA Agreement, SMC Global Power recognized the related
23
power plant as an asset in its balance sheet under property, plant and equipment based on the present value of
the fixed monthly payments due to PSALM under the IPPA Agreement and recognized a corresponding liability
in its balance sheet under finance lease liabilities.
Each of the fixed monthly payments made by SMC Global Power under an IPPA Agreement is apportioned
between finance cost and reduction of (or, in certain cases, addition to) the finance lease liability so as to achieve
a constant rate of interest on the remaining balance of the liability. The finance costs are shown in the
consolidated income statements of SMC Global Power as finance cost and recognized as part of Other income
(charges) while the reduction of the finance lease liability (or addition to finance lease liability as applicable) is
recorded directly in the consolidated balance sheet of SMC Global Power. Each of the variable payments made
by SMC Global Power under an IPPA agreement is recorded in the consolidated income statement of
SMC Global Power as energy fees that form one component of cost of power sold.
As of June 30, 2015, the long-term debt of SMC Global Power relates to its outstanding U.S.$300 million bonds
due 2016 and its U.S.$700 million loan facility entered into in September 2013 and an SPI project debt of
P13.0 billion (U.S.$288.8 million).
As of June 30, 2015, the noncurrent liabilities of SMC Global Power included finance lease liabilities (net of
current portion) of P165.0 billion (U.S.$3.7 billion) and long-term debt (net of current maturities and debt issue
costs) of P42.3 billion (U.S.$937.2 million). As of June 30, 2015, the current liabilities of SMC Global Power
included accounts payable of P28.3 billion (U.S.$627.9 million), finance lease liabilities (current portion) of
P16.2 billion (U.S.$359.7 million) and current portion of long-term debt (net of debt issue costs) of P15.0 billion
(U.S.$333.2 million)
The level of finance lease obligations and long-term debt of SMC Global Power could:
require SMC Global Power to dedicate a substantial portion of its cash flow from operations to debt and
other payment obligations, thereby decreasing the availability of its cash flow for business operations,
including expansion and acquisitions;
increase the vulnerability of SMC Global Power to general adverse economic and industry conditions; and
prevent SMC Global Power from accessing credit or equity markets to satisfy its repayment obligations as
they become due on favorable terms, or at all.
Dependence on the existence of transmission infrastructure.

The transmission infrastructure in the Philippines continues to experience constraints on the amount of electricity
that can be delivered from power plants to customers, as well as limited interconnectivity between the LuzonVisayas grid and the lack of any interconnectivity between the Luzon-Visayas grid and the Mindanao grid.
If these transmission constraints continue, the ability of SMC Global Power to supply electricity from its
IPPA power plants and its planned and contemplated greenfield power projects, as well as the ability of
SMC Global Power to increase its geographical reach, will be adversely affected. This could have a material
adverse effect on the business and revenue growth of the Company from the sale of power.
Certain tax exemptions and tax incentives.
As of June 30, 2015, certain subsidiaries of SMC Global Power, namely, Sultan Energy Phils. Corp. (Sultan),
as concession holder for the Sultan coal deposit, SMC Consolidated Power Corporation for the Limay Greenfield
Power Plant and San Miguel Consolidated Power Corporation for the Davao Greenfield Power Plant, benefited
from certain tax exemptions and tax incentives, deductions from taxable income subject to certain capital
requirements and duty-free importation of capital equipment, spare parts and accessories. In addition, Sultan may
24
make use of tax credits equivalent to national internal revenue taxes and duties paid on raw materials and
supplies and semi-manufactured products used in producing its export products for a period of 10 years from
June 2011.
If these tax exemptions or tax incentives that SMC Global Power or any of its subsidiaries are entitled to have
expired, are revoked or repealed, the income of SMC Global Power from these sources will be subject to the
corporate income tax rate, which is 30.0% of net taxable income as of December 31, 2014. As a result, the tax
expense of SMC Global Power would increase and its profitability would decrease. There have also been reports
in the Philippine press that the Government may in the future discontinue its policy of granting tax incentives for
similar types of projects, and there is no assurance that SMC Global Power will be able to obtain and benefit
from similar tax incentives for future projects. The expiration, non-renewal, revocation or repeal of these tax
exemptions and tax incentives, and any associated impact on SMC Global Power, could have a material adverse
effect on the business, financial condition and results of operations of SMC Global Power.
Government Regulation.
The business of SMC Global Power is subject to extensive government regulation, particularly for its Limay
Cogeneration Plant and its greenfield power plants. To conduct its business, SMC Global Power must obtain
various licenses, permits and approvals. Even when SMC Global Power obtains the required licenses, permits
and approvals, its operations are subject to continued review under the applicable regulations, and the
interpretation or implementation of such regulations is subject to change.
For example, the operations of the Limay Cogeneration Plant and its greenfield power plants are subject to a
number of national and local laws and regulations, including safety, health and environmental laws and
regulations. These laws and regulations impose controls on air and water discharges, on the storage, handling,
discharge and disposal of waste, location of facilities, employee exposure to hazardous substances, site clean-up,
groundwater quality and availability, plant and wildlife protection, and other aspects of the operations of the
business of SMC Global Power. Failure to comply with relevant laws and regulations may result in financial
penalties or administrative or legal proceedings against SMC Global Power, which may cause or result in the
termination or suspension of the licenses or operation of its facilities.
In addition, SMC Global Power implements, through SMEC, its plans to develop its coal mining assets and it
will be subject to national and local laws and regulations affecting coal mining.
SMC Global Power has incurred, and expects to continue to incur, operating costs to comply with such laws and
regulations. In addition, SMC Global Power has made, and expects to continue to make, capital expenditures on
an ongoing basis to comply with safety, health, mining and environmental laws and regulations.
There can be no assurance that SMC Global Power will be able to remain in compliance with applicable laws and
regulations or will not become involved in future litigation or other proceedings or be held liable in any future
litigation or proceedings relating to safety, health, mining and environmental matters, the costs of which could be
material. In addition, safety, health, mining and environmental laws and regulations in the Philippines have
become increasingly stringent. There can be no assurance that the adoption of new safety, health, mining and
environmental laws and regulations, new interpretations of existing laws, increased governmental scrutiny of
safety, health, mining and environmental laws or other developments in the future will not result in SMC Global
Power being subject to fines and penalties or having to incur additional capital expenditures or operating
expenses to upgrade, supplement or relocate its facilities.
If SMC Global Power fails to comply with all applicable regulations or if the regulations governing its business
or their implementation change, SMC Global Power may incur increased costs or be subject to penalties, which
could disrupt its operations and have a material adverse effect on its business and results of operations.
ERC Regulation of electricity rates of distribution utilities.
The imposition of more stringent regulations and similar measures by the ERC could have a material adverse
effect on the business, financial conditions and results of operations of SMC Global Power.
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Sales to distribution utilities constituted approximately 78.4% of sales volume of SMC Global Power for the
six months ended June 30, 2015. While rates charged by SMC Global Power under its offtake agreements,
including those with distribution utilities, are not regulated by the ERC, the rates that distribution utility
customers charge to their customers are subject to review and approval by the ERC. Accordingly, the ability of
distribution utility customers to pay SMC Global Power largely depends on their ability to pass on their power
costs to their customers. There is also no assurance that the current laws, regulations, and issuances affecting the
industry, particularly the EPIRA and the issuances of the ERC, will not change or be amended in the future.
There is no assurance that the ERC will permit the distribution utility customers of SMC Global Power to pass on
or increase their rates or that subsequent reviews by the ERC will not result in the cancellation of any such
increases or require such customers to refund payments previously received from their customers. In addition,
there is no assurance that any rate increases approved by the ERC will not be overturned by Philippine courts on
appeal. SMC Global Power and other generation companies are parties to a petition filed in the Supreme Court
by special interest groups against Meralco in relation to the increase in generation rates for the billing month of
November and December 2013. The case is pending resolution by the Supreme Court. SMC Global Power is also
a party in relation to the ERC Order dated March 3, 2014 issued by the ERC which voided the WESM prices for
the November and December 2013 billing month and imposed recalculated prices to be calculated by PEMC.
SMC Global Power has a pending request with the ERC to reconsider the ERC Order. The ERC in the exercise of
its regulatory powers may also impose fines, penalties, or sanctions to SMC Global Power in appropriate cases.
Any restriction on the ability of distribution utilities to pass on such costs or any intervention in such rates could
have a material adverse effect on the business, financial conditions and results of operations of SMC Global
Power.
Trading on the WESM.
While SMC Global Power only sells a small amount of power through the WESM, volatile market conditions on
the WESM may nevertheless pose risks to SMC Global Power regardless of whether there is a shortage or a
surplus of energy available. When the WESM experiences a shortage, there is little risk to suppliers in terms of
their value-position being destroyed. However, such a suppliers market exposes these suppliers to the risk that
regulatory bodies may intervene (directly or indirectly) to dictate prices and dispatch of power plants. Consumer
outrage, triggered by high prices, could precipitate attempts to suspend the WESM and return to subsidized rates
regimes. Regardless of whether such a suspension ultimately comes to pass, market anticipation of such an
occurrence could lead to value-destructive market distortions. On the other hand, a surplus market tends to cause
spot market prices to reflect the marginal cost of producing power. One of the main features of the WESM is a
merit-order dispatch scheme wherein the cheapest sources of power, such as power produced from geothermal
and hydroelectric energy, are dispatched first, before the more expensive power providers. While a supplier can
mitigate its exposure to surplus risks by contracting the bulk of its capacity to offtakers to protect against low
spot prices, as SMC Global Power has done, this also caps a suppliers ability to take advantage of price spikes
caused by temporary market shortages.
Currently, the ERC has implemented a reduced primary bid cap of P32,000 per MWh. In addition, a permanent
secondary price cap limits spot prices to P6,245 per MWh for as long as cumulative spot prices breach a certain
threshold. Prices are automatically capped at P6,245 per MWh for hours where the average price for the last
168-hours exceeds P9,000 per MWh.
Occurrence of such events could have a material adverse effect on the business, financial conditions and results
of operations of SMC Global Power.
Possible conflicts of interest.
San Miguel Corporation is the sole shareholder of the Issuer, controls the board of directors of the Issuer and
exerts significant influence over the policies, management and affairs of the Issuer. As a result, San Miguel
Corporation is able to exercise significant control and influence over many corporate actions of the Issuer. The
interests of San Miguel Corporation may differ from those of the Securityholders and San Miguel Corporation
may direct the Issuer in a manner that is contrary to the interests of the Issuer or of the Securityholders. There can
be no assurance that conflicts of interest between the Issuer and San Miguel Corporation will be resolved in favor
of the Issuer or Securityholders.
26
Dependence on the support of San Miguel Corporation.

SMC Global Power relies upon San Miguel Corporation for certain shared services such as human resources,
corporate affairs, legal, finance and treasury functions. There is no guarantee that San Miguel Corporation will
continue to provide these services in the future. Should San Miguel Corporation cease to provide these services,
SMC Global Power will have to obtain these services from elsewhere, most likely at a greater expense, which
could have a negative impact on its business and results of operations.
Development of coal exploration and extraction activities.
SMC Global Power has coal assets to provide a source of coal fuel supply for its greenfield power projects.
However, since SMC Global Power is focused primarily on power generation (either through IPPA Agreements
or as owner of newly acquired or newly constructed power plants), SMC Global Power may not be successful in
developing the knowledge, experience or expertise necessary for the successful operation of the coal assets it
may develop or acquire, whether on its own or in conjunction with a joint venture partner. In addition,
acquisition, development and operation of coal assets will require significant managerial, operational and
financial resources.
There is a risk that the coal assets of SMC Global Power may not become commercially viable due to project
delays, cost overruns, changes in market circumstances or a project not producing coal consistent with reserve
estimates of the expected quantity, quality or grade. It is possible that actual costs and economic returns of new
mining operations may differ materially from the best estimates of the Company.
In view of the foregoing, SMC Global Power may not be able to achieve the intended economic benefits of its
coal mining projects, which in turn could materially and adversely affect its business, financial condition, results
of operations and growth prospects.
RISKS RELATING TO THE PHILIPPINES
Political instability.
The Philippines has from time to time experienced severe political and social instability. The Philippine
Constitution provides that, in times of national emergency, when the public interest so requires, the Government
may take over and direct the operation of any privately owned public utility or business. In the last few years,
there were instances of political instability, including public and military protests arising from alleged
misconduct by the previous administration.
On December 12, 2011, the House of Representatives initiated impeachment proceedings against Renato Corona,
Chief Justice of the Supreme Court of the Philippines. The impeachment complaint accused Corona of
improperly issuing decisions that favored former President Gloria Macapagal-Arroyo, as well as failure to
disclose certain properties, in violation of rules applicable to all public employees and officials. The trial of Chief
Justice Corona began in January 2012 and ended in May 2012, with Corona being found guilty with respect to
his failure to disclose to the public his statement of assets, liabilities, and net worth, and consequently being
impeached. In July 2013, a major Philippine newspaper exposed a scam relating to the diversion and misuse of
the Priority Development Assistance Fund by some members of Congress through pseudo-development
organizations headed by Janet Lim Napoles. As a result of this expos, a number of investigations, including one
in the Senate, have been launched to determine the extent of the diversion of the Priority Assistance
Development Fund and the Government officials and the private individuals responsible for the misappropriation
of public funds. On September 16, 2013, cases of plunder and violations of the Anti-Graft and Corrupt Practices
(Republic Act No. 3019, as amended) were filed with the Office of the Ombudsman against Janet Lim Napoles,
three Senators, a few members of the House of Representatives and other persons. In a resolution issued in April
2014, the Office of the Ombudsman found probable cause to indict Napoles, the said senators and others in
connection with the controversy; the proceedings remain pending. In July 2014, a valid impeachment complaint,
endorsed by three representatives from the House of Representatives, against President Benigno S. Aquino, III
over his controversial budget spending program, the Disbursement Acceleration Program, was filed, and
subsequently dismissed. In July and December 2014, complaints for plunder and violations of the Anti-Graft and
Corrupt Practices Act of the Philippines were filed against Vice President Jejomar Cabauatan Binay, Sr. and his
son, Makati City Mayor Jejomar Erwin S. Binay, Jr.
27
On March 27, 2014, the Government and the Moro Islamic Liberation Front (MILF) signed a peace
agreement, the Comprehensive Agreement on Bangsamoro. On September 10, 2014, the draft of the Bangsomoro
Basic Law (BBL) was submitted by President Benigno Aquino III to Congress. The BBL is a draft law
intended to establish the Bangsamoro political entity in the Philippines and provide for its basic structure of
government, which will replace the existing Autonomous Region in Muslim Mindanao.
Following the Mamasapano incident where high-profile terrorists clashed with armed members of the
Bangsamoro Islamic Freedom Fighters and MILF leading to the deaths of members of the Special Action Force
(SAF) of the Philippine National Police, MILF, the Bangsamoro Islamic Freedom Fighters, and several
civilians, the Congress stalled deliberations on the BBL. The Board of Inquiry on the Mamasapano incident and
the Senate released their reports on the Mamasapano incident. On March 27, 2015, President Aquino named a
Peace Council consisting of five original members to study the draft BBL. 17 co-convenors were later named as
part of the Peace Council. The Council examined the draft law and its constitutionality and social impact. The
Council Members testified before the House of Representatives and the Senate, and submitted their report which
endorses the draft BBL but with some proposed amendments. On May 13 and 14, 2015, the Senate conducted
public hearings on the BBL in Zamboanga and Jolo, Sulu, with the Zamboanga City government and sultanate of
Sulu opposing their inclusion in the proposed Bangsamoro entity.
No assurance can be given that the political environment in the Philippines will remain stable and any political
instability in the future could reduce consumer demand, or result in inconsistent or sudden changes in regulations
and policies that affect the business operations of the Company, which could have an adverse effect on the results
of operations and the financial condition of SMC Global Power.
Acts of terrorism, clashes with separatist groups and violent crimes.
The Philippines has been subject to a number of terrorist attacks since 2000. In recent years, the Philippine armed
forces has also been in conflict with the Abu Sayyaf organization, which has ties to the al-Qaeda terrorist
network and has been identified as being responsible for certain kidnapping incidents and other terrorist activities
particularly in the southern part of the Philippines. Moreover, isolated bombings have taken place in the
Philippines in recent years, mainly in regions in the southern part of the Philippines, such as the province of
Maguindanao. Although no one has claimed responsibility for these attacks, it is believed that the attacks are the
work of various separatist groups, possibly including the Abu Sayyaf organization. An increase in the frequency,
severity or geographic reach of these terrorist acts could destabilize the Philippines and adversely affect the
countrys economy.
The Government and the Armed Forces of the Philippines (AFP) have clashed with members of several
separatist groups seeking greater autonomy, including the MILF, the Moro National Liberation Front (MNLF)
and the New Peoples Army. On October 19, 2011, 19 AFP troops were killed in a firefight with MILF members
in the southern Philippines. On December 16, 2011, five AFP soldiers were killed in a clash with New Peoples
Army members. In August 2013, a series of bombings occurred in the cities of Cagayan de Oro and Cotabato
City, as well as other areas in Maguindanao and North Cotabato provinces, all located in Mindanao, and in
September 2013, armed clashes took place between the MNLF and the AFP in Zamboanga City in Mindanao,
with a number of civilians being held hostage.
On January 25, 2015, at Tukanalipao, Mamasapano, Maguindanao, the SAF in efforts to serve warrants of arrest
to high-profile terrorists clashed with armed members of the Bangsamoro Islamic Freedom Fighters and MILF.
The armed clash led to the deaths of 44 members of SAF, 18 from MILF and five from the Bangsamoro Islamic
Freedom Fighters, and several civilians.
These continued conflicts between the Government and separatist groups could lead to further injuries or deaths
by civilians and members of the AFP and SAF, which could destabilize parts of the country and adversely affect
the countrys economy, as well as the operations of SMC Global Power.
Territorial and other disputes with neighboring states.
The Philippines, China and several Southeast Asian nations have been engaged in a series of long standing
territorial disputes over certain islands in the West Philippine Sea, also known as the South China Sea. Despite
28
efforts to reach a compromise, a dispute arose between the Philippines and China over a group of small islands
and reefs known as the Scarborough Shoal. In April and May 2012, the Philippines and China accused one
another of deploying vessels to the shoal in an attempt to take control of the area, and both sides unilaterally
imposed fishing bans at the shoal during the late spring and summer of 2012. These actions threatened to disrupt
trade and other ties between the two countries, including a temporary ban by China on Philippine banana imports,
as well as a temporary suspension of tours to the Philippines by Chinese travel agencies. Since July 2012,
Chinese vessels have reportedly turned away Philippine fishing boats attempting to enter the shoal, and the
Philippines has continued to protest Chinas presence there. In January 2013, the Philippines sent notice to the
Chinese embassy in Manila that it intended to seek international arbitration to resolve the dispute under the
United Nations Convention on the Law of the Sea. China has rejected and returned the notice sent by the
Philippines requesting arbitral proceedings. Chinese vessels have also recently confronted Philippine vessels in
the area, and the Chinese government has warned the Philippines against what it calls provocative actions.
Recent talks between the Government and the United States of America about increased American military
presence in the country, particularly through possible American forays into and use of Philippine military
installations, may further increase tensions. In March 2014, the Philippines filed an arbitration case with the
United Nations Permanent Court of Arbitration in connection with this dispute.
On June 20, 2015, the Government, through the Department of Foreign Affairs, issued a statement reiterating its
serious concern that Chinas reclamation and construction activities in a disputed part of the West Philippine Sea
grossly violate the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea (DOC)
and may serve to escalate the disputes and undermine efforts to promote peace, security, and stability. In the
same statement, the Philippines called on China anew to heed calls from the region and the international
community to exercise self-restraint in the conduct of activities pursuant to paragraph 5 of the DOC. In July
2015, the Philippines presented its case in front of the Arbitration Tribunal in The Hague. The case remains
ongoing.
In early March 2013, several hundred armed Filipino-Muslim followers of Sultan Jamalul Kiram III, the selfproclaimed Sultan of Sulu from the south of the Philippines, illegally entered Lahad Datu, Sabah, Malaysia in a
bid to enforce the Sultan of Sulus historical claim on the territory. As a result of the illegal entry, these followers
engaged in a three-week standoff with the Malaysian armed forces, resulting in casualties on both sides. Clashes
between the Malaysian authorities and followers of the Sultan of Sulu have killed at least 98 Filipino-Muslims
and 10 Malaysian policemen army since March 1, 2013. In addition, about 4,000 Filipino-Muslims working in
Sabah have reportedly returned to the southern Philippines.
On May 9, 2013, a Philippine Coast Guard ship opened fire on a Taiwanese fishermans vessel in a disputed
exclusive economic zone between Taiwan and the Philippines, killing a 65-year old Taiwanese fisherman.
Although the Government maintained that the loss of life was unintended, Taiwan imposed economic sanctions
on the Philippines in the aftermath of the incident. Taiwan eventually lifted the sanctions in August 2013 after a
formal apology was issued by the Government. However, the incident has raised tensions between the two
countries in recent months.
Should territorial disputes between the Philippines and other countries in the region continue or escalate further,
the Philippines and its economy may be disrupted and the operations of SMC Global Power could be adversely
affected.
Enforcing judgments against SMC Global Power.
It may be difficult for investors to enforce judgments against SMC Global Power obtained outside of the
Philippines. In addition, all of the directors and officers of SMC Global Power are residents of the Philippines,
and all or a substantial portion of the assets of such persons are located in the Philippines. As a result, it may be
difficult for investors to effect service of process upon such persons, or to enforce against them judgments
obtained in courts or arbitral tribunals outside the Philippines predicated upon the laws of jurisdictions other than
the Philippines.
The Philippines is party to the United Nations Convention on the Enforcement and Recognition of Arbitral
Awards, though it is not party to any international treaty relating to the recognition or enforcement of foreign
29
judgments. Nevertheless, a judgment or final order of a foreign court is, through the institution of an independent
action, enforceable in the Philippines as a general matter, unless there is evidence that: (i) the foreign court
rendering judgment did not have jurisdiction in accordance with its jurisdictional rules; (ii) the party against
whom enforcement is sought did not receive notice of the proceedings; (iii) judgment was obtained by collusion,
fraud, or on the basis of a clear mistake of law or fact; or (iv) the judgment is contrary to the laws, public policy,
customs or public order of the Philippines.
The sovereign credit ratings of the Philippines.
Historically, the Philippines sovereign debt has been rated relatively low by international credit rating agencies.
Although the Philippines long-term foreign currency-denominated debt was recently upgraded by each of
Standard & Poors, Fitch Ratings and Moodys to investment-grade, no assurance can be given that Standard &
Poors, Fitch Ratings or Moodys or any other international credit rating agency will not downgrade the credit
ratings of the Government in the future and, therefore, Philippine companies. Any such downgrade could have an
adverse impact on the liquidity in the Philippine financial markets, the ability of the Government and Philippine
companies, including SMC Global Power, to raise additional financing and the interest rates and other
commercial terms at which such additional financing is available.
Natural catastrophes.
The Philippines has experienced a number of major natural catastrophes over the years, including typhoons,
floods, volcanic eruptions and earthquakes, that may materially disrupt and adversely affect the business
operations of the Company. In particular, damage caused by natural catastrophes could result disruptions with
respect to the IPPA power plants of the Company, its Limay Cogeneration Plant and its greenfield power plants.
There can be no assurance that SMC Global Power is fully capable to deal with such natural catastrophes and that
the insurance coverage it currently maintains for its Limay Cogeneration Plant and its greenfield power plants
will fully compensate it for all the damages and economic losses resulting from these catastrophes.
RISKS RELATING TO THE SECURITIES
The Securities are not a suitable investment for all investors.
Each potential investor in the Securities must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:
have sufficient knowledge and experience to make a meaningful evaluation of the Securities, the merits and
risks of investing in the Securities and the information contained in this offering circular;
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular
financial situation, an investment in the Securities and the impact the Securities will have on its overall
investment portfolio;
have sufficient financial resources and liquidity to bear all of the risks of an investment in the Securities,
including where the currency for principal or distribution payments is different from the potential
investors currency;
understand thoroughly the terms of the Securities and be familiar with the behavior of any relevant
financial markets; and
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic,
interest rate, foreign exchange rate and other factors that may affect its investment and its ability to bear the
applicable risks.
30
The Securities are undated securities and investors have no right to require redemption.
The Securities are undated and have no fixed final maturity date. Securityholders have no right to require the
Issuer to redeem the Securities at any time and they can only be disposed of by sale. Holders who wish to sell
their Securities may be unable to do so at a price at or above the amount they have paid for them, or at all, if
insufficient liquidity exists in the market for the Securities. Therefore, holders of Securities should be aware that
they may be required to bear the financial risks of an investment in the Securities for an indefinite period of time.
The Securities are subordinated obligations.
The obligations of SMC Global Power under the Securities and the Trust Deed will constitute its unsecured and
subordinated obligations. In the event of the winding-up of the Issuer, the rights and claims of holders of the
Securities will (subject to and to the extent permitted by applicable law) rank senior to the holders of all Junior
Securities of the Issuer and pari passu with each other and with the holders of all Parity Securities of the Issuer,
but junior to the claims of all other creditors.
In the event of a winding-up of SMC Global Power, there is a substantial risk that an investor in the Securities
will lose all of its investment and will not receive a full return of the principal amount or any unpaid amounts due
under the Securities.
Distribution upon liquidation.
Under Philippine law, upon any voluntary or involuntary dissolution, liquidation or winding up of SMC Global
Power, Securityholders will be entitled only to the available assets of the Issuer remaining after the indebtedness
of the Issuer is satisfied. If any such assets are insufficient to pay the amounts due on the Securities, then the
Securityholders shall share ratably in any such distribution of assets in proportion to the amounts to which they
would otherwise be respectively entitled. In the event of liquidation or winding-up, the unsubordinated
obligations of the Issuer shall be preferred over the claims of Securityholders in respect of the Securities, which
Securities shall rank pari passu with each other and the Parity Securities of the Issuer.
Deferral of Distribution payments.
Subject to the Terms and Conditions, SMC Global Power may, at its sole and absolute discretion, elect to defer
any scheduled Distributions on the Securities for any period of time. The Issuer is not subject to any limits as to
the number of times Distributions can be deferred. Although, following a deferral, Arrears of Distributions are
cumulative, subject to the Terms and Conditions of the Securities, the Issuer may defer their payment for an
indefinite period of time by delivering the relevant deferral notices to the Securityholders. Any such deferral of
Distributions shall not constitute a default for any purpose unless, in the case of a deferral, such payment is
required in accordance with Condition 4.7 (Payment of Arrears of Distribution).
Any deferral of Distribution will likely have an adverse effect on the market price of the Securities. In addition,
as a result of the Distribution deferral provision of the Securities, the market price of the Securities may be more
volatile than the market prices of other securities on which original issue discount or interest accrues that are not
subject to such deferrals and may be more sensitive generally to adverse changes in the business, financial
condition, results of operations and prospects of the Issuer.
Redemption at the option of the Issuer.
The Securities are redeemable at the option of the Issuer, in whole but not in part, on the Step Up Date or any
Distribution Payment Date falling after the Step Up Date at 100% of their principal amount together with all
other outstanding amounts due under the Securities accrued to the date fixed for redemption.
The Issuer also has the right to redeem the Securities upon the occurrence of certain changes in Philippine tax
law requiring the payment of Additional Amounts. In addition, the Securities may be redeemed (in whole but not
31
in part) at the option of the Issuer (A) upon the occurrence of a Change of Control Event (i) at any time prior to
(but excluding) the Step Up Date at the Special Redemption Price or (ii) on or at any time after the Step Up Date
at the Redemption Price, (B) upon the occurrence and continuation of a Reference Indebtedness Default Event at
any time at the Redemption Price, (C) upon the occurrence and continuation of an Accounting Event (i) at any
time prior to (but excluding) the Step Up Date at the Special Redemption Price or (ii) on or at any time after the
Step Up Date at the Redemption Price, or (D) in the event 25% or less of the aggregate principal amount of the
Securities issued on the Issue Date remain outstanding (i) at any time prior to (but excluding) the Step Up Date at
the Special Redemption Price (as defined below) or (ii) on or at any time after the Step Up Date at the
Redemption Price, in each case on the giving of irrevocable notice of redemption to the Securityholders in
accordance with Condition 12.1 (Notices to the Securityholders).
The date on which the Issuer elects to redeem the Securities may not accord with the preference of individual
Securityholders. This may be disadvantageous to the Securityholders in light of market conditions or the
individual circumstances of the holder of the Securities. In addition, an investor may not be able to reinvest the
redemption proceeds in comparable securities at an effective distribution rate at the same level as that of the
Securities.
There are limited remedies for default under the Securities.
Any scheduled Distribution will not be due if the Issuer elects to defer that Distribution pursuant to the Terms
and Conditions of the Securities. Notwithstanding any of the provisions relating to non-payment defaults, the
right to institute winding-up proceedings is limited to circumstances where payment has become due and the
Issuer fails to make the payment when due. The only remedy against the Issuer available to the Trustee or (where
the Trustee has failed to proceed against the Issuer, as provided in the Terms and Conditions of the Securities)
any Securityholder for recovery of amounts in respect of the Securities following the occurrence of a payment
default after any sum becomes due in respect of the Securities will be instituting winding-up proceedings and/or
proving and/or claiming in winding-up in respect of the payment obligations of the Issuer arising from the
Securities and the Trust Deed.
The adoption of new accounting policies of PFRS may have a significant impact on the financial condition and
results of operations of SMC Global Power and/or may result in a change to the accounting treatment of the
Securities, which could give the Issuer the right to elect to redeem the Securities.
The FRSC is continuing its policy of issuing PFRS and interpretations which are substantially based on
International Financial Reporting Standards issued by the International Accounting Standards Board (IASB).
FRSC has issued and may in the future issue more new and revised standards and interpretations, including those
required to conform with standards and interpretations issued from time to time by the IASB. Such factors may
require adoption of new accounting policies. There can be no assurance that the adoption of new accounting
policies or new PFRS will not have a significant impact on the financial condition and results of operations of the
Company. In addition, any change or amendment to, or any change or amendment to any interpretation of, PFRS
may result in the reclassification of the Securities such that the Securities must not or must no longer be recorded
as equity of the Issuer, and will give the Issuer the right to elect to redeem the Securities. See Redemption
at the option of the Issuer.
The applicable Rate of Distribution may decline on any Reset Date.
The Rate of Distribution will be reset on each Reset Date by reference to the then Treasury Rate (as defined
below). Accordingly, a Securityholder is exposed to the risk of a fluctuating Rate of Distribution and uncertain
distribution income. A fluctuating Rate of Distribution makes it impossible to determine the yield of the
Securities with respect to any Reset Period in advance.
Substantial indebtedness in the future.
The Issuer may from time to time and without prior consultation of the holders of the Securities create and issue
further Securities (see Condition 9 (Further Issues)). Furthermore, the Issuer and its subsidiaries may from time
32
to time incur substantial additional indebtedness and contingent liabilities. Under the terms of the Securities,
there is no restriction, contractual or otherwise, on the amount of Securities that the Issuer may further issue or
securities or other liabilities that the Issuer and its subsidiaries may issue or incur and that rank senior to, or pari
passu with, the Securities, except that the Issuer may not issue any Preferred Stock which ranks, or is expressed
to rank, by its terms or by operation of law, senior to the Securities. If the Issuer or its subsidiaries incur
additional debt, that could have important consequences to investors. For example, it could: (1) limit the ability
of the Issuer to satisfy its obligations under the Securities and other debt; (2) increase the vulnerability of the
Issuer to adverse general economic and industry conditions; (3) require the Issuer to dedicate a substantial
portion of its cash flow from operations to servicing and repaying its indebtedness, thereby reducing the
availability of its cash flow to fund working capital, planned capital expenditures and other general corporate
purposes; (4) limit the flexibility of the Issuer in planning for or reacting to changes in its businesses and the
industries in which it operates; (5) increase the cost of additional financing; and (6) place the Issuer at a
competitive disadvantage compared to its competitors that have less debt. If the subsidiaries of the Issuer incur
additional indebtedness, that could also have adverse effects on the subsidiaries similar to those described above,
and therefore on the Issuer. The issue of any further Securities or such other securities, or the incurrence of any
such other liabilities, may reduce the amount (if any) recoverable by holders of the Securities on a winding-up of
the Issuer and may also have an adverse impact on the trading price of the Securities and/or the ability of
Securityholders to sell them.
An active trading market for the Securities may not develop or be sustained.
There has been no prior trading market for the Securities. The Issuer has been advised that the Joint Lead
Managers intend to make a market in the Securities, but that they are not obligated to do so and may discontinue
such market making activity at any time without notice. The Issuer cannot predict whether an active trading
market for the Securities will be sustained. The Securities could trade at prices that may be lower than the initial
offering price for the Securities. The price at which the Securities trade depends on many factors, including, but
not limited to:
prevailing interest rates and the markets for similar securities;
general economic conditions; and
the financial condition of the Issuer, historical financial performance and future prospects.
Approval-in-principle has been obtained from the SGX-ST for the listing and quotation of the Securities on the
Official List of the SGX-ST. No assurance can be given that the application to the SGX-ST for the Securities will
be approved or that the Issuer will be able to maintain a listing for the Securities or that a liquid trading market
for the Securities will develop or continue. If an active market for the Securities fails to be sustained, the trading
price of the Securities could be materially and adversely affected. Lack of a liquid or active trading market for
the Securities may adversely affect the price of the Securities or may otherwise impede a holders ability to
dispose of the Securities.
Corporate disclosure standards for debt securities listed on the SGX-ST.
The Issuer will be subject to reporting obligations in respect of the Securities to be listed on the SGX-ST. The
disclosure standards imposed by the SGX-ST are different from those imposed by securities exchanges in other
countries or regions, such as the United States or Hong Kong. As a result, the level of information that is
available may not correspond to what investors in the Securities are accustomed to.
Rights of the Securityholders may be altered without their consent.
The Trust Deed contains provisions for calling meetings of Securityholders to consider matters affecting their
interests generally. These provisions permit defined majorities to bind all Securityholders, including
Securityholders who did not attend and vote at the relevant meeting and Securityholders who voted in a manner
contrary to the majority. The Trust Deed also provides that the Trustee may, without consent of the
Securityholders, agree to any modification of any provision of the Securities which is not materially prejudicial
33
to the interests of the Securityholders or which is of a formal, minor or technical nature or is made to correct a
manifest error or an error which is, in the opinion of the Trustee, proven or to comply with mandatory provisions
of law, in the circumstances described in Terms and Conditions of the Securities Meetings of
Securityholders, Modification, Waiver, Authorization and Determination Modification, Waiver, Authorization
and Determination.
The Trustee may decline to take actions requested by the Securityholders.
Under the Trust Deed, in certain circumstances, the Trustee may, at its sole discretion, request the
Securityholders to provide an indemnity and/or security and/or pre-funding to its satisfaction before it takes
actions on behalf of the Securityholders. The Trustee shall not be obliged to take any such actions if no such
indemnity or security or pre-funding is provided to its satisfaction. Even if the Securityholders agree to
indemnify and/or provide security to and/or pre-fund the Trustee, the time taken to agree to the indemnity and/or
security and/or pre-funding may have an impact as to when such action is taken. In addition, notwithstanding the
provision of an indemnity or security or pre-funding to the Trustee, the Trustee may decline to take action
requested by the Securityholders if it determines that such actions are not permitted under the terms of the Trust
Deed or applicable law.
Risks relating to certain statistical information in this Offering Circular.
Certain statistical information in this Offering Circular relating to the Philippines, the industries and markets in
which the businesses of SMC Global Power compete and other data used in this Offering Circular was obtained
or derived from internal surveys, market research, governmental data, publicly available information and/or
industry publications. Industry publications generally state that the information they contain has been obtained
from sources believed to be reliable. However, there is no assurance that such information is accurate or
complete. Similarly, internal surveys, industry forecasts and market research have not been independently
verified by SMC Global Power and may not be accurate, complete, up-to-date, balanced or consistent with other
information compiled within or outside the Philippines.
If foreign exchange controls were to be imposed, the Issuers ability to access foreign currency to service
foreign currency denominated obligations, including its obligations under the Securities, could be
adversely affected.
Generally, Philippine residents may freely dispose of their foreign exchange receipts and foreign exchange may
be freely sold and purchased outside the Philippine banking system. The Monetary Board of the BSP, with the
approval of the President of the Philippines, has statutory authority, during a foreign exchange crisis or in times
of national emergency, to: (i) suspend temporarily or restrict sales of foreign exchange; (ii) require licensing of
foreign exchange transactions; or (iii) require delivery of foreign exchange to the BSP or its designee banks for
the issuance and guarantee of foreign currency-denominated borrowings. The Government has, in the past,
instituted restrictions on the conversion of Pesos into foreign currency and the use of foreign exchange received
by Philippine residents to pay foreign currency obligations. The Issuer is not aware of any pending proposals by
the Government regarding such restrictions. Although the Government has from time to time made public
pronouncements of a policy not to impose restrictions on foreign exchange, there can be no assurance that the
Government will maintain such policy or will not impose economic or regulatory controls that may restrict free
access to foreign currency. Any such restriction imposed in the future could adversely affect the ability of the
Issuer to service its obligations under the Securities.
34
TERMS AND CONDITIONS OF THE SECURITIES

The following (other than any paragraph in italics), subject to alteration, are the terms and conditions of the
Securities, which will be endorsed on the Certificates issued in respect of the Securities.
The issue of the U.S.$300,000,000 Undated Subordinated Capital Securities (the Securities, which expression,
unless the context otherwise requires, includes any further Securities issued pursuant to Condition 9 and forming
a single series with the Securities) of SMC Global Power Holdings Corp., a corporation organized under the laws
of the Republic of the Philippines (the Issuer) are constituted by a Trust Deed to be dated the Issue Date (the
Trust Deed) made between the Issuer and DB Trustees (Hong Kong) Limited (the Trustee, which expression
includes its successor(s)) as trustee for the holders of the Securities (the Securityholders)).
The statements in these Conditions include summaries of, and are subject to, the detailed provisions of the Trust
Deed and the agency agreement to be dated the Issue Date (the Agency Agreement) made between the Issuer,
the Trustee, Deutsche Bank AG, Hong Kong Branch as principal paying agent (the Principal Paying Agent) and
as transfer agent (the Transfer Agent), the other paying agents named therein (each a Paying Agent and,
together with the Principal Paying Agent, the Paying Agents), Deutsche Bank AG, Hong Kong Branch as
calculation agent (the Calculation Agent) and Deutsche Bank Luxembourg S.A. as the registrar (the Registrar
and, together with the Paying Agents, the Transfer Agent and the Calculation Agent, the Agents). Copies of the
Trust Deed and the Agency Agreement are available for inspection with reasonable prior notification during
normal business hours by the Securityholders at the specified office of the Trustee and the Agents. The
Securityholders are entitled to the benefit of, are bound by, and are deemed to have notice of all the provisions of
the Trust Deed and the Agency Agreement applicable to them.
1.
1.1
FORM, DENOMINATION AND TITLE

Form and denomination
The Securities are issued in registered form in amounts of U.S.$200,000 and integral multiples of U.S.$1,000 in
excess thereof (referred to as the Principal Amount of a Security). A certificate (each a Certificate) will be
issued to each Securityholder in respect of its registered holding of Securities. Each Certificate will be numbered
serially with an identifying number which will be recorded on the relevant Certificate and in the register of
Securityholders (the Register) which the Issuer will procure to be kept by the Registrar.
The Registrar will keep the Register outside of the United Kingdom in accordance with the provisions of the
Agency Agreement.
The Securities are not issuable in bearer form.
Except in the limited circumstances described herein (see The Global Certificate), owners of interests in the
Securities will not be entitled to receive physical delivery of Certificates. Issues of Certificates upon transfer of
Securities are subject to compliance by the transferor and transferee with the certification procedures described
above and in the Agency Agreement.
1.2
Title
Title to the Securities passes only by registration in the Register. The person in whose name a Security is
registered in the Register will (except as otherwise required by law) be treated as the absolute owner of that
Security for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any
interest or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be
liable for so treating the Holder. In these Conditions, Securityholder or Holder means the person in whose name
a Security is registered in the Register.
For a description of the procedures for transferring title to book-entry interests in the Securities, see Clearance
and Settlement of the Securities.
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2.
2.1
TRANSFERS OF SECURITIES AND ISSUE OF CERTIFICATES

Transfers
Subject to Condition 2.4 and Condition 2.5, a Security may be transferred by depositing the Certificate issued in
respect of that Security, with the form of transfer on the back duly completed and signed, at the specified office
of the Registrar or any of the other Agents (other than the Calculation Agent) together with such evidence as the
Registrar or such other Agent may require to prove the title of the transferor and the authority of the individual
who has executed the form of transfer; provided, however, that such Security may not be transferred unless the
Principal Amount of Securities transferred and (where not all of the Securities held by a Securityholder are being
transferred) the Principal Amount of the balance of Securities not transferred are in authorized denominations
described in Condition 1.1. In the case of a transfer of part only of a holding of Securities represented by one
Certificate, a new Certificate will be issued to the transferee in respect of the part transferred and a further new
Certificate in respect of the balance of the holding not transferred will be issued to the transferor.
For a description of certain restrictions on transfers of interests in the Securities, see Subscription and Sale.
2.2
Delivery of new Certificates
Each new Certificate to be issued upon transfer of Securities will, within five business days of receipt by the
Registrar or any of the other Agents (other than the Calculation Agent) of the duly completed form of transfer
endorsed on the relevant Certificate, be mailed by uninsured mail at the risk of the Holder entitled to the
transferred Securities to the address specified in the form of transfer. For the purposes of this Condition, business
day shall mean a day on which banks are open for business in the city in which the specified office of the
Registrar or such other Agent (other than the Calculation Agent) (as applicable) with whom a Certificate is
deposited in connection with a transfer is located.
Where some but not all of the Securities in respect of which a Certificate is issued are to be transferred, a new
Certificate in respect of the Securities not so transferred will, within five business days of receipt by the Registrar
or any of the other Agents (other than the Calculation Agent) of the original Certificate, be mailed by uninsured
mail at the risk of the Holder of the Securities not so transferred to the address of such Holder appearing on the
Register or as specified in the form of transfer.
2.3
Formalities free of charge
Registration of transfer of Securities will be effected without charge by or on behalf of the Issuer, the Registrar or
any other Agent (other than the Calculation Agent) but upon payment (or the giving of such indemnity as the
Issuer, the Registrar or any other Agent (other than the Calculation Agent) may reasonably require) by the
relevant Holder in respect of any tax or other governmental charges which may be imposed in relation to such
transfer.
2.4
Closed Periods
No Securityholder may require the transfer of a Security to be registered during the period of 15 calendar days
ending on the due date for any payment of principal, premium (if any) or Distributions on that Security.
2.5
Regulations
All transfers of Securities and entries on the Register will be made subject to the detailed regulations concerning
transfer of Securities scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the
prior written approval of the Registrar and the Trustee. A copy of the current regulations will be mailed (free of
charge) by the Registrar to any Securityholder who requests one.
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3.
3.1
STATUS, SUBORDINATION AND COVENANT

Status of the Securities
The Securities constitute direct, unconditional, unsecured and subordinated capital securities of the Issuer and
will at all times rank pari passu without any preference among themselves and in priority of claims of holders of
Junior Securities. The rights and claims of the Securityholders are subordinated as described in Condition 3.2.
3.2
Subordination
The claims of the Holders in respect of the Securities, including in respect of any claim to Arrears of
Distribution, will, in the event of the Winding-Up of the Issuer (subject to and to the extent permitted by
applicable law), rank:
(a) junior to all unsubordinated obligations of the Issuer (other than Parity Securities) and any obligation
assumed by the Issuer under any guarantee of, or any indemnity in respect of, any obligation or commitment
which rank or are expressed to rank senior to the Securities;
(b) pari passu with each other and with any Parity Securities of the Issuer; and
(c) senior only to the Issuers Junior Securities.
3.3
No set-off
To the extent and in the manner permitted by applicable law, no Securityholder may exercise, claim or plead any
right of set-off, counterclaim, compensation or retention in respect of any amount owed to it by the Issuer in
respect of, or arising from, the Securities and each Securityholder will, by virtue of his holding of any Security,
be deemed to have waived all such rights of set-off, counterclaim, compensation or retention.
3.4
No Voting Rights
The Securities do not confer any voting rights on Securityholders with respect to the common shares or any other
class of share capital of the Issuer.
3.5
Covenant
The Issuer hereby undertakes not to issue any Preferred Stock which ranks, or is expressed to rank, by its terms
or by operation of law, senior to the Securities.
4.
4.1
DISTRIBUTIONS
Rate of Distribution
Subject to Condition 4.4 and Condition 4.5, the Securities will confer a right to receive distributions
(Distributions):
(a) from the period commencing on (and including) the Issue Date to (but excluding) February 26, 2021 (the
Step Up Date), at the Initial Rate of Distribution; and
(b) from (and including) each Reset Date (including the Step Up Date) to (but excluding) the immediately
following Reset Date, at the relevant Reset Rate of Distribution (determined by the Calculation Agent on the
relevant Reset Determination Date and notified to the Holders, the Principal Paying Agent and the
Registrar),
payable semi-annually in arrear on August 26 and February 26 of each year (each a Distribution Payment Date)
commencing on February 26, 2016.
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Reset Date means the Step Up Date and any subsequent date which is the fifth anniversary of any Reset Date.
4.2
Distribution Accrual
Each Security will cease to accrue Distributions from and including its due date for redemption unless, upon due
presentation, payment of the principal in respect of the Security is improperly withheld or refused or unless
default is otherwise made in respect of payment, in which event Distributions shall continue to accrue as
provided in the Trust Deed.
4.3
Calculation of Broken Amounts
When any Distribution is required to be calculated in respect of a period of less than a full six months, it shall be
calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an
incomplete month, the number of days elapsed on the basis of a month of 30 days.
4.4
Increase in Rate of Distribution
Following the earlier to occur of:

(a) the date which is the 61st day, or if such day is not a Business Day the first Business Day thereafter,
following a Change of Control Event; and
(b) the date on which a Reference Indebtedness Default Event occurs,
and the Issuer does not elect to redeem the Securities pursuant to Condition 5.4, the Rate of Distribution will
increase by 2.50% per annum with effect from the next Distribution Payment Date (or, if the relevant event
occurs on or after the date that is five Business Days prior to the next Distribution Payment Date, the next
following Distribution Payment Date). For the avoidance of doubt, an increase (if any) in the Rate of Distribution
pursuant to this Condition 4.4 shall not occur more than once.
A Change of Control Event means San Miguel Corporation ceasing to, whether directly or indirectly, have
control in respect of more than 50% of the outstanding Voting Stock of the Issuer.
Reference Indebtedness Default Event means an event of default occurs pursuant to Condition 10(c) of the
Issuers outstanding U.S.$300 million 7.0% Notes due 2016 (ISIN: XS0579034223) (the Senior Notes) or
similar condition of any U.S. dollar-denominated debt security issued in exchange for, or the net proceeds of
which are used to refinance or refund, replace, exchange, renew, repay, defease or discharge the Senior Notes
prior to their maturity (the Refinancing Securities), as a result of the Issuers default in, non-compliance with or
non-performance of Condition 4 (Covenants) of the Senior Notes or similar condition of the Refinancing
Securities, as the case may be, as such Senior Notes or Refinancing Securities are amended from time to time in
accordance with Condition 15 of the Senior Notes or similar condition of the Refinancing Securities, as the case
may be.
4.5
Optional Deferral of Distributions
(a) The Issuer may, in its sole and absolute discretion, on any day which is not less than five Business Days
prior to any Distribution Payment Date, resolve to defer payment of any or all of the Distribution which
would otherwise be payable on that Distribution Payment Date unless, during the six months ending on that
scheduled Distribution Payment Date a Compulsory Distribution Payment Event has occurred (the Deferral
Election Event). Any such deferred Distribution will constitute Arrears of Distribution and will not be
due and payable until the relevant Payment Reference Date. Distributions will accrue on each Arrears of
Distribution for so long as such Arrears of Distribution remains outstanding at the same Rate of Distribution
as the Principal Amount of the Securities bears at such time and will be added to such Arrears of
Distribution (and thereafter bear Distributions accordingly) on each Distribution Payment Date.
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(b) The Issuer will notify the Securityholders (in accordance with Condition 12.1), the Trustee and the Principal
Paying Agent of any deferral of Distribution not less than five Business Days prior to the relevant
Distribution Payment Date (the Deferral Election Notice). Deferral of a Distribution pursuant to Condition
4.5(a) will not constitute a default by the Issuer or any other breach of its obligations under the Securities or
the Trust Deed or for any other purpose.
(c) Each Deferral Election Notice shall be accompanied, in the case of the notice to the Trustee and the
Principal Paying Agent, by a certificate in the form scheduled to the Trust Deed signed by two duly
Authorized Signatories of the Issuer confirming that no Compulsory Distribution Payment Event has
occurred.
The Trustee shall be entitled to accept such certificate as sufficient evidence of the occurrence of a Deferral
Election Event in which event it shall be conclusive and binding on the Securityholders.
(d) The Issuer is not subject to any limit as to the number of times Distributions and Arrears of Distributions
may be deferred pursuant to the provisions of Condition 4.5(a).
Compulsory Distribution Payment Event means (a) a discretionary dividend, distribution, interest or other
payment has been paid or declared on or in respect of any Junior Securities or (except on a pro rata basis) Parity
Securities of the Issuer, other than a dividend, distribution or other payment in respect of an employee benefit
plan or similar arrangement with or for the benefit of employees, officers, directors and consultants of the Issuer;
or (b) at the discretion of the Issuer, any Junior Securities or (except on a pro rata basis) Parity Securities of the
Issuer have been redeemed, repurchased or otherwise acquired by the Issuer or any of its Subsidiaries, other than
a redemption, repurchase or other acquisition in respect of an employee benefit plan or similar arrangement with
or for the benefit of employees, officers, directors and consultants of the Issuer.
4.6
Restrictions in the case of Deferral
If on any Distribution Payment Date, payment of all Distributions scheduled to be made on such date is not made
in full by reason of the Issuer deferring such Distributions in accordance with the terms of the Securities, the
Issuer shall not, and shall procure that none of its Subsidiaries will:
(a) declare or pay any discretionary dividends, distributions or make any other discretionary payment on, and
will procure that no discretionary dividend, distribution or other payment is made on any class of
Junior Securities or (except on a pro rata basis) Parity Securities of the Issuer, other than a dividend,
distribution or other payment in respect of an employee benefit plan or similar arrangement with or for the
benefit of employees, officers, directors and consultants of the Issuer; or
(b) redeem, reduce, cancel, buy-back or acquire for any consideration any of the Junior Securities or (except on
a pro rata basis) Parity Securities of the Issuer, other than a redemption, reduction, cancellation, buy-back
or acquisition in respect of an employee benefit plan or similar arrangement with or for the benefit of
employees, officers, directors and consultants of the Issuer,
unless and until (i) the Issuer has satisfied in full all outstanding Arrears of Distribution; or (ii) the Issuer is
permitted to do so with the consent of the Securityholders of at least a majority in aggregate principal amount of
the Securities then outstanding. For the avoidance of doubt, nothing in Condition 4.6 shall restrict the ability of
any Subsidiary of the Issuer to declare and pay dividends, advance loans or otherwise make payments to the
Issuer.
4.7
Payment of Arrears of Distribution
(a) The Issuer may elect to pay Arrears of Distribution (in whole or in part) at any time on the giving of at least
five Business Days prior notice to Securityholders (in accordance with Condition 12.1), the Trustee and the
Principal Paying Agent. If Arrears of Distribution have not been paid in full earlier, all outstanding Arrears
39
of Distribution will become due and payable, and the Issuer must pay such outstanding Arrears of
Distribution (including any amount of Distribution accrued thereon in accordance with Condition 4.5(a)), on
the relevant Payment Reference Date (in accordance with Condition 6). Any partial payment of outstanding
Arrears of Distribution by the Issuer shall be made on a pro rata basis between the Securityholders.
(b) Payment Reference Date means the date which is the earliest of:
(i)
the date on which the Securities are redeemed in accordance with Condition 5;
(ii) the date on which an order is made for the Winding-Up of the Issuer; and
(iii) the date on which the Issuer is in violation of Condition 4.6 or on the occurrence of a Compulsory
Distribution Payment Event.
5.
5.1
REDEMPTION AND PURCHASE

Redemption
The Securities have no fixed redemption date. Unless previously redeemed or purchased and cancelled as
provided below, the Securities will mature on the date on which the corporate term of the Issuer expires in
accordance with its constituent documents (including its articles of incorporation, which currently provide for the
Issuers corporate term to expire on January 23, 2058). If the corporate term of the Issuer is extended, the term of
the Securities will automatically and correspondingly be extended.
As of the date of this Offering Circular, the Issuers articles of incorporation provide that its corporate term will
expire on January 23, 2058 and the Issuer intends to extend its corporate term prior to such expiry. Under the
Corporation Code of the Philippines (Batas Pambansa Blg. 68), the extension of such corporate term will
require an amendment to the Issuers articles of incorporation, which amendment is subject to the approval of
the shareholders and the Board of Directors of the Issuer and the Securities and Exchange Commission of the
Philippines.
5.2
Redemption at the option of the Issuer
Subject to applicable law, the Issuer may redeem the Securities (in whole but not in part) on:
(a) the Step Up Date; or
(b) any Distribution Payment Date falling after the Step Up Date,
in each case, at the Redemption Price, on the giving of not less than 30 and not more than 60 calendar days
irrevocable notice of redemption to the Securityholders in accordance with Condition 12.1.
5.3
Early redemption due to a Gross-up Event
(a) If a Gross-up Event occurs, the Issuer may redeem the Securities (in whole but not in part) at the
Redemption Price, on the giving of not less than 30 and not more than 60 calendar days irrevocable notice
of redemption to the Securityholders in accordance with Condition 12.1.
(b) No such notice of redemption may be given earlier than 45 calendar days prior to the earliest calendar day
on which the Issuer would be for the first time obliged to pay the Additional Amounts in question on
payments due in respect of the Securities.
40
(c) Prior to the giving of any such notice of redemption, the Issuer will deliver or procure that there is delivered
to the Trustee:
(i)
a certificate signed by any two executive officers of the Issuer stating that the Issuer is entitled to effect
such redemption and setting out a statement of facts showing that a Gross-up Event has occurred and
that the obligation to pay Additional Amounts cannot be avoided by the Issuer taking reasonable
measures available to it; and
(ii) an opinion of an independent legal or tax adviser of recognized standing to the effect that the Issuer has
or will become obliged to pay the Additional Amounts in question as a result of a Gross-up Event,
and the Trustee shall be entitled to accept the above certificate and opinion as sufficient evidence of the
satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the
Securityholders.
For the avoidance of doubt, a change of jurisdiction or domicile of the Issuer shall not be considered a reasonable
measure.
Gross-up Event means that as a result of any change in, or amendment to, the laws or regulations or rulings
promulgated thereunder of the Relevant Jurisdiction, or any change in or amendment to any official interpretation
or application of those laws or regulations or rulings promulgated thereunder, which change or amendment
becomes effective on or after August 26, 2015, the Issuer has or will become obliged to pay Additional Amounts;
provided that the payment obligation cannot be avoided by the Issuer taking reasonable measures available to it;
provided further that where any Additional Amounts due in accordance with Condition 7 are in consequence of
any change in the laws or regulations or rulings promulgated thereunder of the Relevant Jurisdiction, or any
change in or amendment to any official interpretation or application of those laws or regulations or rulings
promulgated thereunder after August 26, 2015, a Gross-Up Event shall have occurred only in the event that the
rate of withholding or deduction required by such law, regulation or rulings promulgated thereunder, or such
official interpretation or application thereof, is in excess of 30.0%.
5.4 Early redemption due to a Change of Control Event, Reference Indebtedness Default Event, or
Accounting Event
(a) If a Change of Control Event occurs, the Issuer may redeem the Securities (in whole but not in part) (i) at
any time prior to but excluding the Step Up Date at the Special Redemption Price or (ii) on or at any time
after the Step Up Date at the Redemption Price, in each case on the giving of not less than 30 and not more
than 60 calendar days irrevocable notice of redemption to the Securityholders in accordance with
Condition 12.1.
(b) If a Reference Indebtedness Default Event occurs and is continuing, the Issuer may redeem the Securities (in
whole but not in part) at any time at the Redemption Price, on the giving of not less than 30 and not more
than 60 calendar days irrevocable notice of redemption to the Securityholders in accordance with
Condition 12.1.
(c) If an Accounting Event occurs and is continuing, the Issuer may redeem the Securities (in whole but not in
part) (i) at any time prior to but excluding the Step Up Date at the Special Redemption Price or (ii) on or at
any time after the Step Up Date at the Redemption Price, in each case on the giving of not less than 30 and
not more than 60 calendar days irrevocable notice of redemption to the Securityholders in accordance with
Condition 12.1.
(d) Such notice of redemption as provided in Conditions 5.4(a), 5.4(b), and 5.4(c) may only be given
simultaneously with or after a notification by the Issuer in accordance with Condition 12.1 that a Change of
Control Event, a Reference Indebtedness Default Event or an Accounting Event (as the case may be) has
occurred.
41
(e) An Accounting Event means that an opinion of a recognized accountancy firm of international standing has
been delivered to the Issuer and the Trustee, stating the Securities may no longer be recorded as equity in
the audited consolidated financial statements of the Issuer prepared in accordance with PFRS or other
recognized accounting standards that the Issuer has adopted from time to time for the preparation of its
audited consolidated financial statements and such event cannot be avoided by the Issuer taking reasonable
measures available to it.
5.5
Purchase of Securities
The Issuer or any of its Subsidiaries may, in compliance with applicable laws, purchase Securities in any manner
and at any price. Such acquired Securities may be surrendered for cancellation or held or resold.
5.6
Redemption of Securities in the case of minimal outstanding amounts
In the event that the Issuer and/or any of its Subsidiaries has, individually or in aggregate, purchased (and not
resold) or redeemed Securities equal to or in excess of 75% of the aggregate Principal Amount of the
Securities issued on the Issue Date, the Issuer may redeem the remaining Securities (in whole but not in part):
(a) at any time prior to but excluding the Step Up Date, at the Special Redemption Price; or
(b) on or at any time after the Step Up Date, at the Redemption Price,
on the giving of not less than 30 and not more than 60 calendar days irrevocable notice of redemption to the
Securityholders in accordance with Condition 12.1.
6.
6.1
PAYMENTS
Payments in respect of Securities
Payment of principal, premium (if any) and Distributions will be made by transfer to the registered account of the
Securityholder or by U.S. dollar cheque drawn on a bank that processes payments in U.S. dollars mailed to the
registered address of the Securityholder if it does not have a registered account. Payments of principal and
premium (if any) and payments of Distribution due otherwise than on a Distribution Payment Date will only be
made against surrender of the relevant Certificate at the specified office of any of the Agents (other than the
Calculation Agent). Distributions on Securities due on a Distribution Payment Date will be paid to the holder
shown on the Register at the close of business on the date being the 15th calendar day before the relevant
Distribution Payment Date (the Record Date).
For the purposes of this Condition, a Securityholders registered account means the U.S. dollar account
maintained by or on behalf of it with a bank that processes payments in U.S. dollars, details of which appear on
the Register at the close of business, in the case of principal and premium (if any) and Distributions due
otherwise than on a Distribution Payment Date, on the second Payment Business Day (as defined in
Condition 6.4) before the due date for payment and, in the case of Distributions due on a Distribution Payment
Date, on the relevant Record Date, and a Securityholders registered address means its address appearing on the
Register at that time.
6.2
Payments subject to Applicable Laws
Payments in respect of principal, premium (if any) and Distributions on Securities are subject in all cases to any
fiscal or other laws and regulations applicable in the place of payment, but without prejudice to the provisions of
Condition 7.
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6.3
No commissions
No commissions or expenses shall be charged to the Securityholders in respect of any payments made in
accordance with this Condition.
6.4
Payment on Business Days
Where payment is to be made by transfer to a registered account, payment instructions (for value the due date or,
if that is not a Payment Business Day (as defined below), for value the first following day which is a Payment
Business Day) will be initiated and, where payment is to be made by cheque, the cheque will be mailed, on the
Payment Business Day preceding the due date for payment or, in the case of a payment of principal and premium
(if any) or a payment of Distributions due otherwise than on a Distribution Payment Date, if later, on the
Payment Business Day on which the relevant Certificate is surrendered at the specified office of an Agent (other
than the Calculation Agent).
Securityholders will not be entitled to any Distributions or other payment for any delay after the due date in
receiving the amount due if the due date is not a Payment Business Day, if the Securityholder is late in
surrendering its Certificate (if required to do so) or if a cheque mailed in accordance with this Condition arrives
after the due date for payment.
In this Condition, Payment Business Day means a day (other than a Saturday or Sunday) on which commercial
banks are open for business in City of Manila, New York City and Hong Kong and, in the case of presentation of
a Certificate, in the place in which the Certificate is presented.
6.5
Partial Payments
If the amount of principal, premium (if any) or Distributions which is due on the Securities is not paid in full, the
Registrar will annotate the Register with a record of the amount of principal, premium (if any) or Distributions in
fact paid.
6.6
Agents
The Issuer reserves the right at any time to vary or terminate the appointment of any Agent and to appoint
additional or other Agents provided that:
(a) there will at all times be a Principal Paying Agent;
(b) so long as the Securities are listed on the Singapore Exchange Securities Trading Limited (the SGX-ST) and
if the SGX-ST so requires, in the event that a Global Certificate is exchanged for definitive certificates,
there will be a Paying Agent with a specified office in Singapore, where the Securities may be presented or
surrendered for payment or redemption. In addition, in the event that a Global Certificate is exchanged for
definitive certificates, an announcement of such exchange shall be made by or on behalf of the Issuer
through the SGX-ST and such announcement will include all material information with respect to the
delivery of the definitive certificates, including details of the paying agent in Singapore;
(c) the Issuer undertakes that it will ensure that, if the Securities are issued in definitive form, it maintains a
Paying Agent in a Member State of the European Union that is not obliged to withhold or deduct tax
pursuant to European Council Directive 2003/48/EC (as amended from time to time) or any law
implementing or complying with, or introduced in order to conform to, such Directive;
(d) there will at all times be a Registrar; and
(e) there will at all times be a Transfer Agent.
43
Notice of any termination or appointment and of any changes in specified offices will be given to the
Securityholders promptly by the Issuer in accordance with Condition 12.1.
7.
TAXATION AND GROSS-UP
7.1
Payment without withholding
All payments in respect of the Securities by or on behalf of the Issuer will be made without withholding or
deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of
whatever nature (Taxes) imposed or levied by or on behalf of the Relevant Jurisdiction, unless the withholding or
deduction of the Taxes is required by law. In the event where such withholding or deduction is made by the
Issuer, the Issuer shall pay such additional amount (Additional Amounts) as will result in receipt by the
Securityholders of such amounts as would have been received by them had no such withholding or deduction
been required; except that no Additional Amounts will be payable in relation to any payment in respect of any
Security:
(a) presented for payment (if applicable) by or on behalf of a Securityholder who is liable to the Taxes in
respect of such Security by reason of their having some connection with any Relevant Jurisdiction other
than the mere holding of the Security;
(b) presented for payment (if applicable) more than 30 calendar days after the Relevant Date (as defined in
Condition 7.2) except to the extent that a Holder of such Security would have been entitled to such
Additional Amounts on presenting the same for payment on the last day of the period of 30 calendar days
assuming, whether or not such is in fact the case, that day to have been a Payment Business Day (as defined
in Condition 6.4);
(c) where such withholding or deduction is imposed on a payment to an individual and is required to be made
pursuant to European Council Directive 2003/48/EC (as amended from time to time) or any law
implementing or complying with, or introduced in order to conform to, such Directive;
(d) where such withholding or deduction would not have been so imposed but for the failure by the Holder of
such Security, after written request made to that Holder at least 30 calendar days before any such
withholding or deduction would be payable, by the Issuer, the Trustee or the Paying Agent, as applicable, to
comply with any identification, information, documentation or other similar reporting requirement
concerning its nationality, residence or connection with the Relevant Jurisdiction, which is required or
imposed by a statute, regulation or published administrative interpretation of general application of the
Relevant Jurisdiction as a precondition to reduction or exemption from such withholding or deduction; or
(e) presented for payment (if applicable) by or on behalf of a Securityholder who would have been able to avoid
such withholding or deduction by presenting the relevant Security to another Paying Agent in a Member
State of the European Union.
7.2
Interpretation
In these Conditions:
(a) The Relevant Date means the date on which the payment first becomes due but, if the full amount of the
money payable has not been received by the Principal Paying Agent or the Trustee on or before the
due date, it means the date on which, the full amount of the money having been so received, notice to that
effect has been duly given to the Securityholders by the Issuer in accordance with Condition 12.1.
(b) The Relevant Jurisdiction means the Republic of the Philippines or any political subdivision or any
authority thereof or therein having power to tax, or in the event of any substitution or other corporate action
resulting in the Issuer being incorporated in any other jurisdiction, that other jurisdiction or any political
subdivision or any authority thereof or therein having power to tax.
44
7.3
Additional Amounts, principal and Distributions
Any reference in these Conditions to any amounts in respect of the Securities will be deemed also to refer to any
Additional Amounts which may be payable under this Condition 7 or under any undertakings given in addition
to, or in substitution for, this Condition pursuant to the Trust Deed. Unless the context otherwise requires, any
reference in these Conditions to principal includes any installment amount or redemption amount and any other
amounts in the nature of principal payable pursuant to these Conditions and Distributions includes all amounts
payable pursuant to Condition 4 and any other amounts in the nature of distributions payable pursuant to these
Conditions.
8.
PRESCRIPTION
Securities will become void unless presented for payment within periods of 10 years (in the case of principal) and
five years (in the case of Distributions) from the Relevant Date in respect of the Securities subject to the
provisions of Condition 6.
9.
FURTHER ISSUES
The Issuer is at liberty from time to time without the consent of the Securityholders to create and issue further
Securities or bonds either (a) ranking pari passu in all respects (or in all respects save for the first payment of
Distributions thereon) and so that the same will be consolidated and form a single series with the Securities or
(b) upon such terms as to ranking, distributions, conversion, redemption and otherwise as the Issuer may
determine at the time of the issue. Any further Securities which are to form a single series with the Securities will
be constituted by a deed supplemental to the Trust Deed.
10.
10.1
NON-PAYMENT
Non-payment when due
Notwithstanding any of the provisions below in this Condition 10, the right to institute Winding-Up proceedings
is limited to circumstances where payment has become due. In the case of any Distributions, such Distributions
will not be due if the Issuer has elected to defer Distributions in accordance with Condition 4.5. In addition,
nothing in this Condition 10, including any restriction on commencing proceedings, shall in any way restrict or
limit any rights of the Trustee or any of its directors, officers, employees or agents to claim from or to otherwise
take any action against the Issuer, in respect of any actual, reasonable and documented costs, charges, fees,
expenses or liabilities incurred by such party pursuant to or in connection with the Trust Deed or the Securities.
10.2
Proceedings for Winding-Up
If (a) an order is made or an effective resolution is passed for the Winding-Up of the Issuer or (b) the Issuer fails
to make payment in respect of the Securities for a period of 10 calendar days or more after the date on which
such payment is due, the Issuer shall be deemed to be in default under the Trust Deed and the Securities and the
Trustee may, subject to the provisions of Condition 10.4 and subject to and to the extent permitted by applicable
law, institute proceedings for the Winding-Up of the Issuer, and/or prove in the Winding-Up of the Issuer, and/or
claim in the liquidation of the Issuer, for such payment.
10.3
Enforcement
Without prejudice to Condition 10.2 but subject to the provisions of Condition 10.4 the Trustee may without
further notice to the Issuer institute such proceedings against the Issuer as it may think fit to enforce any term or
condition binding on the Issuer under the Trust Deed or the Securities (other than any payment obligation of the
Issuer under or arising from the Securities or the Trust Deed, including, without limitation, payment of any
principal or premium or satisfaction of any Distributions (including any Arrears of Distribution) in respect of the
Securities, including any damages awarded for breach of any obligations) and in no event shall the Issuer, by
virtue of the institution of any such proceedings, be obliged to pay any sum or sums, in cash or otherwise, sooner
than the same would otherwise have been payable by it.
45
10.4
Entitlement of Trustee
The Trustee shall not and shall not be obliged to take any of the actions referred to in Condition 10.2 or 10.3
above against the Issuer to enforce the terms of the Trust Deed or the Securities unless (a) it shall have been so
requested by an Extraordinary Resolution of the Securityholders or in writing by the Securityholders of at least
one-quarter in principal amount of the Securities then outstanding and (b) it shall have been indemnified and/or
secured and/or pre-funded to its satisfaction.
10.5
Right of Securityholders
Securityholders are not entitled to proceed directly against the Issuer or to institute proceedings for the WindingUp or claim in the liquidation of the Issuer or to prove in such Winding-Up unless the Trustee, having become so
bound to proceed or being able to prove in such Winding-Up or claim in such liquidation, fails to do so within a
reasonable period and such failure shall be continuing, in which case the Securityholders shall have only such
rights against the Issuer as those which the Trustee is entitled to exercise as set out in this Condition 10.
10.6
Extent of Securityholders remedy
No remedy against the Issuer, other than as referred to in this Condition 10, shall be available to the Trustee or
the Securityholders, whether for the recovery of amounts owing in respect of the Securities or under the Trust
Deed or in respect of any breach by the Issuer of any of its other obligations under or in respect of the Securities
or under the Trust Deed.
11.
REPLACEMENT OF CERTIFICATES
Should any Certificate be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of
the Registrar upon payment by the claimant of the expenses incurred in connection with the replacement and on
such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Certificates
must be surrendered before replacements will be issued.
12.
12.1
NOTICES
Notices to Securityholders
All notices to the Securityholders will be valid if mailed to them at their respective addresses in the Register and,
so long as the Securities are listed on a stock exchange and the rules of that stock exchange so require, published
in a daily newspaper of general circulation in the place or places required by the rules of that stock exchange.
Any notice shall be deemed to have been given on the seventh calendar day after being so mailed or on the date
of publication or, if so published more than once or on different dates, on the date of the first publication.
So long as all the Securities are represented by the Global Certificate and the same is/are deposited with a
nominee for a common depositary and Euroclear and Clearstream, Luxembourg, notices to Securityholders shall
be given by delivery to Euroclear and Clearstream, Luxembourg or such additional or substitute clearing system
by the Issuer, for communication by them to entitled accountholders in substitution for publication as required by
the Conditions.
12.2
Notices from Securityholders
Notices to be given by any Securityholder must be in writing and given by lodging the same, together with any
Certificate in respect of such Security or Securities, with the Registrar or, if the Securities are held in a clearing
system, may be given through the clearing system in accordance with its standard rules and procedures.
46
13.
PROVISION OF FINANCIAL STATEMENTS AND REPORTS
So long as any of the Securities remain outstanding and the equity securities of the Issuer are not quoted, listed or
dealt in or traded on the Philippine Stock Exchange or any nationally or internationally recognized stock
exchange or other securities market, the Issuer will furnish to the Trustee and, upon request, any Securityholder:
(i)
as soon as they are available, but in any event within 120 calendar days after the end of the financial year of
the Issuer, copies of its financial statements (on a consolidated basis) in respect of such financial year
(including at least a statement of income, balance sheet and cash flow statement) audited by a member firm
of an internationally recognized firm of independent accountants;
(ii) as soon as they are available, but in any event within 60 calendar days after the end of each quarterly period
(other than the final period of a financial year) of the Issuer, copies of its unaudited financial statements (on
a consolidated basis) in respect of such quarterly period or (in the case of the second quarter of each
financial year) the relevant semi-annual period (including at least a statement of income, balance sheet and
cash flow statement); and
(iii) (A) with each set of financial statements in accordance with clauses (i) and (ii) above and at any other time
within 30 calendar days of the written request of the Trustee; and (B) as soon as possible and in any event
within 14 calendar days after the Issuer becomes aware of the occurrence of a Reference Indebtedness
Default Event, in each case accompanied by an Officers Certificate, in the case of (A) above, confirming
compliance with all of the Issuers obligations under these Conditions and the Trust Deed, and, in the case
of (B) above, setting forth the details of the Reference Indebtedness Default Event and the action which the
Issuer proposes to take with respect thereto, and the Trustee shall be entitled to accept such certificate as
sufficient evidence thereof, in which event it shall be conclusive and binding on the Securityholders.
14. MEETINGS OF SECURITYHOLDERS, MODIFICATION, WAIVER, AUTHORIZATION AND
DETERMINATION
14.1
Meetings of Securityholders
The Trust Deed contains provisions for convening meetings of Securityholders to consider matters affecting their
interests, including the sanctioning by Extraordinary Resolution of a modification of any of these Conditions or
any provisions of the Trust Deed. Such a meeting may be convened by the Issuer and shall be convened by it
upon the request of Securityholders holding not less than 50.0% in principal amount of the Securities for the time
being outstanding. Except where the business of such a meeting includes consideration of a Reserved Matter (as
defined below), the quorum for any meeting convened to consider an Extraordinary Resolution will be one or
more persons holding or representing over 50.0% in principal amount of the Securities for the time being
outstanding, or at any adjourned meeting, one or more persons being or representing Securityholders whatever
the principal amount of the Securities held or represented, unless the business of such meeting includes
consideration of proposals:
(a) to modify the dates on which the Distribution is payable in respect of any Securities;
(b) to reduce or cancel the principal amount of, any premium payable on redemption of, or amount of
Distributions on or to vary the method of calculating the Rate of Distribution on, any Securities;
(c) to change the currency of payment of any Securities; or
(d) to amend this provision or to modify the provisions concerning the quorum required at any meeting of the
Securityholders or the majority required to pass an Extraordinary Resolution (each of (a), (b), (c) and
(d) above, a Reserved Matter),
in which case the necessary quorum for passing an Extraordinary Resolution will be one or more persons holding
or representing not less than 75.0%, or at any adjourned such meeting not less than 25.0%, in principal amount of
47
the Securities for the time being outstanding. An Extraordinary Resolution duly passed at any meeting of
Securityholders or passed by way of electronic consent given by the Securityholders through the relevant clearing
systems in accordance with the Trust Deed will be binding on all Securityholders, whether or not they are present
at any meeting at which such resolution was passed. The vote required to pass an Extraordinary Resolution at any
meeting of Securityholders duly convened and held in accordance with the Trust Deed is not less than two-thirds
of the votes cast. The Trust Deed provides that a written resolution signed by or on behalf of the Holders of not
less than 75.0% of the aggregate principal amount of Securities outstanding shall be as valid and effective as a
duly passed Extraordinary Resolution.
The provisions of this Condition 14.1 are subject to the further provisions of the Trust Deed.
14.2
Modification, Waiver, Authorization and Determination
The Trustee may, without the consent of the Securityholders, agree to any modification of these Conditions or
any of the provisions of the Trust Deed or the Agency Agreement (a) if, in the opinion of the Trustee, such
modification will not be materially prejudicial to the interests of Securityholders or (b) which is of a formal,
minor or technical nature or is to correct a manifest error or an error which, in the opinion of the Trustee, is
proven or (c) to comply with mandatory provisions of law. In addition, the Trustee may, without the consent of
the Securityholders, authorize or waive any breach or proposed breach of these Conditions or any of the
provisions of the Trust Deed if, in the opinion of the Trustee, the interests of the Securityholders will not be
materially prejudiced thereby other than certain Reserved Matters as provided in the Trust Deed.
14.3
Trustee to have Regard to Interests of Securityholders as a Class
In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without
limitation, any modification, waiver, authorization, determination or substitution), the Trustee must have regard
to the general interests of the Securityholders as a class but must not have regard to any interests arising from
circumstances particular to individual Securityholders (whatever their number) and, in particular but without
limitation, must not have regard to the consequences of any such exercise for individual Securityholders
(whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise
connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and
the Trustee will not be entitled to require from the Issuer, nor will any Securityholder be entitled to claim from
the Issuer, the Trustee or any other person, any indemnification or payment in respect of any tax consequence of
any such exercise upon individual Securityholders except to the extent already provided for in Condition 7 and/or
any undertaking given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed.
14.4
Notification to the Securityholders
Any modification, waiver, authorization, determination or substitution agreed to by the Trustee will be binding
on the Securityholders and, unless the Trustee agrees otherwise, any modification or substitution will be notified
by the Issuer to the Securityholders as soon as practicable thereafter in accordance with Condition 12.1.
15.
15.1
INDEMNIFICATION OF THE TRUSTEE AND ITS CONTRACTING WITH THE ISSUER

Indemnification of the Trustee
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility,
including provisions relieving it from taking action unless indemnified and/or secured and/ or pre-funded to its
satisfaction.
15.2
Trustee Contracting with the Issuer
The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into
business transactions with the Issuer and/or any of its Subsidiaries and to act as trustee for the holders of any
other securities issued or guaranteed by, or relating to, the Issuer and/or any of its Subsidiaries, (b) to exercise
48
and enforce its rights, comply with its obligations and perform its duties under or in relation to any such
transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for,
the Securityholders, and (c) to retain and not be liable to account for any profit made or any other amount or
benefit received thereby or in connection therewith.
16.
16.1
GOVERNING LAW AND SUBMISSION TO JURISDICTION

Governing law
The Trust Deed, the Agency Agreement, the Securities and any non-contractual obligations arising out or in
connection with the Trust Deed, the Agency Agreement and the Securities, are governed by, and shall be
construed in accordance with, English law, except that Condition 3.2 and any corresponding provision in the
Trust Deed are governed by and shall be construed in accordance with the laws of the Republic of the
Philippines.
16.2
Jurisdiction of English courts
(a) The Issuer has, in the Trust Deed, irrevocably agreed for the benefit of the Trustee and the Securityholders
that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or
in connection with the Trust Deed or the Securities (including any dispute relating to any non-contractual
obligations arising out of or in connection with the Trust Deed or the Securities) and has accordingly
submitted to the exclusive jurisdiction of the English courts.
(b) The Issuer has, in the Trust Deed, waived any objection to the courts of England on the grounds that they
are an inconvenient or inappropriate forum. The Trustee or the Securityholders may take any suit, action or
proceeding (referred to as Proceedings) arising out of, or in connection with the Trust Deed or the
Securities (including any Proceedings relating to any non-contractual obligations arising out of or in
connection with the Trust Deed or the Securities) against the Issuer in any other court of competent
jurisdiction and concurrent Proceedings in any number of jurisdictions.
16.3
Appointment of process agent
The Issuer has, in the Trust Deed, irrevocably and unconditionally appointed Law Debenture Corporate Services
Limited at the latters registered office for the time being as its agent for service of process in England in respect
of any Proceedings and has undertaken that in the event of such agent ceasing so to act it will appoint such other
person as the Trustee may approve as its agent for that purpose.
17.
RIGHTS OF THIRD PARTIES
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term
of this Security, but this does not affect any right or remedy of any person which exists or is available apart from
that Act.
18.
DEFINITIONS
Unless the context otherwise requires, the following terms will have the following meanings in these Conditions:
Accounting Event has the meaning specified in Condition 5.4.
Additional Amounts has the meaning specified in Condition 7.1.
Agency Agreement has the meaning specified in the preamble to these Conditions.
49
Agent and Agents have the meaning specified in the preamble to these Conditions.
Arrears of Distribution has the meaning specified in Condition 4.5(a).
Authorized Signatory has the meaning given to it in the Trust Deed.
Business Day means a day (other than a Saturday or Sunday) on which commercial banks are open for business
in City of Manila, Hong Kong and New York.
Calculation Agent has the meaning specified in the preamble to these Conditions.
Capital Stock means, with respect to any Person, any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents (however designated, whether voting or non-voting) in equity of such
Person, whether outstanding on the Issue Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
Certificate has the meaning specified in Condition 1.1.
Change of Control Event has the meaning given to it in Condition 4.4.
Common Stock means, with respect to any Person, any and all shares, interests, rights to purchase, warrants,
options or other participations in, and other equivalents (however designated and whether voting or non-voting)
of such Persons common stock or common shares, whether or not outstanding at the Issue Date, and include,
without limitation, all series and classes of such common stock or common shares.
Compulsory Distribution Payment Event has the meaning specified in Condition 4.5.
Conditions means these terms and conditions of the Securities.
Deferral Election Event has the meaning specified in Condition 4.5(a).
Deferral Election Notice has the meaning specified in Condition 4.5(b).
Distribution Payment Date has the meaning specified in Condition 4.1.
Distributions has the meaning specified in Condition 4.1.
Extraordinary Resolution has the meaning given to it in the Trust Deed.
Gross-up Event has the meaning specified in Condition 5.3.
Holder has the meaning specified in Condition 1.2.
Initial Credit Spread means 5.169%.
Initial Rate of Distribution means 6.750% per annum plus any increase pursuant to Condition 4.4.
Issue Date means August 26, 2015.
50
Issuer has the meaning specified in the preamble to these Conditions.

Junior Securities means the common shares of the Issuer and (i) any instrument, security or obligation issued or
entered by the Issuer which ranks, or is expressed to rank, junior to the Securities; and (ii) any security
guaranteed by, or subject to the benefit of an indemnity entered into by, the Issuer where the Issuers obligations
under the relevant guarantee or indemnity rank, or are expressed to rank, junior to the Issuers obligations under
the Securities.
Parity Securities means: (i) any instrument, security (including Preferred Stock) or obligation issued or entered
into by the Issuer which ranks, or is expressed to rank, by its terms or by operation of law, pari passu with the
Securities; and (ii) any security guaranteed by, or subject to the benefit of an indemnity entered into by, the
Issuer where the Issuers obligations under the relevant guarantee or indemnity rank, or are expressed to rank,
pari passu with the Issuers obligations under the Securities.
Paying Agent has the meaning specified in the preamble to these Conditions.
Payment Business Day has the meaning specified in Condition 6.4.
Payment Reference Date has the meaning specified in Condition 4.7(b).
Person means any individual, corporation, partnership, limited liability company, joint venture, trust,
unincorporated organization or government or any agency or political subdivision thereof.
PFRS means Philippine Financial Reporting Standards and includes statements named PFRS and Philippine
Accounting Standards (PAS) and Philippine Interpretations of International Financial Reporting Interpretation
Committee (IFRIC) issued by the Financial Reporting Standards Council (FRSC) as in effect from time to time.
PHP or P means the lawful currency of the Republic of the Philippines.
Preferred Stock as applied to the Capital Stock of any Person means Capital Stock of any class or classes that
by its term is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over any other class of Capital Stock of such Person.
Principal Amount has the meaning specified in Condition 1.1.
Principal Paying Agent has the meaning specified in the preamble to these Conditions.
Proceedings has the meaning specified in Condition 16.2(b).
Rate of Distribution means the Initial Rate of Distribution or the Reset Rate of Distribution, as applicable.
Record Date has the meaning specified in Condition 6.1.
Redemption Price means the Principal Amount of the Securities plus any accrued but unpaid Distributions and
any Arrears of Distribution (including any amount of Distributions accrued thereon in accordance with
Condition 4.5(a)), as applicable.
Reference Indebtedness Default Event has the meaning given to it in Condition 4.4.
Register has the meaning specified in Condition 1.1.
51
Registrar has the meaning given to it in the preamble to these Conditions.

Relevant Date has the meaning specified in Condition 7.2(a).
Relevant Jurisdiction has the meaning specified in Condition 7.2(b).
Reserved Matter has the meaning specified in Condition 14.1.
Reset Date has the meaning specified in Condition 4.1.
Reset Determination Date means, in relation to the calculation of a Reset Rate of Distribution, the second
Business Day before the commencement of the relevant Reset Period.
Reset Period means the period from and including the Step Up Date to but excluding the next Reset Date, and
each successive period from and including a Reset Date to but excluding the next succeeding Reset Date.
Reset Rate of Distribution in respect of any Reset Period means the Treasury Rate calculated on the Reset
Determination Date in respect of that Reset Period plus the Initial Credit Spread and the Step Up Margin.
Securities has the meaning specified in the preamble to these Conditions.
Securityholders has the meaning specified in the preamble to these Conditions.
Senior Notes has the meaning specified in Condition 4.4.
Special Redemption Price means 101% of the Principal Amount of the Securities plus any accrued but unpaid
Distributions and any Arrears of Distribution (including any amount of Distributions accrued thereon in
accordance with Condition 4.5(a)).
Step Up Date has the meaning given to it in Condition 4.1(a).
Step Up Margin means 2.50% per annum.
Subsidiary or Subsidiaries means, with respect to any Person, any corporation, association or other business
entity, more than 50.0% of the voting power of the outstanding Voting Stock of which is owned or controlled,
directly or indirectly, by such Person and one or more other Subsidiaries of such Person. To be controlled by
another means that the other (whether, directly or indirectly, and whether by the ownership of share capital, the
possession of voting power, contract or otherwise) has the power to appoint and/or remove all or the majority of
the members of the board of directors or other governing body of that company or otherwise controls or has a
power to control the affairs and policies of that company and control shall be construed accordingly.
Taxes has the meaning specified in Condition 7.1.
Transfer Agent has the meaning specified in the preamble to these Conditions.
Treasury Rate means the rate in percent per annum equal to the yield, under the heading that represents the
average for the week immediately prior to the Reset Determination Date, appearing in the most recently
published statistical release designated H.15(519) (currently set out on the website
http://www.federalreserve.gov/releases/h15/current/default.htm) or any successor publication that is published
weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded
non-inflation indexed U.S. Treasury securities adjusted to constant maturity under the caption Treasury constant
52
maturities, for the maturity corresponding to five years. If such release (or any successor release) is not
published during the week preceding the Reset Determination Date or does not contain such yields, Treasury
Rate shall be obtained from an internationally recognized investment bank selected by the Issuer.
Trust Deed has the meaning specified in the preamble to these Conditions.
Trustee has the meaning specified in the preamble to these Conditions.
Voting Stock means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power
to vote for the election of directors, managers or other voting members of the governing body of such Person.
Winding-Up means, with respect to the Issuer, a final and effective order or resolution for the bankruptcy,
winding up, liquidation, receivership, insolvency or similar proceedings in respect of the Issuer.
53
THE GLOBAL CERTIFICATE

The Global Certificate contains provisions which apply to the Securities in respect of which the Global
Certificate is issued, some of which modify the effect of the Terms and Conditions of the Securities set out in this
Offering Circular. Terms defined in the Terms and Conditions of the Securities have the same meaning in the
paragraphs below. The following is a summary of certain of those provisions:
ACCOUNTHOLDERS
For so long as all of the Securities are represented by the Global Certificate and the Global Certificate is held on
behalf of a clearing system, each person (other than another clearing system) who is for the time being shown in
the records of Euroclear or Clearstream, Luxembourg (as the case may be) as the holder of a particular aggregate
principal amount of such Securities (each an Accountholder) (in which regard any certificate or other
document issued by Euroclear or Clearstream, Luxembourg (as the case may be) as to the aggregate principal
amount of such Securities standing to the account of any person shall, in the absence of manifest error, be
conclusive and binding for all purposes) shall be treated as the holder of such aggregate principal amount of such
Securities (and the expression Securityholders and references to holding of Securities and to a holder of
Securities shall be construed accordingly) for all purposes other than with respect to payments on such
Securities, the right to which shall be vested, as against SMC Global Power and the Trustee, solely in the
nominee for the relevant clearing system (the Relevant Nominee) in accordance with and subject to the terms
of the Global Certificate. Each Accountholder must look solely to Euroclear or Clearstream, Luxembourg, as the
case may be, for its share of each payment made to the Relevant Nominee.
CANCELLATION
Cancellation of any Security following its redemption or purchase by SMC Global Power or any of its
subsidiaries will be effected by reduction in the aggregate principal amount of the Securities in the register of
Securityholders and by the annotation of the appropriate schedule to the Global Certificate.
PAYMENTS
Payments of principal and Distributions in respect of Securities represented by the Global Certificate will be
made upon presentation or, if no further payment falls to be made in respect of the Securities, against
presentation and surrender of the Global Certificate to or to the order of the Registrar or such other Agent as shall
have been notified to the holder of the Global Certificate for such purpose.
Each payment will be made to or to the order of the person whose name is entered on the Register at the close of
business on the Clearing System Business Day immediately prior to the date for payment, where Clearing
System Business Day means a day on which Euroclear and Clearstream, Luxembourg are both open for
business.
Distributions of amounts with respect to book-entry interests in the Securities held through Euroclear or
Clearstream, Luxembourg will be credited, to the extent received by the Registrar, to the cash accounts of
Euroclear or Clearstream, Luxembourg participants in accordance with the relevant rules and procedures of the
system.
A record of each payment made will be endorsed on the appropriate schedule to the Global Certificate by or on
behalf of the Registrar and shall be prima facie evidence that such payment has been made.
NOTICES
So long as all the Securities are represented by the Global Certificate and the Global Certificate is held on behalf
of a clearing system, notices to Securityholders may be given by delivery of the relevant notice to that clearing
54
system for communication by it to entitled Accountholders in substitution for notification as required by the
Terms and Conditions of the Securities. For so long as the Securities are listed on the SGX-ST notices shall also
be published in the manner required by the rules and regulations of the SGX-ST.
REGISTRATION OF TITLE
Registration of title to Securities in a name other than that of the Relevant Nominee will not be permitted unless
Euroclear or Clearstream, Luxembourg, as appropriate, notifies SMC Global Power that it is unwilling or unable
to continue as a clearing system in connection with the Global Certificate, and in each case a successor clearing
system approved by the Trustee is not appointed by SMC Global Power within 90 days after receiving such
notice from Euroclear or Clearstream, Luxembourg. In these circumstances, title to a Security may be transferred
into the names of holders notified by the Relevant Nominee in accordance with the Terms and Conditions of the
Securities, except that definitive certificates in respect of Securities so transferred may not be available until
21 days after the request for transfer is duly made.
TRANSFERS
Transfers of book-entry interests in the Securities will be effected through the records of Euroclear, Clearstream,
Luxembourg and their respective participants in accordance with the rules and procedures of Euroclear,
Clearstream, Luxembourg and their respective direct and indirect participants, as more fully described under
Clearance and Settlement of the Securities.
RECORD DATE
Distributions on Securities due on a Distribution Payment Date and Arrears of Distribution (and distributions
accrued thereon) will be paid to the holder shown on the register of Securityholders at the close of business on
the date being the fifteenth calendar day before the relevant Distribution Payment Date.
55
EXCHANGE RATES
The PDS, a computer network supervised by the Bangko Sentral ng Pilipinas (BSP), through which the
members of the Bankers Association of the Philippines effect spot and forward currency exchange transactions,
was introduced in 1992. The PDS was adopted by the BSP as a means to monitor foreign exchange rates. The
PDS Rate is the closing spot rate for the purchase of U.S. dollars with Pesos, which is quoted on the PDS and
published in the BSPs Reference Exchange Rate Bulletin and major Philippine financial press on the following
business day. On June 30, 2015, the closing rate for the purchase of U.S. dollars with Philippines Pesos under the
PDS was P45.09 = U.S.$1.00.
The following table sets forth certain information concerning the exchange rate on the PDS between the Peso and
the U.S. dollar for the periods and dates indicated, expressed in Pesos per U.S.$1.00:
Peso/U.S. dollar exchange rate
Period end(1) Average(2) High(3) Low(4)
Year
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August (August 11, 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
Closing rate for the period ended.
(2)
PDS Weighted Average for period end.
(3)
Highest closing rate for the relevant period.
(4)
Lowest closing rate for the relevant period.
56
43.84
43.84
41.05
44.40
44.72
43.81
44.40
41.08
44.40
44.39
47.10
44.58
44.13
44.75
45.41
42.53
41.93
40.85
40.57
43.24
44.09
44.70
44.52
44.59
45.09
45.74
45.93
44.22
44.47
44.40
44.60
45.00
45.29
45.75
44.37
44.83
44.67
44.79
45.20
45.74
45.93
44.08
44.06
44.20
44.49
44.53
45.02
45.61
USE OF PROCEEDS
The net proceeds from the issue of the Securities, which are approximately U.S.$298,500,000 (after the
deduction of commissions, but before expenses), shall be applied towards financing investments in power-related
assets, including its greenfield power projects and general corporate purposes.
57
CAPITALIZATION OF SMC GLOBAL POWER

The following table sets forth, in accordance with PFRS, the total capitalization of SMC Global Power(1) as of
June 30, 2015 and as adjusted to give effect to the issuance of the Securities.
The table should be read in conjunction with the consolidated financial statements of SMC Global Power and the
notes thereto, included in this Offering Circular. Other than as described below, there has been no material
change in the capitalization of SMC Global Power since June 30, 2015.
As of June 30, 2015
Actual
Actual
(in Q millions)
Total long-term debt . . . . . . . . . . . . . . . . . . . . . .

Equity:
Common stock: 10,000,000 Shares issued
and fully paid up as of June 30, 2015 . . .
Undated subordinated capital securities . . .
Securities issued hereby(2) . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total capitalization(2) . . . . . . . . . . . . . . . . . . . . . .
(in U.S.$ millions)
As of June 30, 2015

As adjusted
As adjusted
(in Q millions)
(in U.S.$ millions)
57,284.6
1,270.5
57,284.6
1,270.5
1,062.5
13,110.1
2,490.0
785.3
31,029.8
48,477.7
105,762.3
23.6
290.8
55.2
17.4
688.2
1,075.1
2,345.6
1,062.5
13,110.1
13,459.4
2,490.0
785.3
31,029.8
61,937.1
119,221.7
23.6
290.8
298.5
55.2
17.4
688.2
1,373.7
2,644.2
(1)
Total capitalization constitutes total long-term debt and equity.
(2)
Net of commissions.
58
SELECTED FINANCIAL INFORMATION AND OTHER DATA

The selected historical consolidated statement of financial position data as of December 31, 2012, December 31,
2013 and December 31, 2014 respectively and selected historical consolidated statement of income and cash
flow data for the year ended December 31, 2012, December 31, 2013 and December 31, 2014, respectively set
forth below, have been derived from, and should be read in conjunction with, the audited consolidated financial
statements of SMC Global Power, including the notes thereto, included elsewhere in this Offering Circular. The
selected historical consolidated statement of financial position data as of June 30, 2015 and selected historical
consolidated statement of income and cash flow data for the six months ended June 30, 2014 and June 30, 2015,
respectively set forth below, have been derived from, and should be read in conjunction with, the unaudited
condensed consolidated interim financial statements of SMC Global Power, including the notes thereto, included
elsewhere in this Offering Circular. The consolidated financial statements of SMC Global Power as of and for
the year ended December 31, 2012, 2013 and 2014 respectively, were audited by KPMG. The consolidated
financial statements of SMC Global Power as of and for the six months ended June 30, 2014 and June 30, 2015
were reviewed by KPMG.
Unless otherwise stated, SMC Global Power has presented its consolidated financial results under PFRS.
Potential investors should read the following data together with the more detailed information contained in
Managements Discussion and Analysis of Results of Operations and the consolidated financial statements
and related notes included elsewhere in this Offering Circular. The following data is qualified in its entirety by
reference to all of that information.
CONSOLIDATED STATEMENT OF INCOME DATA
For the years ended
December 31,
2013
2014
2012

June 30,
2014
2015
2015
2014
(in millions
(in millions
of U.S.$) (in millions of Q) of U.S.$)
(in millions of Q)
Sale of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,656.2 74,043.8 84,293.6

Costs and Expenses
Cost of power sold:
Energy fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,149.8 31,269.3 30,775.9
Coal, fuel oil and other consumables . . . . . . . . . . . . . 13,057.0 11,179.3 11,945.3
Depreciation and amortization . . . . . . . . . . . . . . . . . . 5,186.4 5,382.4 6,143.9
Power purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,452.3 3,929.2 6,045.5
Plant operations and maintenance fees . . . . . . . . . . .
173.5
575.6
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,683.2 1,568.6 2,911.9
1,869.5 43,754.3 40,454.5
11,651.3
6,224.5
3,232.5
3,444.5
235.1
2,070.4
258.4
138.0
71.7
76.4
5.2
45.9
57,528.7 53,502.4 58,398.1
1,295.1 28,827.2 26,858.3
595.7
17,127.5 20,541.4 25,895.5
574.3 14,927.2 13,596.2
301.5
Gain on sale of investment . . . . . . . . . . . . . . . . . . . .

106.6 2,587.0
Equity in net earnings (losses) of associates

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,053.4
795.0
(22.3)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
880.6
447.8
550.0
Interest expense and other financing charges . . . . (12,726.5)(12,673.9)(13,168.5)
Other income (charges) net . . . . . . . . . . . . . . . . 9,206.8 (8,491.1)
68.2
682.5
264.9
136.3
134.1
12.8
64.6
15,603.6
6,580.4
2,985.9
2,493.7
280.0
883.4
897.2
(0.5)
(11.4) (94.0)
12.2
176.7
289.8
(292.0) (6,553.3) (6,542.4)
1.5 2,120.9 (1,265.1)
(2.1)
6.4
(145.1)
(28.1)
Income before income tax . . . . . . . . . . . . . . . . . . . . 15,648.3

Income tax expense (benefit) net . . . . . . . . . . . . 1,439.0
3,206.4 13,322.9
(836.3) 2,693.4
295.5 10,660.1 5,984.6

59.7 1,716.5 2,041.5
132.7
45.3
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,209.3
4,042.7 10,629.5
235.7 8,943.5 3,943.1
87.4
Basic/diluted earnings per share . . . . . . . . . . . . . . . . .
P11.37
59
P3.23
P8.50 U.S.$0.19
P7.15
P3.15 U.S.$0.07
CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA

As of December 31,
2013
2014
2012
(in millions of Q)
2014
(in millions
of U.S.$)
As of June 30,
2015
2015
(in millions
of Q)
(in millions
of U.S.$)
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . . . .
Trade and other receivables net . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current
assets . . . . . . . . . . . . . . . . . . . . . . . . .
23,555.4
17,788.1
1,185.0
29,125.2
31,540.4
1,499.1
38,304.3
18,208.3
1,365.0
849.5
403.8
30.3
30,596.4
20,183.0
1,156.6
678.6
447.6
25.7
7,168.5
7,234.9
9,137.2
202.6
11,442.3
253.8
Total Current Assets . . . . . . . . . . . . .
49,697.0
69,399.6
67,014.9
1,486.2
63,378.3
1,405.6
5,059.5
235.4
237,426.2
11,405.3
5,265.6
252.9
14.9
51.5
61.6
49.1
680.9
2,334.3
2,487.3
1,679.1
15.1
51.8
55.2
37.2
Noncurrent Assets
Property, plant and equipment
net . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,303.2 217,021.5 228,133.3
Investments and advances . . . . . . . . . .
13,421.0
6,011.8
10,612.3
Deferred exploration and development
costs . . . . . . . . . . . . . . . . . . . . . . . . .
325.2
526.0
671.8
Goodwill and other intangible assets . .
1,728.6
1,728.6
2,322.2
Deferred tax assets . . . . . . . . . . . . . . . .
1,683.4
2,909.1
2,779.4
Other noncurrent assets net . . . . . . .
396.2
3,506.3
2,215.4
Total Noncurrent Assets . . . . . . . . . .
220,857.6
231,703.3
246,734.4
5,472.0
256,013.1
5,677.8
270,554.6
301,103.0
313,749.3
6,958.3
319,391.4
7,083.4
18,523.3
22,971.9
28,117.8
623.6
28,313.7
627.9
15,436.7
15,630.4
16,205.2
359.4
16,216.7
359.7
142.4
218.5
1,330.0
151.4
29.5
3.4
15,024.7
492.3
333.2
10.9
33,959.9
38,963.3
45,804.4
1,015.8
60,047.4
1,331.7
20,393.9
46,946.5
47,383.2
1,050.9
42,259.9
937.2
179,664.9
2,385.0
179,372.3
2,088.1
170,098.5
3,043.5
3,772.4
67.5
165,025.1
3,475.5
3,659.9
77.1
670.5
14.9
105.8
2.3
Total Noncurrent Liabilities . . . . . . .
202,443.8
228,406.8
221,195.7
4,905.6
210,866.3
4,676.6
Total Liabilities . . . . . . . . . . . . . . . . . .
236,403.7
267,370.1
267,000.1
5,921.5
270,913.7
6,008.3
1,062.5
2,490.0
746.0
1,062.5
2,490.0
785.3
1,062.5
2,490.0
785.3
23.6
55.2
17.4
1,062.5
2,490.0
785.3
23.6
55.2
17.4
29,852.4
34,150.9
29,395.1
33,732.8
13,110.1
29,301.3
46,749.2
290.8
649.8
1,036.8
13,110.1
31,029.8
48,477.7
290.8
688.2
1,075.1
270,554.6
301,103.0
313,749.3
6,958.3
319,391.4
7,083.4

Current Liabilities
Accounts payable and accrued
expenses . . . . . . . . . . . . . . . . . . . . . .
Finance lease liabilities current
portion . . . . . . . . . . . . . . . . . . . . . . . .
Current maturities of long term debt
net of debt issue costs . . . . . . . . . . . .
Income tax payable . . . . . . . . . . . . . . . .
Total Current Liabilities . . . . . . . . . .
Long-term debt net of current
maturities and debt issue costs . . . . .
Finance lease liabilities net of
current portion . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . .
Other noncurrent liabilities net of
current portion . . . . . . . . . . . . . . . . .
Equity
Capital stock . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . .
Undated Subordinated Capital
Securities . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . .
Total Equity . . . . . . . . . . . . . . . . . . . . .
60
CONSOLIDATED STATEMENT OF CASH FLOWS DATA
2012
For the years ended

December 31,
2013
2014
2014
(in millions
of U.S.$)
(in millions of Q)

June 30,
2014
2015
2015
(in millions of Q)
(in millions
of U.S.$)
Net cash flows provided by operating

activities . . . . . . . . . . . . . . . . . . . . . 20,077.9 25,664.0 32,855.8 728.7 17,989.3 10,493.9 232.7
investing activities . . . . . . . . . . . . . . (6,084.2) (20,764.8) (6,432.7) (142.7) 10,064.6 (13,401.1) (297.2)
financing activities . . . . . . . . . . . . . (23,062.0)
837.7 (16,430.3) (364.4) (1,906.4) (4,966.3) (110.1)
Effect of exchange rate changes on
cash and cash equivalents . . . . . . . .
(309.0) (167.2) (813.6) (18.0)
(306.4)
165.5
3.7
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . (9,377.2) 5,569.7 9,179.1 203.6 25,841.1 (7,707.9) (170.9)
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . . 32,932.7 23,555.4 29,125.2 645.9 29,125.2 38,304.3 849.5
Cash and cash equivalents at end of
period . . . . . . . . . . . . . . . . . . . . . . . . 23,555.4 29,125.2 38,304.3
849.5
54,966.2 30,596.4
678.6
ADDITIONAL FINANCIAL AND OPERATING DATA

The table below provides selected additional financial and operating data for the periods indicated.
2012
For the years ended

December 31,
2013
2014
(in millions of Q, unless

Net income . . . . . . . . . . . . . . . . . . . . . .
EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . .
Electricity sold (GWh) . . . . . . . . . . . . .
of which: bilateral offtake
agreements . . . . . . . . . . . . . . . . .
of which: WESM sales . . . . . . . . .
Electricity bought on WESM (GWh) . .
Average realized/paid electricity prices
(P/MWh)
For electricity sold under bilateral
offtake agreements . . . . . . . . . .
For electricity sold on WESM . . . .
For electricity purchased from
WESM . . . . . . . . . . . . . . . . . . . .
Net debt(3) . . . . . . . . . . . . . . . . . . . . . . .
Ratio of net debt to EBITDA(4) . . . . . . .
2014

June 30,
2014
2015
2015
(in millions (in millions of Q, unless

of U.S.$,
unless
indicated
otherwise)
8,943.5
3,943.1
6,994.9(2) 3,875.5(2)
8,789.5
8,152.9
(in millions
of U.S.$,
unless
indicated
otherwise)
14,209.3 4,042.7 10,629.5

7,512.2 8,051.9 10,150.2
15,961.5 16,162.7 17,001.4
235.7
225.1
87.4
85.9(2)
14,487.2 13,315.5 14,891.4

1,474.3 2,847.3 2,110.0
674.9
517.1
476.8
7,666.6
1,122.8
228.5
7,215.9
937.0
187.1
4,658.0 4,752.0 5,014.4

4,871.0 3,783.0 4,560.5
111.2
101.1
5,023.7
4,670.9
5,046.7
4,309.4
111.9
95.6
4,669.0 4,150.0 4,704.8 104.3

5,061.4
5,972.9
132.5
(3,161.5) 6,058.3 (2,419.7) (53.7) (20,405.7) 13,978.5
310.0
(0.42)
0.75
(0.24) (0.24)
(2.16)(5)
1.99(5) 1.99(5)
(1)
Calculated as (a) net income plus (b) income tax expense (benefit), finance cost (less interest income) and depreciation, in each case
excluding amounts attributable to ring-fenced subsidiaries less (c) foreign exchange gain (loss), gain on sale of investment and
aggregate fixed payments made to PSALM. EBITDA should not be viewed in isolation or as an alternative to financial measures
calculated in accordance with PFRS. See Presentation of Financial Information and Non-PFRS Financial Measures.
(2)
respectively.
(3)
Net debt represents the sum of long-term debt net of current maturities and debt issue costs and current maturities of long-term
debt net of debt issue costs less cash and cash equivalents and excluding PSALM finance lease liabilities, in each case, excluding
amounts attributable to ring-fenced subsidiaries.
(4)
Ratio of Net Debt to EBITDA is computed using net debt and EBITDA, in each case excluding amounts attributable to ring-fenced
subsidiaries.
(5)
Ratio of Net Debt to EBITDA is computed using for the most recent four quarterly periods ended June 30, 2014 and 2015.
61
CALCULATION OF EBITDA
The following table presents a reconciliation of EBITDA to net income for each of the periods indicated.
For the years ended
December 31,
2013(1)
2014(1)
2012
(in millions of Q)
Net income . . . . . . . . . . . . . . . . .
Add:
Income tax expense
(benefit) . . . . . . . . . . . . .
Finance cost . . . . . . . . . . . .
Interest income . . . . . . . . . .
Depreciation . . . . . . . . . . . .
Less:
Foreign exchange gains
(loss) . . . . . . . . . . . . . . . .
Aggregate fixed payments
made to PSALM(2) . . . . .
Gain on Sale of
Investment . . . . . . . . . . .
14,209.3
EBITDA . . . . . . . . . . . . . . . . . . .
3,921.6
2014(1)
(in millions
of U.S.$)
9,833.1
1,439.0
(888.1) 2,352.0
12,726.5 12,557.7 12,582.8
(880.6)
(446.9)
(539.0)
5,194.2
5,206.4
5,236.9
(808.3)

June 30,
2014(1)
2015(1)
2015(1)
(in millions of Q)
(in millions
of U.S.$)
218.1
8,669.7
3,322.7
73.7
52.2
279.1
(12.0)
116.1
1,597.9
6,321.0
(172.8)
2,609.3
1,775.7
6,165.7
(287.6)
2,622.6
39.4
136.7
(6.4)
58.2
(17.9)
1,984.3
(1,266.5)
(28.1)
7,707.6
(9,434.2)
17,362.0
19,146.0
20,124.0
446.3
10,046.0
10,990.2
243.7
106.6
2,587.0
7,512.2
8,051.9
10,150.2
225.1
6,994.9(3) 3,875.5(3)
85.9
(1)
Excludes amounts from ring-fenced subsidiaries. A subsidiary with a project debt was nominated as a ring-fenced subsidiary in 2013. If
the amounts from ring-fenced subsidiaries were to be included, the EBITDA would amount to P8.5 billion and P12.8 billion
(U.S.$284.3 million) for the years ended December 31, 2013 and 2014, respectively, and P8.0 billion and P5.8 billion (U.S.$128.1
million) for the six months ended June 30, 2014 and 2015, respectively.
(2)
Aggregate fixed payments made to PSALM is reflected in the Statement of Cash Flows as Payments of Finance Lease Liabilities.
(3)
respectively, excluding amounts attributable to ring-fenced subsidiaries.
62
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the section entitled Selected Financial Information
and Other Data and the audited consolidated financial statements of SMC Global Power, including the notes
thereto, included elsewhere in this Offering Circular.
RESULTS OF OPERATIONS
Description of Certain Components of Our Results of Operations
Sale of Power and Electricity
Sale of power is revenue from power generation that is recognized in the period when actual power or capacity is
generated, transmitted or/and available to the customers, net of related discounts. Sale of electricity is revenue
upon the supply of power to the customers. The Uniform Filing Requirements on the rate unbundling released by
the ERC specified the following bill components: (a) generation charge, (b) transmission charge, (c) system loss
charge, (d) distribution charge, (e) supply charge, (f) metering charge, (g) currency exchange rate adjustment I
and II, where applicable and (h) interclass and life subsidies. VAT, local franchise tax and universal charges are
billed and collected on behalf of the national and local government and do not form part of SMC Global Powers
revenue. Generation, transmission and system loss charges, which are part of revenues, are pass-through charges.
Cost of Power Sold
Cost of power sold consists primarily of (i) cost of coal, other fuel oil and consumables (which consists primarily
of the cost of purchasing coal for delivery to the IPP for the Sual Power Plant and Limay Cogeneration Plant),
(ii) energy fees, which reflect the variable component of the monthly payments due from SMC Global Power to
PSALM under the IPPA Agreements; (iii) depreciation expense relating to the Sual, San Roque and Ilijan Power
Plants under the finance lease accounting method applicable to the IPPA Agreements and Limay Cogeneration
Plant; (iv) power purchased from external sources, which represents the cost of purchasing power from the
WESM; and (v) plant operations and maintenance fees for the operation of Limay Cogeneration Plant.
Operating Expenses
For the six months ended June 30, 2014 and 2015, operating expenses consists principally of outside services,
management fees, taxes and licenses, rent and impairment losses on receivables and other expenses. For the years
ended December 31, 2013, 2014 and 2015, operating expenses consists principally of impairment losses on
receivables, outside services, management fees, donations, market fees, taxes and licenses, professional fees, and
other expenses.
Other Income (Charges)
For the six months ended June 30, 2014 and 2015, other income (charges) consists of (i) equity in net earnings
(losses) of an associate; (ii) foreign exchange gains (losses), (iii) PSALM monthly fees reduction, (iv) interest
income, (v) finance cost and (vi) miscellaneous income. For the years ended December 31, 2013, 2014 and 2015,
other income (charges) consists of (i) equity in net earnings (losses) of an associate; (ii) foreign exchange gains
(losses), (iii) PSALM monthly fees reduction, (iv) interest income, (v) gain on sale of investment, (vi) finance
cost and (vii) miscellaneous income.
Each of the fixed monthly payments made under SMC Global Powers IPPA Agreements is apportioned between
finance cost and reduction of the related finance lease liability so as to achieve a constant rate of interest on the
remaining balance of the finance lease liability. Foreign exchange gains and losses result from the effect of
exchange rate movements on SMC Global Powers foreign currency-denominated monetary assets and liabilities.
63
Results of Operations Period to Period Comparison

Six months ended June 30, 2015 compared to six months ended June 30, 2014
Sale of Power
Sales of power decreased by 7.5% from P43.8 billion in the six months ended June 30, 2014, reflecting the sale
of 8,789 GWh of power, to P40.5 billion in the six months ended June 30, 2015, reflecting the sale of
8,153 GWh of power. The decrease in revenue was mainly driven by the significant decline in the sales quantity
of the Ilijan Power Plant owing to the lower output of the plant caused by the scheduled maintenance outage of
Malampaya gas facility in March and April 2015, the annual outage of Block 2 of the Ilijan Power Plant and a
series of natural gas restrictions.
Cost of Power Sold
Energy fees decreased by 25.32% from P15.6 billion in the six months ended June 30, 2014 to P11.7 billion in
the six months ended June 30, 2015. This decrease represents primarily the significant reduction in net generation
of the Ilijan Power Plant (from 4,301 GWh to 3,477 GWh as a result of the abovementioned lower output of the
plant caused by the scheduled maintenance outage of Malampaya gas facility in March and April 2015) and the
lower generation of the San Roque Power Plant (from 290 GWh to 274 GWh) caused by an extended summer
season and water conservation efforts in line with upper and lower rule curve restrictions imposed by the NIA.
Cost of coal and other fuel oil decreased by 5.4% from P6.6 billion in the six months ended June 30, 2014 to
P6.2 billion in the six months ended June 30, 2015, primarily due to lower average coal prices per metric ton of
the Sual Power Plant from P4,021.24 to P3,509.60. This was partially offset by the increased coal consumption
in the six months ended June 30, 2015 due to higher net generation.
Power purchased from external sources increased by 38.1% from P2.5 billion in the six months ended June 30,
2014 to P3.4 billion in the six months ended June 30, 2015. This increase mainly represents the higher power
purchased from other generators due to lower net generation as a result of outages and WESM trading-related
charges.
Depreciation increased by 7.9% from P3.0 billion in the six months ended June 30, 2014 to P3.2 billion in the
six months ended June 30, 2015, primarily due to the recognition of additional depreciation of Units 3 and 4 of
the Limay Cogeneration Plant which were completed in August 2014.
Operating Expenses
Operating expenses increased by 134.4% from P0.9 billion in the six months ended June 30, 2014 to P2.1 billion
in the six months ended June 30, 2015. The principal factors contributing to this were: (i) the support fee in the
amount of P348.1 million paid by SMC Global Power to its business partner, K-Water, in a joint venture relating
to the acquisition of the AHEPP, (ii) an increase in management fees of P273.7 million, (iii) higher business
taxes relating mainly to real property taxes of the Limay Cogeneration power plant and local business taxes of
the Sual, Ilijan and San Roque Power Plants of P207.1 million, (iv) an increase in rental charges of P157.5
million, and (iv) additional provision for impairment losses on receivables of P53.6 million.
Equity in net losses of an associate and joint venture increased from (P11.4) million in the six months ended
June 30, 2014 to (P94.0) million in the six months ended June 30, 2015, primarily because of the recognition of
equity share in the loss from operations of SMC Global Powers 60% interest in AHC, through PVEI, of (P91.6)
million and SMC Global Powers 35% interest in OEDC amounting to (P2.4) million.
Foreign exchange differential declined from P2.0 billion profit in the six months ended June 30, 2014 to
P1.3 billion loss in the six months ended June 30, 2015, primarily because of the depreciation of the Peso against
the U.S. dollar from P43.65 per U.S. dollar in June 30, 2014 to P45.09 per U.S. dollar in June 30, 2015.
64
Finance costs remained relatively constant at P6.5 billion in the six months ended June 30, 2015 and P6.6 billion
in the six months ended June 30, 2014.
Income Before Income Tax
As a result of the foregoing factors, income before income tax decreased from P10.7 billion in the six months
ended June 30, 2014 to P6.0 billion in the six months ended June 30, 2015.
Income Tax Expense
Net income tax expense increased from P1.7 billion tax expense in the six months ended June 30, 2014 to
P2.0 billion tax expense in the six months ended June 30, 2015, because of the expiration of the income tax
holiday of the IPPA Plants in July 31, 2014.
Net Income
As a result of the abovementioned reasons, net income decreased from P8.9 billion in the six months ended
June 30, 2014 to P3.9 billion in the six months ended June 30, 2015.
Unrealized foreign exchange differential declined from P1.9 billion gain in the six months ended June 30, 2014
to (P1.3) billion loss in the six months ended June 30, 2015, primarily because of the depreciation of the Peso
against the U.S. dollar from P43.65 per U.S. dollar in June 30, 2014 to P45.09 per U.S. dollar in June 30, 2015.
In the six months ended June 30, 2014, discounting the unrealized foreign exchange differential and nonrecurring
income, the net income would be P7.0 billion. In the six months ended June 30, 2015, discounting the unrealized
foreign exchange differential, net income would be P5.2 billion.
2014 Compared to 2013
Sales of Power
Sales of power increased by 13.8% from P74.0 billion in 2013, reflecting the sale of 16,163 GWh of power, to
P84.3 billion in 2014, reflecting the sale of 17,001 GWh of power. The increase in revenue was mainly driven by
higher bilateral volumes sold and improvements in bilateral and WESM average realization prices.
Cost of Power Sold
Energy fees decreased by 1.6% from P31.3 billion in 2013 to P30.8 billion in 2014. This decrease represents
primarily the lower natural gas prices payable to PSALM with respect to the fuel of the Ilijan Power Plant.
Cost of coal and other fuel oil increased by 6.9% from P11.2 billion in 2013 to P11.9 billion in 2014, primarily
due to increase in net generation volume of the Sual Power Plant and commercial operations of the four units of
Limay Cogeneration Plant in 2014. This was partially offset by the decrease in global market prices in 2014.
Power purchased from external sources increased by 53.9% from P3.9 billion in 2013 to P6.0 billion in 2014.
This increase was due to power requirements of APEC sourced from other generators.
Depreciation increased by 14.1% from P5.4 billion in 2013 to P6.1 billion in 2014, primarily due to depreciation
of the Limay Cogeneration Plant which was acquired in September 2013.
Operating Expenses
Operating expenses increased by 88.1% from P1.5 billion in 2013 to P2.9 billion in 2014. The principal factor
contributing to this was the donation to Team Sual Corporation of a grab type coal unloader amounting to
P442.5 million. Also, there was an increase in the provision for impairment losses on receivable by
65
P111.5 million, an increase in taxes and licenses by P296.2 million for the real property tax of the Limay
Cogeneration Plant and donors tax for the coal unloader donation and an increase in outside services expenses by
P108.0 million in 2014.
Equity in net earnings of an associate decreased from P795.0 million in 2013 to (P22.3) million loss in 2014,
primarily because of the recognition of equity share in the loss from operation of 60% interest in AHEPP and
35% interest in OEDC in 2014, compared with the disposal of Global Powers 6.13% interest in Meralco in 2013.
Foreign exchange differential improved from (P9.4) billion loss in 2013 to (P813.6) million loss in 2014,
primarily because of the marginal depreciation of the Peso against the U.S. dollar in 2014, from P44.395 U.S.
dollar in 2013 to P44.720 per U.S. dollar in 2014.
Gain on sale of investment in 2014 was nil and P2.6 billion in 2013 as a result of the sale of Meralco shares.
Finance cost increased from P12.7 billion in 2013 to P13.2 billion in 2014 due to additional debt drawn for the
project finance of the Limay Cogeneration Plant.
As a result of the foregoing factors, income before income tax increased from P3.2 billion in 2013 to
P13.3 billion in 2014.
Income Tax Expense
Net income tax expense increased from (P836.3) million tax benefit in 2013 to P2.7 billion tax expense in 2014,
primarily because of deferred income tax temporary difference of the excess of depreciation and other related
expenses over monthly PSALM payments and expiration of income tax holidays in July 2014 for the IPPA
Power Plants.
Net Income
As a result of the foregoing factors, net income increased from P4.0 billion in 2013 to P10.6 billion in 2014.
Unrealized foreign exchange differential improved from (P9.6) billion loss in 2013 to (P1.6) billion loss in
2014, primarily because of the minimal depreciation of the Peso against the U.S. dollar in 2014, from
P44.395 per U.S. dollar in 2013 to P44.720 per U.S. dollar in 2014. In 2013, discounting the unrealized foreign
exchange differential and nonrecurring income, the net income would be P11.0 billion. In 2014, discounting the
unrealized foreign exchange differential, the net income would be P12.2 billion. Thus, without the unrealized
foreign exchange differential and nonrecurring income, net income would have increased from P11.0 billion in
2013 to P12.2 billion in 2014.
2013 Compared to 2012
Sales of Power
Sales of power are revenue generated from sales of power pursuant to offtake agreements and sales of power
through the WESM. Net sales of power decreased by 1% from P74.7 billion in 2012, reflecting the sale of
15,961 GWh of power, to P74.0 billion in 2013, reflecting the sale of 16,163 GWh of power. This decrease in
revenues resulted primarily from lower average WESM prices for 2013. This was partially offset by increased
generation volume mainly attributable to Suals improved plant utilization.
66
Cost of Power Sold

Energy fees decreased by 5.7% from P33.1 billion in 2012 to P31.3 billion in 2013. This decrease represents
primarily the lower energy fees payable to PSALM with respect to the Ilijan Power Plant due to the change in
transition supply contract to the new power supply contract of Meralco.
Cost of coal and other fuel oil decreased by 14.4% from P13.1 billion in 2012 to P11.2 billion in 2013, primarily
due to lower average coal consumption cost per metric ton. This was partially offset by an increase in the
quantity of coal consumed due to the increase in net generation for 2013.
Power purchased from external sources decreased by 11.7% from P4.5 billion in 2012 to P3.9 billion in 2013.
This decrease was due to lower quantity of power purchased from WESM.
Depreciation increased by 3.8% from P5.2 billion in 2012 to P5.4 billion in 2013, primarily due to depreciation
of the Limay Cogeneration Plant which was acquired in September 2013.
Operating Expenses
Operating expenses decreased by 6.8% from P1.7 billion in 2012 to P1.6 billion in 2013. The principal factors
contributing to this decrease were lower provision for impairment losses on receivable by P280.3 million, lower
professional fees by P107.7 million and lower outside services expenses by P235.3 million in 2013.
Equity in net earnings of an associate decreased from P1.1 billion in 2012 to P795.0 million in 2013, primarily
because of the disposal of SMC Global Powers 6.13% interest in Meralco in 2013 and the non-recognition of
equity share for the fourth quarter. Going forward equity in net earnings from the Meralco investment will not be
recognized. (Please see Note 13 of the 2013 Audited Consolidated Financial Statements).
Foreign exchange differential decreased from P7.7 billion gain in 2012 to (P9.4) billion loss in 2013, primarily
because of the depreciation of the Peso against the U.S. dollar in 2013, from P41.050 U.S. dollar in 2012 to
P44.395 per U.S. dollar in 2013.
Gain on sale of investment increased from P106.6 million in 2012, which represents the sale of interests in
Rockwell shares to P2.6 billion in 2013 as a result of the sale of Meralco shares.
Finance cost remained relatively constant at P12.7 billion in 2012 and 2013.
As a result of the foregoing factors, income before income tax decreased from P15.6 billion in 2012 to
P3.2 billion in 2013.
Income Tax Expense
Net income tax expense decreased from P1.4 billion tax expense in 2012 to (P836.3) million tax benefit in 2013,
primarily because of deferred income tax temporary difference of the excess of depreciation and other related
expenses over monthly PSALM payments.
Net Income
As a result of the foregoing factors, net income decreased from P14.2 billion in 2012 to P4.0 billion in 2013.
Unrealized foreign exchange differential decreased from P7.8 billion gain in 2012 to (P9.6) billion loss in 2013,
primarily because of the depreciation of the Peso against the U.S. dollar in 2013, from P41.050 per U.S. dollar in
67
2012 to P44.395 per U.S. dollar in 2013. In 2012, discounting the unrealized foreign exchange differential and
nonrecurring income, the net income would be P6.3 billion. In 2013, discounting the unrealized foreign
exchange differential and nonrecurring income, the net income would be P11.0 billion. Thus, without the
unrealized foreign exchange differential and nonrecurring loss, net income would have increased from
P6.3 billion in 2012 to P11.0 billion in 2013.
CRITICAL ACCOUNTING POLICIES
For a discussion of the critical accounting policies and significant accounting judgments and estimates of SMC
Global Power please see Note 3 and 4 of the audited consolidated financial statements included in this Offering
Circular.
In accounting for its IPPAs, Agreements with PSALM, SMC Global Powers management has made a judgment
that the IPPA Agreements are agreements that contain a lease.
The management of SMC Global Power has made a judgment that it has substantially acquired all the risks and
rewards incidental to the ownership of the IPPA power plants. Accordingly, each IPPA Agreement was
accounted for as a finance lease and SMC Global Power recognized the IPPA power plants as finance lease
liabilities at the present value of the agreed monthly payments to PSALM. Please see Notes 3, 4, 7 and 12 of the
audited consolidated financial statements included in this Offering Circular.
68
INDUSTRY OVERVIEW
The information in this section has been derived from various Government and private publications and has not
been prepared or independently verified by SMC Global Power, the Joint Lead Managers or any of their
respective affiliates or advisors. Certain information in this section regarding demand for electricity in the
Philippines was derived from the DOE website www.doe.gov.ph and DOE Power Development Plan 2012 to
2030 and has been supplemented with information from the 26th Status Report on EPIRA Implementation, NSCB,
WESM and other sources. SMC Global Power does not have any knowledge that such information from such
sources is inaccurate in any material respect. The information may not be consistent with other information
compiled within or outside the Philippines. The contents of www.doe.gov.ph do not form part of and are not
incorporated by reference into this Offering Circular.
OVERVIEW
The Philippine power industry was historically dominated by the state-owned NPC. Since the 1990s, the
Government decided to restructure and promote the development of the Philippine power industry through
private sector participation and has been privatizing its generation assets and capacity since December 2003.
The current framework of the Philippine power sector is governed by the EPIRA which was enacted in 2001. The
Philippine power industry, following the passage of the EPIRA, has undergone major reforms. The EPIRA aims
to improve the power sector in the Philippines by ensuring and accelerating total electrification of the country
and providing a fairer, competitive landscape for power sector participants, resulting in a more efficient and
transparent industry. Among other things, the EPIRA set out:
The creation of the ERC, which is an independent quasi-judicial regulatory body under the EPIRA;
Separation of the industry into generation, transmission, distribution and supply sectors;
Break-up and privatization of generation assets of the NPC, and the privatization of transmission assets by
PSALM;
Removal of the monopoly distribution utilities that held on retailing electricity within their franchise areas
to allow retail competition; and
RCOA to distribution networks.
Philippine Power Industry Structure

The Philippine power industry has evolved into a competitive market with clear separation between generation,
transmission, distribution and supply. Under the EPIRA, cross ownership in the transmission sector with the
generation and distribution sectors is not allowed.
69
Sector
Details
Generation
Generation companies are involved in converting fuel and other

forms of energy into electricity
Generation companies compete with each other for contracts with

distribution utilities or spot sales on the wholesale electricity spot
market
Generation sector is largely deregulated and competition based

largely on pricing
The generation sector consists of:
NPC-owned and operated facilities

NPC-owned and IPP-operated plants
IPP-owned and operated plants
IPPAs
The transmission network is responsible for transmitting electricity

from power generators to electricity distributors and large end-users
The transmission sector is regulated and operated by a single

transmission network owner and system operator respectively on a
monopolistic structure
TransCo, which is owned by the Government, is the owner of the

transmission network and is responsible for maintaining the
reliability, adequacy, security, stability and integrity of the
nationwide electrical grid. It is mandated to provide open and nondiscriminatory access to its transmission system to all electricity
users
The transmission of electricity through the transmission grid is

subject to transmission wheeling charges
NGCP is a private consortium of Monte Oro Grid Resources, Calaca

High Power Corporation and the State Grid Corporation of China. It
holds the concession contract to operate, maintain and expand the
transmission network
Distribution
Distributors are responsible for distributing electric power off the

transmission network to end-users and consist of private distribution
utilities such as Meralco and the Visayan Electric Company, electric
cooperatives and local Government units
Supply
With the commencement of the RCOA, distribution utilities are

required to unbundle their distribution operations from the supply
operations which makes the supply function competitive in nature
Private suppliers licensed by ERC are allowed to carry out the

supply function using the assets of the distribution utilities, subject
to payment of regulated tariffs
Transmission
POWER GENERATION OWNERSHIP

The ownership of various power generation assets in the Philippines can be subdivided into the following
categories: (1) NPC-owned and operated facilities; (2) NPC-owned and IPP-operated plants (NPC-IPP); and
(3) IPP-owned and operated plants (Non-NPC).
The IPPAs are qualified private sector independent entities that administer and manage the contracted energy
from the energy conversion agreements and power purchase agreements that NPC entered into with the IPPs.
70
Under a typical IPPA agreement, the energy offtake, which would have been delivered to NPC in the absence of
an IPPA agreement, is instead delivered to the IPPA. The IPPA then looks to sell that committed power and
production to customers and end users.
As a result of the privatization process under the EPIRA, there have been major changes to power plant
ownership and management in the Philippines. In 2014, Non-NPC was the largest segment in the countrys
power generation sector, with a market share of 82.5% of total electricity production. NPCs market share has
significantly fallen from 21.0% in 2008 to 6.1% in 2014.
The table below depicts the gross electric power generation by ownership type in the past five years.
Gross Power Generation by Ownership Type (MWh)
Ownership Type
2010
2011
2012
2013
2014
NPC(1)
..............................
NPC-SPUG*(2) . . . . . . . . . . . . . . . . . . . . . . . .
NPC-IPP(3) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-NPC(4) . . . . . . . . . . . . . . . . . . . . . . . . . .
4,053,288
522,482
14,724,519
48,442,471
5,141,747
542,874
9,535,783
53,955,245
5,241,101
466,129
9,874,848
57,339,934
5,035,174
423,283
8,912,324
60,895,060
4,692,425
416,243
8,382,276
63,770,053
Total Generation . . . . . . . . . . . . . . . . . . . . .
67,742,759
69,175,650
72,922,011
75,265,842
77,260,997
Source: DOE Power Statistics 2014

Notes:
* SPUG: Small Power Utilities Group
(1)
NPC includes generation from power plants owned by NPC.
(2)
NPC-SPUG includes generation from power plants owned by NPC and operating in off-grid areas.
(3)
NPC-IPP includes generation of IPPs having contracts with NPC.
(4)
Non-NPC includes generation of IPPs to customers (e.g. private distribution utilities and electric cooperatives).
ECONOMIC GROWTH DRIVERS FOR DEMAND OF POWER IN THE PHILIPPINES

From 2005 to 2014, the nominal GDP in the Philippines grew from approximately P5,678 billion to
P12,634 billion, according to the NSCB, representing a compound annual growth rate (CAGR) of 9.3%.
The Philippines Nominal GDP (Q billion)
14,000
12,000
10,000
8,000
6,000
5,677.7
6,271.2
6,892.7
7,720.9
8,026.1
2008
2009
9,003.5
9,706.2
10,564.9
11,548.2
12,634.1
4,000
2,000
0
2005
2006
2007
2010
2011
2012
2013
2014
Source: NSCB
The electricity, gas and water subsector, also known as the utilities subsector, accounted for 3.8% of the GDP of
the Philippines in 2005 (P217 billion) and 3.3% of GDP in 2014 (P412 billion).
The growth of the Philippine economy has led to a significant increase in demand for electricity over the past
decade. Peak power demand in the Philippines for the period from 2005 to 2014 increased at a CAGR of 3.6%,
with peak demand rising from approximately 8.6 GW in 2005 to approximately 11.8 GW in 2014.
Per capita electricity consumption in the Philippines has also increased from 526 kWh in 2005 to 633 kWh in
2014, having increased at a CAGR of 2.1%. The per capita electricity consumption in the Philippines still
71
remains significantly lower than other emerging economies such as Thailand and China and developed countries
in Europe and North America. This indicates potential for growth in electricity demand as the Philippine
economy continues to develop.
Annual Electricity Per Capita Consumption in the Philippines (kWh)
700
600
526.2
522.8
540.2
2005
2006
2007
544.5
553.6
2008
2009
591.4
590.2
612.3
625.7
632.8
2010
2011
2012
2013
2014
500
400
300
200
100
0
Source: DOE, Business Monitor
Electricity Per Capita Consumption Compared to Other Countries in 2014 (kWh)

18,450.2
20,000
16,000
13,517.1
12,000
10,336.8
8,882.8
8,000
4,000
632.8
918.6
2,521.3
2,929.3
Thailand
Brazil
4,144.2
4,937.5
5,136.4
Malaysia
UK
996.5
0
Philippines Indonesia
India
China
France
Australia
US
Canada
Source: Economist Intelligence Unit, NSCB, Business Monitor
ELECTRICITY SUPPLY AND DEMAND

The Philippines strong GDP growth has underpinned robust electricity demand growth. Peak demand has
increased from 8.6 GW in 2005 to 11.8 GW in 2014 at a CAGR of 3.6%. On the other hand, installed capacity
has only grown at a CAGR of 1.6%. This has resulted in a narrowing reserve margin of 44.8% in 2005 to 34.1%
in 2014.
Historical Peak Demand vs Supply
36.8%
17,325
11,822
35.8%
11,305
17,025
10,761
16,162
10,379
36.6%
17,944
Reserve Margin
10,375
9,472
15,610
16,359
Installed Capacity (MW)
15,681
42.3%
9,054
8,760
10,000
8,629
15,000 44.8%
43.6%
8,987
44.6%
15,803
15,619
20,000
15,937
Peak Demand (MW)
MW
34.7%
34.1%
2013
2014
45.0%
40.0%
39.3%
5,000
50.0%
35.0%
30.0%
25.0%
2005
2006
2007
2008
2009
2010
72
2011
2012
Projected Peak Demand Growth

14.0%
12.8%
12.0%
10.0%
8.0%
8.0%
8.0%
8.0%
8.0%
8.0%
7.0%
6.0%
5.6%
4.0%
4.2%
4.8%
4.8%
4.8%
4.8%
4.8%
2016
2017
2018
2019
2020
2.0%
0.0%
2015
Luzon
Visayas
Mindanao
Source: DOE
According to DOE Power Statistics 2014, as of December 31, 2014, the total installed capacity for the Philippine
power industry amounted to 17,944 MW. In 2014, 77,261 GWh of electricity was generated. Electricity in the
Philippines is distributed across three electricity grids comprising the Luzon, Visayas and Mindanao grids. The
Luzon grid contributes over 70% of power generated in the Philippines.
Gross Power Generation by Grid in 2014 (GWh)
Mindanao
9,481
12.3%
Visayas
11,014
14.3%
Luzon
56,766
73.5%
Total: 77,261 GWh
According to the DOE Power Statistics 2014, the Philippine electricity market had a total non-coincident peak
demand of 11.8 GW in 2014. This demand is divided among the three major grids, with the Luzon grid having
the largest demand at approximately 8,717 MW in 2014. This was an increase of 5.0% compared to the 2013
level of 8,305 MW, mainly due to hot weather conditions and commercial and industrial expansions. In 2014, the
Visayas and Mindanao grids also encountered increased peak demands of 1,636 MW (2013: 1,572 MW) and
1,321 MW (2013: 1,428 MW) respectively.
Peak Demand by Region (2014)
Mindanao
1,469
12.4%
Visayas
1,636
13.8%
Luzon
8,717
73.7%
Total: 11,822 MW
73
MARKET SHARE
Based on ERC Resolution No. 03, Series of 2015, SMC Global Power had a 16.5% market share of the power
supply of the national grid, and a 22.2% market share of the Luzon grid in each case as of June 30, 2015. Key
competitors include the Lopez Group which holds significant interests in First Gen and EDC, and the Aboitiz
Group which holds an interest in Aboitiz Power.
Power Generation Market Share by Installed Capacity as of December 31, 2014
Philippines
Luzon
SMC Global
Power
17%
SMC Global
Power
22%
PSALM
Plants
22%
Other IPPs
61%
PSALM
Plants
13%
Other IPPs
65%
Source: ERC Resolution No. 03, Series of 2015.
ENERGY SOURCES
The Philippines main energy sources for power generation are coal, natural gas, geothermal, hydropower, fuel
oil and diesel oil. Coal-fired plants accounted for the largest proportion of installed capacity and also remained
the largest energy source in 2014, accounting for 42.8% of the countrys total gross generation in 2014. Coal and
natural gas-fired plants are the dominant producers of electricity in the Luzon grid, together accounting for
81.1% of the total generation in 2014. In the Visayas grid, gross generation from geothermal energy
predominates, accounting for 51.1% of total generation in 2011. Hydropower is the main supplier of electricity in
the Mindanao grid, accounting for 50.0% of the total generation in 2014.
Installed Capacity by Plant Type in the Philippines (MW)
2013
Natural Gas
2,862
16.5%
2014
Natural Gas
2,862
15.9%
Oil Based
3,353
19.4%
New RE
153
0.9%
New RE
437
2.4%
Hydro
3,521
20.3%
Coal
5,568
32.1%
Oil Based
3,476
19.4%
Hydro
3,543
19.7%
Coal
5,708
31.8%
Geothermal
1,868
10.8%
Total: 17,325 MW
Geothermal
1,918
10.7%
Total: 17,944 MW
Gross Power Generation by Plant Type in the Philippines (GWh)

2013
Natural Gas
18,791
25.0%
Other Renewable
(Wind,Solar,Biomass)
279
0.4%
Coal
32,081
42.6%
2014
Oil-Based
4,491
6.0% Hydro
10,019
13.3%
Natural Gas
18,690
24.2%
Other Renewable
(Wind,Solar,Biomass)
364
0.5%
Coal
33,054
42.8%
Geothermal
9,605
12.8%
Total: 75,266 GWh
Oil-Based
5,708
7.4%
Hydro
9,137
11.8%
Total: 77,261 GWh
74
Geothermal
10,308
13.3%
Gross Power Generation by Plant Type and Grid in 2014 (GWh)

Luzon
Hydro
4,357
7.7%
Geothermal
3,817
6.7%
Wind
152
0.3%
Visayas
Biomass
65
0.1%
Hydro
35
0.3%
Coal
27,346
48.2%
Natural Gas
18,686
32.9%
Wind
117
1.1%
Mindanao
Biomass
15
0.1%
Biomass
14
0.1%
Coal
4,449
40.4%
Geothermal
5,627
51.1%
Hydro
4,745
50.0%
Oil-based
2,599
27.4%
Oil-based
766
7.0%
Oil-based
2,342
4.1%
Total: 56,766 GWh
Coal
1,258
13.3%
Geothermal
864
9.1%
Total: 11,014 GWh
Total: 9,481 GWh
The total electric power generation in 2014 was 77,261 GWh, 2.7% higher than the 75,266 GWh in 2013.
Generation from fossil fuels (oil, coal and natural gas) increased by 3.8% to 57,451 GWh in 2014 from 55,363
GWh in 2013. Generation from renewable energy decreased by 0.5%, to 19,810 GWh in 2014 from 19,903 GWh
in 2013.
Given its limited supply of natural resources, the Philippines largely relies on imports of coal and oil for
generating electricity. The Governments goal, as set out in the National Energy Sufficiency and Conservation
Program, is to meet supply targets while promoting energy self-sufficiency. Limiting the utilization of imported
fuels will make the Philippines less vulnerable to increasing oil and coal prices and promoting the use of
indigenous sources of energy such as locally mined coal, geothermal and hydro, will play an increasingly vital
role if the Government expects to achieve its self-sufficiency targets.
ELECTRICITY SUPPLY AND DEMAND OUTLOOK
According to the DOE, there are approximately 18 GW of private sector initiated power projects that are either
committed or indicative from 2015 to 2019. Approximately 13 GW of such committed or indicative capacity is
located in Luzon and approximately 11 GW are coal-fired projects.
Private Sector Initiated Power Projects (MW) Breakdown by Region
2016
Luzon . . . . . . . . . . . . . . . . . . .
Visayas . . . . . . . . . . . . . . . . .
Mindanao . . . . . . . . . . . . . . . .
730.7
108.6
367.0
651.6
370.0
890.0
1,170.0
8.0
680.0
Total . . . . . . . . . . . . . . . . . . .
1,206.3
1,911.6
1,858.0
2015
2016
2017
Luzon . . . . . . . . . . . . . . . . . . .
Visayas . . . . . . . . . . . . . . . . .
Mindanao . . . . . . . . . . . . . . . .
18.0
49.0
13.6
556.0
255.1
435.5
3,884.5
210.9
104.9
Total . . . . . . . . . . . . . . . . . . .
80.6
1,246.6
4,200.3
75
2017
Committed
2018
2015
2019
2015-2019 Total
10.0
0.0
9.0
2.0
0.0
17.0
2,564.3
486.6
1,963.0
19.0
19.0
5,013.9
Indicative
2018
2019
2015-2019 Total
2,882.2
203.9
667.8
3,088.2
11.5
407.9
10,428.9
730.4
1,629.6
3,753.9
3,507.6
12,788.9
Private Sector Initiated Power Projects (MW) Breakdown by Fuel Type
2015
2016
2017
Committed
2018
2019
2015-2019 Total
Coal . . . . . . . . . . . . . . . . . . . .
Nat Gas . . . . . . . . . . . . . . . . .
Oil-based . . . . . . . . . . . . . . . .
Geo . . . . . . . . . . . . . . . . . . . .
Hydro . . . . . . . . . . . . . . . . . . .
Solar . . . . . . . . . . . . . . . . . . . .
Wind . . . . . . . . . . . . . . . . . . .
Biomass . . . . . . . . . . . . . . . .
867.0
118.9
11.9
0.0
8.0
66.7
68.0
65.8
1,275.0
450.0
0.0
0.0
33.0
130.0
0.0
23.6
1,220.0
600.0
0.0
0.0
38.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
19.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
10.0
0.0
0.0
9.0
3,362.0
1,168.9
11.9
0.0
108.0
196.7
68.0
98.4
Total . . . . . . . . . . . . . . . . . . .
1,206.3
1,911.6
1,858.0
19.0
19.0
5,013.9
2015
2016
2017
Indicative
2018
2019
2015-2019 Total
Coal . . . . . . . . . . . . . . . . . . . .
Nat Gas . . . . . . . . . . . . . . . . .
Oil-based . . . . . . . . . . . . . . . .
Geo . . . . . . . . . . . . . . . . . . . .
Hydro . . . . . . . . . . . . . . . . . . .
Solar . . . . . . . . . . . . . . . . . . . .
Wind . . . . . . . . . . . . . . . . . . .
Biomass . . . . . . . . . . . . . . . . .
0.0
0.0
3.6
49.0
0.0
10.0
0.0
18.0
1,000.0
0.0
0.0
40.0
43.1
65.5
98.0
0.0
1,800.0
2,065.0
0.0
90.0
32.0
0.0
117.0
96.3
2,250.0
1,200.0
0.0
0.0
186.3
0.0
84.0
33.6
2,860.0
450.0
0.0
40.0
157.6
0.0
0.0
0.0
7,910.0
3,715.0
3.6
219.0
418.9
75.5
299.0
147.9
Total . . . . . . . . . . . . . . . . . . .
80.6
1,246.6
4,200.3
3,753.9
3,507.6
12,788.9
Source: DOE as of June 15, 2015
CUSTOMER SEGMENTS
In 2014, the residential, industrial and commercial segments accounted for 33.1%, 33.8% and 29.6%,
respectively, of total power used in the Philippines, with the remainder consumed by other users. The following
table provides data for electric power consumption in the Philippines, with each sectors percentage of sales
presented as a percentage of total sales in 2014:
2014 Electricity Sales by Customer Sector (GWh)
Others
2,186
3.5%
Industrial
21,429
33.8%
Residential
20,969
33.1%
Commercial
18,761
29.6%
Total: 63,345 GWh

Note: Others include street lights, public buildings, irrigation, energy recovered and others not elsewhere classified.
76
INDEPENDENT POWER PRODUCER ADMINISTRATORS

IPPAs are qualified private sector independent entities that administer and manage the contracted energy from
energy conversion agreements and power purchase agreements that NPC entered into with the IPPs. IPPAs are
appointed through public bidding conducted by PSALM.
The IPPA process provides successful bidders a way to enter and trade in the WESM for a minimal capital outlay
and without the expense of building a new plant. This is a unique way to enter the WESM. This alternative also
allows investors to partake in the benefits of owning generating stations when the IPPA agreement expires.
Among these benefits are: (1) controlling the fuel and its dispatch and (2) trading and contracting of the plants
capacity without the maintenance costs or capital upgrades associated with actual ownership of the plant.
NPC entered into several long-term contracts with IPPs to build or rehabilitate and/or operate power generation
plants prior to the implementation of the EPIRA. A typical contract between NPC and an IPP requires fixed and
variable payments from NPC to the IPP in return for electrical power output. In some of the contracts, NPC also
is required to furnish fuel supplies to the IPP. NPC sells the power purchased under these contracts to distribution
utilities or end-users.
Under a typical IPPA agreement, the energy offtake, which would have been delivered to NPC in the absence of
an IPPA agreement, is instead delivered to the IPPA. The IPPA has the right to sell the power generated by the
related IPP either to the WESM or pursuant to supply contracts with specific customers and often (but not
invariably) is obligated to supply fuel to that IPP. IPPAs pay PSALM a fixed monthly payment and a variable
energy or generation fee. IPPA agreements provide relief for IPPAs in the event that the associated IPPs are
unable to dispatch power for a certain period of time for reasons other than the fault of the IPPA. PSALM/NPC
in turn makes capacity and energy payments to the IPPs pursuant to the relevant IPP contract.
WHOLESALE ELECTRICITY SPOT MARKET
The WESM was established as part of EPIRA. The WESM provides a market in which IPPAs and other
generators can sell power, and at the same time suppliers and wholesale consumers can purchase electricity
where no bilateral contract exists between the two. The aim of the WESM is to provide transparent and efficient
dispatch pricing. Its design is similar to the electricity markets in Australia, Singapore and New Zealand. The
PEMC is responsible for operating and regulating the WESM. The PEMC membership is comprised of
representatives from the electricity industry and is chaired by the Secretary of the DOE. The diagram below
illustrates how the WESM operates:
WESM
Power
Generators
Suppliers and Wholesale Consumers
Sell power
Purchase
electricity
Wholesale
Consumers
Operates and governs

Distribution
Utilities
Retail Buyers (Residential

and Commercial)
PEMC
Source: DOE, ERC
77
Historical WESM Customer Effective Settlement Prices (Q per MWh)

25,769
30,000
16,311
12,312
12,500
9,144
7,985
May-15
Mar-15
Jan-15
Feb-15
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Apr-14
Mar-14
4,627
3,098
2,328
4,689
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
5,551
3,898
3,655 3,546
2,664
2,000
6,474
5,555 5,585
2,863
Jun-14
3,754
4,453 3,743
May-14
5,500
Apr-15
6,735
5,799
Dec-14
8,283
9,000
Source: WESM
In the WESM, although generators are allowed to transact through bilateral contracts, these contracts will have to
be offered to the market for the purpose of determining the appropriate merit order of generators. Settlement
for bilateral contracts will, however, occur outside the market between the contracting parties. Traded electricity
not covered by bilateral contracts will be settled through the market on the basis of the market clearing prices for
each of the trading periods. Typically, the output of cost-efficient plants, such as hydro-electric plants, is
dispatched first, due to a lack of corresponding fuel cost.
78
BUSINESS
OVERVIEW
SMC Global Power is one of the largest power companies in the Philippines, controlling 2,903 MW of combined
contracted capacity as of June 30, 2015 and which benefits from diversified fuel sources, including natural gas,
coal and hydroelectric. Based on ERC Resolution No. 03, Series of 2015, SMC Global Power had a 16.5%
market share of the power supply of the national grid, and a 22.2% market share of the Luzon grid, in each case
as of June 30, 2015. The principal activity of SMC Global Power is the sale of power generated by power plants
in the Philippines that are owned and operated by third-party IPPs, owned through joint ventures with third
parties or greenfield power plants. SMC Global Power entered the power industry in 2009 following the
acquisition of IPPA rights in privatization auctions conducted by the Government. Under the IPPA business
model, SMC Global Power gained the right to sell electricity generated by the power plants owned and operated
by the IPPs without having to, bear any of the large upfront capital expenditures for power plant construction or
maintenance. As an IPPA, SMC Global Power also has the ability to manage both market and price risk by
entering into bilateral contracts with offtakers while capturing potential upside from the sale of excess capacity
through the WESM.
SMC Global Power controls the 2,545 MW combined contracted capacity of the Sual, Ilijan and San Roque
Power Plants through the IPPA Agreements of its subsidiaries, SMEC, SPPC and SPDC, respectively. SMEC
acquired the IPPA rights for the Sual Power Plant in November 2009, SPDC for the San Roque Power Plant in
January 2010 and SPPC for the Ilijan Power Plant in June 2010. The Sual Power Plant is a coal-fired thermal
power plant, the San Roque Power Plant is a hydro-electric power plant, and the Ilijan Power Plant is a natural
gas-fired combined cycle power plant.
In September 2013, SMC Global Power acquired 100% of the Limay Cogeneration Plant from Petron
Corporation through SPI. In November 2014, SMC Global Power acquired a 60% stake in AHC, the owner and
operator of the 218 MW AHEPP through its subsidiary, PVEI. As at June 30, 2015, the capacity of SMC Global
Power is 2,903 MW including the entire capacity of the AHEPP.
SMC Global Power sells power through offtake agreements directly to customers, including Meralco and other
distribution utilities, electric cooperatives and industrial customers, or through the WESM. The majority of the
sales of SMC Global Power are through long-term take-or-pay offtake contracts which have provisions for
passing on fuel costs and certain other fixed costs.
In April 2013, SMC Global Power acquired a 35% equity stake in OEDC. In October 2013, SMC Global Power
entered into a 25-year concession agreement with ALECO. It became effective upon the confirmation of the
NEA in November 2013. SMC Global Power organized and established a fully-owned and controlled subsidiary
APEC which assumed, as the concessionaire, all the rights and interests and performs the obligations of SMC
Global Power under the concession agreement with ALECO.
During the years ended December 31, 2012, 2013 and 2014 and the six months ended June 30, 2014 and 2015,
respectively, SMC Global Power sold 14,487 GWh, 13,316 GWh, 14,891 GWh, 7,667 GWh and 7,216 GWh of
power pursuant to offtake agreements and 1,474 GWh, 2,847 GWh, 2,110 GWh, 1,123 GWh and 937 GWh of
power through the WESM. In contrast, during the years ended December 31, 2012, 2013 and 2014 and the
six months ended June 30, 2014 and 2015, respectively, SMC Global Power purchased 675 GWh, 517 GWh,
477 GWh, 229 GWh and 187 GWh of power from the WESM.
For the year ended December 31, 2014, the total revenue, net income and EBITDA of SMC Global Power were
respectively, and for the six months ended June 30, 2015, the total revenue, net income and EBITDA of SMC
Global Power were P40.5 billion (U.S.$897.2 billion), P3.9 billion (U.S.$87.4 million) and P3.9 billion
(U.S.$85.9 million), respectively, while as of December 31, 2014 and June 30, 2015, SMC Global Power had
total assets of P313.7 billion (U.S.$7.0 billion) and P319.4 billion (U.S.$7.1 billion), respectively.
The experience of SMC Global Power in acting as an IPPA and its ownership of the Limay Cogeneration Plant
and the AHEPP, have enabled SMC Global Power to gain expertise in the Philippine power generation industry.
With this experience, SMC Global Power believes it has a strong platform to participate in the expected future
79
growth of the Philippine power market, through both the development of greenfield power projects and the
acquisition of existing power generation capacity. SMC Global Power initiated two greenfield power projects in
July 2013 and October 2013 with the construction of the Davao Greenfield Power Plant and the Limay
Greenfield Power Plant, respectively. SMC Global Power is considering the further expansion of its power
portfolio of additional capacity nationwide through greenfield power projects over the next few years, depending
on market demand.
With the increased development of greenfield power projects from 2016 onwards, an increasing portion of the
portfolio of SMC Global Power is expected from Company-owned and -operated IPPs. In order to continue its
strategic acquisitions of existing power generation capacity, SMC Global Power intends to participate in the
bidding of selected NPC-owned power generation plants that are scheduled for privatization as asset sales or
under the IPPA framework. SMC Global Power also intends to pursue vertical integration of its power business
by expanding into businesses along the power sector value chain that complement its current power generation
operations. Such vertical integration would encompass both upstream vertical integration (integration of power
generation with fuel suppliers) and downstream vertical integration (integration of power generation with
distribution and supply operations). SMC Global Power also intends to pursue downstream vertical integration by
capitalizing on changes in the Philippine regulatory structure to expand its sales of power to a broader range of
customers, including retail customers. In August 2011, as part of the reorganization of the power-related assets of
San Miguel Corporation, SMC Global Power acquired from San Miguel Corporation a 100% equity interest in
SMELC, which holds a retail electricity supplier license from the ERC. With open access and retail competition
already implemented, the retail electricity supplier license will allow SMC Global Power to enter into RSCs with
customers with power requirements of at least 1 MW, which will be lowered to 750 KW by June 2016. SMC
Global Power also owns coal exploration, production and development rights over approximately 17,000 hectares
of land in Mindanao. SMC Global Power expects that these assets will potentially serve as a source of coal fuel
supply for its planned and contemplated greenfield power projects.
SMC Global Power is a wholly-owned subsidiary of San Miguel Corporation and is the holding company for the
power businesses of San Miguel Corporation. San Miguel Corporation is a diversified conglomerate founded in
1890 that is listed on the PSE and has interests in the food, beverage, packaging, fuel and oil, infrastructure,
telecommunications, banking and property businesses. The relationship of SMC Global Power with San Miguel
Corporation allows it to draw on the extensive business networks, local business knowledge, relationships and
expertise of senior key executive officers of San Miguel Corporation.
COMPETITIVE STRENGTHS AND BUSINESS STRATEGY
Competitive Strengths
Leading power company in the Philippines with a strong growth platform. SMC Global Power is one of the
largest power companies in the Philippines based on its combined contracted capacity of 2,903 MW. SMC
Global Power is the IPPA for the Sual, Ilijan and San Roque Power Plants, which have a combined contracted
capacity attributable to SMC Global Power of 2,545 MW. SMC Global Power also owns the 140 MW Limay
Cogeneration Plant in Limay, Bataan and a 60% stake in AHC, the owner and operator of the 218 MW AHEPP.
Based on the total installed capacity of the market, SMC Global Power, on a contracted capacity basis for the
Sual, Ilijan and San Roque Power Plants and AHEPP, has a 16.5% market share of the power supply of the
national grid of the Philippines, and a 22.2% market share of the Luzon grid, in each case as of June 30, 2015,
based on ERC Resolution No. 03, Series of 2015.
The IPPA business model provides SMC Global Power with the benefit of having the right to sell electricity
generated by the IPPs without having to incur large upfront capital expenditures for the power plant construction,
or to bear any related development risk or ongoing maintenance capital expenditures. As an IPPA, SMC Global
Power determines the amount of power to be produced by the IPP for supply to the customers of the IPPA and
sells the power generated by the IPPs either pursuant to offtake agreements directly with customers or through
the WESM. This business model provides SMC Global Power the ability to manage both market and price risk
by entering directly into bilateral contracts with established customers while capturing potential upside through
the sale of excess capacity through the WESM when spot market prices are attractive.
The experience of SMC Global Power in acting as an IPPA and its history of power plant ownership and
operation, have enabled SMC Global Power to gain significant expertise in the Philippine power generation
industry. With this experience, SMC Global Power believes it is in a strong position to participate in the expected
80
future growth of the Philippine power market, through both the development of greenfield power projects and the
acquisition of existing power generation capacity of selected NPC-owned power generation plants that are
scheduled for privatization as asset sales or under the IPPA framework.
In addition, capitalizing on changes in the Philippine regulatory structure, SMC Global Power holds a retail
electricity supplier license from the ERC, which allows SMC Global Power to enter into offtake agreements with
customers with power requirements of at least 1 MW. With further developments in open access and retail
competition, SMC Global Power may be able to enter into offtake agreements with retail customers with
requirements of as low as 750 KW by June 2016. SMC Global Power also maintains its coal concession assets
which may serve as a back-up fuel source for its greenfield coal plants.
Stable and predictable cash flows underpinned by long-term offtake agreements. SMC Global Power sells
power either through offtake agreements directly to customers, including Meralco and other distribution utilities,
electric cooperatives and industrial customers, or through the WESM. Revenue from bilateral contracts with
offtakers contributed 85%, 89% and 90% of total revenue for the years ended December 31, 2013 and
December 31, 2014 and the six months ended June 30, 2015, respectively. The majority of SMC Global Powers
capacity has bilateral contracts that cover the term of the IPPA agreements.
These offtake agreements provide SMC Global Power with stable and predictable cash flow, by enabling it to
manage both market and price risks. Despite the general volatility in market prices for electric power due to supply
and demand imbalances, SMC Global Power has been able to manage such risks through the contracted sale prices
with offtakers which also provide a long-term stable source of demand. The tariffs under these agreements take into
account adjustments for fuel, foreign exchange, and inflation, thereby allowing SMC Global Power to pass through
its costs to its offtakers. In addition, SMC Global Powers diversified portfolio of baseload and peaking power
plants helps mitigate market risks through long-term, inter-company, replacement power contracts.
Flexible and diversified power portfolio. SMC Global Power manages the capacity of a balanced portfolio of
some of the newest and largest power plants in the Philippines, which benefit from diversified fuel sources. The
IPPA power plants have an average age of 14 years. In terms of installed capacity in the Philippines, the Sual
Power Plant is the largest coal-fired power plant, the Ilijan Power Plant is the largest natural gas-fired power
plant and the San Roque Power Plant is one of the largest and newest hydro-electric power plants.
The existing power portfolio of SMC Global Power consists of (i) IPPAs, covering natural gas-fired (Ilijan Power
Plant), which represents 41% of the capacity of SMC Global Power, coal-fired (Sual Power Plant), which
represents 34% of the capacity of SMC Global Power, and hydro-powered (San Roque Power Plant), which
represents 12% of the capacity of SMC Global Power, (ii) the Limay Cogeneration Plant, which represents 5% of
the capacity of SMC Global Power, and (iii) the AHEPP which represents 8% of the capacity of SMC Global
Power, as of June 30, 2015. Power generated by the Sual and Ilijan Power Plants is primarily used as baseload
supply, and sold to customers pursuant to offtake agreements. Power generated by the San Roque Power Plant
and the AHEPP is used as peaking supply, and sold through the WESM or as replacement power to affiliates.
Power generated by the Limay Cogeneration Plant is 100% sold to Petron Corporation.
SMC Global Power believes that the size and diversity of the fuel supply of its power portfolio reduces its and
the exposure of its customers to fuel-type specific risks such as variations in fuel costs, and regulatory concerns
that are linked to any one type of power plant or commodity price. SMC Global Power believes that its
management of the capacity of this diverse portfolio of power plants allows it to respond efficiently to market
requirements at each point of the electricity demand cycle. This diversity helps it to improve the profitability of
its portfolio by flexibly dispatching electricity in response to market demand and fuel cost competitiveness. SMC
Global Power can enter into bilateral contracts and to trade in the WESM for the balance of its contracted
capacities and energy. By managing the IPPA power plants as a single portfolio and actively managing the
energy output of the plants, SMC Global Power seeks to offer more competitive electricity rates compared to
other power companies with smaller and less diverse portfolios.
Established relationships with world class partners. The IPPA power plants are owned, operated and maintained
by world-class partners, including Marubeni Corporation, Tokyo Electric Power Corporation, Korea Electric Power
Corporation and Mitsubishi Corporation. Since entering the power business, SMC Global Power has established
relationships with internationally recognized fuel suppliers in Indonesia and Australia, as well as with its customers,
including Meralco, its largest customer. SMC Global Power believes that these well-established relationships
provide a strong foundation for its existing business and a platform of potential partners for future expansion.
81
Strong parent company support. The principal shareholder of SMC Global Power, San Miguel Corporation, is a
highly diversified conglomerate with over 125 years of operations in the Philippines. San Miguel Corporation
today has become one of the largest companies listed on the SEC in terms of market capitalization. In addition to
its power business, San Miguel Corporation has investments in vital industries that support the economic
development of the country, including the food and beverage, packaging, fuel and oil, infrastructure,
telecommunications, banking and property businesses.
Under the stewardship of San Miguel Corporation, SMC Global Power has become one of the market leaders in
the Philippine power industry in a relatively short period of time. SMC provides SMC Global Power with key
ancillary and support services in areas that promote operational efficiency, such as human resources, corporate
affairs, legal, finance, and treasury functions. SMC Global Power believes it will continue to benefit from the
extensive business networks of San Miguel Corporation, its in-depth understanding of the Philippine economy
and expertise of its senior managers to identify and capitalize on growth opportunities. Given the substantial
electricity requirements of the other businesses of San Miguel Corporation, SMC Global Power believes that it
can benefit from potential revenue and operational synergies with the San Miguel Corporation group of
companies, and that the San Miguel Corporation group potentially provides a large captive energy demand base
for SMC Global Power.
Experienced management, operating, trading and marketing teams. The senior management of SMC Global
Power has extensive experience in the Philippine power industry, and SMC Global Power believes that they have
a deep understanding of the Philippine electricity markets with respect to the operational, financial, regulatory,
and business development aspects of the operation and management of power plants. The senior management
team of SMC Global Power has strong professional relationships with key industry participants, such as the
DOE, PSALM, NPC, TransCo, NGCP, PEMC and ERC, as well as people from other Government offices and
agencies. The employees of SMC Global Power include experienced energy traders who pioneered WESM
trading and marketing executives who have established strong relationships with the extensive customer base of
NPC. The members of the Executive Committee of SMC Global Power have on average more than 25 years of
experience in executive management and related Government experience in the power industry, including
strengths in key areas of engineering and finance. The executive and senior management have displayed a strong
track record of growth and delivery since SMC Global Power commenced operations in November 2009.
Well-positioned to capitalize on the anticipated growth of the Philippine electricity market. Over the period
from 2015 to 2020, growth in demand for electricity in the Philippines is expected to exceed the growth rate of
the Philippines gross domestic product (GDP), according to the DOE. Construction of new power plants on
average takes a minimum of three years. Given the gap between projected electricity demand and committed
power projects, SMC Global Power expects that there will be a power supply shortage in the medium term until
new capacity is built to meet the growing consumption.
SMC Global Power believes it is well-positioned to take advantage of opportunities from continued growth in the
Philippine electricity market, as well as from the existing power supply shortage. The latter is exacerbated by an
existing base of old Government-owned power plants, which are nearing the end of their useful life, as well as a
large base of seasonal power supply such as the hydropower plants particularly in Mindanao. To meet this need,
SMC Global Power has a defined roadmap to increase capacity by developing greenfield power projects and
bidding for selected NPC-owned power generation plants that are scheduled for privatization.
SMC Global Power is already in the construction stage for two greenfield power projects with 450 MW of
generation capacity expected to be commissioned in 2016 and another 150 MW in 2017. In addition, as a leading
power company in the Philippines with a large customer base, SMC Global Power believes that it is in a strong
position to leverage its relationships with its existing customers to service their expected increased electricity
demand.
Business Strategies
Optimize the generation capacity of its power portfolio. SMC Global Power intends to actively manage its sales
and optimize the operations of its IPPA power plants and the Limay Cogeneration Plant in order to achieve a
balanced mix of power sales through (1) contractual arrangements with electricity customers including
distribution utilities, industrial and commercial customers, (2) sales through the WESM and (3) capturing the
contestable market through retail electricity supply. This approach provides SMC Global Power with the
certainty and predictability of sales from contracted sales while being able to capture sales upside from the
82
WESM. The objective of SMC Global Power is to supply customers based on the least cost while dispatching
according to the requirements of the IPPA agreements, and to sell available excess energy of the IPPA power
plants through the WESM at favorable prices. For the year ended December 31, 2014, sales volumes through
bilateral arrangements compared to sales through the WESM for the Sual, Iljian and San Roque Power Plants
were 90% to 10%, 91% to 9%, and 29% to 71%, respectively. For the Limay Cogeneration Plant, 100% of output
is sold to Petron Corporation on a bilateral basis.
Specifically, in case of high prices in the WESM, SMC Global Power can optimize its portfolio and take
advantage of such pricing and sell the excess output of the IPPA power plants to the WESM after delivering the
contractual amounts required under its offtake agreements. Alternatively, in case of low prices in the WESM,
SMC Global Power can minimize the generation output of its power plants and deliver the contractual amounts
required under its offtake agreements either with output from the San Roque Power Plant or with energy
purchased from the WESM. In the event of tripping or shutdown of either the Sual or Ilijan Power Plant, SMC
Global Power can maximize the dispatch of its remaining units by lowering the bid prices so that the bilateral
contract quantity requirements will be served without buying at high prices from the WESM.
Grow its power portfolio through development and acquisition of power generation capacity. SMC Global
Power intends to utilize its strong platform, extensive relationships and experienced management team to address
the growing demand for power in the Philippines. SMC Global Power plans to continue its strategic development
of greenfield power projects in parallel with its plan to acquire existing power generation capacity by bidding for
selected NPC-owned power generation plants that are scheduled for privatization as asset sales or under the IPPA
framework. SMC Global Power seeks to capitalize on regulatory and infrastructure developments by scheduling
the construction of greenfield power projects to coincide with the planned improvements in the interconnectivity
of the Luzon and Visayas grids, as well as the eventual interconnectivity and implementation of WESM in
Mindanao. In addition, SMC Global Power seeks to maintain the cost competitiveness of these new projects by
strategically locating them in high-demand areas and in proximity to the grid. SMC Global Power is considering
the further expansion of its power portfolio of new capacity nationwide through greenfield power projects over
the next few years, depending on market demand. SMC Global Power plans to carry out the expansion of its
power portfolio in phases across Luzon, Visayas and Mindanao. SMC Global Power plans to use clean coal
technology for its planned and contemplated greenfield power projects.
Vertically integrate complementary businesses. SMC Global Power intends to continue to expand into businesses
along the power sector value chain that complement its current power generation business. SMC Global Power has
obtained a retail electricity supplier license through SMELC to expand its customer base and diversify its sales.
With the open access and retail competition fully implemented, the electricity supplier license allows SMC Global
Power to enter into retail electricity supply agreements with customers with power requirements of at least 1 MW,
which will be lowered to 750KW by June 2016. In addition, SMC Global Power has invested in distribution assets,
namely OEDC and APEC, which creates a competitive advantage through integrated generation and distribution
operations. On the other hand, SMC Global Power has acquired coal exploration, development and production
rights over approximately 17,000 hectares of land in Mindanao. If SMC Global Power is able to develop these
assets and commence mining operations successfully, SMC Global Power through SMEC, expects these assets
could potentially provide a source of coal fuel supply for its greenfield power projects. SMC Global Power believes
that such vertical integration will provide it with a competitive advantage in the Philippine power market.
Leverage operational synergies. SMC Global Power intends to establish a track record of reliability by
partnering with world-class IPP partners. SMC Global Power believes that the high caliber of these IPP partners
enhances the likelihood that the IPPA power plants are in good working condition if SMC Global Power
exercises the option to purchase them upon the expiration of the IPPA Agreements. SMC Global Power also
gains knowledge and expertise with its joint venture partnership with K-Water in AHEPP. SMC Global Power
believes that this approach complements its strategic development of greenfield power projects.
IPPA FRAMEWORK
PSALM, together with NPC, has ECAs or other PPAs in place with various IPPs in the Philippines. Under the
EPIRA, PSALM is required to achieve, through open and competitive bidding, the transfer of the management
and control of at least 70% of the total energy output of the IPP plants under contract with NPC to IPPAs
pursuant to IPPA Agreements, such as those held by SMC Global Power.
83
Under IPPA Agreements, the IPPAs have the right to sell the electricity generated by such IPP in the WESM and
also by entering into PSCs with specific customers and will, in general, manage procurement of the fuel supply to
the associated IPP. The IPPA has to pay PSALM a fixed monthly payment and a variable energy or generation
fee the amount of which depends on the dispatch and performance of the IPP. IPPA Agreements provide relief
for IPPAs such as SMC Global Power in the event the associated IPPs are unable to dispatch for a certain period
of time not due to the fault of the IPPA.
PSALM/NPC in turn, pays the IPPs capacity and energy payments based on their respective ECAs or PPAs. In
some cases, IPPA Agreements provide the IPPA with the right to acquire ownership of the power plants or
generation facilities at the end of the terms of the ECAs or PPAs. Under the IPPA Agreements of SMC Global
Power, SMC Global Power has the right to acquire the Sual Power Plant in October 2024, the Ilijan Power Plant
in June 2022 and the San Roque Power Plant in May 2028 or on some earlier date due to certain events such as
changes in applicable law or non-performance by the IPP.
The IPPA framework is intended to provide successful bidders a way to enter and trade in the WESM for a
minimal capital outlay without the expense of building a new power plant and for IPPAs to enjoy the benefits
normally attributed to owners of power generation plants, including controlling the fuel and its dispatch, trading,
and contracting of the power plant, without maintenance costs or capital upgrades, which remain with the IPPs.
Also, many of the risks of owning a power plant are explicitly managed through the contract. If there is an
extended outage at the power generation plants, for example, there is up to a 50% discount on the monthly fees,
and PSALM bears the force majeure risks to the power generation plants. The IPPA framework also permits an
IPPA to assume the role of NPC as an offtaker of power generated by IPPs without affecting NPCs underlying
agreements with the IPP.
IPPAs are permitted to trade in the WESM, and are also free to enter into bilateral contracts and seek other
markets for the balance of their contracted capacities and energy, as well as enter into other forms of financial
hedging instruments if desired to manage their position in and exposure to the market.
Set forth below is a general illustration of the IPPA framework.
Fuel Supply
Contract
Energy Conversion
Agreement
(ECA) /
Power Purchase
Agreement (PPA)
Fuel Supplier
WESM
Independent
Power
Producer
Administrators
(IPPAs)
Independent
Power
Producers
(IPPs)
IPPA Agreement
Capacity Payments
+
Energy Payments
IPPS
Construct, operate and maintain
plants
Deliver electricity according to the
PPA / ECA and dispatch instructions
from the IPPA
Spot Sale
PSALM Monthly
Payments +
Energy Payments
NPC
Power Supply
Contract
PSALM
IPP counterparty
IPPA counterparty
Become owner and operator of plants

if IPP defaults
Extends equivalent relief to IPPA if

IPP defaults
Plant ownership will be transferred at

expiration of ECA
Bilateral Sale
to Distribution
Utilities and
Industrial
Customers
IPPAs
Hold rights to sell electricity generated
by IPPS
Procure fuel required by IPPs to
generate power (only applicable to
Sual power plant)
IPPA has the option to acquire the
power plant at the end of the IPPA
84
SMC GLOBAL POWER PORTFOLIO

The map below sets out the locations and contracted capacities of the power plants for which SMC Global Power
acts as IPPA, the capacities of the power plants SMC Global Power owns or operates, as well as the locations of
greenfield power projects that are currently under construction by SMC Global Power.
San Roque Hydro Plant
Sual Coal Plant
Angat Hydro Plant

Limay Cogeneration Plant
Luzon
Visayas
Mindanao
Ilijan Natural Gas Plant

Davao Coal Plant
(under construction)
85
Limay Coal Plant

(under construction)
CORPORATE STRUCTURE
The chart below provides an overview of the ownership structure of SMC Global Power and its major operating
subsidiaries as of June 30, 2015.
100%
100%
100%
San Miguel
Energy
Corporation
South Premiere
Power Corp.
IPPA for
1,000MW Sual
Power Plant(1)
IPPA for
1,200MW llijan
Power Plant(1)
100%
100%
Bonanza Energy
Resources, Inc.
Operator of
the COC in
Sarangani
& South
Cotabato
Daguma AgroMinerals, Inc.
Operator of
the COC in
South
Cotabato
100%
100%
100%
Strategic Power
Devt. Corp.
PowerOne
Ventures
Energy Inc.
SMC PowerGen
Inc.
IPPA for
345MW San
Roque
Power Plant(1)
Holding
company for
218 MW Angat
Power Plant
4X35 MW Limay
Cogeneration
Power Plant
100%
Sultan Energy
Phils. Corp
100%
60%
Golden Quest
Equity Holdings
Inc.
Angat
Hydropower
Corporation
Operator of
the COC in
South
Cotabato &
Sultan Kudarat
Holding
Company
Asset
Owner &
Operator of the
Angat Hydro
Plant
100%
100%
San Miguel
Consolidated
Power Corp.
SMC
Consolidated
Power Corp.
Limay Premiere
Power Corp.
2X150 MW
Davao
Greenfield
Power Plant
Phase 1 (Under
construction)
2X150 MW
Limay
Greenfield
Power Plant
Phase 1 (Under
construction)
2X150 MW
Limay
Greenfield
Power Plant
Phase 2 (Under
Construction)
60%
100%
KWPP Holdings
Corporation
Holder of the
Water Rights
and Land Use
Rights of the
Angat Hydro
Plant
100%
100%
100%
San Miguel
Electric Corp.
Albay Power
and Energy
Corp.
Retail
Electricity
Supply (RES)
licensee
35% ownership
in Olongapo
Electricity
Distribution
Company, Inc.
Concessionaire
for O&M of
(2)
ALECO
100%
100%
100%
100%
Mantech Power
Dynamic
Services Inc.
Safetech Power
Services Corp.
Central Luzon
Premiere Power
Corp.
Mariveles
Power
Generation
Corporation
O&M for Limay

Power Plant
O&M for Malita

Power Plant
Power
Generation
Company
Intended for
Future
Expansion
Power
Generation
Company
Intended for
Future
Expansion
Limay Power
Generation
Corporation
Power
Generation
Company
intended for
Future
Expansion
100%
SMC Power
Generation
Corp.
100%
100%
Grand Planters
International
Inc.(3)
Ondarre
Holding
Corporation(4)
Holding
Company
Holding
Company
(1)
SMC Global Power manages and controls the capacity of the plants under IPPA agreements with PSALM.
(2)
Albay Electric Cooperative Inc.
(3)
Completion of acquisition by SMC Global Power of Grand Planters International Inc. is pending to date.
(4)
Completion of acquisition by SMC Global Power of Ondarre Holding Corporation is pending to date.
SMC Global Power also owned, from September 2010 through August 2011, a 620 MW oil-fired power plant
located in Limay, Bataan. In August 2011, SMC Global Power sold its 100% equity interest in Panasia, the
company that owns the Limay Combined Cycle Plant. Accordingly, the Limay Combined Cycle Plant is
accounted for as discontinued operations in the consolidated financial statements of SMC Global Power as of and
for the six months ended December 31, 2011.
Neither SMC Global Power nor any of its subsidiaries or associates has ever been subject to any bankruptcy,
receivership or similar proceedings. None of the subsidiaries of SMC Global Power has ever been a party to any
merger or consolidation.
CORPORATE HISTORY AND MILESTONES
San Miguel Corporation determined in 2007 to enter the power business. In 2009 and 2010, subsidiaries of San
Miguel Corporation successfully acquired, through privatization auctions by PSALM, the IPPA rights for the
Sual, San Roque and Ilijan Power Plants. A San Miguel Corporation subsidiary, Panasia, also purchased the
Limay Combined Cycle Plant in 2010. In order to consolidate its power generation business, San Miguel
Corporation transferred these assets into SMC Global Power over the course of 2009 and 2010. In September
2010, SMC Global Power became a wholly-owned subsidiary of San Miguel Corporation.
86
The following timeline sets forth key events in the corporate history of SMC Global Power:
January 2008 . . . . . . . . . . . . . . . . . . .
SMC Global Power is incorporated under the name Global 5000

Investment Inc. (renamed SMC Global Power Holdings Corp. in October
2010).
January 2009 . . . . . . . . . . . . . . . . . . .
SMC Global Power acquires a 6.13% equity interest in Meralco, which

was eventually sold in December 2013.
November 2009 . . . . . . . . . . . . . . . . .
A San Miguel Corporation subsidiary, SMEC, becomes the IPPA for the
Sual Power Plant.
SMC Global Power acquires a 60% equity interest in SMEC, the
company that is the IPPA for the Sual Power Plant.
January 2010 . . . . . . . . . . . . . . . . . . .
A San Miguel Corporation subsidiary, SPDC, becomes the IPPA for the
San Roque Power Plant.
A San Miguel Corporation subsidiary, Panasia, acquires the Limay
Combined Cycle Plant.
SMEC acquires a 100% equity interest in Bonanza Energy Resources,
Inc. (Bonanza) and Daguma Agro-Minerals, Inc. (Daguma), the
companies having coal mining rights over approximately 10,000
hectares in Lake Sebu, South Cotabato and Tuanadatu, Maitum,
Saranggani Province in Mindanao.
March 2010 . . . . . . . . . . . . . . . . . . . .
SMC Global Power acquires from San Miguel Corporation a 60% equity
interest in SPDC, the company that is the IPPA for the San Roque Power
Plant.
May 2010 . . . . . . . . . . . . . . . . . . . . . . SMEC acquires a 100% equity interest in Sultan, the company having
coal mining rights over approximately 7,000 hectares in Lake Sebu,
South Cotabato and Bagumbayan, Sultan Kudarat in Mindanao.
June 2010 . . . . . . . . . . . . . . . . . . . . . .
A San Miguel Corporation subsidiary, SPPC becomes the IPPA for the
Ilijan Power Plant.
September 2010 . . . . . . . . . . . . . . . . .
SMC Global Power becomes a wholly-owned subsidiary of San Miguel

Corporation, and acquired from San Miguel Corporation:
August 2011 . . . . . . . . . . . . . . . . . . . .
a 100% equity interest in SPPC, the company that is the IPPA for
the Ilijan Power Plant;
a 100% equity interest in Panasia, the company that owns the

Limay Combined Cycle Plant; and
the remaining 40% equity interests in SMEC and SPPC, the

companies that are the IPPAs for the Sual and San Roque Power
Plants.
SMC Global Power sells its 100% equity interest in Panasia, the
company that owns the Limay Combined Cycle Plant, to a third party,
Millennium Holdings, Inc.
San Miguel Corporation transfers to SMC Global Power its 100% equity
interest in SMELC. SMELC holds an RES license from the ERC.
87
January 2013 . . . . . . . . . . . . . . . . . . .
Execution of Engineering, Procurement and Construction (EPC)

Contract with Formosa Heavy Industries, for the construction of the
Limay and Davao Greenfield Power Plants.
July 2013 . . . . . . . . . . . . . . . . . . . . . .
Groundbreaking of the 2 x 150 MW Davao Greenfield Power Plant.
September 2013 . . . . . . . . . . . . . . . .
SMC Global Power is awarded as the winning concessionaire for the

rehabilitation, operations and maintenance of ALECO.
SMC Global Power, through SPI (a wholly owned subsidiary), acquires
the 140 MW Limay Cogeneration Plant from Petron Corporation.
SMC Global Power agreed to sell its 6.13% interest in Meralco. The sale
was completed in March 2014.
October 2013 . . . . . . . . . . . . . . . . . . .
Groundbreaking of the 2 x 150 MW Limay Greenfield Power Plant.
February 2014 . . . . . . . . . . . . . . . . . .
Start of APECs concession of ALECOs distribution franchise.
November 2014 . . . . . . . . . . . . . . . . .
SMC Global Power acquired 60% of AHC, the owner and operator of the
AHEPP.
July 2015 . . . . . . . . . . . . . . . . . . . . . .
Groundbreaking of the AHEPP rehabilitation.
IPPA POWER PLANTS

The table below summarizes information regarding the power plants whose generation capacity is managed and
sold by SMC Global Power under IPPA rights.
Sual
Plant Commercial Operation Date . . . . . . . . .

IPPA Acquisition Date . . . . . . . . . . . . . . . . . . .
Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Installed Capacity (MW) . . . . . . . . . . . . . . . . .

Net Contracted Capacity (MW) . . . . . . . . . . .
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Capacity Factor (%)
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Availability factor (%)
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offtakers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Tax Holiday Expiry(9) . . . . . . . . . . . . .
IPPA Expiry / Asset Transfer Date . . . . . . . .
(1)
Plant Name
Ilijan
San Roque
1999
11/2009
Marubeni Corporation,
Tokyo Electric Power
Corporation(1)
2002
2003
9/2010
3/2010
Korea Electric Power
Marubeni Corporation,
Corporation, Mitsubishi
Kansai Electric
Corporation, TeaM
Company Ltd.(3)
Energy(2)
2 x 647
2 x 635.5
3 x 137
1,000(4)
1,200
345(5)
Coal
Natural Gas
Hydro-electric
Bumi Resources,
Camago-Malampaya Gas
N/A
Glencore, Banpu, Vitol, Fields (through NPC)
KPC
91% bilateral contract(7)
71% WESM
90% bilateral
contract(6)
73%
75%
89%
90%
Meralco, ECs, DUs,
DCCs, CCs, WESM(8)
July 2014
October 2024
Through TeaM Sual Corporation (TeaM Energy).
88
78%
82%
26%
23%
94.%
98%
Meralco, WESM
97%
100%
Intercompany, WESM
July 2014
June 2022
July 2014
May 2028
(2)
Through KEPCO Ilijan Corporation (KEILCO).
(3)
Through San Roque Power Corporation.
(4)
SMC Global Power is entitled to dispatch up to 1,000 MW, which is the net contracted capacity of the Sual Power Plant. The owner of
the plant has the right to generate power in excess of the dispatch instructions of SMC Global Power and sell such excess generation.
(5)
SMC Global Power expects the San Roque Power Plant to generate power at levels below its contracted capacity due to water levels in
the reservoir and downstream irrigation requirements.
(6)
Unit 1 of the Sual Power Plant is fully contracted to Meralco under a long-term offtake agreement while the capacity of Unit 2 of the
Sual Power Plant is contracted to various distribution utilities, electric cooperatives and industrial customers under existing PSCs.
(7)
The entire capacity of the Ilijan Power Plant is contracted to Meralco under a long-term power supply agreement up to 2019, which can
be extended up to the end of the IPPA.
(8)
ECs: Electric Cooperatives; DUs: Distribution Utilities; DCCs: Directly Connected Customers; and CCs: Contestable Customers.
(9)
SMEC, SPPC, and SPDC are registered with the Board of Investments as administrator or operator of their respective power plants on
a pioneer status with non-pioneer incentives and were granted Income Tax Holidays (ITH) for four years without extension,
beginning on August 1, 2010 up to July 31, 2014, subject to compliance with certain requirements under their registrations. The ITH
incentives are limited only to the sale of power generated from these power plants.
Sual Power Plant

Background
The Sual Power Plant is a 2 x 647 MW coal-fired thermal power plant located in Sual, Pangasinan on the
Lingayen Gulf that commenced commercial operations in October 1999, and is the largest coal-fired thermal
power plant in the Philippines in terms of installed capacity. The Sual Power Plant was built by
CEPA Pangasinan Electric Limited pursuant to an ECA with NPC under a 25-year Build-Operate-Transfer
(BOT) scheme that expires on October 24, 2024. In 2007, TeaM Energy, which is a joint venture between
Marubeni Corporation and Tokyo Electric Power Corporation, acquired the Sual Power Plant.
On September 1, 2009, SMEC, a wholly owned subsidiary of SMC Global Power, was declared the winning
bidder and received the notice of award for the IPPA for the Sual Power Plant. On November 6, 2009,
SMEC assumed the administration of the Sual Power Plant in accordance with the provisions of the
IPPA Agreement.
Sual IPPA
Power Plant Capacity and Fuel Supply
SMC Global Power, through its wholly-owned subsidiary, SMEC, has the contractual right to manage, control,
trade, sell or otherwise deal in up to 1,000 MW of the generation capacity of the Sual Power Plant pursuant to
Sual IPPA Agreement. TeaM (Philippines) Energy Corporation, an affiliate of TeaM Energy, is allowed to sell
the remaining balance of 200 MW. TeaM Energy, as the IPP, has the right to generate power in excess of the
dispatch instructions of SMC Global Power and to sell such excess generation. For purposes of this Offering
Circular, the contracted capacity of the Sual Power Plant is 1,000 MW.
SMC Global Power must supply and deliver, at its own cost, the fuel that is necessary for the power plant to
generate the power that SMC Global Power requires TeaM Energy to produce. TeaM Energy is responsible for
supplying fuel at its own cost to the Sual Power Plant to produce power in excess of the dispatch instructions of
SMC Global Power.
IPPA Fees
SMC Global Power pays PSALM a monthly fee that consists of a fixed payment and a variable energy fee.
The fixed payment consists of agreed amounts (in U.S. dollars and Pesos) for the applicable month set out in the
Sual IPPA Agreement. The specific amount of the fixed monthly payments under the Sual IPPA Agreement
increases over the life of the agreement, and the amounts and timing of such increases are specified in a schedule
to the agreement. In any month in which a unit of the Sual Power Plant is unable to produce power for at least
three non-delivering days, these agreed amounts are reduced in proportion to the number of non-delivering days
in that month. A non-delivering day means a 24-hour period during which a unit is unable to produce power for
89
reasons specified in the Sual IPPA Agreement, including planned and unplanned outages arising from causes not
attributable to SMC Global Power.
In addition, SMC Global Power must pay monthly energy fees that are periodically adjusted for inflation and that
consist of (i) a fixed base energy rate for power actually delivered by the Sual Power Plant comprising both a
U.S. dollar and Peso component plus (ii) a variable energy rate for power actually delivered by the Sual Power
Plant, in U.S. dollars only, that takes into account the cost and efficiency of fuel supplied to the Sual Power Plant
as well as the efficiency (unit heat rate) of the Sual Power Plant, which is measured on an annual basis.
Other Provisions
Offtake agreements with certain customers were also assigned to SMC Global Power by NPC/PSALM.
SMC Global Power is required to perform the obligations of NPC under the NPC-assigned offtake agreements,
including the obligation to procure power at its own cost to meet deficiencies, in cases where the Sual Power
Plant is unable to supply the contracted power. SMC Global Power is also required to maintain a U.S.$58 million
performance bond in favor of PSALM. PSALM remains responsible to TeaM Energy for the payment obligations
of NPC under the Sual ECA.
While SMC Global Power is granted the right to coordinate with TeaM Energy, on behalf of NPC, on matters
relating to management of the generation capacity of the Sual Power Plant, SMC Global Power cannot directly
enforce the Sual ECA against TeaM Energy or NPC. Any claims for damages for breach, or other entitlement,
benefit or relief under the Sual IPPA Agreement arising from the breach by TeaM Energy of its Sual
ECA obligations must be claimed by SMC Global Power against PSALM through an equivalent relief claim
(ER Claim). PSALM will then include the ER Claim in its claims against TeaM Energy (the PSALM ER
Claim). The Sual IPPA Agreement does not permit set-off of claims, and SMC Global Power is only entitled to
payment of its ER Claim after PSALM has received payment from TeaM Energy of its corresponding PSALM
ER Claim.
Under the Sual IPPA Agreement, SMC Global Power has the option to acquire the Sual Power Plant in October
2024 without any additional payment by SMC Global Power. SMC Global Power may exercise the option to
acquire the Sual Power Plant prior to October 2024 under certain circumstances, such as changes in law or
non-performance by TeaM Energy of its obligations under the Sual ECA. In this case, the transfer price will be
the net present value of the sum of the agreed monthly payments remaining unpaid at the date of termination of
the Sual IPPA Agreement.
The Sual IPPA Agreement may be terminated by either SMC Global Power or PSALM due to certain force
majeure events. In case of such termination, SMC Global Power is entitled to receive from PSALM a termination
payment equal to the aggregate agreed monthly payments paid by SMC Global Power up to the date of
termination less the aggregate capital recovery fees, fixed operating and maintenance fees, infrastructure fees and
service fees paid or payable by PSALM up to the termination date of the Sual IPPA Agreement.
Power Offtakers
Unit 1 of the Sual Power Plant is fully contracted to Meralco under a long-term offtake agreement while the
capacity of Unit 2 of the Sual Power Plant is contracted to various distribution utilities, electric cooperatives and
industrial customers under existing PSCs.
For PSCs assigned by PSALM to SMC Global Power, the rate is based on the prevailing rate structure of NPC as
approved by the ERC. While the majority of the aforementioned PSCs have expired, SMC Global Power has
entered into new contracts with many of the same customers, and sold the remaining capacity to new customers.
For energy based contracts entered into by SMEC directly with new offtakers on a bilateral basis (or with those
offtakers under previously assigned offtake agreements which have expired), pricing is based on a reasonable
return over the cost structure of SMEC and benchmarked to the basic rates of NPC. The components for pricing
comprise a Basic Energy Rate (BER), also on a time-of-use basis, and a monthly Basic Energy
Rate Adjustment (BERA) charge similar to the ACA charge of NPC.
90
The components for the BERA include adjustments for fuel, foreign exchange and inflation costs. Any changes
to the level of the BER and/or the BERA are not affected by movements in the charges of NPC.
For capacity-based contracts, pricing is based on a fixed and variable payment. The fixed payment represents the
monthly fixed payments to PSALM and fixed operating and maintenance expenses. The variable payment
represents the energy fee, fuel and variable operating and maintenance expense.
Operations Review
The table below is a summary of operating statistics of the Sual Power Plant for the periods indicated.
Year ended December 31,
2012
2013
2014
Actual Energy Generated (GWh) . . . . . . . . . . . . .

Electricity sold (GWh): . . . . . . . . . . . . . . . . . . . . .
of which: bilateral offtake agreements . . . . .
of which: WESM sales . . . . . . . . . . . . . . . . .
Average realized electricity prices(P/MWh):
for electricity sold under bilateral offtake
agreements . . . . . . . . . . . . . . . . . . . . . . . . .
for electricity sold on WESM . . . . . . . . . . . .
Net Capacity Factor (%) . . . . . . . . . . . . . . . . . . . .
Availability Factor (%) . . . . . . . . . . . . . . . . . . . . .
Reliability Factor (%) . . . . . . . . . . . . . . . . . . . . . .
Average Net Dependable Capacity (MW) . . . . . . .
Net Heat Rate (Kcal/KWh) (LHV) . . . . . . . . . . . .
Six months ended June 30,

2014
2015
6,034
7,187
6,645
542
6,427
7,084
6,101
983
6,536
7,132
6,393
740
3,654
3,861
3,473
387
3,706
4,036
3,598
439
4,636
4,912
69
87
96
998
2,494
4,555
4,071
73
88
98
999
2,458
4,611
4,438
75
90
97
999
2,410
4,650
4,467
84
97
96
998
2,434
4,556
3,830
85
99
99
999
2,399
Fuel Supply
The table below sets forth certain information regarding the supply of coal to the Sual Power Plant as of the
periods indicated.
2012
2013
2014
Metric tons (thousands) . . . . . . . . . . . . . . . . . . . . . . . .

Average calorific value (kcal/kg) . . . . . . . . . . . . . . . .
(P millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average price per metric ton (P) . . . . . . . . . . . . . . . .
2,486.4
6,172.0
11,617.3
4,672.3
2,543.4
6,144.0
10,715.7
4,213.2
2,531.2
6,190.7
9,732.8
3,845.2

2014
2015
1,435.1
6,184.9
5,614.6
3,912.2
1,429.8
6,105.9
4,980.3
3,483.2
SMEC has a coal supply agreement with KPC which ensures coal supply from 2015 to 2024, subject to the
extension of KPCs coal contract of work in 2021. Under the coal supply agreement, KPC is required to supply a
total of 24 panamax shipments, each comprising 65,000 metric tons. Pricing under the coal supply agreement is
subject to adjustment based on certain standards applicable to the quality or grade of the coal delivered by KPC.
Operations and Maintenance
The Sual Power Plant is operated by TeaM Energy. Under the Sual ECA, TeaM Energy is responsible at its own
cost, for the management, operation, maintenance, including the supply of consumables and spare parts, and the
repair of the Sual Power Plant. TeaM Energy is required to use its best endeavors to ensure that the Sual Power
Plant is in good operating condition and capable of converting fuel supplied by SMC Global Power under the
Sual IPPA Agreement into electricity in a safe and reliable manner.
The maintenance plan for the Sual Power Plant is agreed upon annually between SMC Global Power, NPC,
PSALM, NGCP and TeaM Energy. The maintenance plan includes scheduled inspections and overhauls,
including scheduled periods of outage. Planned outages for maintenance are scheduled in such a way that only
one unit is scheduled for shut down at any given time. The maintenance plan is established with consideration
91
given to the dispatch requirements of SMC Global Power and recommendations of the plant manufacturer. TeaM
Energy is required to execute the maintenance plan in accordance with the recommendations of the original
equipment manufacturer and good utility practice. TeaM Energy performs periodic maintenance activities on the
generating units of the Sual Power Plant during the course of the operations of the plant. The Sual ECA requires
TeaM Energy to conduct an annual test to check the capacity and heat rate of the generating units of the Sual
Power Plant, if requested by SMC Global Power.
Each of the generating units of the Sual Power Plant historically has been, and is expected to continue to be, shut
down for routine maintenance for approximately 30 days per calendar year. SMC Global Power also expects that
TeaM Energy will shut down these units for more significant maintenance and repair work for a total of
approximately 60 days in every fifth calendar year.
The table below sets forth actual planned outages of the Sual Power Plant for the periods indicated.
2013
2014
2012
Unit 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unit 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27 days
30 days
38 days
30 days
29 days
30 days

2014
2015
0 days
0 days
0 days
0 days
During 2011, the Sual Power Plant underwent major scheduled maintenance activities which occurs once every
five years.
The table below sets forth unplanned outages of the Sual Power Plant for the periods indicated.
2013
2014
2012
Unit 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unit 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 days
33 days
7 days
11 days
10 days
5 days

2014
2015
7 days
4 days
1 day
0 days
Power Transmission
Power from the Sual Power Plant is transmitted through a 25-kilometer 230 kV transmission line from the Sual
Power Plant switchyard to the Kadampat Substation located at Labrador, Pangasinan. The transmission line is
owned by TransCo and operated and maintained by its concessionaire, the NGCP.
Ilijan Power Plant
Background
The Ilijan Power Plant commenced commercial operations on June 5, 2002, and is located on a 60-acre site at
Arenas Point, Barangay Ilijan, Batangas City. The Ilijan Power Plant was constructed and is owned by KEILCO
pursuant to a 20-year ECA with NPC under a BOT scheme that expires on June 4, 2022. NPC/PSALM supplies
natural gas to the Ilijan Power Plant from the Malampaya gas field in Palawan under a gas supply agreement with
Shell Exploration Philippines BV. The Ilijan Power Plant consists of two blocks with a rated capacity of 600 MW
each.
The power plant can also run on diesel oil stored on site. On April 16, 2010, San Miguel Corporation
successfully bid for the appointment to be the IPPA for the Ilijan Power Plant and received a notice of award on
May 5, 2010. On June 10, 2010, San Miguel Corporation and SPPC, a wholly owned subsidiary of SMC Global
Power, entered into an assignment agreement with assumption of obligations whereby San Miguel Corporation
assigned all of its rights and obligations with respect to the Ilijan Power Plant to SPPC, which assumed
administration of the Ilijan Power Plant on June 26, 2010 in accordance with an IPPA Agreement with PSALM
(Ilijan IPPA Agreement).
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Ilijan IPPA
Power Plant Capacity and Fuel Supply
SMC Global Power, through its wholly-owned subsidiary, SPPC, has the contractual right to manage, control,
trade, sell or otherwise deal in the generation capacity of the Ilijan Power Plant pursuant to Ilijan IPPA
Agreement. Although the Installed Capacity of the Ilijan Power Plant totals 1,271 MW, ERC records attribute to
SMC Global Power a capacity of 1,200 MW for the Ilijan Power Plant. Accordingly, for purposes of this
Offering Circular, the contracted capacity of the Ilijan Power Plant is referred to as 1,200 MW.
Under the Ilijan ECA, NPC/PSALM is required to deliver and supply to KEILCO the fuel necessary to operate
the Ilijan Power Plant. If natural gas is unavailable, SMC Global Power may require KEILCO to run the Ilijan
Power Plant using diesel fuel. NPC/PSALM remains responsible for securing the natural gas and diesel fuel
supply to the Ilijan Power Plant.
IPPA Fees
SMC Global Power must pay fixed monthly payments comprising both a U.S. dollar and Peso component. In
addition, SMC Global Power must pay monthly generation payments comprising a must pay amount for
electricity sold up to a given volume (the Must Pay Volume) and a variable amount for electricity sold in
excess of the Must Pay Volume.
As discussed in Note 27(b), Note 27(a) and Note 15(b) of the Issuers audited consolidated financial statements,
as of and for the years ended December 31, 2014 and December 31, 2013, and the Issuers unaudited condensed
consolidated interim financial statements as of and for the six months ended June 30, 2015, respectively, the
Issuer and PSALM have an ongoing dispute arising from differing interpretations of certain provisions related to
generation payments under the Ilijan IPPA Agreement. As a result of such dispute, the parties have arrived at
different computations regarding the subject payments. In a letter dated August 6, 2015, PSALM has demanded
payment of approximately P6.4 billion inclusive of interest, covering the period December 26, 2012 to April 25,
2015, being the difference between the generation payments calculated based on its interpretation and the amount
which has already been paid by the Issuer.
The Issuer continues to dispute this claim and in its reply dated August 12, 2015, initiated a dispute resolution
process with PSALM as provided under the terms of the Ilijan IPPA Agreement, while continuing to maintain
that it has fully paid all of its obligations to PSALM. Notwithstanding the dispute, there are no restrictions or
limitations on the ability of the Issuer to supply power from the Ilijan Plant to Meralco under its power supply
agreement with the latter.
Other Provisions
SMC Global Power is required to maintain a U.S.$60 million performance bond in favor of PSALM. PSALM
remains responsible to KEILCO for the payment obligations of NPC under the Ilijan ECA.
While SMC Global Power is granted the right to coordinate with KEILCO, on behalf of NPC, on matters relating
to management of the generation capacity of the Ilijan Power Plant, SMC Global Power cannot directly enforce
the Ilijan ECA against KEILCO or NPC. Any claims for damages for breach, or other entitlement, benefit or
relief under the Ilijan IPPA Agreement arising from the breach of KEILCO of its obligations under the Ilijan
ECA must be claimed by SMC Global Power against PSALM through the ER Claim and the PSALM ER Claim
mechanism.
Under the Ilijan IPPA Agreement, SMC Global Power has the option to acquire the Ilijan Power Plant in June
2022 without any additional payment by SMC Global Power. SMC Global Power may exercise the option to
acquire the Ilijan Power Plant prior to June 2022 under certain circumstances, such as changes in law or nonperformance by KEILCO of its obligations under the Ilijan ECA. In this case, the transfer price will be the net
present value of the sum of the agreed monthly payments remaining unpaid at the date of termination of the Ilijan
IPPA Agreement.
93
The Ilijan IPPA Agreement may be terminated by either SMC Global Power or PSALM due to certain force
termination less the aggregate capital recovery fees and fixed operating and maintenance fee paid or payable by
NPC/PSALM to KEILCO from the effective date of the Ilijan IPPA Agreement up to the termination date of the
Ilijan IPPA Agreement.
Power Offtakers
The entire capacity of the Ilijan Power Plant is contracted to Meralco under a long-term power supply agreement
up to 2019, which can be extended up to the end of the IPPA.
In the year ended December 31, 2012, 2013 and 2014 and the six months ended June 30, 2014 and 2015, 95%,
86%, 91%, 90% and 93%, respectively, of the volume of power sold from the Ilijan Power Plant were derived
from sales made under offtake agreements. In the year ended December 31, 2012, 2013 and 2014 and the six
months ended June 30, 2014 and 2015, 5%, 14%, 9%, 10% and 7% of the volume of power sold from the Ilijan
Power Plant, respectively, were derived from sales made through the WESM.
Operations Review
The table below is a summary of operating statistics of the Ilijan Power Plant for the periods indicated.
Actual Energy Generated (GWh) . . . . . . . . . . . .

Electricity sold (GWh): . . . . . . . . . . . . . . . . . . . .
of which: bilateral offtake agreements . . . .
of which: WESM sales . . . . . . . . . . . . . . . .
Average realized electricity prices (P/MWh):
agreements . . . . . . . . . . . . . . . . . . . . . . . .
for electricity sold on WESM . . . . . . . . . . .
Net Capacity Factor (%) . . . . . . . . . . . . . . . . . . .
Availability Factor (%) . . . . . . . . . . . . . . . . . . . .
Reliability Factor (%) . . . . . . . . . . . . . . . . . . . . .
Average Net Dependable Capacity (MW) . . . . .
Net Heat Rate (KJ/KWh) . . . . . . . . . . . . . . . . . .
2012
2013
2014
2014
2015
8,222
8,679
8,286
393
8,147
8,459
7,307
1,152
8,576
8,863
8,097
766
4,301
4,439
3,981
458
3,477
3,662
3,419
243
4,683
4,582
78
94
100
1,128
6,708
4,820
2,821
78
94
100
1,139
6,738
4,598
3,719
82
98
100
1,171
6,799
4,732
3,599
82
96
100
1,150
6,813
4,416
2,938
66
79
94
953
6,801
Fuel Supply
NPC is responsible for securing the natural gas and diesel fuel supply to the Ilijan Power Plant. Under a fuel
supply and management agreement between Shell Exploration B.V. and Occidental Philippines, Inc., NPC
supplies natural gas to the Ilijan Power Plant through a 480 km undersea pipeline from the Camago-Malampaya
field in Palawan to the Shell Refinery in Tabangao. From there, the natural gas is transported through a 16-indiameter onshore pipeline running 15 km to the power plant.
KEILCO is responsible for the operations and maintenance of the Ilijan Power Plant for 20 years from June 2002.
Under the Ilijan ECA, KEILCO is required to operate the Ilijan Power Plant pursuant to certain operating criteria
and guidelines, including output of 1,200 MW guaranteed contracted capacity, base load operation, spinning
reserve capability. Under the Ilijan ECA, KEILCO is responsible, at its own cost, for the management, operation,
maintenance, including the supply of consumables and spare parts, and the repair of the Ilijan Power Plant.
The maintenance plan for the Ilijan Power Plant is agreed upon annually between SMC Global Power, NPC,
PSALM, NGCP and KEILCO. The maintenance plan includes scheduled inspections and overhauls, including
scheduled periods of outage and details as to the personnel required to complete each inspection. Planned outages
94
for maintenance are scheduled in such a way that only one unit is scheduled for shut down at any given time. The
maintenance plan is established with consideration given to the dispatch requirements of SMC Global Power and
recommendations of the plant manufacturer. KEILCO is required to execute the maintenance plan in accordance
with the recommendations of the original equipment manufacturer and good utility practice. KEILCO performs
periodic maintenance activities on the generating units of the Ilijan Power Plant during the course of the
operations of the plant. The Ilijan ECA requires KEILCO to conduct an annual test to check the capacity of the
generating units of the Ilijan Power Plant.
Each of the generating units of the Ilijan Power Plant historically has been, and is expected to continue to be, shut
down for routine maintenance for approximately 26 days per calendar year. SMC Global Power also expects that
KEILCO will shut down these units for more significant maintenance and repair work for a total of 35 to 43 days
in every fifth calendar year.
The table below sets forth actual planned outages of the Ilijan Power Plant for the periods indicated.
2012
Block 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013
2014
27 days
14 days
0 days
33 days
13 days
0 days

2014
2015
13 days
0 days
21 days
32 days
The maintenance of the Ilijan Power Plant is conducted once the minimum equivalent operating hours of
12,000 hours has been met. For 2013, Unit 1 of the Ilijan Power Plant, the minimum equivalent operating hours
was not met and therefore there was no planned outage for that year.
The table below sets forth unplanned outages of the Ilijan Power Plant for the periods indicated.
2012
Block 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Block 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013
2014
2 days
1 day
1 day
1 day
2 day
1 day

2014
2015
1 days
0 days
16 days
3 days
Power Transmission
Power from the Ilijan Power Plant is transmitted through a 500 kV transmission line that connects to the Luzon
grid through the Ilijan-Dasmarinas line and Ilijan-Tayabas line. The transmission line is owned by TransCo., and
operated and maintained by NGCP.
San Roque Power Plant
Background
The 345 MW San Roque multi-purpose hydroelectric power plant in San Manuel, Pangasinan commenced
operations on May 1, 2003 and is a peaking plant that was constructed by a consortium composed of Marubeni
Corporation, Sithe Philippines Holdings, Ltd., and Italian-Thai Development Public Company Limited pursuant
to a PPA with NPC under a BOT scheme (the San Roque PPA).
The San Roque Power Plant utilizes the Agno River for power generation and irrigation and contributes to flood
control and water quality improvement for the surrounding region, and comprises three power generation units of
115 MW each. The San Roque Power Plant provides an annual energy generation of 1,065 GWh from the
345 MW hydroelectric power plant, the irrigation of approximately 34,450 hectares of agricultural land, storage
of water that would otherwise flood the Pangasinan plains, and improvement of water quality of the Agno River
which, otherwise, would pollute the downstream rivers.
On December 15, 2009, SPDC, a wholly owned subsidiary of SMC Global Power, successfully bid for the
appointment to be the IPPA for the San Roque Power Plant and received a notice of award on December 28,
2009. SPDC assumed administration of the San Roque Power Plant on January 26, 2010 in accordance with an
IPPA Agreement with PSALM (the San Roque IPPA Agreement). PSALM remains responsible under a PPA
to remunerate the IPP of the San Roque Power Plant for the electricity it produces.
95
San Roque IPPA

Power Plant Capacity
PSALM and SMC Global Power (through SPDC) executed the San Roque IPPA Agreement pursuant to which
SMC Global Power has the right to manage, control, trade, sell or otherwise deal in the electrical generation
capacity of the San Roque Power Plant, while NPC, which owns and operates the dam and related facilities
thereof, obtained and maintains water rights necessary for the testing and operation of the power plant. SMC
Global Power is required to assist PSALM so that the San Roque Power Plant can draw water from the Agno
River required by the power plant and necessary for it to generate the electricity required to be produced under
the San Roque PPA of NPC with San Roque Power Corporation (SRPC). In addition, SMC Global Power must
pay fixed monthly payments comprising both a U.S. dollar and Peso component. These fixed monthly payments
are reduced when there is a plant outage for reasons not attributable to SMC Global Power. In addition, SMC
Global Power pays a fixed generation fee of P1.30 per KWh. While the contracted capacity of SMC Global
Power is 345 MW, it may generate up to 411 MW depending on the water level and inflow to the San Roque
reservoir. Accordingly, for purposes of this Offering Circular, the contracted capacity of the San Roque Power
Plant is referred to as 345 MW.
Minimum Run Rate
The San Roque PPA requires NPC to take-or-pay for a minimum amount of power from the San Roque Power
Plant. The minimum amount required increases from 85 MW through April 2007, 95 MW from May 2007
through April 2013, 110 MW from May 2013 through April 2017 and 115 MW from May 2018 through April
2028. Under the San Roque IPPA Agreement, SMC Global Power is contractually obligated to purchase the
minimum amount of power that NPC is obligated to take-or-pay for under the San Roque PPA.
IPPA Fees
SMC Global Power pays PSALM a monthly fee that consists of a fixed payment and a variable energy fee.
The fixed payment consists of agreed amounts (in U.S. dollars and Pesos) for the applicable month as set out in
the San Roque IPPA Agreement. The specific amount of the fixed monthly payments under the San Roque IPPA
Agreement increases over the life of the agreement, and the amounts and timing of such increases are specified in
a schedule to the agreement. In any month that the San Roque Power Plant is unable to produce power for at least
three non-delivering days, these fixed amounts are reduced in proportion to the number of non-delivering days in
that month. A non-delivering day means a 24-hour period during which the San Roque Power Plant is unable to
produce power for reasons specified in the San Roque IPPA Agreement, including unplanned outages arising
from causes not attributable to SMC Global Power. No reduction in the fixed payment is made if the San Roque
Power Plant is unable to produce power due to planned outages.
The energy fee is computed based on the actual energy delivered by the San Roque Power Plant at a fixed price
of P1.30 per kWh. The actual energy delivered and dispatched by the San Roque Power Plant at any given time
is dependent on the water levels in the reservoir and downstream irrigation requirements at that time.
Other Provisions
The San Roque IPPA Agreement requires SMC Global Power to maintain a performance bond in favor of
PSALM equivalent to U.S.$20 million. Under the San Roque IPPA Agreement, SMC Global Power has the right
to acquire the San Roque Power Plant in May 2028, which is the end of the cooperation period between NPC and
SRPC under the San Roque PPA, or on some earlier date due to certain events such as changes in law or nonperformance by SRPC under the San Roque PPA.
While SMC Global Power is granted the right to coordinate with SRPC, on behalf of NPC, on matters relating to
management of the generation capacity of the San Roque Power Plant, SMC Global Power cannot directly
96
enforce the San Roque PPA against SRPC or NPC. Any claims for damages for breach, or other entitlement,
benefit or relief under the San Roque IPPA Agreement arising from the breach of SRPC of its San Roque PPA
obligations must be claimed by SMC Global Power against PSALM through the ER Claim and the PSALM ER
Claim mechanism. Under the San Roque IPPA Agreement, SMC Global Power has the option to acquire the San
Roque Power Plant in May 2028 without any additional payment by SMC Global Power. SMC Global Power
may exercise the option to acquire the San Roque Power Plant prior to May 2028 under certain circumstances,
such as changes in law or non-performance by SRPC of its obligations under the San Roque PPA. In this case,
the transfer price will be the net present value of the sum of the agreed monthly payments remaining unpaid at
the date of termination of the San Roque IPPA Agreement.
The San Roque IPPA Agreement may be terminated by either SMC Global Power or PSALM due to certain force
termination less the aggregate capital recovery, operating and watershed management fees paid or payable by
NPC/PSALM to SRPC from the effective date of the San Roque IPPA Agreement up to the termination date of
the San Roque IPPA Agreement.
The San Roque Power Plant is a peaking plant. Under the terms of the San Roque PPA, power and energy are
delivered to SMC Global Power at the delivery point (the high voltage side of the step-up transformers) located
at the perimeter fence of the San Roque Power Plant site. SMC Global Power is responsible for contracting with
the NGCP to wheel power from the delivery point.
Operations Review
The table below is a summary of operating statistics of the San Roque Power Plant during the periods indicated.

2012
2013
2014
Actual Energy Generated (GWh) . . . . . . . . . . . . .

Electricity sold (GWh) . . . . . . . . . . . . . . . . . . . . . .
of which: bilateral offtake agreements . . . . .
of which: WESM sales . . . . . . . . . . . . . . . . .
Average realized electricity prices (P/MWh)
agreements . . . . . . . . . . . . . . . . . . . . . . . . .
for electricity sold on WESM . . . . . . . . . . . .
Net Capacity Factor (%) . . . . . . . . . . . . . . . . . . . .
Availability Factor (%) . . . . . . . . . . . . . . . . . . . . .
Reliability Factor (%) . . . . . . . . . . . . . . . . . . . . . .
Average Net Dependable Capacity (MW) . . . . . . .

2014
2015
994
992
453
539
785
795
83
712
695
841
242
599
290
290
13
277
274
511
256
255
6,911
5,041
33
97
100
411
13,137
4,943
26
97
100
411
6,302
5,796
23
100
100
411
9,571
6,716
19
99
100
411
4,814
6,438
18
97
100
391
Water Rights
The generated output energy of the San Roque Power Plant is limited by the Irrigation Diversion Requirements
set by the National Irrigation Administration of the Philippines. Water allocation is usually dictated by rule curve
that is derived from historical data of river flows and water demands. A rule curve shows the minimum water
level requirement in the reservoir at a specific time to meet the particular needs for which the reservoir is
designed. The rule curve must generally be followed except during periods of extreme drought and when public
interest requires. In general, the rule curve dictates the following:
Water Level Above The Upper Rule Curve All demands for water supply and irrigation are met and
electricity can be generated at the full capacity of the turbine units. Excess inflow is discharged through the
spillway. Water released through the spillway is controlled and regulated by the NPC Dam Office
personnel.
97
Between Upper And Lower Rule Curves All demands for water supply and irrigation are satisfied.
Generation of electricity is limited to the released water for water supply and irrigation. Further water
releases for power generation are allowed provided that the auxiliary units are utilized first before main
units.
Water Level Below Lower Rule Curve The remaining water in the reservoir is reserved for water
supply and irrigation. Generation of electricity is limited to these water releases. If necessary, no further
water release for power generation is allowed.
Generally, the output energy of San Roque Power Plant is high during planting seasons which covers the months
of December through April (dry planting season) and July through September (wet planting season). The water
releases from the dam, and thus, energy generation, during the dry planting season is much higher due to the
absence of rain. The water rights of NPC are used by the San Roque Power Plant and NPC, until the date of
transfer of the San Roque Power Plant to NPC (or SMC Global Power, as the case may be), must obtain such
renewals or extensions as may be required to maintain the water rights in full force and effect at all times.
NPC derives its water rights from a permit granted by the National Water Resources Board.
SRPC is responsible for the operations and maintenance of the San Roque Power Plant for 25 years effective
May 1, 2003. SRPC is owned by Marubeni Corporation and Kansai Electric Power Company Ltd. Under the San
Roque PPA, SRPC is responsible for the management, operation, maintenance and repair of the San Roque
Power Plant at its own cost until transfer to NPC or SMC Global Power, as the case may be. As operator,
SRPC is entitled to conduct the normal inspection, regular maintenance, repair and overhaul for a period of
15 days for each unit comprising the San Roque Power Plant. In addition, SRPC has the right to enter into
contracts for the supply of materials and services, including contracts with NPC; appoint and remove consultants
and professional advisers; purchase replacement equipment; appoint, organize and direct staff; manage and
supervise the power plant; establish and maintain regular inspection, maintenance and overhaul procedures; and
otherwise run the power plant within the operating parameters set out in the San Roque PPA.
The maintenance plan for the San Roque Power Plant is agreed upon annually between SMC Global Power,
NPC, PSALM, NGCP and SRPC. The maintenance plan includes scheduled inspections and overhauls, including
scheduled periods of outage and details as to the personnel required to complete each inspection. Planned outages
for maintenance of the generating units are scheduled in such a way that only one unit is shut down at any given
time. The power tunnel that delivers water from the reservoir to the generating units also undergo routine annual
maintenance inspections, during which all units are shut down. The maintenance plan is established with
consideration given to the dispatch requirements of SMC Global Power and recommendations of the plant
manufacturer. SRPC is required to execute the maintenance plan in accordance with the recommendations of the
original equipment manufacturer and good utility practice. SRPC performs periodic maintenance activities on the
generating units of the San Roque Power Plant during the course of the operation of the plant. The San Roque
PPA requires SRPC to conduct an annual test to check the capacity of the generating units of the San Roque
Power Plant. As of the date of this Offering Circular, the generating units of the San Roque Power Plant have
attained and maintained the required contracted capacity specified in the San Roque PPA.
Each of the generating units of the San Roque Power Plant historically has been, and is expected to continue to
be, shut down for routine maintenance for approximately 15 days per calendar year sometime between April to
June of each year, when water levels at the reservoir are low. Since 2010, during periods when a generating unit
is shut down for routine maintenance, the San Roque Power Plant has historically been, and is expected to
continue to be, able to generate power at the applicable minimum run rate from the other generating units. The
San Roque Power Plant does not have a regular schedule for significant maintenance and repair work.
The power tunnel that delivers water from the reservoir to the generating units also undergo routine maintenance
inspections for approximately 15 days per calendar year. Power tunnel inspections historically have been, and are
expected to continue to be, conducted between April to June of each year, after the end of the irrigation period
and when water levels at the reservoir are low.
98
The table below sets forth the actual planned outages of the power tunnel for the San Roque Power Plant for the
periods indicated.
2012

2013
2014
12 days
(May 25 to June 25)
10 days
(May 25 to June 25)
3 days
(May 27 to May 29)

2014
2015
3 days
(May 27 to May 29)
6 days
(May 26 to June 1)
Power Transmission
Power from the San Roque Power Plant is transmitted through a nine-kilometer 230 kV transmission line from
the San Roque Power Plant switchyard to the San Manuel substation located in Pangasinan. The transmission line
is owned by TransCo, and operated and maintained by NGCP.
LIMAY COGENERATION PLANT
Background
The Limay Solid Cogeneration Plant is a 4 x 35 MW fuel-fired cogeneration power plant located in Barangay
Lamao, Limay Bataan. Phase 1 (70 MW) of the Limay Cogeneration Plant commenced commercial operations
on May 6, 2013, while Phase 2 (70 MW) commenced commercial operations on May 19, 2014. The engineering,
procurement, and construction contractors of the Limay Cogeneration Plant are Formosa Heavy Industries and
True North Manufacturing Services Corporation.
SMC Global Power, through its subsidiary SPI, acquired the Limay Cogeneration Plant from Petron Corporation
in September 2013. Petron Corporation remains responsible for the operation and maintenance of the Limay
Cogeneration Plant.
Petron Corporation has the right of first refusal in case of sale of the Limay Cogeneration Plant.
Power Offtakers
The Limay Cogeneration Plant has a net power contracted capacity of 140 MW and a steam generation capacity
of 76 MW fully contracted to Petron Corporation under a 25-year PSA. The output of the Limay Cogeneration
Plant will supply the electricity and steam requirements of the Limay refinery of Petron Corporation including
the increase in demand from the new Refinery Master Plan 2 (RMP-2).
Fuel Supply
The Limay Cogeneration Plant was designed to operate on coal and/or petcoke. Petron Corporation is expected to
supply petcoke as a byproduct of the RMP-2 operations. Currently, the Limay Cogeneration Plant is intended to
use 50% coal and 50% petcoke from RMP-2.
Petron Corporation also serves as the operations and maintenance contractor for the Limay Cogeneration Plant
under a 25-year operations and maintenance contract. Under this contract, Petron Corporation has the
responsibility to operate and maintain the Limay Cogeneration Plant at par with the industry standards.
ANGAT HYDROELECTRIC POWER PLANT
AHEPP is an operating hydroelectric power plant located at the Angat reservoir in San Lorenzo, Norzagaray,
Bulacan, approximately 58 km northeast of Metro Manila. Pursuant to EPIRA, AHEPP was privatized through
99
an asset purchase agreement between PSALM and Korea Water Resource Corporation (K-Water). K-Water
assigned its rights in favor of AHC, a joint venture between K-Water and PVEI, a subsidiary of SMC Global
Power.
The project has a total electricity generating capacity of 218 MW, comprising four main units of 50 MW capacity
each and three auxiliary units of 6 MW capacity each. The Main Units 1 and 2 were commissioned in 1967 and
the Main Units 3 and 4 in 1968. The Auxiliary Units 1 and 2 were commissioned in 1967 and the Auxiliary
Unit 3 in 1978. The Auxiliary Unit 3 was manufactured by Allis-Chalmer and Ebara and all the other units were
manufactured by Toshiba Corporation of Japan. All units are run by the Francis-type turbines, which is the most
commonly used model in hydroelectric power generation.
Fuel Supply and Water Rights
The AHEPP utilizes water resources of the Angat reservoir, which in turn was formed by the Angat dam. The
Angat reservoir is 35 km long and 3 km wide at its widest points, and has surface of 2,300 hectares and viable
storage volume of 850 million cubic meters. The water discharged by the project is used for the following two
purposes:
water resources from water discharged through Auxiliary Units and through the spillway flows to the Ipo
reservoir are used to supply 97.0% of the residential drinking water of Metro Manila; and
water resources from water discharged through Main Units flows downstream to the Bustos reservoir are
utilized for irrigation purposes.
Water rights surrounding the project are co-owned and governed by the following government-owned entities,
pursuant to the Water Code of the Philippines, Angat Reservoir Operation Rules issued and regulated by NWRB
as implemented by a Memorandum of Agreement on the Angat Water Protocol between Metropolitan
Waterworks and Sewerage System (MWSS), NIA, AHC, PSALM, NPC and NWRB:
MWSS, for domestic water supply to Metro Manila;
Provincial Government of Bulacan, for water supply in the Bulacan Province;
NIA, for irrigation diversion requirements; and
NPC, for power generation.
Power Offtakers
AHC sells 100.0% of its generated capacity to the WESM at the prevalent spot price. The main units are being
operated as peaking units. The strategy for the Main Units is to allocate daily water release at the peak hours.
Auxiliary Units are being operated as base load units, as the water requirement from MWSS is continuous
throughout the day, thus eliminating any discrete optionality to choose the hour of allocation.
AHC is currently exploring options to contract the capacity of its Auxiliary Units.
100
Operations Review
The table below is a summary of operating statistics of the Angat Hydro Electric Power Plant during the periods
indicated.
Net Capacity Factor (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Availability Factor (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reliability Factor (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Net Dependable Capacity (MW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
November to
December 2014
Six months ended

June 30, 2015
17
62
32
143
18
56
38
147

AHC will undertake the operation and maintenance of AHEPP in-house. The operations and maintenance team
consists of the incumbent local technical team who have been operating the AHEPP, supported by technical
experts seconded from K-Water.
AHC will enter into technical services agreements with each of K-Water and PVEI to ensure that the appropriate
level of technical and management support will be provided to support the operation and maintenance
requirements of AHC.
APEC
On October 29, 2013, after open and competitive bidding, SMC Global Power entered into a concession
agreement for the operation and maintenance of ALECO, which is the franchise holder for the distribution of
electricity in the province of Albay, Luzon. There is no transfer of the franchise to operate the distribution system
or the ownership of the distribution assets. At the end of the concession period, the distribution system will be
turned over back to ALECO. Under the concession agreement, SMC Global Power would pay a concession fee
consisting of quarterly payments for the operating expenses of residual ALECO, and 50% of the net cash flow if
the net cash flow is positive within 5 years or earlier. SMC Global Power also paid for the severance pay of
ALECO employees dismissed as a result of the concession agreement. SMC Global Power established APEC,
and in January 2014, SMC Global Power assigned all of its rights and obligations under the concession
agreement to APEC. On February 26, 2014 APEC assumed the operations of ALECO in Albay.
SALES STRATEGY AND CUSTOMERS
SMC Global Power seeks to sell substantially all of the power generated by Sual and Ilijan Power Plants and
Limay Cogeneration Plant to customers pursuant to offtake agreements.
Currently, the entire capacity of the Ilijan Power Plant and Unit 1 of the Sual Power Plant are contracted under
long-term offtake agreements with Meralco, while the capacity of Unit 2 of the Sual Power Plant is contracted to
various distribution utilities, electric cooperatives, and industrial customers under existing offtake agreements.
The capacity of Limay Cogeneration Plant is likewise fully contracted to Petron Corporation. These agreements
typically include take-or-pay provisions whereby a customer is required to pay for a minimum contracted amount
of power, regardless of whether or not the customer takes delivery of the entire amount, with the result that
revenue from these offtake agreements is relatively stable during the duration of the agreements. If the generation
output available to SMC Global Power from these plants exceeds the amount deliverable under its offtake
agreements, SMC Global Power offers the excess power for sale through the WESM at the market clearing price.
In the years ended December 31, 2012, 2013 and 2014 and for the six months ended June 30, 2014 and 2015,
approximately 90%, 85%, 89%, 88% and 90% respectively, of total sales revenue from SMC Global Power were
sold to customers pursuant to offtake agreements.
The power generation capacity of the San Roque Power Plant and the AHEPP at any given time depends on the
water levels in the reservoir and downstream irrigation requirements. As such, these plants sell 100% of their
101
generated capacity to the WESM at the prevailing spot prices. The San Roque Power Plant and the main units of
the AHEPP are being operated as peaking units. Available water is used to generate power during peak hours
when prices are higher.
The Auxiliary Units of AHEPP are being operated as base load units, as the water requirement from MWSS is
continuous throughout the day, thus eliminating any discretion to choose the hour of allocation. AHC is
exploring options to contract the capacity of its Auxiliary Units in 2016.
In the years ended December 31, 2012, 2013 and 2014 and the six months ended June 30, 2014 and 2015,
approximately 91%, 82%, 88%, 85% and 87% respectively, of SMC Global Powers volume of power sold to
customers pursuant to offtake agreements. Sales to Meralco accounted for approximately 57%, 64%, 64%, 63%
and 62% of the total sales volume of SMC Global Power, respectively, for the years ended December 31, 2012,
2013 and 2014 and the six months ended June 30, 2014 and 2015. Sales through the WESM accounted for
approximately 9%, 18%, 12%, 13% and 11% of SMC Global Powers total sales volume, respectively, for the
years ended December 31, 2012, 2013 and 2014 and the six months ended June 30, 2014 and 2015. In 2014 and
the six months ended June 30, 2015, 2% and 2%, respectively, of sales volume of SMC Global Power was for
distribution customer sales through APEC.
EXPANSION PLANS
SMC Global Power intends to grow its power business by: (1) developing new greenfield power projects with
strong and profitable fundamentals and (2) continuing its strategic acquisitions of existing power generation
capacity by bidding for selected NPC-owned power generation plants that are currently scheduled for
privatization. SMC Global Power also intends to pursue vertical integration of its power business and to expand
into businesses that complement its power generation operations by further developing its existing coal fuel
supply assets and capitalizing on changes in the Philippine regulatory structure to expand its sales of power to a
broader range of customers, including retail customers. SMC Global Power identifies potential investments by
analyzing the demand for power and power-related services. Factors such as Philippine GDP and population
growth, customer profile and mix, accessibility to the grids, and industrial expansion are considered. SMC
Global Power also looks at commercial viability, potential costs (whether for development or acquisition) and
competitive costs, as well as land acquisition and environmental protection issues and the impact of
environmental protection requirements on overall profitability of the project, and the availability of Government
incentives for a particular project.
Power Generation Capacity
Greenfield Power Projects
SMC Global Power is considering the further expansion of its power portfolio by up to 3,000 MW of new
capacity nationwide through greenfield power projects over the next few years, depending on market demand,
including through the following two coal-fired CFB power projects which are currently under construction:
The following timeline sets forth key project milestones for the Davao Greenfield Power Plant:
January 2013 . . . . . . . . . . . . . . . . . . .
Execution of EPC Contract with Formosa Heavy Industries, for the

construction of the Limay and Davao Greenfield Power Plants
June 2013 . . . . . . . . . . . . . . . . . . . . .
Obtained Environmental Compliance Certificate and Pioneer Status from

Board of Investments (tax holiday)
July 2013 . . . . . . . . . . . . . . . . . . . . . .
Obtained Interim Customs Accreditation and Registration from Bureau

of Customs
August 2013 . . . . . . . . . . . . . . . . . . .
Site hand over
102
September 2013 . . . . . . . . . . . . . . . .
Obtained Certificate of Authority to Import Capital Equipment, Spare

Parts and Accessories from Board of Investments
November 2013 . . . . . . . . . . . . . . . . .
Obtained zoning and location clearance from Municipality of Malita
2014 to August 2016 (estimated) . . .
Construction and engineering progress to continue and signing of offtake

agreements
March 2016 (estimated) . . . . . . . . . .
Commercial Operations Date (COD) for Unit 1
August 2016 (estimated) . . . . . . . . . .
COD for Unit 2
The following timeline sets forth key project milestones for the Limay Greenfield Power Plant (Phase 1):
January 2013 . . . . . . . . . . . . . . . . . . .
Execution of EPC Contract with Formosa Heavy Industries, for the

construction of the Limay and Davao Greenfield Power Plants.
July 2013 . . . . . . . . . . . . . . . . . . . . . .
Obtained Interim Customs Accreditation and Registration from Bureau

of Customs
September 2013 . . . . . . . . . . . . . . . .
Obtained Environmental Compliance Certificate and Pioneer Status from

Board of Investments (tax holiday)
January 2014 . . . . . . . . . . . . . . . . . . .
Site hand over, submitted application for the Certificate of Authority to

Import Capital Equipment, Spare Parts and Accessories to Board of
Investments and pending application and negotiations with the
Municipality of Limay with respect to zoning and location clearance
2014 to 2017 (estimated) . . . . . . . . .
Construction and engineering progress to continue and signing of offtake

agreements
August 2016 (estimated) . . . . . . . . . .
COD for Unit 1
January 2017 (estimated) . . . . . . . . .
COD for Unit 2
The following timeline sets forth key project milestones for the Limay Greenfield Power Plant (Phase 2):
March 2017 (estimated) . . . . . . . . . .
COD for Unit 3
July 2017 (estimated) . . . . . . . . . . . .
COD for Unit 4
The table below summarizes information regarding the greenfield power plants of SMC Global Power.
Plant Name
Proposed
Capacity
Location
Davao Greenfield
Power Plant . . 2 x 150 MW Barangay
Culaman,
Malita, Davao
del Sur
Limay Greenfield
Power Plant
(Phase 1) . . . . 2 x 150 MW Barangay
Lamao, Limay,
Bataan
Limay Greenfield
Power Plant
(Phase 2) . . . . 2 x 150 MW Barangay
Lamao, Limay,
Bataan
(1)
Expected
Commercial
Operation Date
Operator
Fuel Supply
Offtakers
March
2016 for Unit 1,
August 2016
for Unit 2
Safetech
Power
Services
Corp.
Regional Coal
Suppliers /SMC
Global Power coal
mines (back-up)
Industrial
customers,
ECs, DUs(1)
August
2016 for Unit 1,
January 2017
for Unit 2
Mantech
Power
Dynamics
Services
Inc.
Regional Coal
Suppliers /SMC
Global Power coal
mines (back-up)
Industrial
customers,
ECs, DUs(1)
March
2017 for Unit 3,
July 2017
for Unit 4
Mantech
Power
Dynamics
Services
Inc.
Regional Coal
Suppliers /SMC
Global Power coal
mines (back-up)
Industrial
customers,
ECs, DUs(1)
ECs: Electric Cooperatives; DUs: Distribution Utilities.
103
SMC Global Power plans to employ CFB technology for each of the planned greenfield power projects.
Coal-fired power plants generate power by burning coal, a process that generates carbon dioxide, sulfur dioxide
and other pollutants. CFB technology is a type of technology employed to transform coal into a fuel source that is
relatively low in such pollutant emissions compared with other coal-fired power plants. These low emissions are
made possible by processes that are not used in non-CFB coal-fired power plants, such as chemically washing
minerals and impurities from the coal, gasification, treating the flue gases with steam to remove sulfur dioxide,
carbon capture and storage technologies to capture the carbon dioxide from the flue gas and dewatering lower
rank coals (brown coals) to improve the calorific value, thereby improving the efficiency of the conversion into
electricity. CFB technology permits relatively low emissions of carbon dioxide, sulfur dioxide and other
pollutants. CFB technology also uses a low calorific value coal fuel, comparable with the type expected to be
sourced from the coal mining assets of SMC Global Power in Mindanao.
In selecting CFB technology for all of its planned greenfield power projects, SMC Global Power is seeking to
incur cost savings from sourcing coal from its own coal mining assets or third party bulk order discounts for coal
fuel supply, inter-operability, reduced training costs for operators, spare parts exchange and common coal
handling facilities.
Acquisition of Existing Power Generation Capacity
SMC Global Power intends to continue its strategic acquisitions of existing power generation capacity by bidding
for selected Government-owned power generation plants that are currently scheduled for privatization under the
IPPA framework or pursuant to asset sales.
Retail Electricity Supply
SMC Global Power is pursuing downstream vertical integration by capitalizing on changes in the Philippine
regulatory structure to expand its sales of power to a broader range of customers, including retail customers. In
August 2011, as part of the reorganization of the power-related assets of San Miguel Corporation, SMC Global
Power acquired from San Miguel Corporation a 100% equity interest in SMELC, which holds a retail electricity
supplier license from the ERC. As of June 30, 2015, SMELC supplies an equivalent of 27.6 MW to various
facilities of San Miguel Corporation and other contestable customers. Coal Investments
In accordance with the strategy of the Company to pursue vertical integration of its power business, SMC Global
Power has acquired coal exploration, production and development rights over approximately 17,000 hectares of
land in Mindanao, which may provide a source of coal fuel supply for its planned and contemplated greenfield
power projects. Such assets are in the exploratory stage and no results as to their actual viabilities were available
as of June 30, 2015. The mines of SMC Global Power are envisioned to provide fuel for the two new greenfield
projects under construction. The table below sets forth certain information regarding these assets.
104
SMC Global Power

Subsidiary
Description of Asset
Mining Site
Coal Operating Contract Date
Bonanza . . . . . . . . . . . . . . .
Coal operating contract

(COC) with the DOE
covering eight blocks
with a total area of
approximately
8,000 hectares.
Lake Sebu, South

Cotabato and Maitum,
Saranggani Province
COC for exploration

awarded in May 2005,
converted to COC for
development and
production in December
2009
Daguma . . . . . . . . . . . . . . .
COC with the DOE

covering two coal blocks
approximately
2,000 hectares.
Lake Sebu, South

Cotabato
COC for exploration

awarded in November
2002; converted to COC
for development and
production in March
2008
Sultan . . . . . . . . . . . . . . . .
COC with the DOE

covering seven blocks
7,000 hectares.
Lake Sebu, South

Cotabato and
Bagumbayan, Sultan
Kudarat
COC for exploration

awarded in February
2005; converted to COC
for development and
production in February
2009
Each of the COCs has a term of 10 years from the conversion date of the COC for development and production.
The initial 10-year term of each COC may be extended for another 10-year period, and thereafter for a series of
three-year periods not to exceed 12 years, in each case subject to agreement between the parties.
Daguma
Daguma, a coal mining company with coal property covered by COC No. 126 issued by the DOE, dated
November 19, 2002, located in Barangay Ned, Lake Sebu, South Cotabato consisting of two (2) coal blocks with
a total area of two thousand 2,000 hectares, more or less, and has an in-situ coal resources (measured plus
indicative coal resources) of about 94 million metric tons as of June 30, 2015 based on exploratory drilling and
additional in-fill drilling conducted by Daguma.
Sultan
Sultan, which has a coal mining property and right over an aggregate area of 7,000 hectares, more or less
composed of seven (7) coal blocks located in Lake Sebu, South Cotabato and Sen. Ninoy Aquino, Sultan Kudarat
covered by COC No. 134 issued by the DOE dated February 23, 2005. As of June 30, 2015, COC No. 134 has an
in-situ coal resources (measured plus indicative coal resources) of about 35 million metric tons based on
exploratory drilling and confirmatory drilling conducted by Sultan.
Bonanza
Bonanza, a mining company with coal property covered by COC No. 138 issued by the DOE dated May 26,
2005. COC No. 138 is located in Maitum, Sarangani Province and Barangay Ned, Lake Sebu, South Cotabato
consisting of eight (8) coal blocks with a total area of 8,000 hectares, more or less, and has an In-situ coal
resources (measured plus indicative coal resources) of about 23 million metric tons as of June 30, 2015 based on
initial exploratory drilling conducted by SMEC geologists in Maitum, Sarangani. The coal operating contracts
met the contractual/legal criterion and qualified as intangible assets under PFRS 3. Accordingly, total mining
rights recognized from the acquisitions of Sultan, Daguma and Bonanza amounted to P1,720.0 million.
105
The DOE approved the conversion of the COC for Exploration to COC for Development and Production of
Daguma, Sultan and Bonanza, respectively, effective on the following dates:
Subsidiary
COC No.
Effective Date
Term(1)
Daguma
Sultan
Bonanza
126
134
138
November 19, 2008

February 23, 2009
May 26, 2009
10 years
10 years
10 years
(1)
The term for Daguma is followed by another 10-year extension, and thereafter, renewable for a series of 3-year periods not exceeding
12 years under such terms and conditions as may be agreed upon with the DOE. The term for Sultan and Bonanza is renewable for a
series of 3-year periods not exceeding 12 years under such terms and conditions as may be agreed upon with the DOE.
CUSTOMERS
SMC Global Power sells power, through power supply agreements, either directly to customers (distribution
utilities, electric cooperatives and industrial customers) or through the WESM.
Customers
2012
Volume
Sold
(MWh)
Meralco
WESM
2013
Revenue
(in
millions Q)
Volume
Sold
(MWh)
2014
Revenue
(in
millions Q)
Volume
Sold
(MWh)
2014
Revenue
(in
millions Q)
Volume
Sold
(MWh)
2015
Revenue
(in
millions Q)
Volume
Sold
(MWh)
Revenue
(in
millions Q)
9,129,365
1,474,307
43,990 10,366,990
7,185 2,847,254
46,953 10,801,085
10,771 2,110,039
47,234 5,572,709
9,623 1,122,846
24,900 5,044,062
5,245 937,049
21,210
3,954
Total Major
Customers
Others(1)
10,603,672
5,357,788
51,175 13,214,244
23,481 2,948,479
57,724 12,911,124
16,320 4,100,293
56,857 6,695,555
27,437 2,093,928
30,145 5,981,111
13,609 2,171,832
25,164
15,290
Total Sales
15,961,460
74,656 16,162,723
74,044 17,001,417
84,294 8,789,483
43,754 8,152,944
40,454
(1)
Includes Non-MERALCO Distribution Utilities, Electric Cooperatives, Directly Connected Customers, Contestable Customers, Sales
to Distribution Customers, and Inter-company sales.
COMPETITION
SMC Global Power is one of the largest power companies in the Philippines, with a 16.5% share of the power
supply of the national grid, and a 22.2% market share of the Luzon grid in each case as of June 30, 2015, based
on ERC Resolution No. 03, Series of 2015. Its main competitors are the Lopez Group and the Aboitiz Group. The
Lopez Group holds significant interests in First Gen and Energy Development Corporation, while the Aboitiz
Group holds interests in Aboitiz Power Corporation and Hedcor, Inc., among others.
With the Government committed to privatizing the majority of PSALM-owned power generation facilities and
the establishment of WESM, the generation facilities of SMC Global Power will face competition from other
power generation plants that supply the grid during the privatization phase. Multi-nationals that currently operate
in the Philippines and could potentially compete against SMC Global Power in the privatization process include
Korea Electric Power Corporation, Marubeni Corporation, Tokyo Electric Power Corporation, AES Corporation
and Sumitomo, among others. Several of these competitors have greater financial resources, and have more
extensive operational experience and other capabilities than SMC Global Power, giving them the potential ability
to respond to operational, technological, financial and other challenges more quickly than SMC Global Power.
SMC Global Power will face competition in both the development of new power generation facilities and the
acquisition of existing power plants, as well as competition for financing for these activities. The performance of
the Philippine economy and the potential for a shortfall in the Philippines energy supply have attracted many
potential competitors, including multinational development groups and equipment suppliers, to explore
opportunities in the development of electric power generation projects within the Philippines. Accordingly,
competition for and from new power projects may increase in line with the long-term economic growth in the
Philippines.
106
SAFETY, HEALTH AND ENVIRONMENTAL REGULATION AND INITIATIVES

Power operations are subject to extensive, evolving and increasingly stringent safety, health and environmental
laws and regulations. These laws and regulations include the Clean Air Act, Clean Water Act, Toxic Substances
and Hazardous and Nuclear Waste Control Act of 1990, and the Department of Labor and Employment
Occupational Safety and Health Standard of 1989, as amended. Such legislation addresses, among other things,
air emissions, wastewater discharges as well as the generation, handling, storage, transportation, treatment and
disposal of toxic or hazardous chemicals, materials and waste. It also regulates workplace conditions within
power plants and employee exposure to hazardous substances. The Occupational Safety and Health Standard,
meanwhile, was formulated to safeguard the workers social and economic well-being as well as their physical
safety and health.
SMC Global Power complies, and it believes that the IPPs for each of the IPPA power plants managed by
SMC Global Power comply, in all material respects with all applicable safety, health and environmental laws and
regulations.
The Sual Power Plant received its Environmental and Management System Certificate (ISO 14001) in 2004, its
Occupational Standard on Health Safety Certificate (ISO 18001) in 2007 and its Quality Management System
Certificate (ISO 9001) in 2008.
For each of its greenfield power projects, SMC Global Power will comply with all applicable safety, health and
environmental laws and regulations, including securing the necessary Environmental Compliance Certificates in
accordance with Philippine law.
In addition, coal mining in the Philippines is subject to environmental, health and safety laws, forestry laws and
other legal requirements. These laws govern the discharge of substances into the air and water, the management
and disposal of hazardous substances and wastes, site clean-up, groundwater quality and availability, plant and
wildlife protection, reclamation and rehabilitation of mining properties after mining is completed and the
restriction of open-pit mining activities in conserved forest areas.
Notwithstanding the foregoing, the discharge of chemicals, other hazardous substances and pollutants into the
air, soil or water by the power plants owned or managed by SMC Global Power or the coal mines of SMC Global
Power may give rise to liabilities to the Government and to local Government units where such facilities are
located, or to third parties. In addition, SMC Global Power may be required to incur costs to remedy the damage
caused by such discharges or pay fines or other penalties for non-compliance.
Further, the adoption of new safety, health and environmental laws and regulations, new interpretations of
existing laws, increased governmental enforcement of environmental laws or other developments in the future
may require that SMC Global Power make additional capital expenditures or incur additional operating expenses
in order to maintain the operations of its generating facilities at their current level, curtail power generation or
take other actions that could have a material adverse effect on the financial condition, results of operations and
cash flow of the Company.
EMPLOYEES
Management believes that its relationship with its employees is generally good and neither SMC Global Power
nor any of its subsidiaries has experienced a work stoppage as a result of labor disagreements. None of the
employees of SMC Global Power belong to a union.
The following table sets forth the total employee headcount, divided by function, as of June 30, 2015.
Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
37
333
Total Headcount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
392
107
If SMC Global Power is able to acquire additional existing power generation capacity from PSALM, it will hire
additional employees as the business requires.
Consistent with the goal of SMC Global Power being one of the Philippines preferred employers, SMC Global
Power has adopted a rewards and recognition policy that is competitive with industry standards in the
Philippines. Salaries and benefits are reviewed periodically and adjusted to retain current employees and attract
new talents. Tied to this is a performance management system that calls for the alignment of individual key
results, competencies, and development plans with the overall business targets and strategy of the Company.
Performance is reviewed annually and employees are rewarded based on the attainment of pre-defined objectives.
SMC Global Power also has programs for its employees professional and personal development.
The executives of SMC Global Power are granted options to subscribe for SMC common shares reserved for
issuance under the Long Term Incentive Plan of San Miguel Corporation, which is administered by the
SMC Executive Compensation Committee. A specified number of common shares of San Miguel Corporation
are reserved for issuance under the plan at a price equivalent to the fair market value of the common shares San
Miguel Corporation as of the date of the grant, with adjustments depending on the average stock prices of the
prior three months.
INSURANCE
Pursuant to the IPPA arrangements of SMC Global Power, the IPPs associated with the power plants for which
SMC Global Power is the IPPA are responsible for maintaining insurance for all of the facilities, equipment and
infrastructure for those power plants, with the exception of the dam and spillway of the San Roque Power Plant,
for which NPC is obligated to maintain insurance. SMC Global Power is not a beneficiary of any of these
insurance agreements. SMC Global Power employs risk management for purposes of analyzing the risks faced by
its business in the determining the appropriate insurance policies. SMC Global Power does not have business
interruption insurance and believes that there is no business interruption insurance available for the
IPPA business model under which SMC Global Power is currently operating. SMC Global Power has procured
all the necessary policies to cover all insurable risks for the ownership and operation of the Limay Cogeneration
Plant.
INTELLECTUAL PROPERTY
SMC Global Power owns exclusive rights to its corporate name. Management believes that the business of
SMC Global Power as a whole is not materially dependent on any trademark or on any other intellectual
property.
DESCRIPTION OF PROPERTY
SMC Global Power owns the Limay Cogeneration Plant. However, SMC Global Power does not own the
IPPA plants until it elects a transfer of ownership at the expiry of the IPPA Agreement. The executive offices of
SMC Global Power are located at 40 San Miguel Avenue, Mandaluyong City, Philippines and it has two other
offices located in Mandaluyong City and Pasig City, Philippines. These premises are leased by SMC Global
Power from San Miguel Properties, Inc., a subsidiary of San Miguel Corporation.
LEGAL PROCEEDINGS
SMC Global Power and other generation companies became parties to a petition filed in the Supreme Court by
special interest groups which sought to stop the imposition of the increase in generation charge of Meralco for
the November 2013 billing month. The Supreme Court issued a Temporary Restraining Order (TRO) ordering
Meralco not to collect, and the generators not to demand payment, for the increase in generation charge for the
November 2013 billing month. The TRO was originally for 60 days, and was extended for another 60 days. The
case is pending resolution by the Supreme Court.
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In the meantime, on March 3, 2014, an ERC Order was issued declaring the prices in the WESM for the
November and December 2013 billing months, as null and void, and ordered the PEMC, the operator of the
WESM, to calculate and issue adjustment bills using recalculated prices.
SMC Global Power filed a request with the ERC for the reconsideration of the ERC Order. Other generators also
requested the Supreme Court to stop the implementation of the ERC Order. The request is pending resolution by
the ERC.
The ERC Order has no impact on the financials of SMC Global Power, since the financial information reported
in this Offering Circular already took into account the minimum revenues and margins based on the adjusted bills
from PEMC. The payments for energy under bilateral contracts were not affected and only the sales of SMC
Global Power in the WESM are covered by the adjusted bill.
Other than those mentioned above, there are no material pending legal proceedings to which SMC Global Power
or any of its subsidiaries and affiliates is a party or to which any of their material assets are subject.
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REGULATION AND ENVIRONMENTAL MATTERS

ORGANIZATION AND OPERATION OF THE POWER INDUSTRY
The EPIRA established a framework for the organization and operation of the electric power industry in
connection with its restructuring, with the industry divided into four sectors: generation, transmission,
distribution and supply. The following diagram shows the current structure of the electric power industry under
the EPIRA.
Industry structure under the EPIRA:
Joint Congressional
Power Commission
Energy Regulatory
Commission
PSALM
National Electrification
Administration
Department of Energy
National Power
Corporation
Industry Participants
Small Power
Utilities Group
WESM
Any entity
authorized by the
ERC to operate facilities
to generate electricity
Distribution
Utilities
National
Transmission
Corporation
Suppliers/
Aggregators
Production
Electric
Utilities Cooperatives
Legend
Competitive
Oversight
Regulation
Coordination
Regulated
Ownership/
Control
Policy
making
Operation
Supervision
Since the enactment of the EPIRA in 2001, the Philippine power industry has undergone and continues to
undergo significant restructuring. Through the EPIRA, the Government began to institute major reforms with the
goal of fully privatizing all aspects of the power industry. The principal objectives of the EPIRA are:
to ensure and accelerate the total electrification of the country;
to ensure the quality, reliability, security and affordability of the supply of electric power;
to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full
public accountability to achieve greater operational and economic efficiency and enhance the
competitiveness of Philippine products in the global market;
to enhance the inflow of private capital and to broaden the ownership base of the power generation,
transmission and distribution sectors;
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to ensure fair and non-discriminatory treatment of public and private sector entities in the process of
restructuring the electric power industry;
to protect the public interest as it is affected by the rates and services of electric utilities and other providers
of electric power;
to ensure socially and environmentally compatible energy sources and infrastructure;
to promote the utilization of indigenous and new and renewable energy resources in power generation in
order to reduce dependence on imported energy;
to provide for an orderly and transparent privatization of the assets and liabilities of NPC;
to establish a strong and purely independent regulatory body and system to ensure consumer protection and
enhance the competitive operation of the electricity market; and
to encourage the efficient use of energy and other modalities of demand side management.
With a view to implementing these objectives, the DOE, in consultation with the relevant Government agencies,
electric power industry participants, non-Government organizations and electricity consumers, promulgated the
Implementing Rules and Regulations (the IRR) of the EPIRA on February 27, 2002.
The IRR governs the relations between, and respective responsibilities of, the different electric power industry
participants as well as the particular Governmental authorities involved in implementing the structural reforms in
the industry, namely the DOE, NPC, National Electrification Administration, ERC and PSALM.
Reorganization of the Electric Power Industry
Of the many changes initiated by the EPIRA, of primary importance is the reorganization of the electric power
industry by segregating the industry into four sectors: (i) the generation sector; (ii) the transmission sector;
(iii) the distribution sector; and (iv) the supply sector. The goal is for the generation and supply sectors to be fully
competitive and open, while the transmission and distribution sectors will remain regulated as public utilities.
Prior to the EPIRA, the industry was regulated as a whole, with no clear distinctions between and among the
various sectors and/or services.
The Generation Sector
The EPIRA provides that power generation is not a public utility operation. Thus, generation companies are not
required to secure Congressional franchises, and there are no restrictions on the ability of non-Filipinos to own
and operate generation facilities. However, generation companies must obtain a certificate of compliance from
the ERC, as well as health, safety and environmental clearances from appropriate Government agencies under
existing laws. Furthermore, PPAs and PSAs between generation companies and distribution utilities are subject
to the review and approval of the ERC. Generation companies are also subject to the rules and regulations of the
ERC on abuse of market power and anticompetitive behavior. In particular, the ERC has the authority to impose
price controls, issue injunctions, require divestment of excess profits and impose fines and penalties for violation
of the EPIRA and the IRR policy on market power abuse, cross-ownership and anti-competitive behavior.
The goal of the EPIRA is for the generation sector to be open and competitive, while the private sector is
expected to take the lead in introducing additional generation capacity. Generation companies will compete
either for contracts with various retail electricity suppliers, electric cooperatives and private distribution utilities,
or through spot sale transactions in the WESM. Competition will be based largely on pricing, subject to
availability of transmission lines to wheel electricity to the grid and/or buyers. Recovery by distribution utilities
of their purchased power cost is subject to review by the ERC to determine reasonableness of the cost and to
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ensure that the distribution utilities do not earn any revenue therefrom. Upon commencement of the
RCOA generation rates, except those intended for such end-users who may not choose their supplier of
electricity, as determined by the ERC (the Captive Market), will cease to be regulated.
The generation sector converts fuel and other forms of energy into electricity. It consists of the following:
(i) NPC-owned-and-operated generation facilities; (ii) NPC-owned plants, which consist of plants operated by
IPPs, as well as IPP-owned-and-operated plants, all of which supply electricity to NPC; and (iii) IPP-owned-andoperated plants that supply electricity to customers other than NPC.
Under the EPIRA, generation companies are allowed to sell electricity to distribution utilities or to retail
electricity suppliers through either bilateral contracts or the WESM as described below. With the implementation
of RCOA on December 26, 2013, generation companies may likewise sell electricity to eligible end-users with an
average monthly peak demand of 1 MW and certified by the ERC to be contestable customers.
No generation company or related group is allowed to own more than 30% of the installed generating capacity of
the Luzon, Visayas or Mindanao grids and/or 25% of the national installed generating capacity. Also, no
generation company associated with a distribution utility may supply more than 50% of the distribution utilitys
total demand under bilateral contracts, without prejudice to the bilateral contracts entered into prior to the
effectiveness of the EPIRA.
Historically, the generation sector has been dominated by NPC. To introduce and foster competition in the sector,
and, more importantly, to lessen the debt of NPC, the EPIRA mandates the total privatization of the generation
assets and IPP contracts of NPC, which exclude the assets devoted to missionary electrification through the small
power utilities group of NPC. NPC is directed to transfer ownership of all the assets for privatization to a
separate entity, PSALM, which is specially tasked to manage the privatization. Beginning early 2004, PSALM
has been conducting public bidding for the generation facilities owned by NPC.
As of March 28, 2014, PSALM has privatized 25 operating/generating power facilities 20 generating assets
with a rated capacity of 4,316.83 MW were sold, and an additional 3,345.75 MW contract capacity of another
five power plants with a rated capacity of 3,817.4 MW were privatized through IPPA contracts. Major generation
assets sold include the 748 MW Tiwi-Makban geothermal power plant, the 600 MW Calaca coal-fired thermal
power plant, the 600 MW Masinloc coal fired power plant, the 360 MW Magat hydroelectric power plant, and
the 305 MW Palinpinon-Tongonan geothermal power plant. Among the capacities privatized through IPPA
Agreements include the 1,000 MW Sual coal-fired power plant, the 700 MW Pagbilao coal-fired power plant, the
345 MW of the San Roque Power Plant, the 70 MW Bakun hydroelectric power plant, the 40 MW Benguet
hydroelectric power plant and the 1,200 MW Ilijan combined-cycle gas-fired power plant.
Section 47(j) of the EPIRA prohibits NPC from incurring any new obligations to purchase power through
bilateral contracts with generation companies or other suppliers. Also, NPC is only allowed to generate and sell
electricity from generating assets and IPP contracts that have not been disposed of by PSALM.
The Transmission Sector
Pursuant to the EPIRA, NPC has transferred its transmission and sub-transmission assets to TransCo, which was
created pursuant to the EPIRA to assume, among other functions, the electrical transmission function of the NPC.
The principal function of TransCo is to ensure and maintain the reliability, adequacy, security, stability and
integrity of the nationwide electrical grid in accordance with the Philippine Grid Code (Grid Code). TransCo
is also mandated to provide open and non-discriminatory access to its transmission system to all electricity users.
The transmission of electricity through the transmission grid is subject to transmission wheeling charges. As the
transmission of electric power is a regulated common carrier business, TransCos transmission wheeling charges
are subject to regulation and approval by the ERC.
The EPIRA also requires the privatization of TransCo through an outright sale of, or the grant of, a concession
over the transmission assets while the subtransmission assets of TransCo are to be offered for sale to qualified
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distribution utilities. In December 2007, NGCP, comprising a consortium of Monte Oro Grid Resources, Calaca
High Power Corporation and State Grid Corporation of China, won the concession contract to operate, maintain
and expand the TransCo assets with a bid of U.S.$3.95 billion. On January 15, 2009, NGCP was officially
granted the authority to operate the sole transmission system of the country pursuant to a legislative franchise
granted by the Philippine Congress under Republic Act No. 9511.
The Grid Code establishes the basic rules, requirements, procedures and standards that govern the operation,
maintenance and development of the Philippine grid, or the high-voltage backbone transmission system and its
related facilities. The Grid Code identifies and provides for the responsibilities and obligations of three key
independent functional groups, namely: (a) the grid owner, or TransCo; (b) the system operator, or NGCP as the
current concessionaire of TransCo; and (c) the market operator, or the PEMC. These functional groups, as well as
all users of the grid, including generation companies and distribution utilities, must comply with the provisions of
the Grid Code as promulgated and enforced by the ERC.
In order to ensure the safe, reliable and efficient operation of the Philippine grid, the Grid Code provides for,
among others, the following regulations:
the establishment of a grid management committee, which is tasked with the monitoring of the day-to-day
operation of the grid;
performance standards for the transmission of electricity through the grid, as well as the operation and
maintenance thereof, which standards shall apply to TransCo, NGCP, distribution utilities and suppliers of
electricity;
technical and financial standards and criteria applicable to users of the grid, including generation
companies and distribution utilities connected or seeking to connect thereto; and
other matters relating to the planning, management, operation and maintenance of the grid.
The Distribution Sector

The distribution of electric power to end-users may be undertaken by private distribution utilities, cooperatives,
local Government units presently undertaking this function, and other duly authorized entities, subject to
regulation by the ERC. The distribution business is a regulated public utility business requiring a franchise from
the Philippine congress, although franchises relating to electric cooperatives remained under the jurisdiction of
the NEA until the end of 2006. All distribution utilities are also required to obtain a certificate of public
convenience and necessity from the ERC to operate as public utilities.
All distribution utilities are required to submit to the ERC a statement of their compliance with the technical
specifications prescribed in the Philippine Distribution Code (which provides the rules and regulations for the
operation and maintenance of distribution systems), the Distribution Services and Open Access Rules and the
performance standards set out in the IRR of the EPIRA.
The distribution sector is regulated by the ERC, with distribution and wheeling charges, as well as connection
fees from its consumers, subject to ERC approval. Likewise, the retail rate imposed by distribution utilities for
the supply of electricity to its captive consumers is subject to ERC approval. In addition, as a result of the policy
of the Government in promoting free competition and Open Access, distribution utilities are now required to
provide universal and non-discriminatory access to their systems within their respective franchise areas following
commencement of the RCOA.
The Distribution Code establishes the basic rules and procedures that govern the operation, maintenance,
development, connection and use of the electric distribution systems in the Philippines. The Distribution Code
defines the technical aspects of the working relationship between the distributors and all the users of the
distribution system, including distribution utilities, embedded generators and large customers. All such electric
power industry participants in distribution system operations are required to comply with the provisions of the
Distribution Code as promulgated and enforced by the ERC.
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To ensure the safe, reliable and efficient operation of distribution systems in the Philippines, the Distribution
Code provides for, among others, the following regulations:
technical, design and operational criteria and procedures to be complied with by any user who is connected
or seeking connected to a distribution system;
performance and safety standards for the operation of distribution systems applicable to distributors and
suppliers; and
other matters relating to the planning, development, management, operation and maintenance of
distribution systems.
The Supply Sector

The supply of electricity refers to the sale of electricity directly to end-users. The supply function is currently
being undertaken solely by franchised distribution utilities. The retail supply business is not considered a public
utility operation and suppliers are not required to obtain franchises. However, the supply of electricity to a
market of end-users who have a choice on their supplier of electricity is considered a business affected with
public interest. As such, the EPIRA requires all RESs to obtain a license from the ERC and they are subject to the
rules and regulations of the ERC on the abuse of market power and other anti-competitive or discriminatory
behavior.
With the RCOA already implemented, the electricity supplier license will allow SMC Global Power to enter into
retail electricity supply agreements with customers with power requirements of at least 1 MW, which will be
lowered to 750 KW by June 25, 2016. This will encourage competition at the retail level and it is planned that
retail competition will gradually increase over time, provided that supply companies are sufficiently creditworthy
to be suitable offtakers for generation companies.
The following tables summarizes the power supply and demand outlook from 2012 to 2030 in Philippines based
on the DOE Power Development Plan, 2012-2030:
Grid
Installed
capacity
(MW)
Dependable
capacity
(MW)
Available
capacity at
peak
(MW)
Luzon . . . . . . . . . . . . . . . . . . . . . . . . . . .
Visayas . . . . . . . . . . . . . . . . . . . . . . . . .
Mindanao . . . . . . . . . . . . . . . . . . . . . . . .
Philippines . . . . . . . . . . . . . . . . . . . . . . .
11,739
2,402
2,022
16,162
10,824
2,037
1,616
14,477
8,944
1,731
1,311
11,986
(1)
Peak demand
(MW)
7,889
1,522
1,257(1)
Actual reserve
peak (MW)
Required
reserve
margin
(MW)
1,055
312
50
1,610
261
250
Curtailed demand for Mindanao grid.
SMC Global Power believes this increase in demand will lead to electricity shortages and provide opportunities
to build new generation capacity to meet the projected shortage.
Role of the ERC
The ERC is the independent, quasi-judicial regulatory body created under the EPIRA that replaced the Energy
Regulatory Board. The ERC plays a significant role in the restructured industry environment, consisting of,
among others, promoting competition, encouraging market development, ensuring consumer choice and
penalizing abuse of market power by industry participants.
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Among the primary powers and functions of the ERC are:
to determine, fix and approve, after conducting public hearings, transmission and distribution and wheeling
charges and retail rates and to fix and regulate the rates and charges to be imposed by distribution utilities
and their captive end-users, including self-generating entities;
to grant, revoke, review or modify the certificates of compliance required of generation companies and the
licenses required of suppliers of electricity in the contestable market;
to enforce the Grid Code and Distribution Code, which shall include performance standards, the minimum
financial capability standards, and other terms and conditions for access to and use of transmission and
distribution facilities;
to enforce the rules and regulations governing the operations of the WESM and the activities of the
WESM operator to ensure a greater supply and rational pricing of electricity;
to ensure that the electric power industry participants and NPC functionally and structurally unbundled
their respective business activities and rates and to determine the levels of cross-subsidies in the existing
and retail rates until the same is removed in accordance with the different sectors;
to set a lifeline rate for marginalized end-users;
to promulgate rules and regulations prescribing the qualifications of suppliers which shall include, among
others, their technical and financial capability and creditworthiness;
to determine the electricity end-users comprising the contestable and Captive Markets;
to fix user fees to be charged by TransCo/NGCP for ancillary services to all electric power
industry participants or self-generating entities connected to the grid;
to review all power purchase contracts executed between NPC and IPPs, including the distribution utilities;
to monitor and adopt measures to discourage or penalize abuse of market power, cartelization and any
anticompetitive or discriminatory behavior by any electric power industry participant;
to review and approve the terms and conditions of service of TransCo/NGCP and any distribution utility or
any changes therein;
to perform such other regulatory functions as are appropriate and necessary in order to ensure the
successful restructuring and modernization of the electric power industry; and
to have original and exclusive jurisdiction over all cases that involve the contesting of rates, fees, fines and
penalties imposed in the exercise of its powers, functions and responsibilities and over all cases involving
disputes between and among participants or players in the energy industry relating to the foregoing powers,
functions and responsibilities.
Role of the DOE

In accordance with its mandate to supervise the restructuring of the electric power industry, the DOE exercises,
among others, the following functions:
preparation and annual updating of the Philippine Energy Plan and the Philippine Power Development
Program, and thereafter integrate the latter into the former;
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ensuring the reliability, quality and security of the supply of electric power;
exercise of supervision and control over all Government activities pertaining to energy projects;
encouragement of private investment in the power industry and promotion of the development of
indigenous and renewable energy sources for power generation;
facilitation of reforms in the structure and operation of distribution utilities for greater efficiency and lower
costs;
promotion of incentives to encourage industry participants, including new generating companies and
end-users, to provide adequate and reliable electric supply;
education of the public (in coordination with NPC, ERC, NEA and the Philippine Information Agency) on
the restructuring of the industry and the privatization of NPC assets; and
establishment of the WESM in cooperation with electric power industry participants, and formulating rules
governing its operations.
Role of the Joint Congressional Power Commission

The Joint Congressional Power Commission created pursuant to the EPIRA consists of 14 members selected
from the members of the Philippine senate and house of representatives. Its responsibilities and functions
include, among others, the following:
monitoring and ensuring the proper implementation of the EPIRA;
endorsement of the initial privatization plan of PSALM for approval by the President of the Philippines;
ensuring transparency in the public bidding procedures adopted for the privatization of the generation and
transmission assets of NPC;
evaluation of the adherence of industry participants to the objectives and timelines under the EPIRA; and
recommendation of necessary remedial legislation or executive measures to correct the inherent

weaknesses in the EPIRA.
Competitive Market Devices

WESM
The EPIRA mandates the establishment of the WESM, which is a pre-condition for the implementation of the
RCOA, within one year from its effectiveness. The WESM provides a venue whereby generators may sell power,
and at the same time suppliers and wholesale consumers can purchase electricity where no bilateral contract
exists between the two.
On June 28, 2002, the DOE, in cooperation with electric power industry participants, promulgated detailed rules
for the WESM. These rules, as amended on November 11, 2005, set the guidelines and standards for participation
in the market, reflecting accepted economic principles and providing a level playing field for all electric power
industry participants, and procedures for establishing the merit order dispatch for each time (hourly) trading
period. These rules also provide for a mechanism for setting electricity prices that are not covered by bilateral
contracts between electricity buyers and sellers.
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On November 18, 2003, upon the initiative of the DOE, the PEMC was incorporated as a non-stock, non-profit
corporation with membership comprising an equitable representation of electricity industry participants and
chaired by the DOE. The PEMC acts as the autonomous market group operator and the governing arm of the
WESM. The PEMC was tasked to undertake the preparatory work for the establishment of the WESM, pursuant
to Section 30 of the EPIRA and in accordance with the WESM Rules. Its primary purpose is to establish,
maintain, operate and govern an efficient, competitive, transparent and reliable market for the wholesale
purchase of electricity and ancillary services in the Philippines in accordance with relevant laws, rules and
regulations. Moreover, while WESM intends to operate both energy and reserve markets, only the former has
already been launched. Having completed its application for the reserve markets pricing methodology, PEMC
has indicated that the Visayas grid commenced operations on December 26, 2010.
The WESM became operational in the Luzon grid on June 26, 2006. Prior to the commencement of the Luzon
WESM commercial operations, the ERC issued the enforcement of 90% cap on the bilateral supply contracts of
distribution utilities to address other issues that may arise during the commercial operations of the WESM. The
ERC is responsible for monitoring the 90% cap on power sourced from bilateral PSCs of distribution utilities
total monthly demand. Any distribution utility that violates the 90% cap will not be allowed to recover the costs
pertaining to the volume in excess of the cap from its customers.
As of December 31, 2013, there were 239 entities registered as WESM members.
RCOA
The EPIRA likewise provides for a system of Open Access on transmission and distribution wires, whereby
TransCo/NGCP and distribution utilities may not refuse the use of their wires by qualified persons, subject to the
payment of distribution and wheeling charges. Conditions for the commencement of such Open Access system
are as follows:
establishment of the WESM;
approval of unbundled transmission and distribution wheeling charges;
initial implementation of the cross-subsidy removal scheme;
privatization of at least 70% of the total capacity of generating assets of NPC in Luzon and Visayas; and
transfer of the management and control of at least 70% of the total energy output of power plants under
contract with NPC to the IPPAs.
On June 6, 2011, pursuant to Resolution No. 10, Series of 2011, the ERC declared December 26, 2011 as the
Open Access Date to mark the commencement of the full operations of the competitive retail electricity market
in Luzon and Visayas. Accordingly, all electricity-end users with an average monthly peak demand of one MW
for the 12 months preceding the Open Access Date, as certified by the ERC to be contestable customers, shall
have the right to choose their own electricity suppliers.
To ensure smooth transition from the existing structure to RCOA, the ERC promulgated Resolution
No. 16, Series of 2012, providing for a transition period from December 26, 2012 until June 25, 2013. However,
the ERC effectively extended the transition period when it issued Resolution No. 11, Series of 2013, which
allowed contestable customers to stay with their current distribution utility until December 25, 2013, or until such
time that they were able to find a retail electricity supplier. On June 19, 2015, the Department of Energy
promulgated Department Circular No. DC2015-06-0010, which mandated contestable customers to secure their
retail supply contracts by June 25, 2016, including contestable customers with an average demand of 750KW to
999KW for the 12-month period preceding June 25, 2016.
With the implementation of the RCOA, the contestable markets (i.e., end-users with an average monthly peak
demand of 1 MW as certified by the ERC) may choose where to source their electric power requirements and can
negotiate with suppliers for their electricity. Likewise, certain end-users will be allowed to directly source power
through the WESM or by entering into contracts with generation companies. This will encourage competition at
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the retail level and it is anticipated that retail competition will gradually increase over time, provided that supply
companies are sufficiently creditworthy to be suitable offtakers for generation companies.
With the implementation of the RCOA, certain contracts entered into by utilities and suppliers may potentially be
stranded. Stranded contract cost refers to the excess of the contracted cost of electricity under eligible contracts
of NPC over the actual selling price of the contracted energy output of such contracts in the market. Under the
EPIRA, recovery of stranded contract cost may be allowed provided that such contracts were approved by the
Energy Regulatory Board (now the ERC) as of December 31, 2000.
Unbundling of Rates and Removal of Cross Subsidies
The EPIRA mandates that distribution and wheeling charges be unbundled from retail rates and that rates reflect
the respective costs of providing each service. The EPIRA also states that cross-subsidies shall be phased out
within a period not exceeding three years from the establishment by the ERC of a universal charge, which shall
be collected from all electricity end-users. However, the ERC may extend the period for the removal of the
cross-subsidies for a maximum of one year if it determines that there will be a material adverse effect upon the
public interest or an immediate, irreparable and adverse financial effect on a distribution utility.
These arrangements are now in place, in satisfaction of the conditions for the RCOA.
The EPIRA likewise provides for a socialized pricing mechanism called a lifeline rate to be set by the ERC for
marginalized or low-income captive electricity consumers who cannot afford to pay the full cost of electricity.
These end-users are exempt from the cross-subsidy removal for a period of ten years, unless extended by law.
Implementation of the PBR
The ERC issued the Rules for Setting Distribution Wheeling Rates that apply to privately owned distribution
utilities entering performance-based regulation (PBR), which set out the manner in which the new PBR
rate-setting mechanism for distribution-related charges will be implemented. PBR is intended to replace the
return-on-rate-base regulation that has historically determined the distribution charges paid by the distribution
companies customers. Under the PBR, the distribution-related charges that distribution utilities can collect from
customers over a four-year regulatory period will be set by reference to projected revenues which are reviewed
and approved by the ERC and used by the ERC to determine the efficiency factor of a distribution utility. For
each year during the regulatory period, the distribution charge of a distribution utility is adjusted upwards or
downwards taking into consideration the efficiency factor of the utility set against changes in overall consumer
prices in the Philippines. The ERC has also implemented a performance incentive scheme whereby annual rate
adjustments under PBR will also take into consideration the ability of a distribution utility to meet or exceed
service performance targets set by the ERC, such as the average duration of power outages, the average time to
provide connections to customers and the average time to respond to customer calls, with utilities being rewarded
or penalized depending on their ability to meet these performance targets.
Reduction of Taxes and Royalties on Indigenous Energy Resources
To equalize prices between imported and indigenous fuels, the EPIRA mandates the President of the Philippines
to reduce the royalties, returns and taxes collected for the exploitation of all indigenous sources of energy,
including but not limited to, natural gas and geothermal steam, so as to effect parity of tax treatment with the
existing rates for imported coal, crude oil, bunker fuel and other imported fuels. Following the promulgation of
the IRR, then President Arroyo issued Executive Order No. 100 to equalize the taxes among fuels used for power
generation. This mechanism, however, is yet to be implemented.
Government Approval Process
As set forth in the EPIRA, power generation is not considered a public utility operation. Thus, an entity engaged
or intending to engage in the generation of electricity is not required to secure a franchise. However, no person or
entity may engage in the generation of electricity unless such person or entity has complied with the standards,
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requirements and other terms and conditions set by the ERC and has received a certificate of compliance from
the ERC to operate facilities used in the generation of electricity. A certificate of compliance is valid for a period
of five years from the date of issuance.
In addition to the certificate of compliance requirement, a generation company must comply with technical,
financial and environmental standards. A generation company must ensure that all its facilities connected to the
grid meet the technical design and operational criteria of the Grid Code and Distribution Code promulgated by
the ERC. In this connection, the ERC has issued guidelines setting the minimum financial capability standards
for generation companies. Under the guidelines, a generation company is required to meet a minimum annual
interest cover ratio or debt service capability ratio of 1.5x throughout the period covered by its certificate of
compliance. For certificate of compliance applications and renewals, the guidelines require the submission to the
ERC of, among other things, comparative audited financial statements, a schedule of liabilities, and a five-year
financial plan. For the duration of the certificate of compliance, the guidelines also require a generation company
to submit audited financial statements and forecast financial statements to the ERC for the next two financial
years, as well as other documents. The failure by a generation company to submit the requirements prescribed by
the guidelines may be grounds for the imposition of fines and penalties.
In the course of developing a power plant, other permits, approvals and consents must also be obtained from
relevant national, provincial and local Government authorities, relating to, among others, site acquisition,
construction and operation, including environmental licenses and permits.
OTHER REGULATORY MATTERS
Foreign Investment Act of 1991
The FIA liberalized the entry of foreign investment into the Philippines. Under the FIA, in domestic market
enterprises, foreigners can own as much as 100% equity except in areas specified in the Ninth Regular Foreign
Investment Negative List (the Negative List). This Negative List enumerates industries and activities which
have foreign ownership limitations under the FIA and other existing laws. Nationalized activities include, among
others, land ownership, telecommunications, mining and the operation of public utilities.
In connection with the ownership of private land, the Philippine Constitution states that no private land shall be
transferred or conveyed except to citizens of the Philippines or to corporations or associations organized under
the laws of the Philippines at least 60% of whose capital is owned by such citizens. Likewise, under the
Philippine Constitution, only citizens of the Philippines or corporations or associations organized under the laws
of the Philippines at least 60% of whose capital is owned by such citizens may engage in activities relating to the
exploration, development and utilization of natural resources, such as mining activities and operations.
For the purpose of complying with nationality laws, the term Philippine National is defined under the FIA as any
of the following:
a citizen of the Philippines;
a domestic partnership or association wholly-owned by citizens of the Philippines;
a corporation organized under the laws of the Philippines of which at least 60% of the capital stock
outstanding and entitled to vote is owned and held by citizens of the Philippines;
a corporation organized abroad and registered to do business in the Philippines under the Corporation
Code, of which 100% of the capital stock outstanding and entitled to vote is wholly-owned by Filipinos; or
a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a
Philippine National and at least 60% of the fund will accrue to the benefit of Philippine Nationals.
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In SEC Memorandum Circular No. 08 dated May 20, 2013, it is provided that for purposes of determining
compliance with the nationality requirement, the required percentage of Filipino ownership shall be applied to
both (a) the total number of outstanding shares of stock entitled to vote in the election of directors, and (b) the
total number of outstanding shares of stock, whether or not entitled to vote in the election of directors.
Local Government Code
The Local Government Code (Republic Act No. 7160) establishes the system and powers of provincial, city,
municipal, and barangay governments in the country. The general welfare clause of the Local Government Code
states that every local Government unit shall exercise the powers expressly granted, those necessarily implied, as
well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which
are essential to the promotion of the general welfare.
Local Government units exercise police power through their respective legislative bodies. Specifically, the local
Government unit, through its legislative body, has the authority to enact such ordinances as it may deem
necessary and proper for sanitation and safety, the furtherance of the prosperity, and the promotion of the
morality, peace, good order, comfort, convenience, and general welfare of the locality and its inhabitants.
Ordinances can reclassify land, order the closure of business establishments, and require permits and licenses
from businesses operating within the territorial jurisdiction of the local Government unit.
Registration with the Board of Investments
Under the Omnibus Investments Code (Executive Order No. 226, as amended), a Board of Investmentsregistered enterprise may enjoy certain incentives provided such enterprise invests in preferred areas of
investment enumerated in the Investment Priorities Plan annually prepared by the Government. However, prior to
registration with the Board of Investments of the Philippines, the enterprise must first satisfy the minimum equity
required to finance the project applied equivalent to 25% of the estimated project cost, or as may be prescribed
by the Board of Investments.
Such incentives may include: (i) income tax holiday; (ii) additional deduction for labor expenses; (iii) tax
exemption on imported capital equipment; (iv) tax credit on domestic capital equipment; (v) exemption from
contractors tax; (vi) simplification of customs procedure; (vii) unrestricted use of consigned equipment;
(viii) employment of foreign nationals; (ix) tax exemption on imported spare parts; and (x) exemption from
wharfage dues and export duties and fees.
Labor and Employment
The Department of Labor and Employment (DOLE) is the Government agency mandated to formulate
policies, implement programs and services, and serve as the policy-coordinating arm of the Executive Branch in
the field of labor and employment. The DOLE has exclusive authority in the administration and enforcement of
labor and employment laws such as the Labor Code of the Philippines and the Occupational Safety and Health
Standards, as amended, and such other laws as specifically assigned to it or to the Secretary of the DOLE.
Social Security System, PhilHealth and the Pag-IBIG Fund
An employer, or any person who uses the services of another person in business, trade, industry or any
undertaking is required under the Social Security Act of 1997 to ensure coverage of employees following
procedures set out by the law and the Social Security System (SSS). Under the said law, an employer must
deduct from its employees their monthly contributions based on a given schedule, pay its share of contribution
and remit these to the SSS within a period set by law and/or SSS regulations.
Employers are likewise required to ensure enrollment of its employees in a National Health Program
administered by the Philippine Health Insurance Corporation, a Government corporation attached to the
Philippine Department of Health tasked with ensuring sustainable, affordable and progressive social health
insurance pursuant to the provisions of the National Health Insurance Act of 1995. Under the Home
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Development Mutual Fund Law of 2009, all employees who are covered by the Social Security Act of 1997 must
also be registered with and covered by the Home Development Mutual Fund, more commonly referred to as the
Pag-IBIG Fund.
Philippine Competition Act
On July 21, 2015, the President of the Philippines signed into law Republic Act No. 10667 or the Philippine
Competition Act, which became effective on August 8, 2015. It aims to enhance economic efficiency and
promote free and fair competition in trade, industry and all commercial economic activities, prevent economic
concentration which will manipulate or constrict the discipline of free markets, and penalize all forms of anticompetitive agreements, abuse of dominant position and anti-competitive mergers and acquisitions, with the
objective of protecting consumer welfare and advancing domestic and international trade and economic
development. Although the Philippine Competition Act is silent on its applicability specifically to the electric
power industry, Section 55(c) of the Philippine Competition Act provides that insofar as Section 43(u) of the
EPIRA is inconsistent with provisions of the Philippine Competition Act, it shall be repealed. In view of this, the
Philippine Competition Commission now has the original and exclusive jurisdiction over all cases contesting
rates, fees, fines and penalties imposed by the ERC in the exercise of its powers, functions and responsibilities
and over all cases involving disputes between and among participants or players in the energy sector. The
Implementing Rules and Regulations for the Philippine Competition Act have not yet been issued as of the date
of this Offering Circular.
ENVIRONMENTAL MATTERS
The operations of the businesses of SMC Global Power are subject to various laws, rules and regulations that
have been promulgated for the protection of the environment.
EISS Law
The Philippine Environmental Impact Statement System (the EISS Law), which is implemented by the DENR,
is the general regulatory framework for any project or undertaking that is either (a) classified as environmentally
critical or (b) is situated in an environmentally critical area. It requires an entity that will undertake any such
declared environmentally critical project or operate in any such declared environmentally critical area to submit
an Environmental Impact Statement (EIS) which is a comprehensive study of the significant impacts of a
project on the environment. The EIS serves as an application for the issuance of an Environmental Compliance
Certificate (ECC), if the proposed project is environmentally critical or situated in an environmentally critical
area, otherwise, for the issuance of a Certificate of Non-Coverage. An ECC is a Government certification that,
among others, (i) the proposed project or undertaking will not cause significant negative environmental impact;
(ii) the proponent has complied with all the requirements of the EISS Law in connection with the project; and
(iii) the proponent is committed to implement its approved Environmental Management Plan in the EIS. In
general, only projects that pose potential significant impact on the environment shall be required to secure an
ECC. The proponent of a project for which an ECC is issued and determined by the DENR to pose a significant
public risk or necessitate rehabilitation or restoration shall be required to establish an environmental guarantee
fund. Such fund is intended to meet any damage caused by, as well as any rehabilitation and restoration measures
in connection with, the said project.
The Clean Water Act
The Clean Water Act (Republic Act No. 9275) and its implementing rules and regulations provide for water
quality standards and regulations for the prevention, control, and abatement of pollution of the water resources of
the country. The Clean Water Act requires owners or operators of facilities that discharge regulated effluents
(such as wastewater from manufacturing plants or other commercial facilities) to secure a discharge permit from
the DENR which authorizes the owners and operators to discharge waste and/or pollutants of specified
concentration and volumes from their facilities into a body of water or land resource for a specified period of
time. The DENR, together with other Government agencies and the different local Government units, is tasked to
implement the Clean Water Act and to identify existing sources of water pollutants, as well as strictly monitor
pollution sources which are not in compliance with the effluent standards provided in the law.
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The Clean Air Act

Pursuant to the Clean Air Act and its implementing rules and regulations, enterprises that operate or utilize air
pollution sources are required to obtain an Authority to Construct or a Permit to Operate from the DENR with
respect to the construction or the use of air pollutants. The issuance of the said permits seek to ensure that
regulations of the DENR with respect to air quality standards and the prevention of air pollution are achieved and
complied with by such enterprises.
The Renewable Energy Act
The Renewable Energy Act of 2008 (Republic Act No. 9513) aims to promote development and
commercialization of renewable and environment-friendly energy resources such as biomass, solar, and wind
through various tax incentives. Some of the tax incentives granted to renewable energy developers under the said
law include (i) a seven-year income tax holiday; (ii) duty free importation of renewable energy machinery,
equipment, and materials; (iii) special realty tax rates on equipment and machinery; (iv) zero percent VAT rate
for power generated from these energy sources; and (v) the imposition of a reduced corporate tax of 10% on its
net taxable income after the income tax holiday.
Other Environmental Laws
Other regulatory environmental laws and regulations applicable to the businesses of SMC Global Power include
the following:
The Toxic Substances and Hazardous and Nuclear Waste Control Act of 1990 (Republic Act No. 6969),
which regulates, restricts or prohibits the (i) importation, manufacture, processing, handling, storage,
transportation, sale, distribution, use and disposal of chemical substance and mixtures that present
unreasonable risk or injury to health or the environment, and (ii) entry into the Philippines or the keeping in
storage of hazardous wastes which include byproducts, process residue, contaminated plant or equipment
or other substances from manufacturing operations. The said law is implemented by the DENR.
The Ecological Solid Waste Management Act of 2000 (Republic Act No. 9003), which provides for the
proper management of solid waste which includes discarded commercial waste and non-hazardous
institutional and industrial waste. The said law prohibits, among others, the transporting and dumping of
collected solid wastes in areas other than prescribed centers and facilities. The National Solid Waste
Management Commission, together with other Government agencies and the different local Government
units, are responsible for the implementation and enforcement of the said law.
The Code on Sanitation of the Philippines (the Sanitation Code) (Presidential Decree No. 856), which
provides for sanitary and structural requirements in connection with the operation of certain establishments
such as food establishments which include such places where food or drinks are manufactured, processed,
stored, sold or served. Under the Sanitation Code, which is implemented by the Philippine Department of
Health, food establishments are required to secure sanitary permits prior to operation which shall be
renewable on a yearly basis.
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MANAGEMENT
The overall management and supervision of SMC Global Power is undertaken by the Board. The executive
officers and management team cooperate with the Board by preparing appropriate information and documents
concerning the SMC Global Powers business operations, financial condition and results of operations for its
review.
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Currently, the Board consists of seven members, of which two are independent directors. The table below sets
forth certain information regarding the members of the Board as of the date of this Offering Circular.
Name
Age
Position
Citizenship
Ramon S. Ang . . . . . . . . . . . . . . . . . . . . . . . . . .
Ferdinand K. Constantino . . . . . . . . . . . . . . . . .
Alan T. Ortiz . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aurora T. Calderon . . . . . . . . . . . . . . . . . . . . . .
Virgilio S. Jacinto . . . . . . . . . . . . . . . . . . . . . . .
Jack G. Arroyo, Jr. . . . . . . . . . . . . . . . . . . . . . . .
Consuelo M. Ynares-Santiago . . . . . . . . . . . . . .
61
63
62
61
58
57
75
Director / Chairman
Director
Director
Director
Director
Independent Director
Independent Director
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
The business experience for the past five years of each of the directors and executive officers is set forth below.
Ramon S. Ang is the incumbent Chairman of the Board and Chief Executive Officer of SMC Global Power
since August 31, 2010 and the Chairman of the Executive Committee of SMC Global Power since September 2,
2011. He is the Vice Chairman of San Miguel Corporation since January 28, 1999, and the President and Chief
Operating Officer of San Miguel Corporation since March 6, 2002. He is also a Member of the Executive
Committee and Nomination and Hearing Committee of San Miguel Corporation. He also holds, among others,
the following positions in other publicly listed companies: President and Chief Executive Officer of Top Frontier
Investment Holdings, Inc. and Petron Corporation; Chairman of the Board of San Miguel Brewery Inc. and San
Miguel Brewery Hong Kong Limited (listed in the Hong Kong Stock Exchange), and Liberty Telecoms Holdings
Inc.; Vice Chairman of the Board of Ginebra San Miguel, Inc., and San Miguel Pure Foods Company, Inc. He is
also the Chairman and President of San Miguel Holdings Corp. and San Miguel Equity Investments Inc.;
Chairman of the Board of Sea Refinery Corporation, San Miguel Foods, Inc., San Miguel Yamamura Packaging
Corporation, San Miguel Properties, Inc., Clariden Holdings, Inc., Anchor Insurance Brokerage Corporation,
Philippine Diamond Hotel & Resort, Inc., Philippine Oriental Realty Development, Inc., and Atea Tierra
Corporation. He is also the sole director and shareholder of Master Year Limited and the Chairman of Privado
Holdings, Corp. He formerly held the following positions: President and Chief Operating Officer of PAL
Holdings, Inc., Philippine Airlines, Inc.; Director of Air Philippines Corporation; Chairman of the Board of
Cyber Bay Corporation; and Vice Chairman of the Board and Director of Manila Electric Company. Mr. Ang has
held directorships in various domestic and international subsidiaries of San Miguel Corporation in the last five
years. He has a Bachelor of Science degree in Mechanical Engineering from Far Eastern University.
Ferdinand K. Constantino is a Director of SMC Global Power since August 31, 2010 and the Vice Chairman of
the Board since September 2, 2011 of SMC Global Power, and was its Treasurer from August 31, 2010 to
September 1, 2011. He is a member of the Executive Committee, Audit Committee and Executive Compensation
Committee of SMC Global Power since September 2, 2011. He is also a Director of San Miguel Corporation
since May 31, 2010 and the Senior Vice President, Chief Finance Officer and Treasurer of San Miguel
Corporation. He is a member of the Executive Committee, Audit Committee, Executive Compensation
Committee and Nomination and Hearing Committee of San Miguel Corporation. He also holds, among others,
the following positions in other publicly-listed companies: Director of San Miguel Brewery Inc., Top Frontier
Investment Holdings, Inc. and Petron Malaysia Refining & Marketing Bhd, a company publicly listed in
Malaysia. He is also the President of Anchor Insurance Brokerage Corporation; Director of San Miguel
Yamamura Packaging Corporation, San Miguel Foods Inc., Citra Metro Manila Tollways Corporation and
Northern Cement Corporation; and Chairman of the San Miguel Foundation, Inc. He was formerly a Director of
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PAL Holdings, Inc., and Philippine Airlines, Inc. Mr. Constantino previously served San Miguel Corporation as
Chief Finance Officer of the San Miguel Beer Division (1999-2005); Chief Finance Officer and Treasurer of San
Miguel Brewery Inc. (2007-2009); Director of San Miguel Pure Foods Company, Inc. (2008-2009); Director of
San Miguel Properties, Inc. (2001-2009); and Chief Finance Officer of Manila Electric Company (2009). He has
held directorships in various domestic and international subsidiaries of San Miguel Corporation during the last
five years. He holds a degree in AB Economics from the University of the Philippines and completed academic
requirements for an MA Economics degree.
Alan T. Ortiz is the incumbent President and Chief Operating Officer of SMC Global Power since August 31,
2010 and a member of the Audit Committee and Nomination and Election Committee of SMC Global Power
since September 2, 2011. Previously, he was a Director of the Manila Electric Company. He is currently the
Managing Partner of CEOs Inc., a Director and Treasurer of Global Resource for Outsourced Workers, Inc., and
an Assistant Professor in the Department of Economics/Political Science of the Ateneo de Manila University.
Aurora T. Calderon is a Director of SMC Global Power since August 31, 2010 and a member of the Executive
Committee and Chairperson of the Executive Compensation Committee of SMC Global Power since
September 2, 2011. She is also a director of San Miguel Corporation since June 10, 2014 and also the Senior
Vice President-Senior Executive Assistant to the President and Chief Operating Officer of San Miguel
Corporation since January 20, 2011. She is a member of the Executive Compensation Committee of San Miguel
Corporation. She holds the following positions in other publicly listed companies: Director and Treasurer of Top
Frontier Investment Holdings, Inc. and Director of Petron Corporation. She is also a member of the board of
directors of Petron Marketing Corporation, Petron Freeport Corporation, New Ventures Realty Corporation, Las
Lucas Construction and Development Corp., Thai San Miguel Liquor Co., San Miguel Equity Investments Inc.,
Bank of Commerce, and Kankiyo Corporation. She is the President and the Director of Total Managers, Inc. She
was formerly a Director of PAL Holdings, Inc., Philippine Airlines, Inc., Trustmark Holdings Corporation, Zuma
Holdings and Management Corporation, Air Philippines Corporation, and Manila Electric Company. A certified
public accountant, Ms. Calderon graduated from the University of the East with a degree in BS Business
Administration, major in Accountancy, magna cum laude. In addition, Ms. Calderon holds directorships in
various San Miguel Corporation domestic and international subsidiaries.
Virgilio S. Jacinto is the Corporate Secretary of SMC Global Power since August 31, 2010, a Director, the
Compliance Officer and a member of the Nomination Committee and Election Committee of SMC Global Power
since September 2, 2011. He is also the Corporate Secretary, Senior Vice-President and General Counsel and
Compliance Officer of San Miguel Corporation (since October 2010). He is also the Corporate Secretary and
Compliance Officer of Top Frontier Investment Holdings, Inc. and Ginebra San Miguel, Inc. He is a Director of
San Miguel Brewery Inc. and Petron Corporation. He was formerly the Vice President and First Deputy General
Counsel from 2006 to 2010 of San Miguel Corporation. He was Director and Corporate Secretary of United
Coconut Planters Bank, Partner at Villareal Law Offices and Associate at SyCip, Salazar, Feliciano & Hernandez
Law Office. Atty. Jacinto is an Associate Professor at the University of the Philippines, College of Law. He
obtained his law degree from the University of the Philippines. He holds a Master of Laws degree from Harvard
Law School. He holds various directorships in various local and offshore subsidiaries of San Miguel Corporation.
Jack G. Arroyo, Jr. is an Independent Director of SMC Global Power, the Chairman of the Audit Committee,
and a member of the Executive Compensation Committee of SMC Global Power, since September 2, 2011. He is
a medical doctor and ophthalmologist by profession and is currently affiliated with The American Eye Center,
The Medical City, and Eye Referral Center. He is also a member of the Board of Directors of the Philippine
Healthcare Educators, Inc. and the ASEAN Eye Center Association. He is also currently the President of Casino
Espaol de Manila.
Consuelo M. Ynares-Santiago is an Independent Director of SMC Global Power, the Chairperson of the
Nomination and Election Committee, and a member of the Audit Committee of SMC Global Power, since
September 2, 2011. She is also an Independent Director of Anchor Insurance Brokerage Corporation since 2012,
Top Frontier Investment Holdings, Inc. since 2013, South Luzon Tollway Corporation since 2015 and Phoenix
Petroleum Phil. Inc. She served as an Associate Justice of the Supreme Court of the Philippines from 1999 to
2009; Associate Justice of the Court of Appeals of the Philippines from 1990 to 1999; Regional Trial Court
Judge of Makati, Branch 149 from 1986 to 1990; Metropolitan Trial Court Judge of Pasig, Brach 69 from 1983 to
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1984 and of Caloocan City, Branch 41 from January to October 1983, a Municipal Judge in Cainta, Rizal from
1973 to 1983; and as a Legal Officer of the Securities and Exchange Commission from February 1986 to July
1973. She obtained her law degree from the University of the Philippines in 1962.
SENIOR MANAGEMENT
The table below sets forth certain information regarding the executive officers of SMC Global Power as of the
date of this Offering Circular.
Name
Age
Position
Citizenship
Ramon S. Ang . . . . . . . . . . . . . . . . . .
Ferdinand K. Constantino . . . . . . . . .
Virgilio S. Jacinto . . . . . . . . . . . . . . .
Alan T. Ortiz . . . . . . . . . . . . . . . . . . .
Elenita D. Go . . . . . . . . . . . . . . . . . .
Alexander B.M. Simon . . . . . . . . . . .
Ramon U. Agay. . . . . . . . . . . . . . . . .
61
63
58
62
54
52
57
Chairman and Chief Executive Officer

Vice Chairman
Corporate Secretary
President and Chief Operating Officer
General Manager
Assistant Vice President and Chief Finance Officer
Assistant Vice President and Finance Manager
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
The business experience for the past five years of each of the executive officers who are not directors is set forth
below.
Elenita D. Go is the General Manager of SMC Global Power since December 14, 2011. She joined SMC Global
Power in June 2011 as head of its Sales and Trading Group. She was also a Member of the Board of Directors of
Meralco from November 2009 until June 2010. From April 2008 until October 2010, Ms. Go was the head of the
Corporate Procurement Unit of San Miguel Corporation. Ms. Go obtained her Masters in Business
Administration degree from Ateneo de Manila Graduate School of Business and her Bachelor of Science
degree in Electrical Engineering from Mapua Institute of Technology.
Alexander B.M. Simon is the Chief Finance Officer of SMC Global Power since September 2, 2011 and was
appointed Assistant Vice President on March 25, 2015. He had served as a financial consultant (2008-2011) to
various private companies. He had held, among others, the following positions: Vice President for Finance and
Accounting of PruLife of UK (2006-2008); Vice President for Finance and Administration and Chief Finance
Officer of LST, Inc. (2004-2006), financial consultant to various SMEs (2003-2004); Vice President for Finance
and Administration and Chief Finance Officer of Philamcare Health Systems (2003); Vice President and Group
Treasurer/Finance Head of the Marsman Drysdale Group (2001-2003); Assistant Vice President, Treasury of
Bayan Telecommunications, Inc. (1996-2001); Assistant Vice President, Treasury of Isla Communications
Company, Inc. (1995-1996); and Assistant Vice President of Investment & Capital Corporation of the Philippines
(1992-1995).
Ramon U. Agay is the Finance Manager of SMC Global Power since September 2, 2011 and was appointed
Assistant Vice President on March 25, 2015. He is also the Finance Manager of the various subsidiaries of SMC
Global Power, and the Treasurer of Daguma, Bonanza and Sultan. He had previously held finance positions in
San Miguel Corporation and its subsidiaries.
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PRINCIPAL SHAREHOLDER
San Miguel Corporation is the principal shareholder of SMC Global Power and, except for the 3,500 qualifying
shares held by the directors of SMC Global Power, owns 100% of the issued share capital of SMC Global Power.
San Miguel Corporation is a diversified conglomerate and has interests in food, beverage, packaging, fuel and
oil, infrastructure, telecommunications, banking and property businesses.
San Miguel Corporation is a corporation organized and existing under the laws of the Republic of the
Philippines, with registered principal office address at No. 40 San Miguel Avenue, Mandaluyong City. San
Miguel Corporation is a public company under Section 17.2 of the SRC and its shares are listed on the PSE. San
Miguel Corporation, together with its subsidiaries, is one of the largest publicly listed company in the
Philippines.
San Miguel Corporation has become one of the most diversified and also one of the largest Philippine
conglomerates by market capitalization and total assets, with sales equaling approximately 6.2% of the Philippine
GDP in 2014. Originally founded in 1890 as a single brewery in the Philippines, San Miguel Corporation has
transformed itself from a market-leading beverage, food and packaging business with a globally recognized beer
brand, into a large and diversified conglomerate with additional market-leading businesses and investments in the
fuel and oil, energy, infrastructure, and telecommunications industries in the Philippines. San Miguel
Corporation has a portfolio of companies that is interwoven into the economic fabric of the country, benefiting
from, as well as contributing to, the development and economic progress of the Philippines. The common shares
of San Miguel Corporation were listed on the PSE on November 5, 1948, and as of June 30, 2015, San Miguel
Corporation had a market capitalization of P141.5 billion (U.S.$3.1 billion). The consolidated sales, income
from operations and net income of San Miguel Corporation in the six months ended June 30, 2015 were
respectively.
The San Miguel Corporation group has become a Philippine market leader in its established businesses in
beverage, food and packaging industries with over 18,000 employees and more than 100 production facilities in
the Asia-Pacific region as of June 30, 2015. The extensive portfolio of San Miguel Corporation products includes
beer, liquor, non-alcoholic beverages, poultry, animal feeds, flour, meat, dairy products, coffee, various
packaging products, and full range of refined petroleum products, most of which are market leaders in their
respective markets.
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RELATED PARTY TRANSACTIONS

SMC Global Power engages from time to time in a variety of transactions with related parties. The Company has
conducted transactions with related parties on an arms-length basis. See Note 18, Note 18 and Note 10 of the
audited consolidated financial statements of SMC Global Power as of and for the years ended December 31,
2014 and December 31, 2013 and the unaudited condensed consolidated interim financial statements for the six
months ended June 30, 2015, respectively, for more detailed information.
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TAXATION
The statements herein regarding taxation are based on the laws in force as of the date of this offering circular
and are subject to any changes in law occurring after such date, which changes could be made on a retroactive
basis. The following summary does not purport to be a comprehensive description of all of the tax considerations
that may be relevant to a decision to purchase, own or dispose of the Securities and does not purport to deal with
the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or
commodities) may be subject to special rules. Prospective purchasers of Securities are advised to consult their
own tax advisers concerning the overall tax consequences of their ownership of Securities.
PHILIPPINE TAXATION
As used in this section, the term resident alien means an individual whose residence is within the Philippines
and who is not a citizen of the Philippines and a non-resident alien means an individual whose residence is not
within the Philippines and who is not a citizen of the Philippines. A non-resident alien who is actually within the
Philippines for an aggregate period of more than 180 days during any calendar year is considered a non-resident
alien doing business in the Philippines; however, a non-resident alien who is actually within the Philippines for
an aggregate period of 180 days or less during any calendar year is considered a non-resident alien not engaged
in trade or business within the Philippines. A resident foreign corporation is a foreign corporation engaged in
business within the Philippines and a non-resident foreign corporation is a foreign corporation not engaged in
business within the Philippines.
The characterization of the Securities and Distributions for tax purposes is not settled under Philippine tax laws
and regulations. Subject to definitive law or regulation or a specific ruling issued by Philippine tax authority in
respect of the Securities, the Distributions may be treated as dividends or interest for tax purposes. Interest on
debt instruments or interest-bearing obligations of residents (corporate or otherwise), and the amount received as
dividend from domestic corporations, are generally considered as income derived from a source within the
Philippines. Since the Company is a Philippine resident or a domestic corporation, Distributions received by
Securityholders will be treated as income derived from a source within the Philippines and will generally be
subject to Philippine withholding tax.
Documentary Stamp Tax
Under the National Internal Revenue Code of 1997, as amended (the Tax Code), certain documents,
instruments, papers, acceptances, assignments, sales and transfers of obligations, rights or property may be
subject to documentary stamp tax. Documentary stamp tax will be levied, collected and paid for by the person
making, signing, issuing, accepting or transferring the document wherever the document is made, signed, issued,
accepted or transferred when the relevant obligation or right arises from a Philippine source or the relevant
property is situated in the Philippines.
The Tax Code imposes documentary stamp tax on all original issuances of shares of stock or debt instruments at
a uniform rate of P1.00 for each P200, or fractional part thereof, of the par value of such shares of stock or
actual consideration for the issuance of the shares (in the case of no par value shares) or the issue price of such
debt instruments, as the case may be. The original issuance of the Securities (whether treated as shares of stock
or debt instruments) will therefore be subject to documentary stamp tax at this rate based on the issue price of the
Securities. The documentary stamp tax due on the original issuance of the Securities will be for the account of
the Company.
Transfers of shares of stock by assignment in blank, delivery, or by any paper, agreement or memorandum or
other evidence of transfer or sale (including to secure the future payment of money or for the future transfer of
stock) is subject to documentary stamp tax at the rate of P0.75 for each P200, or fractional part thereof, of the
par value of such shares of stock, or at an amount equivalent to 25% of the documentary stamp tax paid upon the
issuance of the shares in the case of no par value shares. Accordingly, subsequent transfers or dispositions of
Securities, if treated as shares of stock for tax purposes, will be subject to documentary stamp tax at these rates.
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No documentary stamp tax is generally payable on the subsequent transfer or disposition of debt instruments,
provided that the transfer or disposition does not constitute a renewal or entail a change in the maturity date or
remaining period of coverage of the relevant instrument. Accordingly, if the Securities are treated as debt
instruments, no documentary stamp tax will generally be imposed on their subsequent transfer or disposition,
provided that any such transfer or disposition meets the foregoing requirements.
Distributions on the Securities
Distributions that are characterized as dividends for Philippine tax purposes will be subject to final withholding
tax at the rate of (i) 10% if the Securityholder is a Philippine citizen or resident alien or (ii) 20% if the
Securityholder is a non-resident alien engaged in trade or business within the Philippines. A non-resident alien
not engaged in trade or business within the Philippines is subject to final withholding tax at the rate of 25%
regardless of whether the Distributions are characterized as dividends or interest or other fixed or determinable
periodic or casual gains or profits. A non-resident foreign corporation is generally taxable on all gross income
received from all sources within the Philippines at the rate of 30%; however, if Distributions received by
non-resident foreign corporations are regarded as taking the form of dividends for Philippine tax purposes, they
may be subject to final withholding tax at the rate of 15%, provided that the country in which the non-resident
foreign corporation is domiciled imposes no taxes on foreign-sourced dividends or allows a credit against the tax
due from the non-resident foreign corporation, in which case taxes are deemed to have been paid in the
Philippines equivalent to 15%, representing the difference between the regular income tax rate of 30% and the
15% tax rate on dividends. Distributions received by domestic corporations and resident foreign corporations that
are regarded as taking the form of dividends for Philippine tax purposes are not subject to Philippine tax.
On the other hand, the tax treatment of interest generally depends on the type of instrument from which the
interest arises and whether the class of taxpayer receiving the interest is a resident or a non-resident for
Philippine tax purposes. Interest on debt instruments arising from borrowing from the public (which for this
purpose means more than nineteen lenders), long-term deposits or investment certificates, currency bank
deposits, trust funds and similar instruments is generally subject to a 20% final withholding tax if received by
Philippine citizens, resident aliens, non-resident aliens engaged in trade or business within the Philippines,
domestic corporations and resident foreign corporations (all of which may generally be considered as residents
in respect of taxation of Philippine-sourced income). Interest on debt instruments not covered by the foregoing
instruments received by the same categories of residents will form part of their taxable income and will be
subject to ordinary income tax rates (at graduated rates from 5% 32% for individuals and 30% for domestic and
resident foreign corporations), subject to the withholding by the issuer of an amount equivalent to 20% of such
interest, which shall be creditable against the income tax liability of the resident for the relevant taxable year.
Interest on debt instruments received by non-residents will generally be subject to final withholding tax at the
rate of (i) 25%, if the holder is a non-resident alien not engaged in trade or business within the Philippines, or
(ii) 20%, if the holder is a non-resident foreign corporation on the assumption that the debt instrument is a
foreign loan granted by such non-resident foreign corporation. Foreign loans are defined as loan contracts,
including all types of debt instrument, whether in kind or in cash, which are payable in a currency other than the
Philippine Peso, entered into by a Philippine resident, corporate or otherwise, with a non-resident. Distributions
will be taxed in the manner and at the rate described above if they are characterized as interest. The tax withheld
constitutes a final settlement of Philippine tax liability in respect of such interest or dividend income earned by
the non-resident individual not engaged in trade or business within the Philippines or by the non-resident foreign
corporation. For the purpose of implementing these rules, the Company will determine the holder of the
Securities based on the records of the Registrar.
The Company, as required by the Tax Code, will withhold and make payment of the applicable withholding tax
described above. However, the Company shall pay Additional Amounts as may be necessary and subject to
certain exceptions, so that the net amounts received by Securityholders equal the amounts which would otherwise
have been receivable by them had no such deduction or withholding been required. See Terms and Conditions
of the Securities Taxation and Gross-up.
The above mentioned tax rates are without prejudice to applicable preferential tax rates under tax treaties in force
between the Philippines and the country of domicile of the non-resident holder. Most tax treaties to which the
Philippines is a party generally provide for a reduced tax rate of 15% in cases where the interest or dividend
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arises in the Philippines and is paid to a resident of the other contracting state. In addition, some treaties provide
that the withholding tax rate may be reduced to 10% in cases where the interest arises in respect of a public issue
of bonded indebtedness or in the case of a dividend, where the recipient of the dividend beneficially owns at least
10% or 25% of the issuer, depending on which treaty applies. However, most tax treaties also provide that
reduced withholding tax rates shall not apply if the recipient of the interest or dividend, who is a resident of the
other contracting state, carries on business in the Philippines through a permanent establishment and the holding
of the relevant interest-bearing or dividend-earning interest is effectively connected with such permanent
establishment.
The Philippine tax authorities have prescribed certain procedures for availment of tax treaty relief. Subject to the
filing of an application for tax treaty relief and its approval by Philippine tax authorities, the Company will
withhold at a reduced rate on any interest or dividend paid to a non-resident holder, provided that such holder
furnishes the Company with proof of the duly completed application filed with Philippine tax authorities for the
aforesaid tax treaty relief. If the regular rate of tax imposed pursuant to the Tax Code on interest or dividends is
withheld by the Company, instead of the reduced rate applicable under a treaty, the non-resident holder may file
a claim for a refund from the Philippine taxing authorities on the basis of an applicable tax treaty. However,
because the refund process in the Philippines could be cumbersome, requiring the filing of an administrative
claim and the possible filing of a judicial appeal, it may be impractical to pursue such a refund.
Sale or Other Disposition of the Securities
A holder of a Security will recognize a gain or loss upon the sale or other disposition (including a redemption at
maturity or otherwise) of the Securities in an amount equal to the difference between the amount realized from
such disposition and such holders basis in the Securities.
Under the Tax Code, gains from the sale, barter, exchange or other disposition of shares of stock held in domestic
corporations that are not traded through the local stock exchange are generally considered as capital gains and
subject to tax at the rate of 5% (for gains not over P100,000 during the taxable year) and 10% (for gains in
excess of P100,000 during the taxable year). This rate applies to capital gains realized by Philippine citizens,
resident aliens, non-resident aliens (whether or not engaged in trade or business within the Philippines), domestic
corporations, resident foreign corporations and non-resident foreign corporations. Accordingly, if the Securities
are regarded as shares of stock for Philippine tax purposes, capital gains tax will be payable on the sale or
disposition of the Securities. Gains from the sale of shares of stock in a domestic corporation are treated as
derived entirely from a source within the Philippines, regardless of where the shares are sold.
Under Section 32(B)(7)(g) of the Tax Code, gains realized from the sale, exchange, or retirement of bonds,
debentures, and other certificates of indebtedness with an original maturity date of more than five years as
measured from the date of the issuance of such bonds, debentures or other certificate of indebtedness (LongTerm Bonds) are exempt from income tax. Accordingly, if the Securities are regarded as Long-Term Bonds for
Philippine tax purposes, gains realized from the sale or transfer of the Securities will be exempt from Philippine
income tax.
If the Securities are not regarded as Long-Term Bonds for Philippine tax purposes, the tax treatment of gains
from the sale or transfer of the Securities will generally depend on whether the relevant Securityholder is a
resident or a non-resident for Philippine tax purposes. Any gain realized by residents from the sale or transfer of
debt instruments forms part of their taxable income and is subject to ordinary income tax rates (at graduated rates
from 5%-32% for individuals and 30% for domestic and resident foreign corporations). On the other hand, gains
realized by non-residents from the sale or transfer of debt instruments are subject to final withholding tax at the
rate of (i) 25%, if the holder is a non-resident alien not engaged in trade or business within the Philippines, or
(ii) 30%, if the holder is a non-resident foreign corporation.
Value-Added Tax
The transfer of the Securities in the Philippines by dealers in securities will be subject to value-added tax at the
rate of 12% on the gross income they derive from the sale or exchange of the Securities.
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Estate and Donors Tax

Securities issued by a corporation organized or constituted in the Philippines in accordance with Philippine laws
are deemed to have a Philippine situs and their transfer by way of succession or donation is subject to Philippine
estate and gift taxes.
The transfer by a deceased person, whether a Philippine resident or a non-Philippine resident, to his heirs of the
Securities shall be subject to an estate tax which is levied on the net estate of the deceased at progressive rates
ranging from 5% to 20%, if the net estate is over P200,000. A Securityholder shall be subject to donors tax
based on the net gift on the transfer of the Securities by gift at either (i) 30%, where the donee or beneficiary is a
stranger, or (ii) at progressive rates ranging from 2% to 15% if the net gifts made during the calendar year exceed
P100,000 and where the donee or beneficiary is not a stranger. For this purpose, a stranger is a person who is
not a: (a) brother, sister (whether by whole or half-blood), spouse, ancestor or lineal descendant; or (b) relative
by consanguinity in the collateral line within the fourth degree of relationship.
The estate or donors taxes payable in the Philippines may be credited with the amount of any estate or donors
taxes imposed by the authority of a foreign country, subject to limitations on the amount to be credited, and the
tax status of the donor. The estate tax and the donors tax, in respect of the Securities, shall not be collected (a) if
the deceased, at the time of death, or the donor, at the time of the donation, was a citizen and resident of a foreign
country which, at the time of his death or donation, did not impose a transfer tax of any character in respect of
intangible personal property of citizens of the Philippines not residing in that foreign country; or (b) if the laws of
the foreign country of which the deceased or donor was a citizen and resident, at the time of his death or
donation, allows a similar exemption from transfer or death taxes of every character or description in respect of
intangible personal property owned by citizens of the Philippines not residing in the foreign country.
In case the Securities are transferred for less than an adequate and full consideration in money or moneys worth,
the amount by which the fair market value of the Securities exceeded the value of the consideration may be
deemed a gift and may be subject to donors taxes.
EU SAVINGS DIRECTIVE
Under Council Directive 2003/48/EC on the taxation of savings income (the Directive), each Member State of
the European Union is required to provide to the tax authorities of another Member State details of payments of
interest or other similar income paid by a person within its jurisdiction to, or secured by such a person for, an
individual beneficial owner resident in, or certain limited types of entity established in, that other Member State.
However, for a transitional period, Austria and Luxembourg will (unless during such period they elect otherwise)
instead operate a withholding system in relation to such payments. Under such a withholding system, the
beneficial owner of the interest payment must be allowed to elect that certain provision of information
procedures should be applied instead of withholding. The rate of withholding is 35%. The transitional period is to
terminate at the end of the first full fiscal year following agreement by certain non-EU countries to exchange of
information procedures relating to interest and other similar income.
A number of non-EU countries and certain dependent or associated territories of certain Member States have
adopted similar measures (either provision of information or transitional withholding) in relation to payments
made by a person within their respective jurisdictions to, or secured by such a person for, an individual beneficial
owner resident in, or certain limited types of entity established in, a Member State. In addition, the Member
States have entered into provision of information or transitional withholding arrangements with certain of those
countries and territories in relation to payments made by a person in a Member State to, or secured by such a
person for, an individual beneficial owner resident in, or certain limited types of entity established in, one of
those countries or territories.
A proposal for amendments to the Directive has been published, including a number of suggested changes which,
if implemented, would broaden the scope of the rules described above. Investors who are in any doubt as to their
position should consult their professional advisers.
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If a payment under a Security were to be made by a person in a Member State or another country or territory
which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that
payment pursuant to the Directive or any law implementing or complying with, or introduced in order to conform
to the Directive, neither the Company nor any Paying Agent nor any other person would be obliged to pay
additional amounts under the terms of such Security as a result of the imposition of such withholding tax. The
Company is, however, required to maintain, if the Securities are issued in definitive form, a Paying Agent in a
Member State that will not be obliged to withhold or deduct tax pursuant to the Directive or any such law.
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CLEARANCE AND SETTLEMENT OF THE SECURITIES

The information set out below is subject to any change in or reinterpretation of the rules, regulations and
procedures of Euroclear and Clearstream, Luxembourg (together, the Clearing Systems) currently in effect.
The information in this section concerning the Clearing Systems has been obtained from sources that the
Company believes to be reliable, but neither the Company nor any Manager takes any responsibility for the
accuracy of this section. Investors wishing to use the facilities of any of the Clearing Systems are advised to
confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System.
Neither the Company nor any other party to the Agency Agreement will have any responsibility or liability for
any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the
Securities held through the facilities of any Clearing System or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests. Custodial and depositary links have been established
with Euroclear and Clearstream, Luxembourg to facilitate the initial issue of the Securities and transfers of the
Securities associated with secondary market trading.
THE CLEARING SYSTEMS
Euroclear and Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg each hold securities for participating organizations and facilitate the
clearance and settlement of securities transactions between their respective participants through electronic bookentry of changes in the accounts of their participants. Euroclear and Clearstream, Luxembourg provide their
respective participants with, among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream,
Luxembourg participants are financial institutions throughout the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access
to Euroclear or Clearstream, Luxembourg is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a Euroclear or Clearstream, Luxembourg
participant, either directly or indirectly.
Distributions of principal with respect to book-entry interests in the Securities held through Euroclear or
Clearstream, Luxembourg will be credited, to the extent received by the Principal Paying Agent, to the cash
accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant rules and
procedures of the institution.
Registration and Form
Book-entry interests in the Securities held through Euroclear and Clearstream, Luxembourg will be evidenced by
the Global Certificate, registered in the name of nominee of the common depositary of Euroclear and
Clearstream, Luxembourg. The Global Certificate will be held by a common depositary for Euroclear and
Clearstream, Luxembourg. Beneficial ownership in the Securities will be held through financial institutions as
direct and indirect participants in Euroclear and Clearstream, Luxembourg.
The aggregate holdings of book-entry interests in the Securities in Euroclear and Clearstream, Luxembourg will
be reflected in the book-entry accounts of each such institution. Euroclear and Clearstream, Luxembourg, as the
case may be, and every other intermediate holder in the chain to the beneficial owner of book-entry interests in
the Securities, will be responsible for establishing and maintaining accounts for their participants and customers
having interests in the book-entry interests in the Securities. The Registrar will be responsible for maintaining a
record of the aggregate holdings of Securities registered in the name of a common nominee for Euroclear and
Clearstream, Luxembourg and/or, if individual Global Certificates are issued in the limited circumstances
described under The Global Certificate Registration of Title, holders of Securities represented by those
individual Global Certificates. The Principal Paying Agent will be responsible for ensuring that payments
received by it from the Company for holders of interests in the Securities holding through Euroclear and
Clearstream, Luxembourg are credited to Euroclear or Clearstream, Luxembourg, as the case may be.
133
The Company will not impose any fees in respect to the Securities; however, holders of book-entry interests in
the Securities may incur fees normally payable in respect of the maintenance and operation of accounts in
Euroclear and Clearstream, Luxembourg.
CLEARANCE AND SETTLEMENT PROCEDURES
Initial Settlement
Upon their original issue, the Securities will be in global form represented by the Global Certificate. Interests in
the Securities will be in uncertificated book-entry form. Purchasers electing to hold book-entry interests in the
Securities through Euroclear and Clearstream, Luxembourg accounts will follow the settlement procedures
applicable to conventional eurobonds. Book-entry interests in the Securities will be credited to Euroclear and
Clearstream, Luxembourg participants securities clearance accounts on the business day following the Closing
Date against payment (for value the Closing Date).
Secondary Market Trading
Secondary market sales of book-entry interests in the Securities held through Euroclear or Clearstream,
Luxembourg to purchasers of book-entry interests in the Securities through Euroclear or Clearstream,
Luxembourg will be conducted in accordance with the normal rules and operating procedures of Euroclear and
Clearstream, Luxembourg and will be settled using the procedures applicable to conventional participants.
General
Although the foregoing sets out the procedures of Euroclear and Clearstream, Luxembourg in order to facilitate
the transfers of interests in the Securities among participants of Euroclear and Clearstream, Luxembourg, none of
Euroclear and Clearstream, Luxembourg is under any obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time.
Neither the Company nor any of its agents will have any responsibility for the performance by Euroclear or
Clearstream, Luxembourg or their respective participants of their respective obligations under the rules and
procedures governing their operations.
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SUBSCRIPTION AND SALE

GENERAL
The Joint Lead Managers have agreed, pursuant to a Subscription Agreement dated August 19, 2015 (the
Subscription Agreement) between SMC Global Power and the Joint Lead Managers and subject to the
satisfaction of certain conditions, to procure subscriptions and payment for the aggregate principal amount of the
Securities. In addition, SMC Global Power has agreed to reimburse the Joint Lead Managers for certain of their
expenses in connection with the issue of the Securities.
The Subscription Agreement provides that SMC Global Power will indemnify the Joint Lead Managers against
certain liabilities. The Subscription Agreement entitles the Joint Lead Managers to terminate it in certain
circumstances prior to payment being made to SMC Global Power.
The Joint Lead Managers and their affiliates have performed and may perform in the future various financial
advisory, investment banking and commercial banking services for SMC Global Power and/or its affiliates from
time to time for which they have received customary fees and expenses and may, from time to time, engage in
transactions with and perform services for SMC Global Power, and/or its affiliates in the ordinary course of their
business.
The Joint Lead Managers or certain of their affiliates may purchase the Securities and be allocated Securities for
asset management and/or proprietary purposes but not with a view to distribution. The Issuer or the Joint Lead
Managers may pay commissions to certain third parties (including, without limitation, commission or rebate to
private banks).
The Joint Lead Managers or certain of their affiliates may purchase the Securities for its or their own account and
enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default swaps
relating to the Securities and/or other securities of the Company or its subsidiaries or associates at the same time
as the offer and sale of the Securities or in secondary market transactions. Such transactions would be carried out
as bilateral trades with selected counterparties and separately from any existing sale or resale of the Securities to
which this offering circular relates (notwithstanding that such selected counterparties may also be purchasers of
the Securities).
The Joint Lead Managers have entered into certain arrangements with the Co-Manager in connection with the
sale of the Securities in the Philippines, for which the Co-Manager will receive a customary fee.
The distribution of this offering circular or any offering material and the offering, sale or delivery of the
Securities is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this
offering circular or any offering material are advised to consult with their own legal advisers as to what
restrictions may be applicable to them and to observe such restrictions. This offering circular may not be used for
the purpose of an offer or invitation in any circumstances in which such offer or invitation is not authorized.
OFFERING AND SELLING RESTRICTIONS
None of SMC Global Power or the Joint Lead Managers makes any representation that any action will be taken
in any jurisdiction by the Joint Lead Managers or SMC Global Power that would permit a public offering of the
Securities, or possession or distribution of this offering circular (in preliminary, proof or final form) or any other
offering or publicity material relating to the Securities, in any country or jurisdiction where action for that
purpose is required. Each of the Joint Lead Managers will comply with all applicable laws and regulations in
each jurisdiction in which it acquires, offers, sells or delivers Securities or has in its possession or distributes this
offering circular (in preliminary, proof or final form) or any such other material, in all cases at its own expense.
The Joint Lead Managers will also ensure that no obligations are imposed on SMC Global Power in any such
jurisdiction as a result of any of the foregoing actions. SMC Global Power will have no responsibility for, and the
Joint Lead Managers will not obtain any consent, approval or permission required by it for, the acquisition, offer,
sale or delivery by it of Securities under the laws and regulations in force in any jurisdiction to which it is subject
135
or in or from which it makes any acquisition, offer, sale or delivery. The Joint Lead Managers are not authorized
to make any representation or use any information in connection with the issue, subscription and sale of the
Securities other than as contained in, or which is consistent with, the offering circular or any amendment or
supplement to it.
United States of America
The Securities are being offered and sold only outside of the United States in offshore transactions in reliance on
Regulation S. The Securities have not been and will not be registered under the Securities Act and may not be
offered or sold within the United States except in accordance with Regulation S or pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act. In addition, until
40 days after the commencement of the offering of the Securities, an offer or sale of Securities within the United
States by a dealer (whether or not participating in the offering) may violate the registration requirements of the
Securities Act.
United Kingdom
Each of the Joint Lead Managers has represented, warranted and agreed that:
(1) it has only communicated or caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity (within the meaning of section
21 of the Financial Services and Markets Act 2000, as amended including by the Financial Services Act
2012 (the FSA) (the FSMA)) received by it in connection with the issue or sale of any Securities in
circumstances in which section 21(1) of the FSMA does not apply to the Company; and
(2) it has complied and will comply with all applicable provisions of the FSMA and Section 89 and 90 of the
FSA with respect to anything done by it in relation to the Securities in, from or otherwise involving the
United Kingdom.
Singapore
Each of the Joint Lead Managers has acknowledged that this offering circular has not been registered as a
prospectus with the Monetary Authority of Singapore, and the Securities will be offered pursuant to exemptions
under the Securities and Futures Act, Chapter 289 of Singapore (the Securities and Futures Act). Each Joint
Lead Manager has represented and agreed that it has not offered or sold any Securities or caused the Securities to
be made the subject of an invitation for subscription or purchase and will not offer or sell any Securities or cause
the Securities to be made the subject of an invitation for subscription or purchase, and has not circulated or
distributed, nor will it circulate or distribute, the offering circular or any document or material in connection with
the offer or sale, or invitation for subscription or purchase, of any Securities, whether directly or indirectly, to
any person in Singapore other than (a) to an institutional investor pursuant to Section 274 of the Securities and
Futures Act, (b) to a relevant person under Section 275(1) of the Securities and Futures Act, or to any person
pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions specified in
Section 275 of the Securities and Futures Act, or (c) otherwise pursuant to, and in accordance with the conditions
of, any other applicable provision of the Securities and Futures Act.
Each of the following persons specified in Section 275 of the Securities and Futures Act which has subscribed or
purchased Securities, namely a person who is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the Securities and Futures
Act)) the sole business of which is to hold investments and the entire share capital of which is owned by one
or more individuals, each of whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each
beneficiary is an individual who is an accredited investor,
136
should note that securities (as defined in Section 239(1) of the Securities and Futures Act) of that corporation or
the beneficiaries rights and interest (however described) in that trust shall not be transferable for six months
after that corporation or that trust has acquired the Securities pursuant to an offer under Section 275 of the
Securities and Futures Act except:
(1) to an institutional investor or to a relevant person defined in Section 275(2) of the Securities and Futures
Act, or any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the
Securities and Futures Act;
(2) where no consideration is or will be given for the transfer;
(3) where the transfer is by operation of law;
(4) as specified in Section 276(7) of the Securities and Futures Act; or
(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures)
Regulations 2005 of Singapore.
Hong Kong
Each of the Joint Lead Managers has represented and agreed that:
(1) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Securities
other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of
Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in
the document being an offering circular as defined in the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the
meaning of that Ordinance; and
(2) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession
for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document
relating to the Securities, which is directed at, or the contents of which are likely to be accessed or read by,
the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than
with respect to Securities which are or are intended to be disposed of only to persons outside Hong Kong or
only to professional investors as defined in the Securities and Futures Ordinance and any rules made
under that Ordinance.
Japan
The Securities have not been and will not be registered under the Financial Instruments and Exchange Act of
Japan (Act No. 25 of 1948, as amended; the FIEA) and each Joint Lead Manager has represented and agreed
that it will not offer or sell any Securities, directly or indirectly, in Japan or to, or for the benefit of, any resident
of Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Act (Act
No. 228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for
the benefit of, a resident of Japan, except pursuant to an exemption from the registration requirements of, and
otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of
Japan.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a Relevant Member State), each Joint Lead Manager has represented and agreed that with
effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member
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State (the Relevant Implementation Date) it has not made and will not make an offer of Securities which are
the subject of the offering contemplated by this offering circular to the public in that Relevant Member State
other than:
(a) at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b) at any time to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of
the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in
the Prospectus Directive), subject to obtaining the prior consent of the other Joint Lead Managers; or
(c) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Securities referred to in (a) to (c) (inclusive) above shall require the Issuer or any
Joint Lead Manager to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a
prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision:
(1) the expression an offer of Securities to the public in relation to any Securities in any Relevant Member
State means the communication in any form and by any means of sufficient information on the terms of the
offer and the Securities to be offered so as to enable an investor to decide to purchase or subscribe the
Securities, as the same may be varied in that Member State by any measure implementing the Prospectus
Directive in that Member State;
(2) the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including
the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes
any relevant implementing measure in the Relevant Member State; and
(3) the expression 2010 PD Amending Directive means Directive 2010/73/EU.
Philippines
Under Republic Act No. 8799, known as the Securities Regulation Code (the Code), and its implementing
rules, securities, such as the Securities, are not permitted to be sold or offered for sale or distribution within the
Philippines unless such securities are approved for registration by the SEC or are otherwise exempt securities or
sold pursuant to an exempt transaction.
The Securities are being offered in the Philippines to not more than nineteen (19) non-qualified buyers and to any
number of qualified buyers as defined in the Code. The offer and sale of the Securities qualify as an exempt
transaction pursuant to sections 10.1 (k) and 10.1(l) of the Code. A confirmation of exemption from the SEC that
the offer and sale of the Securities in the Philippines qualify as an exempt transaction under the Code is not
required to be, and has not been, obtained. To the extent required under applicable regulations that are in effect,
the Issuer will file a notice of exemption from registration with the SEC.
THE SECURITIES BEING OFFERED OR SOLD HAVE NOT BEEN REGISTERED WITH THE SEC
UNDER THE CODE. ANY FUTURE OFFER OR SALE THEREOF IS SUBJECT TO REGISTRATION
REQUIREMENTS UNDER THE CODE, UNLESS SUCH OFFER OR SALE QUALIFIES AS AN EXEMPT
TRANSACTION.
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LEGAL MATTERS
Certain legal matters as to Philippine law relating to the Securities and the offer through the Offering Circular
will be passed upon by Picazo Buyco Tan Fider & Santos, legal counsel to SMC Global Power, and SyCip
Salazar Hernandez & Gatmaitan, legal counsel to the Joint Lead Managers. Certain legal matters as to United
States federal law and English law will be passed upon by Latham & Watkins, legal counsel to SMC Global
Power, and Milbank, Tweed, Hadley & McCloy LLP, legal counsel to the Joint Lead Managers.
Each of the foregoing legal counsel has neither shareholdings in SMC Global Power nor any right, whether
legally enforceable or not, to nominate persons or to subscribe for securities in SMC Global Power. Each of the
legal counsel will not receive any direct or indirect interest in SMC Global Power or in any securities thereof
(including options, warrants or rights thereto) pursuant to or in connection with the Offer.
INDEPENDENT AUDITORS
The fiscal year of SMC Global Power begins on January 1 and ends on December 31 of each year.
KPMG, has audited the consolidated financial statements of SMC Global Power as of and for the years ended
December 31, 2011, December 31, 2012 and December 31, 2013, respectively, in accordance with the Philippine
Standards on Auditing. KPMG, has reviewed the consolidated financial statements of SMC Global Power as of
and for the six months ended June 30, 2015, in accordance with the Philippine Standard on Review Engagements
2410, Review of Interim Financial Information performed by the Independent Auditor of the Entity.
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GLOSSARY OF TERMS
In this Offering Circular, unless the context otherwise requires, the following terms shall have the meanings set
forth below.
ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . Automatic Cost Adjustment Mechanism.
Actual Energy Generated . . . . . . . . . . . . Actual output of the power plant measured in GWh, MWh or KWh
attributable to the contracted capacity of the Sual Power Plant, Ilijan
Power Plant or San Roque Power Plant, as applicable.
AFP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Armed Forces of Philippines.
AHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . Angat Hydropower Corporation.
AHEPP . . . . . . . . . . . . . . . . . . . . . . . . . . Angat Hydroelectric Power Plant.
ALECO . . . . . . . . . . . . . . . . . . . . . . . . . . Albay Electric Cooperative, Inc.
APEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . Albay Power and Energy Corp.
ASEAN . . . . . . . . . . . . . . . . . . . . . . . . . . The Association of Southeast Asian Nations, including Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,
Singapore, Thailand and Vietnam.
Average Net Dependable Capacity . . . . . Average for any given period of the Net Dependable Capacity within
that period, expressed in MW.
Availability Factor . . . . . . . . . . . . . . . . . . Ratio, in percent, equal to (1)(a) the number of hours in a period
(e.g., a month or a year) less (b) the average number of hours of
planned and unplanned outages during that period, divided by (2) the
number of hours in that period.
Bayan . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bayan Resources TBK.
BER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Energy Rate.
BERA . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Energy Rate Adjustment.
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . Board of directors of SMC Global Power.
Bonanza . . . . . . . . . . . . . . . . . . . . . . . . . . Bonanza Energy Resources, Inc.
BOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Build operate transfer.
BSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bangko Sentral ng Pilipinas, the Central Bank of the Philippines.
BTU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . British thermal unit, a unit of heat energy.
CAGR . . . . . . . . . . . . . . . . . . . . . . . . . . . Compound annual growth rate.
140
Captive Market . . . . . . . . . . . . . . . . . . . . A market of end-users who do not have a choice of their supplier of
electricity.
CFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Circulating fluidized bed.
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Peoples Republic of China.
Clean Air Act . . . . . . . . . . . . . . . . . . . . . The Philippine Clean Air Act of 1999.
Clean Water Act . . . . . . . . . . . . . . . . . . . The Philippine Clean Water Act of 2004.
Clearing System Business Day . . . . . . . . A day on which Euroclear and Clearstream, Luxembourg are both
open for business.
Clearing Systems . . . . . . . . . . . . . . . . . . . Euroclear and Clearstream, Luxembourg.
Clearstream, Luxembourg . . . . . . . . . . . . Clearstream Banking, societe anonyme.
COC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coal operating contract.
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . Republic Act No. 8799 of the Philippines, known as the
Securities Regulation Code.
Company . . . . . . . . . . . . . . . . . . . . . . . . . SMC Global Power Holdings Corp. including, as the context requires,
its subsidiaries.
Contestable Market . . . . . . . . . . . . . . . . . A market of end-users who have a choice on their supplier of
electricity.
DAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred Accounting Adjustment.
Daguma . . . . . . . . . . . . . . . . . . . . . . . . . . Daguma Agro Minerals, Inc.
Davao Greenfield Power Plant . . . . . . . . The 2 x 150 MW Davao coal-fired power plant.
DENR . . . . . . . . . . . . . . . . . . . . . . . . . . . Department of Environment and Natural Resources of the Philippines.
Distribution Code . . . . . . . . . . . . . . . . . . The Philippine Distribution Code.
DOC . . . . . . . . . . . . . . . . . . . . . . . . . . . . ASEAN-China Declaration on the Conduct of Parties in the South
China Sea.
DOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Department of Energy of the Philippines.
ECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Energy Conversion Agreement.
ECC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Compliance Certificate.
EDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Energy Development Corporation.
141
EIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Impact Statement.

EISS Law . . . . . . . . . . . . . . . . . . . . . . . . . Philippine Environmental Impact Statement System
EPIRA . . . . . . . . . . . . . . . . . . . . . . . . . . . Philippine Republic Act No. 9136, otherwise known as the Electric
Power Industry Reform Act of 2001.
ERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Energy Regulatory Commission of the Philippines.
ER Claim . . . . . . . . . . . . . . . . . . . . . . . . . Equivalent relief claim.
ERC Order . . . . . . . . . . . . . . . . . . . . . . . . The order dated March 3, 2014 issued by the ERC which voided the
WESM prices for the November and December 2013 billing months
and imposed recalculated prices to be calculated by PEMC.
EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The European Union.
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . Euroclear Bank SA/NV.
FIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign Investment Act of 1991 of the Philippines.
FIEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Financial Instruments and Exchange Act of Japan (Act No. 25 of
1948, as amended.
First Gen . . . . . . . . . . . . . . . . . . . . . . . . . First Gen Corporation.
FRSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Financial Reporting Standards Council of the Philippines.
FSMA . . . . . . . . . . . . . . . . . . . . . . . . . . . The Financial Services and Markets Act 2000 of the United Kingdom.
GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross domestic product.
Government . . . . . . . . . . . . . . . . . . . . . . . The Government of the Philippines.
Grid Code . . . . . . . . . . . . . . . . . . . . . . . . Philippine Grid Code.
GW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gigawatt, a unit of electrical power equivalent to 1,000 MW.
GWh . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gigawatt hours, a unit of electrical energy equivalent to 1,000 MWh.
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . The Hong Kong Special Administrative Region of the Peoples
Republic of China.
IASB . . . . . . . . . . . . . . . . . . . . . . . . . . . . The International Accounting Standards Board.
Ilijan ECA . . . . . . . . . . . . . . . . . . . . . . . . The ECA under which NPC is required to deliver and supply to
KEILCO the fuel necessary to operate the Ilijan Power Plant.
142
Ilijan IPPA Agreement . . . . . . . . . . . . . . The IPPA agreement dated May 11, 2010 made between PSALM and
SMC Global Power with the conformity of the NPC relative to the
IPP contract of NPC for the Ilijan Power Plant.
Ilijan Power Plant . . . . . . . . . . . . . . . . . . Natural gas fired combined cycle power plant with installed capacity
of 2 x 600 MW located in Ilijan, Batangas.
Installed Capacity . . . . . . . . . . . . . . . . . . Gross maximum dependable capacity of a power plant, expressed in
MW, i.e., the maximum amount of power that can be generated by the
power plant.
IPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Power Producer.
IPPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Power Producer Administrator.
IPPA Agreement . . . . . . . . . . . . . . . . . . . Independent Power Producer Administration Agreement.
IPPA power plants . . . . . . . . . . . . . . . . . . The Sual Power Plant, the San Roque Power Plant and the Ilijan
Power Plant.
IRR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Implementing Rules and Regulations of EPIRA promulgated on
February 27, 2002.
ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Organization for Standardization.
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . SMC Global Power Holdings Corp. including, as the context requires,
its subsidiaries.
Joint Bookrunners . . . . . . . . . . . . . . . . . . Australia and New Zealand Banking Group Limited, DBS Bank Ltd.,
Joint Lead Managers . . . . . . . . . . . . . . . . Australia and New Zealand Banking Group Limited, DBS Bank Ltd.,
K-Water . . . . . . . . . . . . . . . . . . . . . . . . . . Korea Water Resource Corporation.
Kcal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kilo-Calorie, a unit of heat energy.
KEILCO . . . . . . . . . . . . . . . . . . . . . . . . . KEPCO Ilijan Corporation, owner of the Ilijan Power Plant, which is
a joint venture between Korea Electric Power Corporation, Mitsubishi
Corporation and TeaM Energy.
KEPCO . . . . . . . . . . . . . . . . . . . . . . . . . . Korea Electric Power Corporation
KJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kilo-Joule, a unit of heat energy.
143
KPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kaltim Prima Coal.

KV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kilo-Volts, a unit of voltage equivalent to 1,000 volts.
KW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kilowatt, a unit of electrical power equivalent to 1,000 watt.
KWh . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kilowatt hours, a unit of electrical energy equivalent to 1,000 watt
hour.
KPMG . . . . . . . . . . . . . . . . . . . . . . . . . . . R.G. Manabat & Co., formerly Manabat Sanagustin & Co., a member
firm of KPMG.
LHV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lower heating value of fuel.
Limay Combined Cycle Plant . . . . . . . . . The combined cycle power plant with installed capacity at 620 MW
located in Limay, Bataan which was owned by Panasia.
Limay Greenfield Power Plant . . . . . . . . The 2 x 150 MW Limay coal-fired power plant.
Limay Cogeneration Plant . . . . . . . . . . . . The 140 MW Limay cogeneration power plant.
Local Government Code . . . . . . . . . . . . . Philippine Republic Act No. 7160.
Luzon grid . . . . . . . . . . . . . . . . . . . . . . . . An interconnected network of transmission lines running through
Luzon for delivering electricity.
Member State . . . . . . . . . . . . . . . . . . . . . The member states of the European Union, including Austria,
Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden and the
United Kingdom.
Meralco . . . . . . . . . . . . . . . . . . . . . . . . . . Manila Electric Company.
MILF . . . . . . . . . . . . . . . . . . . . . . . . . . . . Moro Islamic Liberation Front.
Mindanao grid . . . . . . . . . . . . . . . . . . . . . An interconnected network of transmission lines running through
Mindanao for delivering electricity.
MNLF . . . . . . . . . . . . . . . . . . . . . . . . . . . Moro National Liberation Front.
Must Pay Volume . . . . . . . . . . . . . . . . . . The monthly generation payments SMC Global Power must pay for
electricity sold up to a given volume.
MW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Megawatt, a unit of electrical power equivalent to 1,000 kilowatt.
MWh . . . . . . . . . . . . . . . . . . . . . . . . . . . . Megawatt hours, a unit of electrical energy equivalent to
1,000 kilowatt hour.
MWSS . . . . . . . . . . . . . . . . . . . . . . . . . . . Metropolitan Waterworks and Sewerage System.
144
NEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . National Electrification Administration of the Philippines.

Negative List . . . . . . . . . . . . . . . . . . . . . . Ninth Regular Foreign Investment Negative List issued by the Office
of the President of the Philippines on October 29, 2012.
Net Capacity Factor . . . . . . . . . . . . . . . . . Ratio, in percent, equal to (1) actual electricity generated by a power
plant in a period (net of electricity utilized to drive power plant
service or auxiliaries), divided by (2)(a) number of hours in the period
multiplied by (b) the contracted capacity of such power plant.
Net Dependable Capacity . . . . . . . . . . . . Gross dependable capacity of a power plant (which may be less than
Installed Capacity at any given time if technical problems are present)
less the power plant capacity utilized to drive power plant station
service or auxiliaries, expressed in MW.
Net Heat Rate . . . . . . . . . . . . . . . . . . . . . Heat energy required by a power plant to produce one KWh of
electrical energy net of the parasitic or auxiliary loads of the power
plant, usually expressed in terms of BTU/KWh, Kcal/KWh or
KJ/KWh.
NGCP . . . . . . . . . . . . . . . . . . . . . . . . . . . National Grid Corporation of the Philippines.
NIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . National Irrigation Administration.
Non-NPC . . . . . . . . . . . . . . . . . . . . . . . . . IPP-owned and operated plants.
NPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . National Power Corporation of the Philippines.
NPC-IPP . . . . . . . . . . . . . . . . . . . . . . . . . NPC-owned and IPP-operated plants.
NSCB . . . . . . . . . . . . . . . . . . . . . . . . . . . Philippine National and Statistical Coordination Board.
NWRB . . . . . . . . . . . . . . . . . . . . . . . . . . . National Water Resources Board.
OEDC . . . . . . . . . . . . . . . . . . . . . . . . . . . Olongapo Electricity Distribution Company, Inc.
Open Access . . . . . . . . . . . . . . . . . . . . . . System of allowing qualified persons to use the transmission and/or
distribution systems and associated facilities of distribution utilities
subject to the payment of transmission and/or distribution wheeling
rates approved by the ERC.
Panasia . . . . . . . . . . . . . . . . . . . . . . . . . . . Panasia Energy Holdings Inc.
PBR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Based Regulation.
PDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Philippine Dealing System.
PDS Rate . . . . . . . . . . . . . . . . . . . . . . . . . Closing spot rate on any particular date for the purchase of
U.S. dollars for pesos which is quoted on the PDS.
PEMC . . . . . . . . . . . . . . . . . . . . . . . . . . . Philippine Electricity Market Corporation.
145
PFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . Philippine Financial Reporting Standards.

Philippine peso or Pesos or P . . . . . . . . . The lawful currency of the Philippines.
Philippines . . . . . . . . . . . . . . . . . . . . . . . . Republic of the Philippines.
PPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power purchase agreement.
Prospectus Directive . . . . . . . . . . . . . . . . Directive 2003/71/EC and amendments thereto, including the 2010
PD Amending Directive, to the extent implemented in the Relevant
Member State.
PSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power supply agreement.
PSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Philippine Stock Exchange.
PSALM . . . . . . . . . . . . . . . . . . . . . . . . . . Power Sector Assets and Liabilities Management Corporation.
PSALM ER Claim . . . . . . . . . . . . . . . . . . The ER Claim included in PSALMs claims against TeaM Energy
PSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power supply contract.
PVEI . . . . . . . . . . . . . . . . . . . . . . . . . . . . PowerOne Ventures Energy Inc.
RCOA . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Competition and Open Access.
Relevant Implementation Date . . . . . . . . The date on which the Prospectus Directive is implemented in the
Relevant Member State.
Reliability Factor . . . . . . . . . . . . . . . . . . . Ratio, in percent, equal to (1)(a) the number of hours in a period less
(b) the average unplanned outage hours in that period divided by
(2) the number of hours in that period.
RES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Electricity Supplier.
RSCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail supply contracts.
SAF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Action Force of the Philippine National Police.
Sanitation Code . . . . . . . . . . . . . . . . . . . . The Code on Sanitation of the Philippines.
San Roque IPPA Agreement . . . . . . . . . . The IPPA Agreement dated December 29, 2009 made between
PSALM and SMC Global Power with the conformity of NPC relative
to the IPP contract of NPC for the San Roque Power Plant.
San Roque Power Plant . . . . . . . . . . . . . . Hydroelectric multipurpose power plant with installed capacity of 345
MW located in San Manuel, Pangasinan.
San Roque PPA . . . . . . . . . . . . . . . . . . . . The PPA made between SPDC and NPC dated October 11, 1997 in
relation to the San Roque Power Plant.
146
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Philippine Securities and Exchange Commission.

Securities Act . . . . . . . . . . . . . . . . . . . . . The United States Securities Act of 1933, as amended.
Securities and Futures Act . . . . . . . . . . . . The Securities and Futures Act, Chapter 289 of Singapore.
SGX-ST . . . . . . . . . . . . . . . . . . . . . . . . . . Singapore Exchange Securities Trading Limited.
SMC Global Power . . . . . . . . . . . . . . . . . SMC Global Power Holdings Corp. including, as the context requires,
its subsidiaries.
SMEC . . . . . . . . . . . . . . . . . . . . . . . . . . . San Miguel Energy Corporation.
SMELC . . . . . . . . . . . . . . . . . . . . . . . . . . San Miguel Electric Corp.
SPDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic Power Devt. Corp.
SPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SMC PowerGen, Inc.
SPPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . South Premiere Power Corp.
SRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities Regulation Code of the Philippines (Republic Act
No. 8799) and its implementing rules, as amended.
SRPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . San Roque Power Corporation, operator of the San Roque power
plant.
SSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Social Security System.
Sual ECA . . . . . . . . . . . . . . . . . . . . . . . . . Energy Conversion Agreement dated September 2, 2009 made
between NPC and CEPA Pangasinan Electric Limited for the
Coal-Fired Thermal Power Station at Sual, Pangasinan, Philippines.
Sual IPPA Agreement . . . . . . . . . . . . . . . The IPPA Agreement dated September 2, 2009 made between
PSALM and SMEC with the conformity of NPC relative to the
IPP contract of NPC for the Coal-Fired Thermal Power Station.
Sual Power Plant . . . . . . . . . . . . . . . . . . . 2 x 647 MW Coal-fired power plant located in Sual, Pangasinan.
Subscription Agreement . . . . . . . . . . . . . The subscription agreement made between SMC Global Power and
each of the Joint Lead Managers dated August 19, 2015.
Sultan . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sultan Energy Phils. Corp.
Tax Code . . . . . . . . . . . . . . . . . . . . . . . . . The National Internal Revenue Code of 1997.
TeaM Energy . . . . . . . . . . . . . . . . . . . . . . TeaM Sual Corporation, owner of the Sual Power Plant, which is a
joint venture between Marubeni Corporation and Tokyo Electric
Power Corporation.
147
TransCo . . . . . . . . . . . . . . . . . . . . . . . . . . National Transmission Corporation.

TRO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Temporary restraining order.
Unplanned Outage . . . . . . . . . . . . . . . . . . A shutdown of the plant for reasons other than planned outage. For
purposes of calculating measures of power plant performance that are
reported by the IPPs such as availability and reliability factors,
shutdown due to (1) faults or failures in the transmission system,
(2) force majeure events, (3) disruptions in fuel supply and
(4) dispatch orders from the grid system operators are not included in
unplanned outage.
United States or U.S. . . . . . . . . . . . . . . . . The United States of America.
U.S.$ or U.S. dollar . . . . . . . . . . . . . . . . . Lawful currency of the United States of America.
Visayas grid . . . . . . . . . . . . . . . . . . . . . . . An interconnected network of transmission lines running through
Visayas for delivering electricity.
WESM . . . . . . . . . . . . . . . . . . . . . . . . . . . Wholesale electricity spot market.
148
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
Unaudited condensed consolidated interim financial statements as of June 30, 2015 and for the six
months ended June 30, 2015 and 2014
Report of independent auditors on review of interim financial information . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated interim statements of financial position as of June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated interim statements of comprehensive income for the six months ended June 30, 2015 and
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated interim statements of changes in equity for the six months ended June 30, 2015 and
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated interim statements of cash flows for the six months ended June 30, 2015 and 2014 . . . . . . .
Selected notes to the consolidated interim financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-8
F-9
F-11
Audited consolidated financial statements as of and for the years ended December 31, 2014 and
2013
Report of independent auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statements of financial position as at December 31, 2014 and 2013 . . . . . . . . . . . . . . . . . . .
Consolidated statements of income for the years ended December 31, 2014 and 2013 . . . . . . . . . . . . . . . .
Consolidated statements of comprehensive income for the years ended December 31, 2014 and 2013 . . .
Consolidated statements of changes in equity for the years ended December 31, 2014 and 2013 . . . . . . . .
Consolidated statements of cash flows for the years ended December 31, 2014 and 2013 . . . . . . . . . . . . .
Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-46
F-48
F-50
F-51
F-52
F-53
F-55
Audited consolidated financial statements as of and for the years ended December 31, 2013 and
2012
Report of independent auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statements of financial position as at December 31, 2013 and 2012 . . . . . . . . . . . . . . . . . . .
Consolidated statements of income for the years ended December 31, 2013 and 2012 . . . . . . . . . . . . . . . .
Consolidated statements of comprehensive income for the years ended December 31, 2013 and 2012 . . .
Consolidated statements of changes in equity for the years ended December 31, 2013 and 2012 . . . . . . . .
Consolidated statements of cash flows for the years ended December 31, 2013 and 2012 . . . . . . . . . . . . .
Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-126
F-128
F-129
F-130
F-131
F-132
F-134
F-1
F-3
F-5
F-7

(A Wholly-owned Subsidiary of San Miguel Corporation)
AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
June 30, 2015 and December 31, 2014
F-2
F-3
F-4

AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(In Thousands)
June 30
2015
Unaudited
December 31
2014
Audited
13, 14
13, 14
P30,596,361
20,183,031
1,156,566
11,442,330
63,378,288
P38,304,294
18,208,339
1,365,033
9,137,202
67,014,868
6
7
5
237,426,187
11,405,323
680,879
2,334,292
2,487,304
1,679,107
256,013,092
228,133,323
10,612,277
671,783
2,322,241
2,779,380
2,215,415
246,734,419
P319,391,380
P313,749,287
8, 13, 14
6, 13, 14
P28,313,737
16,216,673
P28,117,804
16,205,224
9, 13, 14
15,024,736
492,283
60,047,429
1,330,037
151,360
45,804,425
9, 13, 14
42,259,935
47,383,208
6, 13, 14
165,025,089
3,475,474
170,098,521
3,043,470
105,779
210,866,277
670,486
221,195,685
270,913,706
267,000,110
Note
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables - net
Inventories
Prepaid expenses and other current assets
Total Current Assets
Noncurrent Assets
Property, plant and equipment - net
Investments and advances - net
Deferred exploration and development costs
Goodwill and other intangible assets
Deferred tax assets
Other noncurrent assets - net
Total Noncurrent Assets
13, 14

Current Liabilities
Accounts payable and accrued expenses
Finance lease liabilities - current portion
Current portion of long-term debt net of debt issue costs
Income tax payable
Total Current Liabilities
Long-term debt - net of current portion and
debt issue costs
Finance lease liabilities - net of current
portion
Deferred tax liabilities
Other noncurrent liabilities - net of current
portion
Total Noncurrent Liabilities
Total Liabilities
Forward
F-5
Note
Equity
Capital stock
Additional paid-in capital
Undated subordinated capital securities
Retained earnings
Reserves
Total Equity
11
11
See Selected Notes to the Consolidated Interim Financial Statements.
F-6
June 30
2015
Unaudited
December 31
2014
Audited
P1,062,504
2,490,000
13,110,066
31,029,825
785,279
48,477,674
P1,062,504
2,490,000
13,110,066
29,301,328
785,279
46,749,177
P319,391,380
P313,749,287

AND SUBSIDIARIES
CONSOLIDATED INTERIM
STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In Thousands, Except Per Share Data)
Six Months Ended June 30

Note
REVENUES
Sale of power
Retail and power related services
COST AND EXPENSES
Cost of power sold:
Energy fees
Coal, fuel oil and other consumables
Power purchases
Depreciation and amortization
Plant operations and maintenance fees
Operating expenses
6
6
INTEREST INCOME
2015
2014
P38,678,490
1,776,019
40,454,509
P41,553,777
2,200,560
43,754,337
11,651,311
6,224,497
3,444,511
3,232,452
235,071
2,070,431
26,858,273
15,603,599
6,580,435
2,493,748
2,985,934
280,038
883,415
28,827,169
13,596,236
14,927,168
289,750
176,654
INTEREST EXPENSE AND OTHER

FINANCING CHARGES
(6,542,355)
(6,553,272)
EQUITY IN NET LOSSES OF AN ASSOCIATE

AND JOINT VENTURES - Net
(93,996)
(11,375)
OTHER INCOME (CHARGES) - Net
(1,265,061)
2,120,905
INCOME BEFORE INCOME TAX
5,984,574
10,660,080
INCOME TAX EXPENSE - Net

NET INCOME/TOTAL COMPREHENSIVE
INCOME
2,041,461
1,716,549
P3,943,113
P8,943,531
P3.15
P7.15
Basic/Diluted Earnings Per Share
12
F-7
F-8
P1,062,504
P1,062,504
Balance as of January 1, 2014 (Audited)

Issuance of undated subordinated capital securities
Net income for the period/total comprehensive income
Dividends declared
Balance as of June 30, 2014 (Unaudited)
P1,062,504
P1,062,504
Balance as of January 1, 2015 (Audited)

Net income for the period/total comprehensive income
Dividends declared
Distributions paid
Balance as of June 30, 2015 (Unaudited)
Capital
Stock
P2,490,000
P2,490,000
P2,490,000
P2,490,000
Additional
Paid-in
Capital
P29,395,060
8,943,531
(5,000,000)
P33,338,591
P29,301,328
3,943,113
(1,500,000)
(714,616)
P31,029,825
P 13,139,511
P13,139,511
P13,110,066
P13,110,066
Undated
Subordinated
Retained
Capital
Earnings
Securities
(Note 11)
(Note 11)

AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(In Thousands)
P785,279
P785,279
P785,279
P785,279
Reserves
P33,732,843
13,139,511
8,943,531
(5,000,000)
P50,815,885
P46,749,177
3,943,113
(1,500,000)
(714,616)
P48,477,674
Total Equity

AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)

Note
CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax
Adjustments for:
Interest expense and other financing charges
Unrealized foreign exchange losses (gains) - net
Equity in net losses of associates and joint
ventures - net
Impairment losses on trade receivables
Interest income
Operating income before working capital changes
Decrease (increase) in:
Inventories
Other noncurrent assets
Increase (decrease) in:
Other noncurrent liabilities
Cash generated from operations
Interest income received
Finance cost paid
Income taxes paid
Net cash flows provided by operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Net additions to property, plant and equipment
Additions to investments and advances
Additions to intangible assets
Proceeds from sale of investment
Net cash flows provided by (used in) investing
activities
Forward
F-9
2015
2014
P5,984,574
P10,660,080
6
6
6,542,355
3,256,278
1,257,436
6,553,272
3,005,734
(1,920,406)
93,996
53,627
(289,750)
16,898,516
11,375
(176,654)
18,133,401
(2,024,344)
208,467
(2,335,955)
536,308
(742,078)
830,262
(451,156)
186,060
(278,418)
(564,707)
12,439,867
290,458
(1,259,918)
(976,458)
10,493,949
1,642,027
19,598,516
182,955
(1,247,984)
(544,153)
17,989,334
(12,482,596)
(887,042)
(22,338)
(9,096)
-
(5,341,168)
(716,135)
(107,135)
16,228,991
(13,401,072)
10,064,553
6
7
5

Note
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from long-term debt
Payments of finance lease liabilities
Dividends paid
Distributions to undated subordinated capital
securities holders
Payment of long-term debt
Proceeds from issuance of undated subordinated
capital securities
Net cash flows used in financing activities
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
END OF PERIOD
F-10
2015
9
6
11
P8,825,000
(10,990,154)
(1,500,000)
11
9
(714,616)
(586,500)
11
(4,966,270)
165,460
2014
P (10,045,959)
(5,000,000)
13,139,511
(1,906,448)
(306,370)
(7,707,933)
25,841,069
38,304,294
29,125,171
P30,596,361
P54,966,240

AND SUBSIDIARIES
SELECTED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
(Amounts in Thousands, Except Per Share Data and Number of Shares)
1. Reporting Entity
SMC Global Power Holdings Corp. (the Parent Company) was incorporated in the
Philippines and registered with the Philippine Securities and Exchange Commission
(SEC) on January 23, 2008, and its primary purpose of business is to purchase, sell,
lease, develop and dispose of all properties of every kind and description, and shares of
stocks or other securities or obligations, created or issued by any corporation or other
entity. The Parent Companys registered office address is located at 155 EDSA, Brgy.
Wack-Wack, Mandaluyong City, Metro Manila.
The accompanying consolidated interim financial statements comprise the interim
financial statements of the Parent Company and its Subsidiaries (collectively referred to
as the Group).
The Parent Company is a wholly-owned subsidiary of San Miguel Corporation (SMC).
The ultimate parent company of the Group is Top Frontier Investment Holdings, Inc.
(Top Frontier). SMC and Top Frontier are public companies under Section 17.2 of the
Securities Regulation Code and whose shares are listed in the Philippine Stock Exchange
(PSE).
The Parent Companys subsidiaries, primarily engaged in power generation and retail
power-related services, are incorporated in the Philippines and registered with the
Philippine SEC. The subsidiaries are as follows:
Note
Power Generation
San Miguel Energy Corporation (SMEC)
South Premiere Power Corp. (SPPC)
Strategic Power Devt. Corp. (SPDC)
SMC PowerGen Inc. (SPI)
Limay Power Generation Corporation (c)
SMC Consolidated Power Corporation (SCPC) (b)
San Miguel Consolidated Power Corporation (SMCPC) (b)
PowerOne Ventures Energy Inc. (PVEI)
Central Luzon Premiere Power Corp. (CLPPC) (e)
Limay Premiere Power Corp. (LPPC) (e)
Mariveles Power Generation Corporation (MPGC) (e)
Retail and Power-related Service Provider
San Miguel Electric Corp. (SMELC)
SMC Power Generation Corp. (SPGC)
Albay Power and Energy Corp. (APEC)
Forward
F-11
Percentage of Ownership
June 30 December 31
2014
2015
10
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
June 30 December 31
2014
2015
Others
Daguma Agro-Minerals, Inc. (DAMI) (a)
Sultan Energy Phils. Corp. (SEPC) (a)
Bonanza Energy Resources, Inc. (BERI) (a)
Golden Quest Equity Holdings Inc. (GQEHI) (a)
Ondarre Holding Corporation (OHC) (d)
Mantech Power Dynamics Services Inc. (MPDSI) (e)
Safetech Power Services Corp. (SPSC) (e)
(a)
(b)
(c)
(d)
(e)
100
100
100
100
100
100
100
100
100
100
-
Indirectly owned by the Parent Company through SMEC and has not yet started commercial operations as of
June 30, 2015.
Construction of power plants on-going as of June 30, 2015.
Incorporated on February 19, 2013; indirectly owned by the Parent Company through SPI and has not yet
started commercial operation as of June 30, 2015.
Acquired on February 10, 2015 and has not started commercial operation as of June 30, 2015.
Incorporated in 2015 and has not started commercial operations as of June 30, 2015.
2. Summary of Significant Accounting and Financial Reporting Policies

Basis of Accounting
The consolidated interim financial information of the Group have been prepared in
accordance with Philippine Accounting Standard (PAS) 34, Interim Financial Reporting.
They do not include all the information required for full annual financial statements in
accordance with Philippine Financial Reporting Standards (PFRS), and should be read in
conjunction with the audited consolidated financial statements of the Group as at and for
the year ended December 31, 2014.
The consolidated interim financial statements of the Group were authorized for issue by
the Parent Companys Board of Directors (BOD) on August 5, 2015.
The consolidated interim financial statements are presented in Philippine peso and all
values are rounded off to the nearest thousand (P000), except when otherwise indicated.
The principal accounting policies and methods adopted in preparing the consolidated
interim financial statements of the Group are the same as those followed in the most
recent annual audited consolidated financial statements.
Adoption of Amendments to Standards and Interpretations
The Group has adopted the following amendments to standards and new interpretation
starting January 1, 2015. Except as otherwise indicated, the adoption of these
amendments to standards and interpretation did not have any significant impact on the
Groups consolidated interim financial statements.
Amendments to Standards and Interpretations Adopted in 2015
The Group has adopted the following PFRS effective January 1, 2015:
Defined Benefit Plans: Employee Contributions (Amendments to PAS 19). The

amendments apply to contributions from employees or third parties to defined benefit
plans. The objective of the amendments is to simplify the accounting for
contributions that are independent of the number of years of employee service, for
example, employee contributions that are calculated according to a fixed percentage
of salary.
F-12
Annual Improvements to PFRS: 2010 - 2012 and 2011 - 2013 Cycles - Amendments
were made to a total of nine standards, with changes made to the standards on
business combinations and fair value measurement in both cycles. Most amendments
will apply prospectively for annual periods beginning on or after July 1, 2014.
Earlier application is permitted, in which case the related consequential amendments
to other PFRS would also apply. Special transitional requirements have been set for
amendments to the following standards: PFRS 2, Share-based Payment, PAS 16,
Property, Plant and Equipment, PAS 38, Intangible Assets, and PAS 40, Investment
Property. The following are the said improvements or amendments to PFRS which
are applicable to the Group:
x
Meaning of Vesting Condition (Amendment to PFRS 2). PFRS 2 has been

amended to clarify the definition of vesting condition by separately defining
performance condition and service condition. The amendment also clarifies
both: how to distinguish between a market and a non-market performance
condition; and the basis on which a performance condition can be differentiated
from a non-vesting condition.
Scope Exclusion for the Formation of Joint Arrangements (Amendment to

PFRS 3, Business Combinations). PFRS 3 has been amended to clarify that the
standard does not apply to the accounting for the formation of all types of joint
arrangements in PFRS 11, Joint Arrangements, - i.e. including joint operations in the financial statements of the joint arrangements themselves.
Disclosures on the Aggregation of Operating Segments (Amendment to PFRS 8,

Operating Segments). PFRS 8 has been amended to explicitly require the
disclosure of judgments made by management in applying the aggregation
criteria. The disclosures include: (i) a brief description of the operating segments
that have been aggregated; and (ii) the economic indicators that have been
assessed in determining that the operating segments share similar economic
characteristics. In addition, the amendments clarify that a reconciliation of the
total of the reportable segments assets to the entitys assets is required only if
this information is regularly provided to the entitys chief operating decision
maker. This change aligns the disclosure requirements with those for segment
liabilities.
Scope of Portfolio Exception (Amendment to PFRS 13, Fair Value

Measurement). The scope of the PFRS 13 portfolio exception - whereby entities
are exempted from measuring the fair value of a group of financial assets and
financial liabilities with offsetting risk positions on a net basis if certain
conditions are met - has been aligned with the scope of PAS 39, Financial
Instruments: Recognition and Measurement and PFRS 9, Financial Instruments.
PFRS 13 has been amended to clarify that the portfolio exception potentially
applies to contracts in the scope of PAS 39 and PFRS 9 regardless of whether
they meet the definition of a financial asset or financial liability under PAS 32,
Financial Instruments: Presentation, - e.g. certain contracts to buy or sell nonfinancial items that can be settled net in cash or another financial instrument.
F-13
Definition of Related Party (Amendment to PAS 24, Related Party Disclosures).

The definition of a related party is extended to include a management entity
that provides key management personnel (KMP) services to the reporting entity,
either directly or through a group entity. For related party transactions that arise
when KMP services are provided to a reporting entity, the reporting entity is
required to separately disclose the amounts that it has recognized as an expense
for those services that are provided by a management entity; however, it is not
required to look through the management entity and disclose compensation
paid by the management entity to the individuals providing the KMP services.
The reporting entity will also need to disclose other transactions with the
management entity under the existing disclosure requirements of PAS 24.
Standards Issued but Not Yet Adopted

A number of new standards and amendments to standards are effective for annual periods
beginning after January 1, 2015. However, the Group has not applied the following new
or amended standards in preparing the consolidated interim financial statements. Unless
otherwise stated, none of these are expected to have a significant impact on the Groups
consolidated interim financial statements.
Effective January 1, 2016
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments

to PAS 16 and PAS 38). The amendments to PAS 38 introduce a rebuttable
presumption that the use of revenue-based amortization methods for intangible assets
is inappropriate. This presumption can be overcome only when revenue and the
consumption of the economic benefits of the intangible asset are highly correlated,
or when the intangible asset is expressed as a measure of revenue.
The amendments to PAS 16 explicitly state that revenue-based methods of
depreciation cannot be used for property, plant and equipment. This is because such
methods reflect factors other than the consumption of economic benefits embodied in
the asset - e.g. changes in sales volumes and prices.
The amendments are effective for annual periods beginning on or after January 1,
2016, and are to be applied prospectively. Early application is permitted.
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to PFRS 10 and PAS 28). The amendments address an inconsistency
between the requirements in PFRS 10, Consolidated Financial Statements, and in
PAS 28, Investments in Associates and Joint Ventures, in dealing with the sale or
contribution of assets between an investor and its associate or joint venture.
The amendments require that a full gain or loss is recognized when a transaction
involves a business (whether it is housed in a subsidiary or not). A partial gain or
loss is recognized when a transaction involves assets that do not constitute a
business, even if these assets are housed in a subsidiary.
The amendments apply prospectively for annual periods beginning on or after
January 1, 2016. Early adoption is permitted.
F-14
PFRS 9 (2014). PFRS 9 (2014) replaces PAS 39 and supersedes the previously
published versions of PFRS 9 that introduced new classifications and measurement
requirements (in 2009 and 2010) and a new hedge accounting model (in 2013).
PFRS 9 includes revised guidance on the classification and measurement of financial
assets, including a new expected credit loss model for calculating impairment,
guidance on own credit risk on financial liabilities measured at fair value and
supplements the new general hedge accounting requirements published in 2013.
PFRS 9 incorporates new hedge accounting requirements that represent a major
overhaul of hedge accounting and introduces significant improvements by aligning
the accounting more closely with risk management.
The new standard is to be applied retrospectively for annual periods beginning on or
after January 1, 2018 with early adoption permitted.
The Group is assessing the potential impact on its consolidated interim financial
statements resulting from the application of PFRS 9.
Leases
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 the inception of the lease
only if one of the following applies:
(a) there is a change in contractual terms, other than a renewal or extension of the
arrangement;
(b) a renewal option is exercised or an extension granted, unless the term of the renewal
or extension was initially included in the lease term;
(c) there is a change in the determination of whether fulfillment is dependent on a
specific asset; or
(d) 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), and at the date of renewal or extension period for scenario (b) above.
Finance Lease
Finance leases, which transfer to the Group substantially all the risks and rewards
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 consolidated interim statements of financial position as finance lease
liabilities.
Lease payments are apportioned between the financing charges and reduction of the lease
liabilities so as to achieve a constant rate of interest on the remaining balance of the
liabilities. Financing charges are recognized in profit or loss.
F-15
Capitalized leased assets are depreciated over the estimated useful lives of the assets
when there is reasonable certainty that the Group will obtain ownership by the end of the
lease term.
Operating Lease
Group as Lessee. Leases which do not transfer to the Group substantially all the risks and
rewards of ownership of the assets are classified as operating leases. Operating lease
payments are recognized as an expense in profit or loss on a straight-line basis over the
lease term. Associated costs such as maintenance and insurance are expensed as incurred.
Group as Lessor. Leases where the Group does not transfer substantially all the risks and
rewards of ownership of the assets are classified as operating leases. Rent income from
operating lease is recognized as income on a straight-line basis over the lease term.
Initial direct costs incurred in negotiating an operating lease are added to the carrying
amount of the leased asset and recognized as an expense over the lease term on the same
basis as rent income. Contingent rents are recognized as income in the period in which
they are earned.
3. Significant Accounting Judgments, Estimates and Assumptions
The preparation of the consolidated interim financial statements in accordance with
PFRS requires management to make judgments, estimates and assumptions that affect the
application of accounting policies and the amounts of assets, liabilities, income and
expenses reported in the consolidated interim financial statements at the reporting date.
However, uncertainty about these judgments, estimates and assumptions could result in
an outcome that could require a material adjustment to the carrying amount of the
affected asset or liability in the future.
Judgments and estimates are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Revisions are recognized in the period in which the
judgments and estimates are revised and in any future period affected.
Judgments
In the process of applying the Groups accounting policies, management has made the
following judgments, apart from those involving estimations, which have the most
significant effect on the amounts recognized in the consolidated interim financial
statements.
Finance Lease - Group as Lessee. In accounting for its Independent Power Producer
Administration (IPPA) Agreements with Power Sector Assets and Liabilities
Management Corporation (PSALM), the Groups management has made a judgment that
the IPPA Agreements are agreements that contain a lease.
The Groups management has made a judgment that it has substantially acquired all the
risks and rewards incidental to the ownership of the power plants. Accordingly, the
Group accounted for the agreements as a finance lease and recognized the power plants
and finance lease liabilities at the present value of the agreed monthly payments to
PSALM.
Finance lease liabilities recognized in the consolidated interim statements of financial
position amounted to P181,241,762 and P186,303,745 as of June 30, 2015 and
December 31, 2014, respectively (Note 6).
F-16
The combined carrying amounts of power plants under finance lease amounted to
P185,539,499 and P188,132,700 as of June 30, 2015 and December 31, 2014,
respectively (Note 6).
Estimates and Assumptions
The key estimates and assumptions used in the consolidated interim financial statements
are based upon managements evaluation of relevant facts and circumstances as of the
date of the consolidated interim financial statements. Actual results could differ from
such estimates.
Fair Value Measurements. A number of the Groups accounting policies and disclosures
require the measurement of fair values, for both financial and non-financial assets and
liabilities.
The Group has an established control framework with respect to the measurement of fair
values. This includes a valuation team that has overall responsibility for overseeing all
significant fair value measurements, including Level 3 fair values. The valuation team
regularly reviews significant unobservable inputs and valuation adjustments. If third
party information is used to measure fair values, then the valuation team assesses the
evidence obtained to support the conclusion that such valuations meet the requirements
of PFRS, including the level in the fair value hierarchy in which such valuations should
be classified.
The Group uses market observable data when measuring the fair value of an asset or
liability. Fair values are categorized into different levels in a fair value hierarchy based
on the inputs used in the valuation techniques.
If the inputs used to measure the fair value of an asset or a liability may be categorized in
different levels of the fair value hierarchy, then the fair value measurement is categorized
in its entirety in the same level of the fair value hierarchy based on the lowest level input
that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of
the reporting period during which the change has occurred.
Allowance for Impairment Losses on Trade and Other Receivables. Provisions are made
for specific and groups of accounts, where objective evidence of impairment exists. The
Group evaluates these accounts on the basis of factors that affect the collectibility of the
accounts. These factors include, but are not limited to, the length of the Groups
relationship with the customers and counterparties, the customers current credit status
based on third party credit reports and known market forces, average age of accounts,
collection experience and historical loss experience. The amount and timing of the
recorded expenses for any period would differ if the Group made different judgments or
utilized different methodologies. An increase in allowance for impairment losses would
increase the recorded operating expenses and decrease current assets.
The allowance for impairment losses on trade and other receivables amounted to
P920,313 and P866,686 as of June 30, 2015 and December 31, 2014, respectively. The
carrying amount of trade and other receivables amounted to P20,183,031 and
P18,208,339 as of June 30, 2015 and December 31, 2014, respectively.
F-17
4. Segment Information
Operating Segments
The Groups operations are divided into the three segments: a) power generation, b) retail
and other power related services and c) coal mining, consistent with the reports prepared
internally for use by the Groups chief operating decision maker in reviewing the
business performance of the operating segments. The coal mining companies, which
were acquired in 2010, have not yet started commercial operations and are in the
exploratory stage of mining activities (Note 5). The mining companies total assets do
not exceed 10% of the combined assets of all operating segments.
The Groups inter-segment sales of power are accounted for based on contracts entered
into by the parties and are eliminated in the consolidation. Segment assets do not include
investments and advances, goodwill and other intangible assets and deferred tax assets.
Segment liabilities do not include long-term debt, deferred tax liabilities and income tax
payable. Capital expenditures consist of additions to property, plant and equipment of
each reportable segment.
The Group operates only in the Philippines which is treated as a single geographical
segment.
Major Customers
The Group sells, retails and distributes power, through power supply agreements, retail
supply agreements, concession agreement and other power related service agreements,
either directly to customers (other generators, distribution utilities, electric cooperatives
and industrial customers) or through the Philippine Wholesale Electricity Spot Market
(WESM). Sale, retail and/or distribution of power to individual external customers that
represents 10% or more of the Groups total revenues is as follows:
2014
2015
P24,900,227
P21,210,123
5,244,649
3,954,345
Customers
Meralco
WESM
F-18
F-19
(138,259)
14,867,051
13,596,236
26,858,273
24,787,842
2,070,431
40,454,509
P40,454,509
-
P 10,306
55,986
P38,878
6,143,959
1,021,839
P389,656
3,233,233
861,753
P2,790,419
14,686
11,074
P -
P2,081,602
7,963
-
P -
P757,720
P752,650
-
18,098
(23)
P15,087
P74,665
P683,275
-
4,776
487,321
P12,093,003
P21,279,209
P72,906,346
40,073,298
10,897
93,335
P17,425,124
P9,875,451
P54,904,121
8,444,799
*Noncash items other than depreciation and amortization include unrealized foreign exchange gain/losses, impairment losses on receivables and equity in net losses of an associate and joint ventures - net.
Capital expenditures
Depreciation and amortization of property, plant and
equipment and intangible assets
Noncash items other than depreciation and amortization*
Consolidated Total Liabilities
P213,097,395
P2,419,373
191,549
P -
(P17,825,673)
(P16,347,903)
(33,855,134)
P -
(P10,037,078)
(P9,937,570)
-
P8,943,531
176,654
(6,553,272)
(11,375)
2,120,905
(1,716,549)
14,927,168
28,827,169
27,943,754
883,415
43,754,337
P43,754,337
-
P303,164,461
11,405,323
2,334,292
2,487,304
3,256,278
1,405,060
P12,482,659
P270,913,706
6,187,640
1,126,225
P17,479,089
P267,000,110
P215,092,035
48,713,245
151,360
3,043,470
P313,749,287
P298,035,389
10,612,277
2,322,241
2,779,380
Consolidated
December 31
June 30
2014
2015
P209,661,278
57,284,671
492,283
3,475,474
P202,659,603
P2,715,846
189,191
Eliminations
December 31
June 30
2014
2015
307,500
(2,211,578)
(1,904,078)
(307,500)
(1,904,078)
P (1,904,078)
Consolidated
2014
2015
Segment liabilities
Long-term debt - net of debt issue costs
Income tax payable
P249,966,190
1,975,929
Others
June 30 December 31
2014
2015
325,734
(2,800,774)
(2,475,040)
(325,734)
(2,475,040)
P (2,475,040)
Eliminations
2014
2015
P319,391,380
P243,137,522
4,997,968
Coal Mining
June 30 December 31
2014
2015
(289,923)
289,923
289,923
P -
2014
Consolidated Total Assets
Other Information
Segment assets
Deferred tax assets
Power Generation
December 31
June 30
2014
2015
(497,054)
497,054
497,054
P -
Others
P3,943,113
(12,710)
12,710
12,710
P -
2015
Consolidated Net Income
(9,019)
9,019
9,019
P -
Coal Mining
2014
2015
For the Six Months Ended June 30
289,750
(6,542,355)
(93,996)
(1,265,061)
(2,041,461)
55,250
2,145,310
2,126,550
18,760
2,200,560
P2,200,560
-
Retail and Other Power

Related Services
December 31
June 30
2014
2015
1,914,278
28,590,804
27,238,696
13,914,834
1,825,821
88,457
27,721,282
869,522
1,776,019
43,457,855
41,153,530
25,437,061
1,801,635
P1,776,019
-
P41,553,777
1,904,078
P38,678,490
2,475,040

Related Services
2014
2015
Interest income
Equity in net losses of an associate and joint ventures - net
Other income (charges) - net
Income tax expense
Segment Result
Cost and Expenses

Cost of power sold
Operating expenses
Sale of Power
External
Inter-segment
Power Generation
2014
2015
Operating Segments
Financial information about reportable segments follows:
For management reporting purposes, the Groups operating segments are organized and managed as follows:
In 2015, PVEI was presented under power generation segment. Accordingly, the 2014
segment reporting was restated to conform with the current year presentation.
5. Deferred Exploration and Development Costs
The movement in deferred exploration and development costs is as follows:
June 30
2015
P671,783
9,096
P680,879
Balance at beginning of year

Additions
Balance at end of year
December 31
2014
P525,999
145,784
P671,783
SMEC acquired DAMI, SEPC and BERI in 2010 resulting in the recognition of mining
rights of P1,719,726.
DAMIs coal property covered by Coal Operating Contract (COC) No. 126, issued by the
Department of Energy (DOE), is located in South Cotabato and consists of two (2) coal
blocks with a total area of two thousand (2,000) hectares, more or less, and has an In-situ
coal resources (measured plus indicative coal resources) of about ninety-four (94) million
metric tons as of June 30, 2015.
SEPC has a coal mining property and right over an aggregate area of seven thousand
(7,000) hectares, more or less, composed of seven (7) coal blocks located in South
Cotabato and Sultan Kudarat. As of December 31, 2014, COC No. 134 has an In-situ
coal resources (measured plus indicative coal resources) of about thirty-five (35) million
metric tons as of June 30, 2015.
BERIs COC No. 138, issued by the DOE is located in Sarangani Province and South
Cotabato consisting of eight (8) coal blocks with a total area of eight thousand (8,000)
hectares, more or less, and has an In-situ coal resources (measured plus indicative coal
resources) of about twenty-three (23) million metric tons as of June 30, 2015.
Status of Operations
In 2008 and 2009, the DOE approved the conversion of the COC for Exploration to COC
for Development and Production of DAMI, SEPC and BERI, respectively, effective on
the following dates:
Subsidiary
DAMI
SEPC
BERI
COC No.
126
134
138
Effective Date
November 19, 2008
February 23, 2009
May 26, 2009
Term*
10 years
10 years
10 years
* The term is followed by another 10-year extension, and thereafter, renewable for a series of 3 year periods not exceeding
12 years under such terms and conditions as may be agreed upon with the DOE.
In May 2011, DAMI, SEPC and BERI separately requested to the DOE for a moratorium
on suspension of the implementation of the production timetable as specified in the
Five-Year Development and Productive Work Progress of COC Nos. 126, 134 and 138
due to the newly enacted Environment Code of South Cotabato which prohibits open pit
mining and other related activities, hence, constrained these companies into
implementing the production timetable without violating this local ordinance. On
April 27, 2012, the DOE granted DAMI, SEPC and BERIs request for a moratorium on
their work commitments from the effective dates of their respective COCs when these
were converted to Development/Production Phase until December 31, 2012.
F-20
On December 27, 2012, DAMI, SEPC and BERI submitted separately their Five-Year
Work Program (WP) to the DOE. The DOE, however, imposed certain requirements
before it can further process the WP. On August 8, 2013, DAMI, SEPC and BERI
resubmitted the Five-Year WP incorporating additional requirements of the DOE.
On April 29, 2014, DAMI, SEPC and BERI requested for a suspension of their work
commitments under their respective COCs until December 31, 2016 or until the ban on
open-pit mining pursuant to the Environment Code of South Cotabato has been lifted,
whichever comes first. On January 26, 2015, the DOE granted the request.
As of June 30, 2015, DAMI, SEPC and BERI are in the exploratory stages of their
mining activities. All related costs and expenses from exploration are currently deferred
as exploration and development costs and will be amortized upon commencement of their
commercial operations.
The Group has not identified any facts and circumstances which suggest that the carrying
amount of the deferred exploration and development costs exceeded recoverable amount
as of June 30, 2015 and December 31, 2014.
F-21
F-22
P 550,441
550,441
P P550,441
Accumulated Depreciation
and Amortization
January 1, 2014 (Audited)
Additions
December 31, 2014 (Audited)
Additions
Disposal
June 30, 2015 (Unaudited)
Carrying Amount
Land
Cost
January 1, 2014 (Audited)
Additions
Disposals
Reclassifications
Additions
Disposals
Reclassifications
Property, plant and equipment consist of:
6. Property, Plant and Equipment
P196,842,844
P199,858,169
21,126,707
5,803,956
26,930,663
3,015,325
29,945,988
P221,760,866
5,027,966
226,788,832
226,788,832
Power Plants
(Note 6)
P5,415,085
P5,565,266
45,193
220,638
265,831
150,181
416,012
P3,480,934
2,350,163
5,831,097
5,831,097
Building
P282,175
P300,417
9,750
36,481
46,231
18,242
64,473
P346,602
46
346,648
346,648
June 30, 2015

Leasehold
Improvements
P951,314
P996,374
51,531
110,171
161,702
62,242
(691)
223,253
P960,758
98,542
98,776
1,158,076
17,245
(754)
1,174,567
Other
Equipment
Total
P33,384,328
P21,413,097
P237,426,187
P228,133,323
21,233,181
6,171,246
27,404,427
3,245,990
(691)
30,649,726
P11,705,540 P238,254,700
17,380,501
17,479,089
(82,420)
(82,420)
(7,590,524)
(113,619)
21,413,097
255,537,750
11,914,973
12,482,659
(754)
56,258
56,258
33,384,328
268,075,913
Construction
in Progress
a. Independent Power Producer (IPP) Administration (IPPA) Agreements

As a result of the biddings conducted by PSALM for the Appointment of the IPP
Administrator for the Contracted Capacity of the following power plants, the Group
was declared the winning bidder and act as IPP Administrator through the following
appointed subsidiaries:
Subsidiary
SMEC
SPDC
SPPC
Power Plant
Sual Coal - Fired Power Station
(Sual Power Plant)
San Roque Hydroelectric Power Plant
(San Roque Power Plant)
Ilijan Natural Gas - Fired Combined Cycle
Power Plant (Ilijan Power Plant)
Location
Sual, Pangasinan
Province
San Roque, Pangasinan
Province
Ilijan, Batangas
Province
The IPPA Agreements are with the conformity of National Power Corporation
(NPC), a government-owned and controlled corporation created by virtue of
Republic Act (R.A.) No. 6395, as amended, whereby NPC confirms, acknowledges,
approves and agrees to the terms of the IPPA Agreements and further confirms that
for so long as it remains the counterparty of the IPP it will comply with its
obligations and exercise its rights and remedies under the original agreement with the
IPP at the request and instruction of PSALM.
The IPPA Agreements include, among others, the following common salient rights
and obligations:
i.
The right and obligation to manage and control the contracted capacity of the
power plant for its own account and at its own cost and risks;
ii. 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 at 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;
iii. The right to receive a transfer of the power plant upon termination of the IPPA
Agreement at the end of the cooperation period or in case of buy-out;
iv. For SMEC and SPPC, the right to receive an assignment of NPCs interest to
existing short-term bilateral power supply contracts;
v. The obligation to supply and deliver, at its own cost, fuel required by the IPP and
necessary for the Sual Power Plant to generate the electricity required to be
produced by the IPP;
vi. Maintain the performance bond in full force and effect with a qualified bank; and
vii. The obligation to pay PSALM the monthly payments and energy fees in respect
of all electricity generated from the capacity, net of outages.
F-23
Relative to the IPPA Agreements, SMEC, SPDC and SPPC have to pay PSALM
monthly payments for fifteen (15) years until October 1, 2024, eighteen (18) years
until April 26, 2028 and twelve (12) years until June 26, 2022, respectively. Energy
fees for the six months ended June 30, 2015 and 2014 amounted to P11,651,311 and
P15,603,599, respectively. SMEC, SPDC and SPPC renewed their performance
bonds in United States dollar (US$) amounting to US$58,187, US$20,305 and
US$60,000 which will expire on November 3, 2015, January 25, 2016 and June 16,
2016, respectively.
The finance lease liabilities are carried at amortized cost using the US dollar and
Philippine peso discount rates as follows:
US Dollar
3.89%
3.85%
3.30%
SMEC
SPPC
SPDC
Philippine Peso
8.16%
8.05%
7.90%
The discount determined at inception of the agreement is amortized over the period
of the IPPA Agreement and recognized as part of Interest expense and other
financing charges account in the consolidated interim statements of comprehensive
income. Interest expense for the six months ended June 30, 2015 and 2014 amounted
to P5,140,621 and P5,414,759, respectively.
The future minimum lease payments for each of the following periods are as follows:
June 30, 2015

Not later than one year
More than one year
and not later than
five years
Later than five years
Less: Future finance
charges on finance
lease liabilities
Present values of
finance lease
liabilities
US Dollar
Payments
US$244,370
Peso
Equivalent of
US Dollar
Payments
P11,018,625
Peso
Payments
P11,701,298
Total
P22,719,923
1,049,422
1,266,605
2,560,397
47,318,428
57,111,247
115,448,300
50,253,309
60,704,110
122,658,717
97,571,737
117,815,357
238,107,017
422,038
19,029,694
37,835,561
56,865,255
US$2,138,359
P96,418,606
P84,823,156
P181,241,762
F-24
December 31, 2014

More than one year
and not later than
five years
charges on finance
lease liabilities
Present values of
finance lease
liabilities
US Dollar
Payments
US$238,557
Peso
Equivalent of
US Dollar
Payments
P10,668,258
Peso
Payments
P11,423,146
Total
P22,091,404
1,027,007
1,413,789
2,679,353
45,927,750
63,224,641
119,820,649
49,178,287
67,753,365
128,354,798
95,106,037
130,978,006
248,175,447
462,375
20,677,383
41,194,319
61,871,702
US$2,216,978
P99,143,266
P87,160,479
P186,303,745
The present values of minimum lease payments for each of the following periods are
as follows:
June 30, 2015

More than one year
and not later than
five years
December 31, 2014

More than one year
and not later than
five years
US Dollar
Payments
US$196,042
Peso
Equivalent
of US Dollar
Payments
P8,839,552
Peso
Payments
P7,377,121
Total
P16,216,673
766,371
1,175,946
US$2,138,359
34,555,653
53,023,401
P96,418,606
26,097,264
51,348,771
P84,823,156
60,652,917
104,372,172
P181,241,762
US Dollar
Payments
US$194,970
Peso
Equivalent
of US Dollar
Payments
P8,719,059
Peso
Payments
P7,486,165
Total
P16,205,224
764,915
1,257,093
US$2,216,978
34,206,990
56,217,217
P99,143,266
26,604,935
53,069,379
P87,160,479
60,811,925
109,286,596
P186,303,745
b. Acquisition of OHC
On February 10, 2015, the Parent Company acquired 100% outstanding capital stock
of OHC for a total consideration amount of P588,050, inclusive of transaction costs.
OHC is engaged in acquiring by purchase, lease, donation or otherwise, and to own,
use, improve, develop, subdivide, sell, mortgage, exchange, lease, develop and hold
for investment or otherwise, real estate of all kinds, and to improve, manage or
otherwise deal with or dispose of buildings, houses, apartments, and other structures
of whatever kind, together with their appurtenances.
F-25
The following summarizes the recognized assets acquired from OHC at the
acquisition date:
Amount
P282
37,327
550,441
P588,050
Cash
Other current assets
Investment property
In accordance with criteria set out in paragraph 2 of PFRS 3, Business Combination,

and based on Philippine Interpretations Committee Question and Answer No. 2011 06 PFRS 3, Business Combinations (2008), and PAS 40, Investment Property Acquisition of investment properties - asset acquisition or business combination, the
Parent Company is exempt from applying acquisition method and should be
accounted for as an asset acquisition based on the principles described in other
PFRSs. The acquired set of assets and activities does not constitute a business as
defined in PFRS 3. The managements intention for acquiring OHC is to use its
investment property for administrative purposes. The investment property is
recognized as land under Property, plant and equipment account in the
consolidated interim statements of financial position.
c. Construction in progress pertains to the following:
i
Power plant project of SMCPC and SCPC for the construction of Coal-Fired
Power Plants in Davao and Bataan, respectively.
ii
Power plant project of LPPC for the construction of the 2x150 MW Coal-Fired
Power Plants in Limay, Bataan.
iii Construction of limestone pulverizing plant and petcoke handling facility of SPI.
Depreciation and amortization are recognized in profit or loss as follows:
2015
P3,232,452
23,826
P3,256,278
Cost of power sold

Operating expenses
2014
P2,985,934
19,800
P3,005,734
Total depreciation and amortization recognized in profit or loss include periodic

amortization of capitalized interest amounting to P6,680 and nil for the six months ended
June 30, 2015 and 2014, respectively.
F-26
7.
Investments and Advances

Investments and advances consist of:
June 30
2015
Cost
Beginning balance
Additions
Adjustment to subscription receivable
Ending balance
Accumulated Equity in Net Losses
Beginning balance
Equity in net losses during the period
Adjustment to equity in net earnings (losses)
prior period
Ending balance
P2,074,051
2,074,051
P301,208
1,830,054
(57,211)
2,074,051
(63,719)
(92,014)
(41,374)
(32,231)
(1,982)
(157,715)
9,886
(63,719)
1,916,336
9,488,987
P11,405,323
Advances
December 31
2014
2,010,332
8,601,945
P10,612,277
The Groups investments pertain to the following:

a. Olongapo Electricity Distribution Company, Inc. (OEDC)
In April 2013, SPGC and San Miguel Equity Investments, Inc. (SMEII) entered into
a Deed of Assignment of Subscription Rights whereby SMEII agreed to assign 35%
ownership interest in OEDC to SPGC for a consideration of P8,750.
As of June 30, 2015 and December 31, 2014, the carrying amount of investment in
OEDC amounted to P189,191 and P191,549, respectively. Subscription payable
amounted to P28,101 as of June 30, 2015 and December 31, 2014, respectively
(Note 8).
The table below summarizes the financial information of investment in an associate
which is accounted for using the equity method:
2015
(Unaudited)
Philippines
P369,363
1,065,194
(929,354)
P505,203
Country of Incorporation
Current assets
Noncurrent assets
Current liabilities
Noncurrent liability
Net assets
Revenue
P624,189
2014
(Audited)
Philippines
P390,447
1,024,781
(899,921)
(9,884)
P505,423
P1,234,670
Net losses/total comprehensive losses
(P313)
(P66,309)
Share in net losses/total comprehensive losses
(P110)
(P23,208)
F-27
b. Angat Hydropower Corporation (Angat Hydro) and KWPP Holdings Corporation

(KWPP)
In accordance with the agreement of the Parent Company through PVEI, a subsidiary
of SMC Global, and Korea Water Resources Corporation (K-Water) to enter into a
joint venture partnership for the acquisition, rehabilitation, operation and
maintenance of the 218 MW Angat Hydroelectric Power Plant (Angat Power Plant)
awarded by PSALM to K-Water, PVEI deposited US$26,448 to an escrow account.
On November 18, 2014, PVEI acquired from the individual stockholders and
K-Water, 2,817,270 shares or 60% of the outstanding capital stock of Angat Hydro
and from the individual stockholders, 75 shares representing 60% of KWPP
outstanding capital stock. Accordingly, PVEI paid K-Water and the individual
stockholders a total of US$39,236 and P15 as full payment of the share purchase
price of Angat Hydro and KWPP shares, respectively. The payment was funded in
part by the deposit in escrow.
In accordance with the entry of PVEI into Angat Hydro and KWPP, K-Water and
PVEI are jointly in control of the management and operation of Angat Hydro and
KWPP.
Further, PVEI agreed to pay K-Water a support fee amounting to 3% of the total
amount of the bridge loan facility which was obtained for the acquisition by Angat
Hydro of the Angat Power Plant.
Angat Hydro
Angat Hydro was incorporated on November 15, 2013 and was created to engage in
the operations and maintenance of the Angat Power Plant and to supply power
generated to power corporations, electric utilities, to import hydro-electric facilities
and equipment, and to do all acts necessary and incidental thereto, in accordance with
R.A. No. 9136 or otherwise known as the Electric Power Industry Reform Act of
2001 (EPIRA).
KWPP
KWPP was incorporated on November 27, 2013 and was established for the purpose
of acquiring, holding or leasing water and flowage rights.
Details in investments in Angat Hydro and KWPP are as follows:
June 30, 2015
Angat Hydro
P1,830,039
Cost
Accumulated Equity in Net Losses
Beginning balance
Equity in net losses for the period
Adjustment to equity in net earnings
prior period
Ending balance
(11,257)
(91,904)
(15)
-
267
(102,894)
(15)
P1,727,145
F-28
KWPP
P15
P -
December 31, 2014

Angat Hydro
P1,830,039
(11,257)
P1,818,782
Acquisition cost
KWPP
P15
(15)
P -
Unrecognized share in net losses in excess of the Groups interest in KWPP

amounted to P121 and nil on June 30, 2015 and 2014, respectively.
The table below summarizes the financial information of investments in joint venture
Angat Hydro
Philippines
P1,097,071
19,626,105
(19,995,953)
(17,275)
P709,948
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net assets
Revenue
KWPP
Philippines
P100
17,185
(856)
(17,185)
(P756)
P884,685

for the period
(P1)
(P153,174)
(P202)
(P91,904)
(P1)
Angat Hydro
Philippines
P407,488
20,187,319
(19,713,866)
(17,819)
P863,122
KWPP
Philippines
P76
17,783
(630)
(17,783)
(P554)

Current assets
Noncurrent assets
Current liabilities
Net assets
Revenue
P153,772
P -
(P72,591)
(P470)

for the period
(P10,990)
(P15)
Advances pertain to deposits made for future investment in land holding companies.
F-29
8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of:
Note
13
Trade
Accrued expenses
Output VAT
Non-trade
Accrued interest
Withholding taxes
Subscription payable
15
June 30
2015
P11,618,220
10,214,988
4,643,441
1,242,102
460,382
106,503
28,101
P28,313,737
December 31
2014
P12,621,078
8,851,501
4,623,037
1,354,760
487,997
151,330
28,101
P28,117,804
Output VAT consists of current and deferred output VAT payable. Deferred output VAT
represents the VAT on sale of power which will be remitted to the Government only
upon collection from the customers.
Accrued expenses consist of other payables to the Government other than output VAT
and withholding taxes.
Non-trade payables mainly pertain to the liability relating to the power rate adjustments
in November and December 2013 sale of power to WESM amounting to P1,239,888 and
P1,916,196 as of June 30, 2015 and December 31, 2014, respectively (Note 15).
9. Long-term Debt
Long-term debt consists of:
Note
Bonds payable
Less debt issue costs
Loans payable
13, 14
Less current portion
F-30
June 30
2015
P13,527,000
34,000
13,493,000
December 31
2014
P13,416,000
61,955
13,354,045
44,583,300
791,629
43,791,671
35,966,800
607,600
35,359,200
57,284,671
15,024,736
P42,259,935
48,713,245
1,330,037
P47,383,208
a. Bonds Payable
On January 28, 2011, the Parent Company carried out a US$300,000, 7%, 5-year
note (Bonds Payable) issue under Regulations of the U.S. Securities Act of 1933, as
amended. The unsecured bond issue is listed in the Singapore Exchange Securities
Trading Limited. The terms and conditions of the bonds contain a negative pledge
provision with certain limitations on the ability of the Parent Company and its
material subsidiaries to create or have outstanding any security interest upon, or with
respect to, any of the present or future business, undertaking, assets or revenue
(including any uncalled capital) of the Parent Company or any of its material
subsidiaries to secure any indebtedness, subject to certain exceptions. Upon the
occurrence of a change of control, each bondholder has the right, at its option, to
require the Parent Company to repurchase all (but not some only) of its bonds, at a
redemption price equal to 101.0% of the principal amount thereof plus accrued
interest on the change of control put date.
The Parent Company has agreed to observe certain covenants, including, among
other things, maintaining a leverage ratio, limitation on guarantees and loans,
limitation on indebtedness, limitation on restricted payments, limitation on dividends
and other restrictions affecting material subsidiaries, limitation on transactions with
shareholders and affiliates, limitation of asset sales, consolidation, merger and sales
of assets and certain other covenants. Interest is payable semi-annually in arrears on
January 28 and July 28 of each year, with first interest payment on July 28, 2011.
Bonds payable amounted to P13,527,000 and P13,416,000 while accrued interest
amounted to P394,538 and P391,300 as of June 30, 2015 and December 31, 2014,
respectively. Interest expense amounted to P559,041 and P562,958 for the six
months ended June 30, 2015 and 2014, respectively.
On December 5, 2013, the BOD was informed of the need to amend certain
provisions of the Bonds Payable, including but not limited to, the definitions of
Asset Sale, Material Subsidiary, Non-Recourse Project Level Indebtedness,
Permitted Security Interest and Project Subsidiaries and the leverage and
cross-default thresholds in order to align the provisions of the Bonds Payable with
the US$700,000 Loan Facility of the Parent Company, thereby providing flexibility
to enable the Parent Company to divest its non-core assets and raise funds in line
with its long term growth strategy.
The US$300,000, 7% bond will mature on January 28, 2016.
b. Loans Payable
Parent Company
On September 9, 2013, the Parent Company signed a US$650,000, 5-year term loan
with a syndicate of banks. The Facility Agreement has some provisions similar to
the US$200,000, 3-year term loan entered into by the Parent Company on March 31,
2011 and pre-terminated on September 30, 2013. Subsequently, on November 15,
2013, the US$650,000 Facility Agreement was amended extending the loan facility
from US$650,000 to US$700,000.
Drawn amount from the Facility Agreement amounted to US$700,000 and
US$500,000 as of June 30, 2015 and December 31, 2014, respectively.
F-31
The Facility Agreement imposes a number of covenants on the part of the Parent
Company including, but not limited to, maintaining a leverage ratio throughout the
duration of the term of the Facility Agreement. The terms and conditions of the
Facility Agreement contains a negative pledge provision with certain limitations on
the ability of the Parent Company and its material subsidiaries to create or have
outstanding any security interest upon or with respect to, any of the present or future
business, undertaking, assets or revenue (including any uncalled capital) of the Parent
Company or any of its material subsidiaries to secure any indebtedness, subject to
certain exceptions.
The US$700,000, 5-year term loan will mature in September 2018.
In March 2015, the remaining US$200,000 was drawn by the Parent Company from
the 5-year term loan entered into on September 9, 2013 with a syndicate of banks.
SPI
On September 27, 2013, SPI has entered into a P13,800,000, 10-year loan with a
syndicate of banks, for the acquisition of a 2 x 35 MW Co-Generation Solid FuelFired Power Plant and all other pertinent machinery, equipment, facilities and
structures for the expansion of the capacity. Of this amount, P12,300,000 and
P1,500,000 were drawn on September 30, 2013 and 2014, respectively. The loan
includes amount payable to a related party amounting to P3,302,250 and P3,451,000
as of June 30, 2015 and December 31, 2014, respectively.
Pursuant to the Facility Agreement, the amount of the loan drawn down in 2014 and
2013 will bear interest at the rate of 6.5446% and 6.3131%, respectively, as
determined by the Facility Agent. Effective November 28, 2014, step-down interest
rate is at 6.2921% and 6.0606% for 2015 and 2014 loans, respectively. The Facility
Agreement has a final maturity date of September 2023.
SPI may, by giving not less than thirty (30) days prior written notice to the Facility
Agent, prepay the loan in whole or in part with accrued interest on the amount
prepaid and subject to a repayment penalty of 1% of the principal amount being paid
to be applied against the outstanding amounts due in the inverse order of maturity.
The repayment schedule consists of forty (40) periods on a quarterly basis. The first
repayment of principal started in December 2014.
The annual maturities on this loan are as follows:
Year
July 1, 2015 December 31, 2015
2016
2017
2018
2019
2020 and thereafter
Gross Amount
Debt Issue Costs
Net
P786,600
1,573,200
1,573,200
1,573,200
1,573,200
5,940,900
P13,020,300
P21,338
39,444
35,107
30,581
25,733
47,207
P199,410
P765,262
1,533,756
1,538,093
1,542,619
1,547,467
5,893,693
P12,820,890
F-32
The Facility Agreement imposes a number of covenants on the part of SPI, including,
but not limited to, maintaining a debt-to-equity ratio and a specified debt service
coverage ratio throughout the duration specified under the Facility Agreement. The
terms and conditions of the Facility Agreement contains certain limitations on the
ability of SPI to declare or pay any dividend, distribution or other return of capital in
respect of any ownership interest to SPI and any other payment to the Parent
Company or its affiliates, subject to certain exceptions.
The loan is secured by the mortgage over the power plant and pledge of shares in SPI
owned by the Parent Company (Note 6).
Loans payable amounted to P44,583,300 and P35,966,800 while accrued interest
amounted to nil and P17,794 as of June 30, 2015 and December 31, 2014, respectively.
Total interest expense and financing charges on loans payable amounted to P836,894 and
P694,911 (inclusive of P56,258 and P175,028 capitalized in construction in progress;
Note 6) for the six months ended June 30, 2015 and 2014, respectively.
The amortization of debt issue costs of P125,545 and P81,002 is included as part of
Interest expense and other financing charges account in the consolidated interim
statements of comprehensive income for the six months ended June 30, 2015 and 2014,
respectively.
As of June 30, 2015 and December 31, 2014, the Group is in compliance with the
covenants of the debt agreements.
The movements in debt issue costs are as follows:
June 30
2015
P669,555
284,443
(125,545)
(2,824)
P825,629
Beginning balance
Addition
Amortization
Capitalized amount
Ending balance
December 31
2014
P727,115
128,535
(173,978)
(12,117)
P669,555
Contractual terms of the Groups interest bearing loans and borrowings and exposure to
interest rate, foreign currency and liquidity risk are discussed in Note 13.
10. Related Party Disclosures
The Group, in the normal course of business, purchases products and services from and
sells products and renders services to related parties. Transactions with related parties are
made at normal market prices and terms. An assessment is undertaken at each financial
year by examining the financial position of the related party and the market in which the
related party operates.
F-33
The following are the transactions with related parties and the outstanding balances:
Purchases
from
Related
Parties
Amounts
Owed by
Related
Parties
Amounts
Owed to
Related
Parties
Year
Revenue
from
Related
Parties
SMC
June 30, 2015

December 31, 2014
P -
P440,892
267,336
P252
10,557
P44,944
18,009
On demand;
non-interest
bearing
Unsecured;
no impairment
Entities under
Common
Control
June 30, 2015

December 31, 2014
4,376,178
7,814,823
1,463,279
2,208,319
1,535,841
852,839
336,346
418,116
On demand;
non-interest
bearing
Unsecured;
no impairment
Associate
June 30, 2015

December 31, 2014
455,463
878,650
On demand;
non-interest
bearing
Unsecured;
no impairment
Associate of an
Entity under
Common
Control
June 30, 2015

December 31, 2014
343,242
-
118,895
-
69,099
-
3,302,558
3,451,000
10 years;
interest
bearing
Secured
June 30, 2015
P5,174,883
P2,023,066
P1,705,847
P3,683,848
December 31, 2014
P8,693,473
P2,475,655
P941,212
P3,887,125
100,655
77,816
Terms
Conditions
a. Amounts owed by related parties consist of trade and other receivables and security
deposits.
b. Amounts owed to related parties consist of trade payables, management fees,
purchases of fuel, reimbursement of expenses, rent, insurance and services rendered
by related parties.
c. The amount owed to associate of an entity under common control consists of interest
bearing loan obtained from Bank of Commerce included as part of Long-term debt
account in the consolidated interim statements of financial position.
d. The compensation of key management personnel of the Group amounted to P21,014
and P17,449 for the six months ended June 30, 2015 and 2014, respectively.
e. SMC offers shares of stock to employees of SMC and its subsidiaries under the
ESPP. Under the ESPP, all permanent Philippine-based employees of SMC and its
subsidiaries who have been employed for a continuous period of one year prior to the
subscription period will be allowed to subscribe at a price equal to weighted average
daily closing prices for three months prior to the offer period less 15% discount. A
participating employee may acquire at least 100 shares of stock up to a maximum of
20,000 shares, subject to certain conditions, through payroll deductions.
The ESPP requires the subscribed shares and stock dividends accruing thereto to be
pledged to SMC until the subscription is fully-paid. The right to subscribe under the
ESPP cannot be assigned or transferred. A participant may sell his shares after the
second year from exercise date. The ESPP also allows subsequent withdrawal and
cancellation of participants subscriptions under certain terms and conditions.
There are no expenses related to ESPP as of June 30, 2015 and December 31, 2014.
f.
The Group does not provide yet post-employment benefits to its employees.
Management believes that the retirement expense is not significant based on the
employees average age and years of service to the Group, and payroll costs as of
June 30, 2015 and December 31, 2014.
F-34
11. Equity
Retained Earnings
The Groups unappropriated retained earnings include the Parent Companys
accumulated earnings in subsidiaries and equity in net losses of an associate and joint
ventures amounting to P10,666 and P427 as of June 30, 2015 and December 31, 2014,
respectively. Such amounts are not available for declaration as dividends until declared
by the respective investees.
The Parent Companys BOD declared cash dividends as follows:
June 30, 2015
Date of
Declaration
Stockholders of
Record
Date Payable
March 25, 2015
March 25, 2015
March 31, 2015
Date of
Declaration
Stockholders of
Record
Date Payable
March 25, 2014

June 3, 2014
August 19, 2014
November 4, 2014
March 25, 2014

June 3, 2014
August 19, 2014
November 4, 2014
April 8, 2014
June 10, 2014
August 29, 2014
November 11, 2014
Dividend Per
Share
Amount
P1.20
P1,500,000
December 31, 2014

Dividend Per
Share
Amount
P1.20
2.80
2.00
2.00
P1,500,000
3,500,000
2,500,000
2,500,000
P10,000,000
Undated Subordinated Capital Securities (USCS)

On May 7, 2014, the Parent Company issued and listed on the Singapore Stock
Exchange, US$300,000 USCS at an issue price of 100%. The holders of the USCS are
conferred a right to receive distribution on a semi-annual basis from their issue date at the
rate of 7.5% per annum, subject to the step-up rate. The Parent Company has a right to
defer this distribution under certain conditions. The USCS have no fixed redemption date
and are redeemable in whole, but not in part, at the Parent Companys option on
November 7, 2019, or any distribution payment date thereafter or upon the occurrence of
certain other events.
The proceeds were used by the Parent Company to finance investments in power-related
assets and other general corporate purposes.
12. Basic and Diluted Earnings Per Share
Basic and diluted EPS is computed as follows:
2014
2015
P8,943,531
P3,943,113
Net income (a)

Weighted average number of shares
outstanding (in thousands) (b)
Basic/diluted EPS (a/b)
1,250,004
P3.15
1,250,004
P7.15
As of June 30, 2015 and 2014, the Group has no dilutive debt or equity instruments.
F-35
13. Financial Risk Management Objectives and Policies

Objectives and Policies
The Group has significant exposure to the following financial risks primarily from its use
of financial instruments:
Interest Rate Risk

Foreign Currency Risk
Liquidity Risk
Credit Risk
This note presents information about the Groups exposure to each of the foregoing risks,
the Groups objectives, policies and processes for measuring and managing these risks,
and the Groups management of capital.
There has been changes to the Groups exposure to the above risks or the manner in
which it manages and measures the risks since prior year. The Groups overall strategy in
managing its capital has likewise remained unchanged since prior year.
The Groups principal non-trade related financial instruments include cash and cash
equivalents, other receivables (current and noncurrent), restricted cash, non-trade
payables, and long-term debt. These financial instruments are used mainly for working
capital management and investment purposes. The Groups trade-related financial assets
and financial liabilities such as trade receivables, accounts payable and accrued expenses
and finance lease liabilities arise directly from and are used to facilitate its daily
operations.
The BOD has the overall responsibility for the establishment and oversight of the
Groups risk management framework.
The BOD has established the Risk Management Committee, which is responsible for
developing and monitoring the Groups risk management policies. The committee reports
regularly to the BOD on its activities.
The Groups risk management policies are established to identify and analyze the risks
faced by the Group, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Groups activities. The Group, through its
training and management standards and procedures, aims to develop a disciplined and
constructive control environment in which all employees understand their roles and
obligations.
The BOD oversees how management monitors compliance with SMCs risk management
policies and procedures, and reviews the adequacy of the risk management framework in
relation to the risks faced by the Group. The BOD is assisted in its oversight role by
SMCs Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk
management controls and procedures, the results of which are reported to the BOD.
Interest Rate Risk
Interest rate risk is the risk that future cash flows from a financial instrument (cash flow
interest rate risk) or its fair value (fair value interest rate risk) will fluctuate because of
changes in market interest rates. The Groups exposure to changes in interest rates relates
primarily to the Groups long-term borrowings. Borrowings issued at fixed rates expose
the Group to fair value interest rate risk. On the other hand, borrowings issued at variable
rates expose the Group to cash flow interest rate risk.
F-36
Management is responsible for monitoring the prevailing market-based interest rate and
ensures that the mark-up rates charged on its borrowings are optimal and benchmarked
against the rates charged by other creditor banks.
On the other hand, the Groups investment policy is to maintain an adequate yield to
match or reduce the net interest cost from its borrowings pending the deployment of
funds to their intended use in the Groups operations and working capital management.
However, the Group invests only in high-quality short-term investments and maintains
the necessary diversification to avoid concentration risk.
In managing interest rate risk, the Group aims to reduce the impact of short-term
fluctuations on the Groups earnings. Over the longer term, however, permanent changes
in interest rates would have an impact on profit or loss.
The management of interest rate risk is also supplemented by monitoring the sensitivity
of the Groups financial instruments to various standard and non-standard interest rate
scenarios. Interest rate movements affect reported equity from increases or decreases in
interest income or interest expense as well as fair value changes reported in profit or loss,
if any.
The sensitivity to a reasonably possible 1% increase in the interest rates, with all other
variables held constant, would have decreased the Groups profit before tax (through the
impact on floating rate borrowings) by P4,005 and P6,388 in 2015 and 2014,
respectively. A 1% decrease in the interest rate would have had the equal but opposite
effect. These changes are considered to be reasonably possible given the observation of
prevailing market conditions in those periods. There is no impact on the Groups equity.
Interest Rate Risk Table
The terms and maturity profile of the interest-bearing financial instruments, together with
its gross amounts, are shown in the following tables:
June 30, 2015
Fixed Rate
Philippine peso-denominated
Step-down interest rate
Foreign currency-denominated
(expressed in Philippine peso)
Interest rate
Floating Rate
Interest rate
December 31, 2014

Fixed Rate
Interest rate
Floating Rate
Interest rate
<1 Year
1-2 Years
>2-3 Years
>3-4 Years
>4-5 Years
>5 Years
Total
P1,402,200
6.0606%
171,000
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P4,594,050
6.0606%
560,250
6.2921%
P11,605,050
1,415,250
-
13,527,000
7%
31,563,000
LIBOR +
Margin
13,527,000
31,563,000
P15,100,200
P1,573,200
P1,573,200
P33,136,200
P1,573,200
P5,154,300
P58,110,300
<1 Year
1-2 Years
>2-3 Years
>3-4 Years
>4-5 Years
>5 Years
Total
P1,223,850
6.0606%
149,250
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P1,402,200
6.0606%
171,000
6.2921%
P5,295,150
6.0606%
645,750
6.2921%
P12,127,800
1,479,000
-
P1,373,100
13,416,000
7%
P14,989,200
P1,573,200
F-37
22,360,000
LIBOR +
Margin
P23,933,200
13,416,000
22,360,000
P1,573,200
P5,940,900
P49,382,800

The Groups exposure to foreign currency risk results from significant movements in
foreign exchange rates that adversely affect the foreign currency-denominated
transactions of the Group. The Groups risk management objective with respect to
foreign currency risk is to reduce or eliminate earnings volatility and any adverse impact
on equity.
Information on the Groups foreign currency-denominated monetary assets and monetary
liabilities and their Philippine peso equivalents are as follows:
June 30, 2015
Note
Assets
Trade and other receivables
Liabilities
Accounts payable and
accrued expenses
Finance lease liabilities
Long-term debt
Net foreign currencydenominated monetary
liabilities
6
9, 10
December 30, 2014
US Dollar
Peso
Equivalent
US Dollar
Peso
Equivalent
US$218,116
99,033
P9,834,844
4,465,416
US$260,178
83,937
P11,635,160
3,753,513
317,149
14,300,260
344,115
15,388,673
174,085
2,138,359
1,000,000
7,849,492
96,418,606
45,090,000
148,277
2,216,977
800,000
6,633,727
99,143,265
35,776,000
3,312,444
149,358,098
3,165,254
141,552,992
US$2,995,295
P135,057,838
US$2,821,139
P126,164,319
The Group reported net unrealized foreign exchange gain (loss) amounting to
(P1,257,436) and P1,920,406 for the six months ended June 30, 2015 and 2014,
respectively, with the translation of its foreign currency-denominated assets and
liabilities. These mainly resulted from the movement of the Philippine peso against US
dollar as shown in the following table:
US Dollar
to Philippine Peso
P45.090
43.650
June 30, 2015

June 30, 2014
The management of foreign currency risk is also supplemented by monitoring the

sensitivity of the Groups financial instruments to various foreign currency exchange rate
scenarios. Foreign exchange movements affect reported equity from increases or
decreases in unrealized and realized foreign exchange gains or losses.
F-38
The following table demonstrates the sensitivity to a reasonably possible change in the
US dollar exchange rate, with all other variables held constant, of the Groups profit
before tax (due to changes in the fair value of monetary assets and monetary liabilities):
June 30, 2015
P1 Decrease
P1 Increase
in the US
in the US
Dollar
Dollar
Exchange
Exchange
Rate
Rate
(P218,116)
P218,116
(99,033)
99,033
(317,149)
317,149
accrued expenses
Long-term debt
December 30, 2014

P1 Decrease
P1 Increase
in the US
in the US
Dollar
Dollar
Exchange
Exchange
Rate
Rate
(P260,178)
P260,178
(83,937)
83,937
(344,115)
344,115
174,085
2,138,359
1,000,000
3,312,444
(174,085)
(2,138,359)
(1,000,000)
(3,312,444)
148,277
2,216,977
800,000
3,165,254
(148,277)
(2,216,977)
(800,000)
(3,165,254)
P2,995,295
(P2,995,295)
P2,821,139
(P2,821,139)
Exposures to foreign exchange rates vary during the year depending on the volume of
foreign currency-denominated transactions. Nonetheless, the analysis above is considered
to be representative of the Groups currency risk.
Liquidity Risk
Liquidity risk pertains to the risk that the Group will encounter difficulty in meeting
obligations associated with financial liabilities that are settled by delivering cash or
another financial asset.
The Groups objectives to manage its liquidity risk are as follows: a) to ensure that
adequate funding is available at all times; b) to meet commitments as they arise without
incurring unnecessary costs; c) to be able to access funding when needed at the least
possible cost; and d) to maintain an adequate time spread of refinancing maturities.
The Group constantly monitors and manages its liquidity position, liquidity gaps and
surplus on a daily basis. A committed standby credit facility from several local banks is
also available to ensure availability of funds when necessary.
F-39
The table below summarizes the maturity profile of the Groups financial assets and
financial liabilities based on contractual undiscounted receipts and payments used for
liquidity management:
June 30, 2015
Financial Assets
Restricted cash (included under
account)
Noncurrent receivable
(included under Other
noncurrent assets account)
Financial Liabilities
expenses (excluding statutory
payables)
(including current portion)
Long-term debt - net (including
current portion)
December 31, 2014

Financial Assets
account)
payables)
current portion)
Carrying
Amount
Contractual
Cash Flow
1 Year
or Less
P30,596,361
20,183,031
P30,596,361
20,183,031
804,362
804,362
1 Year 2 Years
2 Years 5 Years
Over
5 Years
P30,596,361
20,183,031
P -
P -
P -
804,362
22,995,542
22,995,542
22,995,542
181,241,762
238,107,017
22,719,923
23,388,959
74,182,778
117,815,357
57,284,671
58,110,300
15,100,200
1,573,200
36,282,600
5,154,300
Carrying
Amount
Contractual
Cash Flow
1 Year
or Less
1 Year 2 Years
2 Years 5 Years
Over
5 Years
P38,304,294
18,208,339
P38,304,294
18,208,339
P38,304,294
18,208,339
P -
P -
P -
1,054,801
1,054,801
1,054,801
179,129
179,129
179,129
23,331,447
23,331,447
23,331,447
186,303,745
248,175,447
22,091,404
23,170,046
71,935,991
130,978,006
48,713,245
49,382,800
1,373,100
14,989,200
27,079,600
5,940,900
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from
the Groups trade and other receivables. The Group manages its credit risk mainly
through the application of transaction limits and close risk monitoring. It is the Groups
policy to enter into transactions with creditworthy customer or counterparty to mitigate
any significant concentration of credit risk.
The Group has regular internal control reviews to monitor the granting of credit and
management of credit exposures. Where appropriate, the Group obtains collateral or
arranges master netting agreements.
Trade and Other Receivables
The Groups exposure to credit risk is influenced mainly by the individual characteristics
of each customer or counterparty. However, management also considers the
demographics of the Groups customer base, including the default risk of the industry in
which customers or counterparties operate, as these factors may have an influence on the
credit risk.
F-40
The Group has established a credit policy under which each new customer or
counterparty is analyzed individually for creditworthiness before the Groups standard
payment terms and conditions are offered. The Group ensures that sales on account are
made to customers with appropriate credit history. The Group has detailed credit criteria
and several layers of credit approval requirements before engaging a particular customer
or counterparty. The Groups review includes external ratings, when available, and in
some cases bank references. Purchase limits are established for each customer and are
reviewed on a regular basis. Customers that fail to meet the Groups benchmark
creditworthiness may transact with the Group only on a prepayment basis.
The Group establishes an allowance for impairment losses that represents its estimate of
incurred losses in respect of trade and other receivables. The main components of this
allowance include a specific loss component that relates to individually significant
exposures, and, as applicable, a collective loss component established for groups of
similar assets in respect of losses that have been incurred but not yet identified. The
collective loss allowance is determined based on historical data of payment statistics for
similar financial assets.
Financial information on the Groups maximum exposure to credit risk, without
considering the effects of collaterals and other risk mitigation techniques, is presented
below.
June 30
2015
P30,595,844
20,183,031
804,362
P51,583,237

Restricted cash
December 31
2014
P38,303,999
18,208,339
1,054,801
179,129
P57,746,268
The credit risk for cash and cash equivalents is considered negligible, since the
counterparties are reputable entities with high quality external credit ratings.
The Group has no significant concentration of credit risk since the Group deals with a
large number of homogeneous trade customers. The Group does not execute any credit
guarantee in favor of any counterparty.
Capital Management
The primary objective of the Groups capital management is to ensure that it maintains a
strong credit rating and healthy capital ratios in order to support its businesses and
maximize shareholder value.
The Group manages its capital structure and makes adjustments, in the light of changes in
economic conditions. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, distribution payment, pay-off existing debts, return
capital to shareholders or issue new shares, subject to compliance with certain covenants
of its long-term debt and USCS (Notes 9 and 11).
The Group defines capital as capital stock, additional paid-in capital, USCS and retained
earnings, both appropriated and unappropriated.
F-41
The BOD has overall responsibility for monitoring capital in proportion to risk. Profiles
for capital ratios are set in the light of changes in the Groups external environment and
the risks underlying the Groups business, operation and industry.
The Group monitors capital on the basis of debt-to-equity ratio, which is calculated as
total debt divided by total equity. Total debt is defined as total current liabilities and total
noncurrent liabilities, while equity is total equity as shown in the consolidated interim
statements of financial position.
14. Financial Assets and Financial Liabilities
The following methods and assumptions are used to estimate the fair value of each class
Cash and Cash Equivalents, Trade and Other Receivables, Restricted Cash, Noncurrent
Receivable, Accounts Payable and Accrued Expenses (excluding statutory payables).
The carrying amounts of these financial assets and financial liabilities approximate fair
values primarily due to the relatively short-term nature/maturities of these financial
instruments. The fair value of other receivable (noncurrent) is based on the present value
of expected future cash flows using applicable discount rates based on current market
rates of identical or similar quoted instruments.
Finance Lease Liabilities. The fair value is based on the present value of expected cash
flows using the applicable discount rates based on current market rates of similar
instruments.
Long-term Debt. The fair value of interest-bearing fixed-rate loans is based on the
discounted value of expected future cash flows using the applicable market rates for
similar types of instruments as of reporting date. The discount rates used for Philippine
peso-denominated loan range from 2.08% to 4.01% and from 2.54% to 4.29% as of
June 30, 2015 and December 31, 2014, respectively. The discount rates used for foreign
currency-denominated loans range from 0.18% to 0.50% and from 0.17% to 0.63% and
as of June 30, 2015 and December 31, 2014, respectively. The carrying amounts of
floating rate loans with quarterly interest rate repricing approximate their fair values.
The table below presents a comparison by category of carrying amounts and fair values
of the Groups finance lease liabilities and long-term debt - net.
June 30, 2015
Carrying
Amount
Fair Value
Long-term debt - net
December 31, 2014

Carrying
Amount
Fair Value
P181,241,762 P181,241,762
P186,303,745
P186,303,745
57,284,671
59,276,268
P238,526,433 P240,518,030
48,713,245
P235,016,990
51,311,719
P237,615,464
F-42
The fair value of the long-term debt was categorized as Level 2 in the fair value hierarchy
based on inputs other than quoted prices included within Level 1 that are observable at
the reporting date. The Group has no financial instruments valued based on Level 1 and
Level 3 as of June 30, 2015 and December 31, 2014. During the year, 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.
15. Other Matters
a. Contingencies
The Company is a party to certain cases or claims filed by third parties which are
either pending decision by the court/regulators or are subject to settlement
agreements. The outcome of these cases or claims cannot be presently determined.
b. Generation Payments to PSALM
SPPC disputed the claims of PSALM for energy fees. The claims arose from
differing interpretations of certain provisions in the IPPA Agreement related to
energy fees, the fees payable to PSALM for the generation of power to customers.
SPPCs management is in discussions with PSALM to secure a common
understanding through amicable means. However, management and its legal counsel
assessed that SPPCs bases for the amounts due to PSALM are consistent with the
terms of the Ilijan IPPA Agreement. The information usually required is not
disclosed on the grounds that it may prejudice the outcome of the discussion.
c. Temporary Restraining Order (TRO) Issued to Meralco
On December 23, 2013, the Supreme Court (SC) issued a TRO, effective
immediately, preventing Meralco from collecting from its customers the power rate
increase pertaining to November 2013 billing. As a result, Meralco was constrained
to fix its generation rate to its October 2013 level of P5.67/kWh. Claiming that since
the power supplied by generators, including SMEC and SPPC is billed to Meralco's
customers on a pass-through basis, Meralco deferred a portion of its payment on the
ground that it was not able to collect the full amount of its generation cost. Further,
on December 27, 2013, the Department of Energy (DOE), the ERC and the PEMC,
acting as a tripartite committee, issued a joint resolution setting a reduced price cap
on the WESM of P32/kWh. The price will be effective for 90 days until a new cap is
decided upon.
On January 16, 2014, the SC granted Meralcos plea to include other power supplier
and generation companies, including SMEC and SPPC, as respondents to an inquiry.
On February 18, 2014, the SC extended the period of the TRO until April 22, 2014
and enjoined the respondents (PEMC and the generators) from demanding and
collecting the deferred amounts.
On March 3, 2014, the ERC issued an order declaring the November and December
2013 Luzon WESM prices void and imposed the application of regulated prices.
Accordingly, SMEC, SPPC and SPDC recognized a reduction in the sale of power
while SMELC recognized a reduction in its power purchases. Consequently, a
payable and receivable were also recognized for the portion of over-collection or
over-payment. The settlement of which shall be covered by a 24-month Special
Payment Arrangement (SPA) agreed with PEMC which took effect in June 2014. On
June 26, 2014, SMEC, SPPC and SPDC filed with the Court of Appeals a Petition for
Review of these orders. As of June 30, 2015, the outcome of this case cannot be
determined.
F-43
d. Commitments
The outstanding purchase commitments of the Group as of June 30, 2015 and
December 31, 2014 amounted to P1,082,180 and P4,581,000, respectively.
Amount authorized but not yet disbursed for capital projects as of June 30, 2015 and
December 31, 2014 is approximately P16,812,910 and P39,379,030, respectively
(Note 6).
e. Subsequent Events
On July 2, 2015, the Parent Company and SMEC declared cash dividends amounting
to P1,500,000 and P3,000,000, respectively, to stockholders of record on the same
date and paid subsequently on July 9, 2015.
F-44

AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013
F-45
F-46
F-47

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In Thousands)
December 31
Note
2014
2013
8, 25, 26
4, 9, 18, 25, 26
4, 10
P38,304,294
18,208,339
1,365,033
P29,125,171
31,540,444
1,499,135
7, 11
9,137,202
67,014,868
7,234,892
69,399,642
4, 12
4, 13
228,133,323
10,612,277
217,021,519
6,011,799
4, 6
4, 6, 14
4, 22
15, 25, 26
671,783
2,322,241
2,779,380
2,215,415
246,734,419
525,999
1,728,592
2,909,105
3,506,310
231,703,324
P313,749,287
P301,102,966
13, 16, 18, 25, 26
P28,117,804
P22,971,933
4, 7, 25, 26
16,205,224
15,630,430
17, 25, 26
1,330,037
151,360
45,804,425
142,403
218,519
38,963,285
17, 25, 26
47,383,208
46,946,482
4, 7, 25, 26
22
170,098,521
3,043,470
179,372,291
2,088,065
16
670,486
221,195,685
228,406,838
267,000,110
267,370,123
ASSETS
Current Assets
Inventories
Prepaid expenses and other current
assets
Noncurrent Assets
Deferred exploration and
development costs
Deferred tax assets

Current Liabilities
expenses
Finance lease liabilities - current
portion
Current portion of long-term debt net of debt issue costs
Income tax payable
Long-term debt - net of current
portion and debt issue costs
Finance lease liabilities - net of
current portion
Other noncurrent liabilities - net of
current portion
Forward
F-48
December 31
Note
Equity
Capital stock
Undated subordinated capital
securities
Retained earnings
Reserves
Total Equity
2014
2013
P1,062,504
2,490,000
P1,062,504
2,490,000
13,110,066
29,301,328
785,279
46,749,177
29,395,060
785,279
33,732,843
P313,749,287
P301,102,966
19
See Notes to the Consolidated Financial Statements.
F-49

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31

Note
REVENUES
Sale of power
Sale of electricity
2014
2013
P80,080,157
4,213,433
84,293,590
P73,882,922
160,865
74,043,787
30,775,896
11,945,280
6,143,866
6,045,468
575,632
2,911,930
58,398,072
31,269,293
11,179,322
5,382,435
3,929,184
194,388
1,547,750
53,502,372
25,895,518
20,541,415
549,977
447,843
5, 7, 18, 27
COST AND EXPENSES

Cost of power sold:
Energy fees
Power purchases
Operating expenses
7
7, 10, 18
12
7
7, 18, 20
INTEREST INCOME
FINANCING CHARGES
(12,673,891)
7, 17
(13,168,470)
EQUITY IN NET EARNINGS (LOSSES) OF

ASSOCIATES AND JOINT VENTURES Net
13
(22,345)
GAIN ON SALE OF INVESTMENT
13
2,587,044
21
68,225
(8,491,062)
13,322,905
INCOME TAX EXPENSE (BENEFIT) - Net

NET INCOME
F-50
22, 23
2,693,423
P10,629,482
24
P8.50
795,004
3,206,353
(836,302)
P4,042,655
P3.23

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)

Note
NET INCOME
2014
2013
P10,629,482
P4,042,655
P10,629,482
39,306
P4,081,961
OTHER COMPREHENSIVE INCOME

ITEM THAT WILL NOT BE
RECLASSIFIED TO PROFIT OR LOSS
Share in other comprehensive income of an
associate, net of disposal
TOTAL COMPREHENSIVE INCOME
F-51
13, 19
F-52
Total comprehensive income

Dividends declared
Balance as of December 31, 2013
P1,062,504
P1,062,504
Balance as of January 1, 2013
Share in other comprehensive income of an associate,

net of tax
Net income for the year
P1,062,504
P1,062,504

Issuance of undated subordinated capital securities
Net income for the year / total comprehensive income
Dividends declared
Distributions paid
Capital
Stock
(Note 19)
P2,490,000
P2,490,000
P2,490,000
P2,490,000
Additional
Paid-in
Capital
4,042,655
(4,500,000)
P29,395,060
4,042,655
P29,852,405
P29,395,060
10,629,482
(10,000,000)
(723,214)
P29,301,328
P -
P -
P 13,110,066
P13,110,066
Undated
Subordinated
Retained
Capital
Earnings
Securities
(Note 19)
(Note 19)

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands)
39,306
P785,279
39,306
-
P745,973
P785,279
P785,279
4,081,961
(4,500,000)
P33,732,843
39,306
4,042,655
P34,150,882
P33,732,843
13,110,066
10,629,482
(10,000,000)
(723,214)
P46,749,177
Reserves
(Note 19) Total Equity

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

2014
2013
P13,322,905
P3,206,353
13,168,470
6,187,640
1,584,500
144,393
12,673,891
5,404,184
9,592,617
32,850
22,345
(549,977)
33,880,276
(795,004)
(447,843)
(2,587,044)
27,080,004
9
10
11
15
(3,037,652)
134,102
(1,902,310)
1,290,895
(1,633,834)
(314,185)
(240,126)
(1,789,482)
16
5,145,871
670,486
36,181,668
546,350
(2,196,778)
(1,675,452)
32,855,788
3,128,087
26,230,464
527,661
(800,071)
(294,055)
25,663,999
16,228,991
(17,299,444)
(4,622,823)
(593,649)
(145,784)
(6,432,709)
(19,122,531)
(2,145,936)
(200,780)
704,407
(20,764,840)
Note
ACTIVITIES
Adjustments for:
Unrealized foreign exchange losses - net
Impairment losses on trade receivables
Equity in net earnings (losses) of associates and
joint ventures - net
Interest income
Gain on sale of investment
Inventories
Increase in:
Other noncurrent liabilities
Finance cost paid
Income taxes paid
ACTIVITIES
Net additions to property, plant and equipment
Additions to intangible assets
Dividends received
Net cash flows used in investing activities
Forward
F-53
7, 17
7, 12
25
9
13
13
17
9, 13
12
13
14
6
13

Note
ACTIVITIES
Proceeds from issuance of undated subordinated
capital securities
Proceeds from long-term debt
Dividends paid
Distributions to undated subordinated capital
securities holders
Payment of long-term debt
Net cash flows provided by (used in) financing
activities
17
7
19
P 33,191,756
(19,146,035)
(4,500,000)
19
17
(723,214)
(193,200)
(8,708,000)
(16,430,335)
(813,621)
NET INCREASE IN CASH AND CASH

EQUIVALENTS
F-54
2013
P13,110,066
1,500,000
(20,123,987)
(10,000,000)


BEGINNING OF YEAR
END OF YEAR
2014
837,721
(167,154)
9,179,123
5,569,726
29,125,171
23,555,445
P38,304,294
P29,125,171

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Reporting Entity
The accompanying consolidated financial statements comprise the financial statements of
the Parent Company and its Subsidiaries (collectively referred to as the Group).
(PSE).
The Parent Companys subsidiaries, primarily engaged in power generation and retail
power-related services, are incorporated in the Philippines and registered with the
Philippine SEC. The subsidiaries are as follows:
Note
Power Generation
SMC PowerGen Inc. (SPI)
Limay Power Generation Corporation (c)
PowerOne Ventures Energy Inc. (PVEI)
Retail and Power-related Service Provider
SMC Power Generation Corp. (SPGC)
Albay Power and Energy Corp. (APEC)
Others - Coal Mining
Daguma Agro-Minerals, Inc. (DAMI) (a)
Sultan Energy Phils. Corp. (SEPC) (a)
Bonanza Energy Resources, Inc. (BERI) (a)
(a)
(b)
(c)
2013
2014
7, 18
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
December 31, 2014.
Construction of power plants on-going as of December 31, 2014.
started commercial operation as of December 31, 2014.
F-55
2. Basis of Preparation
Statement of Compliance
The consolidated financial statements have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS). PFRS are based on International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board
(IASB). PFRS which are issued by the Philippine Financial Reporting Standards Council
(FRSC), consist of PFRS, Philippine Accounting Standards (PAS), and Philippine
Interpretations.
The consolidated financial statements are also prepared to comply with the requirements
under Section 4.12, Provision of Financial Statements and Reports, of the US$300,000
7% Notes due 2016 issued by the Parent Company (Note 17).
The consolidated financial statements were authorized for issue by the Board of Directors
(BOD) on March 25, 2015.
Basis of Measurement
The consolidated financial statements of the Group have been prepared on a historical
cost basis of accounting.
Functional and Presentation Currency
The consolidated financial statements are presented in Philippine peso, which is the
Parent Companys functional currency. All financial information are rounded off to the
nearest thousand (P000), except when otherwise indicated.
Basis of Consolidation
A subsidiary is an entity controlled by the Group. The Group controls an entity if and
only if, the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.
The Group reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control.
When the Group has less than majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power
over an investee, including the contractual arrangement with the other vote holders of the
investee, rights arising from other contractual arrangements and the Groups voting rights
and potential voting rights.
The financial statements of the subsidiaries are included in the consolidated financial
statements from the date when the Group obtains control, and continue to be consolidated
until the date when such control ceases.
The financial statements of the subsidiaries are prepared for the same reporting period as
the Parent Company, using uniform accounting policies for like transactions and other
events in similar circumstances. Intergroup balances and transactions, including
intergroup unrealized profits and losses, are eliminated in preparing the consolidated
financial statements.
F-56
3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all years
presented in the consolidated financial statements.
Adoption of New or Revised Standards, Amendments to Standards and Interpretations
The Group has adopted the following amendments to standards and new interpretation
starting January 1, 2014. Except as otherwise indicated, the adoption of these
amendments to standards and interpretation did not have any significant impact on the
Groups consolidated financial statements.
Amendments to Standards and Interpretations Adopted in 2014
The Group has adopted the following PFRS effective January 1, 2014:
Offsetting Financial Assets and Financial Liabilities (Amendments to PAS 32,

Financial Instruments). These amendments clarify that:
x
an entity currently has a legally enforceable right to set-off if that right is:
- not contingent on a future event; and
- enforceable both in the normal course of business and in the event of default,
insolvency or bankruptcy of the entity and all counterparties; and
gross settlement is equivalent to net settlement if and only if the gross settlement
mechanism has features that:
- eliminate or result in insignificant credit and liquidity risk; and
- process receivables and payables in a single settlement process or cycle.
Recoverable Amount Disclosures for Non-Financial Assets (Amendments to PAS 36).

These narrow-scope amendments to PAS 36, Impairment of Assets, address the
disclosure of information about the recoverable amount of impaired assets if that
amount is based on fair value less costs of disposal. The amendments clarified that
the scope of those disclosures is limited to the recoverable amount of impaired assets
that is based on fair value less costs of disposal.
Measurement of Short-term Receivables and Payables (Amendment to PFRS 13).

Amendment to PFRS 13, Fair Value Measurement, is part of the Annual
Improvements to PFRS 2010-2012 Cycle. The amendment clarifies that, in issuing
PFRS 13 and making consequential amendments to PAS 39, Financial Instruments:
Recognition and Measurement, and PFRS 9, Financial Instruments, the intention is
not to prevent entities from measuring short-term receivables and payables that have
no stated interest rate at their invoiced amounts without discounting, if the effect of
not discounting is immaterial. The amendment to PFRS 13 is effective immediately.
F-57
Standards Issued But Not Yet Adopted

A number of new standards and amendments to standards are effective for annual periods
beginning after January 1, 2014. However, the Group has not applied the following new
or amended standards in preparing the consolidated financial statements. Unless
otherwise stated, none of these are expected to have a significant impact on the Groups
consolidated financial statements.
Effective July 1, 2014

amendments apply to contributions from employees or third parties to defined benefit
plans. The objective of the amendments is to simplify the accounting for
contributions that are independent of the number of years of employee service, for
example, employee contributions that are calculated according to a fixed percentage
of salary.
The amendments apply retrospectively for annual periods beginning on or after
July 1, 2014. Earlier application is permitted.
Annual Improvements to PFRS: 2010 - 2012 and 2011 - 2013 Cycles - Amendments
were made to a total of nine standards, with changes made to the standards on
business combinations and fair value measurement in both cycles. Most amendments
will apply prospectively for annual periods beginning on or after July 1, 2014.
Earlier application is permitted, in which case the related consequential amendments
to other PFRS would also apply. Special transitional requirements have been set for
amendments to the following standards: PFRS 2, Share-based Payment, PAS 16,
Property, Plant and Equipment, PAS 38, Intangible Assets, and PAS 40, Investment
Property. The following are the said improvements or amendments to PFRS which
are applicable to the Group:
x
Meaning of Vesting Condition (Amendment to PFRS 2). PFRS 2 has been

amended to clarify the definition of vesting condition by separately defining
performance condition and service condition. The amendment also clarifies
both: how to distinguish between a market and a non-market performance
condition; and the basis on which a performance condition can be differentiated
from a non-vesting condition.
Scope Exclusion for the Formation of Joint Arrangements (Amendment to

PFRS 3, Business Combinations). PFRS 3 has been amended to clarify that the
standard does not apply to the accounting for the formation of all types of joint
arrangements in PFRS 11, Joint Arrangements, - i.e. including joint operations in the financial statements of the joint arrangements themselves.
Disclosures on the Aggregation of Operating Segments (Amendment to PFRS 8,

Operating Segments). PFRS 8 has been amended to explicitly require the
disclosure of judgments made by management in applying the aggregation
criteria. The disclosures include: (i) a brief description of the operating segments
that have been aggregated; and (ii) the economic indicators that have been
assessed in determining that the operating segments share similar economic
characteristics. In addition, the amendments clarify that a reconciliation of the
total of the reportable segments assets to the entitys assets is required only if
this information is regularly provided to the entitys chief operating decision
maker. This change aligns the disclosure requirements with those for segment
liabilities.
F-58
Scope of Portfolio Exception (Amendment to PFRS 13). The scope of the

PFRS 13 portfolio exception - whereby entities are exempted from measuring the
fair value of a group of financial assets and financial liabilities with offsetting
risk positions on a net basis if certain conditions are met - has been aligned with
the scope of PAS 39 and PFRS 9.
PFRS 13 has been amended to clarify that the portfolio exception potentially
applies to contracts in the scope of PAS 39 and PFRS 9 regardless of whether
they meet the definition of a financial asset or financial liability under PAS 32,
Financial Instruments: Presentation, - e.g. certain contracts to buy or sell nonfinancial items that can be settled net in cash or another financial instrument.
Definition of Related Party (Amendment to PAS 24). The definition of a

related party is extended to include a management entity that provides key
management personnel (KMP) services to the reporting entity, either directly or
through a group entity. For related party transactions that arise when KMP
services are provided to a reporting entity, the reporting entity is required to
separately disclose the amounts that it has recognized as an expense for those
services that are provided by a management entity; however, it is not required to
look through the management entity and disclose compensation paid by the
management entity to the individuals providing the KMP services. The reporting
entity will also need to disclose other transactions with the management entity
under the existing disclosure requirements of PAS 24, Related Party Disclosures.
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments

to PAS 16 and PAS 38). The amendments to PAS 38 introduce a rebuttable
presumption that the use of revenue-based amortization methods for intangible assets
is inappropriate. This presumption can be overcome only when revenue and the
consumption of the economic benefits of the intangible asset are highly correlated,
or when the intangible asset is expressed as a measure of revenue.
The amendments to PAS 16 explicitly state that revenue-based methods of
depreciation cannot be used for property, plant and equipment. This is because such
methods reflect factors other than the consumption of economic benefits embodied in
the asset - e.g. changes in sales volumes and prices.
The amendments are effective for annual periods beginning on or after January 1,
2016, and are to be applied prospectively. Early application is permitted.
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to PFRS 10 and PAS 28). The amendments address an inconsistency
between the requirements in PFRS 10, Consolidated Financial Statements, and in
PAS 28, Investments in Associates and Joint Ventures, in dealing with the sale or
contribution of assets between an investor and its associate or joint venture.
The amendments require that a full gain or loss is recognized when a transaction
involves a business (whether it is housed in a subsidiary or not). A partial gain or
loss is recognized when a transaction involves assets that do not constitute a
business, even if these assets are housed in a subsidiary.
The amendments apply prospectively for annual periods beginning on or after
January 1, 2016. Early adoption is permitted.
F-59
PFRS 9 (2014). PFRS 9 (2014) replaces PAS 39 and supersedes the previously
published versions of PFRS 9 that introduced new classifications and measurement
requirements (in 2009 and 2010) and a new hedge accounting model (in 2013).
PFRS 9 includes revised guidance on the classification and measurement of financial
assets, including a new expected credit loss model for calculating impairment,
guidance on own credit risk on financial liabilities measured at fair value and
supplements the new general hedge accounting requirements published in 2013.
PFRS 9 incorporates new hedge accounting requirements that represent a major
overhaul of hedge accounting and introduces significant improvements by aligning
the accounting more closely with risk management.
The new standard is to be applied retrospectively for annual periods beginning on or
after January 1, 2018 with early adoption permitted.
The Group is assessing the potential impact on its consolidated financial statements
resulting from the application of PFRS 9.
Financial Assets and Financial Liabilities

Date of Recognition. The Group recognizes a financial asset or a financial liability in the
consolidated statements of financial position when it becomes a party to the contractual
provisions of the instrument. In the case of a regular way purchase or sale of financial
assets, recognition is done using trade date accounting.
Initial Recognition of Financial Instruments. Financial instruments are recognized
initially at fair value of the consideration given (in case of an asset) or received (in case
of a liability). The initial measurement of financial instruments, except for those
designated as at fair value through profit or loss (FVPL), includes transaction costs.
The Group classifies its financial assets in the following categories: held-to-maturity
(HTM) investments, available-for-sale (AFS) financial assets, financial assets at FVPL
and loans and receivables. The Group classifies its financial liabilities as either financial
liabilities at FVPL or other financial liabilities. The classification depends on the purpose
for which the investments are acquired and whether they are quoted in an active market.
Management determines the classification of its financial assets and financial liabilities at
initial recognition and, where allowed and appropriate, re-evaluates such designation at
every reporting date.
Day 1 Profit. 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 the fair value
(a Day 1 profit) in profit or loss unless it qualifies for recognition as some other type of
asset. In cases where data used is not observable, the difference between the transaction
price and model value is only recognized in profit or loss 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 profit amount.
F-60
Financial Assets
Financial Assets at FVPL. A financial asset is classified as at FVPL if it is classified as
held for trading or is designated as such upon initial recognition. Financial assets are
designated as at FVPL if the Group manages such investments and makes purchase and
sale decisions based on their fair value in accordance with the Groups documented risk
management or investment strategy. Derivative instruments (including embedded
derivatives), except those covered by hedge accounting relationships, are classified under
this category.
Financial assets are classified as held for trading if they are acquired for the purpose of
selling in the near term.
Financial assets may be designated by management at initial recognition as at FVPL,
when any of the following criteria is met:
the designation eliminates or significantly reduces the inconsistent treatment that

would otherwise arise from measuring the assets or recognizing gains or losses on a
different basis;
the assets are part of a group of financial assets which are managed and their
performances are evaluated on a fair value basis, in accordance with a documented
risk management or investment strategy; or
the financial instrument contains an embedded derivative, unless the embedded

derivative does not significantly modify the cash flows or it is clear, with little or no
analysis, that it would not be separately recognized.
The Group carries financial assets at FVPL using their fair values. Attributable
transaction costs are recognized in profit or loss as incurred. Fair value changes and
realized gains or losses are recognized in profit or loss. Fair value changes from
derivatives accounted for as part of an effective cash flow hedge are recognized in other
comprehensive income and presented in the consolidated statements of changes in equity.
Any interest earned shall be recognized as part of Interest income account in the
consolidated statements of income. Any dividend income from equity securities
classified as at FVPL shall be recognized in profit or loss when the right to receive
payment has been established.
As of December 31, 2014 and 2013, the Group has no financial assets accounted for
under this category.
Loans and Receivables. Loans and receivables are non-derivative financial assets with
fixed or determinable payments and maturities 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
designated as AFS financial assets or financial assets at FVPL.
Subsequent to initial measurement, loans and receivables are carried at amortized cost
using the effective interest rate method, less any impairment in value. Any interest
earned on loans and receivables is recognized as part of Interest income account in the
consolidated statements of income on an accrual basis. Amortized cost is calculated by
taking into account any discount or premium on acquisition and fees that are an integral
part of the effective interest rate. The periodic amortization is also included as part of
Interest income account in the consolidated statements of income. Gains or losses are
recognized in profit or loss when loans and receivables are derecognized or impaired.
F-61
Cash includes cash on hand and in banks which are stated at face value. Cash
equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and are subject to an insignificant risk of changes in value.
The Groups cash and cash equivalents, trade and other receivables, restricted cash and
noncurrent receivable are included under this category (Notes 8, 9, 15 and 26).
HTM Investments. HTM investments are non-derivative financial assets with fixed or
determinable payments and fixed maturities for which the Groups management has the
positive intention and ability to hold to maturity. Where the Group sells other than an
insignificant amount of HTM investments, the entire category would be tainted and
reclassified as AFS financial assets. After initial measurement, these investments are
measured at amortized cost using the effective interest method, less impairment in value.
Any interest earned on the HTM investments is recognized as part of Interest income
account in the consolidated statements of income on an accrual basis. Amortized cost is
calculated by taking into account any discount or premium on acquisition and fees that
are an integral part of the effective interest rate. The periodic amortization is also
included as part of Interest income account in the consolidated statements of income.
Gains or losses are recognized in profit or loss when the HTM investments are
derecognized or impaired.
As of December 31, 2014 and 2013, the Group has no investments accounted for under
this category.
AFS Financial Assets. AFS financial assets are non-derivative financial assets that are
either designated in this category or not classified in any of the other financial asset
categories. Subsequent to initial recognition, AFS financial assets are measured at fair
value and changes therein, other than impairment losses and foreign currency differences
on AFS debt instruments, are recognized in other comprehensive income and presented
in the Fair value reserves account in the consolidated statements of changes in equity.
The effective yield component of AFS debt securities is reported as part of Interest
income account in the consolidated statements of income. Dividends earned on holding
AFS equity securities are recognized as dividend income when the right to receive the
payment has been established. When individual AFS financial assets are either
derecognized or impaired, the related accumulated unrealized gains or losses previously
reported in equity are transferred to and recognized in profit or loss.
AFS financial assets also include unquoted equity instruments with fair values which
cannot be reliably determined. These instruments are carried at cost less impairment in
value, if any.
Financial Liabilities at FVPL. Financial liabilities are classified under this category
through the fair value option. Derivative instruments (including embedded derivatives)
with negative fair values, except those covered by hedge accounting relationships, are
also classified under this category.
F-62
The Group carries financial liabilities at FVPL using their fair values and reports fair
value changes in profit or loss. Fair value changes from derivatives accounted for as part
of an effective accounting hedge are recognized in other comprehensive income and
presented in the consolidated statements of changes in equity. Any interest expense
incurred is recognized as part of Interest expense and other financing charges account
in the consolidated statements of income.
As of December 31, 2014 and 2013, the Group has no financial liabilities accounted for
Other Financial Liabilities. This category pertains to financial liabilities that are not
designated or classified as at FVPL. After initial measurement, other financial liabilities
are carried at amortized cost using the effective interest method. Amortized cost is
calculated by taking into account any premium or discount and any directly attributable
transaction costs that are considered an integral part of the effective interest rate of the
liability.
The Groups liabilities arising from its trade or borrowings such as accounts payable and
accrued expenses (excluding statutory payables), finance lease liabilities and long-term
debt are included under this category (Notes 7, 16, 17 and 26).
Embedded Derivatives
The Group assesses whether embedded derivatives are required to be separated from the
host contracts when the Group becomes a party to the contract.
An embedded derivative is separated from the host contract and accounted for as a
derivative if all of the following conditions are met: a) the economic characteristics and
risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host contract; b) a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative; and c) 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.
Derecognition of Financial Assets and Financial 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 primarily derecognized when:
the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay them in full without material delay to a third party
under a pass-through arrangement; 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.
When the Group has transferred its rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if and to what extent it has retained
the risks and rewards of ownership. When it has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the
Group continues to recognize the transferred asset to the extent of the Groups continuing
involvement. In that case, the Group also recognizes the associated liability. The
transferred asset and the associated liability are measured on the basis that reflects the
rights and obligations that the Group has retained.
F-63
Financial Liabilities. A financial liability is derecognized when the obligation under the
liability is discharged or cancelled, or expires. When 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.
The difference in the respective carrying amounts is recognized in profit or loss.
Impairment of Financial Assets
The Group assesses, at the reporting date, whether there is objective evidence that 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 objective evidence of impairment as a result of one or more events that have
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.
Assets Carried at Amortized Cost. For financial assets carried at amortized cost such as
loans and receivables, the Group first assesses whether impairment exists individually for
financial assets that are individually significant, or collectively for financial assets that
are not individually significant. If no objective evidence of impairment has been
identified for a particular financial asset that was individually assessed, the Group
includes the asset as part of a group of financial assets with similar credit risk
characteristics and collectively assesses the group 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 the collective impairment assessment.
Evidence of impairment for specific impairment purposes may include indications that
the borrower or a group of borrowers is experiencing financial difficulty, default or
delinquency in principal or interest payments, or may enter into bankruptcy or other form
of financial reorganization intended to alleviate the financial condition of the borrower.
For collective impairment purposes, evidence of impairment may include observable data
on existing economic conditions or industry-wide developments indicating that there is a
measurable decrease in the expected future cash flows of the related assets.
If there is objective evidence of impairment, the amount of loss is measured as the
difference between the assets carrying amount and the present value of estimated future
cash flows (excluding future credit losses) discounted at the financial assets original
effective interest rate (i.e., the effective interest rate computed at initial recognition).
Time value is generally not considered when the effect of discounting the cash flows is
not material. If a loan or receivable has a variable rate, the discount rate for measuring
any impairment loss is the current effective interest rate, adjusted for the original credit
risk premium. For collective impairment purposes, impairment loss is computed based
on their respective default and historical loss experience.
The carrying amount of the asset shall be reduced either directly or through the use of an
allowance account. The impairment loss for the period shall be recognized in profit or
loss. 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 profit or loss, to the extent that the
carrying amount of the asset does not exceed its amortized cost at the reversal date.
F-64
AFS Financial Assets. For equity instruments carried at fair value, the Group assesses, at
each reporting date, whether objective evidence of impairment exists. Objective evidence
of impairment includes a significant or prolonged decline in the fair value of an equity
instrument below its cost. Significant is evaluated against the original cost of the
investment and prolonged is evaluated against the period in which the fair value has
been below its original cost. The Group generally regards fair value decline as being
significant when decline exceeds 25%. A decline in a quoted market price that persists
for 12 months is generally considered to be prolonged.
If an AFS financial asset is impaired, an amount comprising the difference between the
cost (net of any principal payment and amortization) and its current fair value, less any
impairment loss on that financial asset previously recognized in profit or loss, is
transferred from equity to profit or loss. Reversals of impairment losses in respect of
equity instruments classified as AFS financial assets are not recognized in profit or loss.
Reversals of impairment losses on debt instruments are recognized in profit or loss, if the
increase in fair value of the instrument can be objectively related to an event occurring
after the impairment loss was recognized in profit or loss.
In the case of an unquoted equity instrument or of a derivative asset linked to and must
be settled by delivery of an unquoted equity instrument, for which its fair value cannot be
reliably measured, the amount of impairment loss is measured as the difference between
the assets carrying amount and the present value of expected future cash flows from the
asset discounted using the historical effective rate of return on the asset.
Classification of Financial Instruments between Debt and Equity
From the perspective of the issuer, a financial instrument is classified as debt instrument
if it provides for a contractual obligation to:
deliver cash or another financial asset to another entity;
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.
Debt Issue Costs
Debt issue costs are considered as an adjustment to the effective yield of the related debt
and are deferred and amortized using the effective interest method. When a loan is paid,
the related unamortized debt issue costs at the date of repayment are recognized in profit
or loss.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the
consolidated statements of financial position 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, and the related assets and liabilities
are presented gross in the consolidated statements of financial position.
F-65
Inventories
Inventories are measured at the lower of cost and net realizable value. Cost is determined
using first-in-first-out method for materials and supplies, specific identification method
or moving average method for coal inventories and moving average method for fuel oil
and other consumables. Net realizable value is the current replacement cost.
Business Combination
Business combinations are accounted for using the acquisition method as of the
acquisition date. The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the amount of any
non-controlling interests in the acquiree. For each business combination, the Group
elects whether to measure the non-controlling interests in the acquiree at fair value or at
proportionate share of the acquirees identifiable net assets. Acquisition-related costs are
expensed as incurred.
When the Group acquires a business, it assesses the financial assets and financial
liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as at the acquisition
date.
If the business combination is achieved in stages, the acquisition date fair value of the
acquirers previously held equity interest in the acquiree is remeasured at the acquisition
date fair values and any resulting gain or loss is recognized in profit or loss.
The Group measures goodwill at the acquisition date as: a) the fair value of the
consideration transferred; plus b) the recognized amount of any non-controlling interests
in the acquiree; plus c) if the business combination is achieved in stages, the fair value of
the existing equity interest in the acquiree; less d) the net recognized amount (generally
fair value) of the identifiable assets acquired and liabilities assumed. When the excess is
negative, a bargain purchase gain is recognized immediately in profit or loss.
Subsequently, goodwill is measured at cost less any accumulated impairment in value.
Goodwill is reviewed for impairment, annually or more frequently, if events or changes
in circumstances indicate that the carrying amount may be impaired.
The consideration transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts are generally recognized in profit or loss. Costs
related to acquisition, other than those associated with the issue of debt or equity
securities that the Group incurs in connection with a business combination, are expensed
as incurred. Any contingent consideration payable is measured at fair value at the
acquisition date. If the contingent consideration is classified as equity, then it is not
remeasured and settlement is accounted for within equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are recognized in profit or loss.
Goodwill in a Business Combination

Goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the 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 are assigned to those units or groups of units. Each unit or
group of units to which the goodwill is so allocated:
x
represents the lowest level within the Group at which the goodwill is monitored
for internal management purposes; and
is not larger than an operating segment determined in accordance with PFRS 8.
F-66
Impairment is determined by assessing the recoverable amount of the cashgenerating unit or group of cash-generating units, to which the goodwill relates.
Where the recoverable amount of the cash-generating unit or group of cashgenerating units is less than the carrying amount, an impairment loss is recognized.
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. An impairment loss
with respect to goodwill is not reversed.
Intangible Asset Acquired in a Business Combination

The cost of an intangible asset acquired in a business combination is the fair value as
of the date of acquisition, determined using discounted cash flows as a result of the
asset being owned.
Following initial recognition, intangible asset is carried at cost less accumulated
amortization and any impairment losses. The useful life of intangible asset is
assessed to be either finite or indefinite.
An intangible asset with finite life is amortized over the useful economic life and
assessed for impairment whenever there is an indication that the intangible asset may
be impaired. The amortization period and the amortization method for an intangible
asset with a finite useful life are reviewed at least at each reporting date. A change in
the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset is accounted for as a change in accounting estimates.
The amortization expense on intangible asset with finite life is recognized in profit or
loss.
Loss of Control
On the loss of control, the Group derecognizes the assets and liabilities of the
subsidiary, any non-controlling interests and the other components of equity related
to the subsidiary. Any surplus or deficit arising on the loss of control is recognized
in profit or loss. If the Group retains any interest in the previous subsidiary, then
such interest is measured at fair value at the date that control is lost. Subsequently, it
is accounted for as an equity-accounted investee or as an AFS financial asset
depending on the level of influence retained.
Transactions under Common Control

Transactions under common control entered into in contemplation of each other and
business combination under common control designed to achieve an overall commercial
effect are treated as a single transaction.
Transfers of assets between commonly controlled entities are accounted for using book
value accounting.
Non-controlling Interests
The acquisitions of non-controlling interests are accounted for as transactions with
owners in their capacity as owners and therefore no goodwill is recognized as a result of
such transactions. Any difference between the purchase price and the net assets of
acquired entity is recognized in equity. The adjustments to non-controlling interests are
based on a proportionate amount of the identifiable net assets of the subsidiary.
F-67
Investments in an Associate and Joint Venture

An associate is an entity in which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policies of the
investee, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control
of the arrangement have rights to the net assets of the arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous consent of the parties sharing
control.
The considerations made in determining significant influence or joint control is similar to
those necessary to determine control over subsidiaries.
The Groups investments in an associate and joint venture are accounted for using the
equity method.
Under the equity method, the investment in an associate or joint venture is initially
recognized at cost. The carrying amount of the investment is adjusted to recognize the
changes in the Groups share of net assets of the associate or joint venture since the
acquisition date. Goodwill relating to the associate or joint venture is included in the
carrying amount of the investment and is neither amortized nor individually tested for
impairment.
The Groups share in the profit or loss of the associate or joint venture is recognized as
Equity in net earnings (losses) of associates and joint ventures - net account in the
consolidated statements of income. Adjustments to the carrying amount may also be
necessary for changes in the Groups proportionate interest in the associate or joint
venture arising from the changes in the associate or joint ventures other comprehensive
income. The Groups share of those changes is recognized as Share in other
comprehensive income of an associate account in the consolidated statements of
comprehensive income. Unrealized gains and losses resulting from transactions between
the Group and the associate or joint venture are eliminated to the extent of the interest in
the associate or joint venture.
After application of the equity method, the Group determines whether it is necessary to
recognize an impairment loss with respect to the Groups net investment in the associate
or joint venture. At each reporting date, the Group determines whether there is objective
evidence that the investment in the associate or joint venture is impaired. If there is such
evidence, the Group recalculates the amount of impairment as the difference between the
recoverable amount of the associate or joint venture and its carrying amount. Such
impairment loss is recognized as part of Equity in net earnings (losses) of associates and
joint ventures - net account in the consolidated statements of income.
Upon loss of significant influence over the associate or joint control over the joint
venture, the Group measures and recognizes any retained investment at fair value. Any
difference between the carrying amount of the associate or joint venture upon loss of
significant influence or joint control, and the fair value of the retained investment and
proceeds from disposal is recognized in profit or loss.
The financial statements of the associate or joint venture are prepared for the same
reporting period as the Group. When necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
F-68
Property, Plant and Equipment

Property, plant and equipment are measured at cost less accumulated depreciation and
amortization, and any accumulated impairment in value. Such cost includes the cost of
replacing part of the property, plant and equipment at the time that cost is incurred, if the
recognition criteria are met, and excludes the costs of day-to-day servicing.
The initial cost of property, plant and equipment comprises of its construction cost or
purchase price, including import duties, taxes and any directly attributable costs in
bringing the asset to its working condition and location for its intended use. Cost also
includes any related asset retirement obligation (ARO). Expenditures incurred after the
asset has been put into operation, such as repairs, maintenance and overhaul costs, are
normally recognized as expense in the period the costs are incurred. Major repairs are
capitalized as part of property, plant and equipment only when it is probable that future
economic benefits associated with the items will flow to the Group and the cost of the
items can be measured reliably.
Construction in progress (CIP) represents structures under construction and is stated at
cost. This includes the costs of construction and other direct costs. Borrowing costs that
are directly attributable to the construction of plant and equipment are capitalized during
the construction period. CIP is not depreciated until such time that the relevant assets are
ready for use.
Depreciation and amortization, which commences when the assets are available for their
intended use, are computed using the straight-line method over the following estimated
useful lives of the assets:
Number of Years
10 - 43
15 - 25
2 - 15
5 - 10
or term of the lease
whichever is shorter
Power plants
Building
Other equipment
Leasehold improvements
The remaining useful lives, residual values, and depreciation and amortization methods
are reviewed and adjusted periodically, if appropriate, to ensure that such periods and
method of depreciation and amortization are consistent with the expected pattern of
economic benefits from the items of property, plant and equipment.
The carrying amount of property, plant and equipment is reviewed for impairment when
events or changes in circumstances indicate that the carrying amount may not be
recoverable.
Fully depreciated assets are retained in the accounts until they are no longer in use.
An item of property, plant and equipment is derecognized when either it has been
disposed of or when it is permanently withdrawn from use and no future economic
benefits are expected from its use or disposal. Any gain or loss arising from the
retirement and disposal of an item of property, plant and equipment (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is
included in profit or loss in the period of retirement and disposal.
F-69
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost
of intangible assets acquired in a business combination is its fair value as at the date of
acquisition. Subsequently, intangible assets are measured at cost less accumulated
amortization and any accumulated impairment losses. Internally generated intangible
assets, excluding capitalized development costs, are not capitalized and expenditures are
recognized in profit or loss in the year in which the related expenditures are incurred. The
useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortized over the useful life and assessed for
impairment whenever there is an indication that the intangible assets may be impaired.
The amortization period and the amortization method used for an intangible asset with a
finite useful life are reviewed at least at each reporting date. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied
in the asset are accounted for by changing the amortization period or method, as
appropriate, and are treated as changes in accounting estimate. The amortization expense
on intangible assets with finite lives is recognized in profit or loss consistent with the
function of the intangible asset.
Number of Years
25
2-8
Concession right
Computer software and licenses
Gains or losses arising from the disposal of an intangible asset 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.
Intangible Asset - Power Concession Right
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
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 the Interpretation if the conditions in (a) are
met.
The 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 agreement.
Infrastructures within the scope of the Interpretation are not recognized as property, plant
and equipment of the Group. Under the terms of the contractual arrangements within the
scope of the Interpretation, an entity (the company created by the Concession
Agreement) 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.
F-70
The useful lives of power concession right are assessed to be either finite or indefinite.
Power concession right arising from a service concession arrangement is amortized using
straight-line method over the concession period, which is 25 years from the first day of
the commencement of operations, or the estimated useful lives of the infrastructure,
whichever is lower, and assessed for impairment whenever there is an indication that the
asset may be impaired. The amortization period and the amortization method are
reviewed annually. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the concession assets 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 concession assets.
The power concession right is derecognized on disposal or when no further economic
benefits are expected from its use or disposal. Gains or losses arising from derecognition
of concession assets are recognized in profit or loss and measured as the difference
between the net disposal proceeds and the carrying amount of the concession assets.
The Groups power concession right pertains to the right granted by the Government to
the Parent Company to operate the Albay Electric Cooperative, Inc. (ALECO). The
power concession right is carried at cost less accumulated amortization and any
accumulated impairment losses.
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 is 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 proportion 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 entity has contractual obligations to 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 reporting 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.
F-71
Intangible Assets - Mining Rights

The Groups mining rights that are acquired by the Group and have finite lives are
measured at costs less accumulated amortization and any accumulated impairment losses.
Subsequent expenditures are capitalized only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditures are
recognized in profit or loss as incurred.
Amortization of mining rights is recognized in profit or loss on a straight-line basis over
the estimated useful lives. The estimated useful lives of mining rights pertain the period
from commercial operations to the end of the operating contract. Amortization method
and useful lives are reviewed at each reporting date and adjusted as appropriate.
Gains or loss from derecognition of mining rights are measured as the difference between
the net disposal proceeds and the carrying amount of the asset, and is recognized in profit
or loss.
Deferred Exploration and Development Costs
Deferred exploration and development costs comprise of expenditures which are directly
attributable to:
Researching and analyzing existing exploration data;
Conducting geological studies, exploratory drilling and sampling;
Examining and testing extraction and treatment methods; and
Compiling pre-feasibility and feasibility studies.
Deferred exploration and development costs also include expenditures incurred in

acquiring mining rights, entry premiums paid to gain access to areas of interest and
amounts payable to third parties to acquire interests in existing projects.
Exploration assets are reassessed on a regular basis and tested for impairment provided
that at least one of the following conditions is met:
the period for which the entity has the right to explore in the specific area has expired
during the period or will expire in the near future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of mineral

resources in the specific area is neither budgeted nor planned;
such costs are expected to be recouped in full through successful development and
exploration of the area of interest or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not yet reached a
stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in relation
to the area are continuing, or planned for the future.
If the project proceeds to development stage, the amounts included within deferred
exploration and development costs are transferred to property, plant and equipment
under mine development costs.
F-72
Impairment of Non-financial Assets

The carrying amounts of property, plant and equipment, investments and advances,
deferred exploration and development costs and goodwill and other intangible assets with
finite useful lives reviewed for impairment when events or changes in circumstances
indicate that the carrying amounts may not be recoverable. If any such indication exists,
and if the carrying amount exceeds the estimated recoverable amount, the assets or cashgenerating units are written down to their recoverable amounts. The recoverable amount
of the asset is the greater of fair value less costs of disposal and value in use. The fair
value less costs of disposal is the amount obtainable from the sale of an asset in an arms
length transaction between knowledgeable, willing parties, less costs of disposal. In
assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For an asset that does not generate
largely independent cash inflows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. Impairment losses are recognized in profit or
loss 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 assets 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 and amortization, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in profit or loss.
After such a reversal, the depreciation and amortization charge is adjusted in future
periods to allocate the assets revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
Concession Payable
Concession payable is recognized at the date of inception of the concession agreement.
Fixed concession fees are recognized at present value using the discount rate at the
inception date. This account is debited upon payment of fixed fees and such payments are
apportioned between interest payment and payment of the principal. Interest arising from
the accretion of concession payable is presented under Interest expense and other
financing charges account in the consolidated statements of income.
Concession payable that are expected to be settled within 12 months after the reporting
date are classified as current liabilities. Otherwise, these are classified as noncurrent
liabilities.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either in the principal market for the asset or liability, or
in the absence of a principal market, in the most advantageous market for the asset or
liability. The principal or most advantageous market must be accessible to the Group.
The fair value of an asset or liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market
participants act in their best economic interest.
F-73
The Group uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated
financial statements are categorized within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as a
whole:
Level 1: quoted prices (unadjusted) in active markets for identical assets or

liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (i.e., as prices) or indirectly
(i.e., derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
For assets and liabilities that are recognized in the consolidated financial statements on a
recurring basis, the Group determines whether transfers have occurred between Levels in
the hierarchy by re-assessing the categorization at the end of each reporting period.
For purposes of the fair value disclosure, the Group has determined classes of assets and
liabilities on the basis of the nature, characteristics and risks of the asset or liability and
the level of fair value hierarchy, as explained above.
Provisions
Provisions are recognized when: (a) the Group has a present obligation (legal or
constructive) as a result of past events; (b) it is probable (i.e., more likely than not) that
an outflow of resources embodying economic benefits will be required to settle the
obligation; and (c) a reliable estimate can be made of the amount of the obligation. If the
effect of the time value of money is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessment of
the time value of money and the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognized as interest expense.
Where some or all of the expenditure required to settle a provision is expected to be
reimbursed by another party, the reimbursement shall be recognized when, and only
when, it is virtually certain that reimbursement will be received if the entity settles the
obligation. The reimbursement shall be treated as a separate asset. The amount
recognized for the reimbursement shall not exceed the amount of the provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best
estimate.
Share Capital
Common shares are classified as equity. Incremental costs directly attributable to the
issue of common shares are recognized as a deduction from equity, net of any tax effects.
Undated Subordinated Capital Securities
Undated subordinated capital securities are classified as equity when there is no
contractual obligation to deliver cash or other financial assets to another person or entity
or to exchange financial assets or financial liabilities with another person or entity that is
potentially unfavorable to the issuer.
F-74
Incremental costs directly attributable to the issuance of undated subordinated capital

securities are recognized as a deduction from equity, net of tax. The proceeds received
net of any directly attributable transaction costs are credited to undated subordinated
capital securities.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the Group and the amount of the revenue can be reliably measured. Revenues are
stated at amounts invoiced to customers, inclusive of pass-through charges, net of valueadded tax (VAT) and other taxes. The following specific recognition criteria must also
be met before revenue is recognized:
Sale of Power. Revenue from power generation is recognized in the period when actual
power or capacity is generated, transmitted or/and made available to the customers, net of
related discounts.
Sale of Electricity. Revenues are recognized upon the supply of power to the customers.
The Uniform Filing Requirements (UFR) on the rate unbundling released by the Energy
Regulatory Commission (ERC) on October 30, 2001 specified the following bill
components: (a) generation charge, (b) transmission charge, (c) system loss charge,
(d) distribution charge, (e) supply charge, (f) metering charge, (g) currency exchange rate
adjustment I and II, where applicable and (h) interclass and life subsidies. VAT, local
franchise tax and universal charges are billed and collected on behalf of the national and
local government and do not form part of the Groups revenue. Generation, transmission
and system loss charges, which are part of revenues, are pass-through charges.
Interest Income. Revenue is recognized as the interest accrues, taking into account the
effective yield on the asset.
Dividend. Dividend income is recognized when the Groups right as a shareholder to
receive the payment is established.
Gain or Loss on Sale of Investments in Shares of Stock. Gain or loss is recognized if the
Group disposes of its investments in a subsidiary, associate or joint venture. Gain or loss
is computed as the difference between the proceeds of the disposed investment and its
carrying amount, including the carrying amount of goodwill, if any.
Cost and Expense Recognition
Costs and Expenses. Costs and expenses are recognized upon receipt of goods, utilization
of services or at the date they are incurred. Cost of power sold is debited for the direct
costs related to power generation, retail and distribution of electricity, or/and trading.
Interest Expense and Other Financing Charges. Interest expense and other financing
charges comprise finance charges on finance lease liabilities, loans, concession payable
and other borrowings. Finance charges on finance lease liabilities, loans and concession
payable are recognized in profit or loss using the effective interest method.
Short-term Employee Benefits. Short-term employee benefits are expensed as the related
service is provided. A liability is recognized for the amount expected to be paid if the
Group has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.
F-75
Share-based Payment Transactions

Under SMCs Employee Stock Purchase Plan (ESPP), employees of the Group receive
remuneration in the form of share-based payment transactions, whereby the employees
render services as consideration for equity instruments of SMC. Such transactions are
handled centrally by SMC.
Share-based transactions in which SMC grants option rights to its equity instruments
direct to the Groups employees are accounted for as equity-settled transactions. SMC
charges the Group for the costs related to such transactions with its employees. The
amount is charged to operations by the Group.
The cost of ESPP is measured by reference to the market price at the time of the grant
less subscription price. The cumulative expense recognized for share-based transactions
at each reporting date until the date when the relevant employees become fully entitled to
the award (the vesting date) reflects the extent to which the vesting period has expired
and SMCs best estimate of the number of equity instruments that will ultimately vest.
Where the terms of a share-based award are modified, as a minimum, an expense is
recognized as if the terms had not been modified. In addition, an expense is recognized
for any modification, which increases the total fair value of the share-based payment
arrangement, or is otherwise beneficial to the employee as measured at the date of
modification. Where an equity-settled award is cancelled, it is treated as if it had vested
on the date of cancellation, and any expense not yet recognized for the award is
recognized immediately. However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is granted, the cancelled and
new awards are treated as if they were a modification of the original award.
Leases
arrangement;
specific asset; or
F-76
Finance Lease
Finance leases, which transfer to the Group substantially all the risks and rewards
classified in the consolidated statements of financial position as finance lease liabilities.
when there is reasonable certainty that the Group will obtain ownership by the end of the
lease term.
Operating Lease
rewards of ownership of the assets are classified as operating leases. Operating lease
lease term. Associated costs such as maintenance and insurance are expensed as
incurred.
Group as Lessor. Leases where the Group does not transfer substantially all the risks and
rewards of ownership of the assets are classified as operating leases. Rent income from
operating lease is recognized as income on a straight-line basis over the lease term.
Initial direct costs incurred in negotiating an operating lease are added to the carrying
amount of the leased asset and recognized as an expense over the lease term on the same
basis as rent income. Contingent rents are recognized as income in the period in which
they are earned.
Borrowing Costs
Borrowing 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.
Foreign Currency Translations
Transactions in foreign currencies are translated to the functional currency of the Group
at exchange rates at the dates of the transactions. Monetary assets and monetary liabilities
denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between amortized cost in the functional currency at the beginning
of the year, adjusted for effective interest and payments during the year, and the
amortized cost in foreign currency translated at the exchange rate at the reporting date.
Taxes
Current Tax. Current tax is the expected tax payable or receivable on the taxable income
or loss for the year, using tax rates enacted or substantively enacted at the reporting date,
and any adjustment to tax payable in respect of previous years.
Deferred Tax. Deferred tax is recognized in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
F-77
Deferred tax liabilities are recognized for all taxable temporary differences, except:
where the deferred 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
with respect to 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 tax assets are recognized for all deductible temporary differences, carryforward
benefits of unused tax credits - Minimum Corporate Income Tax (MCIT) and unused tax
losses - Net Operating Loss Carry Over (NOLCO), to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and
the carryforward benefits of MCIT and NOLCO can be utilized, except:
where the deferred 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
with respect to deductible temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, deferred 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 tax assets is reviewed at each reporting 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 tax asset to be utilized. Unrecognized deferred tax assets
are reassessed at each reporting date and are recognized to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
The measurement of deferred tax reflects the tax consequences that would follow the
manner in which the Group expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
in 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 at the reporting date.
In determining the amount of current and deferred tax, the Group takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due.
The Group believes that its accruals for tax liabilities are adequate for all open tax years
based on its assessment of many factors, including interpretation of tax laws and prior
experience. This assessment relies on estimates and assumptions and may involve a
series of judgments about future events. New information may become available that
causes the Group to change its judgment regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact tax expense in the period that such a
determination is made.
Current tax and deferred tax are recognized in profit or loss except to the extent that it
relates to a business combination, or items recognized directly in equity or in other
comprehensive income.
F-78
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred taxes
relate to the same taxable entity and the same taxation authority.
Value-added Tax. Revenues, expenses and assets are recognized net of the amount of
VAT, except:
where the tax incurred on a purchase of assets or services is not recoverable from the
taxation authority, in which case the 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 tax included.
The net amount of tax recoverable from, or payable to, the taxation authority is included
as part of Prepaid expenses and other current assets, Other noncurrent assets or
Accounts payable and accrued expenses accounts in the consolidated statements of
financial position.
Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly, to
control the other party or exercise significant influence over the other party in making
financial and operating decisions. Parties are also considered to be related if they are
subject to common control and significant influence. Related parties may be individuals
or corporate entities. Transactions between related parties are on an arms length basis in
a manner similar to transactions with non-related parties.
Basic and Diluted Earnings Per Share (EPS)
Basic EPS is computed by dividing the net income for the period attributable to equity
holders of the Parent Company by the weighted-average number of issued and
outstanding common shares during the period.
For the purpose of computing diluted EPS, the net income for the period attributable to
equity holders of the Parent Company and the weighted-average number of issued and
outstanding common shares are adjusted for the effects of all potential dilutive
instruments.
As at December 31, 2014 and 2013, the Group has no dilutive equity instruments as
disclosed in Note 24 to the consolidated financial statements.
Operating Segments
The Groups operating segments are organized and managed separately based on the fuel
source of the power plants, with each segment representing a strategic business unit that
has different economic characteristic and activities. The BOD (the chief operating
decision maker; CODM) reviews management reports on a regular basis.
The measurement policies the Group used for segment reporting under PFRS 8 are the
same as those used in its consolidated financial statements. There have been no changes
in the measurement methods used to determine reported segment profit or loss from prior
periods. All inter-segment transfers are carried out at arms length prices.
Segment revenues, expenses and performance include sales and purchases between
business segments. Such sales and purchases are eliminated in consolidation.
F-79
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. They
are disclosed in the notes to the consolidated financial statements unless the possibility of
an outflow of resources embodying economic benefits is remote. Contingent assets are
not recognized in the consolidated financial statements but are disclosed in the notes to
the consolidated financial statements when an inflow of economic benefits is probable.
Events After the Reporting Date
Post year-end events that provide additional information about the Groups financial
position at the reporting date (adjusting events) are reflected in the consolidated financial
statements. Post year-end events that are not adjusting events are disclosed in the notes
to the consolidated financial statements when material.
The preparation of the consolidated financial statements in accordance with PFRS
requires management to make judgments, estimates and assumptions that affect the
expenses reported in the consolidated financial statements at the reporting date.
Judgments
significant effect on the amounts recognized in the consolidated financial statements:
PSALM (Notes 7 and 12).
Finance lease liabilities recognized in the consolidated statements of financial position
amounted to P186,303,745 and P195,002,721 as of December 31, 2014 and 2013,
P188,132,700 and P193,319,103 as of December 31, 2014 and 2013, respectively
(Note 12).
F-80
Operating Lease Commitments - Group as Lessor/Lessee. The Group has entered into
various lease agreements either as a lessor or a lessee. The Group has determined that it
retains all the significant risks and rewards of ownership of the property leased out on
operating leases while the significant risks and rewards for property leased from third
parties are retained by the lessors (Note 7).
Rent income recognized in the consolidated statements of income amounted to P18,434
and nil in 2014 and 2013, respectively.
Rent expense recognized in the consolidated statements of income amounted to P115,849
and P24,167 in 2014 and 2013, respectively (Note 20).
Applicability of Philippine Interpretation IFRIC 12 - Concession Right. In accounting for
the Groups transactions in connection with its Concession Agreement with ALECO,
significant judgment was applied to determine the most appropriate accounting policy to
use.
Management used Philippine Interpretation IFRIC 12 as guide and determined that the
Concession Agreement is within the scope of the Interpretation and should be accounted
for under the intangible asset model (Notes 3, 7 and 14).
Contingencies. The Group is currently involved in various pending claims and cases
which could be decided in favor of or against the Group. The Groups estimate of the
probable costs for the resolution of these pending claims and cases has been developed in
consultation with in-house as well as outside legal counsel handling the prosecution and
defense of these matters and is based on an analysis of potential results. The Groups
management and legal counsels currently do not believe that these pending claims and
cases will have a material adverse effect on its financial position and financial
performance. It is possible, however, that future financial performance could be
materially affected by the changes in the estimates or in the effectiveness of strategies
relating to these proceedings (Note 27).
The key estimates and assumptions used in the consolidated financial statements are
based upon managements evaluation of relevant facts and circumstances as of the date
of the consolidated financial statements. Actual results could differ from such estimates.
liabilities.
be classified.
on the inputs used in the valuation techniques (Note 3).
F-81
The methods and assumptions used to estimate the fair values for both financial and
non-financial assets and liabilities are discussed in Note 26.
The Group has no financial asset or financial liability carried at fair values as of
December 31, 2014 and 2013.
P866,686 and P722,293 as of December 31, 2014 and 2013, respectively. The carrying
amount of trade and other receivables amounted to P18,208,339 and P31,540,444 as of
December 31, 2014 and 2013, respectively (Note 9).
Write-down of Inventory. The Group writes-down the cost of inventory to its net
realizable value whenever net realizable value becomes lower than cost due to damage,
physical deterioration, obsolescence, changes in price levels or other causes.
Estimates of net realizable value are based on the most reliable evidence available at the
time the estimates are made of the amount the inventories are expected to be realized.
These estimates take into consideration fluctuations of price or cost directly relating to
events occurring after the reporting date to the extent that such events confirm conditions
existing at the reporting date.
The Group assessed that no write-down of inventories to reduce inventories to net
realizable value is necessary as of December 31, 2014 and 2013.
The carrying amount of inventories amounted to P1,365,033 and P1,499,135 as of
Estimated Useful Lives of Property, Plant and Equipment. The Group estimates the
useful lives of property, plant and equipment based on the period over which the 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.
F-82
In addition, estimation of the useful lives of property, plant and equipment is based on
collective assessment of industry practice, internal technical evaluation and experience
with similar assets. It is possible, however, that future financial performance could be
materially affected by changes in estimates brought about by changes in factors
mentioned above. The amounts and timing of recorded expenses for any period would be
affected by changes in these factors and circumstances. A reduction in the estimated
useful lives of property, plant and equipment would increase the recorded cost and
expenses and decrease noncurrent assets.
Property, plant and equipment, net of accumulated depreciation and amortization
respectively. Accumulated depreciation and amortization of property, plant and
equipment amounted to P27,404,427 and P21,233,181 as of December 31, 2014 and
2013, respectively (Note 12).
Estimated Useful Lives of Intangible Assets. The useful lives of intangible assets are
assessed at the individual asset level as having either a finite or indefinite life. Intangible
assets are regarded to have an indefinite useful life when, based on analysis of all of the
relevant factors, there is no foreseeable limit to the period over which the asset is
expected to generate net cash inflows for the Group.
Intangible assets with finite useful lives amounted to P2,313,375 and P1,719,726 as of
Impairment of Goodwill. The Group determines whether the goodwill acquired in
business combination are impaired at least annually. This requires the estimation of
value in use of the cash-generating units to which the goodwill is allocated. Estimating
value in use requires management to make an estimate of the expected future cash flows
from the cash-generating unit and to choose a suitable discount rate to calculate the
present value of those cash flows.
The carrying amount of goodwill amounted to P8,866 as of December 31, 2014 and 2013
(Note 14).
Acquisition Accounting. The Group accounts for acquired businesses using the
acquisition method of accounting which requires that the assets acquired and the
liabilities assumed be recognized at the date of acquisition based on their respective fair
values.
The application of the acquisition method requires certain estimates and assumptions
especially concerning the determination of the fair values of acquired property, plant and
equipment and intangible assets as well as liabilities assumed at the acquisition date.
Moreover, the useful lives of the acquired property, plant and equipment and intangible
assets have to be determined. Accordingly, for significant acquisitions, the Group
obtains assistance from valuation specialists. The valuations are based on information
available at the acquisition date.
Recoverability of Deferred Exploration and Development Costs. A valuation allowance
is provided for estimated unrecoverable deferred exploration and development costs
based on the Group's assessment of the future prospects of the mining properties,
which are primarily dependent on the presence of economically recoverable reserves in
those properties.
F-83
The Groups mining activities are all in the exploratory stages as of December 31, 2014.
All related costs and expenses from exploration are currently deferred as exploration and
development costs to be amortized upon commencement of commercial operations. The
Group has not identified any facts and circumstances which suggest that the carrying
amount of the deferred exploration and development costs exceeded the recoverable
amounts as of December 31, 2014 and 2013.
Deferred exploration and development costs amounted to P671,783 and P525,999 as of
Realizability of Deferred Tax Assets. The Group reviews its deferred tax assets at each
reporting date and reduces the carrying amount to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax assets
to be utilized. The Groups assessment on the recognition of deferred tax assets on
deductible temporary difference and carryforward benefits of MCIT and NOLCO is
based on the projected taxable income in the following periods.
Deferred tax assets arising from MCIT and NOLCO have not been recognized because
the management believes that it is not probable that future taxable income will be
available against which the Group can utilize the benefits therefrom (Note 22).
Deferred tax assets from temporary differences amounted to P2,779,380 and P2,909,105
as of December 31, 2014 and 2013, respectively (Note 22).
Impairment of Non-financial Assets. PFRS requires that an impairment review be
performed on property, plant and equipment, investments and advances, deferred
exploration and development costs and goodwill and other intangible assets with finite
useful lives when events or changes in circumstances indicate that the carrying amounts
may not be recoverable. Determining the recoverable amount of these assets requires the
estimation of cash flows expected to be generated from the continued use and ultimate
disposition of such assets. While it is believed that the assumptions used in the estimation
of fair values reflected in the consolidated financial statements are appropriate and
reasonable, significant changes in these assumptions may materially affect the
assessment of recoverable amounts and any resulting impairment loss could have a
material adverse impact on the financial performance.
The Group assessed that its non-financial assets are not impaired as of December 31,
2014 and 2013.
The combined carrying amounts of property, plant and equipment, investments and
advances, deferred exploration and development costs and other intangible assets with
finite useful lives amounted to P241,730,758 and P225,279,043 as of December 31, 2014
and 2013, respectively (Notes 6, 12, 13 and 14).
Asset Retirement Obligation. Determining ARO requires estimation of the cost of
dismantling property, plant and equipment and other costs of restoring the leased
properties to their original condition. The Group determined that there are no ARO as of
F-84
Operating Segments
The Groups operations are segmented based on fuel source of the power plants
consistent with the reports prepared internally for use by the Groups CODM in
reviewing the business performance of the operating segments. The differing economic
characteristics and activities of these power plants make it more useful to users of the
consolidated financial statements to have information about each component of the
Groups profit or loss, assets and liabilities.
The coal mining companies, which were acquired in 2010, have not yet started
commercial operations and are in the exploratory stage of mining activities (Note 6). The
mining companies total assets do not exceed 10% of the combined assets of all operating
segments. Accordingly, management believes that as of December 31, 2014 and 2013,
the information about this component of the Group would not be useful to the users of
the consolidated financial statements.
The investment in Manila Electric Company (Meralco) and subsequent transactions
affecting investment in Meralco are presented under Others. Segment liabilities do not
include long-term debt, deferred tax liabilities and income tax payable. Capital
expenditures consist of additions to property, plant and equipment of each reportable
segment.
The Group operates only in the Philippines which is treated as a single geographical
segment.
Major Customers
The Group sells, retails and distributes power, through power supply agreements, retail
supply agreements, concession agreement and other power related service agreements
(Note 7), either directly to customers (other generators, distribution utilities, electric
cooperatives and industrial customers) or through the Philippine Wholesale Electricity
Spot Market (WESM). Sale, retail and/or distribution of power to individual external
customers that represents 10% or more of the Groups total revenues is as follows:
Customers
Meralco
WESM
2014
P47,233,747
9,622,839
F-85
2013
P46,952,999
10,770,643
F-86
4,091,052
122,381
55,554,554
20,432,021
58,915,547
(15,345)
15,345
15,345
P -
2013
(855,229)
855,229
855,229
P -
504,093
504,093
P -
2013
(504,093)
Others
2014
615,000
(5,487,675)
(4,872,675)
(615,000)
(4,872,675)
P (4,872,675)
2013
615,082
(2,718,735)
(2,103,653)
(615,082)
(2,103,653)
P (2,103,653)
Eliminations
2014
25,895,518
58,398,072
55,486,142
2,911,930
84,293,590
P84,293,590
-
2013
P4,042,655
795,004
447,843
(12,673,891)
(8,491,062)
836,302
2,587,044
20,541,415
53,502,372
51,954,622
1,547,750
74,043,787
P74,043,787
-
Consolidated
2014
P10,629,482
(23,919)
23,919
23,919
P -
2014
13,750
147,115
139,164
7,951
160,865
P160,865
-
2013
For the Years Ended December 31

Coal Mining
Companies
(22,345)
549,977
(13,168,470)
68,225
(2,693,423)
26,037,285
4,053,848
37,204
53,919,111
1,635,443
4,213,433
75,986,575
84,952,832
56,304,969
2,610,578
P4,213,433
-
P73,882,922
2,103,653
2014
P80,080,157
4,872,675
2013

Related Service Provider

Equity in net earnings (losses) of associates and joint
ventures - net
Interest income
Income tax benefit (expense)
Segment Result
Cost and Expenses

Cost of power sold
Operating expenses
Sale of Power
External
Inter-segment
2014
Power Generation
Operating Segments
For management reporting purposes, the Groups operating segments are organized and managed separately as follows:
F-87
P 14,686
11,074
5,382,435
7,976,155
6,143,959
1,027,398
P2,081,602
P2,419,373
191,549
P121,438
P218,575,799
P253,043,075
136,669
P38,878
P213,093,977
P249,910,569
157,146
75
41,373
P -
P79,249
P392,316
259,834
18,098
(23)
P15,087
P74,665
P683,275
-
2013
P9,878,869
9,139
-
10,897
87,776
(P9,937,570) (P2,024,583)
-
Eliminations
2013
2014
6,125
1,491,555
P -
P -
P1,255,091 (P10,037,078) (P2,000,723)
P52,425 P17,425,124 P18,948,668
P65,238
P623,242 P54,959,742 P38,419,420

5,615,296
10,263,582
Others
2014

Coal Mining
Companies
2013
2014
*Noncash items other than depreciation and amortization include unrealized foreign exchange gain/losses, impairment losses on receivables and equity in net earnings of associates.
Depreciation and amortization of property, plant and
equipment and intangible assets
Noncash items other than depreciation*
Segment liabilities
Long-term debt
Income tax payable
Other Information
Segment assets
Investments and advances
Intangible assets and goodwill
Deferred tax assets
Power Generation
2013
2014

Related Service Provider
2013
2014
6,187,640
1,126,225
P17,479,089
P267,000,110
P215,092,035
48,713,245
151,360
3,043,470
P313,749,287
P298,035,389
10,612,277
2,322,241
2,779,380
2013
5,397,774
9,509,083
P19,122,531
P267,370,123
P217,974,654
47,088,885
218,519
2,088,065
P301,102,966
P290,453,470
6,011,799
1,728,592
2,909,105
Consolidated
2014

2014
P525,999
145,784
P671,783

Additions
2013
P325,219
200,780
P525,999
rights of P1,719,726 (Note 14).
Department of Energy (DOE), is located in South Cotabato and consists of two (2) coal
blocks with a total area of two thousand (2,000) hectares, more or less, and has an In-situ
coal resources (measured plus indicative coal resources) of about ninety-four (94) million
metric tons as of December 31, 2014.
SEPC has a coal mining property and right over an aggregate area of seven thousand
(7,000) hectares, more or less, composed of seven (7) coal blocks located in South
Cotabato and Sultan Kudarat. As of December 31, 2014, COC No. 134 has an In-situ
coal resources (measured plus indicative coal resources) of about thirty-five (35) million
metric tons.
Cotabato consisting of eight (8) coal blocks with a total area of eight thousand (8,000)
hectares, more or less, and has an In-situ coal resources (measured plus indicative coal
resources) of about twenty three (23) million metric tons as of December 31, 2014.
Subsidiary
DAMI
SEPC
BERI
COC No.
126
134
138
Effective Date
November 19, 2008
February 23, 2009
May 26, 2009
Term*
10 years
10 years
10 years
* The term is followed by another 10-year extension, and thereafter, renewable for a series of 3 year periods not exceeding
In May 2011, DAMI, SEPC and BERI separately requested to the DOE for a moratorium
on suspension of the implementation of the production timetable as specified in the
Five-Year Development and Productive Work Progress of COC Nos. 126, 134 and 138
due to the newly enacted Environment Code of South Cotabato which prohibits open pit
mining and other related activities, hence, constrained these companies into
implementing the production timetable without violating this local ordinance. On
April 27, 2012, the DOE granted DAMI, SEPC and BERIs request for a moratorium on
their work commitments from the effective dates of their respective COCs when these
were converted to Development/Production Phase until December 31, 2012.
F-88
resubmitted the Five-Year WP incorporating additional requirements of the DOE.
On April 29, 2014, DAMI, SEPC and BERI requested for a suspension of their work
commitments under their respective COCs until December 31, 2016 or until the ban on
open-pit mining pursuant to the Environment Code of South Cotabato has been lifted,
whichever comes first. On January 26, 2015, the DOE granted the request.
As of December 31, 2014, DAMI, SEPC and BERI are in the exploratory stages of their
as exploration and development costs and will be amortized upon commencement of their
commercial operations.
The Group has not identified any facts and circumstances which suggest that the carrying
amount of the deferred exploration and development costs exceeded recoverable amount
as of December 31, 2014 and 2013.
7. Agreements
Subsidiary
SMEC
SPDC
SPPC
Power Plant
Sual Coal - Fired Power Station (Sual
Power Plant)
Location
Sual, Pangasinan
Province
Province
Ilijan, Batangas
Province
Republic Act (R.A.) No. 6395, as amended, whereby NPC confirms, acknowledges,
approves and agrees to the terms of the IPPA Agreements and further confirms that
for so long as it remains the counterparty of the IPP it will comply with its
obligations and exercise its rights and remedies under the original agreement with the
IPP at the request and instruction of PSALM.
and obligations:
i.
power plant for its own account and at its own cost and risks;
F-89
third party;
iii. The right to receive a transfer of the power plant upon termination of the IPPA
vii. The obligation to pay PSALM the monthly payments and energy fees in respect
of all electricity generated from the capacity, net of outages.
monthly payments for fifteen (15) years until October 1, 2024, eighteen (18) years
until April 26, 2028 and twelve (12) years until June 26, 2022, respectively. Energy
fees for 2014 and 2013 amounted to P30,775,896 and P31,269,293, respectively.
SMEC, SPDC and SPPC renewed their performance bonds in United States dollar
(US$) amounting to US$58,187, US$20,305 and US$60,000 which will expire on
November 3, 2015, January 25, 2015 and June 16, 2015, respectively. Subsequently,
the performance bond of SPDC was renewed up to January 25, 2016.
US Dollar
3.89%
3.85%
3.30%
SMEC
SPPC
SPDC
Philippine Peso
8.16%
8.05%
7.90%
financing charges account in the consolidated statements of income. Interest
expense in 2014 and 2013 amounted to P10,717,606 and P10,983,520, respectively.
F-90
2014
Not later than one
year
More than one year
and not later than
five years
charges on finance
lease liabilities
Present values of
finance lease
liabilities
2013
Not later than one
year
More than one year
and not later than
five years
charges on finance
lease liabilities
Present values of
finance lease
liabilities
US Dollar
Payments
Peso
Equivalent of
US Dollar
Payments
Peso
Payments
Total
US$238,557
P10,668,258
P11,423,146
P22,091,404
1,027,007
1,413,789
2,679,353
45,927,750
63,224,641
119,820,649
49,178,287
67,753,365
128,354,798
95,106,037
130,978,006
248,175,447
462,375
20,677,383
41,194,319
61,871,702
US$2,216,978
P99,143,266
P87,160,479
P186,303,745
US Dollar
Payments
Peso
Equivalent of
US Dollar
Payments
Peso
Payments
Total
US$218,026
P9,679,245
P10,437,649
P20,116,894
997,500
1,681,853
2,897,379
44,283,990
74,665,869
128,629,104
47,765,439
80,589,359
138,792,447
92,049,429
155,255,228
267,421,551
546,958
24,282,163
48,136,667
72,418,830
US$2,350,421
P104,346,941
P90,655,780
P195,002,721
as follows:
2014
Not later than one
year
More than one year
and not later than
five years
US Dollar
Payments
Peso
Equivalent
of US Dollar
Payments
Peso
Payments
Total
US$194,970
P8,719,059
P7,486,165
P16,205,224
764,915
1,257,093
US$2,216,978
34,206,990
56,217,217
P99,143,266
26,604,935
53,069,379
P87,160,479
60,811,925
109,286,596
P186,303,745
F-91
2013
Not later than one
year
More than one year
and not later than
five years
US Dollar
Payments
Peso
Equivalent
of US Dollar
Payments
Peso
Payments
Total
US$185,176
P8,220,890
P7,409,540
P15,630,430
771,027
1,394,218
US$2,350,421
34,229,759
61,896,292
P104,346,941
27,918,504
55,327,736
P90,655,780
62,148,263
117,224,028
P195,002,721
b. Market Participation Agreements (MPA)

SMEC, SPDC and SPPC entered into a MPA with the Philippine Electricity Market
Corporation (PEMC) to satisfy the conditions contained in the Philippine WESM
Rules on WESM membership and to set forth the rights and obligations of a WESM
member. Under the WESM Rules, the cost of administering and operating the
WESM shall be recovered through a charge imposed on all WESM members or
transactions, as approved by the Energy Regulatory Commission (ERC). For the
years ended December 31, 2014 and 2013, PEMCs market fees charged to SMEC,
SPDC and SPPC amounted to P233,701 and P246,591, respectively (Note 20).
In March 2013, SMELC entered into a MPA for Supplier as Direct WESM
Member - Customer Trading Participant Category with the PEMC to satisfy the
conditions contained in the Philippine WESM Rules on WESM membership and to
set forth the rights and obligations of a WESM member. SMELC has a standby letter
of credit, expiring on December 26, 2015, to secure the full and prompt performance
of obligations for its transactions as a Direct Member and trading participant in the
WESM.
c. Power Supply Agreements
SMEC, SPPC, SPDC, SMELC and SPI have Power Supply Agreements with various
counterparties, including related parties, to sell electricity produced by the power
plants. All agreements provide for renewals or extensions subject to mutually agreed
terms and conditions by the parties.
Certain customers like electric cooperatives are billed based on the time-of-use
(TOU) per kilowatt hour (kWh) while others are billed at capacity-based rate.
However, as stipulated in the contracts, each TOU-based customer has to pay the
minimum charge based on the contracted power using the basic energy charge and/or
adjustments if customer has not fully taken or failed to consume the contracted
power. For capacity-based contracts, the customers are charged with the capacity fees
based on the contracted capacity even if there is no associated energy taken during
the month.
SMEC, SPPC, SPDC and APEC purchase power from WESM and other power
generation companies during periods when the power generated from the power plant
is not sufficient to meet customers power requirements.
d. Coal Supply Agreements
SMEC and SPI have supply agreements with various coal suppliers for their power
plants coal requirements.
F-92
e. Operations and Maintenance (O&M) Services Agreement

In exchange for the O&M services rendered by Petron Corporation (Petron), SPI
pays for all the documented costs and expenses incurred in relation to the operation,
maintenance and repair of the power plant. The agreement is effective for 25 years
from September 2013 until 2038.
f.
Retail Supply Agreements

SMELC has retail supply agreements with customers to supply or sell electricity
purchased from related parties and WESM. All agreements provide for renewals or
extensions subject to terms and conditions mutually agreed by the parties.
The customers are billed based on the capacity charge and associated energy charge.
However, as stipulated in the contracts, each customer has to pay the capacity charge
based on the contracted capacity using the capacity fee and associated energy with
adjustments if customer has not fully taken or failed to consume the contracted
capacity.
g. Lease Agreements
i.
The Group has operating lease agreements with San Miguel Properties, Inc.
(SMPI), a related party under common control, for a period of 1 to 6 years which
is renewable annually or upon agreement between parties.
ii. SPI subleases its plant premises from New Ventures Realty Corporation
(NVRC), a related party under common control. The existing lease agreement is
for 25-year period up to September 30, 2038, subject to renewal. The yearly
rental is subject to an automatic 3% escalation rate for the 4 years following the
negotiation under the lease terms.
iii. SMEC has operating lease agreement with Challenger Aero Air Corporation
(Challenger), a related party under common control, for a period of 1 year
commencing in October 2014 and expiring in September 2015.
Relative to the lease agreements with SMPI and Challenger, the Group was required
to pay advance rental and security deposits which are included under Trade and
other receivables - net or Prepaid expenses and other current assets accounts in
the consolidated statements of financial position (Notes 9 and 11).
Future minimum lease payments under the non-cancellable operating lease
agreements are as follows:
Within one year

After one year but not more than five years
F-93
2014
P24,361
37,928
P62,289
2013
P23,270
62,289
P85,559
Rent expense recognized in the consolidated statements of income amounted to

P115,849 and P24,167 in 2014 and 2013, respectively (Note 20).
iv. During the year, the Parent Company has an operating sub-lease agreement with
Clariden Holdings, Inc. a related party under common control, for a period of
2 years which is renewable upon agreement between the parties.
Future minimum lease receivables under the non-cancellable operating sub-lease is
as follows:
Within one year

2014
P7,120
3,957
P11,077
Rent income recognized in the consolidated statements of income amounted to

P18,434 and nil in 2014 and 2013, respectively.
h. Concession Agreement
The Parent Company entered into a 25-year Concession Agreement with ALECO on
October 29, 2013. It became effective upon confirmation of the National
Electrification Administration on November 7, 2013.
The Concession Agreement include, among others, the following rights and
obligations: i) the Parent Company, through Albay Power and Energy Corp. (APEC),
assumed all the rights and interests and perform the obligations under the Concession
Agreement effective on January 3, 2014; ii) as Concession Fee, the Concessionaire
shall pay to ALECO: (a) separation pay of ALECO employees in accordance with
the Concession Agreement; (b) the amount of P2,100 every quarter for the upkeep of
residual ALECO (fixed concession fees); iii) if the net cash flow of APEC is positive
within five (5) years or earlier from date of signing of the Concession Agreement,
50% of the Net Cash Flow each month shall be deposited in an escrow account until
the cumulative nominal sum reaches P4,048,529; iv) on the 20th anniversary of the
Concession Agreement, the concession period may be extended by mutual agreement
between ALECO and APEC; and v) at the end of the concession period, all assets
and system, as defined in the Concession Agreement, shall be returned by APEC to
ALECO in good and usable condition. Additions and improvements to the system
shall likewise be transferred to ALECO. In this regard, APEC shall provide services
within the franchise area and shall be allowed to collect fees and charges, as
approved by the ERC. ALECO turned over the operations to APEC on February 26,
2014.
Part of the separation pay under ii (a) above in the amount of P80,000 has been
paid to ALECO on December 19, 2013. The payment was recognized as part of
Other noncurrent assets account in the consolidated statements of financial position
pending assumption by APEC of the Concession Agreement.
F-94
The Group recognized as intangible asset all costs directly related to the Concession
Agreement. The intangible asset consist of: a) concession rights, which include fixed
concession fees and separation pay of ALECO employees amounting to P384,317.
Fixed concession fees are recognized at present value using the discount rate at the
inception date with a corresponding concession payable recognized; and
b) infrastructure, which includes the costs of structures and improvements,
distribution system and equipment. Cost of infrastructure amounted to P111,995 and
nil as of December 31, 2014 and 2013, respectively. Interest expense on concession
payable recognized in profit or loss amounted to P4,769 and nil for the years ended
December 31, 2014 and 2013, respectively. Amortization of concession assets
recognized in profit or loss in 2014 and 2013 amounted to P14,610 and nil,
respectively.
Maturities of the carrying amount of concession payable are as follows:
2014
P2,146
9,929
96,969
P109,044
Not later than 1 year

Later than 1 year but not later than 5 years
More than 5 years
Ending balance
The movements in concession asset relating to the Concession Agreement are as

follows:
Note
Cost
Additions
P 496,312
496,312
Accumulated amortization
Amortization
14,610
14,610
Net carrying amount

i.
2014
14
P481,702
MOA with San Roque Power Corporation (SRPC)

On December 6, 2012, SPDC entered into a 5-year MOA with SRPC to sell a portion
of the capacity of the San Roque Power Plant. Under the MOA, i) SRPC shall
purchase a portion of the capacity sourced from the San Roque Power Plant;
ii) SRPC shall pay a settlement amount to SPDC for the capacity; and iii) the MOA
may be earlier terminated or extended subject to terms and mutual agreement of the
parties.
Revenue from sale of capacity of the San Roque Power Plant amounted to
P1,488,437 and P577,192 as of December 31, 2014 and 2013, respectively, and was
recognized as part of Sale of power account in the consolidated statements of
income.
F-95
8. Cash and Cash Equivalents

Cash and cash equivalents consist of:
Note
Cash in banks and on hand
Short-term investments
25, 26
2014
P9,043,630
29,260,664
P38,304,294
2013
P13,330,802
15,794,369
P29,125,171
Cash in banks earns interest at the respective bank deposit rates. Short-term investments
are made for varying periods of up to three months depending on the immediate cash
requirements of the Group and earn interest at the respective short-term investment rates.
9. Trade and Other Receivables
Trade and other receivables consist of:
Note
18
18
Trade
Other receivables
Less allowance for impairment losses
2014
P13,195,630
5,879,395
19,075,025
866,686
P18,208,339
2013
P12,753,539
19,509,198
32,262,737
722,293
P31,540,444
Trade and other receivables are non-interest bearing, unsecured and are generally on a
30-day term or an agreed collection period. The balance of trade receivables is inclusive
of VAT on the sale of power collectible from customers.
The movements in the allowance for impairment losses are as follows:
Note
Charges for the year
20
2014
P722,293
144,393
P866,686
2013
P689,443
32,850
P722,293
As of December 31, the aging of trade receivables is as follows:
Current
Past due
Less than 30 days
30-60 days
61-90 days
Over 90 days
F-96
2014
P6,703,992
2013
P6,625,563
1,125,712
574,608
194,855
4,596,463
P13,195,630
2,574,000
437,877
144,861
2,971,238
P12,753,539
The Group believes that the unimpaired amounts that are past due by more than 30 days
are still collectible based on historical payment behavior and analyses of the underlying
customer credit ratings. There are no significant changes in their credit quality. There
were no write-offs or reversals in 2014 and 2013.
Other receivables include the following:
a. The Parent Companys receivable from the sale of investment in an associate
amounting to P16,228,991. The Parent Company collected the receivable from J.G.
Summit Holdings, Inc. (J.G. Summit) in 2014 (Note 13).
b. Advances to suppliers pertain to the deposits made to certain suppliers for the
ongoing construction of two (2) x 150 Mega Watt (MW) Coal-Fired Power Plant.
c. On June 16, 2011, SMEC entered into a MOA with Hardrock Coal Mining Pty Ltd.
(HCML) and Caason Investments Pty Ltd. (Caason), companies registered in
Australia, for the acquisition of shares in HCML. SMEC paid to Caason Australian
dollar (AUD) 12,000 (equivalent to P550,000), for an option to subscribe to the
shares in HCML (the Deposit) with further option for SMEC to decide not to
pursue its investment in HCML, which will result in the return of the Deposit to
SMEC plus interest. In a letter dated July 15, 2011, SMEC notified Caason and
HCML that it shall not pursue said investment and therefore asked Caason and
HCML for the return of the Deposit with corresponding interest (the Amount Due),
pursuant to the terms of the MOA.
On September 2, 2014, SMEC, HCML and Caason agreed to a schedule of payment
of the outstanding Amount Due to SMEC. As of December 31, 2014, HCML and
Caason has paid a total amount of P119,841, inclusive of interest and other
payments, such as legal costs and expenses. Interest income amounted to P118,824
and P25,015 as of December 31, 2014 and 2013, respectively. As of December 31,
2014 and 2013, total outstanding receivables from HCML amounted to P566,155 and
P562,041, respectively.
d. Pursuant to the MOA in respect of excess capacity of Sual Power Station, SMEC has
receivables from Team Philippines Energy Corp. (TPEC) and Team Sual Corporation
(TSC) for their share in fuel, market fees, coal and other charges related to the
operation of the Sual Power Plant amounting to P59,871 and P30,267 as of
December 31, 2014 and 2013, respectively. Likewise, SMEC has receivables from
WESM for the account of TPEC amounting to P926,583 and P444,463 as of
December 31, 2014 and 2013, respectively.
e. As of December 31, 2014 and 2013, the outstanding claims from PSALM due to
monthly payments reduction amounted to nil and P355,175, respectively (Note 7).
f.
The balance mainly pertains to receivables from customers related to power rate
adjustments which will be remitted to the Government upon collection.
F-97
10. Inventories
Inventories at cost consist of:
Note
7, 18
18
Coal
Fuel oil
Materials and supplies
Other consumables
2014
P1,179,585
93,402
86,242
5,804
P1,365,033
2013
P1,381,589
114,356
3,190
P1,499,135
There were no inventory write-downs to net realizable value for the years ended
December 31, 2014 and 2013. Inventories charged to cost of power sold amounted to
P11,945,280 and P11,179,322 in 2014 and 2013, respectively.
11. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of:
Note
Input VAT
Prepaid tax
Prepaid rent and others
7, 18
2014
P7,389,026
1,296,666
451,510
P9,137,202
2013
P6,058,256
933,774
242,862
P7,234,892
Input VAT consists of current and deferred Input VAT on purchases and can be offset
against the output VAT payable (Note 16).
Prepaid tax consists of creditable withholding taxes and excess tax credits of the Group
from prior years.
F-98
F-99
P200,634,159
P199,858,169
December 31, 2014
15,814,253
5,312,454
21,126,707
5,803,956
26,930,663
P214,319,759
7,441,107
221,760,866
5,027,966
226,788,832
Power Plants
(Note 7)
Carrying Amount
December 31, 2013
Accumulated Depreciation and

Amortization
January 1, 2013
Additions
December 31, 2013
Additions
December 31, 2014
Cost
January 1, 2013
Additions
Reclassifications
December 31, 2013
Additions
Disposals
Reclassifications
December 31, 2014
P5,565,266
P3,435,741
45,193
45,193
220,638
265,831
P 3,480,934
3,480,934
2,350,163
5,831,097
Building
P300,417
P336,852
9,750
9,750
36,481
46,231
P 332,251
14,351
346,602
46
346,648
Leasehold
Improvements
P996,374
P909,227
14,744
36,787
51,531
110,171
161,702
98,776
1,158,076
P43,275
917,483
960,758
98,542
Other
Equipment
P21,413,097
P11,705,540
P4,769,135
6,950,756
(14,351)
11,705,540
17,380,501
(82,420)
(7,590,524)
21,413,097
Construction
in Progress
P228,133,323
P217,021,519
15,828,997
5,404,184
21,233,181
6,171,246
27,404,427
P219,132,169
19,122,531
238,254,700
17,479,089
(82,420)
(113,619)
255,537,750
Total
On September 23, 2013, SPI acquired from Petron a 2 x 35 MW Co-Generation Solid

Fuel-Fired Power Plant and all other pertinent machinery, equipment, facilities and
structures being constructed and installed which comprise the additional 2 x 35 MW
Co-Generation Solid Fuel-Fired Power Plant in Bataan, for a total consideration of
P16,800,000, inclusive of tax (Note 18). The power plant is used as collateral in securing
a loan obtained by SPI from syndicated banks (Note 17).
Construction in progress pertains to the following:
a. Power plant project of SMCPC and SCPC for the construction of Coal-Fired Power
Plants in Davao and Bataan, respectively;
b. Construction of limestone pulverizing plant and petcoke handling facilityof SPI.
SMEC, as IPP Administrator, and TSC, as IPP and operator of the Sual Power Plant,
intend to improve the coal receiving and unloading capability of the Sual Power Plant as
well as increase the coal shipment deliveries thereto (Note 7).
On September 9, 2014, SMEC agreed to provide an additional coal unloader (the Third
Unloader) to the Sual Power Plant while TSC agreed to install, operate and maintain the
same during the life of the Sual IPPA Agreement or until 2024. Considering however,
that TSC is not allowed to accept and install any equipment in the Sual Power Plant that
it does not own, SMEC agreed to donate the same in order to implement the parties
intention to improve unloading capability and increase coal shipment deliveries. The
Third Unloader will be part of the assets to be turned over to SMEC at the end of the Sual
IPPA Agreement or until 2024 and is recognized under Donations account in the
consolidated statements of income (Note 20).
Computer and system installations, and upgrades and implementation of accounting
system recognized as part of capital projects in progress were reclassified to Intangible
assets in 2014 (Note 14).
Note
Cost of power sold
Operating expenses
20
2014
P6,143,866
43,774
P6,187,640
2013
P5,382,435
21,749
P5,404,184
Total depreciation and amortization recognized in profit or loss include annual

amortization of capitalized interest amounting to P4,453 and nil in 2014 and 2013,
respectively.
The Group has interest amounting to P254,539 and P84,367 which was capitalized in
2014 and 2013, respectively. The capitalization rates used to determine the amount of
interest eligible for capitalization range from 6.0606% to 6.5446% and 6.3131% in 2014
and 2013, respectively. The unamortized capitalized borrowing costs amounted to
P349,498 and P87,462 as of December 31, 2014 and 2013, respectively.
P188,132,700 and P193,319,103 as of December 31, 2014 and 2013, respectively.
F-100
13. Investments and Advances

Note
Cost
Additions
Disposal
Adjustment to subscription receivable
Accumulated Equity in Net Earnings
(Losses)
Equity in net earnings (losses) during the
year
Adjustment to equity in net loss prior year
Share in other comprehensive income
Dividends
Disposal
2014
P301,208
1,830,054
(57,211)
2,074,051
19
P12,824,356
301,208
(12,824,356)
301,208
(41,374)
596,598
(32,231)
9,886
(63,719)
795,004
20,535
(704,407)
(749,104)
(41,374)
2,010,332
8,601,945
P10,612,277
Advances
2013
259,834
5,751,965
P6,011,799

a. Meralco
In 2012, investment in an associate consists of 69,059,538 quoted common stock of
Meralco, representing 6.13% ownership interest. The Parent Company has
determined that it has obtained significant influence over the financial and operating
policies of Meralco in conjunction with SMC and subsidiaries ownership of 32.04%
interest in Meralco. Accordingly, the Parent Company applied the equity method of
accounting on its investment in shares of stock of Meralco.
On September 30, 2013, the Parent Company, together with SMC and San Miguel
Pure Foods Company, Inc., entered into a Share Purchase Agreement with
J.G. Summit, for the sale of the Parent Companys 69,059,538 shares of stock of
Meralco for P16,228,991. The sale is subject to the satisfaction of certain closing
conditions, which were satisfied by all the parties on December 11, 2013. As a result
of the sale, the Group recognized a gain of P2,587,044, net of expenses, included as
part of Gain on sale of investment account in the 2013 consolidated statement of
income (Note 9).
b. Olongapo Electricity Distribution Company, Inc. (OEDC)
ownership interest in OEDC to SPGC for a consideration of P8,750.
F-101
As of December 31, 2014 and 2013, carrying amount of investment in OEDC

amounted to P191,549 and P259,834, respectively. Subscription payable amounted to
P28,101 and P65,625 as of December 31, 2014 and 2013, respectively (Note 16).
The table below summarizes the financial information of investment in an associate
2014
(Unaudited)
Philippines
Current assets
Noncurrent assets
Current liabilities
Noncurrent liability
Net assets
P424,000
1,004,174
(916,386)
P511,788
Revenue
P1,231,297
2013
(Audited)
Philippines
P247,317
891,828
(567,671)
(1,990)
P569,484
P656,942
Net losses / total comprehensive losses
(P59,883)
(P92,049)
Share in net losses / total comprehensive losses
(P20,959)
(P31,488)
c. Angat Hydropower Corporation (Angat Hydro) and KWPP Holdings Corporation

(KWPP)
In accordance with the agreement of the Parent Company through PVEI, a subsidiary
of SMC Global, and Korea Water Resources Corporation (K-Water) to enter into a
joint venture partnership for the acquisition, rehabilitation, operation and
maintenance of the 218 MW Angat Hydroelectric Power Plant (Angat Power Plant)
awarded by PSALM to K-Water, PVEI deposited US$26,448 to an escrow account.
On November 18, 2014, PVEI acquired from the individual stockholders and
K-Water, 2,817,270 shares or 60% of the outstanding capital stock of Angat Hydro
and from the individual stockholders, 75 shares representing 60% of KWPP
outstanding capital stock. Accordingly, PVEI paid K-Water and the individual
stockholders a total of US$39,236 and P15 as full payment of the share purchase
price of Angat Hydro and KWPP shares, respectively. The payment was funded in
part by the deposit in escrow.
In accordance with the entry of PVEI into Angat Hydro and KWPP, K-Water and
PVEI are jointly in control of the management and operation of Angat Hydro and
KWPP.
Further, PVEI agreed to pay K-Water a support fee amounting to 3% of the total
amount of the bridge loan facility which was obtained for the acquisition by Angat
Hydro of the Angat Power Plant.
Angat Hydro
Angat Hydro was incorporated on November 15, 2013 and was created to engage in
the operations and maintenance of the Angat Power Plant and to supply power
generated to power corporations, electric utilities, to import hydro-electric facilities
and equipment, and to do all acts necessary and incidental thereto, in accordance with
R.A. No. 9136 or otherwise known as the Electric Power Industry Reform Act of
2001 (EPIRA).
F-102
KWPP
KWPP was incorporated on November 27, 2013 and was established for the purpose
of acquiring, holding or leasing water and flowage rights.
As of December 31, 2014, details in investments in Angat Hydro and KWPP are as
follows:
Angat Hydro
P1,830,039
(11,257)
P1,818,782
Acquisition cost
KWPP
P15
(15)
P -
The table below summarizes the financial information of investments in joint venture
Angat Hydro
Philippines
P407,488
20,187,061
(19,713,866)
(17,421)
P863,262
Current assets
Noncurrent assets
Current liabilities
Net assets
KWPP
Philippines
P69
17,385
(354)
(17,661)
(P561)
Revenue
P153,772
Net losses / total comprehensive losses
(P72,451)
(P470)
Share in net losses / total comprehensive losses for

the period from November 18 to
December 31, 2014
(P11,257)
(P15)
P -
14. Goodwill and Other Intangible Assets

Goodwill and other intangible assets consist of:
Mining rights
Concession assets - net
Computer software under development
Goodwill
Note
6
7
2014
P1,719,726
481,702
111,947
8,866
P2,322,241
2013
P1,719,726
8,866
P1,728,592
The goodwill is attributed to the Groups acquisition of SMEC and SPDC in 2010.
Based on managements assessment of the goodwill, it is not impaired since the
recoverable amount of the related net assets of SMEC and SPDC for which the goodwill
was attributed still exceeds its carrying amount including goodwill as of December 31,
2014 and 2013.
F-103
15. Other Noncurrent Assets

Other noncurrent assets consist of:
Note
13, 25, 26
Restricted cash
Deferred input VAT - net of current
portion
Advances to suppliers
Others
25, 26
7
2014
P1,054,801
2013
P1,800,438
980,057
179,129
1,428
P2,215,415
1,320,591
305,281
80,000
P3,506,310
Restricted cash represents: (a) deposits made by PVEI in an escrow account for the
acquisition, rehabilitation, operation and maintenance of the Angat Power Plant. In 2014,
the amount was withdrawn and paid to the sellers (Note 13); (b) SPIs Cash Flow
Waterfall accounts (Trust Fund) with a local bank as part of the provisions in SPIs
Facility Agreement amounting to P1,021,163 in 2014 and P626,279 in 2013 (Note 17);
and (c) APECs collected contributions from consumers, membership fees and bill
deposits in 2014 and 2013 amounted to P33,638 and nil, respectively.
The deferred input VAT mainly pertains to the input VAT on the purchase of the Limay
power plant from Petron.
Noncurrent receivable represents receivable from a third party for the sale of the Parent
Companys 100% ownership interest in PEI, net of current portion.
Others represent the initial amount paid by the Parent Company for the separation pay of
employees of ALECO in 2013. This amount became part of the concession asset of
APEC when it assumed the Concession Agreement (Note 7).
Note
7, 18
Trade
Accrued expenses
Output VAT
Non-trade
Accrued interest
Withholding taxes
7, 17
13
25, 26
2014
P12,621,078
8,851,501
4,623,037
1,354,760
487,997
28,101
151,330
P28,117,804
2013
P12,750,570
1,837,417
5,364,899
2,287,743
494,755
65,625
170,924
P22,971,933
represents the VAT on sale of power which will be remitted to the Government only
upon collection from the customers (Note 9).
Accrued expenses consist of payables related to power rate adjustments and other
payables to the Government other than output VAT and withholding taxes.
F-104
Non-trade payables mainly pertain to the liability relating to the power rate adjustments
in November and December 2013 sale of power to WESM amounting to P1,916,196 and
P2,119,181 as of December 31, 2014 and 2013, respectively. The noncurrent portion is
presented as other noncurrent liability in the statements of financial position (Note 27).
17. Long-term Debt
Long term debt consists of:
Note
Bonds payable
Loans payable
25, 26
Less current portion
2014
P13,416,000
61,955
13,354,045
2013
P13,318,500
71,164
13,247,336
35,966,800
607,600
35,359,200
34,497,500
655,951
33,841,549
48,713,245
1,330,037
P47,383,208
47,088,885
142,403
P46,946,482
a. Bonds Payable
note (Bonds Payable) issue under Regulations of the U.S. Securities Act of 1933, as
amended. The unsecured bond issue is listed in the Singapore Exchange Securities
Trading Limited. The terms and conditions of the bonds contain a negative pledge
provision with certain limitations on the ability of the Parent Company and its
material subsidiaries to create or have outstanding any security interest upon, or with
respect to, any of the present or future business, undertaking, assets or revenue
(including any uncalled capital) of the Parent Company or any of its material
subsidiaries to secure any indebtedness, subject to certain exceptions. Upon the
occurrence of a change of control, each bondholder has the right, at its option, to
require the Parent Company to repurchase all (but not some only) of its bonds, at a
redemption price equal to 101.0% of the principal amount thereof plus accrued
interest on the change of control put date.
amounted to P391,300 and P388,457 as of December 31, 2014 and 2013,
respectively. Interest expense amounted to P1,123,679 and P1,094,846 in 2014 and
2013, respectively.
F-105
provisions of the Bonds Payable, including but not limited to, the definitions of
Asset Sale, Material Subsidiary, Non-Recourse Project Level Indebtedness,
Permitted Security Interest and Project Subsidiaries and the leverage and
cross-default thresholds in order to align the provisions of the Bonds Payable with
the US$700,000 Loan Facility of the Parent Company, thereby providing flexibility
to enable the Parent Company to divest its non-core assets and raise funds in line
with its long term growth strategy.
The US$300,000, 7% bond will mature on January 28, 2016.
b. Loans Payable
Parent Company
i) On March 31, 2011, the Parent Company signed a US$200,000, 3-year term loan
with a syndicate of banks. The US$200,000 loan was drawn down by the Parent
Company on September 30, 2011. Pursuant to the Facility Agreement, the
amount of the loan drawn down will bear interest at the rate of the London
interbank offered rate plus a margin, payable in arrears on the last day of the
agreed interest period.
The Parent Company may, by giving not less than ten (10) business days prior
written notice to the Facility Agent, prepay the loan in whole or in part with
accrued interest on the amount prepaid and subject to Break Funding Cost where
the prepayment is made on a day other than the last day of an interest period,
without minimum penalty.
On September 30, 2013, the Parent Company pre-terminated the US$200,000,
3-year loan maturing in September 2014.
ii) On September 9, 2013, the Parent Company signed a US$650,000, 5-year term
loan with a syndicate of banks. The Facility Agreement has some provisions
similar to the US$200,000, 3-year term loan entered into by the Parent Company
on March 31, 2011. Subsequently, on November 15, 2013, the US$650,000
Facility Agreement was amended extending the loan facility from US$650,000 to
US$700,000.
Drawn amount from the Facility Agreement amounted to US$500,000 as of
December 31, 2014.
Company including, but not limited to, maintaining a leverage ratio throughout
the duration of the term of the Facility Agreement. The terms and conditions of
the Facility Agreement contains a negative pledge provision with certain
limitations on the ability of the Parent Company and its material subsidiaries to
create or have outstanding any security interest upon or with respect to, any of
the present or future business, undertaking, assets or revenue (including any
uncalled capital) of the Parent Company or any of its material subsidiaries to
secure any indebtedness, subject to certain exceptions.
F-106
SPI
syndicate of banks. Of this amount, P12,300,000 and P1,500,000 were drawn on
September 30, 2013 and 2014, respectively. The loan includes amount payable to a
related party amounting to P3,451,000 and P3,119,565 as of December 31, 2014 and
Pursuant to the Facility Agreement, the amount of the loan drawn down in 2014 and
2013 will bear interest at the rate of 6.5446% and 6.3131%, respectively, as
determined by the Facility Agent. Effective November 28, 2014, step-down interest
rate is at 6.2921% and 6.0606% for 2014 and 2013 loans, respectively. The Facility
Agreement has a final maturity date of September 2023.
The repayment schedule consists of forty (40) periods on a quarterly basis. First
repayment of principal started December 2014.
Year
2015
2016
2017
2018
2019
2020 and thereafter
Gross Amount
P1,373,100
1,573,200
1,573,200
1,573,200
1,573,200
5,940,900
P13,606,800
Debt Issue Costs

P43,063
39,444
35,107
30,581
25,733
47,207
P221,135
Net
P1,330,037
1,533,756
1,538,093
1,542,619
1,547,467
5,893,693
P13,385,665
coverage ratio throughout the duration specified under the Facility Agreement. The
amounted to P17,794 and P22,483 as of December 31, 2014 and 2013, respectively.
Total interest expense and financing charges on loans payable amounted to P1,380,328
and P527,527 (inclusive of P266,655 and P87,462 capitalized in construction in progress
in 2014 and 2013, respectively; Note 12) in 2014 and 2013, respectively.
Interest expense and other financing charges account in the consolidated statements of
income in 2014 and 2013, respectively.
F-107
As of December 31, 2014 and 2013, the Group is in compliance with the covenants of the
debt agreements.
The movements in debt issue costs are as follow:
2014
P727,115
128,535
(173,978)
(12,117)
P669,555

Addition
Amortization
Capitalized amount
2013
P131,071
689,051
(89,912)
(3,095)
P727,115
interest rate, foreign currency and liquidity risks are discussed in Note 25.
The Group, in the normal course of business, purchases products and services from and
sells products and renders services to related parties. Transactions with related parties are
made at normal market prices and terms. An assessment is undertaken at each financial
year by examining the financial position of the related party and the market in which the
related party operates.
The following are the transactions with related parties and the outstanding balances as of
December 31:
Year
Revenue
from
Related
Parties
Purchases
from
Related
Parties
Amounts
Owed by
Related
Parties
Amounts
Owed to
Related
Parties
2014
2013
P -
P267,336
412,372
P10,557
252
P18,009
140,143
On demand;
non-interest
bearing
Unsecured;
no impairment
7, 12, 20
2014
2013
7,814,823
1,831,882
2,208,319
17,993,545
852,839
522,697
418,116
524,268
On demand;
non-interest
bearing
Unsecured;
no impairment
Associate
13
2014
2013
878,650
167,550
On demand;
non-interest
bearing
Unsecured;
no impairment
Associate of an
Entity Under
Common
Control
17
2014
2013
10 years;
interest
bearing
Secured
Note
SMC
Entities Under
Common
Control
77,816
81,546
3,451,000
3,119,565
2014
P8,693,473
P2,475,655
P941,212
P3,887,125
2013
P1,999,432
P18,405,917
P604,495
P3,783,976
Terms
Conditions
a. Amounts owed by related parties consist of trade and other receivables and security
deposits.
by related parties.
F-108
c. The amount owed to associate of an entity under common control consists of interest
account in the consolidated statements of financial position.
and P30,702 for the years ended December 31, 2014 and 2013, respectively.
20,000 shares, subject to certain conditions, through payroll deductions (Note 3).
As of December 31, 2014 and 2013, the expenses related to ESPP amounted to nil
and P505, respectively.
f.
19. Equity
Capital Stock
As of December 31, 2014 and 2013, the Parent Companys authorized capital stock is
P2,000,000, divided into 2,000,000,000 shares with par value of P1 per share.
Capital stock consists of:
2014
P1,250,004
187,500
P1,062,504
Subscribed capital stock

Less subscription receivable
2013
P1,250,004
187,500
P1,062,504
The number of shares subscribed is 1,250,003,500 shares as of December 31, 2014 and
2013.
F-109
Reserves
Reserves consist of:
2014
2013
P785,279
P785,279
Note
Excess of net assets over purchase price of
acquired subsidiaries under common
control
Share in other comprehensive loss of an
associate - net
Additions
Disposal
(39,306)
20,535
18,771
-
13
P785,279
P785,279
Excess of net assets over purchase price of acquired subsidiaries under common control
pertains to the acquisitions of noncontrolling interest in SMEC and SPDC.
The share in other comprehensive loss of an associate consists of unrealized fair value
gain on AFS financial assets and cumulative translation adjustments.
Retained Earnings
accumulated earnings in subsidiaries and equity in net earnings of associates amounting
to P427 and P12,978,115 in 2014 and 2013, respectively. Such amounts are not available
for declaration as dividends until declared by the respective investees.
December 31, 2014
Date of
Declaration
March 25, 2014
June 3, 2014
August 19, 2014
November 4, 2014
Stockholders of
Record
March 25, 2014
June 3, 2014
August 19, 2014
November 4, 2014
Date Payable
April 8, 2014
June 10, 2014
August 29, 2014
November 11, 2014
Dividend per
share
Amount
P1.20
2.80
2.00
2.00
P1,500,000
3,500,000
2,500,000
2,500,000
P10,000,000
December 31, 2013

Date of
Declaration
February 19, 2013
May 3, 2013
August 13, 2013
November 29, 2013
Stockholders of
Record
Date Payable
Dividend per
share
February 19, 2013

May 3, 2013
August 13, 2013
November 29, 2013
February 28, 2013

May 15, 2013
August 15, 2013
December 5, 2013
P0.80
0.80
0.80
1.20
Amount
P1,000,000
1,000,000
1,000,000
1,500,000
P4,500,000
F-110
As of December 31, the Groups appropriated retained earnings, net of reversal are as
follows:
2014
P11,771,000
7,675,000
7,352,300
2,604,600
P29,402,900
Parent Company
SMEC
SPPC
SPDC
2013
P2,643,000
1,800,000
2,981,800
P7,424,800
Undated Subordinated Capital Securities (USCS)

On May 7, 2014, the Company issued and listed on the Singapore Stock Exchange,
US$300,000 USCS at an issue price of 100%.
The holders of the USCS are conferred a right to receive distribution on a semi-annual
basis from their issue date at the rate of 7.5% per annum, subject to the step-up rate. The
Company has a right to defer this distribution under certain conditions.
The USCS have no fixed redemption date and are redeemable in whole, but not in part, at
the Companys option on November 7, 2019, or any distribution payment date thereafter
or upon the occurrence of certain other events.
The proceeds were used by the Company to finance investments in power-related assets
and other general corporate purposes.
20. Operating Expenses
Operating expenses consist of:
Note
Donations
Management fees
Taxes and licenses
Market fees
Impairment losses on receivables
Outside services
Salaries, wages and benefits
Professional fees
Rent
Supplies
Travel and transportation
Miscellaneous
18
7
9
18
4, 7
12
12
2014
P662,752
456,727
406,979
233,701
144,393
143,492
140,128
130,019
115,849
46,451
45,467
43,774
342,198
P2,911,930
2013
P240,060
409,373
110,791
246,591
32,850
35,448
114,070
38,788
24,167
28,965
29,643
21,749
215,255
P1,547,750
The Groups corporate social responsibility projects, included in the Miscellaneous

account, amounted to P127,116 and P106,772 for the years ended
F-111
21. Other Income (Charges)

Other income (charges) consists of:
Note
7
25
PSALM monthly fees reduction

Foreign exchange losses - net
Miscellaneous income
2014
P814,565
(813,621)
67,281
P68,225
2013
P872,243
(9,434,860)
71,555
(P8,491,062)
22. Income Taxes

The components of income tax expense (benefit) are as follows:
2014
P1,608,293
1,085,130
P2,693,423
Current
Deferred
2013
P686,311
(1,522,613)
(P836,302)
Current income tax expense in 2014 and 2013 represents regular corporate income tax of
30% on taxable income, MCIT and final tax on interest income.
Deferred tax assets (liabilities) arise from the following:
2014
Difference of depreciation and other
related expenses over monthly payments
Allowance for impairment losses on
receivables
2013
(P324,095)
P806,712
60,005
(P264,090)
14,328
P821,040
The difference of depreciation and other related expenses over monthly payments
represents timing difference between tax and accounting recognition of expenses.
The amounts above are reported in the consolidated statements of financial position as
follows:
2014
P2,779,380
(3,043,470)
(P264,090)
Deferred tax assets

F-112
2013
P2,909,105
(2,088,065)
P821,040
As of December 31, 2014, the NOLCO and MCIT of the Group that can be claimed as
deduction from future taxable income and deduction from corporate income tax due,
respectively, are as follows:
Year Incurred/Paid
Year 2014
Year 2013
Year 2012
Carryforward
Benefits Up To
December 31, 2017
December 31, 2016
December 31, 2015
NOLCO
P2,073,953
2,187,455
1,577,233
P5,838,641
MCIT
P14,230
12,766
7,417
P34,413
The reconciliation between the statutory income tax rate on income before income tax
and the Groups effective income tax rate is as follows:
Statutory income tax rate

Increase (decrease) in the income tax rate resulting
from:
Income subject to ITH
Nondeductible expenses and others
Effective income tax rate
2014
30.00%
2013
30.00%
(7.87%)
(1.91%)
20.22%
(76.30%)
20.22%
(26.08%)
23. Registrations and License

Registrations with the Board of Investments (BOI)
On August 21, 2007, SEPC was registered with the BOI under the Omnibus Investment
Code of 1987 (Executive Order No. 226), as New Domestic Producer of Coal on a
Non-pioneer Status and was entitled to certain incentives that include, among others, an
Income Tax Holiday (ITH) for four years from June 2011 or date of actual start of
commercial operations, whichever is earlier, but in no case earlier than the date of
registration.
SMEC, SPDC and SPPC are registered with the BOI as administrator/operator of their
respective power plant on a pioneer status with non-pioneer incentives and were granted
ITH for four (4) years without extension beginning August 1, 2010 up to July 31, 2014,
subject to compliance with certain requirements under their registrations. The ITH
incentive availed was limited only to the sale of power generated from the power plants.
In 2013, SMCPC and SCPC were granted incentives by the BOI on a pioneer status for
six (6) years beginning December 2015 and February 2016, respectively, or start of
commercial operations whichever is earlier, subject to the representations and
commitments set forth in the application for registration, the provisions of Omnibus
Investments Code of 1987, the rules and regulations of the BOI and the terms and
conditions prescribed. The ITH incentives shall be limited only to the revenues generated
from the sale of the electricity from the power plants.
F-113
On September 3, 2013 and January 28, 2014, the BOI issued a Certificate of Authority to
SMCPC and SCPC, respectively, subject to provisions and implementing rules and
regulations of Executive Order No. 70, entitled Reducing the Rates of Duty on Capital
Equipment, Spare Parts and Accessories imported by BOI Registered New and
Expanding Enterprises. Authority shall be valid for one (1) year from the date of
issuance. Advanced authority to import capital equipment was granted on May 21, 2013.
For the subsequent year, BOI issued new Certificates of Authority dated March 6 and
September 4, 2014 and February 6, 2015 to SMCPC and SCPC, respectively, both with a
validity of one year from the date of issuance.
On March 4, 2014, the BOI approved the transfer of BOI Certificate of Registration Nos.
2013-047 and 2010-181 from Petron to SPI. Under the Certificates of Registration, SPI is
entitled to certain incentives, including ITH incentives, for the revenue generated from
the sale of electricity from the plant and sold to the grid, other entities and/or
communities.
License Granted by the ERC
On August 22, 2011, SMELC was granted a Retail Electricity Suppliers (RES) License
by the ERC pursuant to Section 29 of the EPIRA which requires all suppliers of
electricity to the contestable market to secure a license from the ERC. The term of the
RES License is for a period of 5 years from the time it was granted and renewable
thereafter.
Net income (a)

Weighted average number of shares
outstanding (in thousands) (b)
2014
P10,629,482
2013
P4,042,655
1,250,004
P8.50
1,250,004
P3.23
As of December 31, 2014 and 2013, the Group has no dilutive debt or equity instruments.
Interest Rate Risk

Liquidity Risk
Credit Risk
F-114
There has been changes to the Groups exposure to the above risks or the manner in
which it manages and measures the risks since prior year. The Groups overall strategy in
managing its capital has likewise remained unchanged since prior year.
equivalents, other receivables (current and noncurrent), restricted cash, non-trade
and financial liabilities such as trade receivables, accounts payable and accrued expenses
and finance lease liabilities arise directly from and are used to facilitate its daily
operations.
obligations.
Interest Rate Risk
the Group to fair value interest rate risk. On the other hand, borrowings issued at variable
rates expose the Group to cash flow interest rate risk.
F-115
if any.
impact on floating rate borrowings) by P6,388 and P11,893 in 2014 and 2013,
respectively. A 1% decrease in the interest rate would have had the equal but opposite
effect. These changes are considered to be reasonably possible given the observation of
prevailing market conditions in those periods. There is no impact on the Groups equity.
December 31, 2014
Fixed Rate
Interest rate
Floating Rate
Interest rate
<1 Year
1-2 Years >2-3 Years
Fixed Rate
Interest rate
Interest rate
Floating Rate
Interest rate
>4-5
Years
>5 Years
Total
P1,223,850 P1,402,200 P1,402,200 P1,402,200 P1,402,200 P5,295,150 P12,127,800

6.0606%
6.0606%
6.0606%
6.0606%
6.0606%
6.0606%
149,250
171,000
171,000
171,000
171,000
645,750
1,479,000
6.2921%
6.2921%
6.2921%
6.2921%
6.2921%
6.2921%
-
13,416,000
7%
<1 Year
P1,373,100 P14,989,200
December 31, 2013
>3-4
Years
1-2 Years
22,360,000
LIBOR +
Margin
13,416,000
22,360,000
P1,573,200 P23,933,200
P1,573,200
P5,940,900
P49,382,800
>3-4
Years
>4-5
Years
>5 Years
Total
>2-3 Years
P172,200 P1,223,850 P1,402,200 P1,402,200 P1,402,200 P6,697,350 P12,300,000

6.3131%
6.3131%
6.3131%
6.3131%
6.3131%
6.3131%
-
P172,200
13,318,500
7%
P1,223,850 P14,720,700
22,197,500
LIBOR +
margin
P1,402,200 P23,599,700
13,318,500
-
22,197,500
P6,697,350
P47,816,000

foreign exchange rates that adversely affect the foreign currency-denominated
transactions of the Group. The Groups risk management objective with respect to
foreign currency risk is to reduce or eliminate earnings volatility and any adverse impact
on equity.
F-116

liabilities and their Philippine peso equivalents as of December 31 are as follows:
2013
2014
Note
Assets
Prepaid and other current
assets
Liabilities
accrued expenses
Long-term debt
Net foreign currencydenominated monetary
liabilities
US Dollar
Peso
Equivalent
US Dollar
Peso
Equivalent
US$260,178
83,937
P11,635,160
3,753,513
US$299,660
22,649
P13,303,411
1,005,512
26,448
1,174,159
7
7, 17
344,115
15,388,673
348,757
15,483,082
148,277
2,216,977
800,000
6,633,727
99,143,265
35,776,000
30,369
2,350,421
800,000
1,348,227
104,346,941
35,516,000
3,165,254
141,552,992
3,180,790
141,211,168
US$2,821,139
P126,164,319
US$2,832,033
P125,728,086
The Group reported net unrealized foreign exchange losses amounting to P1,584,500 and
P9,592,617 in 2014 and 2013, respectively, with the translation of its foreign
currency-denominated assets and liabilities. These mainly resulted from the movement of
the Philippine peso against US dollar as shown in the following table:
US Dollar
to Philippine
Peso
P44.720
44.395
December 31, 2014

December 31, 2013

F-117
before tax (due to changes in the fair value of monetary assets and monetary liabilities)
for the years ended December 31:
2014
P1 Decrease P1 Increase
in the US
in the US
Dollar
Dollar
Exchange
Exchange
Rate
Rate
Cash and cash
equivalents
Trade and other
receivables
Prepaid expenses and
other current assets
accrued expenses
Long-term debt
2013
P1 Increase
P1 Decrease
in the US
in the US
Dollar
Dollar
Exchange
Exchange
Rate
Rate
(P260,178)
P260,178
(P299,660)
P299,660
(83,937)
83,937
(22,649)
22,649
(344,115)
344,115
(26,448)
(348,757)
26,448
348,757
148,277
2,216,977
800,000
3,165,254
(148,277)
(2,216,977)
(800,000)
(3,165,254)
30,369
2,350,421
800,000
3,180,790
(30,369)
(2,350,421)
(800,000)
(3,180,790)
P2,821,139
(P2,821,139)
P2,832,033
(P2,832,033)
Liquidity Risk
F-118
liquidity management as of December 31:
2014
Financial Assets
Trade and other receivables net
account)
payables)
current portion)
2013
Financial Assets
account)
payables)
current portion)
Carrying
Amount
Contractual
Cash Flow
1 Year
or Less
1 Year 2 Years
2 Years 5 Years
Over
5 Years
P38,304,294
P38,304,294
P38,304,294
P -
P -
P -
18,208,339
18,208,339
18,208,339
1,054,801
1,054,801
1,054,801
179,129
179,129
23,331,447
23,331,447
23,331,447
186,303,745
248,175,447
22,091,404
23,170,046
71,935,991
130,978,006
48,713,245
49,382,800
1,373,100
14,989,200
27,079,600
5,940,900
Carrying
Amount
Contractual
Cash Flow
1 Year
or Less
1 Year 2 Years
2 Years 5 Years
Over
5 Years
P29,125,171
P29,125,171
P29,125,171
P -
P -
P -
31,540,444
31,540,444
31,540,444
1,800,438
1,800,438
1,800,438
305,281
305,281
16,947,172
16,947,172
16,947,172
195,002,721
267,421,551
20,116,894
22,013,873
70,035,556
155,255,228
47,088,885
47,816,000
172,200
1,223,850
39,722,600
6,697,350
179,129
126,152
179,129
Credit Risk
policy to enter into transactions with creditworthy customer or counterparty to mitigate
any significant concentration of credit risk.
arranges master netting agreements.
credit risk.
F-119
Financial information on the Groups maximum exposure to credit risk as of
December 31, without considering the effects of collaterals and other risk mitigation
techniques, is presented below.
2014
P38,303,999
18,208,339
1,054,801
179,129
P57,746,268

Restricted cash
2013
P29,125,021
31,540,444
1,800,438
305,281
P62,771,184
Capital Management
the dividend payment to shareholders, distribution payment, pay-off existing debts, return
capital to shareholders or issue new shares, subject to compliance with certain covenants
of its long-term debt and USCS (Notes 17 and 19).
The Group defines capital as capital stock, additional paid-in capital, USCS and retained
F-120
noncurrent liabilities, while equity is total equity as shown in the consolidated statements
of financial position.
of the Groups financial instruments as of December 31:
2013
2014
Financial Assets
Restricted cash (included
under Other noncurrent
assets account)
noncurrent assets
account)
accrued expenses
(excluding statutory
payables)
Fair Value
Carrying
Amount
Fair Value
P38,304,294
P38,304,294
P29,125,171
P29,125,171
18,208,339
18,208,339
31,540,444
31,540,444
1,054,801
1,054,801
1,800,438
1,800,438
179,129
P57,746,563
179,129
P57,746,563
305,281
P62,771,334
305,281
P62,771,334
P23,331,447
P23,331,447
P16,947,172
P16,947,172
186,303,745
186,303,745
195,002,721
195,002,721
48,713,245
51,311,719
P258,348,437 P260,946,911
47,088,885
P259,038,778
50,850,121
P262,800,014
Carrying
Amount
F-121
similar types of instruments as of reporting date. The discount rates used for Philippine
peso-denominated loan range from 2.54% to 4.29% and from 0.49% to 3.80% as of
December 31, 2014 and 2013, respectively. The discount rates used for foreign
currency-denominated loans range from 0.17% to 0.63% and 0.16% to 0.56% as of
December 31, 2014 and 2013, respectively. The carrying amounts of floating rate loans
with quarterly interest rate repricing approximate their fair values.
Level 3 as of December 31, 2014 and 2013. During the year, 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.
instruments.
27. Other Matters
a. Contingencies
The Company is a party to certain cases or claims filed by third parties which are
either pending decision by the court/regulators or are subject to settlement
agreements. The outcome of these cases or claims cannot be presently determined
(Note 4).
b. Generation Payments to PSALM
SPPC disputed the claims of PSALM for energy fees. The claims arose from
differing interpretations of certain provisions in the IPPA Agreement related to
energy fees, the fees payable to PSALM for the generation of power to customers.
SPPCs management is in discussions with PSALM to secure a common
understanding through amicable means. However, management and its legal counsel
assessed that SPPCs bases for the amounts due to PSALM are consistent with the
terms of the Ilijan IPPA Agreement. The information usually required is not
disclosed on the grounds that it may prejudice the outcome of the discussion.
c. Temporary Restraining Order (TRO) Issued to Meralco
immediately, preventing Meralco from collecting from its customers the power rate
increase pertaining to November 2013 billing. As a result, Meralco was constrained
to fix its generation rate to its October 2013 level of P5.67/kWh. Claiming that since
the power supplied by generators, including SMEC and SPPC is billed to Meralco's
customers on a pass-through basis, Meralco deferred a portion of its payment on the
ground that it was not able to collect the full amount of its generation cost. Further,
on December 27, 2013, the Department of Energy (DOE), the ERC and the PEMC,
acting as a tripartite committee, issued a joint resolution setting a reduced price cap
on the WESM of P32/kWh. The price will be effective for 90 days until a new cap is
decided upon. As of December 31, 2013, the outcome of this case cannot be
determined.
F-122
On January 16, 2014, the SC granted Meralcos plea to include other power supplier
and generation companies, including SMEC and SPPC, as respondents to an inquiry.
On February 18, 2014, the SC extended the period of the TRO until April 22, 2014
and enjoined the respondents (PEMC and the generators) from demanding and
collecting the deferred amounts.
On March 3, 2014, the ERC issued an order declaring the November and December
2013 Luzon WESM prices void and imposed the application of regulated prices.
Accordingly, SMEC, SPPC and SPDC recognized a reduction in the sale of power
while SMELC recognized a reduction in its power purchases. Consequently, a
payable and receivable were also recognized for the portion of over-collection or
over-payment. The settlement of which shall be covered by a 24-month Special
Payment Arrangement (SPA) agreed with PEMC which took effect in June 2014. On
June 26, 2014, SMEC, SPPC and SPDC filed with the Court of Appeals a Petition for
Review of these orders.
d. Commitments
The outstanding purchase commitments of the Group as of December 31, 2014
amounted to P4,581,000.
Amount authorized but not yet disbursed for capital projects as of December 31,
2014 is approximately P39,379,030.
e. Electric Power Industry Reform Act of 2001
The EPIRA sets forth the following: (a) Section 49 created PSALM to take
ownership and manage the orderly sale, disposition and privatization of all existing
NPC generation assets, liabilities, IPP contracts, real estate and all other disposable
assets; (b) Section 31(c) requires the transfer of the management and control of at
least seventy percent (70%) of the total energy output of power plants under contract
with NPC to the IPP Administrators as one of the conditions for retail competition
and open access; and (c) Pursuant to Section 51(c), PSALM has the power to take
title to and possession of the IPP contracts and to appoint, after a competitive,
transparent and public bidding, qualified independent entities who shall act as the IPP
Administrators in accordance with the EPIRA. In accordance with the bidding
procedures and supplemented bid bulletins thereto to appoint an IPP Administrator
relative to the capacity of the IPP contracts, PSALM has conducted a competitive,
transparent and open public bidding process following which the Group was selected
winning bidder of the IPPA Agreements discussed in Note 7.
The EPIRA requires generation and distribution utility (DU) companies to undergo
public offering within 5 years from the effective date, and provides cross ownership
restrictions between transmission and generation companies. If the holding company
of generation and DU companies is already listed with the PSE, the generation
company or the DU need not comply with the requirement since such listing of the
holding company is deemed already as compliance with the EPIRA.
A DU is allowed to source from an associated company engaged in generation up to
50% of its demand except for contracts entered into prior to the effective date of the
EPIRA. Generation companies are restricted from owning more than 30% of the
installed generating capacity of a grid and/or 25% of the national installed generating
capacity.
F-123
f.
Subsequent Events
On March 25, 2015, the Parent Company and SMEC declared cash dividends
amounting to P1,500,000 and P2,000,000, respectively, to stockholders of record on
the same date which is payable on March 31, 2015.
On the same date, the BOD confirmed and ratified the Groups acquisition of 100%
equity interest in Ondarre Holding Corporation and the incorporation of the
following companies:
Percentage of
ownership
Parent Company
Limay Premiere Power Corp.
Central Luzon Premiere Power Corp.
Mariveles Power Generation Corporation
Mantech Power Dynamics Services Inc.
Safetech Power Services Corp.
SMEC
Golden Quest Investment Inc.
F-124
100
100
100
100
100
100

AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
F-125
2014 R.G. Manabat & Co., a Philippine partnership and a member firm
of the KPMG network of independent firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. KPMG International
provides no client services. No member firm has any authority to obligate
or bind KPMG International or any other member firm vis--vis third parties,
nor does KPMG International have any such authority to obligate or bind any
member firm. All rights reserved.
F-126
PRC-BOA Registration No. 0003, valid until December 31, 2016

SEC Accreditation No. 0004-FR-3, Group A, valid until November 22, 2014
IC Accreditation No. F-0040-R, Group A, valid until September 11, 2014
BSP Accredited, Category A, valid until December 17, 2014
F-127

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In Thousands)
December 31
Note
2013
2012
8, 25, 26
4, 9, 25, 26
4, 10
7, 11
P29,125,171
31,540,444
1,499,135
7,234,892
69,399,642
P23,555,445
17,788,133
1,184,950
7,168,503
49,697,031
4, 12
13
4, 6
4, 6, 14
4, 22
15, 25, 26
217,021,519
6,011,799
525,999
1,728,592
2,909,105
3,506,310
231,703,324
203,303,172
13,420,954
325,219
1,728,592
1,683,408
396,237
220,857,582
P301,102,966
P270,554,613
13, 16, 18, 25, 26

4, 7, 25, 26
P22,971,933
15,630,430
P18,523,255
15,436,655
17, 25, 26
142,403
218,519
38,963,285
33,959,910
17, 25, 26
4, 7, 25, 26
22
46,946,482
179,372,291
2,088,065
228,406,838
20,393,929
179,664,911
2,384,981
202,443,821
Total Liabilities
267,370,123
236,403,731
1,062,504
2,490,000
785,279
1,062,504
2,490,000
745,973
7,424,800
21,970,260
33,732,843
7,424,800
22,427,605
34,150,882
P301,102,966
P270,554,613
ASSETS
Current Assets
Inventories
Noncurrent Assets
Deferred tax assets

Current Liabilities
Finance lease liabilities - current portion
Current maturities of long term debt - net of
debt issue costs
Income tax payable
Long-term debt - net of current maturities and
debt issue costs
Finance lease liabilities - net of current portion
19
Equity
Capital stock
Reserves
Retained earnings
Appropriated
Unappropriated
Total Equity
F-128

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

SALE OF POWER
Note
2013
2012
5, 7, 18, 27
P74,043,787
P74,656,178
7
7, 10, 18
12
7
31,269,293
11,179,322
5,382,435
3,929,184
173,491
1,568,647
53,502,372
33,149,802
13,056,970
5,186,403
4,452,329
1,683,201
57,528,705
20,541,415
17,127,473
COST AND EXPENSES

Cost of power sold:
Energy fees
Power purchases
Operating expenses
7, 18, 20
GAIN ON SALE OF INVESTMENT
13
2,587,044
106,613
EQUITY IN NET EARNINGS OF

ASSOCIATES - Net
13
795,004
1,053,352
447,843
880,586
INTEREST INCOME
FINANCING CHARGES
7, 17
(12,673,891)
(12,726,547)
21
(8,491,062)
9,206,806
3,206,353
15,648,283
(836,302)
P4,042,655
1,438,976
P14,209,307

INCOME TAX EXPENSE (BENEFIT) - Net
NET INCOME
22, 23
24
F-129
P3.23
P11.37

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)

Note
NET INCOME
2013
2012
P4,042,655
P14,209,307
39,306
P4,081,961
1,176
P14,210,483
OTHER COMPREHENSIVE INCOME

ITEM THAT WILL NOT BE
RECLASSIFIED TO PROFIT OR LOSS
Share in other comprehensive income of an
associate, net of disposal
TOTAL COMPREHENSIVE INCOME
F-130
13, 19
F-131

Dividends declared
Reversal of appropriation
Appropriation during the year
P1,062,504
Share in other comprehensive income of an associate

P1,062,504
P1,062,504
P1,062,504

Dividends declared
Share in other comprehensive income of an associate,

net of disposal
Capital Stock
(Note 19)
P2,490,000
P2,490,000
P2,490,000
P2,490,000
Additional
Paid-in
Capital
1,176
P745,973
1,176
-
P744,797
39,306
P785,279
39,306
-
P745,973
Reserves
(Note 19)
(3,000,000)
4,675,800
P7,424,800
P5,749,000
P7,424,800
P7,424,800
14,209,307
(5,700,000)
3,000,000
(4,675,800)
P22,427,605
14,209,307
P15,594,098
4,042,655
(4,500,000)
P21,970,260
4,042,655
P22,427,605
Retained Earnings (Note 19)

Appropriated
Unappropriated

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(In Thousands)
14,210,483
(5,700,000)
P34,150,882
1,176
14,209,307
P25,640,399
4,081,961
(4,500,000)
P33,732,843
39,306
4,042,655
P34,150,882
Total Equity

AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

Note
ACTIVITIES
Adjustments for:
7, 17
Unrealized foreign exchange (gains) losses - net
25
12
9
13
Equity in net earnings of associates - net
13
Interest income
Gain on sale of property, plant and equipment
9
Inventories
10
11
15
Increase in accounts payable and accrued expenses
16
Finance cost paid
17
Income taxes paid
ACTIVITIES
Dividends received
Additions to property, plant and equipment
Proceeds from sale of property, plant and
equipment
Payment of other current liabilities
Net cash flows used in investing activities
13
12
13
6
13
Forward
F-132
2013
2012
P3,206,353
P15,648,283
12,673,891
9,592,617
5,404,184
32,850
(2,587,044)
(795,004)
(447,843)
27,080,004
12,726,547
(7,840,990)
5,194,238
313,104
(106,613)
(1,053,352)
(880,586)
(178)
24,000,453
(1,633,834)
(314,185)
(240,126)
(1,789,482)
3,128,087
26,230,464
527,661
(800,071)
(294,055)
25,663,999
(2,981,581)
396,627
(3,048,625)
73,016
2,324,631
20,764,521
842,801
(1,356,870)
(172,519)
20,077,933
704,407
(19,122,531)
(2,145,936)
(200,780)
-
559,382
(4,772,605)
(141,360)
391,195
(20,764,840)
740
(2,121,509)
(6,084,157)

Note
ACTIVITIES
Proceeds from long-term borrowings
Payments of long-term debt
Dividends paid
Net cash flows provided by (used in) financing
activities
17
7
17
19
(167,154)
NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS
F-133
P33,191,756
(19,146,035)
(8,708,000)
(4,500,000)
837,721


BEGINNING OF YEAR
END OF YEAR
2013
2012
P (17,361,974)
(5,700,000)
(23,061,974)
(309,018)
5,569,726
(9,377,216)
23,555,445
32,932,661
P29,125,171
P23,555,445

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Reporting Entity
The accompanying consolidated financial statements comprise the financial statements of
the Parent Company and its Subsidiaries (collectively referred to as the Group).
(PSE).
The Parent Companys subsidiaries, primarily engaged in the power business and coal
mining, are incorporated in the Philippines and registered with the Philippine SEC. The
subsidiaries are as follows:
Note
Power Business
Power Generation
SMC PowerGen Inc. (SPI) (b)
Limay Power Generation Corporation (a)
PowerOne Ventures Energy Inc. (PVEI) (c)
Retail Power Supplier
Power-related Service Provider
SMC Power Generation Corp. (SPGC) (c)
Albay Power and Energy Corp. (APEC) (e)
Coal Mining
Daguma Agro-Minerals, Inc. (DAMI) (d)
Sultan Energy Phils. Corp. (SEPC) (d)
Bonanza Energy Resources, Inc. (BERI) (d)
(a)
(b)
(c)
(d)
(e)
2012
2013
7, 12
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
7
7
started commercial operations as of December 31, 2013.
Construction of power plants on-going as of December 31, 2013.
No commercial operations as of December 31, 2013.
December 31, 2013.
Incorporated on November 19, 2013 and has not yet started commercial operations as of December 31, 2013.
F-134
2. Basis of Preparation
Statement of Compliance
The accompanying consolidated financial statements have been prepared in compliance
with Philippine Financial Reporting Standards (PFRS). PFRS are based on International
Financial Reporting Standards (IFRS) issued by International Accounting Standards
Board (IASB). PFRS consist of PFRS, Philippines Accounting Standards (PAS) and
Philippine Interpretations issued by the Financial Reporting Standards Council (FRSC).
The consolidated financial statements are also prepared to comply with the requirements
under Section 4.12, Provision of Financial Statements and Reports, of the US$300,000
7% Notes due 2016 issued by the Parent Company (Note 17).
The consolidated financial statements were authorized for issue by the Board of Directors
(BOD) on March 25, 2014.
Basis of Measurement
The consolidated financial statements of the Group have been prepared on a historical
cost basis of accounting.
Functional and Presentation Currency
The consolidated financial statements are presented in Philippine peso, which is the
Parent Companys functional currency. All financial information are rounded off to the
nearest thousand (P000), except when otherwise indicated.
Basis of Consolidation
A subsidiary is an entity controlled by the Group. The Group controls an entity if and
only if, the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.
The Group reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control.
When the Group has less than majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power
over an investee, including the contractual arrangement with the other vote holders of the
investee, rights arising from other contractual arrangements and the Groups voting rights
and potential voting rights.
The financial statements of the subsidiaries are included in the consolidated financial
statements from the date when the Group obtains control, and continue to be consolidated
until the date when such control ceases.
The consolidated financial statements are prepared for the same reporting period as the
Parent Company, using uniform accounting policies for like transactions and other events
in similar circumstances. Intergroup balances and transactions, including intergroup
unrealized profits and losses, are eliminated in preparing the consolidated financial
statements.
F-135
3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods
presented in the consolidated financial statements, except for the changes in accounting
policies as explained below.
Adoption of New or Revised Standards, Amendments to Standards and Interpretations
The FRSC approved the adoption of a number of new or revised standards, amendments
to standards and interpretations as part of PFRS.
Adopted Effective 2013
The Group has adopted the following PFRS effective January 1, 2013 and accordingly,
changed its accounting policies in the following areas:
Presentation of Items of Other Comprehensive Income (Amendments to PAS 1,

Presentation of Financial Statements). The amendments: (a) require that an entity
presents separately the items of other comprehensive income that would be
reclassified to profit or loss in the future, if certain conditions are met, from those
that would never be reclassified to profit or loss; (b) do not change the existing
option to present profit or loss and other comprehensive income in two statements;
and (c) change the title of the consolidated statements of comprehensive income to
consolidated statements of profit or loss and other comprehensive income. However,
an entity is still allowed to use other titles. The amendments do not address which
items are presented in other comprehensive income or which items need to be
reclassified. The requirements of other PFRS continue to apply in this regard.
As a result of the adoption of the amendments to PAS 1, the Group has modified the
presentation of items comprising other comprehensive income in the consolidated
statements of comprehensive income. Items that may be reclassified to profit or loss
subsequently are presented separately from items that will not be reclassified. The
amendments affect presentation only and have no impact on the Groups financial
position and performance. Comparative information has been re-presented
accordingly.
Disclosures: Offsetting Financial Assets and Financial Liabilities (Amendments to

PFRS 7, Financial Instruments: Disclosures). The amendments include minimum
disclosure requirements related to financial assets and financial liabilities that are:
(a) offset in the consolidated statements of financial position; or (b) subject to
enforceable master netting arrangements or similar agreements. They include a
tabular reconciliation of gross and net amounts of financial assets and financial
liabilities, separately showing amounts offset and not offset in the consolidated
statements of financial position.
The adoption of these amendments did not have an effect on the consolidated
F-136
PFRS 10, Consolidated Financial Statements, introduces a new approach in

determining which investees should be consolidated and provides a single model to
be applied in the control analysis for all investees. An investor controls an investee
when: (a) it has power over an investee; (b) it is exposed or has rights to variable
returns from its involvement with that investee; and (c) it has the ability to affect
those returns through its power over that investee. Control is reassessed as facts and
circumstances change. PFRS 10 supersedes PAS 27 (2008), Consolidated and
Separate Financial Statements, and Philippine Interpretation Standards Interpretation
Committee (SIC) 12, Consolidation - Special Purpose Entities.
As a result of the adoption of PFRS 10, the Group reassessed control over its
investees based on the new control model effective January 1, 2013. The
reassessment did not resulted in changes in consolidation conclusion and in the
current accounting for an investee.
PFRS 11, Joint Arrangements, focuses on the rights and obligations of joint
arrangements, rather than the legal form. The new standard: (a) distinguishes joint
arrangements between joint operations and joint ventures; and (b) eliminates the
option of using the equity method or proportionate consolidation for jointly
controlled entities that are now called joint ventures and only requires the use of
equity method. PFRS 11 supersedes PAS 31, Interests in Joint Ventures, and
Philippine Interpretation SIC 13, Jointly Controlled Entities - Non-monetary
Contributions by Venturers.
The adoption of these amendments did not have significant effect on the consolidated
PFRS 12, Disclosure of Interests in Other Entities, contains the disclosure

requirements for entities that have interests in subsidiaries, joint arrangements
(i.e., joint operations or joint ventures), associates and/or unconsolidated structured
entities. The new standard provides information that enables users to evaluate:
(a) the nature of, and risks associated with, an entitys interests in other entities; and
(b) the effects of those interests on the entitys financial position, financial
performance and cash flows.
As a result of the adoption of PFRS 12, the Group has expanded the disclosures on
its interests in other entities (Note 13).
Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests

in Other Entities: Transition Guidance (Amendments to PFRS 10, PFRS 11, and
PFRS 12). The amendments simplify the process of adopting PFRS 10, PFRS 11 and
PFRS 12 and provide a relief from the disclosures in respect of unconsolidated
structured entities. Depending on the extent of comparative information provided in
the consolidated financial statements, the amendments simplify the transition and
provide additional relief from the disclosures that could have been onerous. The
amendments limit the restatement of comparatives to the immediately preceding
period; this applies to the full suite of standards. Entities that provide comparatives
for more than one period have the option of leaving additional comparative periods
unchanged. In addition, the date of initial application is now defined in PFRS 10 as
the beginning of the annual reporting period in which the standard is applied for the
first time. At this date, an entity tests whether there is a change in the consolidation
conclusion for its investees.
The adoption of these amendments did not have significant effect on the consolidated
F-137
PFRS 13, Fair Value Measurement, replaces the fair value measurement guidance
contained in individual PFRS with a single source of fair value measurement
guidance. It defines fair value, establishes a framework for measuring fair value and
sets out disclosure requirements for fair value measurements. It explains how to
measure fair value when it is required or permitted by other PFRS. It does not
introduce new requirements to measure assets or liabilities at fair value nor does it
eliminate the practicability exceptions to fair value measurements that currently exist
in certain standards.
The adoption of the new standard did not have a significant effect on the
measurement of the Groups assets and liabilities. Additional disclosures are
provided in the individual notes relating to the assets and liabilities whose fair values
were determined.
PAS 19, Employee Benefits (Amended 2011). The amendments include the following
requirements: (a) actuarial gains and losses are recognized immediately in other
comprehensive income; this change removes the corridor method and eliminates the
ability of entities to recognize all changes in the defined benefit retirement obligation
and plan assets in profit or loss; and (b) interest income on plan assets recognized in
profit or loss is calculated based on the rate used to discount the defined benefit
retirement obligation.
PAS 28, Investments in Associates and Joint Ventures (2011), supersedes PAS 28
(2008). PAS 28 (2011) makes the following amendments: (a) PFRS 5, Noncurrent
Assets Held for Sale and Discontinued Operations, applies to an investment, or a
portion of an investment, in an associate or a joint venture that meets the criteria to
be classified as held for sale; and (b) on cessation of significant influence or joint
control, even if an investment in an associate becomes an investment in a joint
venture or vice versa, the entity does not remeasure the retained interest.
F-138
Improvements to PFRS 2009-2011 contain amendments to 5 standards with

consequential amendments to other standards and interpretations.
o
Comparative Information beyond Minimum Requirements (Amendments to

PAS 1). The amendments clarify the requirements for comparative information
that are disclosed voluntarily and those that are mandatory due to retrospective
application of an accounting policy, or retrospective restatement or
reclassification of items in the consolidated financial statements. An entity must
include comparative information in the related notes to the consolidated financial
statements when it voluntarily provides comparative information beyond the
minimum required comparative period. The additional comparative period does
not need to contain a complete set of consolidated financial statements. On the
other hand, supporting notes for the third consolidated statement of financial
position (mandatory when there is a retrospective application of an accounting
policy, or retrospective restatement or reclassification of items in the
consolidated financial statements) are not required.
Presentation of the Opening Statement of Financial Position and Related Notes

(Amendments to PAS 1). The amendments clarify that: (a) the opening
consolidated statement of financial position is required only if there is:
(i) a change in accounting policy; (ii) a retrospective restatement; or
(iii) a reclassification which has a material effect upon the information in the
consolidated statement of financial position; (b) except for the disclosures
required under PAS 8, Accounting Policies, Changes in Accounting Estimates
and Errors, notes related to the opening consolidated statement of financial
position are no longer required; and (c) the appropriate date for the opening
consolidated statement of financial position is the beginning of the preceding
period, rather than the beginning of the earliest comparative period presented.
This is regardless of whether an entity provides additional comparative
information beyond the minimum comparative information requirements. The
amendments explain that the requirements for the presentation of notes related to
the additional comparative information and those related to the opening
consolidated statement of financial position are different, because the underlying
objectives are different.
Classification of Servicing Equipment (Amendments to PAS 16, Property, Plant

and Equipment). The amendments clarify the accounting of spare parts, stand-by
equipment and servicing equipment. The definition of property, plant and
equipment in PAS 16 is now considered in determining whether these items
should be accounted for under this standard. If these items do not meet the
definition, then they are accounted for using PAS 2, Inventories.
F-139
Income Tax Consequences of Distributions (Amendments to PAS 32, Financial

Instruments Presentation). The amendments clarify that PAS 12, Income Taxes,
applies to the accounting for income taxes relating to: (a) distributions to holders
of an equity instrument; and (b) transaction costs of an equity transaction. The
amendments remove the perceived inconsistency between PAS 32 and PAS 12.
Before the amendments, PAS 32 indicated that distributions to holders of an
equity instrument are recognized directly in equity, net of any related income tax.
However, PAS 12 generally requires the tax consequences of dividends to be
recognized in profit or loss. A similar consequential amendment has also been
made to Philippine Interpretation IFRIC 2, Members Share in Co-operative
Entities and Similar Instruments.
Segment Assets and Liabilities (Amendments to PAS 34). This is amended to

align the disclosure requirements for segment assets and segment liabilities in the
interim consolidated financial statements with those in PFRS 8, Operating
Segments. PAS 34 now requires the disclosure of a measure of total assets and
liabilities for a particular reportable segment. In addition, such disclosure is only
required when: (a) the amount is regularly provided to the chief operating
decision maker; and (b) there has been a material change from the amount
disclosed in the last annual consolidated financial statements for that reportable
segment.
Additional disclosures required by the new or revised standards, amendments to

standards and interpretations were included in the consolidated financial statements,
where applicable.
New or Revised Standards, Amendments to Standards and Interpretations Not Yet
Adopted
A number of new or revised standards, amendments to standards and interpretations are
effective for annual periods beginning after January 1, 2013, and have not been applied in
preparing the consolidated financial statements. Except as otherwise indicated, none of
these is expected to have a significant effect on the consolidated financial statements.
The Group will adopt the following new or revised standards, amendments to standards
and interpretations on the respective effective dates:
Recoverable Amount Disclosures for Non-financial Assets (Amendments to PAS 36,

Impairment of Assets). The amendments clarify that the recoverable amount
disclosure only applies to impaired assets (or cash-generating unit) and require
additional disclosures to be made on fair value measurement on impaired assets when
the recoverable amount is based on fair value less costs of disposal. The amendments
harmonize the disclosure requirement for fair value less costs of disposal and value in
use when present value techniques are used to measure the recoverable amount of
impaired assets. The adoption of the amendments is required to be retrospectively
applied for annual periods beginning on or after January 1, 2014. The Group does not
plan to adopt these amendments early.
F-140
Offsetting Financial Assets and Financial Liabilities (Amendments to PAS 32). The
amendments clarify that: (a) an entity currently has a legally enforceable right to setoff if that right is: (i) not contingent on a future event; and (ii) enforceable both in the
normal course of business and in the event of default, insolvency or bankruptcy of
the entity and all counterparties; and (b) gross settlement is equivalent to net
settlement if and only if the gross settlement mechanism has features that:
(i) eliminate or result in insignificant credit and liquidity risk; and (ii) process
receivables and payables in a single settlement process or cycle. The adoption of the
amendments is required to be retrospectively applied for annual periods beginning on
or after January 1, 2014. The Group does not plan to adopt these amendments early.

amendments apply to contributions from employees or third parties to the defined
benefit plans. The objective of the amendments is to simplify the accounting for
contributions that are independent of the number of years of employee service
(i.e., employee contributions that are calculated according to a fixed percentage of
salary). The adoption of the amendments is required to be retrospectively applied for
annual periods beginning on or after July 1, 2014. Earlier application is permitted.
The Group does not plan to adopt these amendments early.
PFRS 9, Financial Instruments (2009, 2010 and 2013). PFRS 9 (2009) introduces
new requirements for the classification and measurement of financial assets. Under
PFRS 9 (2009), financial assets are classified and measured based on the business
model in which they are held and the characteristics of their contractual cash flows.
PFRS 9 (2010) introduces additions relating to financial liabilities. PFRS 9 (2013)
introduces the following amendments: (a) a substantial overhaul of hedge accounting
that will allow entities to better reflect their risk management activities in the
consolidated financial statements; (b) changes to address the so-called own credit
issue that were already included in PFRS 9 to be applied in isolation without the need
to change any other accounting for financial instruments; and (c) removes the
January 1, 2015 mandatory effective date of PFRS 9, to provide sufficient time for
the companies to make the transition to the new requirements. The IASB is currently
discussing some limited amendments to the classification and measurement
requirements and the expected credit loss impairment model to be included. Once
the deliberations are complete, the IASB expects to publish a final version of the
standard that will include all of the phases: (a) Classification and Measurement,
(b) Impairment, and (c) Hedge Accounting. That version of the standard will include
a new mandatory effective date. The adoption of the first phase of PFRS 9 will have
an effect on the classification and measurement of the Groups financial assets but
will potentially have no impact on the classification and measurement of financial
liabilities. The Group does not plan to adopt this standard early.
Financial Assets and Financial Liabilities

Date of Recognition. The Group recognizes a financial asset or a financial liability in the
consolidated statements of financial position when it becomes a party to the contractual
provisions of the instrument. In the case of a regular way purchase or sale of financial
assets, recognition is done using settlement date accounting.
Initial Recognition of Financial Instruments. Financial instruments are recognized
initially at fair value of the consideration given (in case of an asset) or received (in case
of a liability). The initial measurement of financial instruments, except for those
designated as at fair value through profit or loss (FVPL), includes transaction costs.
F-141
The Group classifies its financial assets in the following categories: held-to-maturity
(HTM) investments, available-for-sale (AFS) financial assets, financial assets at FVPL
and loans and receivables. The Group classifies its financial liabilities as either financial
liabilities at FVPL or other financial liabilities. The classification depends on the
purpose for which the investments are acquired and whether they are quoted in an active
market. Management determines the classification of its financial assets and financial
liabilities at initial recognition and, where allowed and appropriate, re-evaluates such
designation at every reporting date.
Day 1 Profit. 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 profit) in profit or loss unless it qualifies for recognition as some other type of
asset. In cases where data used is not observable, the difference between the transaction
price and model value is only recognized in profit or loss 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 profit amount.
Financial Assets
Financial Assets at FVPL. A financial asset is classified as at FVPL if it is classified as
held for trading or is designated as such upon initial recognition. Financial assets are
designated as at FVPL if the Group manages such investments and makes purchase and
sale decisions based on their fair value in accordance with the Groups documented risk
management or investment strategy. Derivative instruments (including embedded
derivatives), except those covered by hedge accounting relationships, are classified under
this category.
Financial assets are classified as held for trading if they are acquired for the purpose of
selling in the near term.
Financial assets may be designated by management at initial recognition as at FVPL,
when any of the following criteria is met:
the designation eliminates or significantly reduces the inconsistent treatment that

would otherwise arise from measuring the assets or recognizing gains or losses on a
different basis;
the assets are part of a group of financial assets which are managed and their
performances are evaluated on a fair value basis, in accordance with a documented
risk management or investment strategy; or
the financial instrument contains an embedded derivative, unless the embedded

derivative does not significantly modify the cash flows or it is clear, with little or no
analysis, that it would not be separately recognized.
The Group carries financial assets at FVPL using their fair values. Attributable
transaction costs are recognized in profit or loss as incurred. Fair value changes and
realized gains or losses are recognized in profit or loss. Fair value changes from
derivatives accounted for as part of an effective cash flow hedge are recognized in other
comprehensive income and presented in the consolidated statements of changes in equity.
Any interest earned shall be recognized as part of Interest income account in the
consolidated statements of income. Any dividend income from equity securities
classified as at FVPL shall be recognized in profit or loss when the right to receive
payment has been established.
F-142
Loans and Receivables. Loans and receivables are non-derivative financial assets with
fixed or determinable payments and maturities 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
designated as AFS financial assets or financial assets at FVPL.
Subsequent to initial measurement, loans and receivables are carried at amortized cost
using the effective interest rate method, less any impairment in value. Any interest
earned on loans and receivables is recognized as part of Interest income account in the
consolidated statements of income on an accrual basis. Amortized cost is calculated by
taking into account any discount or premium on acquisition and fees that are an integral
part of the effective interest rate. The periodic amortization is also included as part of
Interest income account in the consolidated statements of income. Gains or losses are
recognized in profit or loss when loans and receivables are derecognized or impaired.
Cash includes cash on hand and in banks which are stated at face value. Cash
equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and are subject to an insignificant risk of changes in value.
The Groups cash and cash equivalents, trade and other receivables, restricted cash and
noncurrent receivable are included under this category (Notes 8, 9, 15 and 26).
HTM Investments. HTM investments are non-derivative financial assets with fixed or
determinable payments and fixed maturities for which the Groups management has the
positive intention and ability to hold to maturity. Where the Group sells other than an
insignificant amount of HTM investments, the entire category would be tainted and
reclassified as AFS financial assets. After initial measurement, these investments are
measured at amortized cost using the effective interest rate method, less impairment in
value. Any interest earned on the HTM investments is recognized as part of Interest
income account in the consolidated statements of income on an accrual basis.
Amortized cost is calculated by taking into account any discount or premium on
acquisition and fees that are an integral part of the effective interest rate. The periodic
amortization is also included as part of Interest income account in the consolidated
statements of income. Gains or losses are recognized in profit or loss when the HTM
investments are derecognized or impaired.
As of December 31, 2013 and 2012, the Group has no investments accounted for under
this category.
AFS Financial Assets. AFS financial assets are non-derivative financial assets that are
either designated in this category or not classified in any of the other financial asset
categories. Subsequent to initial recognition, AFS financial assets are measured at fair
value and changes therein, other than impairment losses and foreign currency differences
on AFS debt instruments, are recognized in other comprehensive income and presented
in the Fair value reserves account in the consolidated statements of changes in equity.
The effective yield component of AFS debt securities is reported as part of Interest
income account in the consolidated statements of income. Dividends earned on holding
AFS equity securities are recognized as dividend income when the right to receive the
payment has been established. When individual AFS financial assets are either
derecognized or impaired, the related accumulated unrealized gains or losses previously
reported in equity are transferred to and recognized in profit or loss.
F-143
AFS financial assets also include unquoted equity instruments with fair values which
cannot be reliably determined. These instruments are carried at cost less impairment in
value, if any.
Financial Liabilities at FVPL. Financial liabilities are classified under this category
through the fair value option. Derivative instruments (including embedded derivatives)
with negative fair values, except those covered by hedge accounting relationships, are
also classified under this category.
The Group carries financial liabilities as at FVPL using their fair values and reports fair
value changes in profit or loss. Fair value changes from derivatives accounted for as part
of an effective accounting hedge are recognized in other comprehensive income and
presented in the consolidated statements of changes in equity. Any interest expense
incurred is recognized as part of Interest expense and other financing charges account
in the consolidated statements of income.
As of December 31, 2013 and 2012, the Group has no financial liabilities accounted for
Other Financial Liabilities. This category pertains to financial liabilities that are not
designated or classified as at FVPL. After initial measurement, other financial liabilities
are carried at amortized cost using the effective interest rate method. Amortized cost is
calculated by taking into account any premium or discount and any directly attributable
transaction costs that are considered an integral part of the effective interest rate of the
liability.
The Groups liabilities arising from its trade or borrowings such as accounts payable and
accrued expenses, finance lease liabilities and long-term debt are included under this
category (Notes 7, 16, 17 and 26).
Embedded Derivatives
The Group assesses whether embedded derivatives are required to be separated from the
host contracts when the Group becomes a party to the contract.
An embedded derivative is separated from the host contract and accounted for as a
derivative if all of the following conditions are met: a) the economic characteristics and
risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host contract; b) a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative; and c) 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.
Derecognition of Financial Assets and Financial 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 primarily derecognized when:
the rights to receive cash flows from the asset have expired; or
F-144
the Group has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay them in full without material delay to a third party
under a pass-through arrangement; 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.
When the Group has transferred its rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if and to what extent it has retained
the risks and rewards of ownership. When it has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the
Group continues to recognize the transferred asset to the extent of the Groups continuing
involvement. In that case, the Group also recognizes the associated liability. The
transferred asset and the associated liability are measured on the basis that reflects the
rights and obligations that the Group has retained.
Financial Liabilities. A financial liability is derecognized when the obligation under the
liability is discharged or cancelled, or expires. When 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.
The difference in the respective carrying amounts is recognized in profit or loss.
Impairment of Financial Assets
The Group assesses, at the reporting date, whether there is objective evidence that 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 objective evidence of impairment as a result of one or more events that have
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.
Assets Carried at Amortized Cost. For financial assets carried at amortized cost such as
loans and receivables, the Group first assesses whether impairment exists individually for
financial assets that are individually significant, or collectively for financial assets that
are not individually significant. If no objective evidence of impairment has been
identified for a particular financial asset that was individually assessed, the Group
includes the asset as part of a group of financial assets with similar credit risk
characteristics and collectively assesses the group 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 the collective impairment assessment.
Evidence of impairment for specific impairment purposes may include indications that
the borrower or a group of borrowers is experiencing financial difficulty, default or
delinquency in principal or interest payments, or may enter into bankruptcy or other form
of financial reorganization intended to alleviate the financial condition of the borrower.
For collective impairment purposes, evidence of impairment may include observable data
on existing economic conditions or industry-wide developments indicating that there is a
measurable decrease in the estimated future cash flows of the related assets.
F-145
If there is objective evidence of impairment, the amount of loss is measured as the

difference between the assets carrying amount and the present value of estimated future
cash flows (excluding future credit losses) discounted at the financial assets original
effective interest rate (i.e., the effective interest rate computed at initial recognition).
Time value is generally not considered when the effect of discounting the cash flows is
not material. If a loan or receivable has a variable rate, the discount rate for measuring
any impairment loss is the current effective interest rate, adjusted for the original credit
risk premium. For collective impairment purposes, impairment loss is computed based
on their respective default and historical loss experience.
The carrying amount of the asset shall be reduced either directly or through use of an
allowance account. The impairment loss for the period shall be recognized in profit or
loss. 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 profit or loss, to the extent that the
carrying amount of the asset does not exceed its amortized cost at the reversal date.
AFS Financial Assets. For equity instruments carried at fair value, the Group assesses, at
each reporting date, whether objective evidence of impairment exists. Objective evidence
of impairment includes a significant or prolonged decline in the fair value of an equity
instrument below its cost. Significant is evaluated against the original cost of the
investment and prolonged is evaluated against the period in which the fair value has
been below its original cost. The Group generally regards fair value decline as being
significant' when decline exceeds 25%. A decline in a quoted market price that persists
for 12 months is generally considered to be prolonged.
If an AFS financial asset is impaired, an amount comprising the difference between the
cost (net of any principal payment and amortization) and its current fair value, less any
impairment loss on that financial asset previously recognized in profit or loss, is
transferred from equity to profit or loss. Reversals of impairment losses in respect of
equity instruments classified as AFS financial assets are not recognized in profit or loss.
Reversals of impairment losses on debt instruments are recognized in profit or loss, if the
increase in fair value of the instrument can be objectively related to an event occurring
after the impairment loss was recognized in profit or loss.
In the case of an unquoted equity instrument or of a derivative asset linked to and must
be settled by delivery of an unquoted equity instrument, for which its fair value cannot be
reliably measured, the amount of impairment loss is measured as the difference between
the assets carrying amount and the present value of estimated future cash flows from the
asset discounted using the historical effective rate of return on the asset.
Classification of Financial Instruments between Debt and Equity
From the perspective of the issuer, a financial instrument is classified as debt instrument
if it provides for a contractual obligation to:
deliver cash or another financial asset to another entity;
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.
F-146
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.
Debt Issue Costs
Debt issue costs are considered as an adjustment to the effective yield of the related debt
and are deferred and amortized using the effective interest rate method. When a loan is
paid, the related unamortized debt issue costs at the date of repayment are recognized in
profit or loss.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the
consolidated statements of financial position 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, and the related assets and liabilities
are presented gross in the consolidated statements of financial position.
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined
on specific identification method or moving average method for coal inventories and
moving average method for fuel oil and other consumables. Net realizable value is the
current replacement cost.
Business Combination
Business combinations are accounted for using the acquisition method as at the
acquisition date. The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the amount of any
non-controlling interests in the acquiree. For each business combination, the Group
elects whether to measure the non-controlling interests in the acquiree at fair value or at
proportionate share of the acquirees identifiable net assets. Acquisition-related costs are
expensed as incurred.
When the Group acquires a business, it assesses the financial assets and financial
liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as at the acquisition
date.
If the business combination is achieved in stages, the acquisition date fair value of the
acquirers previously held equity interest in the acquiree is remeasured at the acquisition
date fair values and any resulting gain or loss is recognized in profit or loss.
The Group measures goodwill at the acquisition date as: a) the fair value of the
consideration transferred; plus b) the recognized amount of any non-controlling interests
in the acquiree; plus c) if the business combination is achieved in stages, the fair value of
the existing equity interest in the acquiree; less d) the net recognized amount (generally
fair value) of the identifiable assets acquired and liabilities assumed. When the excess is
negative, a bargain purchase gain is recognized immediately in profit or loss.
Subsequently, goodwill is measured at cost less any accumulated impairment in value.
Goodwill is reviewed for impairment, annually or more frequently, if events or changes
in circumstances indicate that the carrying amount may be impaired.
F-147
The consideration transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts are generally recognized in profit or loss. Costs
related to acquisition, other than those associated with the issue of debt or equity
securities that the Group incurs in connection with a business combination are expensed
as incurred. Any contingent consideration payable is measured at fair value at the
acquisition date. If the contingent consideration is classified as equity, then it is not
remeasured and settlement is accounted for within equity. Otherwise, subsequent
changes to the fair value of the contingent consideration are recognized in profit or loss.
Goodwill in a Business Combination

Goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the 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 are assigned to those units or groups of units. Each unit or
group of units to which the goodwill is so allocated:
o
represents the lowest level within the Group at which the goodwill is monitored
for internal management purposes; and
is not larger than an operating segment determined in accordance with PFRS 8.
Impairment is determined by assessing the recoverable amount of the cashgenerating unit or group of cash-generating units, to which the goodwill relates.
Where the recoverable amount of the cash-generating unit or group of cashgenerating units is less than the carrying amount, an impairment loss is recognized.
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. An impairment loss
with respect to goodwill is not reversed.
Intangible Asset Acquired in a Business Combination

The cost of an intangible asset acquired in a business combination is the fair value as
at the date of acquisition, determined using discounted cash flows as a result of the
asset being owned.
Following initial recognition, intangible asset is carried at cost less any accumulated
amortization and impairment losses, if any. The useful life of intangible asset is
assessed to be either finite or indefinite.
An intangible asset with finite life is amortized over the useful economic life and
assessed for impairment whenever there is an indication that the intangible asset may
be impaired. The amortization period and the amortization method for an intangible
asset with a finite useful life are reviewed at least at each reporting date. A change in
the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset is accounted for as a change in accounting estimates.
The amortization expense on intangible asset with finite life is recognized in profit or
loss.
F-148
Loss of Control
On the loss of control, the Group derecognizes the assets and liabilities of the
subsidiary, any non-controlling interests and the other components of equity related
to the subsidiary. Any surplus or deficit arising on the loss of control is recognized
in profit or loss. If the Group retains any interest in the previous subsidiary, then
such interest is measured at fair value at the date that control is lost. Subsequently, it
is accounted for as an equity-accounted investee or as an AFS financial asset
depending on the level of influence retained.
Transactions under Common Control

Transactions under common control entered into in contemplation of each other, and
business combination under common control designed to achieve an overall commercial
effect are treated as a single transaction.
Transfers of assets between commonly controlled entities are accounted for using book
value accounting.
Non-controlling Interests
The acquisitions of non-controlling interests are accounted for as transactions with
owners in their capacity as owners and therefore no goodwill is recognized as a result of
such transactions. Any difference between the purchase price and the net assets of
acquired entity is recognized in equity. The adjustments to non-controlling interests are
based on a proportionate amount of the identifiable net assets of the subsidiary.
Investment in an Associate and Joint Venture
An associate is an entity in which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policies of the
investee, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control
of the arrangement have rights to the net assets of the joint venture. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous consent of the parties sharing
control.
The considerations made in determining significant influence or joint control is similar to
those necessary to determine control over subsidiaries.
The Groups investments in an associate and joint venture are accounted for using the
equity method.
Under the equity method, the investment in an associate or joint venture is initially
recognized at cost. The carrying amount of the investment is adjusted to recognize the
changes in the Groups share of net assets of the associate or joint venture since the
acquisition date. Goodwill relating to the associate or joint venture is included in the
carrying amount of the investment and is neither amortized nor individually tested for
impairment.
F-149
The Groups share in the profit or loss of the associate or joint venture is recognized as
Equity in net earnings of associates - net account in the consolidated statements of
income. Adjustments to the carrying amount may also be necessary for changes in the
Groups proportionate interest in the associate or joint venture arising from the changes
in the associate or joint ventures other comprehensive income. The Groups share of
those changes is recognized as Share in other comprehensive income of an associate
account in the consolidated statements of comprehensive income. Unrealized gains and
losses resulting from transactions between the Group and the associate or joint venture
are eliminated to the extent of the interest in the associate or joint venture.
After application of the equity method, the Group determines whether it is necessary to
recognize an impairment loss with respect to the Groups net investment in the associate
or joint venture. At each reporting date, the Group determines whether there is objective
evidence that the investment in the associate or joint venture is impaired. If there is such
evidence, the Group recalculates the amount of impairment as the difference between the
recoverable amount of the associate or joint venture and its carrying value. Such
impairment loss is recognized as part of Equity in net earnings of associates - net
account in the consolidated statements of income.
Upon loss of significant influence over the associate or joint control over the joint
venture, the Group measures and recognizes any retained investment at fair value. Any
difference between the carrying amount of the associate or joint venture upon loss of
significant influence or joint control and the fair value of the retained investment and
proceeds from disposal is recognized in profit or loss.
The financial statements of the associate or joint venture are prepared for the same
reporting period as the Group. When necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and
amortization, and any accumulated impairment in value, if any. Such cost includes the
cost of replacing part of the property, plant and equipment at the time that cost is
incurred, if the recognition criteria are met, and excludes the costs of day-to-day
servicing.
The initial cost of property, plant and equipment comprises of its construction cost or
purchase price, including import duties, taxes and any directly attributable costs in
bringing the asset to its working condition and location for its intended use. Cost also
includes any related asset retirement obligation (ARO). Expenditures incurred after the
asset has been put into operation, such as repairs, maintenance and overhaul costs, are
normally recognized as expense in the period the costs are incurred. Major repairs are
capitalized as part of property, plant and equipment only when it is probable that future
economic benefits associated with the items will flow to the Group and the cost of the
items can be measured reliably.
Construction in progress (CIP) represents structures under construction and is stated at
cost. This includes the costs of construction and other direct costs. Borrowing costs that
are directly attributable to the construction of plant and equipment are capitalized during
the construction period. CIP is not depreciated until such time that the relevant assets are
ready for use.
F-150
Depreciation and amortization, which commences when the assets are available for their
intended use, are computed using the straight-line method over the following estimated
useful lives of the assets:
Power plants
Building
Other equipment
Leasehold improvements
Number of Years
10 - 43
15 - 25
2 - 15
5 - 10
or term of the lease
whichever is shorter
The remaining useful lives, residual values, and depreciation and amortization methods
are reviewed and adjusted periodically, if appropriate, to ensure that such periods and
method of depreciation and amortization is consistent with the expected pattern of
economic benefits from the items of property, plant and equipment.
The carrying amounts of property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate that the carrying amounts may not be
recoverable.
Fully depreciated assets are retained in the accounts until they are no longer in use.
An item of property, plant and equipment is derecognized when either it has been
disposed of or when it is permanently withdrawn from use and no future economic
benefits are expected from its use or disposal. Any gain or loss arising from the
retirement and disposal of an item of property, plant and equipment (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is
included in profit or loss in the period of retirement and disposal.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost
of intangible assets acquired in a business combination is its fair value as at the date of
acquisition. Subsequently, intangible assets are measured at cost less accumulated
amortization and any accumulated impairment losses. Internally generated intangible
assets, excluding capitalized development costs, are not capitalized and expenditures are
recognized in profit or loss in the year in which the related expenditures are incurred. The
useful lives of intangible assets are assessed to be either finite or indefinite.
Gains or losses arising from the disposal of an intangible asset 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.
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
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 the Interpretation if the conditions in (a) are
met.
F-151
The 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 agreement.
Infrastructures within the scope of the Interpretation are not recognized as property, plant
and equipment of the Group. Under the terms of the contractual arrangements within the
scope of the Interpretation, an entity (the company created by the Concession
Agreement) 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 and PAS 18 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 proportion 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 entity has contractual obligations to 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, i.e., at the best estimate of the expenditure that
would be required to settle the present obligation at the reporting 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 - Power Concession Right
The Groups power concession right pertains to the right granted by the Government to
the Parent Company to operate the Albay Electric Cooperative, Inc. (ALECO). The
power concession right is carried at cost less accumulated amortization and any
accumulated impairment losses.
The power concession right is amortized using the straight-line method over the
concession period and assessed for impairment whenever there is an indication that the
asset may be impaired.
F-152
The amortization period and method are reviewed at least at each reporting date.
Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are 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.
The power concession right is derecognized on disposal or when no further economic
benefits are expected from its use or disposal. Gain or loss from derecognition of the
power concession right is measured as the difference between the net disposal proceeds
and the carrying amount of the asset, and is recognized in profit or loss.
Intangible Assets - Mining Rights
The Groups mining rights that are acquired by the Group and have finite lives are
measured at costs less accumulated amortization and any accumulated impairment losses.
Subsequent expenditures are capitalized only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditures are
recognized in profit or loss as incurred.
Amortization of mining rights is recognized in profit or loss on a straight-line basis over
the estimated useful lives. The estimated useful lives of mining rights pertain the period
from commercial operations to the end of the operating contract. Amortization method
and useful lives are reviewed at each reporting date and adjusted as appropriate.
Gains or loss from derecognition of mining rights are measured as the difference between
the net disposal proceeds and the carrying amount of the asset, and is recognized in profit
or loss.
Deferred Exploration and Development Costs
Deferred exploration and development costs comprise of expenditures which are directly
attributable to:
Researching and analyzing existing exploration data;
Conducting geological studies, exploratory drilling and sampling;
Examining and testing extraction and treatment methods; and
Compiling pre-feasibility and feasibility studies.
Deferred exploration and development costs also include expenditures incurred in

acquiring mining rights, entry premiums paid to gain access to areas of interest and
amounts payable to third parties to acquire interests in existing projects.
Exploration assets are reassessed on a regular basis and tested for impairment provided
that at least one of the following conditions is met:
the period for which the entity has the right to explore in the specific area has expired
during the period or will expire in the near future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of mineral

resources in the specific area is neither budgeted nor planned;
F-153
such costs are expected to be recouped in full through successful development and
exploration of the area of interest or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not yet reached a
stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in relation
to the area are continuing, or planned for the future.
If the project proceeds to development stage, the amounts included within deferred
exploration and development costs are transferred to property, plant and equipment
under mine development costs.
Impairment of Non-financial Assets
The carrying amounts of property, plant and equipment, investments and advances,
deferred exploration and development costs, intangible assets with finite useful lives, and
other noncurrent assets are reviewed for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. If any such
indication exists, and if the carrying amount exceeds the estimated recoverable amount,
the assets or cash-generating units are written down to their recoverable amounts. The
recoverable amount of the asset is the greater of fair value less costs to sell and value in
use. The fair value less costs to sell is the amount obtainable from the sale of an asset in
an arms length transaction between knowledgeable, willing parties, less costs of
disposal. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. Impairment losses are recognized in
profit or loss 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 assets 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 and amortization, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in profit or loss.
After such a reversal, the depreciation and amortization charge is adjusted in future
periods to allocate the assets revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either in the principal market for the asset or liability, or
in the absence of a principal market, in the most advantageous market for the asset or
liability. The principal or most advantageous market must be accessible to the Group.
F-154
The fair value of an asset or liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated
financial statements are categorized within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as a
whole:
Level 1: quoted prices (unadjusted) in active markets for identical assets or

liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly; and
Level 3: inputs for the asset or liability that are not based on observable market
data.
For assets and liabilities that are recognized in the consolidated financial statements on a
recurring basis, the Group determines whether transfers have occurred between Levels in
the hierarchy by re-assessing the categorization at the end of each reporting period.
For purposes of the fair value disclosure, the Group has determined classes of assets and
liabilities on the basis of the nature, characteristics and risks of the asset or liability and
the level of fair value hierarchy, as explained above.
Provisions
Provisions are recognized when: (a) the Group has a present obligation (legal or
constructive) as a result of past events; (b) it is probable (i.e., more likely than not) that
an outflow of resources embodying economic benefits will be required to settle the
obligation; and (c) a reliable estimate can be made of the amount of the obligation. If the
effect of the time value of money is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessment of
the time value of money and the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognized as interest expense.
Where some or all of the expenditure required to settle a provision is expected to be
reimbursed by another party, the reimbursement shall be recognized when, and only
when, it is virtually certain that reimbursement will be received if the entity settles the
obligation. The reimbursement shall be treated as a separate asset. The amount
recognized for the reimbursement shall not exceed the amount of the provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best
estimate.
Share Capital
Common shares are classified as equity. Incremental costs directly attributable to the
issue of common shares are recognized as a deduction from equity, net of any tax effects.
F-155
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the Group and the amount of 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 generation and trading is recognized in the period
when actual capacity is generated or/and transmitted to the customers, net of related
discounts.
Interest Income. Revenue is recognized as the interest accrues, taking into account the
effective yield on the asset.
Dividend. Revenue is recognized when the Groups right as a shareholder to receive the
payment is established.
Gain or Loss on Sale of Investments in Shares of Stock. Gain or loss is recognized if the
Group disposes of its investment in a subsidiary and associate. Gain or loss is computed
as the difference between the proceeds of the disposed investment and its carrying
amount, including the carrying amount of goodwill, if any.
Cost and Expense Recognition
Costs and Expenses. Costs and expenses are recognized upon receipt of goods, utilization
of services or at the date they are incurred. Cost of power sold is debited for the direct
costs related to power generation or/and trading.
Interest Expense and Other Financing Charges. Interest expense and other financing
charges comprise finance charges on finance lease liabilities and other borrowings.
Finance charge on finance lease liabilities is recognized in profit or loss using the
effective interest rate method.
Short-term Employee Benefits. Short-term employee benefits are expensed as the related
service is provided. A liability is recognized for the amount expected to be paid if the
Company has a present legal or constructive obligation to pay this amount as a result of
past service provided by the employee and the obligation can be estimated reliably.
Share-based Payment Transactions
Under SMCs Employee Stock Purchase Plan (ESPP), employees of the Group receive
remuneration in the form of share-based payment transactions, whereby the employees
render services as consideration for equity instruments of SMC. Such transactions are
handled centrally by SMC.
Share-based transactions in which SMC grants option rights to its equity instruments
direct to the Groups employees are accounted for as equity-settled transactions. SMC
charges the Group for the costs related to such transactions with its employees. The
amount is charged to operations by the Group.
F-156
The cost of ESPP is measured by reference to the market price at the time of the grant
less subscription price. The cumulative expense recognized for share-based transactions
at each reporting date until the date when the relevant employees become fully entitled to
the award (the vesting date) reflects the extent to which the vesting period has expired
and SMCs best estimate of the number of equity instruments that will ultimately vest.
Where the terms of a share-based award are modified, as a minimum, an expense is
recognized as if the terms had not been modified. In addition, an expense is recognized
for any modification, which increases the total fair value of the share-based payment
arrangement, or is otherwise beneficial to the employee as measured at the date of
modification. Where an equity-settled award is cancelled, it is treated as if it had vested
on the date of cancellation, and any expense not yet recognized for the award is
recognized immediately. However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is granted, the cancelled and
new awards are treated as if they were a modification of the original award.
Leases
arrangement;
specific asset; or
Finance Lease
Finance leases, which transfer to the Group substantially all the risks and benefits
classified in the consolidated statements of financial position as finance lease liabilities.
when there is reasonable certainty that the Group will obtain ownership by the end of
lease term.
F-157
Operating Lease
benefits of ownership of the asset are classified as operating leases. Operating lease
lease term. Associated costs such as maintenance and insurance are expensed as
incurred.
Borrowing Costs
Borrowing 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.
Foreign Currency Translations
Transactions in foreign currencies are translated to the functional currency of the Group
at exchange rates at the dates of the transactions. Monetary assets and monetary
liabilities denominated in foreign currencies at the reporting date are retranslated to the
functional currency at the exchange rate at that date. The foreign currency gain or loss
on monetary items is the difference between amortized cost in the functional currency at
the beginning of the year, adjusted for effective interest and payments during the year,
and the amortized cost in foreign currency translated at the exchange rate at the reporting
date.
Taxes
Current Tax. Current tax is the expected tax payable or receivable on the taxable income
or loss for the year, using tax rates enacted or substantively enacted at the reporting date,
and any adjustment to tax payable in respect of previous years.
Deferred Tax. Deferred tax is recognized in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
where the deferred 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
with respect to 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 tax assets are recognized for all deductible temporary differences, carryforward
benefits of unused tax credits - Minimum Corporate Income Tax (MCIT) and unused tax
losses - Net Operating Loss Carry Over (NOLCO), to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and
the carryforward benefits of MCIT and NOLCO can be utilized, except:
where the deferred 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
F-158
with respect to deductible temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, deferred 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 tax assets is reviewed at each reporting 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 tax asset to be utilized. Unrecognized deferred tax assets
are reassessed at each reporting date and are recognized to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
The measurement of deferred tax reflects the tax consequences that would follow the
manner in which the Group expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
in 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 at the reporting date.
In determining the amount of current and deferred tax, the Group takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due.
The Group believes that its accruals for tax liabilities are adequate for all open tax years
based on its assessment of many factors, including interpretation of tax laws and prior
experience. This assessment relies on estimates and assumptions and may involve a
series of judgments about future events. New information may become available that
causes the Group to change its judgment regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact tax expense in the period that such a
determination is made.
Current tax and deferred tax are recognized in profit or loss except to the extent that it
relates to a business combination, or items recognized directly in equity or in other
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred taxes
relate to the same taxable entity and the same taxation authority.
Value-added Tax (VAT). Revenues, expenses and assets are recognized net of the amount
of VAT, except:
where the tax incurred on a purchase of assets or services is not recoverable from the
taxation authority, in which case the 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 tax included.
The net amount of tax recoverable from, or payable to, the taxation authority is included
as part of Prepaid expenses and other current assets, Other noncurrent assets or
Accounts payable and accrued expenses accounts in the consolidated statements of
financial position.
F-159
Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly, to
control the other party or exercise significant influence over the other party in making
financial and operating decisions. Parties are also considered to be related if they are
subject to common control and significant influence. Related parties may be individuals
or corporate entities. Transactions between related parties are on an arms length basis in
a manner similar to transactions with non-related parties.
Basic and Diluted Earnings Per Share (EPS)
Basic EPS is computed by dividing the net income for the period attributable to equity
holders of the Parent Company by the weighted-average number of issued and
outstanding common shares during the period.
For the purpose of computing diluted EPS, the net income for the period attributable to
equity holders of the Parent Company and the weighted-average number of issued and
outstanding common shares are adjusted for the effects of all potential dilutive
instruments.
Operating Segments
The Groups operating segments are organized and managed separately based on the fuel
source of the power plants, with each segment representing a strategic business unit that
has different economic characteristic and activities. The BOD (the chief operating
decision maker; CODM) reviews management reports on a regular basis.
The measurement policies the Group used for segment reporting under PFRS 8 are the
same as those used in its consolidated financial statements. There have been no changes
in the measurement methods used to determine reported segment profit or loss from prior
periods. All inter-segment transfers are carried out at arms length prices.
Segment revenues, expenses and performance include sales and purchases between
business segments. Such sales and purchases are eliminated in consolidation.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. They
are disclosed in the notes to the consolidated financial statements unless the possibility of
an outflow of resources embodying economic benefits is remote. Contingent assets are
not recognized in the consolidated financial statements but are disclosed in the notes to
the consolidated financial statements when an inflow of economic benefits is probable.
Events After the Reporting Date
Post year-end events that provide additional information about the Groups financial
position at the reporting date (adjusting events) are reflected in the consolidated financial
statements. Post year-end events that are not adjusting events are disclosed in the notes
to the consolidated financial statements when material.
The preparation of the consolidated financial statements in accordance with PFRS
requires management to make judgments, estimates and assumptions that affect the
expenses reported in the consolidated financial statements at the reporting date.
F-160
Judgments
significant effect on the amounts recognized in the consolidated financial statements:
PSALM (Notes 7 and 12).
Finance lease liabilities recognized in the consolidated statements of financial position
(Note 12).
Operating Lease Commitments - Group as Lessee. The Group has entered into lease
agreements as a lessee. The Group has determined that all the significant risks and
rewards of ownership for property leased from third parties are retained by the lessors
(Note 7).
Rent expense recognized in the consolidated statements of income amounted to P24,167
and P16,515 in 2013 and 2012, respectively (Note 20).
Applicability of Philippine Interpretation IFRIC 12 - Concession Right. In accounting
for the Groups transactions in connection with its Concession Agreement (CA) with
ALECO, significant judgment was applied to determine the most appropriate accounting
policy to use.
Management used Philippine Interpretation IFRIC 12 as guide and determined that the
CA is within the scope of the interpretation and should be accounted for under the
intangible asset model (Notes 3 and 7).
F-161
Contingencies. The Group is currently involved in various pending claims and lawsuits
which could be decided in favor of or against the Group. The Groups estimate of the
probable costs for the resolution of these pending claims and lawsuits has been developed
in consultation with in-house as well as outside legal counsel handling the prosecution
and defense of these matters and is based on an analysis of potential results. The Group
currently does not believe that these pending claims and lawsuits will have a material
adverse effect on its financial position and financial performance. It is possible, however,
that future financial performance could be materially affected by the changes in the
estimates or in the effectiveness of strategies relating to these proceedings. No accruals
were made in relation to these proceedings (Note 27).
The key estimates and assumptions used in the consolidated financial statements are
based upon managements evaluation of relevant facts and circumstances as of the date
of the consolidated financial statements. Actual results could differ from such estimates.
liabilities.
be classified.
on the inputs used in the valuation techniques (Note 3).
The methods and assumptions used to estimate the fair values for both financial and
nonfinancial assets and liabilities are discussed in Notes 10, 13, 14, 15 and 26.
The Group has no financial asset or financial liability carried at fair values as of
F-162
P722,293 and P689,443 as of December 31, 2013 and 2012, respectively.
The carrying amounts of trade and other receivables amounted to P31,540,444 and
P17,788,133 as of December 31, 2013 and 2012, respectively (Note 9).
Write-down of Inventory. The Group writes-down the cost of inventory to its net
realizable value whenever net realizable value becomes lower than cost due to damage,
physical deterioration, obsolescence, changes in price levels or other causes.
Estimates of net realizable value are based on the most reliable evidence available at the
time the estimates are made of the amount the inventories are expected to be realized.
These estimates take into consideration fluctuations of price or cost directly relating to
events occurring after the reporting date to the extent that such events confirm conditions
existing at the reporting date.
The Group assessed that no write-down of inventories to reduce inventories to net
realizable value is necessary as of December 31, 2013 and 2012.
The carrying amount of inventories amounted to P1,499,135 and P1,184,950 as of
Estimated Useful Lives of Property, Plant and Equipment. The Group estimates the
useful lives of property, plant and equipment based on the period over which the 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, estimation of the useful lives of property, plant and equipment is based on
collective assessment of industry practice, internal technical evaluation and experience
with similar assets. It is possible, however, that future financial performance could be
materially affected by changes in estimates brought about by changes in factors
mentioned above. The amounts and timing of recorded expenses for any period would be
affected by changes in these factors and circumstances. A reduction in the estimated
useful lives of property, plant and equipment would increase the recorded cost and
expenses and decrease noncurrent assets.
Property, plant and equipment, net of accumulated depreciation and amortization
respectively. Accumulated depreciation and amortization of property, plant and
equipment amounted to P21,233,181 and P15,828,997 as of December 31, 2013 and
F-163
Estimated Useful Lives of Intangible Assets. The useful lives of intangible assets are
assessed at the individual asset level as having either a finite or indefinite life. Intangible
assets are regarded to have an indefinite useful life when, based on analysis of all of the
relevant factors, there is no foreseeable limit to the period over which the asset is
expected to generate net cash inflows for the Group.
Intangible assets with finite useful lives amounted to P1,719,726 as of December 31,
2013 and 2012 (Note 14).
Impairment of Goodwill. The Group determines whether the goodwill acquired in
business combination are impaired at least annually. This requires the estimation of
value in use of the cash-generating units to which the goodwill is allocated. Estimating
value in use requires management to make an estimate of the expected future cash flows
from the cash-generating unit and to choose a suitable discount rate to calculate the
present value of those cash flows.
The carrying amount of goodwill amounted to P8,866 as of December 31, 2013 and 2012
(Note 14).
Acquisition Accounting. The Group accounts for acquired businesses using the
acquisition method of accounting which requires that the assets acquired and the
liabilities assumed be recognized at the date of acquisition based on their respective fair
values.
The application of the acquisition 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 acquisition date.
Moreover, the useful lives of the acquired intangible assets and property, plant and
equipment have to be determined. Accordingly, for significant acquisitions, the Group
obtains assistance from valuation specialists. The valuations are based on information
available at the acquisition date.
Recoverability of Deferred Exploration and Development Costs. A valuation allowance
is provided for estimated unrecoverable deferred exploration and development costs
based on the Group's assessment of the future prospects of the mining properties,
which are primarily dependent on the presence of economically recoverable reserves in
those properties.
The Groups mining activities are all in the exploratory stages as of December 31, 2013.
All related costs and expenses from exploration are currently deferred as mine
exploration and development costs to be amortized upon commencement of commercial
operations. The Group has not identified any facts and circumstances which suggest that
the carrying amount of the deferred exploration and development costs exceeded the
recoverable amounts as of December 31, 2013 and 2012.
Deferred exploration and development costs amounted to P525,999 and P325,219
Realizability of Deferred Tax Assets. The Group reviews its deferred tax assets at each
reporting date and reduces the carrying amount to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax assets
to be utilized. The Groups assessment on the recognition of deferred tax assets on
deductible temporary difference and carryforward benefits of MCIT and NOLCO is
based on the projected taxable income in the following periods.
F-164
Deferred tax assets arising from NOLCO have not been recognized because the
management believes that its is not probable that future taxable income will be available
against which the Group can utilize the benefits therefrom (Note 22).
Deferred tax assets from temporary differences amounted to P2,909,105 and P1,683,408
Impairment of Non-financial Assets. PFRS requires that an impairment review be
performed on property, plant and equipment, investments and advances, deferred
exploration and development costs and intangible assets with finite lives when events or
changes in circumstances indicate that the carrying amount may not be recoverable.
Determining the recoverable amount of assets requires the estimation of cash flows
expected to be generated from the continued use and ultimate disposition of such assets.
While it is believed that the assumptions used in the estimation of fair values reflected in
the consolidated financial statements are appropriate and reasonable, significant changes
in these assumptions may materially affect the assessment of recoverable amounts and
any resulting impairment loss could have a material adverse impact on the financial
performance.
There were no impairment losses recognized for the years ended December 31, 2013 and
2012.
The combined carrying amounts of property, plant and equipment, investments and
advances, deferred exploration and development costs and intangible assets with finite
lives amounted to P225,279,043 and P218,769,071 as of December 31, 2013 and 2012,
respectively (Notes 6, 12, 13 and 14).
Asset Retirement Obligation. Determining asset retirement obligation requires estimation
of the cost of dismantling property, plant and equipment and other costs of restoring the
leased properties to their original condition. The Group determined that there were no
asset retirement obligations as of December 31, 2013 and 2012.
Operating Segments
The Groups operations are segmented based on fuel source of the power plants
consistent with the reports prepared internally for use by the Groups CODM in
reviewing the business performance of the operating segments. The differing economic
characteristics and activities of these power plants make it more useful to users of the
consolidated financial statements to have information about each component of the
Groups profit or loss, assets and liabilities.
The coal mining companies, which were acquired in 2010, have not yet started
commercial operations and are in the exploratory stage of mining activities (Note 6). The
mining companies total assets do not exceed 10% of the combined assets of all operating
segments. Accordingly, management believes that as of December 31, 2013 and 2012,
the information about this component of the Group would not be useful to the users of
the consolidated financial statements.
F-165
The investment in Manila Electric Company (Meralco) and subsequent transactions
affecting investment in Meralco are presented under Others. Segment liabilities do not
include long-term debt, deferred tax liabilities and income tax payable. Capital
expenditures consist of additions to property, plant and equipment of each reportable
segment.
Major Customers
The Group sells power, through power supply agreements (Note 7), either directly to
customers (distribution utilities, electric cooperatives and industrial customers) or
through the Philippine Wholesale Electricity Spot Market (WESM). Sale of power to
individual external customers that represents 10% or more of the Groups total revenues
is as follows:
Customers
Meralco
WESM
Note
18
F-166
2013
P46,952,999
10,770,643
2012
P43,990,405
7,185,426
F-167

Equity in net earnings of associates - net
Interest income
Income tax benefit (expense)
Segment Result
Cost and Expenses

Cost of power sold
Operating expenses
Sale of Power
External
Inter-segment
33,946,977
4,522,371
24,504,731
8,961,503
18,664,502
13,130,216
33,502,446
444,531
23,531,811
972,920
38,469,348
33,466,234
31,794,718
17,588,751
1,075,751
P38,469,348
-
2013
P31,758,764
1,707,470
2012
P30,201,858
1,592,860
2013
Coal
2012
4,704,560
35,899,840
35,261,564
638,276
40,604,400
P40,178,721
425,679
Natural Gas
Operating Segments
2,490,779
2,114,561
2,033,808
80,753
4,605,340
P4,094,547
510,793
2013
3,472,550
2,374,638
2,313,773
60,865
5,847,188
(15,345)
15,345
15,345
P -
(5,640)
5,640
5,640
P -

Coal Mining Companies
2012
2012
2013
P2,718,693
3,128,495
Hydro
(201,688)
1,479,722
912,373
567,349
1,278,034
P1,278,034
-
2013
2012
(462,647)
462,647
462,647
P -
Others
For management reporting purposes, the Groups operating segments are organized and managed separately as follows:
615,082
(2,718,735)
(2,103,653)
(615,082)
(2,103,653)
P (2,103,653)
457,147
(5,718,791)
(5,261,644)
(457,147)
(5,261,644)
P (5,261,644)
Eliminations
2012
2013
P4,042,655
2,587,044
795,004
447,843
(12,673,891)
(8,491,062)
836,302
20,541,415
53,502,372
51,933,725
1,568,647
74,043,787
P74,043,787
-
P14,209,307
106,613
1,053,352
880,586
(12,726,547)
9,206,806
(1,438,976)
17,127,473
57,528,705
55,845,504
1,683,201
74,656,178
P74,656,178
-
Consolidated
2012
2013
F-168
1,003,790
1,683,175
P 1,003,790
(1,369,668)
9,139
-
P52,425
*Noncash items other than depreciation include unrealized foreign exchange gain/losses, impairment losses on receivables and equity in net earnings of associates.
1,615,675
(1,555,447)
P -
P65,238
P623,242
-
251
-
P3,708
P310,590
P353,686
-
203,968
1,533,556
P18,948,668
P2,861,607
P59,380,713
5,875,130
2,744
(2,290,150)
P4,701,016
P5,236,222
P25,934,751
13,420,954
2012
P -
(P2,000,723)
(P2,024,583)
-
P -
(P7,076,647)
(P6,794,365)
-
Eliminations
2012
2013
P290,453,470
6,011,799
1,728,592
2,909,121
5,404,184
9,509,083
5,194,238
(8,688,029)
P4,772,605
P236,403,731
P213,624,821
20,393,929
2,384,981
P270,554,613
P253,721,659
13,420,954
1,728,592
1,683,408
Consolidated
2012
2013
P19,122,531
P 1,615,609
2,217,443
P67,881
2,571,778
(3,472,764)
P121,438
2,571,678
4,074,909
P -
P39,270,729
P43,244,160
-
Others
Depreciation of property, plant and
equipment
12
Noncash items other than depreciation*
P40,792,711
P42,356,816
-
2013
P267,370,123
P69,675,230
P77,321,817
-
2013
P69,128,174
P75,865,797
-
2012
P301,102,982
P106,208,697
P113,661,610
-
2013
As of December 31, 2013 and 2012

Coal Mining Companies
2012
2012
2013
P217,974,654
47,088,885
218,519
2,088,065
P107,127,647
P114,251,485
136,669
2012
Hydro
Segment liabilities
Long-term debt
Income tax payable
13
2013
Natural Gas
Other Information
Segment assets
Deferred tax assets
Note
Coal

2013
P325,219
200,780
P525,999

Additions
2012
P183,859
141,360
P325,219
rights of P1,719,726 (Note 14).
Department of Energy (DOE) located in South Cotabato consists of two (2) coal blocks
with a total area of two thousand (2,000) hectares, more or less, and has an In-situ coal
resources (measured plus indicative coal resources) of about forty-nine (49) million
metric tons as of February 16, 2014, based on exploratory drilling and additional in-fill
drilling.
SEPC has a coal mining property and right over an aggregate area of 7,000 hectares,
more or less composed of seven (7) coal blocks located in South Cotabato and Sultan
Kudarat. As of February 16, 2014, COC No. 134 has an In-situ coal resources (measured
plus indicative coal resources) of about twenty-one (21) million metric tons based on
exploratory drilling and confirmatory drilling.
Cotabato consisting of eight (8) coal blocks with a total area of 8,000 hectares, more or
less, and has an In-situ coal resources (measured plus indicative coal resources) of about
nine hundred forty (940) thousand metric tons as of February 16, 2014, based on initial
exploratory drilling conducted by the Companys geologists in Sarangani Province. The
exploratory drilling to be conducted on 4 coal blocks of BERI located in South Cotabato
is projected to contain thirty (30) million metric tons based on a geological setting and
initial exploratory drilling.
Subsidiary
DAMI
SEPC
BERI
COC No.
126
134
138
Effective Date
November 19, 2008
February 23, 2009
May 26, 2009
Term*
10 years
10 years
10 years
* The term is followed by another 10 year extension, and thereafter, renewable for a series of 3 year periods not exceeding
F-169
In May 2011, DAMI, SEPC and BERI separately wrote a letter to the DOE requesting for
a moratorium on suspension of the implementation of the production timetable as
specified in the Five-Year Development and Productive Work Progress of COC
Nos. 126, 134 and 138 due to the newly enacted Environment Code of South Cotabato.
This local ordinance prohibits open pit mining and other related activities, hence,
constrained these companies into implementing the production timetable without
violating this local ordinance. On April 27, 2012, the DOE granted DAMI, SEPC and
BERIs request for a moratorium on their work commitments from the effective dates of
their respective COCs when these were converted to Development/Production Phase until
December 31, 2012.
resubmitted the Five-Year WP to the DOE with the accompanying documents pursuant to
DOEs requirements. As of March 26, 2014, the WP is still pending approval by the
DOE.
As of December 31, 2013, DAMI, SEPC and BERI are in the exploratory stages of their
as mine exploration and development costs and will be amortized upon commencement
of their commercial operations. The Group had not identified any facts and circumstances
which suggest that the carrying amount of the deferred exploration and development
costs exceeded recoverable amount as of December 31, 2013 and 2012.
7. Agreements
Subsidiary
SMEC
SPDC
SPPC
Power Plant
Sual Coal - Fired Power Station (Sual
Power Plant)
Location
Sual, Pangasinan
Province
Province
Ilijan, Batangas City
Republic Act (RA) No. 6395, as amended, whereby NPC confirms, acknowledges,
approves and agrees to the terms of the Agreement and further confirms that for so
long as it remains the IPP Counterparty it will comply with its obligations and
exercise its rights and remedies under the original agreement with the IPP at the
request and instruction of PSALM.
F-170
and obligations:
i.
power plant for its own account and at its own cost and risk;
third party;
iii. The right to receive a transfer of the power plant upon termination of the
vii. The obligation to pay PSALM the monthly payments and generation fees in
respect of all electricity generated from the capacity, net of outages.
monthly fees for fifteen (15) years until October 1, 2024, eighteen (18) years until
April 26, 2028 and twelve (12) years until June 26, 2022, respectively. Energy fees
for 2013 and 2012 amounted to P31,269,293 and P33,149,802, respectively. SMEC,
SPDC and SPPC renewed their performance bonds in United States dollar (US$)
amounting to US$58,187, US$20,305 and US$60,000 which will expire on
November 3, 2014, January 25, 2014 and June 16, 2014, respectively. Subsequently,
the performance bond of SPDC was renewed up to January 25, 2015.
US Dollar
3.89%
3.85%
3.30%
SMEC
SPPC
SPDC
Philippine Peso
8.16%
8.05%
7.90%
financing charges account in the consolidated statements of income. Interest
expense in 2013 and 2012 amounted to P10,983,520 and P11,331,293, respectively.
F-171
2013
Not later than one
year
More than one year
and not later than
five years
charges on finance
lease liabilities
Present values of
finance lease
liabilities
2012
Not later than one
year
More than one year
and not later than
five years
charges on finance
lease liabilities
Present values of
finance lease
liabilities
US Dollar
Payments
Peso
Equivalent of
US Dollar
Payments
Peso
Payments
Total
US$218,026
P9,679,245
P10,437,649
P20,116,894
997,500
1,681,853
2,897,379
44,283,990
74,665,869
128,629,104
47,765,439
80,589,359
138,792,447
92,049,429
155,255,228
267,421,551
546,958
24,282,163
48,136,667
72,418,830
US$2,350,421
P104,346,941
P90,655,780
P195,002,721
US Dollar
Payments
Peso
Equivalent of
US Dollar
Payments
Peso
Payments
Total
US$211,614
P8,686,745
P10,129,882
P18,816,627
959,742
1,937,637
3,108,993
39,397,384
79,539,990
127,624,119
45,953,818
92,838,629
148,922,329
85,351,202
172,378,619
276,546,448
636,249
26,118,059
55,326,823
81,444,882
US$2,472,744
P101,506,060
P93,595,506
P195,101,566
as follows:
2013
Not later than one
year
More than one year
and not later than
five years
US Dollar
Payments
Peso
Equivalent
of US Dollar
Payments
Peso
Payments
Total
US$185,176
P8,220,890
P7,409,540
P15,630,430
771,027
1,394,218
US$2,350,421
34,229,759
61,896,292
P104,346,941
27,918,504
55,327,736
P90,655,780
62,148,263
117,224,028
P195,002,721
F-172
2012
Not later than one
year
More than one year
and not later than
five years
US Dollar
Payments
Peso
Equivalent
of US Dollar
Payments
Peso
Payments
Total
US$186,583
P7,659,255
P7,777,400
P15,436,655
769,202
1,516,959
US$2,472,744
31,575,712
62,271,093
P101,506,060
28,967,159
56,850,947
P93,595,506
60,542,871
119,122,040
P195,101,566
b. Market Participation Agreements (MPA)

SMEC, SPDC and SPPC have entered into MPA with the Philippine Electricity
Market Corporation (PEMC) to satisfy the conditions contained in the Philippine
WESM Rules on WESM membership and to set forth the rights and obligations of a
WESM member. Under the WESM Rules, the cost of administering and operating
the WESM shall be recovered through a charge imposed on all WESM members or
transactions, as approved by the Energy Regulatory Commission (ERC). For the
years ended December 31, 2013 and 2012, PEMCs market fees charged to SMEC,
SPDC and SPPC amounted to P246,591 and P187,088, respectively (Note 20).
On March 2013, SMELC entered into a MPA for Supplier as Direct WESM
Member - Customer Trading Participant Category with the PEMC to satisfy the
conditions contained in the Philippine WESM Rules on WESM membership and to
set forth the rights and obligations of a WESM member. SMELC has a standby letter
of credit, expiring on December 26, 2014, to secure the full and prompt performance
of obligations for its transactions as a Direct Member and trading participant in the
WESM.
c. Power Supply Agreements
SMEC, SPPC and SPI have Power Supply Agreements with various counterparties,
including related parties, to sell electricity produced by the power plants. All
agreements provide for renewals or extensions subject to mutually agreed terms and
conditions by the parties.
Certain customers like electric cooperatives are billed based on the time-of-use per
kilowatt hour while others are billed at capacity-based rate. However, as stipulated
in the contracts, each customer has to pay the minimum charge based on the
contracted power using the basic energy charge and/or adjustments if customer has
not fully taken or failed to consume the contracted power. For the years ended
December 31, 2013 and 2012, all customers are above their minimum contracted
power requirements.
SMEC and SPPC purchase replacement power from WESM and other power
generation companies during periods when the power generated from power plant is
not sufficient to meet customers power requirements.
d. Coal Supply Agreements
SMEC and SPI have supply agreements with various coal suppliers for their power
plants coal requirements.
F-173
e. Operations and Maintenance (O&M) Agreements

In exchange for the O&M services rendered by Petron Corporation (Petron), SPI
pays for all the documented costs and expenses incurred in relation to the operation,
maintenance and repair of the power plant.
f.
Lease Agreements
The Group entered into various lease agreements as follows:
i.
Operating lease agreements with San Miguel Properties, Inc. (SMPI), a related
party under common control, for a period of 1 to 6 years, renewable annually or
upon agreement between parties. Relative to the leases, the Group was required
to pay advance rental and security deposits which are included under Prepaid
expenses and other current assets account in the consolidated statements of
financial position (Note 11).
ii. SPI leases its plant premises from New Ventures Realty Corporation (NVRC), a
related party under common control. The existing lease agreement is for 25-year
period up to September 30, 2038, subject to renewal. The yearly rental is subject
to an automatic 3% escalation rate for the 4 years following the negotiation under
the lease terms.
Future minimum lease payments under the non-cancellable operating lease
agreements are as follows:
Within one year

2013
P23,270
62,289
P85,559
2012
P9,911
36,084
P45,995
Rent expense recognized in the consolidated statements of income amounted to

P24,167 and P16,515 in 2013 and 2012, respectively (Note 20).
g. Retail Supply Agreements
SMELC have retail supply agreements with related parties to supply or sell
electricity purchased from WESM and SMEC. All agreements provide for renewals
or extensions subject to mutually agreed terms and conditions by the parties.
The customers are billed based on the capacity charge and associated energy charge.
However, as stipulated in the contracts, each customer has to pay the minimum
charge based on the contracted power using the capacity charge and associated
energy and/or adjustments if customer has not fully taken or failed to consume the
contracted power. For the year ended December 31, 2013, all customers are above
their minimum contracted power requirements.
SMELC purchases power from WESM and SMEC to meet customers power
requirements.
F-174
h. Concession Agreement
The Parent Company entered into a 25-year Concession Agreement with ALECO on
October 29, 2013. It became effective upon confirmation of the National
Electrification Administration on November 7, 2013.
The Concession Agreement include, among others, the following rights and
obligations: i) the Parent Company shall organize and establish Albay Power and
Energy Corp. (APEC), a fully-owned and controlled subsidiary which shall assume
all the rights and interests and perform the obligations of the Parent Company under
the Concession Agreement. The assignment by the Parent Company to APEC is
effective January 3, 2014; ii) as Concession Fee, the Concessionaire shall pay to
ALECO: (a) separation pay of ALECO employees in accordance with the
Concession Agreement; (b) the amount of P2,100 every quarter beginning January 1,
2014 for the upkeep of residual ALECO; iii) if the net cash flow of APEC is positive
within five (5) years or earlier from date of signing of the Concession Agreement,
50% of the Net Cash Flow each month shall be deposited in an escrow account until
the cumulative nominal sum reaches P4,048,529; iv) on the 20th anniversary of the
Concession Agreement, the concession period may be extended by mutual agreement
between ALECO and APEC; and v) at the end of the concession period, all assets
and system shall be returned by APEC to ALECO in good and usable condition.
Addition and improvement to the system shall likewise be transferred to ALECO.
Part of the separation pay under ii (a) above in the amount of P80,000 has been
paid to ALECO on December 19, 2013. The payment was recognized as part of
Other noncurrent assets account in the consolidated statements of financial position
pending assumption by APEC of the Concession Agreement.
i.
Memorandum of Agreement (MOA) with Korea Water Resources Corporation

(K-Water)
On August 23, 2013, PVEI has entered into a MOA with K-Water to enter into a
joint venture partnership with K-Water for the acquisition, rehabilitation, operation
and maintenance of the Angat Hydroelectric Power Plant (Angat Power Plant)
awarded by PSALM to K-Water.
j.
MOA with San Roque Power Corporation (SRPC)

On December 6, 2012, SPDC entered into a 5-year MOA with SRPC to sell a portion
of the capacity of the San Roque Power Plant. Under the MOA, i) SRPC shall
purchase a portion of the capacity sourced from the San Roque Power Plant; ii)
SRPC shall pay a settlement amount to SPDC for the capacity; and iii) the MOA may
be earlier terminated or extended subject to terms and mutual agreement of the
parties.
Revenue from sale of capacity of the San Roque Power Plant amounted to P577,192
as of December 31, 2013 and was recognized as part of Sale of power account in
the consolidated statements of income.
F-175
8. Cash and Cash Equivalents

Cash and cash equivalents consist of:
Note
Cash in banks and on hand
Short-term investments
25, 26
2013
P13,330,802
15,794,369
P29,125,171
2012
P322,426
23,233,019
P23,555,445
Cash in banks earns interest at the respective bank deposit rates. Short-term investments
include demand deposits which can be withdrawn at anytime depending on the
immediate cash requirements of the Group and earn interest at the respective short-term
investment rates.
9. Trade and Other Receivables
Trade and other receivables consist of:
Note
18
18
Trade
Other receivables
Less allowance for impairment losses
2013
P12,753,539
19,509,198
32,262,737
722,293
P31,540,444
2012
P10,999,362
7,478,214
18,477,576
689,443
P17,788,133
Trade and other receivables are non-interest bearing, unsecured and are generally on a
30-day term or an agreed collection period. The balance of trade receivables is inclusive
of VAT on the sale of power collectible from customers.
The movements in the allowance for impairment losses are as follows:
Note
Charges for the year
Reversal of impairment
20
2013
P689,443
32,850
P722,293
2012
P957,392
313,104
(581,053)
P689,443
As of December 31, 2013 and 2012, the aging of trade receivables is as follows:
Current
Past due
Less than 30 days
30-60 days
61-90 days
Over 90 days
F-176
2013
P6,625,563
2012
P6,652,380
2,574,000
437,877
144,861
2,971,238
P12,753,539
1,101,145
826,846
553,779
1,865,212
P10,999,362
The Group believes that the unimpaired amounts that are past due by more than 30 days
are still collectible based on historical payment behavior and analyses of the underlying
customer credit ratings. There are no significant changes in their credit quality.
Other receivables include the following:
a. The Parent Companys receivable from the sale of investment in an associate
amounting to P16,228,991 (Note 13).
b. On June 16, 2011, SMEC entered into a Memorandum of Agreement (MOA) with
Hardrock Coal Mining Pty Ltd. (HCML) and Caason Investments Pty Ltd. (Caason),
a company registered in Australia, for the acquisition of shares in HCML. SMEC
deposited Australian dollar (AUD) 12,000 (P550,000), through SMC Global Power
Holdings Corp., for an option to subscribe to the shares in HCML (the Deposit)
with further option for SMEC to decide not to pursue its investment in HCML, which
will result in the return of the Deposit to SMEC plus interest. In a letter dated
July 15, 2011, SMEC notified Caason and HCML that it shall not pursue said
investment and therefore asked Caason and HCML for the return of the Deposit with
corresponding interest (the Amount Due), pursuant to the terms of the MOA.
Caason and HCML requested SMEC for additional time within which to return the
Amount Due. In June 2012, HCML paid P42,460 for the partial payment of interest.
As of December 31, 2013, SMEC is still in the process of collecting the Deposit.
Interest income amounted to P25,015 and P26,895 in 2013 and 2012, respectively.
As of December 31, 2013 and 2012, the total receivable from HCML amounted to
P562,041 and P546,988, respectively.
c. SMEC has claims from Panasia Energy, Inc. (PEI) amounting to P608,834 and
P987,621 as of December 31, 2013 and 2012, respectively.
d. Pursuant to the MOA in respect of excess capacity of Sual Power Station, SMEC has
receivables from Team Philippines Energy Corp. (TPEC) and Team Sual Corporation
for their share in fuel, market fees, coal and other charges related to the operation of
the Sual Power Plant amounting to P30,267 and P165,746 as of December 31, 2013
and 2012, respectively. Likewise, SMEC has receivables from WESM for the
account of TPEC amounting to P444,463 and P271,471 as of December 31, 2013 and
2012, respectively.
e. As of December 31, 2013 and 2012, the outstanding claims from PSALM due to
fixed fee reduction amounted to P355,175 and P341,500, respectively.
f. Deposits made to land holding companies for the purpose of acquiring certain parcels
of land for future power plant sites. In 2013, deposits to land holding companies
amounting to P5,751,965 were reclassified to Investments and advances account in
the consolidated statements of financial position (Note 13).
g. The balance mainly pertains to receivables from customers related to power rate
adjustments which will be remitted to the Government upon collection.
F-177
10. Inventories
Inventories at cost consist of:
Note
7, 18
18
Coal
Fuel oil
Other consumables
2013
P1,381,589
114,356
3,190
P1,499,135
2012
P1,065,682
119,268
P1,184,950
There were no inventory write-downs to net realizable value for the years ended
December 31, 2013 and 2012. Coal, fuel oil and other consumables charged to cost of
power sold amounted to P11,179,322 and P13,056,970 in 2013 and 2012, respectively.
11. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of:
Note
Input VAT
Prepaid tax
PSALM monthly fee outage credits
Prepaid rent and others
7, 18
2013
P6,058,256
933,774
242,862
P7,234,892
2012
P5,402,236
872,618
800,557
93,092
P7,168,503
Input VAT consists of current and deferred Input VAT on purchases and can be offset
against the output VAT payable (Note 16).
Prepaid tax consists of creditable withholding taxes and excess tax credits of the Group
from prior years.
PSALM monthly fee outage credits pertain to the approved reduction in future monthly
fees payable to PSALM resulting from the outages of the Sual Power Plant in 2012.
F-178
F-179
P198,505,506
P200,634,159
December 31, 2013
10,627,850
5,186,403
15,814,253
5,312,454
21,126,707
P214,319,759
214,319,759
7,441,107
221,760,866
Power Plants
(Note 7)
Carrying Amount
December 31, 2012
Accumulated Depreciation and

Amortization
January 1, 2012
Additions
Disposals
December 31, 2012
Additions
December 31, 2013
Cost
January 1, 2012
Additions
Disposals
December 31, 2012
Additions
Reclassifications
December 31, 2013
P3,435,741
P -
45,193
45,193
P 3,480,934
3,480,934
Building
P336,852
P -
9,750
9,750
P 332,251
14,351
346,602
Leasehold
Improvements
P909,227
P28,531
7,460
7,835
(551)
14,744
36,787
51,531
P31,208
13,180
(1,113)
43,275
917,483
960,758
Other
Equipment
P11,705,540
P4,769,135
P9,710
4,759,425
4,769,135
6,950,756
(14,351)
11,705,540
Construction
in Progress
P217,021,519
P203,303,172
10,635,310
5,194,238
(551)
15,828,997
5,404,184
21,233,181
P214,360,677
4,772,605
(1,113)
219,132,169
19,122,531
238,254,700
Total
On September 23, 2013, SPI acquired from Petron 2 x 35 MW Co-Generation Solid

Fuel-Fired Power Plant and all other pertinent machineries, equipment, facilities and
structures being constructed and installed which comprise the additional 2 x 35 MW CoGeneration Solid Fuel-Fired Power Plant in Bataan, for a total consideration of
P16,800,000, inclusive of tax. The power plant is used as collateral in securing a loan
obtained by SPI from syndicated banks (Note 17).
Construction in progress pertains to the following:
a. Power plant project of SMCPC and SCPC for the construction of 2 x 150 MW power
plant in Davao and Bataan, respectively;
b. Power plant expansion project of SPI for the construction of the additional 2 x 35
MW power plant in Limay, Bataan;
c. Construction of additional coal unloader of SMEC for the Sual Power Plant; and
d. Upgrade and implementation of accounting system.
Note
Cost of power sold
Operating expenses
20
2013
P5,382,435
21,749
P5,404,184
2012
P5,186,403
7,835
P5,194,238
Construction in progress also includes interest amounting to P87,462 that was capitalized
in 2013. The capitalization rate used to determine the amount of interest eligible for
capitalization was 6.3131%.
(Notes 4 and 7).
F-180
13. Investments and Advances

Note
Cost
Additions
Disposal
2013
P12,824,356
301,208
(12,824,356)
301,208
Accumulated Equity in Net Earnings

Equity in net earnings during the year
Share in other comprehensive income
Dividends
Disposal
19
596,598
795,004
20,535
(704,407)
(749,104)
(41,374)
259,834
5,751,965
P6,011,799
Advances
2012
P12,824,356
12,824,356
385,604
1,053,352
1,176
(843,534)
596,598
13,420,954
P13,420,954

a. Meralco
In 2012, investment in an associate consists of 69,059,538 quoted common stock of
Meralco, representing 6.13% ownership interest. The Parent Company has
determined that it has obtained significant influence over the financial and operating
policies of Meralco in conjunction with SMC and subsidiaries ownership of 32.04%
interest in Meralco. Accordingly, the Parent Company applied the equity method of
accounting on its investment in shares of stock of Meralco. In the same year, the
Parent Company paid the remaining balance of P2,121,509 on the purchase of
Meralco shares.
On May 14, 2012, the Parent Company received the stock certificate for the property
dividend from Meralco consisting of 194,624,266 common stock of Rockwell Land
Corporation, with a book value of P284,151. On July 27, 2012, the Parent Company
sold through the PSE its Rockwell Land Shares at P2.01 per share and recognized a
gain of P106,613 included as part of Gain on sale of investment account in the
2012 consolidated statement of income.
On September 30, 2013, the Parent Company, together with SMC and San Miguel
Purefoods Company, Inc., entered into a Share Purchase Agreement with JG Summit
Holdings, Inc., for the sale of the Parent Companys 69,059,538 shares of stock of
Meralco for P16,228,991. The sale is subject to the satisfaction of certain closing
conditions, which were satisfied by all the parties on December 11, 2013. As a result
of the sale, the Group recognized a gain of P2,587,044 included as part of Gain on
sale of investment account in the 2013 consolidated statement of income.
F-181
b. Olongapo Electricity Distribution Company, Inc. (OEDC)

ownership interest in OEDC to SPGC for a consideration of P8,750. As of
December 31, 2013, investment in OEDC amounted to P301,208. Subscription
payable amounted to P65,625 as of December 31, 2013 (Note 16).
The table below summarizes the financial information of investment in associates which
are accounted for using the equity method:
December 31, 2013*
(Unaudited)
OEDC
December 31, 2012*

(Audited)
Meralco
Country of incorporation
Philippines
Philippines
Percentage of ownership
35.00%
6.13%
Current assets
Noncurrent assets
Current liabilities
Net assets
P275
839
(569)
P545
Sales
P657
P285,270
(P120)
(P120)
P17,158
26
17,184
Share in net income (loss)

Share in other comprehensive
income
Share in total comprehensive income (loss)
(P42)
P1,052
(P42)
1
P1,053
Share in net assets

Goodwill
Carrying amount of investment in an associate
P191
69
P260
P4,152
9,269
P13,421
Net income (loss)

Other comprehensive income
Total comprehensive income (loss)
P92,243
124,830
(59,518)
(89,828)
P67,727
*Amounts in Millions
Advances pertain to deposits made for future investment in land holding companies.
F-182
14. Goodwill and Other Intangible Assets

Goodwill and other intangible assets consist of:
Note
6
Mining rights
Goodwill
2013
P1,719,726
8,866
P1,728,592
2012
P1,719,726
8,866
P1,728,592
The goodwill is attributed to the Groups acquisition of SMEC and SPDC in 2010.
Based on managements assessment of the goodwill, it is not impaired since the
recoverable amount of the related net assets of SMEC and SPDC for which the goodwill
was attributed still exceeds its carrying amount including goodwill as of December 31,
2013 and 2012.
15. Other Noncurrent Assets
Other noncurrent assets consist of:
Restricted cash
Deferred input VAT - net of current portion
Others
Note
7, 25, 26
25, 26
7
2013
P1,800,438
1,320,591
305,281
80,000
P3,506,310
2012
P 396,091
146
P396,237
Restricted cash represents: (a) deposits made by PVEI in an escrow account for the
acquisition, rehabilitation, operation and maintenance of the Angat Power Plant (Note 7);
and (b) SPIs Cash Flow Waterfall accounts (Trust Fund) with a local bank as part of the
provisions in SPIs Facility Agreement (Note 17).
The deferred input VAT mainly pertains to the input VAT on the purchase of the Limay
power plant from Petron.
Noncurrent receivable represents noncurrent portion of receivable from a third party for
the sale of the Parent Companys 100% ownership interest in PEI.
Others represent the amount paid by the Parent Company to ALECO for the separation
pay of ALECO employees. This amount will become part of the concession asset of the
Parent Company upon assumption by APEC of the Concession Agreement (Note 7).
F-183

Note
7, 18
Trade
Output VAT
Non-trade payables
Accrued expenses
Accrued interest
Withholding taxes
7, 17
13
25, 26
2013
P12,750,570
5,364,899
2,287,743
1,837,417
494,755
65,625
170,924
P22,971,933
2012
P12,104,772
4,648,547
1,264,169
447,162
58,605
P18,523,255
represents the VAT on the sale of power which will be remitted to the Government only
upon collection from the customers (Note 9).
Non-trade payables pertain to the over collection of November 2013 sale of power from
WESM following an ERC order imposing regulated power prices for November and
December 2013 Luzon WESM prices (Note 27).
Accrued expenses consist of payables related to power rate adjustments and other
payables to the Government other than output VAT and withholding taxes.
17. Long-term Debt
Long term debt consists of:
Note
Bonds payable
Loans payable
25, 26
Less current maturities
F-184
2013
P13,318,500
71,164
13,247,336
2012
P12,315,000
105,538
12,209,462
34,497,500
655,951
33,841,549
8,210,000
25,533
8,184,467
47,088,885
142,403
P46,946,482
20,393,929
P20,393,929
a. Bonds Payable
bond issue under Regulations of the U.S. Securities Act of 1933, as amended. The
unsecured bond issue is listed in the Singapore Exchange Securities Trading Limited.
The terms and conditions of the bonds contain a negative pledge provision with
certain limitations on the ability of the Parent Company and its material subsidiaries
to create or have outstanding any security interest upon, or with respect to, any of the
present or future business, undertaking, assets or revenue (including any uncalled
capital) of the Parent Company or any of its material subsidiaries to secure any
indebtedness, subject to certain exceptions. Upon the occurrence of a change of
control, each bondholder has the right, at its option, to require the Parent Company to
repurchase all (but not some only) of its bonds, at a redemption price equal to
101.0% of the principal amount thereof plus accrued interest on the change of control
put date.
amounted to P388,456 and P359,188 as of December 31, 2013 and 2012,
respectively. Interest expense amounted to P1,094,846 and P1,017,769 in 2013 and
2012, respectively.
provisions of the Bond dated January 28, 2011 relating to the US$300,000, 7% bond
due in 2016, specifically, the definitions of Asset Sale, Permitted security
interest and Project subsidiaries in order to align the provisions of the Bond with
the US$700,000 Loan facility of the Parent Company, thereby providing flexibility to
enable the Parent Company to divest its non-core assets and raise funds in line with
its long term growth strategy.
The US$300,000 7% bond will mature on January 28, 2016.
b. Loans Payable
Parent Company
i) On March 31, 2011, the Parent Company signed a US$200,000, 3-year term loan
with a syndicate of banks. The US$200,000 loan was drawn down by the Parent
Company on September 30, 2011. Pursuant to the Facility Agreement, the
amount of the loan drawn down will bear interest at the rate of the London
interbank offered rate plus a margin, payable in arrears on the last day of the
agreed interest period.
The Parent Company may, by giving not less than ten (10) business days prior
written notice to the Facility Agent, prepay the loan in whole or in part with
accrued interest on the amount prepaid and subject to Break Funding Cost where
the prepayment is made on a day other than the last day of an interest period,
without minimum penalty.
F-185
On September 30, 2013, the Parent Company pre-terminated the US$200,000

3-year loan maturing in September 2014.
ii) On September 9, 2013, the Parent Company signed a US$650,000, 5-year term
loan with a syndicate of banks. The Facility Agreement has some provisions
similar to the US$200,000, 3-year term loan entered into by the Parent Company
on March 31, 2011.
Subsequently, on November 15, 2013, the US$650,000 Facility Agreement was
amended extending the loan facility from US$650,000 to US$700,000.
Drawn amount from the Facility Agreement amounted to US$500,000 as of
December 31, 2013.
Company including, but not limited to, maintaining a leverage ratio throughout
the duration of the term of the Facility Agreement. The terms and conditions of
the Facility Agreement contains a negative pledge provision with certain
limitations on the ability of the Parent Company and its material subsidiaries to
create or have outstanding any security interest upon or with respect to, any of
the present or future business, undertaking, assets or revenue (including any
uncalled capital) of the Parent Company or any of its material subsidiaries to
secure any indebtedness, subject to certain exceptions.
SPI
syndicate of banks. Of this amount, P12,300,000 was drawn on September 30, 2013,
which includes amount payable to a related party amounting to P3,119,565 as of
December 31, 2013 (Note 18). Pursuant to the Facility Agreement, the amount of the
loan drawn down will bear interest at the rate of 6.3131% determined by the Facility
Agent. The Facility Agreement has a final maturity date of September 2023.
The repayment schedule consists of 40 periods on a quarterly basis.
Year
2014
2015
2016
2017
2018
2019 and thereafter
Gross Amount
P172,200
1,223,850
1,402,200
1,402,200
1,402,200
6,697,350
P12,300,000
F-186
Debt Issue Costs

P29,797
29,921
27,386
24,357
21,201
50,479
P183,141
Net
P142,403
1,193,929
1,374,814
1,377,843
1,380,999
6,646,871
P12,116,859
coverage ratio throughout the duration of the term of the Facility Agreement. The
amounted to P22,483 and P1,683 as of December 31, 2013 and 2012, respectively. Total
interest expense on loans payable amounted to P520,326 (inclusive of P84,367
capitalized in construction in progress; Note 12) and P234,284 in 2013 and 2012,
respectively.
Interest expense and other financing charges account in the consolidated statements of
income in 2013 and 2012, respectively.
As of December 31, 2013 and 2012, the Group is in compliance with the covenants of the
debt agreements.
The movements in debt issue costs are as follows:
2013
P131,071
689,051
(89,912)
(3,095)
P727,115

Addition
Amortization
Capitalized amount
2012
P195,010
(63,939)
P131,071
interest rate, foreign currency and liquidity risks are discussed in Note 25.
F-187

The Group, in the normal course of business, purchases products and renders services
from and sells products to related parties. Transactions with related parties are made at
normal market prices and terms. An assessment is undertaken at each financial year by
examining the financial position of the related party and the market in which the related
party operates.
The following are the transactions with related parties and the outstanding balances as of
December 31:
Year
Revenue
from
Related
Parties
Purchases
from
Related
Parties
Amounts
Owed by
Related
Parties
Amounts
Owed to
Related
Parties
2013
2012
P 33,930
P412,372
241,604
P252
19,290
P140,143
40,622
On demand;
non-interest
bearing
Unsecured;
no impairment
7, 12, 20
2013
2012
1,831,882
712,584
17,993,545
265,826
522,697
110,034
524,268
69,172
On demand;
non-interest
bearing
Unsecured;
no impairment
Associate
13
2013
2012
167,550
43,990,405
On demand;
non-interest
bearing
Unsecured;
no impairment
Associate of an
Entity Under
Common
Control
17
2013
10 years;
interest
bearing
Secured
Note
SMC
Entity Under
Common
Control
81,546
5,045,384
3,119,565
2013
P1,999,432
P18,405,917
P604,495
P3,783,976
2012
P44,736,919
P507,430
P5,174,708
P109,794
Terms
Conditions
a. Amounts owed by related parties consist of trade receivables and security deposits.
by related parties.
c. The amount owed to associate of an entity under common control includes interest
account in the consolidated statements of financial position.
and P32,598 for the years ended December 31, 2013 and 2012, respectively.
20,000 shares, subject to certain conditions, through payroll deductions (Note 3).
F-188
As of December 31, 2013 and 2012, the expenses related to ESPP amounted to P505
and P218, respectively.
f.
19. Equity
Capital Stock
As of December 31, 2013 and 2012, the Parent Companys authorized capital stock is
P2,000,000, divided into 2 billion shares with par value of P1 per share.
Capital stock consists of:
2013
P1,250,004
187,500
P1,062,504
Subscribed capital stock

Less subscription receivable
2012
P1,250,004
187,500
P1,062,504
The number of shares subscribed is 1,250,003,500 shares as of December 31, 2013 and
2012.
Reserves
Reserves consist of:
Note
Excess of net assets over purchase price of
acquired subsidiaries under common
control
Share in other comprehensive loss of an
associate - net
Additions
Disposal
13
2013
2012
P785,279
P785,279
(39,306)
20,535
18,771
P785,279
(40,482)
1,176
(39,306)
P745,973
Excess of net assets over purchase price of acquired subsidiaries under common control
at the beginning of year pertains to the acquisitions of noncontrolling interest in SMEC
and SPDC.
F-189
As of December 31, 2012, the share in other comprehensive loss of an associate consists
of unrealized fair value gain on AFS financial assets and cumulative translation
adjustments.
Retained Earnings
accumulated earnings in subsidiaries and equity in net earnings of associates amounting
to P12,978,115 and P15,222,638 in 2013 and 2012, respectively. Such amounts are not
available for declaration as dividends until declared by the respective investees.
December 31, 2013
Date of Declaration
February 19, 2013
May 3, 2013
August 13, 2013
November 29, 2013
Stockholders of Record
February 19, 2013
May 3, 2013
August 13, 2013
November 29, 2013
Date Payable
February 28, 2013
May 15, 2013
August 15, 2013
December 5, 2013
Amount
P1,000,000
1,000,000
1,000,000
1,500,000
P4,500,000
December 31, 2012

Date of Declaration
January 27, 2012
April 25, 2012
July 26, 2012
November 9, 2012
Stockholders of Record
January 27, 2012
April 25, 2012
July 26, 2012
November 9, 2012
Date Payable
February 15, 2012
May 8, 2012
August 8, 2012
November 9, 2012
Amount
P2,000,000
1,700,000
1,000,000
1,000,000
P5,700,000
On December 27, 2012, the Parent Company appropriated: a) P2,092,750 for the
construction of a power plant; and b) P446,250 for the payment of interest on the bonds
payable; and c) P104,000 for the payment of interest on the loans payable (Note 17),
SPPC appropriated P232,800 for the payment of fees due to PSALM under its IPPA
Agreement for the Ilijan Power Plant, and SMEC appropriated: a) P1,238,000 for mining
project development costs, b) P500,000 for the upgrading of the power plants coal
unloading facility, and c) P62,000 for the purchase of computer software. These projects
were approved by the BOD on the same date, and are expected to commence in 2013. As
of December 31, 2013, the projects to which these appropriations relate are still on-going
and are expected to be completed in 2-3 years.
On December 7, 2012, the Parent Company reversed its appropriation of retained
earnings made on December 14, 2011 amounting to P3,000,000.
F-190
20. Operating Expenses

Operating expenses consist of:
Note
18
7
Management fees
Market fees
Donations
Salaries, wages and benefits
Taxes and licenses
Professional fees
Outside services
Travel and transportation
Supplies
Rent
Freight, trucking & handling
Miscellaneous
18
9
4, 7
12
2013
P409,373
246,591
240,060
114,070
110,791
38,788
35,448
32,850
29,643
28,965
24,167
21,749
20,897
215,255
P1,568,647
2012
P257,270
187,088
215,728
71,670
74,614
146,469
270,756
313,104
9,112
8,652
16,515
7,835
2,438
101,950
P1,683,201
The Groups corporate social responsibility projects, included in the Miscellaneous

expense account, amounted to P106,772 and P43,372 for the years ended
21. Other Income (Charges)
Other income (charges) consists of:
Foreign exchange gains (losses) - net

PSALM monthly fees reduction
Miscellaneous income
Note
25
7
7
2013
(P9,434,860)
872,243
71,555
(P8,491,062)
2012
P7,707,630
917,901
581,275
P9,206,806
22. Income Taxes

The components of income tax expense (benefit) are as follows:
2013
P686,311
(1,522,613)
(P836,302)
Current
Deferred
2012
P172,519
1,266,457
P1,438,976
Current income tax expense in 2013 and 2012 represents regular corporate income tax of
30% on taxable income not covered by SMEC, SPDC and SPPCs income tax holiday
(ITH) (Note 23), MCIT and final tax on interest income.
F-191
Deferred tax assets (liabilities) arise from the following:

2013
Difference of depreciation and other
related expenses over monthly payments
NOLCO
Allowance for impairment losses on
receivables
2012
P806,712
-
(P716,778)
16
14,328
P821,040
15,189
(P701,573)
The difference of depreciation and other related expenses over monthly payments
represents timing difference between tax and accounting recognition of expenses.
The amounts above are reported in the consolidated statements of financial position as
follows:
2013
P2,909,105
(2,088,065)
P821,040
Deferred tax assets

2012
P1,683,408
(2,384,981)
(P701,573)
As of December 31, 2013, the NOLCO and MCIT of the Group that can be claimed as
deduction from future taxable income and deduction from corporate income tax due,
respectively, are as follows:
Year Incurred/Paid
Year 2013
Year 2012
Year 2011
Carryforward Benefits Up To
December 31, 2016
December 31, 2015
December 31, 2014
NOLCO
P1,976,928
1,786,978
1,348,267
P5,112,173
MCIT
P12,766
7,417
1,378
P21,561
The reconciliation between the statutory income tax rate on income before income tax
and the Groups effective income tax rate is as follows:
Statutory income tax rate

Increase (decrease) in the income tax rate resulting
from:
Income subject to ITH
Difference of depreciation and other related
expenses over monthly payments
Nondeductible expenses and others
Effective income tax rate
F-192
2013
30.00%
2012
30.00%
(76.30%)
(11.44%)
20.22%
(26.08%)
(4.58%)
(4.78%)
9.20%
23. Registrations and License

Registrations with the Board of Investments (BOI)
On August 21, 2007, SEPC was registered with the BOI under the Omnibus Investment
Code of 1987 (Executive Order No. 226), as New Domestic Producer of Coal on a Nonpioneer Status and was entitled to certain incentives that include, among others, an
income tax holiday (ITH) for four years from June 2011 or date of actual start of
commercial operations, whichever is earlier, but in no case earlier than the date of
registration.
SMEC, SPDC and SPPC are registered with the BOI as administrator/operator of their
respective power plant on a pioneer status with non-pioneer incentives and were granted
ITH for four (4) years without extension beginning August 1, 2010, subject to
compliance with certain requirements under their registrations. The ITH incentive
availed was limited only to the sale of power generated from the power plants.
In 2013, SMCPC and SCPC were granted incentives by the BOI on a pioneer status with
pioneer incentives as operator of their respective power plant for six (6) years beginning
December 2015 and February 2016, respectively, or start of commercial operations
whichever is earlier, subject to the representations and commitments set forth in the
application for registration, the provisions of Omnibus Investments Code of 1987, the
rules and regulations of the BOI and the terms and conditions prescribed. The project
registration status shall be automatically downgraded to non-pioneer incentives with four
(4) years ITH when certain terms and conditions are not met. The ITH incentive availed
was limited only to the sale of power generated from the power plants.
On September 3, 2013 and January 28, 2014, BOI issued a Certificate of Authority to
SMCPC and SCPC, respectively, subject to provisions and implementing rules and
regulations of Executive Order No. 70, entitled Reducing the Rates of Duty on Capital
Equipment, Spare Parts and Accessories imported by BOI Registered New and
Expanding Enterprises. Authority shall be valid for one (1) year from the date of
issuance or will not be cleared for zero duty rate if capital equipment applied for
importation are not ordered within the effectivity of the certification. Advanced authority
to import capital equipment was granted on May 21, 2013.
License Granted by the ERC
On August 22, 2011, SMELC was granted a Retail Electricity Suppliers (RES) License
by the ERC pursuant to Section 29 of R.A. No. 9136 or the Electricity Power Industry
Reform Act of 2001 (EPIRA) which requires all suppliers of electricity to the contestable
market to secure a license from the ERC. The term of the RES License is for a period of
5 years from the time it was granted and renewable thereafter.
F-193

Net income (a)

Weighted average number of shares outstanding
(in thousands) (b)
2013
P4,042,655
2012
P14,209,307
1,250,004
P3.23
1,250,004
P11.37
As of December 31, 2013 and 2012, the Group has no dilutive debt or equity instruments.
Interest Rate Risk

Liquidity Risk
Credit Risk
equivalents, restricted cash, other receivables (current and noncurrent), non-trade
and financial liabilities such as trade receivables, accounts payable and accrued expenses,
finance lease liabilities arise directly from and are used to facilitate its daily operations.
obligations.
F-194
Interest Rate Risk
the Group to fair value interest rate risk. On the other hand, borrowings issued at
variable rates expose the Group to cash flow interest rate risk.
if any.
impact on floating rate borrowings) by P11,893 and nil in 2013 and 2012, respectively.
A 1% decrease in the interest rate would have had the equal but opposite effect. These
changes are considered to be reasonably possible given the observation of prevailing
market conditions in those periods. There is no impact on the Groups other
F-195

December 31, 2013
Fixed Rate
Interest rate
Interest rate
<1 Year
1-2 Years
>2-3 Years
>3-4
Years
>4-5
Years
>5 Years
Total
P172,200
6.3131%
P1,223,850
6.3131%
P1,402,200
6.3131%
P1,402,200
6.3131%
P1,402,200
6.3131%
P6,697,350
6.3131%
P12,300,000
Floating Rate
Interest rate
P172,200
December 31, 2012
1-2 Years
P -
P -
Floating Rate
Interest rate
>2-3 Years
P -
8,210,000
LIBOR +
margin
P -
P8,210,000
P -
P1,223,850 P14,720,700
<1 Year
Fixed Rate
Interest rate
13,318,500
7%
22,197,500
LIBOR +
margin
P1,402,200 P23,599,700
>3-4
Years
P12,315,000
7%
P12,315,000
13,318,500
22,197,500
P6,697,350
P47,816,000
>5 Years
Total
>4-5
Years
P -
P -
P12,315,000
8,210,000
P -
P -
P20,525,000

foreign exchange rate that adversely affect the foreign currency-denominated transactions
of the Group. The Groups risk management objective with respect to foreign currency
risk is to reduce or eliminate earnings volatility and any adverse impact on equity.
liabilities and their Philippine peso equivalents as of December 31 are as follows:
2012
2013
Note
Assets
Trade and other
receivables
Prepaid and other current
assets
Liabilities
accrued expenses
Finance lease
liabilities
Long-term debt
Net foreign currencydenominated
monetary liabilities
7
7, 17
US Dollar
Peso
Equivalent
US Dollar
Peso
Equivalent
US$299,660
P13,303,411
US$102,531
P4,208,894
22,649
1,005,512
17,171
704,895
26,448
1,174,159
348,757
15,483,082
119,702
4,913,789
30,369
1,348,227
20,689
849,287
2,350,421
800,000
104,346,941
35,516,000
2,472,744
500,000
101,506,060
20,525,000
3,180,790
141,211,168
2,993,433
122,880,347
US$2,832,033
P125,728,086
US$2,873,731
P117,966,558
F-196
The Group reported net unrealized foreign exchange gains (losses) amounting to
(P9,592,617) and P7,840,990 in 2013 and 2012, respectively, with the translation of its
foreign currency-denominated assets and liabilities. These mainly resulted from the
movement of the Philippines peso against US dollar as shown in the following table:
US Dollar
to Philippine Peso
P44.395
41.050
December 31, 2013

December 31, 2012

before tax (due to changes in the fair value of monetary assets and monetary liabilities)
for the years ended December 31:
2013
P1 Decrease P1 Increase
in the US
in the US
Dollar
Dollar
Exchange
Exchange
Rate
Rate
Cash and cash
equivalents
Trade and other
receivables
Prepaid expenses and
other current assets
accrued expenses
Long-term debt
2012
P1 Increase
P1 Decrease
in the US
in the US
Dollar
Dollar
Exchange
Exchange
Rate
Rate
(P299,660)
P299,660
(P102,531)
P102,531
(22,649)
22,649
(17,171)
17,171
(26,448)
(348,757)
26,448
348,757
(119,702)
119,702
30,369
2,350,421
800,000
3,180,790
(30,369)
(2,350,421)
(800,000)
(3,180,790)
20,689
2,472,744
500,000
2,993,433
(20,689)
(2,472,744)
(500,000)
(2,993,433)
P2,832,033
(P2,832,033)
P2,873,731
(P2,873,731)
Liquidity Risk
F-197
liquidity management.
December 31, 2013
Financial Assets
account)
payables)
current maturities)
Carrying
Amount
Contractual
Cash Flow
1 Year
or Less
1 Year 2 Years
2 Years 5 Years
Over
5 Years
P29,125,171
P29,125,171
P29,125,171
P -
P -
P -
31,540,444
31,540,444
31,540,444
1,800,438
1,800,438
1,800,438
305,281
305,281
16,947,172
16,947,172
16,947,172
195,002,721
267,421,551
20,116,894
22,013,873
70,035,556
155,255,228
47,088,885
47,816,000
172,200
1,223,850
39,722,600
6,697,350
Carrying
Amount
Contractual
Cash Flow
1 Year
or Less
1 Year 2 Years
2 Years 5 Years
Over
5 Years
P23,555,445
P23,555,445
P23,555,445
P -
P -
P -
17,788,133
17,788,133
17,788,133
396,091
396,091
13,030,027
13,030,027
13,030,027
195,101,566
276,546,448
18,816,627
19,387,598
65,963,604
20,393,929
24,775,793
1,062,698
1,062,698
22,650,397
126,152
179,129
December 31, 2012
Financial Assets
payables)
current maturities)
90,810
305,281
172,378,619
-
Credit Risk
policy to enter into transactions with a wide diversity of creditworthy customer or
counterparty to mitigate any significant concentration of credit risk.
F-198
arranges netting agreements.
credit risk.
Financial information on the Groups maximum exposure to credit risk as of
December 31, without considering the effects of collaterals and other risk mitigation
techniques, is presented below.
2013
P29,125,021
31,540,444
1,800,438
305,281
P62,771,184

Restricted cash
2012
P23,555,335
17,788,133
396,091
P41,739,559
Capital Management
F-199
the dividend payment to shareholders, pay-off existing debts, return capital to
shareholders or issue new shares, subject to compliance with certain covenants of longterm debt (Note 17).
The Group defines capital as paid-in capital stock, additional paid-in capital and retained
noncurrent liabilities, while equity is total equity as shown in the consolidated statements
of financial position.
The Group is not subject to externally-imposed capital requirements.
of the Groups financial instruments as of December 31:
2012
2013
Financial Assets
Restricted cash (included
under Other noncurrent
assets account)
expenses (excluding
statutory payables)
(including current
maturities)
Fair Value
Carrying
Amount
Fair Value
P29,125,171
P29,125,171
P23,555,445
P23,555,445
31,540,444
31,540,444
17,788,133
17,788,133
1,800,438
1,800,438
305,281
P62,771,334
305,281
P62,771,334
396,091
P41,739,669
396,091
P41,739,669
P16,947,172
P16,947,172
P13,030,027
P13,030,027
195,002,721
195,002,721
195,101,566
195,101,566
47,088,885
P259,038,778
50,850,121
P262,800,014
20,393,929
P228,525,522
22,985,068
P231,116,661
Carrying
Amount
F-200
similar types of instruments as of reporting date. Discount rates used for Philippine pesodenominated loan range from 0.49% to 3.80% as of December 31, 2013. The discount
rates used for foreign currency-denominated loans range from 0.16% to 0.56% and
0.21% to 0.79% as of December 31, 2013 and 2012, respectively. The carrying amounts
of floating rate loans with quarterly interest rate repricing approximate their fair values.
Level 3 as of December 31, 2013 and 2012. During the year, 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.
instruments.
27. Other Matters
a. Contingencies
The Company is a party to certain lawsuits or claims which are either pending
decision by the court/regulators or are subject to settlement agreements. The
outcome of these lawsuits or claims cannot be presently determined.
x
Generation Payments to PSALM

SPPC disputed the claims of PSALM for generation payments. The claims arose
from differing interpretations of certain provisions in the IPPA Agreement
related to generation payments, the fees payable to PSALM for the generation of
power to customers. SPPCs management is in discussions with PSALM to
secure a common understanding through amicable means. However,
management and its legal counsel assessed that SPPCs bases for the amounts
due to PSALM are consistent with the terms of the Ilijan IPPA Agreement. The
outcome of these claims is uncertain; accordingly, the amount cannot be
presently determined.
F-201
Temporary Restraining Order (TRO) Issued to Meralco

immediately, preventing Meralco from collecting from its customers the power
rate increase pertaining to November 2013 billing. As a result, Meralco was
constrained to fix its generation rate to its October 2013 level of P5.67/kWh.
Claiming that since the power supplied by SMEC and SPPC is billed to
Meralco's customers on a pass-through basis, Meralco deferred a portion of its
payment on the ground that it was not able to collect the full amount of its
generation cost. Further, on December 27, 2013, the Department of Energy
(DOE), the ERC and the PEMC, acting as a tripartite committee, issued a joint
resolution setting a reduced price cap on the WESM of P32/kWh. The interim
price will be effective for 90 days until a new cap is decided upon. As of
December 31, 2013, the outcome of this case cannot be presently determined.
On January 16, 2014, the SC granted Meralcos plea to include other power
supplier and generation companies, including SMEC and SPPC, as respondents
to an inquiry. On February 18, 2014, the SC extended the period of the TRO until
April 22, 2014 and enjoined the respondents (PEMC and the generators) from
demanding and collecting the deferred amounts.
On March 3, 2014, the ERC issued an order declaring the November and
December 2013 Luzon WESM prices void and imposed the application of
regulated prices. Accordingly, SMEC, SPPC and SPDC recognized a reduction
in the sale of power and as non-trade liability the portion already collected
(Note 16).
b. Commitments
The outstanding purchase commitments of the Group as of December 31, 2013
amounted to P42,284.
Amount authorized but not yet disbursed for capital projects as of December 31,
2013 is approximately P54,491,809.
c. Electric Power Industry Reform Act of 2001
RA No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001
(EPIRA) sets forth the following: (a) Section 49 created PSALM to take ownership
and manage the orderly sale, disposition and privatization of all existing NPC
generation assets, liabilities, IPP contracts, real estate and all other disposable assets;
(b) Section 31(c) requires the transfer of the management and control of at least
seventy percent (70%) of the total energy output of power plants under contract with
NPC to the IPP Administrators as one of the conditions for retail competition and
open access; and (c) Pursuant to Section 51(c), PSALM has the power to take title to
and possession of the IPP contracts and to appoint, after a competitive, transparent
and public bidding, qualified independent entities who shall act as the IPP
Administrators in accordance with the EPIRA. In accordance with the bidding
procedures and supplemented bid bulletins thereto to appoint an IPP Administrator
relative to the capacity of the IPP contracts, PSALM has conducted a competitive,
transparent and open public bidding process following which the Group was selected
winning bidder of the IPPA Agreements discussed in Note 7.
F-202
The EPIRA requires generation and distribution utility (DU) companies to undergo
public offering within 5 years from the effective date, and provides cross ownership
restrictions between transmission and generation companies. If the holding company
of generation and DU companies is already listed with the PSE, the generation
company or the DU need not comply with the requirement since such listing of the
holding company is deemed already as compliance with the EPIRA.
A DU is allowed to source from an associated company engaged in generation up to
50% of its demand except for contracts entered into prior to the effective date of the
EPIRA. Generation companies are restricted from owning 30% of the installed
capacity of the grid and/or 25% of the national installed generating capacity.
d. Subsequent Event
On March 25, 2014, the Parent Company declared cash dividends amounting to
P1,500,000 to stockholders of record on the same date payable on April 8, 2014.
F-203
THE ISSUER
SMC Global Power Holdings Corp.
40 San Miguel Avenue
Mandaluyong City
Manila 1550
Philippines
TRUSTEE
PRINCIPAL PAYING AGENT, TRANSFER

AGENT AND CALCULATION AGENT
DB Trustees (Hong Kong) Limited

Level 52, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
Deutsche Bank AG, Hong Kong Branch

Level 52, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
REGISTRAR
Deutsche Bank Luxembourg S.A.

2 Boulevard Konrad Adenauer
L-1115 Luxembourg
LEGAL ADVISORS
To the Joint Lead Managers as to Philippine law
To the Issuer as to Philippine law
SyCip Salazar Hernandez & Gatmaitan

SyCipLaw Center
105 Paseo de Roxas
Makati City 1226
Metro Manila
Philippines
Picazo Buyco Tan Fider & Santos

18th, 19th, and 17th Floors, Liberty Center
104 H.V. dela Costa Street
Salcedo Village, Makati City
Philippines
To the Joint Lead Managers and the Trustee as to

English law
To the Issuer as to English law
Milbank, Tweed, Hadley & McCloy LLP

30/F Alexandra House
18 Chater Road
Central Hong Kong
Latham & Watkins

18th Floor, One Exchange Square
8 Connaught Place, Central
Hong Kong
AUDITORS OF THE ISSUER

R.G. Manabat & Co., formerly Manabat Sanagustin & Co, a member firm of KPMG
9th Floor, The KPMG Center
6787 Ayala Avenue
Makati City 1226
Philippines
LISTING AGENT
Latham & Watkins
9 Raffles Place
#42-02 Republic Plaza
Singapore 048619
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SMC GLOBAL POWER HOLDINGS CORP.

(incorporated with limited liability in the Republic of the Philippines)

U.S.$300,000,000 Undated Subordinated Capital Securities

Joint Lead Managers and Joint Bookrunners

BofA Merrill Lynch

DBS Bank Ltd.

TERMS AND CONDITIONS OF THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE GLOBAL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CAPITALIZATION OF SMC GLOBAL POWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SELECTED FINANCIAL INFORMATION AND OTHER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS . . . . . . . . . . . . .

REGULATION AND ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CLEARANCE AND SETTLEMENT OF THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

known and unknown risks;

performance or achievements expressed or implied by forward-looking statements.

the ability of SMC Global Power to successfully implement its strategies;

adverse weather patterns and natural disasters;

the ability of SMC Global Power to successfully manage its growth;

any political instability in the Philippines;

the ability of SMC Global Power to secure additional financing;

price volatility in the wholesale energy spot market;

changes in power supply and demand dynamics in the Philippines; and

competition in the Philippine power industry.

PRESENTATION OF FINANCIAL INFORMATION

leading power company in the Philippines with a strong growth platform;

stable and predictable cash flows underpinned by long-term offtake agreements;

flexible and diversified power portfolio;

established relationships with world class partners;

strong parent company support;

experienced management, operating, trading and marketing teams; and

well-positioned to capitalize on the anticipated growth of the Philippine electricity market.

optimize the generation capacity of its power portfolio;

vertically integrate complementary businesses; and

leverage operational synergies.

SUMMARY FINANCIAL INFORMATION AND OTHER DATA

For the six months ended

(in millions (in millions of Q) (in millions

Sale of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,656.2 74,043.8 84,293.6

1,869.5 43,754.3 40,454.5

57,528.7 53,502.4 58,398.1

1,295.1 28,827.2 26,858.3

17,127.5 20,541.4 25,895.5

574.3 14,927.2 13,596.2

Gain on sale of investment . . . . . . . . . . . . . . . . . . . .

Equity in net earnings (losses) of associates

Income before income tax . . . . . . . . . . . . . . . . . . . . 15,648.3

295.5 10,660.1 5,984.6

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,209.3

235.7 8,943.5 3,943.1

Basic/diluted earnings per share . . . . . . . . . . . . . . . . .

CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA

(in millions (in millions (in millions

Total Current Assets . . . . . . . . . . . . . . . . . . .

270,554.6 301,103.0 313,749.3 6,958.3 319,391.4 7,083.4

CONSOLIDATED STATEMENT OF CASH FLOWS DATA

Net cash flows provided by operating

For the six months ended

20,077.9 25,664.0 32,855.8

(6,084.2) (20,764.8) (6,432.7) (142.7) 10,064.6 (13,401.1) (297.2)

837.7 (16,430.3) (364.4) (1,906.4) (4,966.3) (110.1)

32,932.7 23,555.4 29,125.2