Philippine Dealing & Exchange Corp....Fuel Supply Imported - PT Trubaindo Coal Mining, PT Kaltim Prima Coal, Vitol Asia Pte. Ltd., Galaxy Energy and Resources Camago Malampaya Gas

18 August 2020 Philippine Dealing & Exchange Corp. 37th Floor, Tower 1, The Enterprise Center 6766 Ayala Avenue corner Paseo de Roxas Makati City Attention: Atty. Marie Rose M. Magallen-Lirio Head – Issuer Compliance and Disclosure Department Gentlemen: SMC Global Power Holdings Corp. (the “Corporation”) hereby furnishes the Philippine Dealing & Exchange Corp. an update to the investors of the Corporation herein attached as Annex “A”. Thank you. Very truly yours, SMC GLOBAL POWER HOLDINGS CORP. By: Corporate Information Officer

Confidential

August 2020

Roadshow Presentation

SMC Global Power Holdings Corp.

2STRICTLY PRIVATE AND CONFIDENTIAL

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Presenters

San Miguel CorporationSMC Global Power Holdings Corp.

Elenita Go

General Manager

Paul Causon

Chief Finance Officer

Sergio Edeza

Head of Treasury

Reyna Beth de Guzman

Head of Investor Relations


Table of Contents

Section 1 Company Overview 5

Section 2 Covid-19 Updates: Industry Developments and Company-Specific Updates 11

Section 3 Battery Energy Storage Systems Updates 17

Section 4 Liquified Natural Gas (LNG) Projects 28

Section 5 Key Credit Considerations 37

Section 6 Key Financial Highlights 54

Company Overview

Section 1


1,674 MW22%

2,185 MW29%

2,050 MW27%

563 MW8%

1,010 MW14%

Pulverized coal Supercritical & CFB Natural gas Hydro BESS

Location of Existing Power Assets

SMC Global Power Holdings Corp.Company Background

Current Mix (4,347 MW)2

Davao Greenfield

Power Plant

300 MW

Luzon

Visayas

Mindanao

Sual Power Plant

1,000 MW

San Roque

Power Plant

345 MW

Ilijan Power Plant

1,200 MW

Angat Hydroelectric

Power Plant

218 MW

Masinloc Power

Plant and

Masinloc BESS

1,019 MW1

• Holding company for San Miguel Corporation’s investments in the

Philippine power industry.

• One of the largest power companies in the Philippines with a

total installed capacity of 4,347 MW3 having a diversified portfolio

of power sources – Coal, Natural Gas and Hydropower.

• Currently holds a market share of 25% in the Luzon Grid, 8% of

the Mindanao Grid and 19% in the National Grid.4 The Luzon Grid

represents 73% of the nationwide demand. 5

• Capacity is mostly contracted with over 95% of revenues

coming from bilateral contracts, with Meralco as the key customer.

• Portfolio diversification plans to transition into high growth, low

emission, viable frontier technologies through its 1,000 MWh

Battery Energy Storage Systems (BESS) projects and LNG

Projects.

Notes:

1 Includes Unit 3 (335 MW) of the Masinloc Power Plant expected to start commercial operations within December 2020

2 Mix as of June 30, 2020. Excludes the Kabankalan BESS and Masinloc U3. Masinloc BESS represents 0.23% of

Installed Capacity.

3 Does not include Unit 3 (335 MW) of the Masinloc Power Plant which is expected to start commercial operations within

December 2020

4 Based on ERC Resolution No. 02, Series of 2020

5 Based on the 2019 DOE Power Statistics

6 2024 Expected Fuel/Technology Mix of SMCGP includes the 600 MW Mariveles, 335 MW Masinloc U3, 350 MW

Masinloc U4, 850 MW Ilijan Expansion, and 1,000 MWh BESS

Limay Greenfield

Power Plant

600 MW

Fuel & Technology MixForecasted Mix (7,482 MW)6

1,674 MW38%

900 MW21%

1,200 MW28%

563 MW13%

10 MW0%


Power Portfolio OverviewIPPAs, Acquired and Greenfield Plants

Power AssetsOperational IPPA Plants JV Plant Acquired IPP Plant Greenfield Plants

Sual Ilijan San Roque Angat Masinloc & Masinloc BESS6 Davao Limay

Type Coal Natural Gas Hydro Hydro Coal & Battery Coal Coal

Commercial Operations Date 1999 2002 2003 1967 (112 MW),

1968 (100 MW),

1978 (6 MW)

1998 (660 MW),

2018 (10 MWh)6

2018 (14 MW)7,

2020E (335 MW)

2017 (150 MW),

2018 (150 MW)

2017 (300 MW),

2018 (150 MW),

2019 (150 MW)

Year of Acquisition 2009 2010 2010 2014 2018 - -

Ownership Marubeni Corporation,

Tokyo Electric

Power Corporation

Korea Electric Power

Corporation, Mitsubishi

Corporation,

TeaM Energy

Marubeni Corporation,

Kansai Electric Company

Ltd.

AHC5 MPPCL8 SMCPC10 SCPC12

Total Installed Capacity (MW) 1,000 1,200 345 218 1,019 300 600

Technology Pulverized Coal Combined Cycle Storage Hydropower Storage Hydropower Pulverized Coal & Battery Energy

Storage System

Circulating Fluidized Bed Circulating

Fluidized Bed

Average Calorific Value1 (kcal/kg) 6,231 N/A N/A N/A 5,498 4,389 4,264

Average Net Heat Rate1 2,508 kcal/kwh 7,030 KJ/kwh N/A N/A 2,617 kcal/kwh 2,742 kcal/kwh 2,798 kcal/kwh

Operator TeaM Sual Corp. KEILCO3 SRPC4 AHC Mantech9 Safetech11 Mantech

IPPA Expiry / Asset Transfer Date October 2024 April 2022 June 2028 - - - -

Fuel Supply Imported -

PT Trubaindo Coal Mining,

PT Kaltim Prima Coal, Vitol

Asia Pte. Ltd., Galaxy

Energy and Resources

Camago-Malampaya

Gas Fields

(through NPC/PSALM)

- - Imported –

Vitol Asia Pte. Ltd., Banpu,

Idemitsu Kosan Co., Ltd., Noble

Resources International Pte. Ltd.,

PT Kaltim Prima Coal

Imported –

PT Bara Tabang, PT

Kaltim Prima Coal, Galaxy

Energy and Resources

Imported –

PT Bara Tabang, PT

Kaltim Prima Coal,

Trafigura Pte. Ltd., Galaxy

Energy and Resources, PT

Antang Gunung Meratus

Offtakers2 Meralco, ECs, DUs, DCCs,

3rd Party RES, WESM

Meralco, WESM Intercompany, WESM Intercompany, WESM Meralco, ECs, CCs, WESM ECs, DUs, Industrial DCCs, ECs, DUs, CCs,

WESM

Name of IPPA SMEC SPPC SPDC - - - -

Name of IPP TeaM Sual Corp., a

subsidiary of TeaM

Energy

KEILCO, owned by

Korea Electric Power

Corporation, Mitsubishi

Corporation and TeaM

Energy.

SRPC, owned by

Marubeni Corporation

and Kansai Electric

Power Company, Ltd.

AHC, a JV between

SMC Global Power’s

subsidiary PowerOne

Ventures Energy Inc.,

and K-Water

MPPCL, a wholly-owned

subsidiary of SMC Global Power

SMCPC, a wholly-owned

subsidiary of

SMC Global Power

SCPC, a wholly-owned

subsidiary of

SMC Global Power

Notes:

1 Figures as of June 30, 2020

2 ECs: Electric Cooperatives; DUs: Distribution Utilities; DCCs: Directly

Connected Customers; CCs: Contestable Customers

3 KEILCO – KEPCO Ilijan Corporation

4 SRPC – San Roque Power Corporation

5 AHC – Angat Hydropower Corporation

6 BESS – Battery Energy Storage System

7 Masinloc Unit 2 Retrofit

8 MPPCL – Masinloc Power Partners Co. Ltd .

9 Mantech – Mantech Power Dynamics Services Inc.

10 SMCPC – San Miguel Consolidated Power Corporation

11 Safetech – Safetech Power Services Corp.

12 SCPC – SMC Consolidated Power Corporation

Source: SMC Global Power

Picazo

On Fuel Supply:

SMC Global Power to confirm

if there is any

confidentiality/non

provisions in contracts with

these entities. In particular,

any consent relating to (i)

identifying these entities and

(ii) the existence of the

contract.


Major Greenfield Power Plant Projects Under Development

Masinloc Power Plant

Unit 3

Masinloc Power Plant

Unit 41 Mariveles Power Plant2 Ilijan Expansion (LNG)3 BESS Projects4

Installed

Capacity335 MW 350 MW 600 MW 850 MW 1,000 MWh

Target COD December 2020 20242022: 300 MW

2023: 300 MW2023

Substantial Completion:

2020 to Q1 2021: 470 MWh

Q2 to Q4 2021: 530 MWh

TechnologySupercritical Pulverized

Coal Technology

Supercritical Pulverized

Coal Technology

Circulating Fluidized Bed

Technology

LNG Combined Cycle

Power Plant

Battery Energy Storage

System

Location Masinloc, Zambales Masinloc, ZambalesMariveles,

Bataan

Ilijan,

Batangas

Luzon: 720 MWh

Visayas: 190 MWh

Mindanao:90 MWh

EPC Contractors POSCO Engineering &

Construction Co. Ltd.

Formosa Heavy Industries

Inc.

Formosa Heavy Industries

Inc.

Shortlisted EPC

Contractors: Siemens,

MHPS, FHI, B&V, POSCO,

and Daelim

ABB

Fluence Energy (JV

between Siemens and

AES)

Wartsila

Notes:

1 Currently finalizing the EPC contract for this power plant. Will utilize some existing shared facilities of Masinloc U3 and will be

located in the compound of the Masinloc Power Plant.

2 Ongoing construction and fabrication works.

3 Currently finalizing the EPC contract for this power plant with details as discussed in the LNG section.

4 Ongoing construction for various sites as discussed in BESS section.


• In September 2019, MERALCO conducted a Competitive Selection Process (CSP) for its 1200 MW greenfield

power requirement. The CSP in 2019 was declared a failure when only 1 bidder submitted bidding documents.1

• MERALCO then in early 2020 secured the approval of the Department of Energy for the CSP of 1800 MW

greenfield baseload capacity,1 for its requirements in 2024/2025 which include the following:

➢ 1200MW capacity from the failed CSP in 2019 and

➢ Additional 600MW from the target 1500 MW baseload capacity supposedly scheduled for bidding in 2020.1

• We expect the preparations for the CSP to commence in the next few weeks and the formal bidding to happen in

the next 2 to 4 months2.

Meralco Greenfield Bid – Indicative Terms of Reference Highlights3

Capacity 1,200 MW (Net)

Profile Baseload

Term 20 Years

Target COD• Mar 2024 – 600 MW

• Sept 2024 – 600 MW

Tariff

• Fixed & Variable Tariffs

• Tariff adjustments for FX, Fuel

Indices & Inflation (effectively

pass-through for fuel)

Technical

Parameters

➢ Must use High Efficiency, Low

Emissions (HELE) technology

➢ Guaranteed net plant heat rate

per loading & fuel type

Outages➢ With outage allowance

provisions

Status ➢ Failed bid – for Rebid 4Q 2020

Notes:

1 Source: DOE OK’s Meralco’s 1800MW CSP, The Philippine Star, 10 August 2020 and Meralco's disclosure on this last April 29, 2020

available at PSE edge

2 Source: MERALCO cannot delay 1800MW supply – DOE, Manila Bulletin, 9 August 2020.

3 Based on the terms of reference of Meralco 1,200 MW Greenfield Bid conducted in September 2019

The Company intends to

use the capacity of its

greenfield power plants to

bid for the upcoming

1,800 MW Meralco bid

and other capacities for

CSP.

Bilateral Sales OpportunitiesMeralco Greenfield Bid and Other CSPs


• Minimal merchant risk with about 95% of

revenues coming from bilateral sales to

customers.

• As of June 2020 YTD, half of bilateral revenues

and demand can be attributed to contracts with

MERALCO, an S&P rated corporation (BBB-

investment grade)2

SMCGP Customer Groups and Major Power Supply Agreement (PSA) Portfolio

D. MERALCO Baseload with MPPCL (260MW)

expired in December 2019. It was renewed by

Meralco, but its ERC approval and supply are still

pending to date. We expect it to be implemented

by Nov 2020.

E. Various Non-Meralco distribution utilities

comprise 34% of SMCGP’s bilateral volumes.

These customers primarily reflect residential

customer demand in various cities/provinces.

F. Industrial and Retail Electricity Supply (RES)

customers are comprised of commercial/

manufacturing facilities.

A. MERALCO Baseload (1000MW) contracts provide a

large and stable base of bilateral volume and will be

served primarily by the Sual and Ilijan Plants over its

10-year term. We believe this contract mainly

reflects the residential demand under Meralco and

has been dispatched from 75 to 80% in 1H 2020.

B. MERALCO Midmerit contract (290MW) is a five-year

PSA which started on March 15, 20201. Due to a

relatively higher price owing to its peaking dispatch

and lower minimum requirements, it is dispatched less

and is volatile in terms of load profile (45 to 60%).

C. MERALCO-RES (MPower) contracts (790MW) serve

industrial customers of Meralco of which 500MW is

dispatched as baseload with the remaining 290MW

dispatched as midmerit .

Notes:

1 Supply was originally set to begin in December 26, 2019 but was delayed due to late

release of ERC approval

2 S&P affirms Meralco’s investment-grade rating, Business World, May 20, 2020

Current Bilateral Sales PortfolioMERALCO and Other Customers

46%

50%

38%

34%

16%

16%

% by Revenue

% by kWh

MERALCO Other Distribution Utilities Other Industrial & RES

June 2020 Bilateral Sales by Customer Type

Covid-19 Updates: Industry Developments and

Company-Specific Updates

Section 2


Covid-19 UpdatesSystem Demand - Luzon

Luzon System Demand1

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Peak L

uzon D

em

and M

W

2019

2020

Jan – Mar PRE-ECQ:

+5% vs 2019

Mar – May ECQ/MECQ

-19% vs 2019

Jun – Jul GCQ

-5% vs 2019

MECQ

- 10%

GCQ2

- 8%

• Historical demand growth of 5-7% CAGR for the past 3 years was maintained prior to the Enhanced Community Quarantine

(ECQ) or the period Jan – Mar 15, 2020. Demand reached 11,000 MW, or 5% over 2019 levels. Luzon demand was originally

expected to hit 11,600 MW during the April summer peak.

• However, the Philippine government implemented an ECQ last Mar 16 to May 15 which reduced system demand by 25 to 30%1.

With industrial activity at a standstill, peak Luzon demand dropped to 8,200 MW during the ECQ period, with

the remaining demand representing mainly residential customers through the distribution utilities.

• System demand picked up beginning May 15 as quarantine measures lightened to Modified ECQ (MECQ) and General Community

Quarantine (GCQ). Partial return of industrial & commercial activities increased Luzon demand by 1,200 - 1,500 MW1.

• However, this improvement was a short-term reversal only. With COVID-19 cases still rising in Metro Manila, NCR and neighboring

cities were placed under MECQ on again from August 4 to August 18. During this period, system demand is expected to go

down again by 10 to 15% compared to the same period last year, matching the demand drop of the first MECQ from May 15-

31. System demand is expected to return to normal in October to over 10,000 MW but should come back to 8,500MW levels by

December, consistent with historical seasonality trends.

Notes:

1 WESM Data (Demand and Customer Meter Nodes) for 3-year growth, January 2019 - August 2020 data. Sept-Dec 2020 is the

Company’s conservative forecasted demand that assumes ~8-10% below 2019 levels.

2 Assumed return to GCQ by August 19 until the end 2020.

2020 (F)


0%

5%

10%

15%

20%

25%

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Jan Feb Mar Apr May Jun Jul

Week of month 2020

% WESM Sales Volume % WESM Purchase Volume

Notes:

1 For the Enhanced Community Quarantine Period (Mar 16-31, 2020)

2 Computed using WESM volumes, company’s actual generation and BCQ data. Where WESM

Sales % = WESM Sales / Net Generation and WESM Purch % = WESM Purchases / BCQ.

3 WESM supply, demand, and price data for the relevant period.

4 Approved maintenance schedules for GOP (Grid Operations Program) 2020, as revised

5 Company WESM price forecast for the period discussed.

Covid-19 UpdatesSystem Supply and Prices - Luzon

• For the remainder of the year, the following plants are

scheduled for maintenance4. Combined with the reduced

demand, the system is left in a relatively healthy position until

demand picks up in the following years.

• WESM prices are expected to be low but stable, with

average prices of ₱~1.9–2.6/kwh for 2H 2020. However,

spot prices are still susceptible to spikes in the event of

unplanned outages (e.g. additional outage of 1,000 – 2,000

MW could still trigger spikes)5.

System Prices during ECQ - Luzon

• The low demand caused a temporary oversupply during

the ECQ/MECQ period.3 Consequently, WESM prices

dropped, ranging from nil to ₱1.70/kwh3, or an average

spot price of ₱1.54/kwh1, below power generation costs.

• SMCGP leveraged on this situation by sourcing up to

14% of its bilateral volume from WESM (from as low as

~4% in Wk 3 February), while significantly reducing

exposure by selling less energy at the low spot prices

(almost 0% in Wk 1 May). Generation was reduced

partially by advancing maintenance works (PMS) for

Limay 3 and 4 and Masinloc 1 and 2.

• The reduced industrial and commercial demand flattened

WESM prices. Instead of sharp spikes at midday, WESM

prices for the period had a “dual night peak” driven by

residential demand3. This is favorable for generators,

particularly in mitigating their WESM exposure in cases

where BCQs exceed generation in day peak hours.

WESM Price and Supply Forecast for 2H 2020 - Luzon

*Masinloc U1 Retrofit

3rd Wk March – May

ECQ/MECQ

Average WESM Price

Php1.88/kwh

% of WESM Sales/Gen and % of WESM Purchases/BCQ2


Covid-19 UpdatesEffect of COVID Quarantine Measures on SMCGP’s Bilateral Volumes

• As of June 30, 2020, our PSAs with distribution

utilities and MERALCO baseload were generally

unaffected by the ECQ, as these comprise mostly

residential customers. For the same period, these two

sectors comprise more than half of our demand and

maintained a steady load factor of ~75%.

• MERALCO’s nominations under our PSAs continue to

be high on average1, particularly for the baseload

contracts. We proactively coordinate with them on

their nominations under our PSAs to optimize our

generator bids and dispatch to maintain plant

reliability.

• From March 17 to May 31 (“the ECQ period”), the

Company’s customer groups representing commercial

and industrial customers – (IND/CC/RES and

MPower) together had a 39% drop in demand. We

mitigated the impact of this by optimizing our

maintenance outages and generator bids to maintain

WESM exposure at ideal levels (3% spot sales) given

the low prevailing prices.

• Industrial demand recovered substantially when

the quarantine protocols were relaxed in June.

This along with higher Meralco Midmerit nominations

improved overall bilateral demand.

Bilateral Customer Demand2

Notes:

1 Actual daily nominations of Meralco under their PSAs with various subsidiaries of

SMCGP

2 Company bilateral customers demand data

3 Extension of the MPPCL-Meralco PSA which expired on December 2019, which

may begin to draw on November 2020 subject to ERC approval

DU +

MERALCO

Baseload:

stable and

unaffected

Ind, RES,

MPower:

Affected by

COVID

MERALCO

Midmerit

Moderate outlook for 2H 2020: SMCGP expects the 3,125 MW

bilateral customer demand in 1H 2020 to drop to about 2,800 –

2,900 MW until October 2020. By November 2020, Meralco may

draw on its 260 MW PSA3.

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan Feb Mar Apr May Jun


Covid-19 UpdatesSMCGP Supply and Demand Management Initiatives

Key Supply & Demand Initiatives Done to Manage the

Impact of Covid-19

SMCGP Aggregate Average Generation vs. Peak Bilateral

Demand (MW)

• Advanced key plant maintenance activities in

consideration of low customer nominations and low spot

prices. Maintenance schedule for Limay Units 3 and 4 and

Masinloc Units 1 and 2 were accelerated to coincide with

the ECQ period during 1H 2020.

• Pooling and stacking generation portfolio to optimize

margins by maximizing plants with lower fuel costs.

• Limay and Sual were kept at 85-100% Plant Capacity

Factor (PCF), forming the base of most generation

amongst the portfolio

• Ilijan was kept at its minimum generation (70% PCF)

due to high Malampaya Gas Prices which are currently

the highest fuel cost in our portfolio

• Reduced overall WESM sales to below 3% of

generation, and WESM arbitrage to up to 15% of

bilateral sales, particularly for periods with low prices,

and took arbitrage opportunities when possible

• For Industrial and Retail Electricity Supply (RES)

customers, we reviewed contract terms, focusing

particularly on the risk of demand variances during periods

of uncertain supply. In 2Q 2020, we have negotiated for a

reduction up to 90MW for the maximum allowable

capacities (MACs) of customers who consume

significantly below their MACs.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan Feb Mar Apr May Jun

Generation Peak Demand

CustomerOriginal MAC

(MW)

Negotiated MAC

(MW)Reduction

Industrial/RES 1 140 95 45



Others 111 91 21

Total 313 223 91

Maximum Allowable Capacity Management


Covid-19 UpdatesCompany-Specific Impact

Fuel and Inventory

▪ We believe to have sufficient inventory to meet our

power plant’s requirements and our access to fuel

shipments have not been adversely affected by

Covid-19 travel restrictions.

▪ Physical inventory equivalent to 28.50 days1

operations for all our plants as of June 30, 2020.

▪ Given the low demand for power generation, we

negotiated for deferral of some coal shipments.

▪ We are currently using high CV coal for Masinloc (5,500

kcal), Limay (4,700 kcal) and Malita (4,700 kcal) to

improve plant reliability, but achieving generation costs at

historic lows on a Php/kwh basis.

▪ Of the 60 panamax shipments scheduled for the

remainder of the year, 60% has been contracted on a

fixed price basis. Our fixed price coal supply contracts

put us in a favorable position given the risk of coal prices

moving sideways or up, with some forecasts saying

prices could reach US$75/MT by end-2020 driven

primarily by China expected relaxation of its import quota

which could rebalance the coal market.2 Our fixed price

contracts allow us to have competitive fuel costs for our

coal power plants which have been at their historical

lows, particularly for the plants we own and operate.

Safety Measures

▪ The Company is conducting swab testing on all employees

within the group. In July, San Miguel Corporation opened its own

testing facility using state-of-the-art Covid19 RT-PCR testing

equipment, with the capacity to serve its ~70,000 employees,

consultants, service providers and partners, when appropriate, to

ensure their safety as we continue to work.

▪ Employees based in the power plants were put on lockdown

to ensure continuous operations of our generation portfolio

and prevent infection. These employees were provided with

adequate room and board, as well as additional benefits such as

medical support and protective equipment. Other employees were

put under flexible work arrangements (i.e. a work-from-home

setup, and skeletal workforce). Safety protocols were also

implemented (e.g. hand washing, PPEs, social distancing).

▪ While there were a few employees who tested positive for Covid-

19, the Company has ensured that they are immediately

quarantined to prevent spread while providing medical support. To

date, the few employees who have tested positive have either fully

recovered or are recovering well.

Notes:

1 Converted using 2019 daily consumption for Sual, Limay and Malita while Masinloc is

forecasted requirements with U3 operations.

2 Source: PT Delta Dunia Makmur Tbk Company Presentation, August 2020

Battery Energy Storage System Updates

Section 3


Philippine Power Industry BackgroundEnsuring System Reliability through Frequency Control

Notes:

1 Estimated reserve requirements for each of Luzon, Visayas and Mindanao is based on

the largest single generating unit currently operating in each grid. The Company

believes that in the event that there is an outage of the largest single generating unit,

then the available frequency regulating reserves should cover such outage.

2 Department Circular No. DC2019-08-0012

3 As defined under the 2016 Philippine Grid Code.

4 As per Philippine Grid Code

Grid Reliability, Stability & Power Quality

Philippine DOE Energy Storage System Policies² Opportunity

Need for significant reserve capacities with fast

response time for precision frequency control

A massive and timely opportunity for BATTERY

ENERGY STORAGE SYSTEMS (BESS)

Philippine Grid Ancillary Services Requirements¹

• The National Grid Corporation of the Philippines (NGCP)

requires adequate frequency control (through AS reserves)

to achieve grid operations within frequency limits (59.7 -

60.3 Hz) at all times.

• The Frequency Response Obligation (FRO) requirement

necessitates sufficient, fast-response reserves to arrest

frequency fluctuations in the order of milliseconds to

seconds timeframe. → Necessitates fast-response AS

reserves.

• Estimated ~1,900 MW in Frequency Regulating

Reserves requirements composed of Primary and

Secondary Reserves with up to ~950 MW in Tertiary

Reserves3

• Frequency is crucial to power systems. Deviations from the nominal

frequency (60 Hz)4 result from imbalances between supply and

demand.

• Currently, the grid is highly susceptible to automatic load shedding

(frequency below 59.2 Hz) and frequency violations beyond limits

(59.7-60.3 Hz)

➢ Loss of 600 MW in Luzon will lead to frequency drop of 1.0 Hz in

~2.7 seconds

➢ Aging plants (~20 yrs old) and large renewable capacity (1,100

MW installed capacity of solar and wind as of 2019)

• To maintain grid reliability and stability, and prevent load

dropping and blackouts, the grid requires Ancillary Services (AS),

particularly regulating reserves, to maintain frequency every second.

• Prohibition on the Grid and System Operators from owning

Energy Storage Systems (ESS), including BESS

• Grid Operator should optimize use of ESS in ancillary services pool

by

➢Using BESS technologies and

➢Displacement of less efficient conventional generators (i.e. Diesel)

• Identified Purposes

➢Ancillary Services

➢Management of the penetration of renewable energies

➢Various other applications


• With projected entry of 34.8 GW in “variable

capacities” e.g. renewables such as solar and

wind by 2040, the DOE forecasts flexible

capacity e.g. BESS must increase alongside

renewable by 6.5 GW or about ~20% of the

additional variable renewables1.

• Such flexible capacities must provide AS,

particularly primary and secondary reserves. AS

reserve requirements2 are as follows:

Evolving AS Mix – Flexible Capacity for

Variable Renewables

Philippine Power Industry BackgroundAncillary Services (AS) Market

Primary and Secondary Firm

Ancillary Services Mix3

AS Market is as large as ~2,850 MW.

• We see an opportunity to contract more

than 2,200 MW in capacity across the

Philippines representing uncontracted

ASPA requirements & non-firm ASPA

contracts. Of this, around 1,300 MW are

for frequency regulating reserves.

• Currently, 200 MW in frequency

regulating reserves ASPA requirements

are being provided by Diesel, Coal and

Geothermal and 412 MW from

Hydroelectric firm capacities.

Notes:

1 DOE Power Outlook 2018-2040

2 Estimated reserve requirements for each of Luzon, Visayas and Mindanao is based on the largest single generating unit currently operating

in each grid. The Company believes that in the event that there is an outage of the largest single generating unit, then the available

frequency regulating reserves should cover such outage.

3 Based on various ASPA applications with the ERC available in the www.erc.gov.ph as of September 30, 2019. Under these existing ASPA

applications, references to Contingency, Regulating, and Dispatchable Reserves are equivalent to Primary, Secondary, and Tertiary

Reserves, respectively under the new 2016 Philippine Grid Code.

4 Tertiary Reserve Requirements up to 947MW

280 262

199 239781

168 146

100

220

340

460

580

700

Primary Secondary Tertiary

MW

Luzon - Existing ASPA3

38

98

112150

52

20

50

80

110

140

170

200


MW

Mindanao - Existing ASPA3

71 84

38

50

38

41

100

29

20

50

80

110

140

170

200


MW

Visayas - Existing ASPA3

Hydro, 412 MW

BESS, 10 MW

Coal, 131 MW

Diesel, 123 MW

GRID

Frequency Regulating

ReservesTertiary

Reserves4

Primary

Reserve

Secondary

Reserve

Luzon 647 MW 647 MW 647 MW

Visayas 150 MW 150 MW 150 MW

Mindanao 150 MW 150 MW 150 MW

TOTAL 947 MW 947 MW 947 MW

http://www.erc.gov.ph/


Partnership with Leading BESS EPC Providers Strategic Locations

Masinloc BESS

• Pioneer grid-scale BESS in Philippines

and Southeast Asia

• 10MWh BESS providing frequency

regulation services to NGCP through

ASPA

• Largest BESS in the Philippines

Experience in Philippine BESS Frequency

Regulating Reserve

Notes:

1 Fluence and ABB – Exclusivity for the Philippines. Wartsila – exclusivity per site/region

2 Source: 2018 DOE Power Statistics

Wartsila • Acquired Greensmith, a recognized leader in energy storage

technology and systems integration; responsible for

deploying over 179 MWh BESS in 70 sites globally

• Has 63,000 MW of installed power plant capacity in 176

countries around the world and employs approximately

18,000 professionals in over 200 locations

ABB • 130-years of experience, operating in 100 countries with

about 136,000 employees

• 10-years experience deploying and operating energy storage

Fluence • 1,125 MWh in BESS capacity installed in 95 projects

across 20 countries, including the 10MWh Masinloc BESS

• Navigant Research Top 1 Vendor for Utility-Scale Energy

Storage Systems Integrators

• 10 years experience in energy storage systems

Exclusive contracts¹ with: • Identified strategic locations near areas in close proximity to

NGCP substations and with power quality issues.

• 31 sites already acquired/ have access to and are in advanced

stages of site development.

• NGCP has issued 25 System Impact Studies and 24 Facility

Studies from NGCP

Case Study: Kabankalan BESS

• Located in Negros Island in

Visayas region

• Majority of 360 MW demand in

the island; large island solar

capacity of 330 MW²

• Optimal location is

Kabankalan S/S as

indicated in System

Impact Study of NGCP

Kabankalan

BESS Site

Proof of concept in Masinloc BESS

Battery Energy Storage Systems (BESS)Strategic Locations and Partnerships Formed


(20)

(15)

(10)

(5)

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MW

Comparison of BESS vs. Other Technologies for Regulation

• Instantaneous and more precise

regulation support with almost zero (0) lag

from desired response

Desired Response

HYDRO

STEAM

BESS

• BESS is capable of more dynamic

regulation than traditional/analog

generators i.e. steam-based such as coal

or natural gas

• No fuel charge cost versus other

technologies i.e. coal, diesel and hydro

The response time of BESS is much faster than that of a conventional power plant (subseconds versus 3–5 seconds) which makes it

extremely useful for grid frequency balancing1. The Company believes these applications and benefits are illustrated below:

Note:

1 Handbook on Battery Energy Storage System, Asian Development Bank (2018)

Battery Energy Storage Systems (BESS)Technological Advantages of BESS for AS


Battery Energy Storage System Project Overview (Highlights)1

Overall Project

Completion:

32%

Substantial

Completion3:

• 15 sites (470

MWh) in 2020 to

Q1 2021

• 16 sites (530

MWh) in Q2 to Q4

2021

Final

Completion4:

• 6 sites (190 MWh)

in 2020 to Q1 2021

• 25 sites (810

MWh) in Q2 to Q4

of 2021 Ongoing foundation works for inverters and

core transformer.

Ongoing installation of rebars for permanent

structure and concreting for inverter pad

foundation.

Ongoing concreting of control building roof

deck slab and erection of gantry steel support.

Battery modules arrived at site.

Notes:

1 As of August 2020

2 Projects with overall completion of 50% and above

3 Substantial completion refers to the stage of the BESS project where testing and commissioning works have been completed.

4 Final completion refers to the stage of the BESS project where remaining minor works after substantial completion have been completed. COD

of these sites subject to issuance of ERC of the relevant permit.

Regional Status

Projects in Advanced Stages of Construction2

Construction Highlights

PROJECT SITE Capacity (MWh) Access to sitePermit

(ECC)

BOI

registration

Site

Development

EPC

(construction,

delivery of equipment)

InterconnectionASPA, ERC,

WESM

LUZON 720 100.0% 63.9% 94.2% 42.7% 15.8% 0.4% 0.0%

VISAYAS 190 100.0% 66.3% 98.9% 45.8% 36.5% 15.8% 0.0%

MINDANAO 90 100.0% 94.4% 88.9% 86.7% 23.3% 1.1% 0.0%

NATIONAL 1,000 100.0% 67.1% 94.6% 47.3% 20.4% 3.4% 0.0%

PROJECT SITE Capacity (MWh) Access to sitePermit

(ECC)

BOI

registration

Site

Development

EPC

(construction,



WESM

Pangasinan Site 1 20 100.0% 100.0% 100.0% 100.0% 62.6% 0.0% 0.0%

Bataan Site 1 40 100.0% 100.0% 100.0% 100.0% 73.3% 0.0% 0.0%

Cebu Site 1 20 100.0% 80.0% 100.0% 100.0% 73.3% 0.0% 0.0%

Davao Site 1 20 100.0% 100.0% 100.0% 100.0% 52.0% 5.0% 0.0%

Picazo

Permit (ECC)

Please reconsider reference to ECC

since company is not, strictly speaking,

permitted to commence site

development/construction if the ECC

has not been secured.

may no been acquired already flat

i.e. not site development necessary.

SMCGP:

Site dev % may refer to site dev

or contract signed even the ECC is not

yet 100% we need to assign weight for

the accomplished works

Latham:

Please note that for

OC, will propose to

include a new section

under Business

presentin

project information/

tables in these slides

Yes

Permits

Permits

Site-

Related

Permits

Major

Permits

Site-

Related

Permits


Battery Energy Storage System Project Overview (Site Status)1

PROJECT SITE CapacitySubstantial

completionAccess to site

Permit

(ECC)

BOI

registration

Site

Development

EPC

(construction,



WESM

LUZON 720

1 Albay 40 2021 Q2 100% 0% 100% 0% 0% 0% 0%

2 Bataan Site 1 40 2020 Q4 100% 100% 100% 100% 73% 0% 0%

3 Bataan Site 2 60 2020 Q4 100% 100% 93% 100% 26% 5% 0%

4 Batangas 40 2021 Q2 100% 0% 100% 0% 0% 0% 0%

5 Bulacan Site 1 20 2021 Q2 100% 0% 100% 0% 0% 0% 0%

6 Bulacan Site 2 20 2021 Q2 100% 0% 0% 0% 0% 0% 0%

7 Cagayan 40 2021 Q1 100% 100% 95% 95% 29% 0% 0%

8 Ilocos Norte 40 2021 Q2 100% 0% 100% 0% 0% 0% 0%

9 Isabela 40 2020 Q4 100% 100% 95% 92% 27% 0% 0%

10 La Union 20 2021 Q2 100% 0% 100% 0% 0% 0% 0%

11 Laguna 60 2021 Q2 100% 67% 97% 5% 3% 0% 0%

12 Metro Manila 40 2021 Q2 100% 100% 100% 5% 0% 0% 0%

13 Nueva Ecija 20 2021 Q2 100% 0% 100% 0% 0% 0% 0%

14 Pampanga 60 2021 Q2 100% 100% 97% 30% 5% 0% 0%

15 Pangasinan Site 1 60 2020 Q4 100% 100% 93% 100% 39% 0% 0%

16 Pangasinan Site 2 40 2021 Q2 100% 0% 100% 0% 0% 0% 0%

17 Tarlac 60 2021 Q2 100% 100% 93% 50% 24% 0% 0%

18 Zambales 20 2020 Q4 100% 100% 90% 100% 20% 0% 0%

VISAYAS 190

19 Bohol 20 2020 Q4 100% 100% 100% 100% 2% 0% 0%

20 Cebu Site 1 20 2020 Q4 100% 80% 100% 100% 73% 0% 0%

21 Cebu Site 2 20 2021 Q2 100% 0% 100% 0% 0% 0% 0%

22 Cebu Site 3 20 2021 Q2 100% 0% 100% 0% 0% 0% 0%

23 Iloilo 20 2021 Q2 100% 0% 100% 0% 0% 0% 0%

24 Leyte Site 1 40 2021 Q1 100% 100% 95% 3% 73% 0% 0%

25 Leyte Site 2 20 2021 Q1 100% 100% 100% 80% 23% 0% 0%

26 Kabankalan, Negros Occidental Phase 1 20 2020 Q4 100% 100% 100% 100% 99% 100%

Kabankalan, Negros Occidental Phase 2 10 2020 Q4 100% 100% 100% 100% 8% 100%

MINDANAO 90

27 Davao del Norte 10 2021 Q2 100% 50% 0% 0% 0% 0% 0%

28 Davao Site 1 20 2020 Q4 100% 100% 100% 100% 52% 5% 0%

29 Davao Site 2 20 2020 Q4 100% 100% 100% 90% 31% 0% 0%

30 Misamis Oriental Site 1 20 2020 Q4 100% 100% 100% 100% 8% 0% 0%

31 Misamis Oriental Site 2 20 2020 Q4 100% 100% 100% 100% 14% 0% 0%

TOTAL 1,000

Picazo

Permit (ECC)

Please reconsider reference to ECC

since company is not, strictly speaking,

permitted to commence site

development/construction if the ECC

has not been secured.

SMCGP:

Site dev % may refer to site dev

or contract signed even the ECC is not

yet 100% we need to assign weight for

the accomplished works

Latham:

Please note that for

OC, will propose to

include a new section

under Business

presentin

project information/

tables in these slides

Note:

1 As of August 2020

PermitsMajor

Permits

Site-

Related

Permits


Completed construction and

installation of

20 MWh Kabankalan (March 2020)

Kabankalan Status

• Ancillary Service (AS) and Philippine Grid Code

(PGC) compliance tests have been completed.

• Awaiting certificate from NGCP and schedule of

inspection of ERC.

• Awaiting Certificate of Compliance from the

ERC to attain COD

• Initiated ASPA negotiations with NGCP.

Battery Energy Storage System Kabankalan Update


• Identified strategic locations near areas in close proximity

to NGCP substations and with power quality issues.

• 31 sites already acquired/ have access and in

advanced stages of site development and for which the

NGCP has issued 25 System Impact Studies and 24

Facility Studies.

• Pending application with the DOE to grant its BESS

projects the status of Energy Project of National

Significance (EPNS)

Site Highlights

BATAAN SITE: Foundation works for battery containers,

transformers and PASSMO completed. Ongoing installation

of PASSMO base and excavation for cable trench.

PANGASINAN SITE: Ongoing foundation works for inverters

and core transformer.

Battery Energy Storage System Site and Permitting Updates

DAVAO SITE: Ongoing concreting of control building,

roofdeck slab, and erection of gantry steel support. Battery

modules already arrived at site. BESS Project adjacent to

the Davao Greenfield Power Plant

Permit Highlights

18 31 ECC

BOI Registration Certificates28 39

BOI registration for 31 sites include 28 projects

which were granted pioneer status with an

extended ITH of 6 years instead of 4 years


Battery modules for Installation

Ongoing manufacturing for the following equipment:

Equipment Production Highlights

Inverters

29

97,500

196

341

41

150,000

290

485

Power Transformers

Battery Modules

Containers / Enclosures

Memorandum of Understanding (“MOU”) with Samsung

• Executed a Memorandum of Understanding on January 21, 2020 with

battery module manufacturer, Samsung SDI, to grant the Company

preferential customer status.

• This may give the Company privileges including assurances such as:

• Receive competitive pricing

• Performance guarantees and extended support periods

• Warranties

Power Transformer Inverter

Modules Installed & Enclosed Battery Enclosures

Samsung’s Battery Module

manufacturing process has

a 2,000-point real-time

quality control system

Actual Battery Module

Battery Energy Storage System Equipment Production and Manufacturing


BATTERY (R-HUB) – Additional 400 to 500 MW

Identified and currently evaluating

additional sites that can be used

to put up BESS PROJECT:

1. La Union

2. Zambales

3. Bulacan

4. Pangasinan

5. Bataan

6. Cagayan

7. Nueva Viscaya

8. Laguna

9. Quezon

10. Camarines Norte

11. Samar

12. Camarines Sur

Sites are also in identified

locations near NGCP

substations and in areas

where frequency regulation

may be necessary.

1 2 3

4 5 6

7 8 9

10 11 12

23 For Repeaters

only

Liquified Natural Gas (LNG) Projects

Section 4


Philippine Power Industry BackgroundPhilippine LNG Situation

• Generation from natural gas plants accounts for 29% of the generation in the Luzon

Grid1

• The ~3,300 MW Natural Gas plants in the Philippines are all located in Luzon2 and

all rely on Malampaya as its fuel source3

• Malampaya is nearing the end of its service contract in early 20244. We observed

that Malampaya gas pricing is not comparable with and higher than market based

on indices such as JKM which is currently at US$2.2/MMBtu

• There are currently no LNG receiving and processing facilities servicing the

Philippine market, creating a virtual monopoly for Malampaya for the domestic LNG

market

• The supply of natural gas to the Ilijan Power Plant is set to expire in June 2022 to

coincide with the end of its IPPA Agreement5

POWER PLANT CAPACITY (MW)

Ilijan 1,200

Sta. Rita 1,043

San Lorenzo 527

San Gabriel 420

Avion 100

TOTAL 3,290

22,354 , 29%

2019 Luzon Grid Generation (GWh, %)1

Coal Oil Natural Gas Renewable Energy

Notes:

1. DOE 2019 Power Statistics

2. Based on ERC Resolution No. 02, Series of 2020

3. Inferred from gas source of Sta. Rita, San Lorenzo, San Gabriel, and Avion as mentioned in their website:

https://www.firstgen.com.ph/our-business/our-power-plants/

4. Source: Alfonso Cusi not keen on extending SC 38 for Malampaya project, Philippine Star, September 19, 2019

5. Upon expiration of the Ilijan IPPA, SPPC will become the legal owner and operator of the Ilijan Power Plant.

Philippine LNG Power Plants

https://www.firstgen.com.ph/our-business/our-power-plants/


Liquified Natural Gas (LNG) ProjectsLNG Supply Sourcing

• NewCastle and Henry Hub are forecasted to drop by 51% and

57%, respectively from their 2018 highs.

• Lockdowns caused by the COVID-19 pandemic have

exacerbated the previous decline in prices as seen in lower

prices in April-June 2020.

• Estimated FID of ~367 MTPA over the next 5 years will further

increase LNG supply

• Varying outlooks on the LNG but we have indication that various

market players are willing to fix lower vs. forecasted prices

0

2

4

6

8

10

12

14

0

20

40

60

80

100

120

140

Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21

Newcastle Coal (US$/t) Henry Hub Gas (US$/MMBTU) JKM Gas (US$/MMBTU)

US$/MT US$/MMBTU

2020 2021 2022 2023

MARKET OUTLOOK1

FORECAST

Notes:

1 Bloomberg, International Gas Union, Platts, Reuters

2 For coal, based on historical and forecasted prices as converted assuming 4,200 kcal/kg design coal, freight of US$7.00/MT, incidentals 3%, heat

rate of 2,253.43 kcal/kwh (Company assumption) and FX rate of 49.83 (June 2020); For natural gas, based on historical and forecasted prices

converted using heat rate of 6,899 kj/kWh (Company assumption) and FX rate of 49.83

3 Based on live offers received by the Company

2018

Coal: Php2.39/kwh

NG: Php3.52/kwh

Δ: Php1.13/kwh

June 2020

Coal: ~Php1.80/kwh

NG: ~Php2.10/kwh

Δ: Php0.30/kwh

Impact of Market to Electricity Prices2:

• Previous hurdle to natural gas as a fuel source was

the ~Php1.1/kwh differential of LNG fuel costs

versus comparable coal technologies

• The decline in LNG prices in the market has

narrowed this differential to Php0.30/kwh.

• LNG suppliers are willing to fix LNG prices in the

medium term narrowing the price differential given

forecasted increase in prices3.

Fuel Outlook1


Liquified Natural Gas (LNG) ProjectsLNG Terminal Technologies for Regasification and Storage

• As of 2020, Global LNG regasification capacity already

reached 821 MTPA across 37 countries, with an

additional 120 MTPA under construction1.

• Growth is driven by Floating Storage and Regasification

Units (FSRU) solutions. Close to 50 FSRUs could be in

operation by 20252. This growth is partially driven by

cheaper costs, i.e. an FSRU newbuild would cost

~US$300-450M versus an onshore terminal at US$750-

1,000M2.

• Floating Storage Units (FSU) usage is also increasing.

This is driven by quick turnaround time (< 12 months for

FSU vs. 36-40 for onshore tank) and lower cost (an FSU

costs ~$100-150m versus $140M for onshore tank).2

• Trend is towards modular regasification units, with

companies such as AG&P4 and Wartsila5 offering such

solutions.

Growth Drivers to LNG Terminal Technologies2:

• More diverse solutions (FSRU, on-shore terminal,

hybrid)

• More flexible solutions (lease/charter basis)

• Decreasing costs

• Faster turnaround to “First Gas” (as fast as 12

months)

Maturing LNG Terminal Technologies

LNG Power Plants

LNG Power Plants technologies are relatively mature

with significantly better performance for various metrics:

Metric Coal LNG

CAPEX

(estimated)6 US$2.2M/MW US$1.1-1.3M/MW

Thermal

Efficiency3

42% (supercritical)

36% (pulverized coal)

60% (combined

cycle)

CO2

Emissions3

(lb per kwh)

2.21 0.92

Notes:

1 Source: 2020 World LNG Report, IGU

2 Outlook for FSRUs, University of Oxford, 2017.

3 Source: Energy Information Administration (https://www.eia.gov/tools/faqs/faq.php?id=74&t=11)

4 AG&P Website

5 Wartsila Website

6 Based on live offers received by the Company for the Ilijan Expansion and experience from its operational

greenfield power plants and the Ilijan Power Plant.

https://www.eia.gov/tools/faqs/faq.php?id=74&t=11


• AG&P is the Majority owner of GAS Entec, the pioneer for

modular regassification solutions and patent holder for

Regastainer ® technologies

• Versatile and reliable regassification solution capable of

onshore and offshore as Floating Regasification Unit (FRU)

deployment

Strategic Technology Company Subsidiary :

International LNG Expertise

Liquified Natural Gas (LNG) ProjectsLocal Partner with Strong International LNG Expertise

• The planned Ilijan LNG

Terminal will be developed by

AG&P LNG Terminals and

Logistics, with EPC work

handled by AG&P Construction

Solutions (together, AG&P).

• AG&P has extensive expertise

in LNG regassification

technologies and the

development & execution of

LNG infrastructure solutions to

utilize natural gas for retail and

power plant use.

• Excellent track record in

Philippine construction and

design, with large Philippine

manufacturing capacity:

Fabrication

Yard

50 hectares in

Batangas,

Philippines

Structural

Fabrication

60,000 MT p.a.

Capacity

Piping

Fabrication

600,000 dia-inches

p.a. Capacity

Assembly

Capacity125,000 MT p.a.

AG&P acted as EPC contractor or technical partner for various LNG Terminal projects

across the world

Bali Hybrid LNG

Terminal

EPC for:

• FRU (50 mmscfd)

• FSRU (26,000

CBM and 50

mmscfd)

Osaka Gas

Technical partner on

new business

opportunities and

engineering for

various facilities (e.g.

modular truck loading

skids, small-scale

LNG receiving

facilities, etc.)

Regastainer ®

Fabrication

Completed / delivered

modular

regassification units

for multiple projects

around the world

(Singapore, South

Korea, Turkey, Africa,

among others)

Karaikal LNG

Terminal

EPC for Hybrid LNG

Terminal Solution

(FSU + Regastainer +

Downstream Facilities

& Balance of Plant)

Source: AG&P


Liquified Natural Gas (LNG) ProjectsHybrid Onshore/Offshore Solution

• As of August 2020, the Company is in advanced stages of executing

a binding term sheet on the Terminal Use Agreement (“TUA”) with

AG&P to provide LNG receiving, storage and regasification services

to the Ilijan Power Plant and the Ilijan Expansion.

• The terminal is planned to be commercially operational by June

2022, in time for the expiration of the Ilijan IPPA.

• Hybrid solution using modular technology, resulting in a cost-

effective EPC cost and consequently, a viable terminal use fee for

the power plants. The proposed facility is composed of the following

components:

StorageFSU – 137,000 CBM

Onshore storage – 40,000 CBM

Regas420 (5x82) mmscfd good for 3.0 MTPA or

~3,000 MW of Power Plant Capacity1

BOG

Handling

Efficient LNG processing and storage while

minimizing environmental impact

Mooring

system

• Jetty

• 4 berthing dolphins

• 6 mooring dolphins

• LNG unloading arms (cryogenic)

Balance of

Plant

Utilities, seawater pump, gas boiler skid, gas

receiving facilities

Provision for

Additional

Capacity2

• Modular regasification units (provision for

5-6 regas units or ~500 mmscfd)

• Onshore LNG Storage – 130,000 CBM

Notes:

1 Estimated 1,200 MW at baseload operations and 1,800 MW at midmerit/ peaking

operations

2 Optional expansion subject to mutual agreement of terminal users and the terminal

company.

1,200 MW

Ilijan Power

Plant


Priority Project

• SMC has negotiated “priority status” for the Ilijan LNG

Terminal over all projects of AG&P2

Liquified Natural Gas (LNG) ProjectsStrong Local Presence and International LNG Experts

To leverage on AG&P’s strong network of partners for LNG

(including GAS Entec for Regas, KOGAS-tech for storage, ADNOC

for FSUs, Ausenco for FEED, and Osaka Gas for Terminal O&M)

Strong Foothold for Construction in Batangas1

• AG&P has large local manpower pool and

capable of worker mobilization of up to 4,000

(versus estimated ~1,000 pax necessary for

Ilijan Terminal)

• 96 hectare yard for fabrication in close

proximity to Ilijan - ~20KM and ~37KM away by

barge and land, respectively. This allows

flexibility through a modular approach to

construction and offsite fabrication.

Network of LNG Best-in-Class Partners

• As the foundation customers,

SMC’s power plants will also be

the priority terminal users for the

terminal and its capacity

Notes:

1 Source: AG&P

2 Based on the binding Terminal use Agreement term sheet which is in advanced stages of negotiations as of

August 2020.


• With access and control of ~73 hectares of land adjacent

to the existing 1,200 MW Ilijan Power Plant

• Includes properties along the shoreline with priority to use

the foreshore area3 with a uniquely deep ocean over a

uniquely deep ocean area (15.5m draught) that is close to

shore (220 km).

➢ Reduces marine/ offshore costs

➢ Capable of accommodating standard LNG Carriers

up to 180,000 CBM

➢ Proximity to the Verde Island passage blocks

typhoons

Strategic Location for LNG Terminal and Expansion Consolidated Volumes and Competitive Terms

• Significant consolidated volumes of up to 1.2 Million Tons of

LNG per year or ~ 1-2 full load LNG carriers per month to be

sourced from the global market. Majority of volumes secured

with fixed-price downstream PSAs with Meralco (1,000 MW

baseload and 290 MW midmerit).

• This has allowed us to negotiate for competitive and fixed

terms. We have received offers that we believe will allow us to

obtain the following terms for the Ilijan Power Plant and Ilijan

Expansion:

LNG Supply1

Price Essentially viable and fixed pricing for

10-years

Flexibility Ability to defer or accelerate delivery

schedules subject to downstream

requirements aligned with PSAs

Terminal Use2

Price Fixed Price for 20 years

Priority Power plants are foundation

customers and will be priority for LNG

receiving, storage and processingNotes:

1 Based on 3 live offers from major players in the oil and gas industry as received by the

Company from global fuel suppliers

2 Based on AG&P Terminal Use Agreement term sheet which is in advanced stages of

negotiation as of August 2020.

3 Subject to DENR Approval

Diversify further into LNG Power Generation and leverage on existing capacities and portfolio base.

Ilijan

Site

Liquified Natural Gas (LNG) ProjectsConsiderable Volumes due to Strategic Location


Competitive Position of LNG Plants for CSPs

Metric LNG Benchmark

Thermal Efficiency

(%)61-63%1 Min 53%2

Heat Rate (btu/kwh) 6,0601 Max 6,4152

Nox (mg/nm3) 38.63 Max of 1,500.04

Sox (mg/nm3) 2.13 Max of 1,500.04

CO (mg/nm3) 40.03 Max of 500.04

Opacity (%) 7.73 Max of 20.04

CO2 Emissions5

(lb per kwh)0.92 N/A

• Fully compliant with requirements of most CSPs

requiring HELE technologies

Notes:

1 Based on gross efficiency and net heat rate at 100% CF derived from 59.4% net efficiency, as

stated in offers receiving by SMCGP from EPC contractors for Ilijan Expansion.

2 LNG plant GNPHR at 100% CF based on 1,200 MW Meralco greenfield bid released in 2019.

Converted to thermal efficiency using 3,600 kj/kwh.

3 Actual Ilijan Performance – Jan – Jun 2020

4 Department of Environment and Natural Resources (DENR) regulations

5 Energy Information Administration

6 Based on AG&P Terminal Use Agreement term sheet for signing

7 Based on live offers received by the Company for the Ilijan Expansion and experience from its

operational greenfield power plants and the Ilijan Power Plant.

8 See footnotes in LNG Supply Sourcing slide

• High availability – 99.3% for Ilijan3 and guaranteed at

97% for the LNG Terminal6

• Low CAPEX costs at ~US$1.1 - 1.3 Million/MW versus

coal at ~US$2.2 Million/MW7

• Favorable global market prices narrowing down delta of

fuel fee versus coal from ~ ₱1.13/kwh to ~₱0.30/kwh8

LNG Combined Cycle Plants Operational Benefits

• Faster construction time at 1.5 – 2 years versus coal

plants at 3-4 years.7

• Better operational flexibility with fast start-up and grid

response (capable of operating at baseload and

midmerit/ peaking operations)7

• Superior plant efficiency and heat rates versus other

fuels5

Strengthen generation portfolio performance through high efficiency and low emission additional LNG capacities.

Liquified Natural Gas (LNG) ProjectsStrong Contributor to Portfolio to Secure Bilateral Contracts

Key Credit Considerations

Section 5


Key Credit ConsiderationsOverview

Geared to Capture Future Demand Growth4

Industry Leader with a Strong Growth Platform1

Experienced and Highly Competent Management Team

Well-Positioned to Secure and Provide Ancillary Services through its Growing BESS Portfolio

A Member of the San Miguel Corporation Group of Companies

Strong Commitment to Stringent Environmental Policies and Pollution Controls5

Established Relationships with International Partners

Flexible and Diversified Power Portfolio7

Well-Positioned as the Leading Baseload Generator Using Clean Power Technologies3

8

2

10

9

Stable and Predictable Cash Flows6


San Miguel26%

First Gen22%

GN Power12%

Aboitiz7%

Mgen5%

Others28%

San Miguel20%

Meralco34%

Aboitiz21%

Ayala11%

Others14%

San Miguel19%

Aboitiz21%

First Gen15%

Others45%

25%

Aboitiz Power21%

First Gen16%

Others38%

• Installed capacity of

4,347 MW1, one of the

largest among Philippine

power producers and

largest in Luzon

• Controls capacities of

the largest baseload

plants in the Philippines

(Sual, Ilijan and

Masinloc)

• One of the largest

supplier of Meralco DU,

supplying 3,462 GWh or

approx. 22% of its 2Q

2020 power purchases3

• Major player in Supply

and Distribution Markets

Meralco Power

Suppliers3

Luzon

Market Share by Installed Generation Capacity as of June 20202

Philippines

Key Credit ConsiderationsIndustry Leader with a Strong Growth Platform#1

Notes:

1 As of June 30, 2020

2 Based on ERC Resolution No. 02, Series of 2020

3 Source: Meralco 2020 monthly generation charge reports for January – June 2020

4 Source: ERC Cases 2013-2020 and submitted PSPP’s of DUs posted on DOE website

5 Source: Competitive Retail Electricity Market Report from ERC as of June 2020

Contestable Customer

Market Share5

Distribution

Market Share4

22%

First Gas22%

WESM12%

FGP11%

Quezon

Power7%

Others27%


4,347

335

4,682

470

530

600

850

350

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Current SMCGPCapacity

Masinloc Unit 3 Proforma Capacity BESS Phase 1 BESS Phase 2 Mariveles Ilijan LNGExpansion

Masinloc Unit 4

MW

Key Credit ConsiderationsIndustry Leader with a Strong Growth Platform #1

Planned Capacity (MW)

Under construction

Expected COD: Q4 2020Pipeline projects

• One of the largest power companies in the Philippines in terms of installed capacity with diversified expansion plans anchored on cost

competitive baseload plants including LNG and BESS plants

• Pioneer in Battery Energy Storage Systems in the Philippines with expansion plans of 1,000 MWh2 in BESS capacities

• Strong diversification platform into LNG and other high efficiency low emission technologies

Source: Company information

Notes:

1 As of June 30, 2020

2 Battery energy storage capacity in pipeline incudes the planned 20 MWh Kabankalan BESS

2022 - 20232020-2021

BESS21

2024


Key Credit ConsiderationsWell-Positioned to Secure and Provide Ancillary Services through its Growing BESS Portfolio

Masinloc BESS

• Pioneer grid-scale BESS in

Philippines and Southeast Asia

• 10MWh BESS providing frequency

regulation services to NGCP through

ASPA

• Pioneer grid-scale BESS in

the Philippines

Strong Foothold in BESS Projects and Frequency

Regulating Reserve ASPAs

Proof of concept in Masinloc BESS

#2

Kabankalan BESS for Ancillary Services

Kabankalan BESS

• AS and PGC Compliance Tests

already completed

• ASPA for Regulating Reserve already

being processed and finalized by

NGCP. This reflects the same

commercial term as the foregoing

ASPA of Masinloc BESS

Well-positioned to Complete 1,000 MWh of BESS

Projects across the Philippines, with 15 sites (470

MW) set for substantial completion in 2020 to Q1

2021

1,000 MWh BESS projects are 100% Fully Funded

Technological Advantages for BESS as AS

• Fastest response time amongst AS – instantaneous with almost zero

lag from desired response

• More dynamic and precise regulation than traditional/analog generators

i.e. steam-based such as coal or natural gas

• Efficient at 85%+ Roundtrip Efficiency & high Availability at 97%+

• Modular Design

• High Project Rate of Return

• Short Payback Period (2-year for the 10MWh Masinloc BESS)

• Predictable and contracted cashflows

• Counterparty is the grid system operator with minimal credit risk

Ancillary Services Procurement Agreement (ASPA)

• Relatively standard tariffs, particularly for regulating reserves,

subject to ERC approval

• Requires Project substantial completion prior to contracting with

NGCP - Full commitment to construct the Project follows once

NGCP clears the Project in its System Impact Study

The existing ASPA of the Masinloc BESS with NGCP is on a take-or-pay

scheme with capacity payments for both charging and discharging

capacity, subject to dispatch protocols and guidelines.

High Yield Frontier Business

Environmental

• Regulatory environment has remained supportive of this business model

• Compensates for intermittency of renewables like solar and wind and

allows influx of renewables


#3

Strong Foothold for LNG Power in the Philippines

• Strategic location adjacent to the existing Ilijan Power Plant

allows volume aggregation for sourcing and processing

(regassification and storage)

• Ability to negotiate for LNG supply and regassification at

essentialy viable and fixed prices for the next 10 years

• LNG Plants are substantially contracted with the 1,200 MW

Ilijan Power Plant serving Meralco PSAs of the group.

• Planned LNG Terminal has sufficient capacities for further

expansion with SMCGP Power Plants as priority customers

Anchor for Diversification and Portfolio

Improvements

• Reliable capacity capable of operating as baseload,

midmerit, and peaking capacity

• High efficiency versus comparable technologies (~61-

63% thermal efficiency)

• Low emissions particularly for SOx, NOx, PM, CO, and

even CO2 will improve emissions intensity of the

company’s power plant portfolio

• Fully compliant with benchmarks for High Efficiency and

Low Emission (HELE) technologies and strong

contender to PSA bids

• Easier to finance than coal owing to lower costs and

improved efficiencies and emissions performance

Metric Coal LNG

CAPEX

(estimated)US$2.2M/MW

US$1.1-

1.3M/MW

Thermal

Efficiency3

42% (supercritical)

36% (pulverized coal)

60% (combined

cycle)

CO2

Emissions3

(lb per kwh)

2.21 0.92

Key Credit ConsiderationsWell-Positioned as the Leading Baseload Generator Using Clean Power Technologies


Key Credit ConsiderationsGeared to Capture Future Demand Growth#4

Capacity Additions Forecast by Operations Type3

Projected1 Installed Capacity2

2020 2021 2022 2023 2024 2025

San Miguel 4,682 4,682 4,982 6,132 6,482 6,482

Baseload 4,094 4,094 4,394 5,544 5,894 5,894

Others 573 573 573 573 573 573

Aboitiz 5,867

Baseload 4,293

Others 1,574

First Gen 3,561

Baseload 3,271

Others 291

Other Generators 11,493

Baseload 5,464

Others 6,028

• SMCGP has the highest installed baseload1

capacity and supported by our diversified portfolio

making it a strong contender for new PSA

requirements from demand growth

• Ongoing 1,000 MWh BESS projects which can

capture forecasted Flexible Capacity requirements

set by the DOE of almost 2 GW by 2030

• Balanced portfolio of plants set to capture spot

market opportunities driven by forecasted capacity

constraints in short to medium term

• According to the DOE, sustained demand growth of

5.5% with some forecasts going as high as 7%4

Notes:

1 Based on ERC Resolution No. 02, Series of 2020 as adjusted to reflect the Company’s projected installed capacities

2 Baseload capacities refer to Coal, Natural Gas, and Geothermal Plants while Other capacities refer to other fuel types

excluding BESS.

3 DOE Power Outlook 2018-2040

4 DOE Power Development Plan 2016-2040

Historical WESM Prices

1,175

5,4855,324

12,791

600

1,965

0

5,000

10,000

15,000

20,000

25,000

2025 2030

Other Capacity Variable Flexible

3.4

1

3.8

1

3.8

4

3.9

0

3.9

6

3.3

0

2.4

2

2.3

9 3

.74

5.1

0

4.2

0

4.0

7

4.1

1

3.7

9

2.7

1

2.9

7

3.8

2

3.3

2

3.1

9 4

.73

4

.06

5.0

8

7.3

2

6.6

5

7.7

7

4.6

6

3.0

0

2.1

4

4.2

2

5.1

1

5.9

4

2.8

7

3.2

8

2.4

5

1.4

9

2.0

4 3.2

7

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00


EPC Guarantee1 and Actual Supercritical Coal Emissions2 as % of Philippine3 & World Bank Standards3

0%

20%

40%

60%

80%

100%

SOx NOx CO Opacity PM

ppm ppm ppm % mg/Nm3

Guarantees Actual Philippine Standards

0%

20%

40%

60%

80%

100%

SOx NOx PM

ppm ppm mg/Nm3

Guarantees Actual

#5

0%

20%

40%

60%

80%

100%

SOx NOx PM

ppm ppm mg/Nm3

Actual World Bank

0%

20%

40%

60%

80%

100%

SOx NOx CO Opacity PM

ppm ppm ppm % mg/Nm3

Actual Philippine Standards

Actual Subcritical Coal Emissions4 as % of Philippine & World Bank Standards3

Note:

1 Emissions guarantees based on EPC contract with Posco

2 Actual figures based on Masinloc U3 Commissioning-Report for Air Emission Guarantees Test conducted by a third party with total test

period over 48 hours

3 2008 IFC Environmental, Health and Safety Guidelines

4 Actual figures for Davao Greenfield Power Plant as of Q3 2019EA Clean Coal Centre; converted using the applicable conversion factor

Key Credit ConsiderationsStrong Commitment to Stringent Environmental Policies and Pollution Controls


Strong Commitment to the Environment

Environmental Certifications

2Q 2020 Emission Level1

#5

Note:

1 Average monthly emission levels

Power Plant

NOx SO2 PM

Emission

level

DENR

Applicable

Standard

Emission

level

DENR

Applicable

Standard

Emission

level

DENR

Applicable

Standard

(ppm) (ppm) (mg/Nm3)

Sual Power Plant 182.0 732.0 317.1 524.0 13.8 200.0

Masinloc Power

Plant 97.3 732.0 117.9 524.0 53.7 200.0

Limay Power

Plant76.4 487.0 59.9 245.0 10.4 150.0

Davao Power

Plant71.3 487.0 85.8 245.0 9.3 150.0

• Masinloc and Davao Greenfield Power Plant also have ISO 55001 (Asset

Management). Davao Greenfield Power Plant was the first power plant in the

Philippines to receive ISO 50001

• Diversification into LNG and BESS

creates improvements in overall

emissions of its power portfolio

• Employs various environmentally

sound technologies, including: LNG

combined cycle generators, super

critical boiler, electrostatic

precipitator and flue gas

desulfurization systems

• Winner in the Asian Power Awards

• 2018 - Environmental Upgrade of

the Year (Limay), Power Utility of

the Year (Davao), and Innovative

Power Technology of the Year

Philippines (Masinloc)

• 2019 - Power Utility of the Year

and Environmental Upgrade of the

Year (Davao), Power Plant

Upgrade of the Year and

Information Technology of the

Year (Masinloc)

Key Credit ConsiderationsStrong Commitment to Stringent Environmental Policies and Pollution Controls


Environmental Social Governance InitiativesIntegrated and Comprehensive Foundation Program Thrusts Aligned with UN SDG

SMCGP Foundation Thrusts

Health Education

“Good Health

to Celebrate

Life”

“Educating New

Generation of

Innovative Engineers”

(“Engine”)

“Local Economy

Acceleration and

Progress” (“Leap”)

Ridge to Reef

Conservation

Program

1. Mobile Health Clinic

2. Medical Missions

3. Brgy. Community Health

Clinic Improvement

4. Safe Water Access

5. BHW Capacity Building

1. Scholarship Program (for IPs

and non IPs)

2. School Facilities

Improvement

3. Apprenticeship

4. Teacher Training

1. Local Job Creation

2. Technical Vocational courses

3. Community-driven

Entrepreneurship

4. Processing Centers for Local

Products

1. 747 Program (7 Million Trees

for 7 Years)

2. Coral Reef Rehabilitation

3. Carbon footprint mitigation

4. Watershed management

5. Plastic Waste Recycling

Facility

Economic Empowerment Environmental Stewardship


Why Sustainability Matters

• SMCGP embarked on Sustainability Reporting using the Global ReportingInitiative (GRI) standards, an internationally- accepted and used framework.

• SMCGP published its first Sustainability Report in accordance with GRIStandards: Core Option. The report covered 2018 data from its five sites:

• Angat Hydroelectric Power Plant

• Limay Greenfield Power Plant

• Davao Greenfield Power Plant

• Masinloc Power Plant

• SMC Global Power Corporate Office

• Received the GRI Organizational Mark for the 2018 Sustainability Report

Engagement and Materiality Testing

• SMCGP conducted Stakeholder Consultation and Materiality Testing to

identify GRI topics that our internal and external stakeholders consider

important.

• Out of 33 topics, 25 topics were determined as critical to our stakeholders

• A total of 102 disclosures were reported under Economic, Environment, and

Social categories.

• The report underwent and completed the GRI Materiality Disclosure service

and received the GRI Organizational Mark in June 2020.SMC Global Power 2018 Sustainability Report Cover

Environmental Social Governance InitiativesSustainability Reporting


SMCGP, through its partner, the University of Asia and the Pacific (UA&P),

tapped three experts in the fields of economic, environment, and social to

comprise its External Review Committee (ERC) members to review the

Company’s 2018 Sustainability Report.

The role of the members of the ERC is to review the content and data quality of

the report in relation to the GRI Standards. A collective statement was written by

the ERC members to provide their findings and recommendations.

Sustainability Team and Commitments

• The report was a product of collaboration among SMCGP employeesacross sites. A Sustainability Core Team, Steering Council, andTechnical Working Groups were formed to embed our Sustainabilityobjectives in our operations.

• Our Sustainability mission drives the company to provide reliable,accessible, and affordable energy to the country. This mission can onlybe achieved by committing sustainability in our operations through:

• Powering the Economic Progress of the Country

• Constant Support and Partnership with our Communities

• Protecting Employee Welfare

• Responsible Stewardship of Nature

• SMCGP is currently working on its 2nd Sustainability Report which will

cover 2019 and 2020 data. The target release for the said report will

be in May 2021.

External Review Committee

One (1) Subject

Matter Expert for

Social Matters

One (1) Subject

Matter Expert for

Economic

Matters

One (1) Subject

Matter Expert for

Environmental

Matters

Environmental Social Governance InitiativesSustainability Reporting


Operational IPPA power plants Greenfield power plants JV

Sual

(Coal)

Ilijan

(Natural Gas)

San Roque

(Hydro)

Masinloc

Units 1 and 2 & BESS

(Coal & Battery)

Limay

Units 1, 2, 3, and 4

(Coal)

Davao

Units 1 and 2

(Coal)

Angat1

(Hydro)

Installed capacity

1,000 MW 1,200 MW 345 MW 684 MW 600 MW 300 MW 218 MW

Key offtakers

Meralco, Various

distribution utilities,

industrial, & RES

Meralco WESM

Meralco, Various

distribution utilities and

contestable customers

Various distribution

utilities and contestable

customers

Various distribution

utilities and industrial

customers

WESM

PSAs tenor/expiry2

12yrs / 2024 10yrs / 2022 - 2021 10yrs 10yrs -

Take-or-pay2 (Yes/No)

Yes Yes - Yes Yes Yes -

Fuel cost pass through2 (Yes/No)

Yes Yes - Yes Yes Yes -

Revenue mix (2Q 2020)

91%9%

Key Credit ConsiderationsStable and Predictable Cash Flows#6


Notes:

1 SMCGP through its subsidiary, PowerOne Ventures Energy

Inc. ("PVEI"), owns 60% in Angat hydro plant

2 Of majority of PSAs. Starting 2020: for Sual, new Meralco

PSA has term of 10-years until 2029. For Ilijan, new Meralco

PSA has term of 10 years until 2029 and 5 years until 2024.

These contracts have take-or-pay provisions in the form of

minimum energy offtake. The contracts also have guaranteed

tariff escalations instead of fuel price and foreign exchange

pass-through.

Ancillary Services Procurement Agreement (“ASPA”)

• Rates are relatively standard, particularly for regulating reserves but still subject to ERC

approval

• Requires the substantial completion of the Project prior to contracting with NGCP - Full

commitment to construct the Project follows once NGCP clears the Project in its System

Impact Study

• Generally with a term of 5 years extendible for another 5 years

Masinloc 10 MWh BESS has an existing ASPA with NGCP on a take-or-pay scheme for capacity

payments for both charging and discharging capacity, subject to dispatch protocols and

guidelines.

97% 3%

99%

1%

100%

95%

5%

100%


3,859, 52%

2,050, 27%

563, 8%

1,010, 13%

Coal NatGas Hydro BESS

Diversification by Fuel Type/Technology Diversification of Sales Mix2

Key Credit ConsiderationsFlexible and Diversified Power Portfolio#7


Notes:

1 Excludes Masinloc U3

2 Based on percentage of total revenues for the six months ended June 30, 2020

3 Based on 2024 Expected Fuel/Technology Mix of SMCGP with the 600 MW Mariveles, 335 MW Masinloc U3, 350 MW Masinloc U4,

850 MW Ilijan LNG Expansion, and 1,000 MWh BESS

• Good balance of baseload and peaking plants

• Diversified fuel sources across coal, natural gas, hydropower and recently battery

energy storage systems thus reducing fuel-specific risks. Further diversification

into LNG and BESS will reduce expected coal-dependence by 2024.

• Expected reduction of emissions on a portfolio level with the switch towards high

efficiency, low emission technologies such as LNG Combined Cycle and BESS.

Total Installed Capacity: 4,347 MW Total Sales: ₱57,177 millionTotal Installed Capacity: 6,482 MW +

1,000 MWh BESS

Current Mix1 2024 Expected Mix with Masinloc U3

and BESS3

Bilateral, 95%

WESM, 5%

Reduced share of coal in our portfolio by 2024 from 59% to 52%3

2,57459%

1,20028%

56313%

100%

Coal NatGas Hydro BESS


Key Credit ConsiderationsEstablished Relationships with International Partners#8

IPPA Partners Fuel Suppliers Offtakers

TeaM Sual Corporation

(TEPCO and Marubeni)

KEPCO Ilijan Corporation

(Korea Electric, Mitsubishi,

and TeaM Energy)

San Roque Power

Corporation (Marubeni &

Kansai Electric)

K-Water

Banpu

Glencore AG

PT Jorong Barutama

Noble Resources

International Pte. Ltd.

PT Bara Tabang

PT Kaltim Prima Coal

PT Arutmin Indonesia

Vitol Asia Pte. Ltd.

Idemitsu Kosan Co., Ltd.

PT Antang Gunung Meratus

Galaxy Energy and

Resources

Trafigura Pte. Ltd.

Manila Electric Company

Petron Corporation

MPower

Olongapo Electric Distribution

Company

SM Prime Holdings Inc.

ISECO I

TARELCO II

BATELEC I


Overview of San Miguel Corporation ("SMC")

Key Credit ConsiderationsA Member of the San Miguel Corporation Group of Companies#9

Food & Beverages

• One of the largest consumer companies in the Philippines

• No. 1 in Beer, Gin, Chinese Wine and four food categories

• Rich heritage and strong brands associated with good quality

• Extensive and efficient distribution network

Packaging

• One of the largest packaging operations in the Philippines offering a total

packaging solution to major food, pharmaceutical, chemical, beverage and

personal care manufacturers

Fuel and Oil

• Largest integrated oil refining and marketing company with overall market

share of 26.5% of Philippine market in terms of sales volume1

• Major player in Malaysia with a 21.3% market share of the retail market2

Infrastructure

• Holds long-term concessions in the infrastructure sector in the Philippines

• Manages and operates key infrastructure developments such as the Tarlac-

Pangasinan-La Union Expressway, Skyway Stages 1 to 4, NAIA Expressway,

South Luzon Expressway, Star Tollway and MRT-7

• Awarded and has signed Concession Agreement to develop, construct,

manage and operate the proposed New Manila International Airport under a

BOT framework

Note:

1 Based on company estimates and data from DOE data as of December 31, 2019.

2 As of December 31, 2019. Based on estimates using Company’s internal assumptions, calculations and industry data from

The Concilium Group Sdn Bhd.

SMC is one of the largest and diversified conglomerate with market capitalization of ₱236,006 million (US$ 4,802 million) as of July 31, 2020.

SAN MIGUEL HOLDING CORP.


Board of Directors

Senior Management

Key Credit ConsiderationsExperienced and Highly Competent Management Team#10

Ramon S. AngFerdinand K. Constantino Aurora T. Calderon Virgilio S. Jacinto Jack G. Arroyo, Jr.

Consuelo M. Ynares-Santiago

Josefina Guevara-Salonga

Chairman &

Chief Executive

Officer, President &

Chief Operating

Officer

Vice Chairman DirectorDirector & Corporate

SecretaryIndependent Director Independent Director Independent Director

Vice Chairman,

President and Chief

Operating Officer of

SMC and Chairman and

Director of various SMC

subsidiaries

Director, Chief Finance

Officer and Treasurer of

SMC and Director of

several SMC

subsidiaries

Senior Executive

Assistant to the

President and Chief

Operating Officer of

SMC and Director of

several SMC

subsidiaries

Corporate Secretary,

General Counsel and

Compliance Officer of

SMC and Director of

several SMC

subsidiaries

Member of the BOD of

the Philippine Health

Insurance Corporation,

the Philippine

Healthcare Educators,

Inc., and the Philippine

Society of Cataract &

Refractive Eye Surgery

Former Associate

Justice of the Supreme

Court of the Philippines

and the Court of

Appeals of the

Philippines

Former Associate

Justice of the Court of

Appeals of the

Philippines and former

Executive Judge of the

Makati Regional Trial

Court

Elenita D. Go Paul D. Causon Ramon U. AgayJose Ferlino P.

Raymundo Jeciel B. Campos Danilo T. TolarbaJulie Ann B. Domino-

PabloGonzalo B. Julian, Jr.

General ManagerVice President &

CFO

Assistant Vice

President &

Comptroller

Assistant Vice President for Energy

Sourcing and Trading

Assistant Vice President for Sales

and Marketing

Assistant Vice President for

Human Resources

Assistant Vice President & General

Counsel

Assistant Vice President for Sales and Marketing-RES, Head of the Battery

Business

SVP of San Miguel

Corporation and

General Manager of

SMEC, SPDC and

SPPC and other

operating

subsidiaries, among

other positions with

over 36 years of

experience in

management,

marketing,

procurement and

engineering

Concurrently CFO

and Treasurer of

Angat Hydropower

Corporation.

Previously held senior

finance positions in

several SMC

subsidiaries in the

telco and airline

industries. Formerly a

Partner of KPMG

Philippines and

Comptroller of China

Banking Corporation

Finance and

Administration

Manager of SMEC,

SPDC and SPPC and

held various Finance

positions in various

SMC subsidiaries

since 1980. CPA with

over 37 years of

experience in various

finance posts within

SMC

Professional electrical

engineer with over 32

years of experience in

the power sector. In

charge of the

supervision of the

WESM trading and

dispatch

Registered

mechanical engineer

with over 17 years of

experience in the

power sector. Former

Marketing &

Commercial Relations

Officer for Central

Luzon region at NPC

Regional Office

Head of the

Human Resources

Division of SMC

Global Power.

Former Manager

of SMC Corporate

Human Resources

and held various

senior human

resources

positions in

various SMC

subsidiaries.

Heads the Legal

Department and is the

Corporate Secretary of

several subsidiaries.

Former Chief-of-Staff of

the Office of the

President & CEO, & the

Corporate Planning Dept.

Manager of PSALM

Corporation. A CPA

lawyer in the Philippines

and a member of the

New York State Bar.

Registered electrical

engineer with over 30

years of experience in

the power industry.

Formerly Director of

the Grid Management

Committee of the

Philippines and a

senior superintendent

of Meralco.

Key Financial Highlights

Section 6


Financial Highlights

Net Income (₱ Million) and Net Income Margin (%)5Income from Operations (₱ Million) and Operating

Profit Margin (%)4

EBITDA (₱ Million)1 and EBITDA Margin (%)2Revenues (₱ Million)

Notes:

1 EBITDA 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

2 EBITDA Margin is calculated as EBITDA over Revenues

3 Consolidated Gross EBITDA is calculated as EBITDA including ring-fenced subsidiaries plus aggregate fixed payments made to PSALM

4 Operating Profit Margin is calculated as Income from Operations over Revenues

5 Net Income Margin is calculated as Net Income over Revenues

9.9% 6.9% 10.6% 10.0% 15.9%29.3% 27.6% 26.6% 25.4% 31.7%

Margin

(%)

3

9.2% 8.9% 6.1% 6.9% 11.5%

82,791

120,103135,060

72,511

57,177

2017 2018 2019 6M 2019 6M 2020

8,217 8,300

14,364

7,263

9,063

2017 2018 2019 6M 2019 6M 2020

24,276

33,17435,954

18,384 18,120

2017 2018 2019 6M 2019 6M 2020

7,654 10,717 8,297 4,987 6,564

33,889

43,824 46,847

23,417 26,785

2017 2018 2019 6M 2019 6M 2020

EBITDA Consolidated Gross EBITDA


USD Capital Securities, 13,823

Redeemable Perpetual Securities, 32,752

Capital Stock, 3,553

Senior Perpetual Capital Securities,

96,058

Retail Bonds, 79,373

Term Loan, 48,996

Non-Recourse Project Debt, 38,757

Ring-fenced Project Debt, 59,829

Financial HighlightsDebt Maturity Profile and Capital Funding

Outstanding Funding Sources (₱ Million) as of June 30, 2020

Long-Term Debt Maturity Profile (₱ Million) - Excluding Non-Recourse Project Debt (Limay, Malita & Masinloc)

as of June 30, 2020

Total: ₱373,141 million

9,966 24,915 14,625

6,153

23,758

19,090

15,710

11,679

3,609

2020 2021 2022 2023 2024 2025 2026 2027

USD Term Loan PHP Term Loan Retail Bonds


Consolidated Total Equity (₱ Million) and

Net Debt1-to-Consolidated Total Equity Ratio2 (x)

Financial HighlightsRelevant Financial Ratios

Notes:

1 Net debt represents the consolidated debt of the Company and its subsidiaries — net of debt issue costs less cash and cash equivalents and including PSALM finance lease liabilities, in each

case, excluding amounts attributable to ring-fenced subsidiaries

2 Starting June 30, 2017, the relevant financial covenants of the Company are Net debt to Consolidated total equity ratio and Interest Coverage ratio which should not be more than 3.25x and not

less than 2.25x, respectively. The Net debt to Consolidated total equity ratio is computed by dividing Net debt over Consolidated total equity. Consolidated total equity is Equity as adjusted to

exclude Retained earnings (deficit) of ring-fenced subsidiaries and includes the Senior Perpetual Capital Securities. The Interest Coverage ratio is computed by dividing the most recent four

quarterly period consolidated EBITDA (gross of PSALM payments and excluding ring-fenced subsidiaries) over the most recent four quarterly period consolidated interest expense (excluding

ring-fenced subsidiaries).

3 Interest expense does not include other financing charges, amortization of long-term debt and mark-to-market currency

Interest Expense3 (₱ Million) and

Interest Coverage Ratio2 (x)

62,980

96,217

150,590

125,201

182,692

2.97 2.80

1.44

1.92

1.07

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2017 2018 2019 6M 2019 6M 2020

Consolidated Total Equity Net Debt to Consolidated Total Equity

2,222 6,151 7,574 4,156 3,644

11,842

17,090

18,921

9,790 9,036

2.88

2.52 2.35 2.38

2.74

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2017 2018 2019 6M 2019 6M 2020

Net of Ring-fenced and IPPA Gross Interest Coverage Ratio


Financial HighlightsCapital Expenditures

19,12317,299

33,833

14,862

8,912

6,050

10,11711,426

0

10,000

20,000

30,000

2013 2014 2015 2016 2017 2018 2019 6M 2020

Annual Capexin ₱ Million

completed Davao and Limay Greenfield Power Plant Projects on-going Masinloc Power Plant Unit 3, Mariveles

Power Plant and Battery Energy Storage Systems

Projects

Major Expansion Projects

0

0

12,326

10,637

43,350

25,012

57,810

41,380

Ilijan LNG (850MW)

Masinloc Unit 4 (350MW)

Mariveles (600MW)

BESS (1000MWh)

Capex For Disbursement

in ₱ MillionCapex Guide

Battery: US$1.0 Million / MWh

Coal: US$2.2 Million / MW

(except for Masinloc Unit 4 at US$1.4 Million / MW)

LNG: US$1.1 - 1.3 Million / MW

30% will be funded by equity

and 70% to be funded by

project finance debt

Fully funded by US$500M and

US$600M in perpetual

securities issued last Nov 2019

and Jan 2020, respectively

Thank you

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