2009 Annual Report

2009 ANNUAL REPORT 1 3 Financial Highlights 4 Message to Shareholders 7 Focused 9 Management’s Discussion of Operations 18 Corporate Social Responsibility 20 Corporate Governance 21 Board of Directors 22 Officers 26 Corporate Information 27 Financial Section Our Cover In carrying out its mission of being the world’s partner in construction, Team EEI is FOCUSED and continues to capitalize on its strengths in providing value to its clients. As we approach our 80th Anniversary, we will remain FOCUSED and will gear ourselves up with the skills and expertise to conquer any project that can be dreamt. We will fix our eyes on our vision and achieve it by remaining faithful to our values. Being FOCUSED is what will bring us closer to our target, to a stronger and globally- competitive EEI. 2 2009 ANNUAL REPORT FINANCIAL HIGHLIGHTS EEI Corporation and Subsidiaries In Million Pesos, except financial ratios and per share data Net Income Revenues Total Assets (In Million Pesos) (In Billion Pesos) (In Billion Pesos) 10 8 600 8 6 6 400 4 4 2 200 2 1 0 0 0 2006 2007 2008 2009 2006 2007 2008 2009 2006 2007 2008 2009 2009 2008 For the Year Revenues 6,267 9,190 EBITDA 1,012 1,119 Net Income 563 506 Earnings per Share 0.544 0.489 At Year End Total Assets 8,177 7,839 Cash and Cash Equivalents 886 1,179 Bank Loans 1,497 1,811 Stockholders’ Equity 3,256 2,763 Financial Ratios Current Ratio 1.30:1.00 1.24:1.00 Debt-to-Equity Ratio 1.51:1.00 1.84:1.00 Book Value per Share 3.14 2.67 2009 ANNUAL REPORT 3 MESSAGE TO SHAREHOLDERS We Kept Our Focus ver the last few years, we have been enhancing our hiring, training and manpower development programs, improving our business systems and operation processes, and strengthening our relationships with our customers. O Continuous improvement has always been our goal and doing the right things in the right way is what we constantly aspire. These actions have boosted our performance during the last year and have improved our competitive position. The year that passed was another fruitful year for EEI. The strategies that we drew up and executed have been working well and proved to be effective even against a backdrop of an economy in a worldwide recession. With a net income of P563.2 million, 11% higher than the previous year, 2009 was the best year yet for EEI. EEI was recognized by Asiamoney as the Philippines’ best managed company in the small capital category in Asia for 2009. The publication cited EEI’s proactive stand and aggressive pursuit of projects despite the financial crisis resulting in the more than 200% increase in its share price compared to the Philippine Stock Exchange index benchmark of 57%. Recently, EEI was also recognized by Corporate Governance Asia – the region’s most authoritative publication on Corporate Governance – for its practices and commitment to high standards of corporate governance and corporate social responsibility. As a testament to our core value of Safety, Al Rushaid Construction Company Ltd., EEI’s joint venture company in the Kingdom of Saudi Arabia, completed the Sharq Project with 42 million safe manhours without lost time incident from the start of the project until its completion in October, 2009. We are honored by the recognition and awards we have received, though our motivations are not the awards but the desire to serve our clients and other stakeholders in the best way we can. As always, we owe our success to our customers, and more importantly, to our dedicated team of employees. 4 2009 ANNUAL REPORT Going Where the Work Is At the same time, we will develop the talent and additional skills that will make the organization Since the 1970s, EEI has been bringing Filipino more robust and flexible, to increase its capability expertise overseas. When the local construction of addressing a wider range of customer needs. industry contracted, EEI aggressively expanded its overseas operations to make up for the In 2007, the Company began a modernization weakness of the domestic market. This road program of equipment and machinery to build we took generated remarkable results for the production capacity in response to the increasing Company. number of projects and in anticipation of higher demand. This modernization program, which The Middle East market still remains strong and involves significant capital expenditures, includes EEI will continue to capitalize on its established the modernization of the equipment and software presence in the region as a preferred contractor used in its Steel Fabrication Shop as well as the for heavy industrial projects. EEI will continue purchase and upgrading of mobile and stationary to leverage on its strengths and accumulated lifting equipment. This program will continue for experience in the petrochemical, oil and gas, the next few years as the Company works towards power, and mining sectors as well as on its being more competitive in the rapidly growing other core competencies of building, module international market for structural and modular steel fabrication and horizontal construction to gear-up fabrication. for other markets like Singapore, Guam, Papua New Guinea and Qatar where construction We are also improving our business processes. needs in these fields are expected to grow. Programs and other initiatives that have been made towards development in logistics and supply We see a resurgence in domestic construction chain management systems have led to more and our foundations are still well rooted in the efficient use of resources and quicker service local construction market. We are looking at delivery. Programs will also be introduced in the many new prospects in light and heavy industrial equipment management and maintenance scheme construction, as well as in the fabrication of to increase reliability. Alliances and partnerships engineered structures and modular assemblies. with other players in the value chain are being We will assess all opportunities and optimize developed, to improve operating efficiencies and our resources. And as long as it is consistent with competitiveness. our strategies, EEI will be there. Systems have been installed to improve risk management, safety, quality and efficiency through Thrusts of the Company management control processes and monitoring. Innovative approaches and new methodologies are We will continue to pursue heavy industrial also being developed for building and infrastructure prospects in Saudi Arabia, Qatar, Singapore, projects to speed up completion time of projects Papua New Guinea and wherever these well- which will improve our margins. funded projects are located. Management believes that the growth objectives Recruitment and training activities will continue can be achieved by gearing the organization to to be a priority, to make sure that the needed be the best consistently and making it a preferred management, supervisory and skilled workers global player in the construction industry. will be available at the time that they are needed. 2009 ANNUAL REPORT 5 All our efforts will be done with a keen eye clearly focused and consciously aware of the effects of our activities on the environment. We will always uphold freedom from harm and look at the improvement of the quality of life of our employees and their families. This is our commitment. Staying Focused We would like to thank the Board of Directors for the valuable direction and guidance that they constantly give; the employees who compose Team EEI – for the hard work, dedication and commitment to quality, safety, and advocacy of our values of integrity and service; the clients, for the trust and for the opportunities they give us to serve them; our suppliers for the partnership and support; and all shareholders, for the continued confidence that you have put in EEI. Today, our direction remains clear and we intend to continue maintaining top-level performance in the years ahead. Team EEI is focused and will keep its focus on the opportunities to grow our business and ensure our long-term profitability. RIZALINO S. NAVARRO ROBERTO JOSE L. CASTILLO Chairman of the Board President and CEO 6 2009 ANNUAL REPORT EI Corporation, after 79 years of existence, is a Laboratory to provide hands-on training in a simulated strong and robust company, ready to take on the working environment. challenges of the changing business environment E that it is in. EEI has chosen to focus its efforts on its Skills upgrading and management training programs have core businesses and this effectively defines its avenues for also been launched to advance the careers and provide growth. growth and new knowledge for the professionals, since the demand for such is expected to escalate as well. Our commitment to delivering on-time services, at world- class quality standards, and with the highest regard for Training will continue to be a priority to ensure that the health and safety in the workplace are some of things Company will be able to supply the required manpower that have made EEI a preferred contractor of global with the appropriate skills for its planned expansion. Engineering, Procurement and Construction (EPC) Companies and a contractor and engineering services FOCUS ON COMPETENCIES provider of choice for the construction of buildings, roads and bridges, and industrial plants and facilities. EEI’s experience in the construction and installation of facilities in power, petrochemical, mining, and oil and This is the EEI brand that will carry the company through gas plants has created for the Company a reputation in the next decade of growth. electro-mechanical installations, both here and abroad, and has made EEI a preferred choice of EPCs. FOCUS ON TRAINING Our teams of skilled and motivated workers readily take on the challenges put before them and constantly seek A comprehensive technical crafts training and development new techniques to assure our clients of satisfaction.

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