AES Corporation (NYSE: AES) is a Fortune 500 company that generates and distributes electrical power. It was founded on January 28, 1981 as Applied Energy Services[3] by Roger Sant from the US Federal Energy Administration and Dennis Bakke from the Office of Management and Budget. It is headquartered in Arlington, Virginia. AES Corporation is one of the world's leading power companies, generating and distributing electric power in 31 countries and employing 27,000 people worldwide.
In 2008, AES Corporation's total revenue was 16.1 Billion, of which $9.11B came from the company's Power Generation division,and $6.99B from Utilities.[4]
In April 2010, AES Wind Generation, a wholly-owned subsidiary of AES, acquired UK-based wind developer Your Energy (YEL) and has also signed an agreement to buy a 51% stake in a wind portfolio from 3E, a Polish wind developer. This move will add more than 700MW to AES Wind Generation’s European pipeline
Holding to form a joint venture in Turkey, AES-Entek, that will develop and operate power generation projects. AES and Koç Holding will have equal interests in Entek Elektik Uretim A.S. (Entek), which includes 300 MW of natural gas facilities. AES-Entek will diversify into other energy sources - coal, hydroelectric, wind, as well as natural gas - by pursuing greenfield projects, acquisitions, and other opportunities through the Government of Turkey's plan to privatize 15 GW of generation assets. The companies will benefit from Turkey's position as an energy corridor for Europe, the Middle East and Russia by collaborating on projects throughout the region.
AES-Entek combines AES' global development and operations experience with Koç Holding's market strength and local energy sector insight. As Turkey's largest conglomerate, Koç Holding includes industrial sites, as well as mining and refinery businesses. Closing on the share purchase agreement is subject to approval by Turkish regulatory authorities and is expected to occur before the second quarter of 2011.
At a signing ceremony today in Istanbul, leaders of each company remarked on the significance of the joint venture and the potential for Turkey's power sector.
Mustafa V. Koç, Chairman of Koç Holding, said, "Today Koç Holding formed an important partnership in the field of energy with AES, one of the world's leading power companies. As we have in the past, we are forming a foreign partnership to bring expertise and capital to an extremely important sector for Turkey. This partnership demonstrates a collective trust in the Turkish economy and its people, and both companies are well capitalized to take advantage of growth opportunities."
Paul Hanrahan, President and Chief Executive Officer of AES, stated, "We value Koç Holding's extensive knowledge of the Turkish market and see enormous opportunity to develop and modernize electricity generation projects that will deliver a compelling return on investment. In so doing, we see the potential to strengthen Turkey's role as a regional leader in the power sector, building upon its geographically strategic position."
Erol Memioglu, President, Koç Energy Group, stated, "Koç Holding has been operating in all branches of Turkish energy: oil refining and distribution; gas distribution; electricity production; as well as coal mining. We are optimistic about building on our successes in the energy sector through our partnership with AES, and believe we can diversify risk and apply our resources more effectively if we combine our experience with our partner's international power expertise. With a shared vision and a complementary corporate culture, we believe AES-Entek is well positioned to meet our goal to become one of the five largest Independent Power Producers in Turkey by 2015."
AES entered Turkey as an investor in the power sector in 2007, consistent with the Company's strategy to pursue opportunities in markets with increasing demand for electricity. Turkey is one of the world's fastest growing economies with its annual Gross Domestic Product projected to more than five percent, according to Eurostat. Turkey's operating capacity of 46 GW of coal, geothermal, hydroelectric, natural gas and wind facilities is expected to increase 30 percent by 2015.
The Turkish electricity market uses three systems to determine prices: balancing mechanism; bilateral contracts; and regulated tariffs. Entek's facilities sell power to the spot market and through bilateral contracts, and can benefit from peak period operations. AES-Entek will be one of the ten largest Independent Power Producers in Turkey with assets including a 142 MW combined cycle natural gas facility in the Bursa Demirtas Industrialized Zone, and a 157 MW combined cycle natural gas facility in Kocaeli.
AES' subsidiary, AES Mont Blanc Holdings B.V., (a Netherlands company) will acquire a 49.6 percent interest from Aygaz, which is controlled by Koç Group. Upon closing the shareholders of AES-Entek Elektrik Üretim A.S. (AES-Entek) will consist of the AES (49.62 percent), the Koç Group (49.62 percent), and certain minority shareholders (0.76 percent).
About Koç Holding
The Koç Group is Turkey's leading conglomerate operating in a variety of sectors including energy, consumer durables, automotive, finance, IT and telecommunications and tourism. The Group has been a driving force of the Turkish economy with total sales that make up about seven percent of Turkey's GDP and exports that comprise eight percent of Turkey's total exports. As of 2009, Koç Holding is the only Turkish company in the Fortune Global 500 list of companies, in 273rd place. In addition to its leading market positions in low-penetrated consumer driven sectors, its extensive distribution network, which is yet the largest in Turkey with over 12,000 points of reach and the largest customer database with strong
CRM capabilities, the Group is also active abroad with about 21 percent of revenues stemming from international operations and exports. To learn more, please visit www.koc.com.tr.
About The AES Corporation
The AES Corporation (NYSE: AES) is a Fortune 500 global power company with generation and distribution businesses. Through our diverse portfolio of thermal and renewable fuel sources, we provide affordable and sustainable energy to 29 countries. Our workforce of 27,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2009 revenues were $14 billion and we own and manage $40 billion in total assets. To learn more, please visit www.aes.com.
Safe Harbor Disclosure
This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES' current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.
Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES' filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A "Risk Factors" in AES' 2009 Annual Report on Form 10-K. Readers are encouraged to read AES' filings to learn more about the risk factors associated with AES' business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
BUSINESS REQUIREMENTS | AES Corporation retained Headstrong to assist it with a number of high priority projects as part of a corporate mandate to help the firm reach new levels of success in its global marketplace. These crucial strategic initiatives included a Cost Cutting Initiative (CCI), Key Performance Indicators (KPI), Corporate Survey Application and Web Application Enhancements, including improvements to the firm's core database and security structure.
HEADSTRONG SOLUTION | Headstrong was selected as the consultant of choice to help AES meet its strategic goals for a number of reasons. Because of the firms' long-standing relationship, trust has evolved and the teams have learned to work efficiently together - even remotely. Additionally, the rapid development work, strong management expertise and exceptional communication skills have helped to limit costs while providing the quality and speed of development AES desires.
In total, Headstrong custom-developed six internal corporate Web applications for AES Corporation, including the Cost Cutting Initiative (CCI) Reporting System, the KPI Benchmarking System, the Corporate Survey Application, the Financial Management System (FMS), the Grant Management System and an HR Information System (HRIS). Included in the development was a corporate database structure, core to supporting the corporate IT group's requirements, and a Web service providing user authentication, tied to Microsoft Active Directory, to effectively manage information security and access. In addition, for improved executive decision making, Headstrong created a performance management Intranet site that ties much of the data from the various Web applications into one easy-to-view executive dashboard. Headstrong also implemented single server authentication to incorporate security and access rights for all internal AES Web applications.
COST CUTTING INITIATIVE (CCI) REPORTING SYSTEM PROJECT OVERVIEW As part of an ongoing corporate initiative to boost near-term cash flow and earnings, AES business units wanted to undertake well-defined business actions to identify cost cutting measures through cost savings and performance enhancements.
Prior to the commencement of this project, critical information was ineffectively accumulated by way of e-mail and spreadsheets, greatly hampering both the data collection and consolidation processes. To overcome the challenges brought about by this semi-automated process, Headstrong was engaged to deliver an improved, more technically adept solution. Headstrong created the Cost Cutting Initiative (CCI) application, a database-driven Intranet system that maximizes the efficiency of the collection process while enhancing the integrity of the data being collected. This browser-based application created a secure information access portal, which is transparent to the business user and of utmost importance to AES. CCI is available to all users within the organization who have a standard browser and access to the corporate Intranet.
KEY PERFORMANCE INDICATOR (KPI) BENCHMARKING SYSTEM PROJECT OVERVIEW To support AES Corporation's desire to achieve industry excellence, the firm's management team identified Key Performance Indicators (KPIs) to be used to strategically assess the performance of its key business units and benchmark them against both its competitors and the industry as a whole. Headstrong was contracted to develop an application that would accurately gather metrics from AES business units around the world and calculate various KPIs. To provide an application that would be flexible and robust, Headstrong utilized the Microsoft® .NET framework and the common functionalities available from the CCI system, including user authentication, database connectivity, and more.
The KPI system is designed to be a highly customizable application such that it allows users to incorporate and integrate KPIs in real-time, as they become available. Each business unit, depending on its business type, mission and deliverables, will provide different metrics and require its own KPI calculation method.
SURVEY APPLICATION PROJECT OVERVIEW To compliment AES' focus on sustaining business growth and maintaining a premier global industry position, AES management realized the need to gather timely feedback from its employees around the world on various corporate initiatives.
Headstrong was retained to develop a customizable, Web-based Survey Application that provides a highly intuitive and flexible means for managing and entering surveys, building questions and linking answers. It also collects user responses and stores them in a data repository where they can be accessed to generate customized reports. And because it's an Intranet application, the survey can easily be accessed by AES Corporation business units around the world.
BENEFIT TO CUSTOMER | The solutions developed have helped AES Corporation reach new levels of business effectiveness and success, positioning it well to meet its strategic goals. The CCI application helps AES business units to track each initiative to its estimated and actual end result. The system maximizes the efficiency of the collection process and enhances the integrity of the data being collected.
Complimenting the CCI application, the Key Performance Indicators (KPI) application provides valuable information to better run the business, highlights best practices and identifies areas for continuous improvement that are enhancing operational efficiencies and customer service, reducing costs, increasing revenues and improving environmental and safety standards. Together with other application features, this complex process is being handled by the system with defined accuracy, rendering it an indispensable tool for AES.
The advantages of the Web-based corporate survey application are evident. Due to the availability of timely information, the management team's ability to provide informed feedback for future corporate initiatives is greatly improved. Additionally, employee morale, buy-in and productivity has increased due to employees' ability to provide direct input and feedback to the management team about corporate initiatives that affect them.
In addition to the business value each application has delivered to the AES user community, AES now also has a corporate database infrastructure in place to effectively support the corporate IT group's long-term future requirements, including future Intranet development efforts.
In 2008, AES Corporation's total revenue was 16.1 Billion, of which $9.11B came from the company's Power Generation division,and $6.99B from Utilities.[4]
In April 2010, AES Wind Generation, a wholly-owned subsidiary of AES, acquired UK-based wind developer Your Energy (YEL) and has also signed an agreement to buy a 51% stake in a wind portfolio from 3E, a Polish wind developer. This move will add more than 700MW to AES Wind Generation’s European pipeline
Holding to form a joint venture in Turkey, AES-Entek, that will develop and operate power generation projects. AES and Koç Holding will have equal interests in Entek Elektik Uretim A.S. (Entek), which includes 300 MW of natural gas facilities. AES-Entek will diversify into other energy sources - coal, hydroelectric, wind, as well as natural gas - by pursuing greenfield projects, acquisitions, and other opportunities through the Government of Turkey's plan to privatize 15 GW of generation assets. The companies will benefit from Turkey's position as an energy corridor for Europe, the Middle East and Russia by collaborating on projects throughout the region.
AES-Entek combines AES' global development and operations experience with Koç Holding's market strength and local energy sector insight. As Turkey's largest conglomerate, Koç Holding includes industrial sites, as well as mining and refinery businesses. Closing on the share purchase agreement is subject to approval by Turkish regulatory authorities and is expected to occur before the second quarter of 2011.
At a signing ceremony today in Istanbul, leaders of each company remarked on the significance of the joint venture and the potential for Turkey's power sector.
Mustafa V. Koç, Chairman of Koç Holding, said, "Today Koç Holding formed an important partnership in the field of energy with AES, one of the world's leading power companies. As we have in the past, we are forming a foreign partnership to bring expertise and capital to an extremely important sector for Turkey. This partnership demonstrates a collective trust in the Turkish economy and its people, and both companies are well capitalized to take advantage of growth opportunities."
Paul Hanrahan, President and Chief Executive Officer of AES, stated, "We value Koç Holding's extensive knowledge of the Turkish market and see enormous opportunity to develop and modernize electricity generation projects that will deliver a compelling return on investment. In so doing, we see the potential to strengthen Turkey's role as a regional leader in the power sector, building upon its geographically strategic position."
Erol Memioglu, President, Koç Energy Group, stated, "Koç Holding has been operating in all branches of Turkish energy: oil refining and distribution; gas distribution; electricity production; as well as coal mining. We are optimistic about building on our successes in the energy sector through our partnership with AES, and believe we can diversify risk and apply our resources more effectively if we combine our experience with our partner's international power expertise. With a shared vision and a complementary corporate culture, we believe AES-Entek is well positioned to meet our goal to become one of the five largest Independent Power Producers in Turkey by 2015."
AES entered Turkey as an investor in the power sector in 2007, consistent with the Company's strategy to pursue opportunities in markets with increasing demand for electricity. Turkey is one of the world's fastest growing economies with its annual Gross Domestic Product projected to more than five percent, according to Eurostat. Turkey's operating capacity of 46 GW of coal, geothermal, hydroelectric, natural gas and wind facilities is expected to increase 30 percent by 2015.
The Turkish electricity market uses three systems to determine prices: balancing mechanism; bilateral contracts; and regulated tariffs. Entek's facilities sell power to the spot market and through bilateral contracts, and can benefit from peak period operations. AES-Entek will be one of the ten largest Independent Power Producers in Turkey with assets including a 142 MW combined cycle natural gas facility in the Bursa Demirtas Industrialized Zone, and a 157 MW combined cycle natural gas facility in Kocaeli.
AES' subsidiary, AES Mont Blanc Holdings B.V., (a Netherlands company) will acquire a 49.6 percent interest from Aygaz, which is controlled by Koç Group. Upon closing the shareholders of AES-Entek Elektrik Üretim A.S. (AES-Entek) will consist of the AES (49.62 percent), the Koç Group (49.62 percent), and certain minority shareholders (0.76 percent).
About Koç Holding
The Koç Group is Turkey's leading conglomerate operating in a variety of sectors including energy, consumer durables, automotive, finance, IT and telecommunications and tourism. The Group has been a driving force of the Turkish economy with total sales that make up about seven percent of Turkey's GDP and exports that comprise eight percent of Turkey's total exports. As of 2009, Koç Holding is the only Turkish company in the Fortune Global 500 list of companies, in 273rd place. In addition to its leading market positions in low-penetrated consumer driven sectors, its extensive distribution network, which is yet the largest in Turkey with over 12,000 points of reach and the largest customer database with strong
CRM capabilities, the Group is also active abroad with about 21 percent of revenues stemming from international operations and exports. To learn more, please visit www.koc.com.tr.
About The AES Corporation
The AES Corporation (NYSE: AES) is a Fortune 500 global power company with generation and distribution businesses. Through our diverse portfolio of thermal and renewable fuel sources, we provide affordable and sustainable energy to 29 countries. Our workforce of 27,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2009 revenues were $14 billion and we own and manage $40 billion in total assets. To learn more, please visit www.aes.com.
Safe Harbor Disclosure
This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES' current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.
Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES' filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A "Risk Factors" in AES' 2009 Annual Report on Form 10-K. Readers are encouraged to read AES' filings to learn more about the risk factors associated with AES' business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
BUSINESS REQUIREMENTS | AES Corporation retained Headstrong to assist it with a number of high priority projects as part of a corporate mandate to help the firm reach new levels of success in its global marketplace. These crucial strategic initiatives included a Cost Cutting Initiative (CCI), Key Performance Indicators (KPI), Corporate Survey Application and Web Application Enhancements, including improvements to the firm's core database and security structure.
HEADSTRONG SOLUTION | Headstrong was selected as the consultant of choice to help AES meet its strategic goals for a number of reasons. Because of the firms' long-standing relationship, trust has evolved and the teams have learned to work efficiently together - even remotely. Additionally, the rapid development work, strong management expertise and exceptional communication skills have helped to limit costs while providing the quality and speed of development AES desires.
In total, Headstrong custom-developed six internal corporate Web applications for AES Corporation, including the Cost Cutting Initiative (CCI) Reporting System, the KPI Benchmarking System, the Corporate Survey Application, the Financial Management System (FMS), the Grant Management System and an HR Information System (HRIS). Included in the development was a corporate database structure, core to supporting the corporate IT group's requirements, and a Web service providing user authentication, tied to Microsoft Active Directory, to effectively manage information security and access. In addition, for improved executive decision making, Headstrong created a performance management Intranet site that ties much of the data from the various Web applications into one easy-to-view executive dashboard. Headstrong also implemented single server authentication to incorporate security and access rights for all internal AES Web applications.
COST CUTTING INITIATIVE (CCI) REPORTING SYSTEM PROJECT OVERVIEW As part of an ongoing corporate initiative to boost near-term cash flow and earnings, AES business units wanted to undertake well-defined business actions to identify cost cutting measures through cost savings and performance enhancements.
Prior to the commencement of this project, critical information was ineffectively accumulated by way of e-mail and spreadsheets, greatly hampering both the data collection and consolidation processes. To overcome the challenges brought about by this semi-automated process, Headstrong was engaged to deliver an improved, more technically adept solution. Headstrong created the Cost Cutting Initiative (CCI) application, a database-driven Intranet system that maximizes the efficiency of the collection process while enhancing the integrity of the data being collected. This browser-based application created a secure information access portal, which is transparent to the business user and of utmost importance to AES. CCI is available to all users within the organization who have a standard browser and access to the corporate Intranet.
KEY PERFORMANCE INDICATOR (KPI) BENCHMARKING SYSTEM PROJECT OVERVIEW To support AES Corporation's desire to achieve industry excellence, the firm's management team identified Key Performance Indicators (KPIs) to be used to strategically assess the performance of its key business units and benchmark them against both its competitors and the industry as a whole. Headstrong was contracted to develop an application that would accurately gather metrics from AES business units around the world and calculate various KPIs. To provide an application that would be flexible and robust, Headstrong utilized the Microsoft® .NET framework and the common functionalities available from the CCI system, including user authentication, database connectivity, and more.
The KPI system is designed to be a highly customizable application such that it allows users to incorporate and integrate KPIs in real-time, as they become available. Each business unit, depending on its business type, mission and deliverables, will provide different metrics and require its own KPI calculation method.
SURVEY APPLICATION PROJECT OVERVIEW To compliment AES' focus on sustaining business growth and maintaining a premier global industry position, AES management realized the need to gather timely feedback from its employees around the world on various corporate initiatives.
Headstrong was retained to develop a customizable, Web-based Survey Application that provides a highly intuitive and flexible means for managing and entering surveys, building questions and linking answers. It also collects user responses and stores them in a data repository where they can be accessed to generate customized reports. And because it's an Intranet application, the survey can easily be accessed by AES Corporation business units around the world.
BENEFIT TO CUSTOMER | The solutions developed have helped AES Corporation reach new levels of business effectiveness and success, positioning it well to meet its strategic goals. The CCI application helps AES business units to track each initiative to its estimated and actual end result. The system maximizes the efficiency of the collection process and enhances the integrity of the data being collected.
Complimenting the CCI application, the Key Performance Indicators (KPI) application provides valuable information to better run the business, highlights best practices and identifies areas for continuous improvement that are enhancing operational efficiencies and customer service, reducing costs, increasing revenues and improving environmental and safety standards. Together with other application features, this complex process is being handled by the system with defined accuracy, rendering it an indispensable tool for AES.
The advantages of the Web-based corporate survey application are evident. Due to the availability of timely information, the management team's ability to provide informed feedback for future corporate initiatives is greatly improved. Additionally, employee morale, buy-in and productivity has increased due to employees' ability to provide direct input and feedback to the management team about corporate initiatives that affect them.
In addition to the business value each application has delivered to the AES user community, AES now also has a corporate database infrastructure in place to effectively support the corporate IT group's long-term future requirements, including future Intranet development efforts.