EDC PR 2016 (FS section)

The following tables demonstrate the sensitivity to a reasonably possible change in interest rates,
with all other variables held constant, of the Company’s income before income tax and equity as
of December 31, 2016 and 2015. The impact on the Company’s equity is due to changes in the
fair value of AFS investments, cross currency swaps and interest rate swaps designated as cash
flow hedges.
2016
Effect on Equity
Increase/Decrease Effect on Income Change in Fair Value of Fair value adjustments
in Basis Points Before Income Tax AFS Investments on hedging transactions
+100 ₱219,329,151 (₱12,438,535) ₱541,211,391
-100 (219,329,151) 9,689,178 (541,211,391)
2015
Effect on Equity
Increase/Decrease
in Basis Points
Effect on Income
Before Income Tax
Change in Fair Value of
AFS Investments
Fair value adjustments
on hedging transactions
+100 ₱227,015,099 (₱15,956,477) ₱513,389,618
-100 (227,015,099) 7,421,723 (513,389,618)
The effect of changes in interest rates in equity pertains to the fair valuation of AFS investments
and derivatives designated as cash flow hedges, and is exclusive of the impact of the changes
affecting the Company’s profit or loss.
Liquidity Risk
The Company’s objective is to maintain a balance between continuity of funding and sourcing
flexibility through the use of available financial instruments. The Company manages its liquidity
profile to meet its working and capital expenditure requirements and service debt obligations. As
part of the liquidity risk management program, the Company regularly evaluates and considers the
maturity of both its financial investments and financial assets (i.e. trade receivables, other financial
assets) and resorts to short-term borrowings whenever its available cash or matured placements
is not enough to meet its daily working capital requirements. To ensure immediate availability of
short-term borrowings, the Company maintains credit lines with banks on a continuing basis.
Liquidity risk arises primarily when the Company has difficulty collecting its receivables from its
major customers, NPC and TransCo. Other instances that contribute to its exposure to liquidity
risk are when the Company finances long-term projects with internal cash generation and when
there is credit crunch especially at times when the company has temporary funding gaps.
The tables below show the maturity profile of the Company’s financial assets used for liquidity
purposes based on contractual undiscounted cash flows as of December 31, 2016 and 2015.
On Demand
Less than 3
Months
3 to
6 Months
2016
>6 to
12 Months
(In Thousand Pesos)
>1 to
5 Years
More than
5 Years Total
Loans and receivables -
Cash and cash equivalents ₱1,086,991 ₱9,512,840 ₱– ₱– ₱– ₱– ₱10,599,831
Financial Asset at FVPL 1,018,529 – – – – – 1,018,529
AFS investments -
Debt investments 127,540 – – – – – 127,540
₱2,233,060 ₱9,512,840 ₱– ₱– ₱– ₱– ₱11,745,900
272
I Energy Development Corporation Performance Report 2016