EDC PR 2016 (FS section)

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Financial Statement ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Corporate Information and Authorization for Issuance of the Consolidated Financial Statements General Energy Development Corporation (the “Parent Company” or “EDC”) was incorporated in the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) on March 5, 1976. Beginning December 13, 2006, the common shares of EDC were listed and traded in the Philippine Stock Exchange (PSE). The Parent Company and its subsidiaries (collectively referred to as the “Company”) are primarily engaged in the business of exploring, developing, and operating geothermal energy, and other indigenous renewable energy projects in the Philippines. Red Vulcan Holdings Corporation (Red Vulcan) is the parent company of EDC, while Lopez, Inc. is the ultimate parent company. Red Vulcan and Lopez, Inc. are both incorporated in the Philippines. Geothermal and Other Renewable Energy Projects EDC’s geothermal power projects consist of two principal activities: (i) the production of geothermal steam for use at EDC’s and its subsidiaries’ geothermal power plants, and (ii) the generation and sale of electricity through those geothermal power plants pursuant to “take-or-pay and take-and-pay offtake arrangements”. EDC’s steam and electricity sales are supported by medium-term to long-term offtake agreements in various forms. EDC’s steam sales are backed by long-term offtake agreements with its wholly owned subsidiaries: (i) Geothermal Resource Sales Contracts (GRSCs) with Green Core Geothermal Inc. (GCGI); and (ii) a Steam Sales Agreement (SSA) with National Power Corporation. EDC has three 25-year Power Purchase Agreements (PPAs) with National Power Corporation (NPC) covering EDC’s Unified Leyte and Mindanao Geothermal Power Projects (Mindanao I and Mindanao II). The PPAs for Unified Leyte and Mindanao I are scheduled to expire in 2022, while the PPA for Mindanao II will expire in 2024 (see Notes 3 and 34). The Parent Company’s subsidiaries, namely GCGI, BGI, First Gen Hydro Power Corporation (FG Hydro) and Unified Leyte Geothermal Inc. (ULGEI), hold offtake agreements in the form of Transition Supply Contracts (TSCs), Power Supply Contracts (PSCs) and Power Supply Agreements (PSAs) with various customers, particularly electric cooperatives (see Notes 35, 36, 38 and 41). Also, FG Hydro sells electricity through ancillary service to the National Grid Corporation of the Philippines (NGCP) under the Ancillary Services Procurement Agreement (ASPA). Generated electricity in excess of contracted levels is sold to the WESM. EDC holds service contracts with the Department of Energy (DOE). It has fifteen (15) geothermal contract areas, each granting EDC exclusive rights to explore, develop, and utilize the corresponding resources in the relevant contract area. EDC conducts commercial operations in the following four of its fifteen (15) geothermal contract areas: Tongonan, Kananga, Leyte – EDC operates geothermal steamfield projects in Leyte, which deliver steam to the Tongonan geothermal power plant, owned by EDC’s subsidiary GCGI, and the EDC-owned Unified Leyte geothermal power plants. 102-45 171
Southern Negros, Valencia, Negros Oriental - EDC operates two geothermal steamfield projects in Southern Negros, which deliver steam to the two (2) GCGI-owned Palinpinon geothermal power plants and EDC-owned Nasulo geothermal power plant. Bacon-Manito, Albay and Sorsogon - EDC operates two (2) geothermal steamfield projects, which deliver steam to two geothermal power plants in Albay and Sorsogon, owned by EDC’s subsidiary BGI. Mt. Apo, Kidapawan, Cotabato - EDC operates one (1) geothermal steamfield project, which delivers steam to two EDC-owned geothermal power plants on Mt. Apo. The Company also operates hydroelectric power plant through FG Hydro, a 60%-owned subsidiary of EDC. FG Hydro generates revenue from the sale of electricity generated by its 132-Megawatt (MW) Pantabangan-Masiway hydroelectric plants (PAHEP/MAHEP) located in Nueva Ecija. In November 2014, EBWPC, a wholly owned subsidiary of EDC, started to generate electricity from its 150-MW Burgos Wind Energy Project located in Ilocos Norte, which was sold to the WESM until April 2015. The Energy Regulatory Commission (ERC) granted on April 13, 2015 the Feed-In-Tariff (FIT) Certificate of Compliance (FIT COC) for the Burgos Wind Project - Phase I and II, which specifies that the project is entitled to the FIT rate of ₱8.53 per kilowatt-hour (kWh), subject to adjustments as may be approved by the ERC, from November 11, 2014 to November 10, 2034. All electricity generated after the receipt of FIT COC were sold to the National Transmission Corporation (TransCo). EDC also operates the 6.82-MW Burgos Solar Project (Phases 1 and 2) located in Burgos, Ilocos Norte. The two-phased Burgos Solar Project achieved commercial operations on March 5, 2015 for Phase 1 and on January 19, 2016 for Phase 2. On April 17, 2015, EDC received the FIT COC for its Burgos Solar Project - Phase 1, which was granted by the ERC on April 6, 2015. The FIT COC specifies that the project, having a total capacity of 4.16 MW is entitled to the FIT rate of ₱9.68 per kWh, subject to adjustments as may be approved by the ERC, from March 5, 2015 to March 4, 2035. On March 1, 2016, the ERC issued to EDC the FIT COC for the Burgos Solar Project - Phase 2. The COC specifies that the project, having a total capacity of 2.66 MW is entitled to the FIT rate of ₱8.69 per kWh, subject to adjustments as may be approved by the ERC, from January 19, 2016 to January 18, 2036. Subsidiaries The Parent Company and its subsidiaries were separately incorporated and registered with the Philippine SEC, except for its foreign subsidiaries. Below are the Parent Company’s ownership interests in its subsidiaries: Percentage of Ownership December 31, 2016 December 31, 2015 Direct Indirect Direct Indirect EDC Drillco Corporation (EDC Drillco) 100.00 – 100.00 – EDC Geothermal Corp. (EGC)*** 100.00 – 100.00 – Green Core Geothermal Inc. (GCGI) – 100.00 – 100.00 Bac-Man Geothermal Inc. (BGI) – 100.00 – 100.00 Unified Leyte Geothermal Energy Inc. (ULGEI) – 100.00 – 100.00 Southern Negros Geothermal, Inc. (SNGI)** – 100.00 – 100.00 Bac-Man Energy Development Corporation (BEDC)** – 100.00 – 100.00 (Forward) 172 I Energy Development Corporation Performance Report 2016 102-45
Page 1 and 2: 2016 Audited Consolidated Financial
Page 3 and 4: Compliance • We have monitored th
Page 5 and 6: 156 I Energy Development Corporatio
Page 7 and 8: We have fulfilled the responsibilit
Page 9 and 10: Those charged with governance are r
Page 11 and 12: ENERGY DEVELOPMENT CORPORATION (A S
Page 17 and 18: Preferred Stock (Note 19) Common St
Page 19: Years Ended December 31 2016 2015 2
Page 23 and 24: EDC Drillco EDC Drillco is a compan
Page 25 and 26: Geotermica Chile SPA also incorpora
Page 27 and 28: Authorization for Issuance of the C
Page 29 and 30: These amendments are applied prospe
Page 31 and 32: Applicability of IFRIC 12, Service
Page 33 and 34: In August 2013, EDC Geotermica SpA
Page 35 and 36: Fair Value Measurement of Financial
Page 37 and 38: In 2011, EDC recognized full impair
Page 39 and 40: The factors that the Company consid
Page 41 and 42: Recognition of Deferred Income Tax
Page 43 and 44: Current versus Non-current Classifi
Page 45 and 46: In 2015, the functional currency of
Page 47 and 48: Construction in progress represents
Page 49 and 50: would have been determined, net of
Page 51 and 52: Classified under loans and receivab
Page 53 and 54: Derivative financial instruments ar
Page 55 and 56: the allowance account. Any subseque
Page 57 and 58: maturity or expected disposal date
Page 59 and 60: has expired, as well as the Parent
Page 61 and 62: Proceeds from Insurance Claims Proc
Page 63 and 64: Future Changes in Accounting Polici
Page 65 and 66: The Company is currently assessing
Page 67 and 68: oader review of the research projec
Page 69 and 70: LGBU NIGBU BGBU MAGBU Pantabangan/
Page 71 and 72:
7. Trade and Other Receivables 2016
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The movements of the net accumulate
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12. Property, Plant and Equipment L
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Total borrowing costs capitalized t
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Bac-Man 3 Engineering Procurement a
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13. Goodwill and Intangible Assets
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Carrying amount of exploration and
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2015 Long term receivables Input VA
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The long-term debts are presented n
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The Parent Company capitalized in i
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₱8.5 billion GCGI Term Loan On Ma
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19. Equity Capital Stock As require
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On March 6, 2015, the BOD approved
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US$14.0 million thereafter up to 20
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Transactions for the years ended De
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Remuneration of Key Management Pers
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Net retirement and other post-emplo
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The following tables summarize the
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The Company expects to contribute
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Beginning of Year Charged to Income
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f. g. h. i. j. k. On June 29, 2011,
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Stock awards granted by the Committ
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Foreign Currency Risk Foreign curre
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US$ Japanese yen (JP¥) Sweden kron
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2015 Foreign Currency Appreciates (
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The following tables demonstrate th
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Financial Assets and Financial Liab
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The Company classifies its financia
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The table below shows the derivativ
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Pertinent details of the IRS are as
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The Company monitors capital using
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Legal Claims The Company is conting
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EDC also holds geothermal resource
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As of December 31, 2016, the Compan
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As of December 31, 2016, the Compan
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Ancillary Services Procurement Agre
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41. ULGEI Power Supply Agreements A
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EDC PR 2016 (FS section)

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