EDC PR 2016 (FS section)

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Financial Statement In June 2015, a reassessment was made by the management which resulted to a change in the estimated useful life of the Burgos Wind Power Plant from 20 years to 25 years (see Note 12). The carrying amount of the property, plant and equipment excluding land and construction in progress amounted to ₱79,486.5 million and ₱77,981.2 million as of December 31, 2016 and 2015, respectively (see Note 12). The carrying amount of water rights and other intangible assets amounted to ₱1,471.2 million and ₱1,638.0 million as of December 31, 2016 and 2015, respectively (see Note 13). Impairment of Non-financial Assets other than Goodwill The Company assesses impairment on these non-financial assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Company considers important which could trigger an impairment review include the following: significant under-performance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets or the strategy for overall business; and significant negative industry or economic trends. The Company assesses whether there are any indicators of impairment for all non-financial assets, other than goodwill, at each financial reporting date. The Company recognizes an impairment loss whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is computed using the value in use (VIU) approach. Recoverable amount is estimated for an individual asset or, if it is not possible, for the cash-generating unit (CGU) to which the asset belongs. In the case of input VAT, where the collection of tax claims is uncertain, the Company provides and allowance for impairment of input VAT based on the assessment of management and Company’s legal counsel. The Company recorded a provision for impairment of input VAT of ₱50.6 million, ₱61.8 million and ₱53.4 million in 2016, 2015 and 2014, respectively (see Notes 15 and 22). The carrying amount of input VAT amounted to ₱4,080.7 million and ₱4,132.1 million as of December 31, 2016 and 2015, respectively (see Note 15). Loss on direct write-off of input VAT claims amounting to ₱56.8 million, ₱131.4 million and ₱234.2 million in 2016, 2015 and 2014, respectively, are included in “Miscellaneous Income (Charges)” in the consolidated statements of income (see Note 26). For property, plant and equipment and intangible assets, when VIU calculations are undertaken, management estimates the expected future cash flows from the asset or CGU and discounts such cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset to calculate the present value as of the financial reporting date. Management also makes an assessment whether previously recognized impairment loss should be reversed. Reversal of an impairment loss is recognized when there is an increase in the estimated service potential of an asset, either from use or from sale, since the date when the Company last recognized an impairment loss for that asset. 187
In 2011, EDC recognized full impairment on its Northern Negros Geothermal Power Plant (NNGP) assets amounting to ₱8,737.6 million due to steam supply limitations. To utilize the remaining facilities and fixed assets of NNGP to the extent possible, the BOD approved the transfer of selected NNGP assets to Nasulo Power Plant located in Southern Negros. In light of the completion of the Nasulo Power Plant in July 2014, the Company has determined that the impairment loss previously recognized on assets transferred to and installed in Nasulo (from NNGP) must be reversed as the service potential of those assets has now been established (see Note 12). Accordingly, reversal of impairment loss amounting to ₱2,051.9 million was recognized in 2014 representing the net book value of assets installed in Nasulo Power Plant had there been no impairment loss previously recognized on these assets. The corresponding deferred tax asset amounting to ₱205.2 million has likewise been reversed. No similar reversal was recognized in 2016 and 2015. From originally being part of the NNGP CGU, the related assets have become part of the CGU consisting of Nasulo/Nasuji steam field and power plants in 2014. The amount of reversal of impairment was presented under the Negros Island Geothermal Business Unit (NIGBU) operating segment since the CGU is located in Negros Island (see Note 5). Based on a discounted cash flow projection using 8.7% as pre-tax discount rate, the recoverable amount of the relevant CGU is estimated to be at ₱15,673.6 million as of July 31, 2014, the effective date of the reversal. The period covered by the cash flow projection is consistent with the estimated useful life of major component of the Nasulo Power Plant. The carrying amount of property, plant and equipment as of December 31, 2016 and 2015 amounted to ₱91,932.0 million and ₱88,567.7 million, respectively (see Note 12). The carrying amount of water rights as of December 31, 2016 and 2015 amounted to ₱1,430.8 million and ₱1,527.0 million, respectively (see Note 13). The carrying amount of other intangible assets as of December 31, 2016 and 2015 amounted to ₱40.4 million and ₱111.0 million, respectively (see Note 13). Recoverability of Goodwill As of December 31, 2016 and 2015, the Company’s goodwill is allocated to the following CGUs: Entity CGU 2016 2015 GCGI Palinpinon power plant complex ₱2,107.5 million ₱2,107.5 million GCGI Tongonan power plant complex 134.2 million 134.2 million FG Hydro Pantabangan- Masiway hydroelectric plants 293.3 million 293.3 million EDC HKL* Hot Rock entities 126.8 million 116.3 million ₱2,661.8 million ₱2,651.3 million *Changes in the carrying amount is due to the foreign exchange adjustment Goodwill is tested for recoverability annually as at September 30 for GCGI and December 31 for FG Hydro and Hot Rock or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired. This requires an estimation of the VIU of the CGUs to which goodwill is allocated. Estimating VIU requires the Company to estimate the expected future cash flows from the CGUs and discounts such cash flows using weighted average cost of capital to calculate the present value of those future cash flows. 188 I Energy Development Corporation Performance Report 2016
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 and 20: Years Ended December 31 2016 2015 2
Page 21 and 22: Southern Negros, Valencia, Negros O
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: Fair Value Measurement of Financial
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
Page 73 and 74: The movements of the net accumulate
Page 75 and 76: 12. Property, Plant and Equipment L
Page 77 and 78: Total borrowing costs capitalized t
Page 79 and 80: Bac-Man 3 Engineering Procurement a
Page 81 and 82: 13. Goodwill and Intangible Assets
Page 83 and 84: Carrying amount of exploration and
Page 85 and 86: 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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