EDC PR 2016 (FS section)

Financial Statement
During the relocation and construction of the Nasulo Power Plant, the Company incurred general
borrowings used to fund the project. In 2014, the borrowing costs capitalized in connection with
the project amounted to ₱14.4 million with capitalization rate of 6.3% per annum.
The Company performed testing run from April 2014 to July 20, 2014. The total revenue
generated from testing amounted to ₱343.5 million. Out of this amount, ₱99.8 million was offset
against the costs of testing whether the assets are functioning properly.
On July 21, 2014, the Parent Company declared that the Nasulo Power Plant, after achieving a
capacity of 49.4 MW, was already complete and in the condition necessary for it to operate as
intended by management. Consequently, the total cost of the newly constructed assets was
reclassified from “Construction in progress” to “Power Plants” category. Upon completion of the
Nasulo Power Plant, the adjacent Nasuji Power Plant with capacity of 20 MW has been placed on
preservation mode.
In light of the completion of the Nasulo Power Plant, the Parent 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.
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 now become part of the
CGU consisting of Nasulo/Nasuji steam field and power plants. The recoverable amount of such
CGU as of July 31, 2014, the effective date of the reversal, determined by the Parent Company is
estimated to be at ₱15,673.6 million, representing the value in use computed using 8.7% pre-tax
discount rate. The amount of reversal of impairment was presented under NIGBU operating
segment since the CGU is located in Negros Island (see Note 5).
Completion of the Rehabilitation of Bac-Man Geothermal Power Plants (BMGPP)
On May 5, 2010, BGI acquired the BMGPP in an auction conducted by PSALM where BGI
submitted the highest offer price of US$28.3 million.
Located in Bacon, Sorsogon City and Manito, Albay in the Bicol region, the BMGPP package
consists of two steam field complexes. The Bac-Man I power plant has two 55-MW generating
units (Unit 1 and Unit 2), while Bac-Man II power plant has one 20-MW generating units (Unit 3).
EDC supplies the steam that fuels these power plants.
Units 1, 2 and 3 became available for use on January 28, 2014, June 3, 2014 and October 1, 2013,
respectively. Total borrowing costs capitalized to the project amounted to ₱9.5 million in 2014
from general borrowings using a capitalization rate of 6.5% per annum. The total cost reclassified
from construction in progress to power plant account amounted to ₱1,574.4 million,
₱2,178.7 million and ₱551.3 million for Units 1, 2 and 3, respectively.
In October 2014, the turbine retrofitting for Bac-Man Unit 2 was completed, increasing its
capacity to 60 MW. Similarly, on February 20, 2015, the Company completed the installation of
the brand new Toshiba steam turbine rotor unit and diaphragms for its Unit 1, increasing its
capacity to 60 MW.
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