2014 Financial Statement

EDC 2014 Performance Report
The stock grants are given in lieu of cash incentives and bonuses. The grant of shares under the
ESGP does not require an exercise price to be paid by the awardees. The granted shares will vest
over a three-year period as follows: 20% after the first anniversary of the grant date; 30% after the
second anniversary of the grant date; and the remaining 50% after the third anniversary of the
grant date. Awardees that resign or are terminated will lose any right to unvested shares. There
are no cash settlement alternatives.
The ESGP covers officers and employees of the Parent Company or other individuals whom the
Committee may decide to include. The Committee shall maintain the sole discretion over the
selection of individuals to whom awards may be granted for any given calendar year.
Stock awards granted by the Committee to officers and employees of EDC are shown below:
Fair Value
Grant Date
Number of
Shares Granted
Per Share
at Grant Date Vested Unvested
December 1, 2009 7,000,000 ₱4.20 7,000,000 –
June 1, 2010 2,625,000 4.70 2,625,000 –
June 1, 2011 2,625,000 6.75 2,625,500 –
June 1, 2012 2,625,000 5.84 525,000 1.312,500
June 1, 2013 2,250,000 6.10 450,000 1,800,000
Total compensation expense recognized in 2014, 2013 and 2012 amounted to ₱7.9 million,
₱11.9 million and ₱24.7 million, respectively. A corresponding increase in the “Common shares
in employee trust account” amounting to ₱4.8 million, ₱6.9 million and ₱13.8 million and increase
in the “Additional paid-in capital” account amounting to ₱3.0 million, ₱4.9 million and
₱10.9 million were recorded for the years ended December 31, 2014, 2013 and 2012, respectively
(see Note 19).
31.
Financial Risk Management Objectives and Policies
The Company’s financial instruments consist mainly of cash and cash equivalents, AFS
investments and long-term debts. The main purpose of these financial instruments is to finance
the Company’s operations and accordingly manage its exposure to financial risks. The Company
has various other financial assets and liabilities such as trade receivables, trade payables and other
liabilities, which arise directly from operations.
Financial Risk Management Policy
The main financial risks arising from the Company’s financial instruments are credit risk, foreign
currency risk, interest rate risk, equity price risk and liquidity risk. The Company’s policies for
managing the aforementioned risks are summarized hereinafter below.
Credit Risk
The Company’s geothermal and power generation business trades with only one major customer,
NPC, a government-owned-and-controlled corporation. Any failure on the part of NPC to pay its
obligations to the Company would significantly affect the Company’s business operations. As a
practice, the Company monitors closely its collection from NPC and charges interest on delayed
payments following the provision of its respective SSAs and PPAs. Receivable balances are
monitored on an ongoing basis to ensure that the Company’s exposure to bad debts is not
significant. The maximum exposure of trade receivable is equal to its carrying amount.
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