2014 Financial Statement

EDC 2014 Performance Report
These non-financial assets (property, plant and equipment, intangible assets and input VAT) are
tested for impairment when there are indicators that the carrying amounts may not be recoverable.
Where the collection of tax claims is uncertain based on the assessment of management and
Company’s legal counsel, the Company provides an allowance for impairment of input VAT.
The Company also recorded a provision for impairment of input VAT of ₱53.4 million,
₱36.2 million and ₱196.1 million in 2014, 2013 and 2012, respectively (see Notes 15 and 22).
For property, plant and equipment and intangible assets, when value-in-use calculations are
undertaken, management estimates the expected future cash flows from the asset or cashgenerating
unit (CGU) and discounts such cash flows using the sensitivity analysis of key
assumptions to calculate the present value as of the financial reporting date.
Management also makes an assessment whether previously recognized impairement 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.
In 2011, EDC recognized full impairmenton its Northern Negros Geothermal Power Plant
(NNGP) assets amounting to ₱8.7 billion due to steam supply limitations. Subsequently, selected
NNGP assets were transferred to and installed in 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 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.
From originally being part of the NNGP cash-generating unit, the related assets have now become
part of the cash-generating unit consisting of Nasulo/Nasuji steam field and power plants. The
amount of reversal of impairment was presented under NIGBU operating segment since the cashgenerating
unit is located in Negros Island (see Note 6).Based on a discounted cash flow
projection using 8.7% pre-tax discount rate, the recoverable amount of the relevant cashgenerating
unit is estimated to be at ₱15,673.6 million. 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, 2014 and 2013
amounted to ₱83,073.5 million and ₱66,240.0 million, respectively (see Note 12). The carrying
amount of water rights as of December 31, 2014 and 2013 amounted to ₱1,623.2 million and
₱1,719.4 million, respectively (see Note 13). The carrying amount of input VAT as of
December 31, 2014 and 2013 amounted to ₱4,231.6 million and ₱3,779.4 million, respectively
(see Note 15).
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