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SEC Number 66381
File Number _____
ENERGY DEVELOPMENT CORPORATION
(Company’s full Name)
One Corporate Centre Julia Vargas cor. Meralco Ave., Ortigas Center, Pasig City
(Company’s Address)
(632) 755-2332
(Telephone Number)
June 30, 2016
(Quarter Ending)
SEC FORM 17-Q
(Form Type)
6 6 3 8 1
SEC Registration Number
E N E R G Y D E V E L O P M E N T C O R P O R A T I O N
( A S u b s i d i a r y o f R e d V u l c a n H o l d i
n g s C o r p o r a t i o n ) A N D S U B S I D I A R I E S
(Company’s Full Name)
J u l i a V a r g a s C o r n e r M e r a l c o A v e n u
e , O r t i g a s C e n t e r , P a s i g C i t y
(Business Address: No. Street City/Town/Province)
Maribel A. Manlapaz 755-2332 (Contact Person) (Company Telephone Number)
0 6 3 0 S E C 1 7 0 8 1 0
Month Day (Form Type) Month Day (Fiscal Year) (Annual Meeting)
(Secondary License Type, If Applicable)
Article I
Dept. Requiring this Doc. Amended Articles Number/Section
Total Amount of Borrowings
678 P=42,183,548,035 P=30,068,595,726
Total No. of Stockholders Domestic Foreign
To be accomplished by SEC Personnel concerned
File Number LCU
Document ID Cashier
S T A M P S
Remarks: Please use BLACK ink for scanning purposes.
COVER SHEET
SEC Form 17Q – 2Q 2016
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-Q
QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES
REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER
1. For the quarterly period ended June 30, 2016
2. Commission identification number: 66381
3. BIR Tax Identification No. 000-169-125-000
4. Exact name of issuer as specified in its charter: ENERGY DEVELOPMENT CORPORATION
5. PHILIPPINES 6. (SEC Use Only)
Province, country or other jurisdiction of Industry Classification Code
Incorporation or organization
7. One Corporate Centre Julia Vargas cor. Meralco Ave.,
Ortigas Center, Pasig City 1605
Address of issuer's principal office Postal Code
8. (632) 755-2332
Issuer's telephone number, including area code:
9. ___________________________________
Former name, former address and former fiscal year, if changed since last report:
10. Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA
Title of each Class Number of shares outstanding
as of June 30, 2016
Common Stock, P1.00 par value 18,737,010,000
Preferred Stock, P0.01 par value 9,375,000,000
11. Are any or all of the securities listed on a Stock Exchange?
Yes [ √ ] No [ ]
If yes, state the name of such Stock Exchange and the class/es of securities listed therein:
Philippine Stock Exchange Common Stock
12. Indicate by check mark whether the registrant:
(a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or
Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation
Code of the Philippines, during the preceding twelve (12) months (or for such shorter period the
registrant was required to file such reports)
Yes [ √ ] No [ ]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ √ ] No [ ]
SEC Form 17Q – 2Q 2016
PART 1: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our unaudited consolidated financial statements for the six-month period ended
June 30, 2016 have been prepared in accordance with Philippine Accounting Standards
(PAS) 34, Interim Financial Reporting, and are filed as Annex I of this report.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (“MD & A”)
The following is a discussion and analysis of the Company’s consolidated financial
performance for the six-month period ended June 30, 2016. The prime objective of this MD&A is
to help the readers understand the dynamics of our Company’s business and the key
factors underlying our financial results. Hence, our MD&A is comprised of a discussion of
our core business and an analysis of the results of operations. This section also focuses on
key statistics from the unaudited financial statements and pertains to risks and uncertainties
relating to the geothermal and other renewable power industry in the Philippines where we
operate up to the stated reporting period. However, our MD&A should not be considered all
inclusive, as it excludes unknown risks, uncertainties and changes that may occur in the general
economic, political and environment condition after the stated reporting date.
Our MD&A should be read in conjunction with our unaudited consolidated financial
statements and the accompanying notes. All financial information is reported in Philippine
Pesos (PhP) unless otherwise stated.
Any references in this MD&A to “we”, “us”, “our”, or “Company” pertains to the Energy
Development Corporation and its subsidiaries. "EDC" pertains to the Parent Company Energy
Development Corporation.
Additional information about the Company can be found on our corporate website
www.energy.com.ph.
SEC Form 17Q – 2Q 2016
The following is a summary of the key sections of this MD&A:
OVERVIEW OF OUR BUSINESS ..............................................................................................4 Principal Products or Services .................................................................................................... 4
Distribution methods of products or services ............................................................................. 4 Competition................................................................................................................................. 5 Dependence on one or a few major customers and identity of any such major customers ........ 5 New Products or Services ........................................................................................................... 7
FINANCIAL HIGHLIGHTS ........................................................................................................7 RESULTS OF OPERATIONS .....................................................................................................8 FINANCIAL CONDITION ........................................................................................................12 CAPITAL AND LIQUIDITY RESOURCES ............................................................................16 CASH FLOW ...............................................................................................................................16
DISCUSSION ON THE SUBSIDIARIES .................................................................................17 Green Core Geothermal Inc. (GCGI) ........................................................................................ 17
Bac-Man Geothermal Inc. (BGI) .............................................................................................. 19 EDC Burgos Wind Power Corporation (EBWPC) ................................................................... 21
Unified Leyte Geothermal Energy Inc. (ULGEI) ..................................................................... 22 FG Hydro Power Corporation (FG Hydro) ............................................................................... 23
KEY PERFORMANCE INDICATORS ....................................................................................24 Commitments that will have an impact on the issuer’s liquidity ............................................25
Foreign Exchange Rate Volatility...............................................................................................25 Any event that will trigger direct or contingent financial obligation that is material to the
company, including any default or acceleration of an obligation ............................................25
CASH DIVIDENDS .....................................................................................................................25 MAJOR STOCKHOLDERS ......................................................................................................26
BOARD OF DIRECTORS ..........................................................................................................27
OFFICERS ...................................................................................................................................27
SEC Form 17Q – 2Q 2016 4
OVERVIEW OF OUR BUSINESS
Principal Products or Services
The Company operates in the four geothermal service contract areas where it is principally involved in the
generation and sale of electricity through Company-owned geothermal power plants to NPC, electric
cooperatives, privately-owned distribution utilities (DUs), large industrial clients, and National Grid
Corporation of the Philippines (NGCP), pursuant to Power Purchase Agreements (PPAs), Wholesale
Electricity Spot Market (WESM), Ancilliary Services Provider (ASP), and Feed-in Tariff (FIT),
respectively.
EDC’s subsidiaries, Green Core Geothermal, Inc. (GCGI) and Bac-Man Geothermal, Inc. (BGI), also
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.
Through its 60% equity interest in First Gen Hydro Power Corporation (FG Hydro), the Company
indirectly operates the 120 MW Pantabangan and 12 MW Masiway Hydroelectric Power Plants, located
in Pantabangan, Nueva Ecija Province, Central Luzon. The power plants supply electricity into the Luzon
grid to service the consumption of its distribution utilities clients covered by bilateral contract quantities.
The Company has evolved into being the country’s premier pure renewable energy player, possessing
interests in geothermal, hydro, wind and solar power. For geothermal energy, its expertise spans the
entire geothermal value chain, i.e., from geothermal energy exploration and development, reservoir
engineering and management, engineering design and construction, environmental management and
energy research and development. Its wind energy expertise covers project research & development and
wind data assessment. With FG Hydro, the Company has not only acquired expertise in hydropower
operation and maintenance, but also the capability to sell power on a merchant basis.
The Company also operates the Burgos Solar Project (Phases 1 and 2), which is inside the same
concession area as EDC Burgos Wind Power Corporation (EBWPC) wind farm.
Distribution methods of products or services
About 42.8% or 1,843.0 GWh of the 4,305.5 GWh sales volume from its electricity business was sold to
NPC by Unified Leyte and Mindanao 1 and 2 Power Plants. About 28.8% or 1,239.8 GWh sales volume
was sold to electric cooperatives, industrial customers and WESM in the Visayas region by the
Palinpinon, Tongonan and Nasulo geothermal plants. About 12.6% or 543.1 GWh sales volume was sold
to electric cooperatives, industrial customers and WESM in the Luzon region by the Bac-Man geothermal
power plants.
FG Hydro's electricity generation of 213.8 GWh was sold to WESM in the Luzon region and distribution
utility clients in Nueva Ecija. Ancillary services of 149.8 GWh was sold to NGCP.
Burgos wind and solar power plants generated 121.0 GWh and 5.3 GWh of electricity, respectively,
which were sold under the Feed-In-Tariff (FIT) regime.
ULGEI’s 189.7 GWh strips of energy were sold mainly to WESM.
SEC Form 17Q – 2Q 2016 5
Competition
The Government, in implementing the thrust of the EPIRA, has paved the way for a more independent
and market-driven Philippine power industry. As such, selling power and consequently the dispatch of
power plants depend on the ability to offer competitively priced power supply to the market. The
Company has multiple power projects in Luzon, Visayas, and Mindanao.
The successful privatization of NPC assets and NPC-IPP contracts in Luzon and Visayas, coupled with
the integration of the two Grids under the WESM, introduced new players and opened competition in the
power industry. Multinationals that currently operate in the Philippines and could potentially compete
against the Company include KEPCO Power Corporation, CalEnergy International Services, Inc.,
Marubeni Energy Corporation, and AES Corporation. Aboitiz group and San Miguel group are the
Company‘s two closest competitors. For wind power, its closest competitor is North Luzon Renewable
Energy Corporation, which operates the Caparispisan Wind Farm in Pagudpud, Ilocos Norte in addition
to the following: Alterenergy Philippines Holdings Corporation, Petrowind Energy, Inc., Trans-Asia
Renewable Energy Corp., and Northwind Power Development Corporation.
The Company will face competition in both the development of new power generation facilities and the
acquisition of existing power plants, as well as in the financing for these activities.
The performance of the Philippine economy and the historical high returns of power projects in the
country have attracted many potential competitors, including multinational development groups and
equipment suppliers, to explore opportunities in the development of electric power generation projects in
the Philippines. Accordingly, competition for and from new power projects may increase in line with the
long-term economic growth in the Philippines.
The Company believes that it will be able to compete because of its competitively-priced power, the
reliability of its power plants, its use of clean and renewable fuels, and its expertise and experience in
power supply contracting and trading.
Dependence on one or a few major customers and identity of any such major customers
Close to 35.3% of the Company’s electricity revenue are derived from existing long-term Power Purchase
Agreements (PPAs) with NPC.
Concessions
As of June 30, 2016, the Company holds the following service contracts.
Geothermal Resource
The Company holds five (5) Geothermal Renewable Energy Service Contracts (GRESC) with the DOE
for the following geothermal projects:
• Tongonan Geothermal Project (expiring in 2031)
• Southern Negros Geothermal Project (expiring in 2031)
• Bacon-Manito Geothermal Project (expiring in 2031)
• Mt. Apo Geothermal Project (expiring in 2042)
• Northern Negros Geothermal Project (expiring in 2044)
SEC Form 17Q – 2Q 2016 6
The Company, through its subsidiaries Green Core Geothermal Inc. and Bac-Man Geothermal Inc.
secured three (3) Geothermal Operating Contracts covering power plant operations:
• Tongonan Geothermal Power Plant (with a twenty-five (25) year contract period expiring in
2037, renewable for another twenty-five (25) years)
• Palinpinon Geothermal Power Plants (with a twenty-five (25) year contract period expiring in
2037, renewable for another twenty-five (25) years)
• Bacon-Manito Geothermal Power Plants (with a twenty-five (25) year contract period expiring in
2037, renewable for another twenty-five (25) years)
The Company also holds Geothermal Renewable Energy Service Contracts (GRESC) for the following
prospect areas:
• Ampiro Geothermal Project (with a five-year pre-development period expiring in 2017, 25-year
contract period expiring in 2037, renewable for another twenty-five (25) years)
• Mandalagan Geothermal Project (with a five-year pre-development period expiring in 2017, 25-
year contract period expiring in 2037, renewable for another twenty-five (25) years)
• Mt. Zion Geothermal Project (with a five-year pre-development period expiring in 2017, 25-year
contract period expiring in 2037, renewable for another twenty-five (25) years)
• Lakewood Geothermal Project (with a five-year pre-development period expiring in 2017, 25-
year contract period expiring in 2037, renewable for another twenty-five (25) years)
• Balingasag Geothermal Project (with a five-year pre-development period expiring in 2017, 25-
year contract period expiring in 2037, renewable for another twenty-five (25) years)
• Mt. Zion 2 Geothermal Project (with a five-year pre-development period expiring in 2020, 25-
year contract period expiring in 2040, renewable for another twenty-five (25) years)
Wind Resource
The Company holds eleven (11) Wind Energy Service Contracts (WESC) with the DOE. The WESCs
cover the following:
• 150 MW Wind Project in Burgos, Ilocos Norte; under DOE Certificate of Registration No.
WESC 2009-09-004 (25-year contract period expiring in 2034; renewable for another twenty-five
(25) years)
• 84 MW Wind Project in Pagudpud, Ilocos Norte; under DOE Certificate of Registration No.
WESC 2010-02-040 (25-year contract period expiring in 2035; renewable for another twenty-five
(25) years)
• Burgos 1 Wind Project in Burgos, Ilocos Norte; under DOE Certificate of Registration No.
WESC 2013-12-063 (25-year contract period expiring in 2038; renewable for another twenty-five
(25) years)
• Burgos 2 Wind Project in Burgos, Ilocos Norte; under DOE Certificate of Registration No.
WESC 2013-12-063 (25-year contract period expiring in 2038; renewable for another twenty-five
(25) years)
• Matnog 1 Wind Project in Matnog & Magdalena, Sorsogon; under DOE Certificate of
Registration No. WESC 2014-07-075 (25-year contract period expiring in 2039; renewable for
another twenty-five (25) years)
• Matnog 2 Wind project in Matnog, Sorsogon; under DOE Certificate of Registration No. WESC
2014-07-076 (25-year contract period expiring in 2039; renewable for another twenty-five (25)
years)
• Matnog 3 Wind Project in Matnog, Sorsogon; under DOE Certificate of Registration No. WESC
2014-07-077 (25-year contract period expiring in 2039; renewable for another twenty-five (25)
years)
SEC Form 17Q – 2Q 2016 7
• Iloilo 1 Wind Project in Batad & San Dionisio, Iloilo; under DOE Certificate of Registration No.
WESC 2014-07-078 (25-year contract period expiring in 2039; renewable for another twenty-five
(25) years)
• Negros Wind Project in Manapla & Cadiz City, Negros Occidental; under DOE Certificate of
Registration No. WESC 2014-07-080 (25-year contract period expiring in 2039; renewable for
another twenty-five (25) years)
• Burgos 3 Wind Project in Burgos and Pasuquin, Ilocos Norte; under DOE Certificate of
Registration No. WESC 2015-09-085 (25-year contract period expiring in 2040; renewable for
another twenty-five (25) years)
• Burgos 4 Wind Project in Burgos, Ilocos Norte; under DOE Certificate of Registration No.
WESC 2015-09-086 (25-year contract period expiring in 2040; renewable for another twenty-five
(25) years)
Solar Resource
The Company holds five (3) Solar Energy Service Contracts (SESC) with the DOE. The SESCs cover
areas in the following:
• 4.16 MW Phase 1 & 2.66 MW Phase 2 Burgos Solar Project, Ilocos Norte; under DOE Certificate
of Registration No. SESC 2014-07-088 (25-year contract period expiring in 2039; renewable for
another twenty-five (25) years)
• Murcia Solar Project in Murcia, Negros Occidental; under SESC No. 2015-03-113
(25-year contract period expiring in 2040; renewable for another twenty-five (25) years)
• Bogo Solar Project in Bogo, Cebu; under SESC No. 2015-06-234 (25-year contract period
expiring in 2040; renewable for another twenty-five (25) years)
• President Roxas Solar Project in President Roxas, North Cotabato; under SESC No. 2015-03-114
(25-year contract period expiring in 2040; renewable for another twenty-five (25) years)*
• Kilada-Matalam Solar Project in Matalam, North Cotabato; under SESC No. 2015-03-119
(25-year contract period expiring in 2040; renewable for another twenty-five (25) years)*
*Cancellation letter has been submitted with Department of Energy (DOE) dated March 2016, awaiting
confirmation reply
New Products or Services
On January 17, 2016, the Company has successfully commissioned its 2.66 MW Burgos Solar Project
Phase 2, which is inside the same concession area as EBWPC’s wind farm. The project is geographically
situated in Barangay Saoit, Burgos Ilocos Norte.
On March 1, 2016, the Energy Regulatory Commission (ERC) issued to EDC the Certificate of
Compliance (COC) for the Burgos Solar Power Plant Phase 2. The COC specifies that the project, having
a total capacity of 2.66 MW is entitled to the Feed-In Tariff (FIT) rate of P8.69, subject to adjustments as
may be approved by the ERC, from January 19, 2016 to January 18, 2036.
FINANCIAL HIGHLIGHTS
June 2016 vs. June 2015 Results
During the first semester of 2016, the recurring net income generated increased by 2.7% or
P133.0 million to P4,980.8 million from the P4,847.8 million posted during the same period in 2015. The
increase is mainly attributable to the P230.1 million increase in revenue coupled with P240.4 million
SEC Form 17Q – 2Q 2016 8
decrease in recurring cost of sales of electricity and general & administrative expenses offset by
P292.6 million increase in provision for current tax.
Recurring net income attributable to equity holders of the Parent Company was posted at
P4,682.3 million, up by 0.6% as compared to the P4,655.9 million for the same period in 2015.
The Company posted a net income of P5,207.0 million in the first semester of 2016, a 8.5% or
P406.5 million increase from the P4,800.5 million in the six-month period ended June 30, 2015. The
movement was driven by the P230.1 million increase in revenue coupled with the decrease of
P443.4 million in combined cost of sales of electricity and general & administrative expenses offset by
the P271.9 million increase in provision for income tax.
Net income is equivalent to 30.6% of total revenues for the period ended June 30, 2016 as compared to
the 28.6% for the same period in 2015.
Net income attributable to equity holders of the Parent Company at P4,682.3 million for the first semester
of 2016 is a P26.4 million increase from P4,655.9 million during the same period in 2015.
RESULTS OF OPERATIONS
The following table details the results of operations of the Company for the first semester of 2016 and
2015.
STATEMENTS OF INCOME
Horizontal and Vertical Analysis of Material Changes as of June 30, 2016 and 2015
HORIZONTAL ANALYSIS VERTICAL ANALYSIS
Favorable (Unfavorable) Variance
(Amounts in PHP millions) June 2016 June 2015 Amount % 2016 2015
REVENUE
Sale of electricity 17,005.5 16,775.4 230.1 1.4% 99.9% 100.0%
COSTS OF SALE OF ELECTRICITY
Costs of sale of electricity (6,384.0) (6,428.3) 44.3 -0.7% -37.5% -38.3%
GENERAL AND ADMINISTRATIVE EXPENSES (2,747.6) (3,146.7) 399.1 -12.7% -16.2% -18.8%
FINANCIAL INCOME (EXPENSE)
Interest income 135.7 150.0 (14.3) -9.5% 0.8% 0.9%
Interest expense (2,296.0) (2,377.9) 81.9 -3.4% -13.5% -14.2%
(2,160.3) (2,227.9) 67.6 -3.0% -12.7% -13.3%
OTHER INCOME (CHARGES)
Foreign exchange losses – net (16.0) (234.0) 218.0 -93.2% -0.1% -1.4%
Proceeds from insurance claims 293.0 751.1 (458.1) -61.0% 1.7% 4.5%
Miscellaneous, net
55.6 (121.8) 177.4 -145.6% 0.3% -0.7%
332.5 395.3 (62.8) -15.9% 2.0% 2.4%
INCOME BEFORE INCOME TAX 6,046.1 5,367.8 678.3 12.6% 35.6% 32.0%
BENEFIT FROM (PROVISION FOR) INCOME TAX
Current
(807.2) (514.6) (292.6) 56.9% -4.7% -3.1%
Deferred
(31.9) (52.6) 20.7 -39.4% -0.2% -0.3%
(839.1) (567.2) (271.9) 47.9% -4.9% -3.4%
NET INCOME 5,207.0 4,800.5 406.4 8.5% 30.6% 28.6%
Net income attributable to:
Equity holders of the Parent Company 4,908.2 4,608.6 299.6 6.5% 28.9% 27.5%
Non-controlling interest 298.9 191.9 107.0 55.8% 1.8% 1.1%
EBITDA 10,627.0 9,688.2 938.8 9.7% 62.5% 57.8%
RECURRING NET INCOME 4,980.8 4,847.8 133.0 2.7% 29.3% 28.9%
Recurring net income attributable to:
Equity holders of the Parent Company 4,682.3 4,655.9 26.4 0.6% 27.5% 27.8%
Non-controlling interest 298.5 191.9 106.6 55.5% 1.8% 1.1%
SEC Form 17Q – 2Q 2016 9
YTD June 30, 2016 vs. YTD June 30, 2015
Revenue
Total revenue from sale of electricity for the period ended June 30, 2016 increased by 1.4% or
P230.1 million to P17,005.5 million from P16,775.4 million during the same period in 2015. The
improvement was principally driven by the P866.1 million increase in combined revenue contribution of
FG Hydro (P328.6 million), Tongonan (P259.4 million), Palinpinon (P160.6 million), and
Burgos Wind (P117.6 million) power generating units, offset by Bac-Man’s decrease in revenue
contribution amounting to P578.3 million.
Costs of Sale of Electricity
Costs of sale of electricity decreased by 0.7% or P44.3 million to P6,384.0 million for the period ended
June 30, 2016 from P6,428.3 million during the same period in 2015 mainly due to the decline of the
following:
P355.6 million purchased services and utilities attributable to the deferment of activities;
P128.5 million parts and supplies primarily due to lower consumption of fuel and mechanical
parts for maintenance activities; and
P32.6 million business and related expenses particularly travel and training expenses.
The aforementioned were offset by P477.2 million increase of the following:
P232.9 million depreciation and amortization due to additional property, plant and equipment;
P198.5 million rental, insurance and taxes mainly owing to increase in insurance premium; and
P45.8 million personnel costs.
General and Administrative Expenses
General and administrative expenses decreased by 12.7% or P399.1 million to P2,747.6 million in the
first semester of 2016 from P3,146.7 million during the same period in 2015 mainly on assessment of the
following:
P174.9 million rental, insurance and taxes mainly; and
P164.4 million business and related expense particularly travel and training expenses.
Financial Income (Expense)
Financial expenses - net decreased by 3.0% or P67.6 million to P2,160.3 million for the period ended
June 30, 2016 from P2,228.0 million during the same period in 2015.
Interest Income
Interest income decreased by 9.5% or P14.2 million to P135.7 million for the period ended
June 30, 2016 from P149.9 million during the same period in 2015 mainly due to lower investible
funds coupled with lower weighted average interest rates.
Interest Expense
Interest expense decreased by 3.4% or P81.9 million to P2,296.0 million for the period ended
June 30, 2016 from P2,377.9 million during the same period in 2015. The favorable variance was
on account of the amortization payment of loan principal.
SEC Form 17Q – 2Q 2016 10
Other Income (Charges)
Other income for the first semester of 2016 amounted to P332.6 million, 15.9% or a P62.7 million
decrease from P395.3 million during the same period in 2015.
Foreign exchange gains (losses) - net
Foreign exchange loss - net for the six-month period ended June 30, 2016 amounted to
P16.0 million, a P218.0 million decrease from P234.0 million foreign exchange losses - net
during the same period in 2015. The variance was mainly brought about by the depreciation of
PHP against US$ for the period ended June 30, 2015, none in 2016.
The comparative foreign exchange rates were as follows:
PHP:US$
December 31, 2014 44.720
June 30, 2015 45.090
December 31, 2015 47.060
June 30, 2016 47.060
Proceeds from insurance claims
Proceeds amounting to P293.0 million for the period ended June 30, 2016 pertains to claims on
business interruption due to lightning, machinery breakdown, and damages due to typhoons
Seniang. Proceeds amounting to P751.1 million were received for the insurance claims due to
typhoons Yolanda, Glenda and Sendong in 2015.
Miscellaneous, net
Miscellaneous income - net for the period ended June 30, 2016 amounted to P55.6 million, or a
P177.4 million turnaround from P121.8 million miscellaneous charges – net during the same
period in 2015. The movement was mainly due to derivative gains – net from the forward foreign
exchange contracts entered into with various banks considering the PhP and US$ exchange rates
as of the transactions/reporting dates.
Provision for Income Tax
Current
The Company’s current tax expense increased by 56.9% or P292.6 million to P807.2 million for
the period ended June 30, 2016 from P514.6 million during the same period in 2015 mainly on
account of higher taxable income.
Deferred
Deferred tax expense for the first semester of 2016 amounted to P31.9 million, a 39.4% or a
P20.7 million decrease from the P52.6 million during the same period in 2015, mainly due to the
recognition of deferred tax asset on NOLCO from head office expenses for exploration and other
non-renewable energy related activities while none for the same period in 2015.
SEC Form 17Q – 2Q 2016 11
Net Income
As a result of the foregoing, the Company’s net income increased by 8.5% or P406.6 million to
P5,207.1 million for the first semester of 2016 from P4,800.5 million net income during the same period
in 2015.
Net income is equivalent to 30.6% of total revenue for the period ended June 30, 2016 as compared to
28.6% for the same period in 2015.
SEC Form 17Q – 2Q 2016 12
FINANCIAL CONDITION
The following table details the financial condition of the Company as of June 30, 2016 and
December 31, 2015.
STATEMENT OF FINANCIAL POSITION
Horizontal and Vertical Analysis of Material Changes as of June 30, 2016 and December 31, 2015
HORIZONTAL ANALYSIS VERTICAL ANALYSIS
Favorable (Unfavorable) Variance
(Amounts in PHP millions) June 2016
December
2015 Amount % 2016 2015
ASSETS
Current Assets
Cash and cash equivalents 15,577.2 17,613.9 (2,036.7) -11.6% 11.5% 12.9%
Trade and other receivables 6,364.8 5,346.2 1,018.6 19.1% 4.7% 3.9%
Parts and supplies inventories 3,484.3 3,251.9 232.4 7.1% 2.6% 2.4%
Financial asset at fair value through profit or loss 1,057.5 1,014.3 43.2 4.3% 0.8% 0.7%
Due from related parties 179.9 – 179.9 100.0% 0.1% 0.0%
Current portion of:
Derivative assets 293.9 58.6 235.3 401.5% 0.2% 0.0%
Available-for-sale (AFS) investments – 129.6 (129.6) -100.0% 0.0% 0.1%
Other current assets 2,245.3 2,263.4 (18.2) -0.8% 1.7% 1.7%
Total Current Assets 29,202.9 29,677.9 (475.0) -1.6% 21.5% 21.8%
Noncurrent Assets
Property, plant and equipment 88,829.5 88,567.7 261.8 0.3% 65.4% 65.1%
Goodwill and intangible assets 4,204.0 4,289.3 (85.3) -2.0% 3.1% 3.2%
Exploration and evaluation assets 3,098.1 3,073.6 24.5 0.8% 2.3% 2.3%
Deferred tax assets – net 1,111.4 1,120.1 (8.7) -0.8% 0.8% 0.8%
Available-for-sale (AFS) investments 571.2 435.1 136.1 31.3% 0.4% 0.3%
Derivative assets 60.4 293.0 (232.6) -79.4% 0.0% 0.2%
Other noncurrent assets 8,689.7 8,584.2 105.5 1.2% 6.4% 6.3%
Total Noncurrent Assets 106,564.3 106,363.0 201.3 0.2% 78.5% 78.2%
TOTAL ASSETS 135,767.2 136,041.1 (273.9) -0.2% 100.0% 100.0%
LIABILITIES AND EQUITY
LIABILITIES
Current Liabilities
Trade and other payables 8,978.9 9,989.9 (1,011.0) -10.1% 6.6% 7.3%
Income tax payable 338.7 29.2 309.5 1059.9% 0.2% 0.0%
Due to related parties 32.9 101.8 (68.9) -67.7% 0.0% 0.1%
Current portion of:
Long-term debts 11,316.8 7,860.9 3,455.9 44.0% 8.3% 5.8%
Derivative liabilities 22.9 4.9 18.0 367.3% 0.0% 0.0%
Total Current Liabilities 20,690.2 17,986.7 2,703.5 15.0% 15.2% 13.2%
Noncurrent Liabilities
Long-term debts - net of current portion 60,935.3 66,650.7 (5,715.4) -8.6% 44.9% 49.0%
Net retirement and other post-employment benefits 2,081.0 1,914.9 166.1 8.7% 1.5% 1.4%
Derivative liabilities - net of current portion 561.4 197.5 363.9 184.3% 0.4% 0.1%
Provisions and other long-term liabilities 2,115.9 2,061.6 54.3 2.6% 1.6% 1.5%
Total Noncurrent Liabilities 65,693.6 70,824.7 (5,131.1) -7.2% 48.4% 52.1%
EQUITY
Equity Attributable to Equity Holders of the Parent
Preferred stock 93.8 93.8 - 0.0% 0.1% 0.1%
Common stock 18,750.0 18,750.0 - 0.0% 13.8% 13.8%
Treasury Stock (73.5) (28.4) (45.1) 158.8% -0.1% 0.0%
Common shares in employee trust account (350.2) (350.2) - 0.0% -0.3% -0.3%
Additional paid-in capital 6,284.0 6,284.0 - 0.0% 4.6% 4.6%
Equity reserve (3,706.4) (3,706.4) - 0.0% -2.7% -2.7%
Net accumulated unrealized gain on AFS investments 140.1 104.0 36.1 34.7% 0.1% 0.1%
Fair value adjustments on hedging transactions (561.7) (177.5) (384.2) 216.5% -0.4% -0.1%
Cumulative translation adjustment arising
from foreign subsidiaries 5.7 (97.3) 103.0 -105.9% 0.0% -0.1%
Retained earnings 27,061.8 24,778.4 2,283.4 9.2% 19.9% 18.2%
47,643.6 45,650.4 1,993.2 4.4% 35.1% 33.6%
Non-controlling interests 1,739.7 1,579.4 160.3 10.1% 1.3% 1.2%
Total Equity 49,383.3 47,229.7 2,153.6 4.6% 36.4% 34.7%
TOTAL LIABILITIES AND EQUITY 135,767.2 136,041.1 (273.9) -0.2% 100.% 100.0%
SEC Form 17Q – 2Q 2016 13
Cash and cash equivalents
Cash and cash equivalents decreased by 11.6% or P2,036.7 million to P15,577.2 million as of
June 30, 2016 from the P17,613.9 million in December 31, 2015. This was primarily attributable to the
P7,395.2 million and P2,826.7 million decrease in net cash generated from financing and investing
activities, respectively and offset by P8,168.1 million net cash generated from operating activities.
Trade and other receivables
Trade and other receivables increased by 19.1% or P1,018.6 million to P6,364.8 million as of
June 30, 2016 from P5,346.2 million balance as of December 31, 2015 mainly due to increase in NPC and
NTC receivables.
Parts and supplies inventories
This account increased by 7.1% or P232.4 million to P3,484.3 million as of June 30, 2016 from the
P3,251.9 million as of December 31, 2015. The increase was due to purchase of various materials and
supplies for plants maintenance and rehabilitation activities.
Due from related parties
This account increased by 100.0% or P179.9 million to P179.9 million as of June 30, 2016 mainly due to
interest free advance for ULGEI P265.8 million.
Available-for-sale (AFS) investments
The decrease of 100.0% or P129.6 million to nil as of June 30, 2016 from the P129.6 million in
December 31, 2015 in current available for sale investments is mainly due to the redemption of the
matured placement last January 15, 2016 while, the increase of 31.3% or P136.1 million to P571.2 million
as of June 30, 2016 from P435.1 million in December 31, 2015 in non-current available for sale
investment is due to realignment, amortization and MTM adjustment..
Derivative asset
This account increased by 401.5% or P235.3 million to P293.9 million as of June 30, 2016 from
P58.6 million balance as of December 31, 2015 in current portion while, the decreased of 79.4% or
P232.6 million to P60.4 million as of June 30, 2016 from P293.0 million balance as of
December 31, 2015 in non-current portion due to the outstanding hedging of foreign loans of the Parent
company.
Trade and other payables
This account decreased by 10.1% or P1,011.0 million to P8,978.9 million as of June 30, 2016 from the
P9,989.9 million balance as of December 31, 2015 due to payment to suppliers.
Income tax payable
The increase in Income tax payable is due to the higher income tax expense for the period.
SEC Form 17Q – 2Q 2016 14
Due to related parties
This account decreased by 67.7% or P68.9 million to P32.9 million as of June 30, 2016 from
P101.8 million as of December 31, 2015 mainly due to decrease in consultancy fees with First Gen
Corporation.
Derivative liability (current portion)
The increase of 367.3% or P18.0 million to P22.9 million from P4.9 million as interest rate swap
agreements resulted in loss.
Long-term debt – net of current portion
The decrease in long-term debt of 8.6% or P5,715.4 million to P60,935.3 million from P66,650.7 million
pertains mainly to the exchange rate realignment of loan balances.
Net retirement and other post-retirement benefit
The 8.7% increase or P166.1 million to P2,081.0 million as of June 30, 2016 from P1,914.9 million as of
December 31, 2015 mainly due to retirement expense provision recognized during the period.
SEC Form 17Q – 2Q 2016 15
Derivative liability (net current portion)
The increase of 184.3% or P363.9 million to P561.4 million from P197.5 million as interest rate swap
agreements resulted in loss.
Provisions and other long-term liabilities
This account increased by 2.6% or P54.3 million to P2,115.9 million as of June 30, 2016 from
P2,061.6 million balance as of December 31, 2015 mainly due to retirement expense provision recognized
during the period.
Cumulative translation adjustments arising from foreign subsidiaries
The increase of P458.6 million is mainly due to the outstanding hedging of foreign loans of the company.
Net accumulated unrealized gain on AFS investments
This account increased by 34.7% or P36.1 million to P140.1 million as of June 30, 2016 and
P104.0 million as of December 31, 2015. The increase is mainly due to fair value of AFS investments for
the period.
Retained earnings
The increase of 9.2% or P2,283.4 million to P27,061.8 million as of June 30, 2016 from
P24,778.4 million as of December 31, 2015 was mainly due to the P4,908.2 million net income
attributable to the equity holders of the Parent, partly reduced by P2,631.2 million cash dividend declared.
Non-controlling interests
Non-controlling interest increased by 10.1% or P160.3 million to P1,739.7 million as of June 30, 2016
from the P1,579.4 million balance as of December 31, 2015 due to the net income attributable to
non-controlling interests of P298.9 million offset by the P142.8 million total cash dividend paid to non-
controlling interests during the period.
SEC Form 17Q – 2Q 2016 16
CAPITAL AND LIQUIDITY RESOURCES
As of the six-month period ended
(in millions of pesos) YTD June 2016 YTD June 2015 YoY change
Statement of Financial Position Data
Total Assets 135,767.2 130,273.7 5,493.5
Total Liabilities 86,383.9 83,798.8 2,585.1
Total Stockholder’s Equity 49,383.3 46,474.9 2,908.4
The Company’s assets as of June 30, 2016 amounted to P135,767.2 million, 4.2% higher as compared to
the P130,273.7 million level as of June 30, 2015.
CASH FLOW
YTD June 30, 2016 vs. YTD June 30, 2015
Net cash flows from operating activities decreased by P3,247.4 million to P8,240.3 million for the period
ended June 30, 2016 from P11,487.8 million during the same period in 2015 mainly due to settlement of
trade payables.
Net cash flows used in investing activities decreased by 50.4% or P2,944.7 million to P2,899.0 million for
the quarter ended June 30, 2016 as compared to the P5,843.7 million during the same quarter in 2015
primarily due to lower capital expenditures.
Net cash flows used in financing activities for the six-month period ended June 30, 2016 amounted to
P7,395.2 million, a P3,174.9 million increase from the P4,220.3 million during the same period in 2015
due to higher payments of long-term debt.
SEC Form 17Q – 2Q 2016 17
DISCUSSION ON THE SUBSIDIARIES
Green Core Geothermal Inc. (GCGI)
(Amounts in PHP millions)
For the periods ended June 30
2016 2015
Revenue 5,445.7 5,025.3 Costs of sale of electricity (3,940.0) (4,330.5) General and administrative expenses (165.0) (276.7) Other income (charges) – net (203.8) (95.7) Income before income tax 1,136.9 322.4 Provision for income tax (201.4) (70.5) Net income 935.5 251.9
As of
June 30, 2016 December 31, 2015
Total current assets 4,403.6 3,776.7 Total noncurrent assets 9,729.9 9,675.2 Total current liabilities 3,255.4 3,017.2 Total noncurrent liabilities 6,481.9 6,976.0 Total equity 4,396.2 3,458.7
GCGI’s revenue increased by 8.4% or P420.4 million, to P5,445.7 million as of June 30, 2016 from
P5,025.3 million for the same period in 2015. The increase was due to higher sales volume by 69.2 GWh
and higher average tariff by P0.07/kWh.
Costs of sale of electricity decreased by 9.0% or P390.5 million, to P3,940.0 million in 2016 from
P4,330.5 million in 2015. The decrease was due to lower cost of steam (P456.0 million) offset by higher
rental, insurance and taxes (P39.8 million) and repairs and maintenance (P34.9 million).
General and administrative expenses decreased by 40.4% or P111.7 million, to P165.0 million in 2016
from P276.7 million in 2015. The decrease was due to lower purchased services & utilities
(P58.4 million), personnel costs (P42.3 million), and rental, insurance and taxes (P8.3 million).
Other charges – net increased by 113.0% or P108.1 million, to P203.8 million in 2016 from P95.7 million
in 2015. The unfavorable variance was mainly due to higher interest expense on long-term loan
(P78.8 million) and lower interest income (P35.1 million). The long-term loan was drawn last
March 8, 2015.
With the foregoing, net income increased by 271.4% or P683.6 million, to P935.5 million in 2016 from
P251.9 million in 2015.
Total current assets increased by 16.6% or P626.9 million, to P4,403.6 million as of June 30, 2016 from
P3,776.7 million balance as of December 31, 2015. The increase was due to higher cash & cash
equivalents (P511.7 million) and trade & other receivables (P85.0 million).
Total current liabilities increased by 7.9% or P238.2 million, to P3,255.4 million as of June 30, 2016 from
P3,017.2 million as of December 31, 2015. The increase was attributed to higher trade & other payables
(P211.8 million) and this period’s income tax payable, none in 2015, (P105.6 million) offset by lower
amount of due to related parties (P80.1 million).
SEC Form 17Q – 2Q 2016 18
Total noncurrent liabilities decreased by 7.1% or P494.1 million, to P6,481.9 million as of June 30, 2016
from P6,976.0 million as of December 31, 2015 due to this period’s repayment of the loan
(P510.0 million).
Total equity increased by 27.1% or P937.5 million, to P4,396.2 million as of June 30, 2016 from
P3,458.7 million as of December 31, 2015 due to this period’s net income (P935.5 million).
SEC Form 17Q – 2Q 2016 19
Bac-Man Geothermal Inc. (BGI)
(Amounts in PHP millions) For the periods ended
June 30, 2016 June 30, 2015 Revenues 1,679.9 2,228.0 Costs of sale of electricity (1,439.4) (1,164.7) General and administrative expenses (49.0) (102.9) Other expense (49.6) (1.3) Income before income tax 141.9 959.1 Provision for income tax 0.5 (0.6) Net income 142.4 958.5
As of
June 30, 2016 Audited
December 31, 2015 Total Current Assets 3,453.6 5,307.1 Total Non-Current Assets 5,511.6 5,724.3 Total Current Liabilities 1,487.5 1,756.6 Total Non-Current Liabilities 4,093.8 4,383.3 Total Equity 3,383.9 4,891.5
In spite of increase in sales volume, revenues decreased by 24.6% or P=548.1 million, to P=1,679.9 million
as of June 30, 2016 from P=2,228.0 million for the same period in 2015. The decrease was primarily due to
lower WESM prices.
Costs of sale of electricity increased by 23.6% or P=274.7 million, to P=1,439.4 million as of June 30, 2016
from P=1,164.7 million for the same period in 2015. The increase was primarily due to higher steam costs
driven by higher volume (P=227.8 million), depreciation and amortization (P=72.4 million), rental,
insurance and taxes (P=24.5 million), and personnel costs (P=5.1 million).
General and administrative expenses decreased by 52.4% or P=53.9 million, to P=49.0 million as of
June 30, 2016 from P=102.9 million for the same period in 2015. The decrease was due to lower purchased
services and utilities (P=23.3 million), personnel costs (P=20.8 million), and rental, insurance and taxes
(P=7.5 million).
This year’s other expense was higher by 3,715.4% or P=48.3 million, to P=49.6 million as of June 30, 2016
from P=1.3 million for the same period in 2015. The increase was primarily due to higher interest expense
and foreign exchange losses amounting to P=124.4 million and P=5.1 million, respectively, partially offset
by the P=81.9 million insurance proceeds for machinery breakdown claims.
This year’s provision for income tax of P=0.5 million is attributable to deferred tax impact of temporary
differences on retirement and other post employments benefits while provision for income tax last year of
P=0.6 million pertains to current income tax attributable to non-registered activities.
Total current assets decreased by 34.9% or P=1,853.5 million, to P=3,453.6 million as of June 30, 2016 from
P=5,307.1 million as of December 31, 2015. The decrease was primarily due to the decrease of cash and
cash equivalents by P=2,027.1 million, partly offset by the decrease of trade receivables and other
receivables, other current assets, and parts and supplies inventories by P=115.5 million, P=50.2 million and
P=7.5 million, respectively.
SEC Form 17Q – 2Q 2016 20
Total non-current assets decreased by 3.7% or P=212.7 million, to P=5,511.6 million as of June 30, 2016
from P=5,724.3 million as of December 31, 2015. The decrease was mainly due to decrease of property,
plant and equipment by P=229.9 primarily due to the collection from Weir Engineering Services arising
from settlement of the arbitration case, partly offset by increase in other non-current assets by
P=17.6 million.
Total current liabilities decreased by 15.3% or P=269.1 million, to P=1,487.5 million as of June 30, 2016
from P=1,756.6 million as of December 31, 2015. The decrease was mainly due to decrease of trade and
other payables and due to related parties by P=258.6 million and P=10.4 million, respectively.
Total non-current liabilities decreased by 6.6% or P=289.5 million, to P=4,093.8 million as of June 30, 2016
from P=4,383.3 million as of December 31, 2015. The increase was primarily due to payment made on the
long-term debt of P=300.0 million
Total equity decreased by 30.8% or P=1,507.6 million, to P=3,383.9 million as of June 30, 2016 from
P=4,891.5 million as of December 31, 2015. The decrease was primarily due to dividend declaration of
P=1,650.0 million, partially offset by net income earned during the period of P=142.4 million.
SEC Form 17Q – 2Q 2016 21
EDC Burgos Wind Power Corporation (EBWPC)
(Amounts in PHP millions)
For the years ended
June 30, 2016 June 30, 2015
Revenue 1,030.9 913.3 Costs of sale of electricity (596.7) (452.9) General and administrative expenses (55.8) (63.8) Other charges – net (402.6) (436.4) Income (Loss) before income tax (24.2) (39.8) Provision for income tax 1.4 4.8 Net Income (Loss) (22.8) (35.0)
As of
June 30, 2016 December 31, 2015
Total current assets 2,086.3 2,551.2 Total noncurrent assets 17,900.6 18,198.2 Total current liabilities 1,232.0 1,786.4 Total noncurrent liabilities 13,535.8 13,365.1 Total equity 5,219.1 5,598.0
Revenues increased by 12.9% or P=117.6 million, to P=1,030.9 million as of June 30, 2016 from
P=913.3 million for the same period in 2015. The increase was mainly due to higher actual generated sales
volume for the current period.
Costs of sale of electricity increased by 31.9% or P=143.8 million to P=596.7 million as of June 30, 2016
from P=452.9 million for the same period in 2015. The unfavorable variance was mainly due to increase in
rental, insurance and taxes (P=67.4 million), repair and maintenance (P=56.1 million) and depreciation and
amortization (P=38.0 million). These were partly offset by lower purchased services and utilities
(P=18.2 million).
General and administrative expenses decreased by 12.5% or P=8.0 million, to P=55.8 million as of
June 30, 2016 from P=63.8 million for the same period in 2015. This was mainly due to lower rental,
insurance and taxes (P=10.3 million) and purchased services and utilities (P=4.7 million). These were partly
offset by higher materials and supplies (P=6.5 million).
Other charges - net decreased by 7.8% or P=33.8 million, to P=402.6 million as of June 30, 2016 from
P=436.4 million for the same period in 2015. This was mainly due to lower foreign exchange loss
(P=46.8 million), partly offset by the increase in net interest expense incurred (P=16.7 million) on the
US$315 million debt facility.
Total current assets decreased by 18.2% or P=464.9 million primarily due to decreased in cash and cash
equivalents (P=392.6 million).
Total noncurrent assets decreased by P=297.6 million mainly due to decreased in property, plant and
equipment by P=334.6 million.
Total current liabilities decreased by 31.0% or P=554.4 million due to the decreased in trade and other
payables by P=514.2 million and long-term debt by P=109.2 million.
SEC Form 17Q – 2Q 2016 22
Unified Leyte Geothermal Energy Inc. (ULGEI)
(Amounts in PHP millions)
For the period ended
June 30, 2016 June 30, 2015
Revenue 753.0 762.5
Costs of sale of electricity (1,031.2) (873.2)
General and administrative expenses (4.8) (3.2)
Other income (charges) – net - -
Loss before income tax (283.0) (113.9)
Provision for income tax - -
Net Loss (283.0) (113.9)
As of
June 30, 2016 December 31, 2015
Total current assets 255.6 194.3
Total noncurrent assets - -
Total current liabilities 932.2 587.9
Total noncurrent liabilities - -
Total equity (capital deficiency) (676.6) (393.6)
ULGEI’s revenue decreased by 1.2% or P=9.5 million, to P=753.0 million as of June 30, 2016 from P=762.5
million for the same period in 2015. The unfavorable variance was due to lower selling price of electricity in
WESM.
Costs of sale of electricity increased by 18.1% or P=158.0 million, to P=1,031.2 million as of June 30, 2016 from
P=873.2 million for the same period in 2015 mainly due to higher purchased price of electricity.
General and administrative expenses increased by 50.0% or P=1.6 million, to P=4.8 million as of June 30, 2016
from P=3.2 million for the same period in 2015. The unfavorable variance was mainly due to higher purchased
services and utilities (P=0.7 million) and business and related expenses (P=0.9 million).
With the foregoing, net loss increased by 148.5% or P=169.1 million to P=283.0 million as of June 30, 2016 from
P=113.9 million for the same period in 2015.
Total currents assets increased by 31.5% or P=61.3 million, to P=255.6 million as of June 30, 2016 from
P=194.3 million balance as of December 31, 2015. The increase was mainly due to the higher trade receivable
(P=81.0 million ) and offset by decrease in cash (P=25.7 million).
Total current liabilities increased by 58.6% or P=344.3 million, to P=932.2 million as of June 30, 2016 from
P=587.9 million balance as of December 31, 2015. The increase was caused by higher due to related parties
(P=325.7 million) and trade payables (P=18.6 million).
Total capital deficiency increased by 71.9% or P=283.0 million to P=676.6 million as of June 30, 2016 from
P=393.6 million balance as of December 31, 2015. The increase was due to net loss on operation.
SEC Form 17Q – 2Q 2016 23
FG Hydro Power Corporation (FG Hydro)
(Amounts in PHP millions)
As of and for the periods ended
June 30 2016 2015
Operating revenues 1,537.2 1,208.7 Cost of sales 311.7 307.9 General and administrative expenses 162.9 175.7 Operating profit 1,062.6 725.1 Other expenses – net 59.2 83.1 Income before tax 1,003.4 642.0
Provision for (benefit from) income tax 271.4 162.2
Net income 732.0 479.8
June 30, 2016 Dec. 31, 2015
Total current assets 1,687.1 1,734.2
Total noncurrent assets 5,926.1 5,670.1 Total current liabilities 641.9 596.4 Total noncurrent liabilities 2,619.5 2,831.2 Total equity 4,351.8 3,976.7
FG Hydro generated revenues of P1,537.2 million for the period ended June 30, 2016, 27.2% or
P328.5 million higher than the revenues of P1,208.7 million for the same period in 2015. The favorable
variance was mainly on account of a 21% increase in ancillary service revenues and slightly higher
electricity generated in 2016 that consequently resulted to lower replacement power purchases.
Cost of sales for the period ended June 30, 2016 is slightly higher at P311.7 million as compared to the
P307.9 million level for the same period in 2015. The unfavorable variance was mainly due to higher
water service fees paid to NIA during the period. General and administrative expenses was lower at
P162.9 million, P12.8 million or 7.3% lower compared to the P175.7 million expense for the same period
in 2015. The favorable variance was mainly due to lower professional fees paid in 2016 partly offset by
increase in amount of plant insurance amortization. Interest expense for the period ended June 30, 2016 of
P64.0 million was 25.9% or P22.4 million lower as compared to P86.4 million for the same period in
2015 due to reduced long-term debt balance. Provision for current income tax for the period ended
June 30, 2016 of P271.4 million is 67.3% or P109.2 million higher as compared to P162.2 million for the
same period in 2015. Overall, FG Hydro posted a 52.6% or P252.2 million increase in net income of
P732.0 million for the period ended June 30, 2016 as compared to the P479.8 million reported income for
the same period in 2015.
Total assets as of June 30, 2016 stood at P7,613.2 million, P208.9 million or 2.8% higher than the
December 31, 2015 level of P7,404.3 million. The favorable variance was mainly due to higher accounts
receivable balance in 2016.
As of June 30, 2016, total liabilities stood at P3,261.4 million, P166.2 million or 4.8% lower than the
December 31, 2015 level of P3,427.6 million. The favorable variance is mainly on account of lower
lon-term debt balance as of end of June 30, 2016.
Total equity as of June 30, 2016 of P4,351.8 million rose by 9.4% or P375.1 million as compared to the
December 31, 2015 level of P3,976.7 million.
SEC Form 17Q – 2Q 2016 24
KEY PERFORMANCE INDICATORS
The top eight (8) key performance indicators are set forth below:
Ratio June 2016 June 2015
Current Ratio 1.41:1 2.60:1
Debt-to-Equity Ratio 1.46:1 1.50:1
Net Debt-to-Equity Ratio 1.15:1 1.17:1
Return on Assets (%) 6.21 9.94
Return on Equity (%) 17.25 27.25
Solvency Ratio 0.11 0.10
Interest Rate Coverage Ratio 3.46 3.05
Asset-to-Equity Ratio 2.75 2.80
Current Ratio – Total current assets divided by total current liabilities. This ratio is a rough indication of
a company’s ability to pay its short-term obligations. Generally, a current ratio above 1.00 is indicative of
a company’s greater capability to settle its current obligations.
Debt-to-Equity Ratio – Total interest-bearing debts divided by stockholders’ equity. This ratio expresses
the relationship between capital contributed by the creditors and the owners. The higher the ratio, the
greater the risk being assumed by the creditors. A lower ratio generally indicates greater long-term
financial safety.
Net-Debt-to-Equity Ratio – Total interest-bearing debts less cash & cash equivalents divided by
stockholders’ equity. This ratio measures the company’s financial leverage and stability. A negative net
debt-to-equity ratio means that the total of cash and cash equivalents exceeds interest-bearing liabilities.
Return on Assets – Net income (annual basis) divided by total assets (average). This ratio indicates how
profitable a company is relative to its total assets. This also gives an idea as to how efficient management
is at using its assets to generate earnings.
Return on Equity – Net income (annual basis) divided by total stockholders’ equity (average). This ratio
reveals how much profit a company earned in comparison to the total amount of shareholder equity found
on the balance sheet. A business that has a high return on equity is more likely to be one that is capable of
internally generating cash. For the most part, the company’s return on equity is compared with an industry
average. The company is considered superior if its return on equity is greater than the industry average.
Solvency Ratio – Net income excluding depreciation and non-cash provisions divided by total debt
obligations. This ratio gauges a company’s ability to meet its long-term obligations.
Interest Rate Coverage Ratio – Earnings before interest and taxes of one period divided by interest
expense of the same period. This ratio determines how easily a company can pay interest on outstanding
debt.
Asset-to-Equity Ratio – Total assets divided by total stockholders’ equity. This ratio shows a
company’s leverage, the amount of debt used to finance the firm.
SEC Form 17Q – 2Q 2016 25
Commitments that will have an impact on the issuer’s liquidity
As of June 30, 2016, the Company has unserved purchase orders and awarded contracts for the purchase
of various capital goods in the total amount of P715.8 million.
Other than these, we are not aware of any other material commitments that should impact the Company’s
liquidity.
Foreign Exchange Rate Volatility
The Company has P=30,068.6 million in long-term US dollar denominated loans as of June 30, 2016 which
is 41.62% of the total Company’s long-term loans.
Any event that will trigger direct or contingent financial obligation that is material to the company,
including any default or acceleration of an obligation
There are no material changes in the contingent financial obligations since the last annual balance sheet
date.
CASH DIVIDENDS
Parent Company
On March 9, 2016, EDC declared cash dividend amounting to P=2,600.0 million to its common
shareholders and P=7.5 million to its preferred shareholder of record as of March 23, 2016 payable on or
before April 12, 2016.
First Gen Hydro
On January 20, 2016, FG Hydro paid cash dividend amounting to P=142.8 million to its non-controlling
common stockholder.
SEC Form 17Q – 2Q 2016 26
MAJOR STOCKHOLDERS
As of June 30, 2016, the total number of stockholders was 678 and the stock price was P5.52. Public float
level was at 49.24% (or 9,225,526,239 common shares).
List of Top 20 Stockholders as of June 30, 2016
Rank Name Nationality
Number of Shares
% Preferred Common Total
1 Red Vulcan Holdings Corporation Filipino 9,375,000,000 7,500,000,000 16,875,000,000 60.03
2 PCD Nominee Corporation Foreign - 5,305,665,906 5,305,665,906 18.87
3 PCD Nominee Corporation Filipino - 3,917,231,645 3,917,231,645 13.93
4 First Gen Corporation Filipino - 991,782,700 991,782,700 3.53
5 Northern Terracotta Power Corporation Filipino - 986,337,000 986,337,000 3.51
6 F. Yap Securities, Inc. Filipino - 5,690,000 5,690,000 0.02
7 Peter D. Garrucho, Jr. Filipino - 5,670,000 5,670,000 0.02
8 Benjamin K. Liboro &/or Luisa Liboro Filipino - 2,525,500 2,525,500 0.01
9 Croslo Holdings Corporation Filipino - 2,220,000 2,220,000 0.01
10 Manuel Moreno or Maria Terasa Lopez Filipino - 1,310,000 1,310,000 0.00
11 Arthur A. de Guia Filipino - 950,000 950,000 0.00
12 ALG Holdings Corporation Filipino - 875,000 875,000 0.00
13 First Life Financial Co., Inc. Filipino - 800,000 800,000 0.00
14 Peter Mar &/or Annabelle C. Mar Filipino - 700,000 700,000 0.00
15 Rosalind Camara Filipino - 663,750 663,750 0.00
16 Ma. Consuelo R. Lopez Filipino - 500,000 500,000 0.00
17 Nicolas, Virginia Maria D. Filipino - 393,000 393,000 0.00
18
Puno,Francis Giles B. &/or Ma. Patricia
Puno Filipino - 367,500 367,500 0.00
19 Edwin U. Lim Filipino 350,000 350,000 0.00
20 Eric U. Lim Filipino 321,000 321,000 0.00
SEC Form 17Q – 2Q 2016 27
BOARD OF DIRECTORS
As of June 30, 2016, the members of the Board of Directors of EDC are as follows:
Oscar M. Lopez Chairman Emeritus
Federico R. Lopez Chairman and Chief Executive Officer
Peter D. Garrucho, Jr. Director
Joaquin E. Quintos IV Director
Ernesto B. Pantangco Director and Executive Vice President
Francis Giles B. Puno Director
Richard B. Tantoco Director, President and Chief Operating Officer
Jonathan C. Russell Director
Edgar O. Chua Independent Director
Francis Ed. Lim Independent Director
Arturo T. Valdez Independent Director
OFFICERS
As of June 30, 2016, the Officers of EDC are as follows:
Name Position
Federico R. Lopez Chief Executive Officer
Richard B. Tantoco President and Chief Operating Officer
Ernesto B. Pantangco Executive Vice President
Nestor H. Vasay Senior Vice President/Chief Financial
Officer/Treasurer/Head of Finance & Shared
Services Group
Manuel S. Ogena Senior Vice President, Head of Geosciences and
Reservoir Engineering Group (Retired effective
June 30, 2016 COB)
Dominador M. Camu Jr. Senior Vice President, Head of Operations and
Engineering Group
Ma. Elizabeth D. Nasol Vice President, Head of Human Resource
Management Group
Raymundo N. Jarque Vice President, Head of Business Development
Group
Rassen M. Lopez Vice President, Head of Legal and Regulatory
Group
Ramon A. Carandang Vice President, Head of Corporate Affairs Group
Bernardito M. Lapuz Vice President, Chief Risk Officer, Head of
Strategy and Risk Management Group
Reman A. Chua Vice President, Head of Wind Ilocos Norte
Business Unit
Ariel Arman V. Lapus Vice President, Business Development, and
Managing Director for Latin America
Ferdinand B. Poblete Vice President, Chief Information Officer, Head of
Information Technology Group
Erwin O. Avante Vice President, Head of Corporate Finance,
Compliance Officer (SEC & PSE)
SEC Form 17Q – 2Q 2016 28
Name Position
Manuel C. Paete Vice President, Head of LGBU Project & Resource
Management
Liberato S. Virata Vice President, Head of BGBU Project & Resource
Exploration Management
Ellsworth R. Lucero Vice President, Head of LGBU Operations and
Maintenance (Retired effective June 30, 2016 -
COB)
Maribel A. Manlapaz Assistant Vice President, Comptroller
Teodorico Jose R. Delfin Corporate Secretary
Ana Maria A. Katigbak Assistant Corporate Secretary
Glenn L. Tee Chief Audit Executive / Assistant Vice President,
Internal Audit
Erudito S. Recio Corporate Information Officer / Senior Manager,
Investor Relations
ENERGY DEVELOPMENT CORPORATION AND SUBSIDIARIES
FINANCIAL SOUNDNESS INDICATORS
Ratio June 2016 June 2015
Current Ratio 1.41:1 2.60:1
Debt-to-Equity Ratio 1.46:1 1.50:1
Net Debt-to-Equity Ratio 1.15:1 1.17:1
Return on Assets (%) 6.21 9.94
Return on Equity (%) 17.25 27.25
Solvency Ratio 0.11 0.10
Interest Rate Coverage Ratio 3.46 3.05
Asset-to-Equity Ratio 2.75 2.80
EDC Geothermal Corporation (EGC)
First Gen Hydro Power Corporation (FGHPC)
EDC Wind Energy Holdings Inc.
(EWEHI)
EDC Holdings International Limited
(EHIL)
• Green Core Geothermal Inc. (GCGI)
• Bac-Man Geothermal Inc. (BGI)
• Unified Leyte Geothermal Energy Inc. (ULGEI)
• Southern Negros Geothermal, Inc. (SNGI)
• EDC Mindanao Geothermal Inc. (EMGI)
• Bac-Man Energy Development Corporation
(BEDC) • Kayabon Geothermal, Inc.
(KGI) •Mount Apo Renewable Energy
Inc. (MAREI)
Energy Development (EDC) Corporation Chile Limitada
Energy Development Corporation Hong Kong
Limited (EDC HKL)
Prime Terracotta Holdings Corporation
Red Vulcan Holdings Corporation
ID: 100%
D: 100% D: 100% D: 100% D: 100% D: 60%
ID: 100% D: 99.99%
Legend: D – Direct Ownership ID – Indirect Ownership E – Economic Interest V – Voting Interest
E: 40% V: 60%
E: 100% V: 100%
PT EDC Indonesia EDC Peru Holdings S.A.C.
EDC Chile Holdings SPA
PT EDC Panas Bumi Indonesia
EDC Geotermica Chile SPA
EDC Geotermica Peru S.A.C.
Geotermica Quello Apacheta Peru S.A.C.
ID: 100%
ID: 70%
ID: 95% ID: 95% ID: 100%
ID: 100%
EDC Geotermica Del Sur S.A.C.
EDC Energia Azul S.A.C.
EDC Energia Peru S.A.C.
EDC Energia Geotermica S.A.C.
EDC Progreso Geotermico S.A.C.
EDC Energia Renovable S.A.C.
Geotermica Crucero Peru S.A.C.
Geotermica Loriscota Peru S.A.C.
Geotermica Tutupaca Norte Peru S.A.C.
ID: 70%
EDC Bright Solar Energy Holdings Inc.
(EBSEHI)
EDC Drillco Corporation (EDC
Drillco)
EDC Bago Solar Power Corporation
(EBSPC)
D: 100%
ID: 100% •EDC Pagali Burgos Wind Power Corporation (EPBWPC) •EDC Burgos Wind Power Corporation (EBWPC) •EDC Pagudpod Wind Power Corporation (EPWPC)
•EDC Bayog Burgos Wind Power Corporation (EBBWPC) •Matnog 1 Renewable Energy Corporation (M1REC) •Matnog 2 Renewable Energy Corporation (M2REC)
•Matnog 3 Renewable Energy Corporation (M3REC) •Iloilo 1 Renewable Energy Corporation (I1REC) •Negros 1 Renewable Energy Corporation (N1REC)
EDC Desarollo Sostenible Ltd
ID: 100%
EDC Energia Verde Peru S.A.C.
ID: 30%
EDC Soluciones Sostenibles Ltd
ID: 100%
EDC Energia Verde Chile SpA
EDC Energia de la Tierra SpA
ID: 100%
ID: 100%
EDC Burgos Solar
Corporation (EBSC)
ID: 100% ID: 0.01%
ID: 0.01%
ID: 99.99%
ID: 99.96%
ID: 99.99% ID: 0.01%
ID: 0.01% ID: 99.99% ID: 0.01%
ID: 70%
ID: 70%
FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES SCHEDULE K – CORPORATE STRUCTURE
MARCH 31, 2016
Companies within the Lopez Group
FIRST PHILIPPINE HOLDINGS CORPORATION AND SUBSIDIARIES SCHEDULE K – CORPORATE STRUCTURE
MARCH 31, 2016
FPH Group
ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation)
SUPPLEMENTARY SCHEDULE OF ALL EFFECTIVE STANDARDS
AND INTERPRETATIONS June 30, 2016
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of June 30, 2016
Adopted Not
Adopted
Not
Applicable
Framework for the Preparation and Presentation of Financial
Statements
Conceptual Framework Phase A: Objectives and qualitative
characteristics
PFRSs Practice Statement Management Commentary
Philippine Financial Reporting Standards
PFRS 1
(Revised)
First-time Adoption of Philippine Financial
Reporting Standards
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled
Entity or Associate
Amendments to PFRS 1: Additional Exemptions for
First-time Adopters
Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time
Adopters
Amendments to PFRS 1: Severe Hyperinflation and
Removal of Fixed Date for First-time Adopters
Amendments to PFRS 1: Government Loans
PFRS 2 Share-based Payment
Amendments to PFRS 2: Vesting Conditions and
Cancellations
Amendments to PFRS 2: Group Cash-settled
Share-based Payment Transactions
PFRS 3
(Revised)
Business Combinations
PFRS 4 Insurance Contracts
Amendments to PAS 39 and PFRS 4: Financial
Guarantee Contracts
PFRS 5 Non-current Assets Held for Sale and Discontinued
Operations
PFRS 6 Exploration for and Evaluation of Mineral
Resources
Exhibit 2.2
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of June 30, 2016
Adopted Not
Adopted
Not
Applicable
PFRS 7 Financial Instruments: Disclosures
Amendments to PFRS 7: Transition
Amendments to PAS 39 and PFRS 7:
Reclassification of Financial Assets
Amendments to PAS 39 and PFRS 7:
Reclassification of Financial Assets - Effective Date
and Transition
Amendments to PFRS 7: Improving Disclosures
about Financial Instruments
Amendments to PFRS 7: Disclosures - Transfers of
Financial Assets
Amendments to PFRS 7: Disclosures - Offsetting
Financial Assets and Financial Liabilities
Amendments to PFRS 7: Mandatory Effective Date
of PFRS 9 and Transition Disclosures
PFRS 8 Operating Segments
PFRS 9 Financial Instruments (2010 version)*
Amendments to PFRS 9: Mandatory Effective Date
of PFRS 9 and Transition Disclosures*
Financial Instruments (2013 version)*
Financial Instruments (2014 version)*
PFRS 10 Consolidated Financial Statements
Amendments to PFRS 10, PFRS 12 and PAS 27:
Investment Entities
Amendments to PFRS 10 and PAS 28: Sale or
Contribution of Assets between an Investor and its
Associate or Joint Venture*
PFRS 11 Joint Arrangements
PFRS 12 Disclosure of Interests in Other Entities
Amendments to PFRS 10, PFRS 12 and PAS 27:
Investment Entities
PFRS 13 Fair Value Measurement
PFRS 14 Regulatory Deferral Accounts*
PFRS 15 Revenue from Contracts with Customers*
Philippine Accounting Standards
PAS 1
(Revised)
Presentation of Financial Statements
Amendment to PAS 1: Capital Disclosures
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of June 30, 2016
Adopted Not
Adopted
Not
Applicable
Amendments to PAS 32 and PAS 1: Puttable
Financial Instruments and Obligations Arising on
Liquidation
Amendments to PAS 1: Presentation of Items of
Other Comprehensive Income
PAS 2 Inventories
PAS 7 Statement of Cash Flows
PAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors
PAS 10 Events after the Reporting Period
PAS 11 Construction Contracts
PAS 12 Income Taxes
Amendment to PAS 12 - Deferred Tax: Recovery of
Underlying Assets
PAS 16 Property, Plant and Equipment
Amendments to PAS 16 and PAS 18: Clarification
of Acceptable Methods of Depreciation and
Amortization*
Amendments to PAS 16 and PAS 41: Bearer Plants*
PAS 17 Leases
PAS 18 Revenue
PAS 19 Employee Benefits
Amendments to PAS 19: Actuarial Gains and
Losses, Group Plans and Disclosures
Amendments to PAS 19: Defined Benefit Plans:
Employee Contributions*
PAS 19
(Amended)
Employee Benefits
PAS 20 Accounting for Government Grants and Disclosure
of Government Assistance
PAS 21 The Effects of Changes in Foreign Exchange Rates
Amendment: Net Investment in a Foreign Operation
PAS 23
(Revised)
Borrowing Costs
PAS 24
(Revised)
Related Party Disclosures
PAS 26 Accounting and Reporting by Retirement Benefit
Plans
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of June 30, 2016
Adopted Not
Adopted
Not
Applicable
PAS 27
(Amended)
Separate Financial Statements
Amendments to PFRS 10, PFRS 12 and PAS 27:
Investment Entities
Amendment: Equity Method in Separate Financial
Statements*
PAS 28
(Amended)
Investments in Associates and Joint Ventures
Amendment: Accounting for Acquisitions of
Interests in Joint Operations*
PAS 29 Financial Reporting in Hyperinflationary
Economies
PAS 31 Interests in Joint Ventures
PAS 32 Financial Instruments: Disclosure and Presentation
Amendments to PAS 32 and PAS 1: Puttable
Financial Instruments and Obligations Arising on
Liquidation
Amendment to PAS 32: Classification of Rights
Issues
Amendments to PAS 32: Offsetting Financial Assets
and Financial Liabilities
PAS 33 Earnings per Share
PAS 34 Interim Financial Reporting
PAS 36 Impairment of Assets
Amendment to PAS 36: Impairment of Assets -
Recoverable Amount Disclosures for Non-Financial
Assets
PAS 37 Provisions, Contingent Liabilities and Contingent
Assets
PAS 38 Intangible Assets
PAS 39 Financial Instruments: Recognition and
Measurement
Amendments to PAS 39: Transition and Initial
Recognition of Financial Assets and Financial
Liabilities
Amendments to PAS 39: Cash Flow Hedge
Accounting of Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option
Amendments to PAS 39 and PFRS 4: Financial
Guarantee Contracts
Amendments to PAS 39 and PFRS 7:
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of June 30, 2016
Adopted Not
Adopted
Not
Applicable
Reclassification of Financial Assets
Amendments to PAS 39 and PFRS 7:
Reclassification of Financial Assets - Effective Date
and Transition
Amendments to Philippine Interpretation IFRIC 9
and PAS 39: Embedded Derivatives
Amendment to PAS 39: Eligible Hedged Items
Amendment to PAS 39: Novation of Derivatives
and Continuation of Hedge Accounting
PAS 40 Investment Property
PAS 41 Agriculture
Philippine Interpretations
IFRIC 1 Changes in Existing Decommissioning, Restoration
and Similar Liabilities
IFRIC 2 Members’ Share in Co-operative Entities and
Similar Instruments
IFRIC 4 Determining Whether an Arrangement Contains a
Lease
IFRIC 5 Rights to Interests arising from Decommissioning,
Restoration and Environmental Rehabilitation
Funds
IFRIC 6 Liabilities arising from Participating in a Specific
Market - Waste Electrical and Electronic Equipment
IFRIC 7 Applying the Restatement Approach under PAS 29
Financial Reporting in Hyperinflationary
Economies
IFRIC 8 Scope of PFRS 2
IFRIC 9 Reassessment of Embedded Derivatives
Amendments to Philippine Interpretation
IFRIC - 9 and PAS 39: Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 PFRS 2 - Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction
Amendments to Philippine Interpretations
IFRIC 14, Prepayments of a Minimum Funding
Requirement
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of June 30, 2016
Adopted Not
Adopted
Not
Applicable
IFRIC 15 Agreements for the Construction of Real Estate*
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 18 Transfers of Assets from Customers
IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments
IFRIC 20 Stripping Costs in the Production Phase of a Surface
Mine
IFRIC 21 Levies
SIC-7 Introduction of the Euro
SIC-10 Government Assistance - No Specific Relation to
Operating Activities
SIC-12 Consolidation - Special Purpose Entities
Amendment to SIC - 12: Scope of SIC 12
SIC-13 Jointly Controlled Entities - Non-Monetary
Contributions by Venturers
SIC-15 Operating Leases - Incentives
SIC-21 Income Taxes - Recovery of Revalued
Non-Depreciable Assets
SIC-25 Income Taxes - Changes in the Tax Status of an
Entity or its Shareholders
SIC-27 Evaluating the Substance of Transactions Involving
the Legal Form of a Lease
SIC-29 Service Concession Arrangements: Disclosures.
SIC-31 Revenue - Barter Transactions Involving
Advertising Services
SIC-32 Intangible Assets - Web Site Costs
*These standards, interpretations and amendments to existing standards became effective subsequent to June 30, 2016. The
Company did not early adopt these standards, interpretations and amendments.
Energy Development Corporation (A Subsidiary of Red Vulcan Holdings Corporation) and Subsidiaries
Unaudited Interim Condensed Consolidated
Financial Statements
June 30, 2016 (With Comparative Audited Figures
as of December 31, 2015)
and For the Six-Month Periods Ended
June 30, 2016 and 2015
ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation)
AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION AS OF JUNE 30, 2016
(With Comparative Audited Figures as of December 31, 2015)
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
ASSETS
Current Assets
Cash and cash equivalents (Notes 5 and 23) P=15,577,176,864 P=17,613,921,891
Financial assets at fair value through profit or loss (Note 23) 1,057,510,950 1,014,293,092
Trade and other receivables (Notes 6 and 23) 6,364,814,482 5,346,227,386
Parts and supplies inventories (Note 7) 3,484,301,821 3,251,943,359
Due from a related party (Notes 22 and 23) 179,855,238 –
Current portion of:
Derivative assets (Note 23) 293,937,315 58,602,033
Available-for-sale investments – 129,603,240
Other current assets (Note 8) 2,245,255,902 2,263,418,699
Total Current Assets 29,202,852,572 29,678,009,700
Noncurrent Assets
Property, plant and equipment (Note 9) 88,829,487,327 88,567,738,668
Exploration and evaluation assets 3,098,095,931 3,073,600,767
Goodwill and intangible assets (Note 10) 4,203,978,824 4,289,260,334
Deferred tax assets - net 1,111,390,145 1,120,091,912
Available-for-sale investments - net of current portion
(Note 23) 571,230,046 435,123,312
Derivative assets - net of current portion (Note 23) 60,419,569 293,010,166
Other noncurrent assets (Notes 11 and 23) 8,689,714,683 8,584,215,557
Total Noncurrent Assets 106,564,316,525 106,363,040,716
TOTAL ASSETS P=135,767,169,097 P=136,041,050,416
LIABILITIES AND EQUITY
Current Liabilities
Trade and other payables (Notes 12 and 23) P=8,978,915,498 P=9,989,938,751
Due to related parties (Notes 22 and 23) 32,911,455 101,769,634
Income tax payable 338,668,689 29,161,489
Current portion of:
Long-term debts (Notes 13 and 23) 11,316,843,873 7,860,904,237
Derivative liabilities (Note 23) 22,882,197 4,943,539
Total Current Liabilities 20,690,221,712 17,986,717,650
(Forward)
- 2 -
Equity
Equity attributable to equity holders of the Parent Company:
Preferred stock 93,750,000 93,750,000
Common stock 18,750,000,000 18,750,000,000
Treasury stock (73,511,508) (28,416,391)
Common shares in employee trust account (350,247,130) (350,247,130)
Additional paid-in capital 6,284,045,797 6,284,045,797
Equity reserve (3,706,430,769) (3,706,430,769)
Net accumulated unrealized gain on available-for-sale
investments 140,109,866 104,003,133
Fair value adjustments on hedging transactions (Note 23) (561,748,987) (177,500,756)
Cumulative translation adjustment on foreign subsidiaries 5,815,405 (97,279,985)
Retained earnings 27,061,829,028 24,778,400,459
47,643,611,702 45,650,324,358
Non-controlling interests 1,739,700,807 1,579,355,909
Total Equity 49,383,312,509 47,229,680,267
TOTAL LIABILITIES AND EQUITY P=135,767,169,097 P=136,041,050,416
See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
Noncurrent Liabilities
Long-term debts - net of current portion
(Notes 13 and 23) 60,935,299,888 66,650,689,335
Derivative liabilities - net of current portion
(Note 23) 561,376,581 197,525,898
Net retirement and other post-employment benefits 2,081,028,207 1,914,904,494
Provisions and other long-term liabilities 2,115,930,200 2,061,532,772
Total Noncurrent Liabilities 65,693,634,876 70,824,652,499
Total Liabilities 86,383,856,588 88,811,370,149
ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation)
AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF INCOME
Three-Month Periods Ended
June 30
Six-Month Periods Ended
June 30
2016 2015 2016 2015
REVENUE FROM SALE OF
ELECTRICITY P=7,909,190,070 P=8,277,716,847 P=17,005,456,130 P=16,775,396,315
COSTS OF SALE OF ELECTRICITY
(Note 15) (3,168,035,007) (3,403,885,526) (6,384,016,138) (6,428,347,213)
GENERAL AND ADMINISTRATIVE
EXPENSES (Note 16) (1,382,677,981) (1,823,974,531) (2,747,634,316) (3,146,680,557)
FINANCIAL INCOME (EXPENSES)
Interest income (Notes 4 and 18) 64,619,973 81,833,312 135,697,392 149,949,194
Interest expense (Notes 4 and 17) (1,095,822,906) (1,246,225,333) (2,295,986,479) (2,377,882,980)
(1,031,202,933) (1,164,392,021) (2,160,289,087) (2,227,933,786)
OTHER INCOME (CHARGES)
Foreign exchange losses - net (Note 19) (517,438,190) (253,199,934) (15,960,178) (233,996,017)
Proceeds from insurance claims 199,085,992 674,033,597 293,020,992 751,092,490
Miscellaneous - net (Note 20) 39,841,399 (76,501,923) 55,559,000 (121,784,146)
(278,510,799) 344,331,740 332,619,814 395,312,327
INCOME BEFORE INCOME TAX 2,048,763,350 2,229,796,509 6,046,136,403 5,367,747,086
PROVISION FOR INCOME TAX
Current (375,096,920) (114,334,682) (807,213,378) (514,633,339)
Deferred 38,892,255 (48,854,899) (31,896,444) (52,613,098)
(336,204,665) (163,189,581) (839,109,822) (567,246,437)
NET INCOME P=1,712,558,685 P=2,066,606,928 P=5,207,026,581 P=4,800,500,649
Net income attributable to:
Equity holders of the Parent Company P=1,654,153,329 P=2,115,634,693 P=4,908,162,838 P=4,608,556,482
Non-controlling interests 58,405,356 (49,027,765) 298,863,743 191,944,167
P=1,712,558,685 P=2,066,606,928 P=5,207,026,581 P=4,800,500,649
Basic/Diluted Earnings Per Share
(Note 21) P=0.091 P=0.112 P=0.262 P=0.245
See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.
ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation)
AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
Three-Month Periods Ended
June 30
Six-Month Periods Ended
June 30
2016 2015 2016 2015
NET INCOME P=1,712,558,685 P=2,066,606,928 P=5,207,026,581 P=4,800,500,649
OTHER COMPREHENSIVE INCOME
(LOSS)
Other comprehensive income (loss) to be
reclassified to profit or loss in subsequent
periods:
Cumulative translation adjustment
on hedging transactions (65,023,426) 277,359,822 (384,248,231) 101,425,351
Changes in fair value of available-for-sale
investments recognized in equity 9,711,310 (35,265,061) 36,106,733 20,054,607
Cumulative translation adjustments
on foreign subsidiaries 104,202,248 (19,168,359) 103,095,390 (57,063,484)
NET OTHER COMPREHENSIVE
INCOME (LOSS) TO BE
RECLASSIFIED TO PROFIT OR
LOSS IN SUBSEQUENT PERIODS 48,890,132 222,926,402 (245,046,108) 64,416,474
Other comprehensive income not to be
reclassified to profit or loss in
subsequent periods:
Remeasurements of retirement and other
post-employment benefits – – 10,702,886 –
TOTAL OTHER COMPREHENSIVE
INCOME (LOSS), NET OF TAX 48,890,132 222,926,402 (234,343,222) 64,416,474
TOTAL COMPREHENSIVE INCOME,
NET OF TAX P=1,761,448,817 P=2,289,533,330 P=4,972,683,359 P=4,864,917,123
Total comprehensive income attributable
to:
Equity Holders of the Parent Company P=1,703,043,461 P=2,338,561,095 P=4,669,538,461 P=4,672,972,956
Non-controlling interests 58,405,356 (49,027,765) 303,144,898 191,944,167
P=1,761,448,817 P=2,289,533,330 P=4,972,683,359 P=4,864,917,123
See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.
ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation)
AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2016 AND 2015
Equity Attributable to Equity Holders of the Parent Company
Preferred
Stock
Common
Stock
Treasury Stock
Common
Shares in
Employee
Trust Account
Additional
Paid-in
Capital
Equity
Reserve
Net
Accumulated
Unrealized Gain
on Available-for-
sale investments
Fair
Value
Adjustments on
Hedging
Transactions
Cumulative
Translation
Adjustments on
Foreign
Subsidiaries
Retained
Earnings Subtotal
Non-controlling
Interests Total Equity
Balances, January 1, 2016 P=93,750,000 P=18,750,000,000 (P=28,416,391) (P=350,247,130) P=6,284,045,797 (P=3,706,430,769) P=104,003,133 (P=177,500,756) (P=97,279,985) P=24,778,400,459 P=45,650,324,358 P=1,579,355,909 P=47,229,680,267
Total comprehensive income:
Net income – – – – – – – – – 4,908,162,838 4,908,162,838 298,863,743 5,207,026,581
Changes in fair value of
available-for-sale
investments recognized
in equity
–
–
–
–
– 36,106,733
–
– – 36,106,733 – 36,106,733
Fair value adjustments on
hedging transactions
–
–
–
–
–
– (384,248,231)
–
– (384,248,231)
– (384,248,231)
Cumulative translation
adjustments on foreign
subsidiaries
–
–
–
–
–
– – 103,095,390 103,095,390 103,095,390
Remeasurements of
retirement and other
post-employment benefits
–
–
–
–
–
– – – 6,421,731 6,421,731 4,281,155 10,702,886
– – – – – 36,106,733 (384,248,231) 103,095,390 4,914,584,569 4,669,538,461 303,144,898 4,972,683,359
Cash dividends (Notes 12 and 14) – – – – – – – – (2,631,156,000) (2,631,156,000) – (2,631,156,000)
Cash dividends to non-controlling
interest,
– – – – – – – – – – (142,800,000) (142,800,000)
Acquisition of treasury stock – (45,095,117) – – – – – – – (45,095,117) – (45,095,117)
Balances, June 30, 2016 P=93,750,000 P=18,750,000,000
(P=73,511,508) (P=350,247,130) P=6,284,045,797 (P=3,706,430,769) P=140,109,866 (P=561,748,987) P=5,815,405 P=27,061,829,028 P=47,643,611,702 P=1,739,700,807 P=49,383,312,509
See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.
- 2 -
Equity Attributable to Equity Holders of the Parent Company
Preferred
Stock
Common
Stock
Common
Shares in
Employee
Trust Account
Additional
Paid-in
Capital
Equity
Reserve
Net
Accumulated
Unrealized Gain
on Available-for-
sale investments
Cumulative
Translation
Adjustments on
Hedging
Transactions
Cumulative
Translation
Adjustments on
Foreign
Subsidiaries
Retained
Earnings Subtotal
Non-controlling
Interests Total Equity
Balances, January 1, 2015 P=93,750,000 P=18,750,000,000 (P=346,730,774) P=6,285,845,818 (P=3,706,430,769) P=143,192,675 (P=178,182,172) (P=6,530,344) P=21,095,090,585 P=42,130,005,019 P=1,490,081,458 P=43,620,086,477
Total comprehensive income:
Net income – – – – – – – – 4,608,556,482 4,608,556,482 191,944,167 4,800,500,649
Changes in fair value of
available-for-sale
investments recognized
in equity – – – – – 20,054,607 – – – 20,054,607 – 20,054,607
Cumulative translation
adjustments on hedging
transactions – – – – – – 101,425,351 – – 101,425,351 – 101,425,351
Cumulative translation
adjustments on foreign
subsidiaries – – – – – – – (57,063,484) – (57,063,484) – (57,063,484)
– – – – – 20,054,607 101,425,351 (57,063,484) 4,608,556,482 4,672,972,956 191,944,167 4,864,917,123
Cash dividends (Note 14) – – – – – – – – (1,882,500,000) (1,882,500,000) – (1,882,500,000)
Cash dividends to non-controlling
interest, – – – – – – – – – – (128,000,000) (128,000,000)
Share-based payment – – 252,374 190,368 – – – – – 442,742 – 442,742
Balances, June 30, 2015 P=93,750,000 P=18,750,000,000 (P=346,478,400) P=6,286,036,186 (P=3,706,430,769) P=163,247,282 (P=76,756,821) (P=63,593,828) P=23,821,147,067 P=44,920,920,717 P=1,554,025,625 P=46,474,946,342
See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.
ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation)
AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six-Month Periods
Ended June 30
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P=6,046,136,403 P=5,367,747,086
Adjustments for:
Depreciation and amortization (Notes 9, 10, 15 and 16) 2,717,481,396 2,464,699,297
Interest expense (Note 17) 2,295,986,479 2,377,882,980
Interest income (Note 18) (135,697,392) (149,949,194)
Provision for doubtful accounts (Note 16) 44,891,208 31,569,575
Mark-to-market gain on financial assets at fair value
through profit or loss (Note 20) (43,217,858) (404,429)
Loss on direct write-off of input VAT claims (Note 20) 35,644,993 87,111,648
Provision for impairment of parts and supplies(Note 16) (9,180,977) (7,778,222)
Unrealized foreign exchange losses (gains) - net (Note 19) (2,408,869) 192,647,861
Gain on sale of property, plant and equipment
(Notes 9 and 20) (128,755) (371,246)
Share-based payment expense – 442,742
Operating income before working capital changes 10,949,506,628 10,363,598,098
Decrease (increase) in:
Trade and other receivables (1,026,565,039) 284,199,630
Parts and supplies inventories (223,177,485) (208,084,527)
Due from a related party (179,855,238) –
Other current assets 162,892,856 (850,277,118)
Increase (decrease) in:
Trade and other payables (1,048,620,753) 2,178,003,259
Due to related parties (68,858,179) 38,478,912
Provisions and other long-term liabilities 61,494,723 92,700,294
Retirement and other post-employment benefits 177,997,101 166,927,555
Cash generated from operations 8,804,814,614 12,065,546,103
Income taxes paid including creditable withholding taxes (564,485,053) (577,780,107)
Net cash flows from operating activities 8,240,329,561 11,487,765,996
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of property, plant and equipment (Note 9) (3,029,446,939) (5,157,210,848)
Collection of liquidated damages from contractor (Note 9) 122,029,156 –
Purchase of available-for-sale investments (100,000,000) –
Purchase of financial assets at fair value through profit or loss – (500,000,000)
Interest received 143,671,264 155,696,383
Proceeds from:
Sale of property, plant and equipment 16,617,315 10,941,362
Redemption of available-for-sale investments 131,480,090 –
Increase in:
Debt service reserve account (72,380,075) –
Exploration and evaluation assets (25,108,007) (161,686,310)
Intangible assets (2,830,925) (58,671,561)
Other noncurrent assets (83,018,151) (132,763,055)
Net cash flows used in investing activities (2,898,986,272) (5,843,694,029)
(Forward)
- 2 -
For the Six-Month Periods
Ended June 30
2016 2015
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of treasury stock (P=45,095,117) –
Proceeds from availment of long-term debts (Note 13) – P=9,442,483,901
Payments of:
Long term debt (2,345,639,407) (9,418,238,750)
Interest and other financing charges (2,230,493,722) (2,234,006,099)
Cash dividends (Note 14) (2,773,956,000) (2,010,500,000)
Net cash flows used in financing activities (7,395,184,246) (4,220,260,948)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (2,053,840,957) 1,423,811,019
EFFECT OF FOREIGN EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS 17,095,930 (1,819,966)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 17,613,921,891 14,010,213,414
CASH AND CASH EQUIVALENTS AT END OF PERIOD
(Notes 5 and 23) P=15,577,176,864 P=15,432,204,467
See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.
ENERGY DEVELOPMENT CORPORATION (A Subsidiary of Red Vulcan Holdings Corporation)
AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Corporate Information
General
Energy Development Corporation (the “Parent Company” or “EDC”) was incorporated in the
Philippines and registered with the Securities and Exchange Commission on March 5, 1976.
Beginning December 13, 2006, the common shares of EDC were listed and traded in the
Philippine Stock Exchange.
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 is the parent company of EDC while Lopez, Inc. is the ultimate parent company.
Principal Office Address
The registered principal office address is at 38th Floor, One Corporate Centre, Julia Vargas
Avenue corner Meralco Avenue, Ortigas Center, Pasig City.
Authorization for Issuance of the Unaudited Interim Condensed Consolidated Financial
Statements
The interim condensed consolidated financial statements were reviewed, approved and authorized
for issuance by the Board of Directors (BOD) thru the Audit and Governance Committee on
August 10, 2016.
2. Basis of Preparation
The unaudited interim condensed consolidated financial statements of the Company as of
June 30, 2016 and for the six-month periods ended June 30, 2016 and 2015 have been prepared in
accordance with Philippine Accounting Standard (PAS) 34, Interim Financial Reporting. The
unaudited interim condensed consolidated financial statements do not include all the information
and disclosures required in the annual financial statements, and should be read in conjunction with
the Company’s annual financial statements as at December 31, 2015.
The unaudited interim condensed consolidated financial statements have been prepared on a
historical cost basis, except for the financial assets at fair value through profit or loss (FVPL),
derivative instruments and available-for-sale (AFS) investments that are measured at fair value.
The unaudited interim condensed consolidated financial statements are presented in Philippine
peso (Peso), which is the Parent Company’s functional currency. All values are rounded to the
nearest peso, except when otherwise indicated.
- 2 -
3. Significant Accounting Policies
The accounting policies adopted in the preparation of the unaudited interim condensed
consolidated financial statements are consistent with those followed in the preparation of the
Company’s annual consolidated financial statements as of and for the year ended
December 31, 2015, except for the adoption of the following amended accounting standards that
became effective beginning January 1, 2016.
Effective January 1, 2016
PFRS 10, Consolidated Financial Statements, and PAS 28, Investments in Associates and
Joint Ventures - Investment Entities: Applying the Consolidation Exception
(Amendments)
These amendments clarify that the exemption in PFRS 10 from presenting consolidated
financial statements applies to a parent entity that is a subsidiary of an investment entity that
measures all of its subsidiaries at fair value and that only a subsidiary of an investment entity
that is not an investment entity itself and that provides support services to the investment
entity parent is consolidated. The amendments also allow an investor (that is not an
investment entity and has an investment entity associate or joint venture), when applying the
equity method, to retain the fair value measurement applied by the investment entity associate
or joint venture to its interests in subsidiaries. These amendments are effective for annual
periods beginning on or after January 1, 2016. These amendments are not applicable to the
Company since none of the entities within the Company is an investment entity nor does the
Company have investment entity associates or joint venture.
PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements
(Amendments)
The amendments will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities
already applying PFRS and electing to change to the equity method in its separate financial
statements will have to apply that change retrospectively. For first-time adopters of PFRS
electing to use the equity method in its separate financial statements, they will be required to
apply this method from the date of transition to PFRS. The amendments are effective for
annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments do not have any impact on the Company’s unaudited interim condensed
consolidated financial statements.
PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations
(Amendments)
The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an
interest in a joint operation, in which the activity of the joint operation constitutes a business
must apply the relevant PFRS 3 principles for business combinations accounting. The
amendments also clarify that a previously held interest in a joint operation is not remeasured
on the acquisition of an additional interest in the same joint operation while joint control is
retained. In addition, a scope exclusion has been added to PFRS 11 to specify that the
amendments do not apply when the parties sharing joint control, including the reporting entity,
are under common control of the same ultimate controlling party.
- 3 -
The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation and are prospectively
effective for annual periods beginning on or after January 1, 2016, with early adoption
permitted. These amendments do not have any impact on the Company as there has been no
interest acquired in a joint operation during the period.
PAS 1, Presentation of Financial Statements - Disclosure Initiative (Amendments)
The amendments are intended to assist entities in applying judgment when meeting the
presentation and disclosure requirements in PFRS. They clarify the following:
That entities shall not reduce the understandability of their financial statements by either
obscuring material information with immaterial information; or aggregating material items
that have different natures or functions
That specific line items in the profit or loss and OCI and the statement of financial
position may be disaggregated
That entities have flexibility as to the order in which they present the notes to financial
statements
That the share of OCI of associates and joint ventures accounted for using the equity
method must be presented in aggregate as a single line item, and classified between those
items that will or will not be subsequently reclassified to profit or loss.
Early application is permitted and entities do not need to disclose that fact as the amendments
are considered to be clarifications that do not affect an entity’s accounting policies or
accounting estimates. These amendments do not have impact on the Company.
PFRS 14, Regulatory Deferral Accounts
PFRS 14 is an optional standard that allows an entity, whose activities are subject to
rate-regulation, to continue applying most of its existing accounting policies for regulatory
deferral account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14
must present the regulatory deferral accounts as separate line items on the statement of
financial position and present movements in these account balances as separate line items in
the statement of profit or loss and other comprehensive income. The standard requires
disclosures on the nature of, and risks associated with, the entity’s rate-regulation and the
effects of that rate-regulation on its financial statements. PFRS 14 is effective for annual
periods beginning on or after January 1, 2016. Since the Company is an existing PFRS
preparer and is not involved in any rate-regulated activities, this standard does not apply.
PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants
(Amendments)
The amendments change the accounting requirements for biological assets that meet the
definition of bearer plants. Under the amendments, biological assets that meet the definition
of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply.
After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost
(before maturity) and using either the cost model or revaluation model (after maturity). The
amendments also require that produce that grows on bearer plants will remain in the scope of
PAS 41 measured at fair value less costs to sell. For government grants related to bearer
plants, PAS 20, Accounting for Government Grants and Disclosure of Government Assistance,
will apply. The amendments are retrospectively effective for annual periods beginning on or
- 4 -
after January 1, 2016, with early adoption permitted. These amendments do not have any
impact to the Company as the Company does not have any bearer plants.
PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of
Acceptable Methods of Depreciation and Amortization (Amendments)
The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part)
rather than the economic benefits that are consumed through use of the asset. As a result, a
revenue-based method cannot be used to depreciate property, plant and equipment and may
only be used in very limited circumstances to amortize intangible assets. The amendments are
effective prospectively for annual periods beginning on or after January 1, 2016, with early
adoption permitted. These amendments do not have any impact to the Company given that the
Company has not used a revenue-based method to depreciate its non-current assets.
Annual Improvements to PFRSs (2012-2014 cycle)
The Annual Improvements to PFRSs (2012-2014 cycle) are effective for annual periods beginning
on or after January 1, 2016 and do not have any impact on the Company. They include:
PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in
Methods of Disposal
The amendment is applied prospectively and clarifies that changing from a disposal through
sale to a disposal through distribution to owners and vice-versa should not be considered to be
a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no
interruption of the application of the requirements in PFRS 5. The amendment also clarifies
that changing the disposal method does not change the date of classification.
PFRS 7, Financial Instruments: Disclosures - Servicing Contracts
PFRS 7 requires an entity to provide disclosures for any continuing involvement in a
transferred asset that is derecognized in its entirety. The amendment clarifies that a servicing
contract that includes a fee can constitute continuing involvement in a financial asset. An
entity must assess the nature of the fee and arrangement against the guidance in PFRS 7 in
order to assess whether the disclosures are required. The amendment is to be applied such that
the assessment of which servicing contracts constitute continuing involvement will need to be
done retrospectively. However, comparative disclosures are not required to be provided for
any period beginning before the annual period in which the entity first applies the
amendments.
PFRS 7 - Applicability of the Amendments to PFRS 7 to Condensed Interim Financial
Statements
This amendment is applied retrospectively and clarifies that the disclosures on offsetting of
financial assets and financial liabilities are not required in the condensed interim financial
report unless they provide a significant update to the information reported in the most recent
annual report.
- 5 -
PAS 19, Employee Benefits - Regional Market Issue Regarding Discount Rate
This amendment is applied prospectively and clarifies that market depth of high quality
corporate bonds is assessed based on the currency in which the obligation is denominated,
rather than the country where the obligation is located. When there is no deep market for high
quality corporate bonds in that currency, government bond rates must be used.
PAS 34, Interim Financial Reporting - Disclosure of Information ‘Elsewhere in the Interim
Financial Report’
The amendment is applied retrospectively and clarifies that the required interim disclosures
must either be in the interim financial statements or incorporated by cross-reference between
the interim financial statements and wherever they are included within the greater interim
financial report (i.e., in the management commentary or risk report).
4. Operating Segment Information
The Company’s operating segments are determined based on geographical segment, with each
segment representing a strategic business location that has similar economic and political
conditions, proximity of operations and specific risks associated with operations in a particular
area.
The Company’s identified reportable segments below are consistent with the segments reported to
the BOD, which is the Chief Operating Decision Maker (CODM) of the Company:
a. Leyte Geothermal Business Unit (LGBU) - This segment pertains to Leyte geothermal
production field and power plants. This includes projects in Tongonan, Mahanagdong, Upper
Mahiao, Malitbog, Unified Leyte Geothermal Energy, Inc. (ULGEI) and other projects in
Leyte Province.
b. Negros Island Geothermal Business Unit (NIGBU) - This segment refers to Southern Negros
geothermal production field and power plants. Power plants included in NIGBU are
Palinpinon I, Palinpinon II and Nasulo.
c. Bacon-Manito Geothermal Business Unit (BGBU) - This segment relates to Bacon-Manito
geothermal production field and power plants.
d. Mt. Apo Geothermal Business Unit (MAGBU) - This segment refers to Mt. Apo geothermal
production field and power plants.
e. Pantabangan/Masiway - This segment relates to Pantabangan-Masiway hydroelectric complex
located in Nueva Ecija Province.
f. Wind-Ilocos Norte Business Unit (WINBU) - This segment pertains to both wind and solar
projects commercially operating in Northern Luzon.
g. All others - refers to other renewable energy projects including foreign investments and Head
Office of the Company.
- 6 -
Management monitors the operating results of the business segments separately for the purpose of
making decisions about resources to be allocated and of assessing performance. Finance costs,
finance income, income taxes and other charges and income are managed on a group basis.
Segment performance is evaluated based on net income for the period and earnings before interest,
taxes, and depreciation and amortization (EBITDA). Net income for the period is measured
consistent with consolidated net income reported in the unaudited interim condensed consolidated
financial statements. EBITDA is calculated as revenues minus costs of sale of electricity and
general and administrative expenses, excluding non-cash items such as depreciation and
amortization, impairment losses on non-financial assets, and loss on disposal of property, plant
and equipment, among others.
- 7 -
Financial information on the operating
segments are summarized as follows: Pantabangan/
LGBU NIGBU BGBU MAGBU Masiway WINBU All others Total
For the Six-Month Period Ended
June 30, 2016
Segment revenue from external customers P=9,149,049,119 P=6,099,631,226 P=2,768,234,015 P=1,217,180,298 P=1,537,244,000 P=1,080,369,857 (P=466,500) P=21,851,242,015
Intersegment revenue (1,782,624,981) (1,974,801,390) (1,088,359,514) – – – – (4,845,785,885)
Segment revenue 7,366,424,138 4,124,829,836 1,679,874,501 1,217,180,298 1,537,244,000 1,080,369,857 (466,500) 17,005,456,130
Segment expenses (4,331,475,117) (1,646,064,045) (1,035,983,730) (858,301,994) (474,591,151) (669,613,145) – (9,016,029,182)
Unallocated expenses – – – – – – (115,621,272) (115,621,272)
Interest income 56,485,678 24,098,230 30,810,895 9,846,452 3,696,109 10,758,455 1,573 135,697,392
Interest expense (808,234,140) (420,695,911) (269,380,038) (164,496,594) (63,966,524) (407,260,191) (161,953,081) (2,295,986,479)
Other income (expense) - net 63,000,000 196,714,956 78,094,968 11,530,375 1,100,855 (15,107,489) (2,713,851) 332,619,814
Benefit from (provision for) income taxes (302,559,443) (286,616,923) (33,931,940) (14,908,902) (255,941,576) 1,389,089 53,459,873 (839,109,822)
Net income (loss) P=2,043,641,116 P=1,992,266,143 P=449,484,656 P=200,849,635 P=747,541,713 P=536,576 (P=227,293,258) P=5,207,026,581
EBITDA P=4,152,605,898 P=2,956,268,165 P=974,429,748 P=571,994,476 P=1,278,225,878 P=787,578,041 (P=466,500) P=10,720,635,705
Unallocated expenses (93,638,403)
P=10,626,997,303
Pantabangan/
LGBU NIGBU BGBU MAGBU Masiway WINBU All others Total
For the Six-Month Period Ended
June 30, 2015
Segment revenue from external customers P=8,154,998,921 P=6,427,116,388 P=3,088,506,354 P=1,165,933,091 P=1,208,676,865 P=921,159,368 P=762,548,161 P=21,728,939,148
Intersegment revenue (1,174,027,238) (2,369,056,096) (860,549,243) – – – (549,910,256) (4,953,542,833)
Segment revenue 6,980,971,683 4,058,060,292 2,227,957,111 1,165,933,091 1,208,676,865 921,159,368 212,637,905 16,775,396,315
Segment expenses (4,208,393,160) (1,878,346,391) (1,215,017,121) (806,276,322) (483,607,614) (520,324,719) – (9,111,965,327)
Unallocated expenses – – – – – – (463,062,443) (463,062,443)
Interest income 71,911,804 48,271,533 14,790,940 7,877,090 3,440,385 3,652,055 5,387 149,949,194
Interest expense (839,345,213) (519,605,499) (238,309,020) (157,325,956) (86,377,183) (374,384,101) (162,536,008) (2,377,882,980)
Other income (expense) - net 538,634,463 (64,381,323) 7,278,473 (63,537,194) (125,015) (65,501,687) 42,944,610 395,312,327
Benefit from (provision for) income taxes (265,375,636) (146,998,169) 15,692,932 (8,476,723) (162,249,985) 4,327,343 (4,166,199) (567,246,437)
Net income (loss) P=2,278,403,941 P=1,497,000,443 P=812,393,315 P=138,193,986 P=479,757,453 (P=31,071,741) (P=374,176,748) P=4,800,500,649
EBITDA P=3,768,623,129 P=2,628,818,160 P=1,264,677,655 P=579,838,965 P=940,610,130 P=734,184,110 P=212,637,906 P=10,129,390,055
Unallocated expenses (441,147,383)
P=9,688,242,672
- 8 -
LGBU NIGBU BGBU MAGBU WINBU
Pantabangan/ Masiway Elimination Total
As of and for the period ended
June 30, 2016
Segment assets P=79,578,152,617 P=22,411,586,659 P=13,173,816,379 P=9,891,360,175 P=20,642,473,849 P=7,613,142,336 (P=64,051,830,120) P=89,258,701,895 Unallocated corporate assets 46,508,467,202
Total assets P=135,767,169,097
Segment liabilities P=37,817,745,109 P=18,642,094,612 P=15,785,196,275 P=4,825,228,483 P=15,752,225,331 P=3,261,393,165 (P=64,502,399,812) P=31,581,483,163
Unallocated corporate liabilities 54,802,373,425
Total liabilities P=86,383,856,588
Capital expenditures P=2,346,452,556 P=145,911,572 P=96,107,143 P=89,318,756 P=28,223,147 P=17,143,120 P=– ₱2,723,156,294
Unallocated capital expenditures 342,660,481
Total capital expenditures P=3,065,816,775
Depreciation and amortization P=1,100,519,950 P=468,976,279 P=326,435,166 P=209,790,282 P=374,203,822 P=215,573,029 P=13,263,106 P=2,708,761,634
Unallocated depreciation and amortization 8,719,762
Total depreciation and amortization P=2,717,481,396
Other non-cash items P=17,136,927 P=8,526,095 P=4,103,812 P=3,325,890 P=2,617,507 P=– P=– P=35,710,231
Total other non-cash items P=35,710,231
Pantabangan / LGBU NIGBU BGBU MAGBU WINBU Masiway Elimination Total
As of and for the year ended December 31, 2015
Segment assets P=78,058,899,778 P=32,936,609,463 P=17,500,580,950 P=9,818,726,619 P=7,403,627,346 P=21,135,652,224 (P=74,253,610,830) P=92,600,485,550
Unallocated corporate assets 43,440,564,866
Total assets P=136,041,050,416
Segment liabilities P=36,810,240,513 P=30,236,009,726 P=19,286,579,171 P=4,802,875,925 P=3,453,122,772 P=15,519,077,210 (P=74,528,409,031) P=35,579,496,286
Unallocated corporate liabilities 53,231,873,863
Total liabilities P=88,811,370,149
Capital expenditure P=3,190,355,706 P=2,000,554,649 P=1,073,681,653 P=259,986,884 P=199,538,446 P=2,299,087,704 (P=225,590,000) P=8,797,615,042
Unallocated capital expenditure 1,660,293,121
Total capital expenditure P=10,457,908,163
Depreciation and amortization P=2,092,459,202 P=918,912,641 P=518,360,990 P=427,234,777 P=432,800,865 P=691,251,183 P=– P=5,081,019,658
Unallocated depreciation and amortization 74,817,039
Total depreciation and amortization P=5,154,836,697
Other non-cash items P=105,122,238 P=34,343,277 P=15,612,965 P=3,761,570 P=– P=8,834,795 P=– P=167,674,845
Unallocated non-cash items 23,465,622
Total other non-cash items P=191,140,467
- 9 -
The following table shows the Company’s reconciliation of EBITDA to the consolidated net
income for the six-month periods ended June 30, 2016 and 2015:
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
EBITDA P=10,626,997,303 P=9,688,242,672
Add (deduct):
Depreciation and amortization (Notes 9, 10,
15 and 16) (2,717,481,396) (2,464,699,297)
Interest expense (Note 17) (2,295,986,479) (2,377,882,980)
Provision for income tax (839,109,822) (567,246,437)
Proceeds from insurance claims 293,020,992 751,092,490
Interest income (Note 18) 135,697,392 149,949,194
Provision for doubtful accounts (Note 16) (44,891,208) (30,953,052)
Foreign exchange gains - net (Note 19) (15,960,178) (233,996,017)
Reversal of impairment of parts
and supplies inventories (Note 16) 9,180,977 7,778,222
Miscellaneous - net (Note 20) 55,559,000 (121,784,146)
Consolidated net income P=5,207,026,581 P=4,800,500,649
In the normal course of business, entities within the Company engage in intercompany sale and
purchase of steam and electricity. Intersegment revenues are all eliminated in consolidation.
Segment information is measured in conformity with the accounting policies adopted for
preparing and presenting the consolidated financial statements. Intersegment revenue are made at
normal commercial terms and conditions.
Unallocated expenses pertain to expenses of the corporate, technical and administrative support
groups while unallocated corporate assets and liabilities which include among others certain cash
and cash equivalents, property, plant and equipment, parts and supplies inventories, trade and
other payables and retirement and post-employment benefits, pertain to the Head Office and are
managed on a group basis.
5. Cash and Cash Equivalents
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
Cash on hand and in banks P=2,154,338,897 P=2,389,289,290
Cash equivalents 13,422,837,967 15,224,632,601
P=15,577,176,864 P=17,613,921,891
Cash in banks earn interest at the respective bank deposit rates. Cash equivalents consist of
money market placements, which are made for varying periods of up to three months depending
on the immediate cash requirements of the Company.
- 10 -
6. Trade and Other Receivables
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
Trade P=6,290,738,522 P=5,202,441,632
Others:
Loans and notes receivables 80,371,629 89,808,207
Non-trade accounts receivable 65,760,112 126,859,526
Advances to employees 31,807,291 30,135,380
Employee receivables 9,156,975 9,905,713
187,096,007 256,708,826
6,477,834,529 5,459,150,458
Less allowance for doubtful accounts 113,020,047 112,923,072
P=6,364,814,482 P=5,346,227,386
Trade receivables are noninterest-bearing and are generally collectible in 30 to 60 days. Majority
of the Company’s trade receivables arose from sale of electricity to National Power Corporation.
7. Parts and Supplies Inventories
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
Drilling tubular products and equipment spares P=1,506,599,482 P=1,465,329,233
Power plant spares 870,209,114 782,543,298
Pump, production/steam gathering system, steam
turbine, valves and valve spares 772,254,911 694,433,653
Electrical, cable, wire product and compressor
spares 103,600,021 90,825,523
Construction and hardware supplies, stationeries and
office supplies, hoses, communication and other
spares and supplies 73,033,479 65,697,140
Heavy equipment spares 55,740,809 59,415,737
Automotive, mechanical, bearing, seals, v-belt,
gasket, tires and batteries 49,382,584 35,132,285
Chemical, chemical products, gases and catalyst 31,798,112 36,621,297
Measuring instruments, indicators and tools, safety
equipment and supplies 21,683,309 21,945,193
P=3,484,301,821 P=3,251,943,359
- 11 -
8. Other current assets
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
Debt service reserve account (Note 13) P=1,396,629,283 P=1,324,249,208
Tax credit certificates 301,591,775 279,694,215
Withholding tax certificates 238,217,488 157,896,581
Prepaid expenses 262,717,993 450,489,959
Advances to contractors 46,099,363 49,716,522
Others – 1,372,214
P=2,245,255,902 P=2,263,418,699
- 12 -
9. Property, Plant and Equipment
June 30, 2016 (Six Months)
Land Power Plants
Fluid Collection
and Recycling
System (FCRS)
and Production
Wells
Buildings,
Improvements
and Other
Structures
Exploration,
Machinery and
Equipment
Transportation
Equipment
Furniture,
Fixtures and
Equipment
Laboratory
Equipment
Construction
in Progress Total
Cost
Balances at January 1 P=624,552,251 P=64,510,830,206 P=33,259,806,881 P=4,543,063,384 P=4,285,760,412 P=163,740,940 P=1,340,722,365 P=811,692,784 P=10,002,975,160 P=119,543,144,383
Additions 45,369,199 15,061,356 15,464,277 2,360,823 9,752,086 3,792,857 18,264,950 42,670,759 2,913,080,468 3,065,816,775
Disposals/retirements – – – – (149,240) (8,961,076) (29,029,393) (102,693) – (38,242,402)
Reclassifications (8,688,492) 292,413,267 1,776,488,655 282,368,171 869,287 2,310,291 31,235,321 4,953,414 (2,524,984,111) (143,034,197)
Balances at June 30 661,232,958 64,818,304,829 35,051,759,813 4,827,792,378 4,296,232,545 160,883,012 1,361,193,243 859,214,264 10,391,071,517 122,427,684,559
Accumulated Depreciation,
Amortization and Impairment
Balances at January 1 17,627,581 15,195,703,581 10,507,769,251 1,172,790,122 2,737,318,225 92,947,565 788,132,389 439,794,568 23,322,433 30,975,405,715
Depreciation and amortization for the
period
– 1,685,422,265 541,651,668 137,911,016 131,830,535 11,523,042 81,245,984 39,784,452
– 2,629,368,962 Disposals/Retirement – – – – (79,071) (6,868,228) (14,711,037) (95,507) – (21,753,843)
Reclassifications – (10,719,477) 298,610 7,508,687 16,820,636 546,910 296,977 424,055 – 15,176,398
Balances at June 30 17,627,581 16,870,406,369 11,049,719,529 1,318,209,825 2,885,890,325 98,149,289 854,964,313 479,907,568 23,322,433 33,598,197,232
Net Book Value P=643,605,377 P=47,947,898,460 P=24,002,040,284 P=3,509,582,553 P=1,410,342,220 P=62,733,723 P=506,228,930 P=379,306,696 P=10,367,749,084 P=88,829,487,327
- 13 -
December 31, 2015 (One Year)
Land Power Plants
FCRS and
Production Wells
Buildings,
Improvements
and Other
Structures
Exploration,
Machinery and
Equipment
Transportation
Equipment
Furniture,
Fixtures and
Equipment
Laboratory
Equipment
Construction
in Progress Total
Cost
Balances at January 1 P=589,066,312 P=59,577,057,719 P=30,192,192,743 P=4,239,601,990 P=4,251,389,923 P=151,535,137 P=1,281,953,440 P=706,277,459 P=8,038,618,446 P=109,027,693,169
Additions 35,485,939 1,602,819,287 191,722,229 13,313,740 70,476,664 26,915,182 50,514,107 95,540,309 8,371,120,706 10,457,908,163
Disposals/retirement – (98,704,767) – (331,313) (20,121,483) (18,576,376) (17,163,789) (1,391,692) – (156,289,420)
Reclassifications – 3,429,657,967 2,875,891,909 290,478,967 (15,984,692) 3,866,997 25,418,607 11,266,708 (6,406,763,992) 213,832,471
Balances at December 31 624,552,251 64,510,830,206 33,259,806,881 4,543,063,384 4,285,760,412 163,740,940 1,340,722,365 811,692,784 10,002,975,160 119,543,144,383
Accumulated Depreciation,
Amortization and Impairment
Balances at January 1 17,627,581 12,069,397,981 9,457,338,583 866,221,681 2,475,756,340 81,036,916 622,573,853 364,215,824 – 25,954,168,759 Depreciation and amortization for the year – 3,172,391,661 1,050,430,668 304,253,687 304,370,857 24,970,326 173,166,380 76,845,708 – 5,106,429,287
Disposals/retirements – (68,346,907) – (177,507) (16,533,475) (13,113,088) (9,248,861) (1,380,497) – (108,800,335)
Reclassifications – 22,260,846 – 2,492,261 (26,275,497) 53,411 1,641,017 113,533 – 285,571
Reversal of previously impaired property,
plant and equipment – – – – – – – – 23,322,433 23,322,433
Balances at December 31 17,627,581 15,195,703,581 10,507,769,251 1,172,790,122 2,737,318,225 92,947,565 788,132,389 439,794,568 23,322,433 30,975,405,715
Net Book Value P=606,924,670 P=49,315,126,625 P=22,752,037,630 P=3,370,273,262 P=1,548,442,187 P=70,793,375 P=552,589,976 P=371,898,216 P=9,979,652,727 P=88,567,738,668
- 14 -
Estimated Rehabilitation and Restoration Costs
FCRS and production wells include the estimated rehabilitation and restoration costs of the
Company’s steam fields and power plants’ contract areas at the end of the contract period. These
were based on technical estimates of probable costs, which may be incurred by the Company in
the rehabilitation and restoration of the said steam fields and power plants’ contract areas from
2031 up to 2044, discounted using the Company’s risk-adjusted rate.
Similarly, the Company estimated a provision related to the removal and disposal of all wind farm
materials, equipment and facilities from the contract areas at the end of contract period. The
amount of provision was recorded as part of the costs of power plants.
These costs, net of accumulated amortization, amounted to P=677.3 million and P=682.3 million as
of June 30, 2016 and December 31, 2015, respectively. As of June 30, 2016 and
December 31, 2015, the provision for rehabilitation costs recognized under “Provisions and other
long-term liabilities” amounted to P=1,090.9 million and P=1,058.0 million, respectively.
Collection of liquidated damages from Weir Engineering Services Limited (Weir)
On February 2, 2016, BGI received the International Court of Arbitration of the International
Chamber of Commerce (ICC) Tribunal’s Phase 1 Award dated February 1, 2016, wherein Weir
was ordered to pay BGI US$4.4 million pursuant to the favorable determination by the Engineer,
Parsons Brinckerhoff Philippines Inc. that sums are owed by Weir to BGI under the Contract for
Works - Completion of Works to Steam Turbine and Generator of Units 1, 2 and 3 dated March
29, 2012. Weir was also ordered to reimburse BGI for the legal costs incurred amounting to
US$0.9 million.
Weir has paid US$4.4 million (P=209.9 million) and US$0.9 million (P=42.3 million) on
February 9, 2016 and February 23, 2016, respectively.
On June 27, 2016, all claims arising under the contract between BGI and Weir have been settled
satisfactorily and that pursuant to this, BGI has agreed to return the US$1.9 million
(P=88.9 million) to Weir, and that BGI and Weir have agreed to jointly take steps to cause the
discontinuance of the arbitration.
The net amount received of US$2.5 million (P=122.0 million) for the liquidated damages was
accounted as reduction from property, plant, and equipment.
- 15 -
Depreciation and Amortization
Details of depreciation and amortization charges recognized in the unaudited interim consolidated
statements of income are shown below:
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
Property, plant and equipment P=2,629,368,962 P=2,400,131,359
Intangible assets (Note 10) 88,112,434 64,567,938
P=2,717,481,396 P=2,464,699,297
Costs of sales of electricity (Note 15) P=2,568,757,580 P=2,335,845,028
General and administrative (Note 16) 148,723,816 128,854,269
P=2,717,481,396 P=2,464,699,297
10. Goodwill and Intangible Assets
June 30, 2016 (Six Months)
Goodwill Water Rights
Other Intangible
Assets Total
Cost
Balances at January 1 P=2,651,268,704 P=2,404,778,918 P=203,718,042 P=5,259,765,664
Additions – – 2,830,925 2,830,925
Balances at June 30 P=2,651,268,704 P=2,404,778,918 P=206,548,967 P=5,262,596,589
Accumulated Amortization
Balances at January 1 – 877,744,306 92,761,024 970,505,330
Amortization (Notes 15 and 16) – 48,095,578 40,016,856 88,112,434
Balances at June 30 – 925,839,884 132,777,880 105,861,7765
Net Book Value P=2,651,268,704 P=1,478,939,034 P=73,771,086 P=4,203,978,824
2015
Goodwill Water Rights
Other
Intangible
Assets Total
Cost
Balances at January 1 P=2,651,447,390 P=2,404,778,918 P=312,519,889 P=5,368,746,197
Additions – – 14,118,479 14,118,479
Reclassifications (Note 9) – – (122,920,326) (122,920,326)
Foreign exchange translation
adjustment (178,686) – – (178,686)
Balances at December 31 2,651,268,704 2,404,778,918 203,718,042 5,259,765,664
Accumulated Amortization
Balances at January 1 – 781,553,149 44,639,260 826,192,409
Amortization (Notes 15 and 16) – 96,191,157 48,121,764 144,312,921
Balances at December 31 – 877,744,306 92,761,024 970,505,330
Net Book Value P=2,651,268,704 P=1,527,034,612 P=110,957,018 P=4,289,260,334
Water rights are amortized using the straight-line method over 25 years, which is the term of the
agreement with National Irrigation Administration. The remaining amortization period of water
rights is 15.4 years as of June 30, 2016.
Other intangible assets pertain to the Company’s accounting software.
- 16 -
11. Other Noncurrent Assets
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
Input value added tax (VAT) P=4,173,688,227 P=4,471,008,284
Tax credit certificates 2,634,775,274 2,655,267,017
Long-term receivables 141,789,764 127,074,578
Prepaid expenses 634,583,942 534,594,491
Special deposits and funds 130,071,375 117,103,382
Others 1,421,673,760 1,112,461,952
9,136,582,342 9,017,509,704
Less allowance for doubtful accounts 446,867,659 433,294,147
P=8,689,714,683 P=8,584,215,557
Provision for doubtful accounts pertaining to input VAT and long-term receivables amounted to
P=44.89 million and P=31.6 million for the six-month periods ended June 30, 2016 and 2015,
respectively
(Note 16).
Others
Others include capital expenditures funding made by the Company to Enerco amounting to
P=1,229.4 million and P=947.1 million as of June 30, 2016 and December 31, 2015, respectively.
The Company intends to capitalize these capital expenditures funding against the shares
subscription once the Company decides to continue the Mariposa Project which is dependent on
the results of geological and other technical studies on the project.
12. Trade and Other Payables
June 30,
2016
(Unaudited)
December 31,
2015
(Audited)
Accounts payable:
Third parties P=-4,719,120,373 P=6,106,304,175
Related parties (Note 22) 1,146,989,138 1,972,851,687
Accrued interest on long-term debts 895,656,474 899,937,453
Withholding and other taxes payable 256,337,314 385,542,255
Government share payable 62,567,328 58,778,040
Deferred credits 25,004,390 48,755,834
SSS and other contributions payable 4,501,037 4,193,828
Other payables 1,868,739,444 513,575,479
P=8,978,915,498 P=9,989,938,751
Accounts payable are noninterest-bearing and are normally settled on a 30 to 60 days term.
The accrued interest represents interest accrual on outstanding loans.
“Other payables” account include mainly provision for shortfall generation.
- 17 -
13. Long-term Debts
Creditor/Project Maturities Interest Rate
June 30, 2016
(Unaudited)
December 31, 2015 (Audited)
US$300.0 Million Notes January 20, 2021 6.5% P=14,031,504,179 P=14,023,483,523
Peso Public Bonds
Series 2 - P=3.5 billion December 4, 2016 9.3327% 3,495,902,327 3,491,326,269
International Finance Corporation
(IFC)
IFC 1 - P=4.1 billion 2012-2033 7.4% per annum for the
first five years subject to
repricing for another
five to 10 years
2,367,203,004 2,535,091,675
IFC 2 - P=3.3 billion 2013-2025 6.6570% 2,349,360,773 2,471,717,976
Fixed Rate Note Facility (FXCN)
P=4.0 billion 2012-2022 6.6108% per annum
from April 4, 2012 to April 30, 2015 and
5.25% from April 30,
2015 until maturity
3,670,634,269 3,737,122,040
P=3.0 billion 2012-2022 6.6173% per annum
from April 4, 2012 to
April 30, 2015 and 5.25% from April 30,
2015 until maturity
2,751,969,014 2,801,750,828
Refinanced Syndicated Term Loan
US$175.0 million 2013 - 2017 LIBOR plus a margin
of 175 basis points 4,513,996,049 4,916,764,416
2013 Peso Fixed-Rate Bonds P=4.0 billion May 3, 2023 4.7312% 3,961,766,613 3,959,423,253
P=3.0 billion May 3, 2020 4.1583% 2,946,635,328 2,943,911,465
US$80 Million Term Loan June 21, 2018 1.8% margin plus LIBOR
3,389,423,339 3,568,385,220
Commercial Debt Facility US$37.5 Million October 23, 2029 2% margin plus
LIBOR 1,638,312,883 1,675,035,601
ECA Debt Facility US$150 Million October 23, 2029 2.35% margin plus LIBOR
P=6,495,359,278 P=6,638,811,162
Commercial Debt Facility P=5.6 Billion October 23, 2029 2% + PDST-F rate 5,277,214,194 5,398,440,226
P=291.2 Million Term Loan December 17, 2030 5.75% 289,058,798 288,932,892
Restructured Philippine National Bank
(PNB) and Allied Bank Peso Loan
November 7, 2022 1.5% + PDST-F rate
or 1.0% + BSP overnight rate
2,996,250,000 3,187,500,000
P=8.5 Billion Term Loan March 6, 2022 5.25% 7,421,065,630 7,922,729,666
P=5.0 Billion Term Loan September 9, 2025 5.25% 4,656,488,083 4,951,167,360
Total 72,252,143,761 74,511,593,572
Less current portion 11,316,843,873 7,860,904,237
Noncurrent portion P=60,935,299,888 P=66,650,689,335
The Company’s foreign-currency denominated long-term debts were translated into Philippine
pesos based on the prevailing foreign exchange rates at the date of the unaudited interim
consolidated statement of financial position (USD1= P=47.06 on June 30, 2016 and
USD1= P=47.06 on December 31, 2015).
EDC Parent Loan
In June 2016, the Parent Company executed a loan agreement with Union Bank of the Philippines
for the total amount of P=5.0 billion.
- 18 -
14. Dividends
Parent Company
On March 9, 2016, EDC declared cash dividend amounting to P=2.6 billion to its common
shareholders and P=7.5 million to its preferred shareholder of record as of March 23, 2016 payable
on or before April 12, 2016.
First Gen Hydro
On January 20, 2016, FG Hydro paid cash dividend amounting to P=142.8 million to its
non-controlling common stockholder.
15. Costs of Sale of Electricity
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
Depreciation and amortization P=2,568,757,580 P=2,335,845,028
Personnel costs 1,162,007,127 1,116,240,407
Rental, insurance and taxes 807,378,619 608,887,437
Purchased services and utilities (Note 22) 891,554,222 1,247,138,541
Repairs and maintenance 538,898,872 542,665,191
Parts and supplies issued 242,704,699 371,185,951
Government share 132,077,490 133,104,635
Business and related expenses 40,637,529 73,280,023
P=6,384,016,138 P=6,428,347,213
16. General and Administrative Expenses
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
Personnel costs P=1,093,476,030 P=1,030,915,152
Purchased services and utilities 964,300,844 1,090,287,949
Rental, insurance and taxes 250,348,268 425,221,692
Depreciation and amortization 148,723,816 128,854,269
Business and related expenses 146,367,751 310,738,976
Repairs and maintenance 57,952,357 62,270,776
Parts and supplies issued 50,755,019 75,216,913
Provision for doubtful accounts (Note 11) 44,891,208 30,953,052
Reversal of impairment of parts and supplies
inventories (9,180,977) (7,778,222)
P=2,747,634,316 P=3,146,680,557
- 19 -
17. Interest Expense
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
Interest on long-term debts including amortization
of transaction costs (Note 13) P=2,268,964,874 P=2,356,649,157
Interest accretion on provision for rehabilitation
and restoration costs 23,116,051 17,328,270
Interest on liability from litigation 3,905,554 3,905,553
P=2,295,986,479 P=2,377,882,980
18. Interest Income
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
Interest on placements (Note 5) P=127,463,429 P=141,920,323
Interest on overdue accounts/others 6,905,433 2,831,019
Interest on savings/current accounts 595,695 4,472,047
Others 732,835 725,805
P=135,697,392 P=149,949,194
19. Foreign Exchange Gains (Losses) - net
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
Realized foreign exchange losses - net (P=18,369,047) (P=16,116,289)
Unrealized foreign exchange gains - net 2,408,869 250,112,306
(P=15,960,178) P=233,996,017
This account pertains mainly to foreign exchange adjustments on repayment of loans and
restatement of outstanding balances of foreign currency-denominated loans, short-term placements
and cash in banks.
- 20 -
20. Miscellaneous Income
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
Derivative gains - net P=51,900,600 P=–
Mark to market gain - financial asset at fair value
through profit or loss 43,217,858 404,429
Input VAT claims written-off (35,644,993) (87,111,648)
Gain on sale of property, plant and equipment
(Note 9) 128,755 371,246
Others (4,043,220) (35,448,173)
P=55,559,000 (P=121,784,146)
21. Earnings Per Share
The earnings per share amounts were computed as follows:
June 30,
2016
(Unaudited)
June 30,
2015
(Unaudited)
(a) Net income attributable to equity shareholders of
the Parent Company P=4,908,162,838 P=4,608,556,482
Less dividends on preferred shares 7,500,000 7,500,000
(b) Net income attributable to common shareholders
of the Parent Company P=4,900,662,838 P=4,601,056,482
(c) Weighted average number
of common shares outstanding 18,735,122,527 18,750,000,000
Basic/diluted earnings per share (b/c) P=0.262 P=0.245
The Parent Company does not have dilutive common stock equivalents as of June 30, 2016 and
2015.
22. Related Party Transactions
a. First Balfour, Inc. (First Balfour)
Following the regular bidding process, the Company awarded to First Balfour procurement
contracts of various structural and mechanical/piping works.
First Balfour is a wholly-owned subsidiary of First Holdings.
b. First Gen
First Gen provides financial consultancy, business development and other related services to
the Parent Company under a consultancy agreement beginning September 1, 2008. Such
agreement is for a period of three years up to August 31, 2011. Under the terms of the
- 21 -
agreement, billings for consultancy services shall be P=8.7 million per month plus applicable
taxes. This was increased to P=11.8 million effective September 2009 to cover the cost of
additional officers and staff assigned to the Parent Company. The consultancy agreement was
subsequently extended until December 31, 2016.
c. Other Related Parties
In the ordinary course of business, the Company avails of or grants advances from/to its
related parties for working capital requirements. Such advances are payable/collectible within
12 months and are non-interest bearing.
Following are the other related parties identified by the Company:
First Gas Holdings Corporation and First Gas Power Corporation are subsidiaries of First
Gen.
First Philippine Holdings, parent company of First Gen, is a subsidiary of Lopez Holdings
Corporation (formerly Benpres Holdings Corporation).
Bayan Telecommunications Inc. (Bayantel) is 97.3%-owned by Bayantel Holdings on
which Lopez Holdings Corporation has 47.3% ownership.
Lopez Holdings Corporation has 56.5% interest on ABS-CBN Corp. ABS-CBN
Publishing, Inc. is a wholly owned subsidiary of ABS-CBN Corp, ABS-CBN Foundation.
Rockwell Land Corporation is 86.58%-owned by First Philippine Holdings.
FEDCOR is a wholly-owned subsidiary of First Philippine Holdings.
Adtel Inc. is a wholly-owned subsidiary of Lopez, Inc.
First Philec Manufacturing Technologies Corp., Securities Transfer Services, Inc. and First
Philippine Realty Corp. (FPRC), formerly known as INAEC Development Corp, are
wholly-owned subsidiaries of First Philippine Holdings.
First Gen Energy Solutions (First GES) is a wholly-owned subsidiary of First Gen.
Thermaprime Well Services, Inc. (Thermaprime) is a subsidiary of First Balfour, a
wholly owned subsidiary of First Holdings. Thermaprime provides drilling services such
as, but not limited to, rig operations, rig maintenance, well design and engineering.
- 22 -
Following are the amounts of transactions for the six-month periods ended June 30, 2016 and
2015 and outstanding balances as of June 30, 2016 and December 31, 2015 with entities under
common control:
Balances
Transactions for the six-month period
ended June 30
(Unaudited)Transactions for the three-
month period ended March 31
(Unaudited)
June 30
UnauditedMarch
31,
2016
Unaudited
December 31
AuditedDecembe
r 31, 2015
Audited
Related Party Nature of Transaction Terms 2016 2015 2016 2015
Entities under common
control
Due from related parties
First Gen Interest-free advances Unsecured and will be
settled in cash
P=265,800,000 P=– P=179,855,238 P=–
Balances
Transactions for the six-month period
ended June 30
(Unaudited)Transactions for the three-
month period ended March 31
(Unaudited)
June 30
UnauditedMarch
31,
2016
Unaudited
December 31
AuditedDecembe
r 31, 2015
Audited
Related Party Nature of Transaction Terms 2016 2015 2016 2015
Trade and other
receivables (Note 6)
First GES Sale of electricity
Unsecured and will be
settled in cash P=135,668,506 P=174,852,505 P=29,845,902 P=40,330,538
Due to related parties
First Gen Consultancy fee Unsecured and will be
settled in cash P=194,271,104 P=182,428,235 P=32,224,044 P=97,228,235
Dividend - do - 138,849,578 – – –
Interest-free advances - do - 13,803,400 11,928,033 687,411 4,490,831
FGP Corp - do - - do - 227,805 43,300 – 2,133
First Gas Power Corporation - do - - do - – 60,880 – 48,435
P=347,151,887 P=194,460,448 P=32,911,455 P=101,769,634
Trade and other payables
(Note 12)
Thermaprime Drilling and other related
services
Unsecured and will be
settled in cash P=823,969,465 P=835,924,021 P=162,978,276 P=602,471,776
First Balfour Inc. Steam augmentation and other
services
- do -
725,513,144 1,362,391,648 943,522,669 1,356,167,441
Rockwell Land Corporation -do - - do - 26,264,981 80,810 26,264,981 –
First Gen Energy Solutions,
Inc.
- do - - do - 22,647,656 10,914,281 – –
Bayantel - do - - do - 8,155,500 9,757,876 5,605,372 1,687,740
Adtel - do - - do - 3,821,098 232,943 (2,145,118) 1,900,142
ABS-CBN Publishing, Inc. - do - - do - 823,036 3,600 841,600
FPRC - do - - do - 509,224 1,338,633 27,693
Skycable do - do - 361,607 – 1,217,411 186,830
First Philec Manufacturing
Technologies Corp Purchase of services and utilities
- do -
44,196 351,830 9,117,293 9,117,293
FEDCOR - do - - do - – – 358,000 358,000
First Philippine Industrial
Corp - do -
- do -
– 3,654 3,654 3,654
ABS-CBN Foundation - do - - do - – – 63,000 63,000
ABS-CBN Corp. - do - - do - – – 26,518
P=1,612,109,907 P=2,220,995,696 P=1,146,989,138 P=1,972,851,687
Entities under common control are indirect subsidiaries of Lopez, Inc., the Company’s ultimate
parent company. The sales to and purchases from related parties are made at normal commercial
terms and conditions.
The Parent Company issued letters of credit amounting to US$80.0 million in favor of its
subsidiary, EDC Chile Limitada, as evidence of the Parent Company’s financial support for EDC
Chile Limitada’s participation in the bids for geothermal concession areas by the Chilean
Government.
The Company also issued letters of credit in favor of its subsidiaries in Peru, namely, EDC
Quellaapacheta and EDC Energia Verde Peru SAC at US$0.3 million each as evidence of the
- 23 -
Parent Company’s financial support for the geothermal authorizations related to the exploration
drilling activities of the said entities. Except for the letters of credit issued by the Company in
favor of EDC Chile Limitada, EDC Quellaapacheta and EDC Energia Verde Peru SAC as
mentioned above, there were no guarantees that have been given to or/and received from any other
related party in 2016 and 2015.
The Company has not recognized any impairment loss on trade and other receivables relating to
intercompany transactions as of June 30, 2016 and December 31, 2015.
23. Financial Risk Management Objectives and Policies
The Company’s financial instruments consist mainly of cash and cash equivalents, AFS
investments, trade receivables, trade payables 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.
The Company classifies its financial instruments in the following categories:
June 30, 2016 (Unaudited)
Loans and
Receivables
AFS
Investments
Liabilities at
Amortized
Cost
Financial
Assets at
Fair Value
through
Profit or
Loss
Derivatives
Designated as
Cash Flow
Hedges Total
(In Thousand Pesos)
Financial Assets
Cash and cash equivalents P=15,577,177 P=− P=− P=− P=− P=15,577,177
Trade receivables 6,177,718 − − − − 6,177,718
Non-trade receivables 65,757 − − − − 65,757
Loans and notes
receivables 80,372 − − − − 80,372
Employee receivables 9,157 − − − − 9,157
Due from a related party 179,855 − − − − 179,855
Long-term receivables 40,524 − − − − 40,524
Debt service reserve
account 1,396,629 − − − − 1,396,629
AFS - debt investments − 133,944 − − − 133,944
AFS - equity investments − 437,286 − − − 437,286
Financial assets at FVPL − − − 1,057,511 − 1,057,511
Derivative assets − − − − 354,357 354,357
Total financial assets P=23,527,189 P=571,230 P=− P=1,057,511 P=354,357 P=25,510,287
(In Thousand Pesos)
Financial Liabilities
Accounts payable* P=5,805,054 P=− P=− P=− P=− P=5,805,054
Accrued interest on
long-term debts − − 895,656 − − 895,656
Other payables** − − 7,383 − − 7,383
Due to related parties − − 32,911 − − 32,911
Long-term debts − − 72,252,144 − − 72,252,144
Derivative liabilities − − − − 584,259 584,259
Total financial assets P=5,805,054 P=− P=73,188,094 P=− P=584,259 P=79,577,407
*excluding statutory liabilities
**excluding non-financial liabilities.
- 24 -
December 31, 2015 (Audited)
Loans and
Receivables
AFS
Investments
Liabilities at
Amortized
Cost
Financial
assets at
FVPL
Derivatives
Designated as
Cash Flow
Hedges Total
(In Thousand Pesos)
Financial Assets
Cash and cash equivalents P=17,613,922 P=− P=− P=− P=− P=17,613,922
Trade receivables 5,089,519 − − − − 5,089,519
Non-trade receivables 126,860 − − − − 126,860
Loans and notes
receivables 89,808 − − − − 89,808
Employee receivables 9,906 − − − − 9,906
Long-term receivables 32,685 − − − − 32,685
Debt service reserve account 1,324,249 − − − − 1,324,249
AFS - debt investments − 258,699 − − − 258,699
AFS - equity investments − 306,027 − − − 306,027
Financial assets at FVPL − − − 1,014,293 − 1,014,293
Derivative assets − − − − 351,612 351,612
Total financial assets P=24,286,949 P=564,726 P=− P=1,014,293 P=351,612 P=26,217,580
(In Thousand Pesos)
Financial Liabilities
Accounts payable* P=− P=− P=8,034,016 P=− P=− P=8,034,016
Accrued interest on
long-term debts − − 899,937 − − 899,937
Other payables** − − 17,874 − − 17,874
Due to related parties − − 101,770 − − 101,770
Long-term debts − − 74,511,594 − − 74,511,594
Derivative liabilities − − − − 202,469 202,469
Total financial assets P=− P=− P=83,565,191 P=− P=202,469 P=83,767,660
*excluding statutory liabilities to the Government **excluding non-financial liabilities.
The following tables show the fair value information of financial instruments classified under
loans and receivables, financial assets at FVPL, AFS investments, and derivatives designated as
cash flow hedges and analyzed by sources of inputs on fair valuation as follows:
Quoted prices in active markets for identical assets or liabilities (Level 1);
Those involving inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and
Those with inputs for the asset or liability that are not based on observable market data
(unobservable inputs) (Level 3)
June 30, 2016 (Unaudited)
Carrying
Amounts
Fair Values
Total Level 1 Level 2 Level 3
Financial Assets
Loans and receivables:
Long-term receivables P=40,524,245 P=38,396,797 P=− P=− P=38,396,797
Financial assets at FVPL 1,057,510,950 1,057,510,950 − 1,057,510,950 −
AFS investments:
Debt investments 133,943,580 133,943,580 133,943,580 − −
Equity investments 437,286,466 437,286,466 437,286,466 − −
(Forward)
- 25 -
June 30, 2016 (Unaudited)
Carrying
Amounts
Fair Values
Total Level 1 Level 2 Level 3
Derivative assets designated as
cash flow hedges:
Derivative assets 354,356,884 354,356,884 − 354,356,884 −
Financial Liabilities
Financial liabilities at amortized
cost:
Long-term debts P=72,252,143,761 P=84,341,414,489 P=− P=− P=84,341,414,489
Derivative Liability:
Derivative liabilities
designated as cash
flow hedges 584,258,778 584,258,778 − 584,258,778 −
December 31, 2015 (Audited)
Carrying
Amounts
Fair Values
Total Level 1 Level 2 Level 3
Financial Assets
Loans and receivables:
Long-term receivables P=32,685,410 P=30,285,275 P=− P=− P=30,285,275
Financial assets at FVPL 1,014,293,092 1,014,293,092 − 1,014,293,092 −
AFS investments:
Debt investments 258,699,227 258,699,227 258,699,227 − −
Equity investments 306,027,326 306,027,326 306,027,326 − −
Derivative assets designated as
cash flow hedges:
Derivative assets 351,612,199 351,612,199 − 351,612,199 −
Financial Liabilities
Financial liabilities at amortized
cost:
Long-term debts 74,511,593,572 84,805,828,947 − − 84,805,828,947
Derivative Liablitiy:
Derivative liabilities
designated as cash flow
hedges 202,469,437 202,469,437 − 202,469,437 −
Due to relatively short maturity, ranging from one to three months, carrying amounts approximate
fair values for cash in banks, trade and other receivables, loans and notes receivables, due to
related parties and trade and other payables.
The methods and assumptions used by the Company in estimating the fair value of financial
instruments are:
Long-term Receivables
The fair value of long-term receivables was computed by discounting the expected cash flow using
the applicable rates of 2.73% and 3.89% as at June 30, 2016 and December 31, 2015.
AFS Investment
Fair values of quoted debt and equity securities are based on quoted market prices. For equity
investments that are not quoted, the investments are carried at cost less allowance for impairment
losses due to the unpredictable nature of future cash flows and the lack of suitable methods of
arriving at a reliable fair value.
- 26 -
Financial assets at FVPL
The fair values of financial assets at FVPL are measured using inputs that are observable at the
reporting date such as government and corporate securities listed in the Philippine Dealing and
Exchange Corporation provided by the counterparty bank.
Derivative assets and liabilities designated as cash flow hedges
The fair values of derivative assets and liabilities designated as cash flow hedges are based on
quotations provided by the counterparty banks.
Long-term Debts
The fair values for the Company’s long-term debts are estimated using the discounted cash flow
methodology with the applicable rates ranging from 1.75% to 21.58% and 1.75% to 11.27% as at
June 30, 2016 and December 31, 2015, respectively.
For the six-month period ended June 30, 2016, and for the year ended December 31, 2015 there
were no transfers between Level 1 and Level 2 fair value measurements and no transfers into and
out of Level 3 fair value measurements.
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.
With respect to the credit risk arising from other financial assets of the Company, which comprise
of cash and cash equivalents excluding cash on hand, financial assets at FVPL, other receivables
and AFS investments, the Company’s exposure to credit risk arises from default of the
counterparty, with a maximum exposure equal to the carrying amount of these instruments before
taking into account any collateral and other credit enhancements.
The following tables below show the aging analysis of the Company’s financial assets as of
June 30, 2016 and December 31, 2015:
June 30, 2016 (Unaudited)
Past Due but Not Impaired
Neither Past
Due nor
Impaired
Less than
30 Days
31 Days
to 1 Year
Over 1 Year
up to
3 Years
Over
3 Years
Past
Due and
Impaired Total
(In Thousand Pesos)
Loans and receivables:
Cash and cash
equivalents
(excluding cash on
hand) P=15,433,802 P=− P=− P=− P=− P=− P=15,433,802
Trade receivables 3,803,382 441,574 864,809 1,067,952 − 113,020 6,290,737
Due from a related
party 179,855 − − − − − 179,855
Loans and notes
receivables 80,372 − − − − − 80,372
Employee receivables 9,157 − − − − − 9,157
Non-trade receivables 24,626 10,061 3,101 27,969 − − 65,757
(Forward)
- 27 -
June 30, 2016 (Unaudited)
Past Due but Not Impaired
Neither Past
Due nor
Impaired
Less than
30 Days
31 Days
to 1 Year
Over 1 Year
up to
3 Years
Over
3 Years
Past
Due and
Impaired Total
(In Thousand Pesos)
Long-term receivables 40,524 − − − − 101,266 141,790
Debt service reserve
account 1,396,629 − − − − − 1,396,629
AFS investments:
Debt investments 133,944 − − − − − 133,944
Equity investments 437,286 − − − − − 437,286
Financial assets at FVPL 1,057,511 − − − − − 1,057,511
Derivative assets
designated as cash
flow hedges:
Derivative assets 354,357 − − − − − 354,357
Total P=22,951,445 P=451,635 P=867,910 P=1,095,921 P=− P=214,286 P=25,581,197
December 31, 2015 (Audited)
Past Due but Not Impaired
Neither Past
Due nor
Impaired
Less than
30 Days
31 Days
to 1 Year
Over 1 Year
up to
3 Years
Over
3 Years
Past
Due and
Impaired Total
(In Thousand Pesos)
Loans and receivables:
Cash and cash
equivalents
(excluding cash on
hand) P=17,495,408 P=– P=– P=– P=– P=– P=17,495,408
Trade receivables 3,460,994 476,414 62,165 1,089,945 – 112,923 5,202,441
Loans and notes
receivables 89,808 – – – – – 89,808
Employee receivables 9,906 – – – – – 9,906
Non-trade receivables 118,665 – – 6,255 – 1,939 126,859
Long-term receivables 30,200 – – 1,870 615 94,389 127,074
Debt service reserve
account 1,324,249 – – – – – 1,324,249
AFS investments:
Debt investments 258,699 – – – – – 258,699
Equity investments 306,027 – – – – – 306,027
Financial assets at FVPL 1,014,293 – – – – – 1,014,293
Derivatives designated as
cash flow hedges:
Derivative assets 351,612 – – – – – 351,612
Total P=24,459,861 P=476,414 P=62,165 P=1,098,070 P=615 P=209,251 P=26,306,376
Credit Quality of Financial Assets
Financial assets are classified as high grade if the counterparties are not expected to default in
settling their obligations. Thus, the credit risk exposure is minimal. These counterparties
normally include customers, banks and related parties who pay on or before due date. Financial
assets are classified as a standard grade if the counterparties settle their obligation with the
Company with tolerable delays. Low grade accounts are accounts, which have probability of
impairment based on historical trend. These accounts show propensity of default in payment
despite regular follow-up actions and extended payment terms.
As of June 30, 2016 and December 31, 2015, financial assets categorized as neither past due nor
impaired are viewed by management as high grade, considering the collectability of the
- 28 -
receivables and the credit history of the counterparties. Meanwhile, past due but not impaired
financial assets are classified as standard grade.
Derivative Designated as Accounting Hedges
The Company engages in derivative transactions, particularly cross currency swaps and interest
rate swaps to manage its foreign currency risk and/or interest rate risk arising from its floating-rate
foreign-currency denominated loans.
The table below shows the Company’s derivative financial instruments designated as accounting
hedges:
June 30, 2016 (Unaudited) December 31, 2015 (Audited)
Derivative
Assets
Derivative
Liabilities
Derivative
Assets
Derivative
Liabilities
Cross-currency swaps P=293,937,315 P=– P=351,612,199 P=–
Interest rate swaps – 584,258,778 – 202,469,437
Call spread swaps 60,419,569 – – –
P=354,356,884 P=584,258,778 P=351,612,199 P=202,469,437
Presented as:
Current P=293,937,315 P=22,882,197 P=58,602,033 P=4,943,539
Noncurrent 60,419,569 561,376,581 293,010,166 197,525,898
P=354,356,884 P=584,258,778 P=351,612,199 P=202,469,437
Call Spread Swap Contracts
In March 2016, the Parent Company entered into three call spread swaps with an aggregate
notional amount of US$9.6 million. In June 2016, the Parent Company also entered into
additional two call spread contract with notional amount of US$9.6 million each. These derivative
contracts are designed to hedge the possible foreign exchange loss of its US$80.0 million club
loan.
The aggregate fair value changes on these call spread contracts amounted to P=60.4 million as of
June 30, 2016.
Cross Currency Swap Contracts
In 2012, the Parent Company entered into six non-deliverable cross-currency swap (NDCCS)
agreements with an aggregate notional amount of US$65.0 million. These derivative contracts are
designed to partially hedge the foreign currency and interest rate risks on the Parent Company’s
Refinanced Syndicated Term Loan (Hedged Loan) that is benchmarked against US LIBOR and
with flexible interest reset feature that allows the Parent Company to select what interest reset
frequency to apply (i.e., monthly, quarterly or semi-annually) [see Note 13]. As it is the Parent
Company’s intention to reprice the interest rate on the Hedged Loan quarterly, the Parent
Company utilizes NDCCS with quarterly interest payments and receipts.
In 2014, the Parent Company entered into additional six NDCCS with aggregate notional amount
of US$45.0 million to further hedge its foreign currency risks and interest rate risks arising from
the Hedged Loan.
Effectively, the 12 NDCCS converted 62.86% of the Hedged Loan into a fixed rate peso loan.
Under the NDCCS agreements, the Parent Company receives floating interest based on 3-month
US LIBOR plus 175 basis points and pays fixed peso interest. On specified dates, the Parent
- 29 -
Company also receives specified USD amounts in exchange for specified peso amounts based on
the agreed swap rates. These USD receipts correspond with the expected interest and fixed
principal amounts due on the Hedged Loan.
Pertinent details of the NDCCS are as follows:
Notional
amount
(in millions)
Trade
Date
Effective
Date
Maturity
Date
Swap
rate
Fixed
rate
Variable rate
US$15.00 03/26/12 03/27/12 06/17/17 P=43.05 4.87% 3-month LIBOR + 175 bps
10.00 04/18/12 06/27/12 06/17/17 42.60 4.92 -do-
10.00 05/03/12 06/27/12 06/17/17 42.10 4.76 -do-
10.00 06/15/12 06/27/12 06/17/17 42.10 4.73 -do-
10.00 07/17/12 09/27/12 06/17/17 41.25 4.58 -do-
10.00 10/29/12 12/27/12 06/17/17 41.19 3.44 -do-
7.50 05/14/14 06/27/14 06/17/17 43.60 3.80 -do-
7.50 05/14/14 06/27/14 06/17/17 43.57 3.80 -do-
7.50 06/09/14 06/27/14 06/17/17 43.55 3.60 -do-
7.50 06/09/14 06/27/14 06/17/17 43.55 3.60 -do-
7.50 07/10/14 9/27/14 06/17/17 43.29 3.50 -do-
7.50 07/09/14 9/27/14 06/17/17 43.37 3.68 -do-
The maturity date of the 12 NDCCS coincides with the maturity date of the Hedged Loan.
As of June 30, 2016 and December 31, 2015, the outstanding aggregate notional amount of the
Parent Company’s NDCCS amounted to US$75 million. The aggregate fair value changes on
these NDCCS amounted to P=16.9 million gain and P=12.1 million loss as of June 30, 2016 and
December 31, 2015, respectively.
Interest Rate Swap Contracts
In the last quarter of 2014, EBWPC entered into four interest rate swaps (IRS) with aggregate
notional amount of US$150 million. This is to partially hedge the interest rate risks on its ECA
and Commercial Debt Facility (Foreign Facility) that is benchmarked against US LIBOR and with
flexible interest reset feature that allows EBWPC to select what interest reset frequency to apply
(i.e., monthly, quarterly or semi-annually) [see Note 13]. As it is EBWPC’s intention to reprice
the interest rate on the Foreign facility semi-annually, EBWPC utilizes IRS with semi-annual
interest payments and receipts.
Under the IRS agreement, EBWPC will receive semi-annual interest of 6-month LIBOR and will
pay fixed interest. EBWPC designated the IRS as hedging instruments in cash flow hedge against
the interest rate risks arising from the Foreign Facility.
Pertinent details of the IRS are as follows:
Notional
amount
(in million)
Trade
Date
Effective
Date
Maturity
Date
Fixed
rate
Variable rate
US$62.00 10/20/14 12/15/14 10/23/29 2.635% 6-month LIBOR
40.00 10/20/14 12/15/14 10/23/29 2.635 -do- 39.00 12/11/14 12/15/14 10/23/29 2.635 -do-
9.00 10/20/14 12/15/14 10/23/29 2.508 -do-
The maturity date of the four IRS coincides with the maturity date of the Foreign Facility.
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As of June 30, 2016 and December 31, 2015, the outstanding aggregate notional amount of
EBWPC's IRS amounted to US$147 million. The aggregate fair value changes on these IRS
amounted to P=584.3 million loss and P=202.5 million loss as of June 30, 2016 and
December 31, 2015, respectively.
Fair value Adjustments
The net movement of changes made to “Fair value Adjustments on Hedging Transactions”
account for the Company’s cash flow hedges is as follows:
June 30, 2016 (Six months)
(Unaudited)
December 31,
2015 (One year)
(Audited)
Balance at beginning of the period (P=177,500,756) (P=178,182,172)
Changes in fair value of the cash flow hedges (517,094,220) 259,449,991
(694,594,976) 81,267,819
Transferred to consolidated statement of income:
Foreign exchange loss (gain) 26,307,500 (175,500,000)
Interest expense 77,629,996 (94,741,473)
103,937,496 (270,241,473)
Balance before tax (590,657,480) (188,973,654)
Tax 28,908,493 11,472,898
Balance at end of the period (P=561,748,987) (P=177,500,756)
Fair Value Changes of Derivatives
The table below summarizes the net movement in fair values of the Company’s derivatives as of
June 30, 2016 and December 31, 2015.
June 30, 2016 (Six months)
(Unaudited)
December 31,
2015 (One year)
(Audited)
Balance at beginning of the period P=149,142,762 (P=15,565,756)
Net changes in fair value of derivatives:
Designated as accounting hedges (456,674,652) 259,449,991
Not designated as accounting hedges – –
(456,674,652) 259,449,991
Fair value of settled instruments:
Designated as accounting hedges 77,629,996 (94,741,473)
Not designated as accounting hedges – –
77,629,996 (94,741,473)
Balance at end of the period (P=229,901,894) P=149,142,762
Presented as:
Derivative assets P=354,356,884 P=351,612,199
Derivative liabilities (584,258,778) (202,469,437)
(P=229,901,894) P=149,142,762
The effective portion of the changes in the fair value of the derivatives designated as accounting
hedges were deferred in equity under “Fair Value Adjustment on Hedging Transactions” account.
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Capital Management
The primary objective of the Company’s capital management is to ensure that it maintains a
healthy capital ratio in order to comply with its financial loan covenants and support its business
operations.
24. Other Matters
Seasonality or Cyclicality of Interim Operations
For Wind Ilocos Norte Business Unit, higher revenue and operating profits are expected in the last
quarter of the year this is based on the generation profile of Burgos. Solar power plant is expected
to generate its highest revenue during summer months. For the rest of the entities, except for FG
Hydro’s sale of electricity coming from hydroelectric power/operations, seasonality or cyclicality
of interim operations is not applicable to the Parent Company’s type of business because of the
nature of its contracts with NPC, which includes guaranteed volume under the applicable take-or-
pay, minimum energy off-take or contracted energy provisions. GCGI’s sales to cooperatives and
industries are also not subject to seasonality or cyclicality.
Issuances, Repurchases, and Repayments of Debt and Equity Securities
There are no issuances, repurchases and repayments of debt and equity securities during the
current period
Changes in Estimates of Amounts Reported in Prior Financial Years
The key assumptions concerning the future and other key sources of estimation uncertainty used in
preparation of the unaudited interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Company’s annual consolidated financial statements
as of and for the year ended December 31, 2015.
Changes in the Composition of the Company During the Interim Period
There are no material changes in the composition of the registrant during the period.
Changes in Contingent Liabilities or Contingent Assets Since the Last Annual Reporting Date
There are no material changes in the contingent liabilities or contingent assets since the last annual
reporting date.
Existence of Material Contingencies and Any Other Events or Transactions that are Material to
an Understanding of the Current Interim Period
There are no material contingencies and any other events or transactions during the period.