Energy Development Corporation
38th Floor, One Corporate Centre Building, Julia Vargas corner Meralco Avenue
Ortigas Center, Pasig 1605, Philippines
Trunklines: +63 (2) 667-7332 (PLDT) / +63 (2) 755-2332 (Globe)
July 28, 2015
JANET A. ENCARNACIONHEAD, Disclosures Department
The Philippine Stock Exchange, Inc. Philippine Stock Exchange Plaza
Ayala Triangle, Ayala Avenue, Makati City
Dear Ms. Encarnacion:
In compliance with the disclosure requirements of the Philippine Stock Exchange, we submit the SEC Advisement letter on the Updates to the 2015 Annual Corporate Governance Report, particularly EDC's Stockholders' Questions and Answers by the Board and Officers of EDC during the recently held EDC Annual Stockholders' Meeting and several portions of the Internal Audit Section.
107272015001912
SECURITIES ANO EXCHANGE COMMISSION·
·-., :
SEC Building,EDSA, Greenhills,Mandaluyong City, Metro Manila,Philippines
Te1:(632) 726-0931to 39 Fax:(632) 725-5293 Emaìl:mis@sec.gov.ph
Barcode Page
lhe following document has been received:
Receiving Officer/Encoder : Fernando T. Fernandez
Receiving Branch : SEC Head Office
Receipt Date and lime : July 27, 2015 05:06:31 PM Received From : Head Office
Com pany Representative
Doc Source
Company lnformation
SEC Registration No. 0000066381
Company Name ENERGY DEVELOPMENT CORPORATION
lndustry Classification
Company Type StockCorporation
Document lnformation
Document ID Document Type Document Code Period Covered No. of Days Late Department Remarks
107272015001912
LETTERIMISC LTR
July 27, 2015
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CED/CFD/CRMD/MRD/NTD CGFD
COVERSHEET
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SEC Registration Number
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(Company's Full Name)
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MI el r al l c o lA vie l ol r l t l i gJals c e n t e r
Pla l s i l g c i l t vi l l l l l l
(Business Address: No.,Street City l Town l Province)
Atty. Ana Maria A. Katigbak 817-6791
Contact Person Company Telephone Number
Advisement Letter on EDC Stockholders' Question and
Answers by the Board and Officer of EDC
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Fiscal Year
FORM TYPE
Secondary License Type,IfApplicable
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Dept Requiring this Doc Amended Articles Number l Section
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Total No. of Stockholders
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Energy Development Corporation
38th Floor.OnP. Corporale Centm Building, Julia Vargas corner Meralco Avemm, Ortigas Center, Pasig City 1605, Phllipplnes
Trunklines: +63 (2) 667·7332 (f'LDT) l +63 (2) 755 2332 (Glebe)
July 27, 2015
ATIY.JUSTINA F.CALLANGAN Director
Corporate Governance and Finance Department
Securities and Exchange Commission SEC Building,EDSA,Greenhills Mandaluyong City,Metro Manila Philippines
Subject: Advisement letter an EDC Stockholders' Questions and Answers by the Board and Officers of EDC during the recently held Annual Stockholders' Meeting and other matters
Dear Director callangan,
The Energy Development Corporation (EDC) hereby informs the Commission that in view of the recently held EDC Annual Stockholders' Meeting and Organizational Board Meeting last May 5, 2015, we have updated our 2015 Annual Corporate Governance Report (ACGR), particularly EDC Stockholders' Questions and Answers by the Board and Officers of EDC during the recently held Annual Stockholders' Meeting, and several portions of the Internai Audit section.
The corresponding updates to the company's ACGR in the company website (www.energy.com.ph) shall be made upon submission of this advisement letter.
Yours truly,
Erwin O.Avante Vice-President and Compliance Officer
A. INTERNAL AUDIT AND CONTROL
l) Internai Audit
(a) Resigoation, Re-assignment and Reasons
Disclose any resignation!s or re-assignment of the internai audit staff (iocluding those
employed by the third-party auditing firm) and the reasonls for tbem.
INmof udit SJ•t:fi | Reason |
Mr. Gervy P. Enopia (EDC Auditor, Resigned) | Farnily, Better career and financial ortunities |
Ms. Bettina Jamae B. Tudela (Outsourced Audit Firm's Auditor, Resigned) | Better career and financial opportunities |
Ms. Jennifer A. Francisco (Outsourced Audit Firm's Auditor, Resigned) | Better career and financial opportunities |
(b) Progress against Plaus, lssues, Findiogs and Examiuation Trends
State tbe internai audit's progress against plans, significant issues, significant findiogs and examination trends. (as ofMay 2015)
P!()gr.ess ainst Plans | Accomplisbed 20% of tbe 2015 Audit Pian at the close of the 1st quarter of 2015 |
Issues | • Strengthen controls over fixed assets management to ensure proper and adequate safeguarding. |
Eindings | Non-compliance with policies, procedures, and SOPs in selected areas of asset management. |
E:x:.amina,tJihJt11llellds | Pervasive issues and findings revolve around contro! inadequacy, process or operational inefficiencies, updating of established guidelines and procedures, non-compliance with policies, standard operating procedures. |
[The reiationship among progress, pians, issues and fmdings shouid be viewed as an internai control review cycle which involves the following step-by-step activities:
l) Preparation of an audit plan inclusive of a timeline and miiestones;
2) Conduct of examination based on the pian;
3) Evaluation ofthe progress in the implementation ofthe plan;
4) Documentation ofissues and fmdings as a result ofthe examination;
5) Determination of the pervasive issues and findings ("exarnination trends") based on singie year result andlor year-to-year results;
6) Conduct ofthe foregoing procedures on a regular basis.]
B. RIGHTSOFSTOCKHOLDERS
l) Right to participate effectively in and vote in Annuai/Special Stockholders' Meetiogs
l
State, if any, questions and answers during tbe Annual/Special Stockholders' Meeting.
Energy Development Corporation Annual Stockholders' Meeting May 5, 2015
Mr. Jose Ferrer: Wlrar is the ratio or allocation of the Company's intemational P''ojects compared to domestic projects? W1tat is t/te percentage?
Answer: Currently, the Company's project is l 00% domestic but there are exploration projects in Chile and Peru that are on going. We are also the pioneer of geothermal projects in the Pacifie Ring of Fire. However, it will take severa!years for it to finish. So as ofnow, the dornestic projects are centered in Leyte and Bacman.
Mr. Jose Ferre,·: Will you still proceed with the rehabilitation o.f Botong (project)?
Answer: The Company willleave Botong as it is right now because the location is on an unstable cliff and is prone to Iandslide. It is recommended that no power plant should be built there.
Mr. Jose Ferrer: How about the geothermal power plant in Northern Negros?
Answer: The Company ìs stili conducting tests to deterrnine the final available megawatts from Northem Negros. In the mean time, we are also looking for potential solar and wind energy capabìlity. Reforestation or green house activities are also considered. The Company will be producing energy in Northem Negros after the assessment is completed.
Mr. Rommel Songco: With regard to the solar .farm in Burgos, what are you expecting in terms o.frevenues annually? fs it operating right now?
Answer: It is operating right now. As for the revenue, it is at 50 to 60 million for 4 megawatts.
Mr. Rommel Songco: What would be the expected expansìon plan.for geothermal sites?
Answer: The main expansìon will be in Bacman whìch will requìre an investment of around $l50USD. Explorations and drilling are done.
Mr. Rommel Songco: When will the Bacman expansion befìnished?
Answer: 27 months from notice. That's around 2 Y2 to 3 years.
Mr. Rommel Songco: What would be the next step.for the growth expansion o.f EDC?
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Answer We are looking at geothennal expansion, but it is capitai intensive and we're expectìng to invest around US$5 million per megawatt. For wìnd, we're expecting to invest around US$3 million per mcgawatt and for solar, we're expecting to invest around US$2 million per megawatt.
In the short tenn, there are a lot of opportunities to expand our solar portfolio from 4
MW to a higher number. In tenns of wind potential, we have developed in Burgos is the first 150 MW, but the entire portfolio of EDC is about 560 MW capacity so it can take about another 41O MW capacity. As you see, solar is very quick; wind projects take a bit longer while geothennal projects take the longest, so it is a combination of strategy and technology and a robust market.
Esperanza Lopez: How much is the auditing fee, inclusive of tax, VAT, and out-of-town expenses. is paid to SGV far January to December 2014?
Answer: Audit fee is around Phpl O million.
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