EDC PR 2016 (FS section)

Financial Statement
financial liabilities, or both, which are managed and their performance evaluated on a fair value
basis, in accordance with a documented risk management strategy; or (c) the financial instrument
contains an embedded derivative that would need to be separately recorded.
Derivatives embedded in host contracts are accounted for as a separate derivatives and recorded at
fair value if their economic characteristics and risks are not clearly and closely related to those of
the host contracts and the host contracts are not held for trading or designated at FVPL. These
embedded derivatives are measured at fair value with changes in fair value recognized in profit or
loss. Re-assessment only occurs if there is either a change in the terms of the contract that
significantly modifies the cash flows that would otherwise be required or a reclassification of a
financial asset out of the FVPL category.
Classified under financial instruments at FVPL are foreign currency forward contracts, call spread
swaps and financial asset at fair value through profit or loss as of December 31, 2016 and 2015
(see Note 31). Changes in fair value are recognized in the profit or loss unless it qualifies under
hedge accounting.
HTM Investments
HTM investments are quoted non-derivative financial assets with fixed or determinable payments
and fixed maturities for which the Company has the positive intention and ability to hold to
maturity. Where the Company sells other than an insignificant amount of HTM investments, the
entire category would be tainted and would have to be reclassified as AFS investments.
Furthermore, the Company would be prohibited to classify any financial assets as HTM
investments for the following two years. After initial measurement, HTM investments are
|measured at amortized cost using the effective interest rate method. Amortized cost is calculated
by taking into account any discount or premium on acquisition and fees that are integral part of the
effective interest rate. Gains and losses are recognized in the profit or loss when the HTM
investments are derecognized or impaired, as well as through the amortization process. The effect
of restatement of foreign currency-denominated HTM investments are also recognized in the profit
or loss.
The Company has no HTM investments as of December 31, 2016 and 2015.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They are not entered into with the intention of immediate or
short-term resale and are not classified as or designated as AFS financial assets or financial assets
at FVPL.
After initial measurement, loans and receivables are carried at amortized cost using the effective
interest rate method less any allowance for impairment. Amortized cost is calculated by taking
into account any discount or premium on acquisition and fees that are not integral part of the
effective interest rate. The amortization is included in “Interest income” account in the
consolidated statement of income.
The losses arising from impairment of loans and receivables are recognized in the statement of
income. The level of allowance for impairment losses is evaluated by management on the basis of
the factors that affect the collectibility of accounts. Loans and receivables are classified as current
assets when it is expected to be realized within 12 months after the financial reporting date or
within the normal operating cycle, whichever is longer. Otherwise, these are classified as
noncurrent assets.
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