2014 Financial Statement

EDC 2014 Performance Report
Financial Instruments
Financial instruments are recognized in the consolidated statement of financial position, when the
Company becomes a party to the contractual provisions of the instrument. All regular way
purchases and sales of financial assets are recognized on the trade date, which is the date when the
Company commits to purchase the asset. Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the period generally established by regulation
or convention in the market place. Derivatives are also recognized on a trade date basis.
Financial instruments are recognized initially at fair value. Except for financial instruments at fair
value through profit or loss (FVPL), the initial measurement of financial instruments includes
transaction costs. The Company classifies its financial assets into the following categories:
financial assets at FVPL, held-to-maturity (HTM) investments, AFS investments, and loans and
receivables. For financial liabilities, the Company classifies them into financial liabilities at FVPL
and other financial liabilities. The classification depends on the purpose for which the investments
were acquired and whether they are quoted in an active market. Management determines the
classification of its investments at initial recognition and, where allowed and appropriate,
re-evaluates such designation at every financial reporting date.
Financial instruments are classified as liability or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument or
a component that is a financial liability, are reported as expense or income. Distributions to
holders of financial instruments classified as equity are charged directly to equity, net of any
related income tax benefit.
Financial Assets and Financial Liabilities at FVPL
Financial assets and financial liabilities at FVPL include those held for trading and those
designated upon initial recognition as at FVPL.
Financial assets and financial liabilities are classified as held for trading if they are acquired for
the purpose of selling and repurchasing in the near term. Derivatives, including separated
embedded derivatives, are also classified as held for trading unless they are designated as effective
hedging instruments or a financial guarantee contract. Gains or losses on investments held for
trading are recognized in the consolidated statement of income under the “Other income (charges)”
account.
Financial assets or financial liabilities may be designated at initial recognition as at FVPL if the
following criteria are met: (a) the designation eliminates or significantly reduces the inconsistent
treatment that would otherwise arise from measuring the assets or recognizing gains or losses on
them on a different basis; or (b) the assets and liabilities are part of a group of financial assets,
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.
Where a contract contains one or more embedded derivatives, the entire hybrid contract may be
designated as at FVPL, except where the embedded derivative does not significantly modify the
cash flow or it is clear that separation of the embedded derivative is prohibited.
Classified under financial instruments at FVPL are foreign currency forward contracts, foreign
currency swap contracts and financial asset at fair value through profit or loss as of
December 31, 2014 and 2013 (see Note 31).
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