2014 Financial Statement

EDC 2014 Performance Report
Amounts taken to other comprehensive income (loss) are transferred to the consolidated statement
of income when the hedge transaction affects profit or loss, such as when hedged financial income
or expense is recognized or when a forecast sale or purchase occurs. Where the hedged item is the
cost of a non-financial asset or liability, the amounts taken to other comprehensive income (loss)
are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognized in other
comprehensive income (loss) are transferred to the consolidated statement of income. If the
hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or
if its designation as hedge is revoked, amounts previously recognized in other comprehensive
income (loss) remain in equity until the forecast transaction occurs. If the related transaction is
not expected to occur, the amount is recognized in the consolidated statement of income.
Embedded Derivatives
An embedded derivative is a component of a hybrid (combined) instrument that also includes a
non-derivative host contract with the effect that some of the cash flows of the combined
instrument vary in a way similar to a stand-alone derivative. The Company assesses whether
embedded derivatives are required to be separated from the host contracts when the Company first
becomes party to the contract. An embedded derivative is separated from the hybrid or combined
contract if all the following conditions are met:
(a)
(b)
(c)
the economic characteristics and risks of the embedded derivative are not clearly and closely
related to the economic characteristics and risks of the host contract;
a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative; and
the hybrid instrument is not recognized at FVPL.
Subsequent reassessment is prohibited unless there is a change in the terms of the contract that
significantly modifies the cash flows that otherwise would be required under the contract, in which
case reassessment is required. The Company determines whether a modification to cash flows is
significant by considering the extent to which the expected future cash flows associated with the
embedded derivative, the host contract or both have changed and whether the change is significant
relative to the previously expected cash flows on the contract.
Impairment of Financial Assets
The Company assesses at each financial reporting date whether a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is deemed to be
impaired, if and only if, there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset (an incurred loss event) and that loss event
has an impact on the estimated future cash flows of the financial asset or a group of financial
assets that can be reliably estimated. Objective evidence of impairment may include indications
that the borrower or a group of borrowers is experiencing significant financial difficulty, default or
delinquency in interest or principal payments, the probability that they will enter bankruptcy or
other financial reorganization and where observable data indicate that there is measurable decrease
in the estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
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