EDC 2014 SR (UPDATED)

EDC 2014 Performance Report
Classification of Financial Instruments
On initial recognition, the financial instruments, or its component parts, are classified either as a
financial asset, a financial liability or an equity instrument in accordance with the substance of the
contractual arrangement and the definition of a financial asset, a financial liability or an equity
instrument. The substance of a financial instrument, rather than its legal form, governs its
classification in the consolidated statement of financial position.
In addition, the Company classifies financial assets by evaluating, among others, whether the asset
is quoted or not in an active market. Included in the evaluation on whether a financial asset is
quoted in an active market is the determination on whether quoted prices are readily and regularly
available, and whether those prices represent actual and regularly occurring market transactions in
an arm’s length basis.
The classifications of financial assets and financial liabilities of the Company are presented in
Note 31.
Determination of Control over an Investee Company
Control is presumed to exist when an investor is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the
investee. The Company has established that it has the ability to control its subsidiaries by virtue of
either 100% or majority interest in the investee companies.
Determination of whether NCI is Material for Purposes of PFRS 12 Disclosures
PFRS 12 requires an entity to disclose certain information, including summarized financial
information, for each of its subsidiaries that have non-controlling interests that are material to the
reporting entity. The Company has determined that the NCI in FG Hydro is material for purposes
of providing the required disclosures under PFRS 12. FG Hydro is one of the reportable segments
of the Company (under Pantabangan/Masiway business unit) with significant assets and liabilities
relative to the Company’s consolidated total assets and consolidated total liabilities. Also,
dividends attributable to the NCI are considered significant relative to the total dividends declared
by the Group in current and prior periods.
Assessment of whether a Transaction Qualifies as Business Combination under PFRS 3
The Company has made the following assessments in accounting for its investments in certain
entities:
a)
Acquisition of Shares of Hot Rock Companies
On December 19, 2013, Energy Development Corporation Hong Kong Limited (EDC HK; an
indirect wholly-owned subsidiary of EDC), entered into a Share Sale Agreement (SSA), as
amended, with Hot Rock Holding Ltd (BVI) (HR Holding BVI), an indirect wholly-owned
subsidiary of Hot Rock Limited (HRL) incorporated in British Virgin Islands. HRL, a listed
company in Australian Stock Exchange, is primarily engaged in geothermal exploration
activities in Australia, Chile and Peru. Under the SSA, all shares of Hot Rock Chile Ltd (BVI)
[HRC BVI] and Hot Rock Peru Ltd (BVI) [HRP BVI] held by HR Holding BVI shall be
acquired by EDC HK, subject to certain pre-completion conditions. HRC BVI and HRP BVI
are also incorporated in the British Virgin Islands and direct wholly-owned subsidiaries of HR
Holding BVI. The total purchase price for the acquisition of Hot Rock entities amounted to
US$3.0 million. The acquisition was completed on January 3, 2014 (the acquisition date) as
agreed by EDC HK and HR Holding BVI after all conditions precedent have either been
fulfilled or waived by both parties.
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