7.9. Cash and cash equivalents

Cash and cash equivalents include cash on hand, bank deposits payable on demand, other short-term investments with high liquidity and with original maturity date of up to three months. Current account overdraft is presented in the consolidated cash flow statement as a component of the financial cash flows. The Group classifies cash and cash equivalents as financial assets measured at amortized cost, while taking into account, from 1 January 2018, impairment losses calculated in accordance with the expected loss model.

As of 1 January 2018, the Group estimates impairment losses for cash and cash equivalents on the basis of the probability of insolvency calculated on the basis of external ratings of the banks in which the cash is kept and publicly available rating agency information pertaining to probability of insolvency and the expected loss is calculated on the basis of these probabilities, the time horizon of the exposure to credit risk and on the basis of the expected recovery rate.

In connection with the low associated credit risk, cash and cash equivalents are assigned a 3-month horizon for credit risk exposures.

Analysis of the levels of credit risk assessment for cash based on external agency ratings is presented in Note 9.5.1.

As at 31 September 2018, restricted cash amounted to PLN 165.8 million (PLN 150.7 million on 31 December 2017) and included mainly cash received by JZR under an agreement with the State Treasury Minister to provide support which does not constitute public aid, designated for specific investment projects in the amount of PLN 126.5 million and funds accumulated on the VAT account (as part of the split payment mechanism) as well as bid deposits and good performance bonds. In the course of its business, the Group makes payments on the above accounts on an ongoing basis.

The currency structure of the Group’s cash and cash equivalents, after conversion to PLN, is as follows:

Cash and cash equivalents are identical in the consolidated cash flow statement and in the consolidated statement of financial position.