9.4. Derivatives

Derivatives are carried at fair value as at the date of concluding the contract and then revalued to fair value as at each final day of the reporting period. Derivatives are shown as assets when their value is positive and as liabilities when their value is negative, and the profit or loss from their valuation is shown immediately in the financial result.

A derivative financial instrument is classified as a short-term financial instrument if the settlement date of that instrument of its part is within one year from the final day of the reporting period. If the settlement date of the financial instrument is over one year from the final day of the reporting period then such an instrument or part thereof is classified as a long-term financial instrument.

For accounting purposes, hedging involves proportionate offsetting of results obtained through changes in fair value or changes in cash flows from the hedging instrument and hedged position.

The Group applies hedge accounting to secure cash flows. Applying cash flow hedge accounting makes it possible to post the effective part of the hedge to other comprehensive income, which in effect is accumulated in capital, which leads to matching the impact on the financial result of hedge instruments measurement and the pursuit of the hedged position.

The Group applies hedge accounting with respect to foreign exchange risk.

Cash flow hedging is a hedge against the threat of volatility of cash flows which can be attributed to a specific risk type associated with the respective asset or liability or with a highly probable contemplated transaction and which could influence profit or loss.

Gains or losses on the changing fair value of the cash flow hedge instrument are recognized in other comprehensive income in the part constituting effective hedge, while any ineffective portion of the hedge is recognized in the profit or loss of the current period.

The effective part captured in other comprehensive income is posted to profit or loss in the same period in which the hedged position affects profit or loss.

The Group ceases to apply cash flow hedge accounting if the hedging instrument expires, is sold, reversed or realized or when the Group withdraws its designation of the instrument as a hedge or if the hedge no longer meets the hedge accounting criteria and realization of the planned transaction is no longer expected.

Financial assets after conversion to PLN:

Financial liabilities after conversion to PLN:

The nominal values of contracts expressed in their respective currencies are presented in the table below:

The nominal values of commodity contracts hedging the price risk expressed in tons are presented in the table below: