• 7.3 Other financial instruments measured at fair value

7.3 Other financial instruments measured at fair value

mask
Scroll

in PLN millions, unless otherwise stated

The item “Other financial instruments measured at fair value” mainly includes: shares (listed and unquoted) which were not acquired for trading purposes, for which the option of measurement at fair value through other comprehensive income was selected in order to limit the volatility of the result, and loans granted measured at fair value through profit or loss, as they did not pass the contractual cash flow test (SPPI), because in the financing structure of the target recipient of funds, debt is changed into capital at the last stage, and that is why they were obligatorily classified to this category.

Shares are initially recognised at fair value increased by transaction costs, and at the end of the reporting period they are measured at fair value with recognition of gains/losses from measurement in other comprehensive income. The amounts recognised in accumulated other comprehensive income are not transferred later to profit or loss, while accumulated gains/losses on a given equity instrument are transferred within equity to retained earnings at the moment an equity instrument ceases to be recognised. Dividends from such investments are recognised in profit or loss.

The translation of items expressed in a foreign currency is performed according to the accounting policies described in Note 1.2.

The fair value of unquoted shares is calculated using the adjusted net assets method. The application of this method is due to the specific nature of the assets of companies whose shares are subject to measurement. Observable Input data other than the ones from the active market were used in the measurement (e.g. transaction prices of real estate similar to one subjected to measurement, market interest rates of State Treasury bonds and fixed-term deposits in financial institutions, and the risk-free discount rate published by the European Insurance and Occupational Pensions Authority).

The fair value of listed shares is calculated based on the closing price as at the end of the reporting period.

The loan’s fair value is set at the present value of future cash flows, including any change in market risk and credit risk factors during the loans’ life.

Export to Excel

As at
31 December 2021		 As at
31 December 2020
Shares of listed companies (Warsaw Stock Exchange
and TSX Venture Exchange), of which:		 516 523
TAURON POLSKA ENERGIA S.A. 483 496
GRUPA AZOTY S.A. 27 22
ABACUS MINING & EXPLORATION CORPORATION 1 1
Other shares quoted on TSX Venture Exchange 5 4
Unquoted shares 99 95
Loans granted 22 18
Other financial instruments measured at fair value, of which: 637 636
recognised in assets held for sale (disposal group) – –
recognised as “other financial instruments measured at fair value” 637 –

The measurement of listed shares is classified to level 1 of the fair value hierarchy (i.e. measurement is based on the prices of these shares listed on an active market at the measurement date), while the measurement of unquoted shares is classified to level 2 (i.e. measurement based on observable data, not deriving from an active market).

The measurement of loans granted is classified to level 2 of the fair value hierarchy.

In 2021 as well as in 2020, there were no dividends or transfers of accumulated profit or loss within the equity of companies in which the Group had shares classified as other financial instruments measured at fair value.

Due to investments in listed companies, the Group is exposed to price risk. Changes in the listed share prices of these companies resulting from the current macroeconomic situation may have a significant impact on the level of other comprehensive income and on the accrued amount recognised in equity.

Export to Excel

As at 31 December 2021

 Percentage change of share price As at 31 December 2020 Percentage change of share price
12% -12% 14% -13%
Carrying amount Other comprehensive income Other comprehensive income Carrying amount Other comprehensive income Other comprehensive income
Listed shares 516 63 (63) 523 71 (66)

Sensitivity analysis for significant types of market risk to which the Group is exposed presents the estimated impact of potential changes in individual risk factors (at the end of reporting period) on profit or loss and other comprehensive income.

Potential changes in share prices at the end of the reporting period were determined at the level of standard deviations from the WIG20 index for a period of 3 calendar years ended on the reporting date.

Previous topic
7.2 Derivatives
Next topic
7.4 Other financial instruments measured at amortised cost

Search results