The Group selected the accounting policy in the area of hedge accounting and decided to continue applying the hedge accounting principles in accordance with IAS 39 „Financial Instruments: Recognition and Measurement” until the end of works of the International Reporting Standards Board on the guidelines for macro hedge accounting (Macro hedging).
Hedge accounting recognizes the compensation effects of changes in the fair value measurement of hedging and hedged items affecting the statement of profit or loss. Pursuant to the adopted hedge accounting principles, the Group designates certain derivatives as hedges of fair value and future cash flows of certain assets, provided the criteria determined in IAS 39 are met. Hedge accounting is used to account for hedging relationships if all of the following conditions are met:
- at the inception of the hedge there is a formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk;
- the hedge is expected to be highly effective in offsetting changes in fair value or cash flows attributable to the hedged ris k, consistently with the originally documented risk management strategy for that particular hedging relationship;
- for cash flow hedges, a forecast transaction that will be hedged must be highly probable and must present an exposure to variations in cash flows that could ultimately affect profit or loss;
- the effectiveness of the hedge can be reliably measured, i.e. the fair value or cash flows of the hedged item that are attributable to the hedged risk and the fair value of the hedging instrument can be reliably measured;
- the hedge is assessed on an ongoing basis and determined actually to have been highly effective throughout the financial reporting periods for which the hedge was designated.
Fair value hedge
Changes in the fair value measurement of financial instruments designated as hedged items are charged to the statement of profit or loss in the portion arising from the risk subject to hedge. The remaining portion of the change in the balance sheet amount is booked in accordance with general principles applicable to the particular class of financial instruments.
Change in the fair value measurement of financial instruments designated as hedged items is presented in the statement of financial position as
Adjustment of fair value of hedging and hedged item for macro fair value hedge or as
Adjustment of fair value of hedged item for micro fair value hedge.
Changes in the fair value measurement of derivatives designated as hedging instruments under hedge accounting are entirely recognized in the statement of profit or loss under the same item as results of changes in the value of the hedged items, i.e. in the
Result on fair value hedge accounting.
Cash flow hedge
The effective part of changes in the fair value of derivative instruments designated and qualified as cash flow hedges is recognized in other comprehensive income. The profit or loss relating to the ineffective part is presented in the profit or loss account for the current period.
Amounts recognized in other comprehensive income are included in revenues or costs of the same period in which the hedged item will affect the profit or loss account.
If the hedging instrument expired or was sold, or when the hedge no longer meets the hedge accounting criteria, any accumulated profits or losses recognized at this moment in other comprehensive income remain in other comprehensive income until the forecast transaction is recognized in the profit or loss account. If the forecasted transaction is no longer considered probable, total gains and losses recognized in other comprehensive income are immediately transferred to the profit or loss account.
