The PGE Group entities are exposed to currency transaction risk and currency translation risk. The main sources of exposure to currency risk are presented below:
- capital expenditures denominated in or indexed to foreign currencies;
- indebtedness denominated in foreign currencies;
- sales of electricity denominated in foreign currencies (export);
- fees denominated in or indexed to foreign currency relevant to purchase of transmission capacities;
- sales and purchases of CO2 emission rights and gas as well as purchases of hard coal denominated in or indexed to foreign currencies;
- expenses related to current use of production goods denominated in or indexed to foreign currencies;
- financial assets with deposit characteristics denominated in foreign currencies.
The PGE Group entities enter into currency based derivative transactions exclusively in the purpose to hedge identified exposure to risk. Thus, the PGE Group entities are not permitted, as regards currency based derivative transactions, to enter into speculative transactions, i.e. those that increase the currency risk exposure in comparison with their level resulting from identified sources of exposure and that aim to obtain additional gains from risk factor changes.
The table below presents the Group’s exposure to currency risk with regards to particular classes of financial instruments:
Total carrying amount in PLN | CURRENCY POSITION AS AT DECEMBER 31, 2016 | |||||
EUR | USD | |||||
Currency | PLN | Currency | PLN | |||
FINANCIAL ASSETS | ||||||
Trade and other financial receivables, including: | 6,562 | 39 | 173 | - | - | |
Bonds acquired, bills | 89 | 20 | 89 | - | - | |
Trade receivables | 2,705 | 19 | 84 | - | - | |
Cash and cash equivalents | 2,669 | 13 | 59 | - | - | |
Derivatives, including: | 365 | 743 | 3,288 | - | - | |
Measured at fair value through profit or loss | 9 | 15 | 66 | - | - | |
CCIRS hedging instruments | 231 | 728 | 3,222 | - | - | |
FINANCIAL LIABILITIES | ||||||
Loans, borrowings, bonds, including: | (10,014) | (771) | (3,411) | (24) | (101) | |
Interest bearing loans and borrowings | (6,171) | (129) | (569) | (24) | (101) | |
Bonds issued and other debt securities | (3,842) | (642) | (2,842) | - | - | |
Trade and other financial liabilities measured at amortized cost, including: | (3,589) | (16) | (65) | - | - | |
Trade liabilities | (976) | (8) | (33) | - | - | |
Liabilities due to purchase of property, plant and equipment | (1,237) | >(1) | (2) | - | - | |
Other financial liabilities | (123) | (7) | (30) | |||
Derivatives, including: | (30) | - | - | (2) | (7) | |
Measured at fair value through profit or loss | (30) | - | - | (2) | (7) | |
NET CURRENCY POSITION | 8 | 44 | (26) | (108) |
The carrying amount of derivative instruments is their fair value. The value of currency risk exposure for forward derivatives is their nominal value at currency. The value of currency risk exposure for CCIRS derivatives is the currency value of discounted cash flows of currency leg.
The carrying amount of derivative instruments is their fair value. The value of currency risk exposure for forward derivatives is their nominal value at currency. The value of currency risk exposure for CCIRS derivatives is the currency value of discounted cash flows of currency leg.
restated
Total carrying amount in PLN
CURRENCY POSITION AS AT DECEMBER 31, 2015
EUR
USD
CHF
Currency
PLN
Currency
PLN
Currency
PLN
FINANCIAL ASSETS
Trade receivables
2,548
36
151
-
-
-
-
Cash and cash equivalents
3,104
67
280
-
-
-
-
Derivatives, including:
50
694
2,958
-
-
-
-
Measured at fair value through profit or loss
7
(35)
(149)
-
-
-
-
CCIRS hedging instruments
43
729
3,107
-
-
-
-
FINANCIAL LIABILITIES
Interest bearing loans and borrowings
(1,673)
(140)
(597)
(35)
(137)
(6)
(26)
Bonds issued and other debt securities
(3,734)
(642)
(2,734)
-
-
-
-
Trade and other financial liabilities measured at amortized cost, including:
(3,979)
(50)
(213)
-
-
-
-
Trade liabilities
(1,119)
(42)
(178)
-
-
-
-
Liabilities due to purchase of property, plant and equipment
(1,633)
(8)
(35)
-
-
-
-
Derivatives, including:
(89)
(9)
(37)
(3)
(12)
-
-
Measured at fair value through profit or loss
(89)
(9)
(37)
(3)
(12)
-
-
NET CURRENCY POSITION
(44)
(192)
(38)
(149)
(6)
(26)