Financial instruments designated upon initial recognition at fair value through profit and loss

Accounting policies

The Group classifies a financial instrument to this category when:

1. it is a combined instrument containing one or more embedded derivatives that qualify for separate recognition, provided, however, that the embedded derivative does not change the cash flows resulting from the host contract significantly or the derivative cannot be separated;
2. such classification of an instrument eliminates or significantly reduces the inconsistency in measurement or recognition (the so-called accounting mismatch resulting from different measurement methods for assets and liabilities and different recognition of the related gains or losses), e.g. financial instruments economically hedged without applying hedge accounting;
3. the results on a category of financial instruments are assessed on a fair value basis, pursuant to the Group’s risk management principles or investment strategy.

The Group has a policy of financial assets and liabilities management according to which financial assets and liabilities classified as held for trading portfolio and financial assets and liabilities designated upon initial recognition at fair value through the profit or loss portfolio are managed separately.

Financial instruments classified in this category are designated at fair value with changes in fair value recognized in profit and loss, in net income from financial instruments measured at fair value through profit or loss.

Financial information

The item “Treasury bonds in PLN and in foreign currencies” comprises bonds issued by the State Treasury of the Republic of Poland.