Nota 26.4 Fair value of financial instruments
Details of the fair value of financial instruments whose measurement is possible are presented below:
- cash and cash equivalents, short-term bank deposits and short-term bank loans. The carrying amount of such instruments approximates their fair value because of the short maturities of such instruments,
- trade receivables, other receivables, trade payables. The carrying amount of such instruments approximates their fair value because of their short maturities,
- long-term bank credits and loans with variable interest. The carrying amount of such instruments approximates their fair value due to the variable interest,
- long-term bank credits and loans with fixed interest. The carrying amount of such instruments amounts to PLN 212 750 thousand and their fair value to PLN 213 394 thousand (categorised as a Level 2 fair value),
- foreign exchange derivatives, interest rate. The carrying value of these instruments is equal to their fair value,
- available-for-sale financial assets. The carrying amount of such instruments is equal to their fair value.
There were no financial instruments recognised by the Group in 2015 and in 2014 for which the initial value resulting from the transaction would differ from their fair value as at the date of transaction, determined using the appropriate valuation technique.
The fair value of the Group’s financial instruments measured at fair value by level of classification as follows:
31 December 2015
| Classification level | Level I | Level II | Level III |
|---|---|---|---|
| Financial assets at fair value: | |||
| available-for-sale shares | – | – | 13 204 |
| currency forwards | – | 1 283 | – |
| futures contracts for emission rights | – | 2 891 | – |
| – | 4 174 | 13 204 | |
| Financial liabilities at fair value: | |||
| currency forwards | – | (927) | – |
| interest rate forwards | – | (59) | – |
| – | (986) | – |
31 December 2014
| Classification level | Level I | Level II | Level III |
|---|---|---|---|
| Financial assets at fair value: | |||
| available-for-sale shares | – | – | 13 205 |
| currency forwards | – | 29 | – |
| futures contracts for emission rights | – | 3 844 | – |
| – | 3 873 | 13 205 | |
| Financial liabilities at fair value: | |||
| currency forwards | – | 1 163 | – |
| – | 1 163 | – |
The fair value hierarchy presented in the table above is as follows:
Level 1 – price quoted in the active market for the same assets or liabilities,
Level 2 – the value determined based on inputs other than quoted prices included in level 1 that are directly or indirectly observable or ascertainable based on the market information,
Level 3 – the value determined on the basis of data inputs that are not based on observable market inputs.
The fair value of currency derivatives and forwards for emission rights presented in level II is determined based on a valuation carried out by banks with which the related contracts were concluded. Such valuations are reviewed by discounting the expected cash flows from the contracts using market interest rates prevailing at the reporting date.
The Group has investments of PLN 13 204 thousand (31 December 2014: PLN 13 205 thousand) in shares that were qualified to Level III because the shares are not quoted in an active market and there were no transactions performed on the shares. The fair value of the shares was estimated by an expert using valuation techniques containing significant unobservable inputs, i.e. the expected cash flows and discount rates.
