Annual report - HSE

In the books of account loans are recognised in accordance with settlement date, while
receivables are recognised in accordance with trading date.
They are included under current assets, except in case of maturities of more than 12
months after the date of the statement of financial position. In such case they are classified
under long-term assets.
Cash and cash equivalents
Cash and cash equivalents comprise cash, bank deposits of up to three months and other
short-term quickly realisable investments with original maturity of three months or less.
They are carried at cost. Overdrafts on bank accounts are included under short-term
financial liabilities.
5.5.7.6.2 Non-derivative financial liabilities
Non-derivative financial liabilities comprise operating, financial and other liabilities.
Financial liabilities are initially carried at fair value increased by the costs that are directly
attributable to the transaction. After the initial recognition, financial liabilities are measured
at amortised cost using the effective interest method.
Among them, the Group records loans received with interest, liabilities to suppliers and
liabilities to others.
Loans received are initially recognised on the date of their settlement (payment), while
other non-derivative financial liabilities are recognised on the trade date.
The portion of long-term financial liabilities that falls due within less than a year after the
cash flow statement date is disclosed under short-term financial liabilities.
5.5.7.6.3 Derivatives
Derivatives are used for the hedging of Group’s exposure against interest rate, price and
currency risks. The Group has concluded interest and currency swaps as well as futures
contracts for the purchase of electricity and emission coupons in the following years.
These are financial instruments that do not require initial financial investment, while their
value is changing due to change in interest rates, goods prices or foreign exchange rates.
Derivatives are initially recognised at fair value, namely according to net principle, which
means that the sole value of transaction concluded is not disclosed in financial statements.
After the initial recognition, derivatives are measured at fair value, while the corresponding
changes are considered in the following manner:
• When a derivative is defined as hedging in case of exposure to changeability of cash
flows that may be attributed to an individual risk related to recognised asset, liability or
very probable envisaged transactions, which can affect the profit or loss, the successful
portion of changes in fair value of derivative is recognised in comprehensive income
and disclosed in risk hedging reserve. Unsuccessful portion of changes in the fair value
of financial instrument is directly recognised in the income statement. The Group shall
discontinue prospectively the hedge accounting if the hedge no longer meets the criteria
for hedge accounting, if the hedging instrument is sold, terminated or exercised. The
accumulated profit or loss recognised in comprehensive income remains recorded
in the hedging reserve until the envisaged transaction impacts the profit or loss. If the
envisaged transactions cannot be expected any more, the amount recognised in other
comprehensive income must be directly recognised in profit or loss. In other cases, the
amount recognised as comprehensive income is transferred to profit or loss for the same
period in which the protected item affects the profit or loss.
• Effects of other derivatives, which are not determined as risk hedges in case of exposure
to cash flow changeability or cannot be attributed to individual risk related to recognised
asset or liability, are recognised in profit or loss.
Annual Report HSE 2012
5 Financial Report of HSE Group
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