110
It must be noted that the above table does not include liabilities to clients from the performance of construction
projects, as the maturity of such values cannot be assessed.
Moreover, cash-advances from customers, construction contacts liabilities as well as the provisions and
accrued expenses are not included.
4.8 Hedging Accounting
The Group uses Derivative financial instruments such as Commodity Futures and Currency Forwards in order
to mitigate the risk related to its business activities along with the risk related to the funding of such activities.
At inception of the hedging transaction, the Group validates the hedging relationship between the underlying
and the hedging instrument as far as its risk management strategy is concerned. The Group also verifies the
hedging efficiency from the beginning of the hedging relationship and on a continuing basis.
All derivative financial instruments are initially recognized at fair value as at the date of settlement and are
valued on a mark - to - market basis on each balance sheet date. The result of this valuation is recognized as
an asset when positive and as a liability when negative.
When a derivative financial instrument is no longer regarded as hedging instrument any difference in its fair
value is recognized in profit and loss.
There are three kinds of hedges:
Fair Value Hedging
Fair value hedging is regarded when hedging the exposure in the fluctuations of the fair value of a recognized
asset, liability, contingent liability or part of them that could have a negative impact on results.
When hedging accounting, concerning fair value hedge, is followed then any profit or loss from revaluation is
recognized in profit and loss.
Cash Flow Hedging
The Group enters into Cash Flow Hedging transactions in order to cover the risks that cause fluctuations in its
cash flows and arise either from an asset or a liability or a forecasted transaction.
On revaluation of open positions, the effective part of the hedging instrument is recognized directly in Equity as
“Hedging Reserve” while the ineffective part is recognized in Profit & Loss. The amounts recognized in Equity
are transferred in profit and loss at the same time as the underlying.
When a hedging instrument has expired, sold, settled or does not qualify for hedging accounting all accumulated
profit or loss recognized in Equity, stays in Equity until the final settlement of the underlying. If the underlying is
not expected to be settled then any profit or loss recognized in Equity is transferred to profit and loss account.
Hedging of a Net Investment
Hedging of a foreign investment is regarded for accounting purposes in a way similar to cash flow hedging.
The effective part of the hedging result is recognized directly in Equity while any ineffective part is recognized
in profit and loss. Accumulated profit or loss recognized in Equity is transferred in profit and loss account at
the time of disposal of the investment.
Determination of Fair Value
The fair value of financial instruments trading in an active market is defined by the published prices as of the
date of the financial statements.
The fair value of financial instruments not traded in active market is defined through the use of valuation
techniques and assumptions based on relevant market information as of the date of the financial statements.
