Tauron – 28. Other financial assets

SELECTED ACCOUNTING PRINCIPLES Other financial assets of the Group include, inter alia, shares and stocks, deposits, bid bonds, security deposits and collaterals provided, derivatives, loans granted to unrelated entities. Upon initial recognition, financial assets are classified to the appropriate category of financial assets and measured accordingly. The principles of classification and measurement of financial assets in accordance with IFRS 9 Financial Instruments are described in Note 51 to these consolidated financial statements. PROFESSIONAL JUDGEMENT AND ESTIMATES The measurement of financial assets at a fair value requires the Group to estimate the fair value at each balance sheet date. The methodology for calculating fair value is presented in Note 51 to these consolidated financial statements. The measurement of financial assets measured at amortised cost requires the Group to estimate expected credit losses at each balance sheet date. The methodology for estimating expected credit losses for loans granted is presented in note 52.1.4 to these consolidated financial statements.

SELECTED ACCOUNTING PRINCIPLES

Other financial assets of the Group include, inter alia, shares and stocks, deposits, bid bonds, security deposits and collaterals provided, derivatives, loans granted to unrelated entities.

Upon initial recognition, financial assets are classified to the appropriate category of financial assets and measured accordingly. The principles of classification and measurement of financial assets in accordance with IFRS 9 Financial Instruments are described in Note 51 to these consolidated financial statements.

PROFESSIONAL JUDGEMENT AND ESTIMATES

The measurement of financial assets at a fair value requires the Group to estimate the fair value at each balance sheet date. The methodology for calculating fair value is presented in Note 51 to these consolidated financial statements.

The measurement of financial assets measured at amortised cost requires the Group to estimate expected credit losses at each balance sheet date. The methodology for estimating expected credit losses for loans granted is presented in note 52.1.4 to these consolidated financial statements.

Table 1

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	As at 31 December 2020	As at 31 December 2019
Derivative instruments	158,846	105,529
Shares	85,454	140,508
Receivables due to financial compensation for traiding companies	61,357	151,114
Bid bonds, deposits and collateral transferred	55,815	131,192
Deposits and term deposits for Mining Decommissioning Fund	53,448	50,228
Initial deposits arising from stock exchange transactions	48,663	184,353
Variation margin deposits arising from stock exchange transactions	–	25,113
Investment fund units	–	26,622
Loans granted	–	12,451
Other	10,911	7,447
Total	474,494	834,557
Non-current	208,063	235,522
Current	266,431	599,035

As at 31 December 2020, assets from the positive valuation of derivatives relate to commodity derivatives (including, to a large extent, forward instruments from transactions for which CO2 emission allowances are the underlying commodity), forward FX derivatives and CCIRS instruments. Due to the market situation in the current reporting period, mainly related to COVID-19, the occurrence of material changes in commodity derivative prices and the depreciation of the Polish zloty, an increase in the assets arising from the measurement of the above derivatives occurred in the year ended 31 December 2020 compared to the end of 2019. Derivatives are described in more detail in Note 51.3 hereto.

As at 31 December 2020, the shares and stocks held mainly comprise shares in the following companies:

SCE Jaworzno III sp. z o.o. with the value of PLN 29,476 thousand;
EEC Magenta Sp. z o.o. 2 ASI SKA with the value of PLN 19,116 thousand;
ElectroMobility Poland S.A. with the value of PLN 11,026 thousand.

Decrease in the value of shares and stocks is related to reclassification of assets of the subsidiary, TAURON Ciepło Sp. z o.o. to assets classified as held for sale, as a result of which its shares and stocks in other companies were recognised in the item of assets classified as held for sale and reclassification of shares in PGE EJ 1 Sp. z o.o. to assets classified as held for sale.

Compensation receivables for trading companies in the amount of PLN 61 357 thousand result from the request filed in September 2020 by TAURON Sprzedaż Sp. z o.o. to correct the amount of the price difference and financial compensation for the entire year 2019, as described in more detail in Note 13 to these consolidated financial statements.

The value of deposits, bonds, collaterals relates mainly to the collaterals provided by the subsidiary from the Generation segment in favour of PSE S.A. on account of securing due performance of the agreement for the provision of electricity transmission services and the collaterals provided by the Company under the clearing guarantee system with Izba Rozliczeniowa Giełd Towarowych S.A. As at 31 December 2020 and 31 December 2019, the collaterals under the above titles amounted to the total of PLN 36,209 thousand and PLN 83,817 thousand, respectively.

The value of initial deposits (in the comparable period also of supplementary deposits) is related mainly with forward transactions for CO2 emission allowances concluded on foreign stock markets. The change in the value of deposits in relation to the comparable period results mainly from the Company’s position on the stock exchange as at the balance sheet date and changes in the prices of allowances. The reduction in the volume of stock exchange futures contracts for CO2 emission allowances is mainly related to the change in the strategy of securing the Group’s redemption needs, consisting in a one-off replacement of exchange contracts with over-the-counter contracts (as described in more detail in Note 14.1 of these consolidated financial statements) and the conclusion of new contracts for redemption purposes of the Group’s companies on the over-the-counter market.