in PLN millions, unless otherwise stated
In 2020 the Group was exposed to the risk of changes in interest rates due to loans granted to joint ventures, investing cash, the reverse factoring program and using borrowings.
Positions with variable interest rates expose the Group to the risk of changes in cash flow from a given position as a result of changes in interest rates (i.e. it has an impact on the interest costs or income recognised in profit or loss). Positions with fixed interest rates expose the Group to the risk of fair value changes of a given position, excluding positions measured at amortised cost, for which the change in fair value does not affect their measurement and profit or loss.
The main items which are exposed to interest rate risk are presented below:
| As at 31 December 2020 |
As at 31 December 2019 |
|||||
|---|---|---|---|---|---|---|
| Cash flow risk | Fair value risk | Total | Cash flow risk | Fair value risk | Total | |
| Cash and cash equivalents* | 2 924 | – | 2 924 | 1 373 | 1 373 | |
| Loans granted | – | 18 | 18 | – | 17 | 17 |
| [Note 7.1] Borrowings | (3 463) | (3 872) | (7 335) | (3 873) | (4 000) | (7 873) |
| Similar payables** | (1 264) | – | (1 264) | (596) | – | (596) |
As part of the strategic management of interest rate risk, in 2019 the Parent Entity entered into Cross Currency Interest Rate Swap (CIRS) transactions for the notional amount of PLN 2 billion, hedging against the market risk connected with the issue of bonds in PLN with a variable interest rate1. CIRS transactions open as at 31 December 2020 are presented in note 7.5.1.3.
An analysis of the Group’s sensitivity to interest rates risk in relation to items with a variable interest rate is presented in the following table.
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| +100 basis points | -50 basis points | +100 basis points | -50 basis points | |||||
| profit or loss | other comprehensive income | profit or loss | other comprehensive income | profit or loss | other comprehensive income | profit or loss | other comprehensive income | |
| Cash and cash equivalents | 25 | – | (13) | – | 10 | – | (5) | – |
| Borrowings | (34) | – | 17 | – | (39) | – | 19 | – |
| Financial derivatives – interest rate | – | 150 | – | (80) | 17 | 131 | – | (72) |
| Similar payables | (1) | – | – | – | – | – | – | – |
| Impact on profit or loss | (10) | – | 4 | – | (12) | – | 14 | – |
| Impact on other comprehensive income | – | 150 | – | (80) | – | 131 | – | (72) |
An expert method including recommendations of the ARMA model was used to determine the potential volatility of interest rates.
1 Zadłużenie z tytułu obligacji w PLN generuje ryzyko walutowe ze względu na fakt, że większość przychodów ze sprzedaży Jednostki Dominującej jest denominowana w USD.