in PLN millions, unless otherwise stated
Credit risk related to loans granted depends on risk related to the realisation of the joint mining venture in Chile (Sierra Gorda S.C.M.). These loans, as a result of the impairment recognised at the moment of initial recognition due to credit risk, were classified as POCI, and are measured at the end of the subsequent reporting periods at amortised cost using the effective interest rate method and the effective discount rate adjusted by credit risk.
The basis for accruing interest on POCI loans is their gross value less any allowance for impairment at the moment of initial recognition.
The loan granted does not have collateral limiting the exposure to credit risk, therefore the amount exposed to potential loss due to credit risk is the gross amount of the loan.
The following table presents the change in the period in the gross value of POCI loans.
| 2020 | 2019 | |
|---|---|---|
| Gross amount as at 1 January | 5 694 | 5 199 |
| Interest accrued | 377 | 341 |
| Gains on reversal of allowances for impairment | 74 | 106 |
| Exchange differences from the translation of statements of operations with a functional currency other than PLN | (76) | 48 |
| Gross amount as at 31 December | 6 069 | 5 694 |
There was no expected impairment of loans in respect of which impairment was recognised at the moment of initial recognition in any of the presented reporting periods.
As at 31 December 2020, the Group classified the measurement to fair value of loans granted to level 3 of the fair value hierarchy because of the utilisation in the measurement of a significant unmeasurable parameter, being the forecasted cash flows of Sierra Gorda S.C.M. These cash flows are the most sensitive to changes in copper prices, which implies other assumptions such as forecasted production and operating margin. Therefore, the Group performed a sensitivity analysis of the fair value of loans to changes in copper prices.
Because of the significant sensitivity of the forecasted cash flows of Sierra Gorda S.C.M. to changes in copper price, pursuant to IFRS 13 p.93.f the Group performed a sensitivity analysis of the fair value (level 3) of loans to changes in copper prices.
| Copper prices [USD/t] | ||||||
|---|---|---|---|---|---|---|
| Scenarios | 2021 | 2022 | 2023 | 2024 | 2025 | LT |
| Base | 6 500 | 6 300 | 6 400 | 6 614 | 6 614 | 6 834 |
| Pessimistic | 5 500 | 5 000 | 5 200 | 5 500 | 5 800 | 6 834 |
| Optimistic | 8 000 | 8 500 | 8 500 | 8 500 | 8 500 | 6 834 |
|
Carrying amount |
Fair value | Fair value | ||
| Classes of financial instruments | 31 December 2020 | Optimistic scenario | Pessimistic scenario | |
| Loans granted measured at amortised cost | 6 069 | 5 998 | 7 133 | 5 094 |