10.23. Equity

Upon the transition to IFRS, i.e. on 1 January 2004, in accordance with the requirements of IAS 29, the parent company restated the equity components except for retained earnings from the previous years with the application of the general price index starting from the dates when the given equity items were contributed or otherwise emerged until 31 December 1996.

Share capital is recognised at the value resulting from the restatement of the nominal value in accordance with the requirements of IAS 29 described above.

Differences between the fair value of the payment received and the nominal value of shares are recognised in the share premium supplementary capital.

Dividends are recognised as liabilities in the period when they were approved by virtue of a resolution.

The Group key employees are entitled to take up the parent company shares at a fixed price. The capital from share based payments reflects the fair value of the options granted.

The Group is a party to forward/futures contracts hedging the future cash flows. The portion of gains or losses on a hedging instrument being an effective hedge is recognised directly in other comprehensive income in the ‘Hedging reserve’ item.

If the result on a hedged transaction refers to a transaction subsequently resulting in the recognition of a financial asset or a financial liability, the related gains or losses remain in the ‘Hedging reserve’ item until the hedged item or transaction influences the profit or loss, and then the result in question is charged to profit or loss.

In this item, the Group presents retained earnings (loss), the profits which according to the owners’ decision are retained in the Group, and actuarial gains (losses) related to post-employment benefits.

The item comprises foreign exchange gains and losses on translation of the data of consolidated subsidiaries for which the functional currency is other than PLN. The Group translates the data in accordance with the following procedures:

• assets and liabilities – at the exchange rate as at the balance-sheet date;revenue and costs – at the weighted average exchange rate from a given period.

Non-controlling interests represent that part of equity at a subsidiary which may not be directly or indirectly attributed to the parent company. As at the date of control takeover, non-controlling interests are measured at the value of proportional share in the fair value of identifiable net assets of the subsidiary. At the subsequent dates, the carrying amount of non-controlling interest is updated for the value of comprehensive income attributable to non-controlling interests.