10.5. Translation of items expressed in foreign currencies

As of the balance sheet date, monetary assets and liabilities expressed in foreign currencies are translated into the functional currency at the exchange rate of a given currency applicable as at the end of the reporting period. Currency translation differences resulting from the settlement of items and from the translation are recognised in finance income or costs or, in the cases provided for in the accounting principles (policy), capitalised in the value of assets. Non-monetary assets and liabilities recognised at the historical cost expressed in a foreign currency are disclosed at the historical exchange rate as at the transaction date. Non-monetary assets and liabilities recognised at fair value expressed in a foreign currency are revalued to the fair value at the exchange rate binding on the valuation date.

As at the balance-sheet date, the assets and liabilities of foreign subsidiaries are translated into the Group statements currency at the exchange rate binding at the balance-sheet date, whereas the statements of profit or loss and statements of other comprehensive income are translated at the mean exchange rate for a given reporting period, from the last days of the particular months of the given period, in consideration of the exchange rates at the beginning of the preceding period. Currency translation differences resulting from such a translation are recognised in other comprehensive income and accumulated in a separate item of equity. At the moment of disposal of a given foreign company, the deferred currency translation differences accumulated in the equity corresponding to a given foreign entity are recognised in the income statement. Goodwill originating at the acquisition of a foreign company and any adjustments on account of fair value measurement of assets and liabilities at such acquisition are treated as the assets and liabilities of such foreign company and translated at the mean exchange rate of the given currency determined by the National Bank of Poland as at the balance-sheet date.

The table below presents the applied exchange rates: