foreign associates at the exchange rates at the end of the reporting period, and on trans- lation of the share of profit/loss and other comprehensive income for the year from average exchange rates to the exchange rates at the end of the reporting period, are recognised in other comprehensive income and attributed to a separate translation reserve in equity. 

On complete or partial disposal of a foreign entity or on repayment of balances which constitute part of the net investment in the foreign entity, the share of the cumula- tive amount of the exchange differences recognised in other comprehensive income relating to that foreign entity is recognised in the income statement when the gain or loss on disposal is recognised. 

Prior to translation of the financial state- ments of foreign entities in countries with hyperinflation, the financial statements are inflation-adjusted for changes in purchasing power in the local currency. Inflation adjust- ment is based on relevant price indexes at the end of the reporting period. 

## Hyperinflation 

The financial statements of foreign entities whose functional currency is the currency of a hyperinflationary market are stated in terms of the measuring unit current at the end of the 

reporting period using a general price index. Non-monetary assets are restated to the cur- rent purchasing power at the reporting date from the value on the date when they were first recognised in the financial statements. 

The gain/loss is recognised in other com- prehensive income. The gain/loss on the net monetary position is recognised as financial income or expenses in the income statement. Income statement items are restated from the value on the transaction date to the value on the reporting date except for items related to non-monetary assets, such as depreciation and amortisa- tion and consumption of inventories etc. Deferred tax is adjusted accordingly. The comparative figures for the Group are not restated in terms of the measuring unit current at the end of the reporting period. 

## Derivative financial instruments 

Derivative financial instruments are initially recognised in the statement of financial position at fair value on the trade date and subsequently measured at fair value. At- tributable transaction costs are recognised in the income statement. 

The fair values of derivative financial instru- ments are included in other receivables and other payables, and positive and negative values are offset only when the Group has the 

right and the intention to settle several finan- cial instruments net. Fair values of derivative financial instruments are computed on the basis of current market data and generally accepted valuation methods. 

Changes in the fair value of derivative finan- cial instruments designated as and qualifying for recognition as a fair value hedge of recog- nised assets and liabilities are recognised in the income statement, together with changes in the value of the hedged asset or liability with respect to the hedged portion. Except for foreign currency hedges, hedging of future cash flows according to a firm agreement is treated as a fair value hedge of a recognised asset or liability. 

Changes in the portion of the fair value of derivative financial instruments which are designated and qualify as a cash flow hedge and which effectively hedge changes in the value of the hedged item are recognised in other comprehensive income and attributed to a separate reserve in equity. When the hedged transaction results in gains or losses, amounts previously recognised in other comprehensive income are transferred to the same item as the hedged item when the hedged risk impacts the income statement. When the hedged item is a non-financial as- set, the amount recognised in other compre- hensive income is transferred to the carrying 

amount of the asset when the non-financial asset is recognised. 

Derivatives designated as and qualifying for recognition as a cash flow hedge of financial investments are recognised in other com- prehensive income. On complete or partial disposal of the financial investment, the portion of the hedging instrument that is recognised in other comprehensive income and relates to that financial investment is recognised in the income statement when the gain or loss on disposal is recognised. 

For derivative financial instruments that do not qualify for hedge accounting, changes in fair value are recognised in the income statement as financial income or financial expenses. 

Changes in the fair value of derivative financial instruments used to hedge net investments in foreign subsidiaries, joint ventures or associ- ates and which effectively hedge currency fluctuations in these entities are recognised in the consolidated financial statements in other comprehensive income and attributed to a separate translation reserve in equity. 

Embedded derivatives are recognised sepa- rately from the host contract and measured at fair value if their economic characteristics and risks are not closely related to those of the host contract, as a separate instru- 

