3.1. Functional currency, presentation currency and foreign currencies

Transactions denominated in foreign currencies are translated into the functional currency using exchange rate prevailing at the dates of the transactions. At each balance sheet date, items are translated by the Group using the following principles:

• cash items denominated in foreign currencies are translated using a closing rate i.e. the average rateannounced by the National Bank of Poland prevailing as at the end of the reporting period;
• non-cash items measured at historical cost denominated in a foreign currency are translated using the exchange rate as at the date of the transaction;
• non-cash items measured at fair value in a foreign currency are translated using the exchange rates
  prevailing as at the date of determination of the fair value

Foreign exchange gains and losses arising from the settlement of such transactions and from the valuation of monetary and non-monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.