DRAVA, KUPA, RJE»INA, LOKVARKA, LI»ANKA LIKA, DOBRA ...

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE HEP GROUP (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2010
25. LONG-TERM LIABILITIES TO THE GOVERNMENT
The long-term debt to the Government in the amount of HRK 33,734 thousand relates to the obligation arising on
the sale of housing units to employees under the Government program, which was discontinued in 1996. According
to the law regulating housing sales, 65% of the proceeds from the sale of apartments to employees were payable
to the state at such time as the proceeds were collected. According to the law, HEP d.d. has no liability to remit the
funds, unless and until they are collected from the employee. Decrease of liabilities in comparison to 2009 year is
caused by write off of receivables from banks based on sold apartments paid with old foreign-currency savings as
well as liabilities towards State up to 65% of sold apartments also paid with old foreign-currency savings.
26. DERIVATIVE FINANCIAL INSTRUMENTS
INTEREST RATE SWAP
The Group has one interest rate swap contract which hedges the Group’s exposure to variable interest rate debt.
Under the contract, the six-month interest rate payable by the Company is fixed at 5.39%, while the swapped interest
rate is equal to the six-month EURIBOR rate, approximately 1.2019% at 31 December 2010 (2009: approximately
1.0075 %).
Contract settlements are payable every six months. The contract matures on 25 October 2012. The notional
principal amount of the interest rate swap contract at 31 December 2010 was EUR 10,226 thousand (2009: EUR
15,339 thousand). The fair value of the interest rate swap contract, representing a future obligation, at 31 December
2010 amounted to HRK 2,875 thousand (2009: HRK 6,284 thousand). The related deferred tax asset at 31 December
2010 amounted to HRK 575 thousand (2009: HRK 1,257 thousand).
The non-current and the current portions of the obligation are presented below:
31 December 2010 31 December 2009
HRK’000 HRK’000
Long-term portion (Note 29) 672 3,513
Current portion (Note 33) 2,203 2,771
2,875 6,284
111
HEP ANNUAL REPORT 2010
CHAPTER 6 - FINANCIAL STATEMENTS