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

122
HEP ANNUAL REPORT 2010
CHAPTER 6 - FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE HEP GROUP (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2010
37. FINANCIAL INSTRUMENTS (continued)
FINANCIAL RISK MANAGEMENT OBJECTIVES
The Group’s Treasury function provides services to the business, co-ordinates access to domestic and international
financial markets, monitors and manages the financial risks relating to the operations of the Group through internal
risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including
currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.
MARKET RISK
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates (see below). Market risk exposures are supplemented by sensitivity analysis. There has been no change
to the Group’s exposure to market risks or the manner in which it manages and measures the risk.
FOREIGN CURRENCY RISK MANAGEMENT
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign
exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities
at the reporting date are as follows:
Assets Liabilities
31 December 2010 31 December 2009 31 December 2010 31 December 2009
(in ‘000 ) (in ‘000 ) (in ‘000 ) (in ‘000 )
European Union (EUR) 88,390 3,866 573,176 647,683
USD 34 198 75,315 82,591