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

126
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)
LIQUIDITY RISK MANAGEMENT (continued)
Liquidity and interest rate risk tables (continued)
MATURITY OF DERIVATIVE FINANCIAL LIABILITIES
The Group has an interest rate swap, which it uses to hedge its ex posure to variable rate debt. Based on the underlying
agreement, the six-month interest rate payable by the Company is fixed at 5.39 %, whereas the swap rate
is equal to six-month EURIBOR, or approximated at 1.2019 % at 31 December 2010 (2009: 1.0075 %), as disclosed
in detail in Note 26.
Weighted
average
effective
interest rate
Less than 1
month
1 – 3
months
3 – 12
months
% (HRK’00) (HRK’000) (HRK’000) (HRK’000) (HRK’00) (HRK’000)
31 December 2010
Variable interest rate
instruments
1.2019% - - 1,108 476 - 1,584
Fixed interest rate
instruments
5.39% - - (4,969) (2,136) - (7,105)
Total
31 December 2009
- - (3,861) (1,660) - (5,521)
Variable interest rate
instruments
1.0075% - - 1,444 1,314 - 2,758
Fixed interest rate
instruments
5.39% - - (7,726) (7,029) - (14,755)
Total - - (6,282) (5,715) - (11,997)
1 – 5
years
Over 5
years
FAIR VALUE OF FINANCIAL INSTRUMENTS
Valuation methods or assumptions in determining fair value
The fair values of financial assets and financial liabilities are determined as follows:
- The fair value of financial assets and financial liabilities with standard terms and conditions and traded on
active liquid markets is determined with reference to quoted market prices.
- the fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined
in accordance with generally accepted pricing models based on discounted cash flow analysis using prices
from observable current market transactions and dealer quotes for similar instruments.
- fair value of derivative instruments is calculated using the listed price. Where such prices are not available,
the analysis uses discounted cash flows using the current yield curve for the period of the instruments under
optional derivatives, while the optional derivative used models for pricing options. Forward currency contracts
are valued using quoted forward exchange rates and yield curves derived from quoted interest rates for contracts
with similar maturity. Interest rate swaps are valued at the present value of estimated future cash flows
and discounted based on the current yield curve derived from quoted interest rates.
Total