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

INDEPENDENT AUDITOR’S REPORT
To the Owner of HEP d.d.:
We have audited the consolidated financial statements of the HEP Group (the ‘Group’), which comprise the consolidated
statement of financial position as at 31 December 2010 and the related consolidated income statement,
consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
notes.
MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Except
as provided in paragraphs a) and c) below, we conducted our audit in accordance with International Standards on
Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and
fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
MATTERS AFFECTING THE OPINION
A) PREPAYMENTS TO HRVATSKE AUTOCESTE d.o.o.
As described in Note 13, the Group advanced HRK 300 million to Hrvatske autoceste d.o.o. in December 2006 for the
acquisition of electricity facilities on the Croatian motorways within two years from the date of the advance payment.
As of the date of these financial statements, the legal title to those facilities has not yet been transferred to the
Group. The Group is the economic beneficiary of the electricity facilities, which it uses for their intended economic
purposes and in the supply of electricity to customers. As of the date of publication of these financial statements,
the Group has not classified the advance payment by type of assets used in the Group’s business, and we have
received no calculation of the economic impact of the reclassification of those assets from prepayments to assets in
use and the related depreciation from the Management Board. As a result, we are unable to assess the impact of
this matter on the Group’s financial statements.
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HEP ANNUAL REPORT 2010
CHAPTER 6 - FINANCIAL STATEMENTS