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
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES (continued)
CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES (continued)
Availability of taxable profits against which the deferred tax assets could be recognised
A deferred tax asset is recognized only to the extent that it is probable that the related tax benefit will be realized.
In determining the amount of deferred taxes that can be recognised are required, which are based on the probable
quantification of time and level of future taxable profits, together with the future tax planning strategy. The carrying
amounts of deferred tax assets at 31 December 2010 and 31 December 2009 amounted to HRK 159,429 thousand
and HRK 120,351 thousand, respectively (see Note 9).
Actuarial estimates used in determining the retirement bonuses
The cost of defined benefits is determined using actuarial estimates. Actuarial estimates involve assumptions about
discount rates, future salary increases and the mortality or fluctuation rates. Because of the long-term nature of
those plans, there is uncertainty surrounding those estimates. Provisions for jubilee awards and retirement bonuses
amounted to HRK 348,425 thousand and HRK 287,849 thousand at 31 December 2010 and 31 December 2009,
respectively (see Note 27).
Consequences of certain legal actions
There are a number of legal actions involving the Group, which have arisen from the regular course of their operations.
If there is a present obligation as a result of a past event (taking into account all available evidence, including
the opinion of law experts) for which is probable that outflow of resources will be required to settle the obligation
and if a reliable estimate can be made of the amount of the obligation, provisions are recorded (see Note 27).
Remeasurement of the Janaf shares and investment property at fair value
During 2010 and 2009, the Group remeasured the Jadranski naftovod shares and the investment properties at fair
value.
In 2010 and 2009 fair value was made based on notification of Central clearing deposit company regarding
open balances as of 31 December 2010 and 2009. Market value of Jadranski naftovod share as at 31 December
2010 was HRK 3,000 (2009: 2,826)
Gain resulting from the fair valuation of the investment property amount to HRK 19,865 thousands, while in
2009 loss resulting from fair valuation was in amount of HRK19,748 thousand (see notes 5 and 7).
Valuation of inventories
During 2010 based on estimation, Group has made value adjustment of obsolete inventories and materials (material
with no transactions in previous 2 year) according to ageing structure in total amount of HRK 15,070 thousands
(2009: 110,647 thousand).
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HEP ANNUAL REPORT 2010
CHAPTER 6 - FINANCIAL STATEMENTS