MOL GROUP Annual Report

Capital managementThe primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthycapital ratios in order to support its business and maximize shareholder value.Types and fair values of financial assets (excluding trade receivables, other current assets and cash and cash equivalents) andfinancial liabilities (excluding trade and other payables) are the following:The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintainor adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholdersor issue new shares. Treasury share transactions (see Note 17) are also used for such purposes, No changes were made in theobjectives, policies or processes during the years end 31 December 2010 and 31 December 2009.The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.2010 2009HUF millionHUF millionLong-term debt, net of current portion 947,910 829,111Current portion of long-term debt 102,050 103,577Short-term debt 160,863 178,457Less: Cash and cash equivalents 313,166 177,105Net debt 897,657 934,040Equity attributable to equity holders of the parent 1,435,070 1,294,005Non-controlling interest 539,407 535,647Total equity 1,974,477 1,829,652Capital and net debt 2,872,134 2,763,692Gearing ratio (%) 31.3% 33.8%34 Financial instrumentsFinancial instruments in the balance sheet include investments, other non-current assets, trade receivables, other currentassets, cash and cash equivalents, short-term and long-term debt, other long-term liabilities, trade and other payables.Derivatives are presented as other non-current assets, other non-current liabilities, other current assets and trade and otherpayables. Fair value of fixed rate bond which is carried at amortized cost is based on market prices.2010 2009HUF millionHUF millionFinancial instruments at fair value through other comprehensive incomeCash flow hedgesNet receivable from currency risk hedging derivatives as cash-flow hedge (see Note 12) 4,116 4,139Total financial instruments at fair value through other comprehensive income 4,116 4,139Financial instruments at fair value through profit or lossDerivatives designated as hedgesReceivable from currency risk hedging derivatives as fair-value hedge (see Note 12) - non current 155 -Receivables from currency risk hedging derivatives as fair-value hedge (see Note 15) - current 29 1,097Fair value of firm commitments as hedged item under commodity price transactions (see Note 15) 61 -Derivatives not designated as hedgesFair value of the option on MOL shares transferred to CEZ (see Note 15) 28,858 3,989Fair value of share swap (see Note 15) - 496Net receivables from commodity price transactions (see Note 15) 21 146Receivables from foreign exchange forward transactions (see Note 15) 8 65Total financial instruments at fair value through profit or loss 29,132 5,793Loans and receivablesLoans given, net of current portion (see Note 12) 23,431 20,707Current portion of loans given (see Note 15) 1,143 1,921Total loans and receivables 24,574 22,628Available for sale investments (see Note 11)Quoted equity shares – Jadranski Naftovod d.d. 13,460 12,473Unquoted equity shares 8,041 6,141Total available for sale investments 21,501 18,614Total financial assets 79,323 51,174Total non-current 49,203 43,460Total current 30,120 7,714Notes to the financialstatements2010 2009HUF millionHUF millionFinancial liabilities at fair value through profit or lossConversion option of exchangeable capital securities by Magnolia Finance Ltd(see Note 17 and Note 21)25,079 19,698Derivatives designated as hedgesNet payables from commodity price transactions designated as fair value hedge(see Note 22 and Note 33)61 -Payables from currency risk hedging derivatives as fair value hedge (see Note 21) 205 362Payables from currency risk hedging derivatives as fair value hedge (see Note 22) 53 -Derivatives not designated as hedgesFair value of share swap (see Note 22) 227 -Total financial liabilities at fair value through profit or loss 25,625 20,060Financial liabilities at amortized costNon-current interest bearing loans and borrowings 1,044,492 928,147Current interest bearing loans and borrowings 160,863 178,457Transferred “A” shares with put and call options attached (see Note 17 and 22) 108,959 43,417Non-interest bearing long-term liabilities 5,468 4,541Total financial liabilities at amortized cost 1,319,782 1,154,562Total financial liabilities 1,345,407 1,174,622Total non-current 1,075,244 952,748Total current 270,163 221,874152 MOL Group annual report 2010 153