Instructions for Filling Out the HR-LEAS Form for HANFA

Instructions for Filling Out the HR-LEAS Form

1. General Notes

The HR-LEAS form must be completed by all leasing companies that have received approval to operate from the Croatian Financial Services Supervisory Agency (HANFA), as well as by companies that have submitted an application for compliance with the provisions of the Leasing Act.

Data entered into the form must follow the categories prescribed by Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community (ESA 95).

The form is compiled and submitted to HANFA on a quarterly basis and consists of two parts: "Stocks and Transactions" and "Breakdown of Securities". The "Stocks and Transactions" form consists of a header and the stocks and transactions of financial instruments in the assets and liabilities of the leasing company, classified by sectors defined by the European System of National Accounts. The header of this form contains data relating to the reporting entity (leasing company) and the reporting period. It is important to note that the eight-digit identification number assigned by the Croatian Bureau of Statistics must be entered in the "Company Identification Number" field. The data presented in the report relate only to the reporting quarter, not to the cumulative amount from the beginning of the year. Stock data relate to the last day of the reporting quarter, while transaction data relate to transactions carried out during the reporting quarter.

Both forms, "Stocks and Transactions" and "Breakdown of Securities", contain four values (A, B, C, and D) for each row of the form, i.e., for each financial instrument.

Column A contains the market value of the instruments shown in the rows of the form. Column B contains the book value of the instruments shown in the rows of the form. The definition of book value depends on the instrument, as described in more detail below. Column C contains the acquisition transaction (purchase or creation) of the instrument. In assets, this refers to investment, and in liabilities, to borrowing, i.e., an increase in liabilities. Column D contains the sale or repayment transaction of the instrument. In assets, this refers to the return of investment, and in liabilities, to a reduction in indebtedness, i.e., a reduction in liabilities. The "Breakdown of Securities" form contains a more detailed breakdown of two items from the "Stocks and Transactions" form: investments in short-term and long-term debt securities (items 20 and 21 of the "Stocks and Transactions" form). For each row of the reporting forms, all four columns must be filled (some may have a value of zero if the leasing company had that instrument in assets or liabilities but no longer has it, while some columns may remain empty if the leasing company never had that instrument in assets and liabilities and cannot have it at all).

All values in the form must be expressed in Croatian kunas without lipas (not in thousands of kunas). Values in foreign currencies must be converted into their Croatian kuna equivalent using the average exchange rate of the Croatian National Bank (HNB) at the end of the period (columns A and B) or on the date of the transaction (columns C and D). Generally, negative values cannot appear in the report, except in the case of losses exceeding the amount of capital, which is shown in liabilities as a negative amount of capital and reserves.

For most instruments, it is necessary to indicate the corresponding breakdown by counterparty sector as indicated in the form. Sector definitions are described in point 4 "Determination of Counterparty Sector".

2. Financial Instruments in Assets

Cash as a means of payment represents the book value of banknotes and coins in domestic or foreign currency held by the reporting entity in the cash register. Market and book values are equal. Increases are shown in column C, and decreases in column D during the reporting period.

Transaction accounts (current and checking accounts) in domestic or foreign currency are funds that can be immediately converted into currency or are transferable by check, bank order, book entry, or similar means, without any significant restrictions or sanctions. Market and book values are equal. Accrued due and due interest must be added to the value of the instrument. Increases are shown in column C, and decreases in column D during the reporting period. Accrued interest must be added to the value of the acquisition transaction in column C.

Deposits are all other deposits in domestic or foreign currency, excluding transactional deposits. They cannot be used for payments at any time, nor can they be converted into currency or transactional deposits without significant restrictions or sanctions. Savings deposits must be included in this item. Market and book values are equal. Accrued due and due interest must be added to the value of the instrument. Increases (granting of deposits) are shown in column C, and decreases (return of deposits) in column D during the reporting period. Accrued interest on granted deposits during the reporting period must be added to the value of the acquisition transaction and shown as a single amount in column C.

Investments in short-term debt securities, excluding financial derivatives, are investments by the leasing company in debt securities with an original maturity of up to one year (e.g., Treasury bills of the Ministry of Finance maturing within one year - in kunas and foreign currencies, commercial papers, HNB cashier's checks, bills of exchange...). Market and book values usually differ. If present, the market value is shown according to the price that includes the value of accrued due interest (so-called "dirty price"). If not, market and book values are equal. Accrued due and due interest and due principal must be included in the book value of the instrument. Transactions in column C show amounts paid (purchase of a security with accrued due interest), while column D shows amounts received (sale or payout of part of a security with accrued due interest) for securities during the reporting period. Together with acquisition transactions in column C, accrued interest for the entire reporting period must be added for those securities that were in the portfolio of the leasing company at the beginning of the reporting period, and for securities purchased by the leasing company during the reporting period, accrued interest from the date of purchase to the end of the reporting period must be added.

Investments in long-term debt securities are debt securities with an original maturity of more than one year, excluding financial derivatives (e.g., bonds, Treasury bills of the Ministry of Finance with an original maturity of more than one year). Market and book values usually differ. If present, the market value is shown according to the price that includes the value of accrued due interest (so-called "dirty price"). The market value is not the amortized cost value. Accrued due and due interest and due principal must be included in the book value of the instrument. Transactions in column C show amounts paid (purchase of a security with accrued due interest), while column D shows amounts received (sale or payout of part of a security with accrued due interest) for securities during the reporting period. When showing acquisition transactions in column C, accrued interest for the entire reporting period must be added for those securities that were in the portfolio of the leasing company at the beginning of the reporting period, and for securities purchased by the leasing company during the reporting period, accrued interest from the date of purchase to the end of the reporting period must be added. When the remaining maturity decreases to less than one year, bonds are still shown as long-term debt securities, i.e., according to the original maturity.

Derivative financial instruments that represent assets are contracts whose value is derived from another underlying instrument (exchange rate, interest rate, consumer price index (CPI), stock price, bond price...). They are used as instruments to protect against financial risk, but also for speculation based on the movement of the price of the underlying asset. Only the market value, which represents the fair value of the instrument, is filled in. Transactions show only transactions in instruments where there is a payment at the initiation of the instrument, and they represent assets for the leasing company.

Short-term loans are loans and receivables from financial leasing with an original maturity of up to one year. Market and book values are equal if the loan or receivable from financial leasing is not traded. Accrued due and due interest and due principal must be added to the value of the instrument. Amounts of newly granted financial leases are shown in column C, and repayments of principal and interest on granted loans and repaid financial leases during the reporting period are shown in column D. Accrued interest must be added to the value of the acquisition transaction in column C.

Long-term loans are loans and receivables from financial leasing with an original maturity of more than one year. Market and book values are equal if the loan or receivable from financial leasing is not traded. Accrued due and due interest and due principal must be added to the value of the instrument. Amounts of newly granted financial leases are shown in column C, and repayments of principal and interest on granted loans and repaid financial leases during the reporting period are shown in column D. Accrued interest must be added to the value of the acquisition transaction in column C.

Fair value is the amount for which an asset can be exchanged, or the amount by which a liability can be settled, between knowledgeable and willing parties in a transaction before the agreement.

Stocks and other equity interests, excluding interests in investment funds, represent the financial asset of the reporting entity through which it exercises ownership rights over a certain company, participates in the distribution of profits, and in the distribution of the company's assets in the event of liquidation proportionally to the ownership share in the company's share capital. This instrument is divided into the following categories:

• Stocks traded on an organized market, excluding interests/stocks in investment funds, are those stocks traded on official markets (stock exchanges) and other secondary markets. The market value of stocks is the number of stocks owned by the leasing company multiplied by the last market price in the reporting period. The book value should be shown as the book value per stock multiplied by the number of stocks owned by the leasing company. Under the book value in the previous sentence, the book value of the total capital and reserves according to the books of the company whose stocks were purchased (issuer) is understood. The book value for the purposes of this report is not the amount shown in the court registry. Transactions show amounts paid (purchases) or received (sales) for stocks during the reporting period.
• Stocks not traded on an organized market, excluding interests/stocks in investment funds, are those stocks not traded on official markets (stock exchanges). The market value shown is the value that the leasing company maintains in its business books, meaning that the market value is equal to the book value. The book value should be shown as the book value per stock multiplied by the number of stocks owned by the company. Under the book value in the previous sentence, the book value of the total capital and reserves according to the books of the company whose stocks were purchased (issuer) is understood. Transactions show amounts paid (purchases) or received (sales) for stocks during the reporting period.
• Other equity interests other than stocks and interests/stocks in investment funds are all other forms of capital (e.g., share in a limited liability company). The market value shown is the value that the leasing company maintains in its business books. The book value should be shown as the book value per share multiplied by the number of shares owned by the company. Under the book value in the previous sentence, the book value of the total capital and reserves according to the books of the company whose shares were purchased (issuer) is understood. Transactions show amounts paid (purchases) or received (sales) for shares during the reporting period.

Interests/stocks in investment funds are interests in capital issued by investment funds, specialized financial institutions whose purpose is to invest collected funds in the money, capital, or real estate markets. The market and book value of interests in open investment funds are equal and are the result of multiplying the number of interests by the net asset value (NAV) of the interest on the last day of the reporting period. The market value of interests in a closed investment fund is equal to the product of the number of shares of the closed investment fund in the assets of the leasing company and the last market price of the shares of the closed investment fund from the stock exchange on the last day of the reporting period, which is usually not equal to the book value of the interests in the closed investment fund. If shares of a closed investment fund are not traded, the market and book values of the interests are equal. Transactions show amounts paid (purchases) or received (sales) for interests/stocks of investment funds during the reporting period. For this instrument, a breakdown into resident monetary and resident non-monetary investment funds (which include other open investment funds, closed investment funds, and investment funds established by special law) and non-resident investment funds is provided.

Prepaid insurance premiums represent the amount of actively deferred items for insurance policies that the leasing company has contracted and paid. Market and book values in columns A and B are always equal. Increases are entered in column C, and decreases in column D during the reporting period.

Granted advances include trade credits (approved payment deferrals up to one year) and advances granted by the leasing company. Market and book values are equal. Increases are entered in column C, and decreases in column D during the reporting period. Definition of trade credits and advances: "Trade credits and advances are financial receivables relating to the delivery of goods and services for which payment has not yet been made, to trade credits accepted by a company engaged in factoring (unless the relevant credit is considered a loan), to the rental of buildings over time, and to delays relating to payments for goods and services if not recorded as loans."

Other receivables include all receivables that cannot be recorded elsewhere (e.g., overdue uncollected receivables, except for interest and principal on deposits, loans, securities, and financial leasing). Market and book values in columns A and B are always equal. Increases are entered in column C, and decreases in column D during the reporting period.

Other non-financial assets represent all other assets not previously mentioned and which cannot be classified into any of the previously described categories (e.g., buildings, software, patents, etc.). The book value of assets given in operating leases is also included in this item. Market and book values in columns A and B are always equal. The amount is shown on a net basis as valued by the leasing company in its books. In column C, transactions are shown according to the value maintained by the leasing company in its business books (acquisition cost), and in column D, amounts received upon liquidation of that type of asset.

3. Financial Instruments in Liabilities

Short-term loans are loans with an original maturity of up to one year. Market and book values are equal. Accrued due and due interest and due principal must be added to the value of the instrument. Amounts of received loans are shown in column C, and repayments of principal and interest during the reporting period are shown in column D. Accrued interest must be added to the value of the acquisition transaction and shown as a single amount in column C.

Long-term loans are loans with an original maturity of more than one year. Market and book values are equal. Accrued due and due interest and due principal must be added to the value of the instrument. Amounts of received loans are shown in column C, and repayments of principal and interest on loans during the reporting period are shown in column D. Accrued interest must be added to the value of the acquisition transaction and shown as a single amount in column C.

Issued short-term debt securities, excluding financial derivatives, are debt securities with an original maturity of up to one year, issued by the leasing company. If present, the market value is shown according to the price that includes accrued due interest (so-called "dirty price"). If not, market and book values are equal. Accrued due and due interest and due principal must be included in the book value of the instrument. Amounts of new issuances of debt securities during the reporting period are shown in column C, and amounts paid for the repurchase of debt securities during the reporting period, including accrued due interest during the reporting period, are shown in column D. Together with acquisition transactions in column C, accrued interest for the entire reporting period must be added for those securities that were issued before the beginning of the reporting period, and for securities issued by the leasing company during the reporting period, accrued interest from the date of issuance to the end of the reporting period must be added. If the company repurchases its own debt securities, the value of those instruments (particularly market and book values) must be reduced by that amount.

Issued long-term debt securities, excluding financial derivatives, are debt securities with an original maturity of more than one year, issued by the company (e.g., bonds). If present, the market value is shown according to the price that includes accrued due interest (so-called "dirty price"). If not, market and book values are equal. Accrued due and due interest and due principal must be included in the book value of the instrument. Amounts of new issuances of debt securities during the reporting period are shown in column C, and amounts paid for the repurchase of debt securities during the reporting period, including accrued due interest during the reporting period, are shown in column D. Together with acquisition transactions in column C, accrued interest for the entire reporting period must be added for those securities that were issued before the beginning of the reporting period, and for securities issued by the leasing company during the reporting period, accrued interest from the date of issuance to the end of the reporting period must be added. If the company repurchases its own debt securities, the value of those instruments (particularly market and book values) must be reduced by that amount. When the remaining maturity decreases to less than one year, bonds are still shown as long-term debt securities, i.e., according to the original maturity.

Derivative financial instruments that represent liabilities are contracts whose value is derived from another underlying instrument (exchange rate, interest rate, consumer price index (CPI), stock price, bond price...). They are used as instruments to protect against financial risk, but also for speculation based on the movement of the price of the underlying asset. Only the market value, which represents the fair value of the instrument, is filled in. Transactions show only transactions in instruments where there is a payment at the initiation of the instrument, and they represent liabilities for the leasing company.

Received deposits under leasing agreements represent the amount that clients must deposit with the leasing company based on the leasing agreement. Market and book values are equal. Increases are entered in column C, and decreases in column D during the reporting period.

Capital and reserves represent the total amount, i.e., the sum of all accounts that make up the company's capital, including all types of provisions and reserves. The market value should be shown as the amount obtained by multiplying the total number of shares by the last market price of the share on the last day of the reporting period. If the company's shares are not traded, or if the leasing company is not organized as a joint-stock company but as a limited liability company, market and book values are equal. The book value takes the entire capital, retained earnings, current period profit, reserves, and provisions. Transactions show amounts of increases and decreases in accordance with transactions recorded in the company's books during the reporting period.

Received advances include trade credits (approved payment deferrals) and advances received by the leasing company. Market and book values are equal. Increases are entered in column C, and decreases in column D during the reporting period. Definition of trade credits and advances: "Trade credits and advances are financial receivables relating to the delivery of goods and services for which payment has not yet been made, to trade credits accepted by a company engaged in factoring (unless the relevant credit is considered a loan), to the rental of buildings over time, and to delays relating to payments for goods and services if not recorded as loans."

Other liabilities include all liabilities that cannot be recorded elsewhere (e.g., overdue unpaid liabilities, except for interest and principal on loans and securities). Market and book values are equal. Increases are entered in column C, and decreases in column D during the reporting period.

4. Determination of Counterparty Sector

If the reporting entity does not classify the sectoral affiliation of the client in its business books in the manner prescribed by the ESA95 methodology, the determination of the sectoral affiliation of the counterparty for certain instruments can be carried out using the best expert assessment of the company, for which the following descriptions and definitions of certain sectors can be of great help.

Non-financial corporations

Companies and quasi-corporations that do not engage in financial intermediation, but mainly...