annual report 2004 - Severočeské doly a.s.

More documents

Recommendations

Info

56 —— 57 Notes to Consolidated Financial Statements for the Year Ended December 31, 2004 1. General Severočeské doly a.s. (“Severočeské doly” or “the Company”) is a Czech Republic joint-stock company, which was established on January 1, 1994 and its registered seat is in Chomutov, Czech Republic. The Company was established by merging of two state owned enterprises Doly Nástup Tušimice and Doly Bílina. As of December 31, 2004 the state represented by National Property Fund held 55.4% of its shares. Severočeské doly is a mining company, which has approximately 45% share in lignite market in the Czech Republic. The Company has an agreement with ČEZ, a.s., the dominant electricity producer in the Czech Republic and a holder of 37.2% of the Company’s outstanding shares, to supply lignite to ČEZ’s five fossil power plants in the North Bohemia region and certain large fossil power plants elsewhere in the Czech Republic. As a result, approximately 79% of the lignite production was supplied to ČEZ, a.s., which represented 60% of ČEZ’s coal consumption. The Company operates two separate mines; the Nástup Tušimice (“DNT”) mine and the Bílina (“DB”) mine. The geological reserves of the mines amount to 1,019 million tons of lignite from which 549 million tons can still be mined. Annual production of the mines is about 22 million tons of lignite, with an overburden roof approximately 77 million cubic meters of earth. The financial statements were authorised for issue by Erich Grünbaum, Chief Financial Officer of Severočeské doly a.s., on February 18, 2005. 2. Summary of Significant Accounting Policies Statement of Compliance The consolidated financial statements of Severočeské doly a.s. have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Basis of Preparation The consolidated financial statements are prepared under the historical cost convention, except that available-forsale investments are stated at their fair value (see Note 5). Changes in IFRS The International Accounting Standards Board (IASB) introduced many changes to the International Financial Reporting Standards and issued new standards and interpretations during 2003 and 2004 that will be valid from 1 January 2005 or later. Therefore, it is possible that the IFRS financial statements for the year ended 31 December 2005 or later will contain comparative data for the year 2004 that will differ from the data presented in these financial statements. The Company is currently assessing the impact that new or revised standards will have on the Group accounting policies and financial data presented. Principles of Consolidation The consolidated financial statements of Severočeské doly (“the Group”) include Severočeské doly a.s. and the companies that it controls (see Note 17). This control is normally evidenced when the Company owns, either directly or indirectly, more than 50% of the voting rights of a company’s share capital or is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. The equity and net income attributable to minority shareholders’ interests are shown separately in the Consolidated Balance Sheets and the Consolidated Statements of Income, respectively. The purchase method of accounting is used for acquired businesses. Companies acquired or disposed of during the year are included in the consolidated financial statements from the date of acquisition or to the date of disposal. Intercompany balances and transactions, including intercompany profits and unrealized profits and losses are eliminated. Unrealized losses are eliminated similarly but only to the extent that there is no evidence of impairment of the asset transferred. Investments in associates are accounted for by the equity method of accounting. Associates are entities over which the Group generally has between 20% and 50% of the voting rights, or over which the Group has significant influence, but which it does not control. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group’s investment in associates includes goodwill (net of accumulated amortization) on acquisition. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not to recognize further losses, unless the Group has incurred obligations or made payments on behalf of the associates. Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.
Basis of Accounting The Group maintains its books and records in accordance with accounting principles and practices mandated by the Czech Law on Accounting. Czech Accounting Standards and IFRS differ in certain respects. The accompanying financial statements reflect certain adjustments and reclassifications not recorded in the accounting records of the Group in order to conform the Czech statutory balances to financial statements prepared in accordance with IFRS issued by the International Accounting Standards Board. The adjustments are summarized in Note 18. Change in Classification of Items Certain prior year financial statement items have been reclassified to conform to the current year presentation. Measurement Currency Based on the economic substance of the underlying events and circumstances relevant to the Group, the measurement currency of the Group has been determined to be the Czech crown (CZK). Estimates The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the year. Actual results could differ from those estimates. Revenue Recognition Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Sales are recognized net of sales taxes and discounts. Revenue from sales of goods are recognized when delivery has taken place and transfer of risks and rewards has been completed. Revenues from sales of services are recognized on providing services to third parties. Interest is recognized on a time proportion basis that reflects the effective yield on the asset. Dividends are recognized when the shareholder’s right to receive payment is established. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the Consolidated Statement of Income. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. The original cost also includes the estimated cost of dismantling and removing the asset and restoring the site to the extent that it is recognized as a provision under IAS 37, Provisions, Contingent Liabilities and Contingent Assets. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to income in the period the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of property, plant and equipment. Depreciation is computed on a straight-line basis over the following estimated useful lives: Years Buildings and structures 15.0 – 45.0 Machinery and equipment 3.0 – 14.5 Furniture and fixtures 3.0 – 14.5 Motor vehicles 3.0 – 14.5 The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. Construction-work-in-progress represents plant and properties under construction and is stated at cost. This includes cost of construction, plant and equipment and other direct costs. Construction-work-in-progress is not depreciated until such time as the relevant assets are completed and put into operational use. Investments The company applies IAS 39, Financial Instruments: Recognition and Measurement. As a result, financial investments are classified into the following categories: held-to-maturity and available-for-sale. Investments with fixed or determinable payments and fixed maturity that the Company has the positive intent and ability to hold to maturity other than loans and receivables originated by the Company are classified as held-to-maturity investments. All other investments, other than loans and receivables originated by the Company, are classified as available-for-sale.
Page 1 and 2:
SEVEROČESKÉ DOLY a.s. — annual
Page 3 and 4:
Severočeské doly a.s. is the larg
Page 5 and 6:
RAM The operating part of a heavy t
Page 7 and 8: CONCERTINA The protective concertin
Page 9 and 10: Most Important Events of 2004 Janua
Page 12 and 13: 10 —— 11 Interview with the Cha
Page 14 and 15: 12 —— 13 Directors and Officers
Page 16 and 17: 14 —— 15 Jaroslav Volšický (*
Page 18 and 19: 16 —— 17 Executive Management T
Page 20 and 21: 18 —— 19 Company Profile Severo
Page 22 and 23: 20 —— 21 Report of the Board of
Page 24 and 25: 22 —— 23 Sales and Marketing Sa
Page 26 and 27: 24 —— 25 Product structure (%)
Page 28 and 29: 26 —— 27 Developments in coal e
Page 30 and 31: 28 —— 29 Developments in invest
Page 32 and 33: 30 —— 31 How Investments are Fi
Page 34 and 35: 32 —— 33 Employee education str
Page 36 and 37: 34 —— 35 municipalities and oth
Page 38 and 39: 36 —— 37 tion plants based on t
Page 40 and 41: 38 —— 39 on the innovation of t
Page 42 and 43: 40 —— 41 Financial Performance
Page 44 and 45: 42 —— 43 sumption of materials
Page 46 and 47: 44 —— 45 Shares and Shareholder
Page 48 and 49: 46 —— 47 Right to a Dividend 1.
Page 50 and 51: 48 —— 49 Strategy and Outlook f
Page 52 and 53: 50 —— 51 Outlook for 2005 Terri
Page 54 and 55: 52 —— 53 Report of Independent
Page 56 and 57: 54 —— 55 Consolidated Statement
Page 60 and 61: 58 —— 59 Held-to-maturity inves
Page 62 and 63: 60 —— 61 Segments The Group has
Page 64 and 65: 62 —— 63 6. Investments in Asso
Page 66 and 67: 64 —— 65 Deferred Taxes, Net At
Page 68 and 69: 66 —— 67 The effect on retained
Page 70 and 71: 68 —— 69 Cash and In-kind Incom
Page 72 and 73: 70 —— 71 Organizational Chart G
Page 74 and 75: 72 —— 73 Shareholder Financial
Page 76 and 77: 74 —— 75 Persons Responsible fo
Page 78: Consulting and production: © B.I.G
show all

annual report 2004 - Severočeské doly a.s.

Create successful ePaper yourself

Delete template?

Save as template?