WAY UPWARDS - HSE

Financial report of HSE Group
177
currency at the beginning of the period, which is repaired
for the amount of effective interest and payments
during the period, as well as amortised cost
in foreign currency converted at the exchange rate at
the end of the period. Non-cash assets and liabilities
expressed in a foreign currency and measured at fair
value are converted in the functional currency at the
exchange rate on the date when the amount of fair
value is determined. Foreign exchange differences
are recognised in the consolidated income statement,
namely according the net principle (difference
between positive and negative foreign exchange differences
among revenue or difference between negative
and positive foreign exchange differences and
expenses).
In translation of financial statements of subsidiaries
abroad, whose functional value is not equal to
presentation value of the group, the following exchange
rates are used:
••
Assets and liabilities »except equity« translated
according to the exchange rate on the reporting
date;
••
Equity according to historical exchange rate;
••
Revenue and expenses according to average
exchange rate in the year of reporting.
••
Assessment of useful life of amortisable assets
(Point 1, 2);
••
Test of impairment of assets (Disclosure 5.5.8.1. –
Point 1, 2, 3, 4);
••
Assessment of fair value of derivatives (Disclosures
5.5.8.8.3 and 5.5.8.8.4);
••
Assessment of realisable values of receivables;
••
Assessment of net realisable value of inventories;
– Point 7);
••
Assessment of provisions for jubilee and
termination benefits; – Point 13);
••
Assessment of other provisions (Disclosure 5.5.8.1.
– Point 14); and
••
Assessment of contingent liabilities and assets
(Disclosure 5.5.8.1. – Point 21).
5.5.6 Branch and representative offices
The company has two foreign branch offices in Czech
Republic and Slovakia and two representative offices
in Serbia and Romania. In 2011, the group companies
did not perform transactions through subsidiaries.
The operations of branch and representative offices
are included in financial statements of the Group.
5.5.5 Use of assessments and judgements
The preparation of financial statements requires that
the management forms certain assessments and assumptions
which affect the disclosed amounts of
assets and liabilities, revenue and expenses and disclosures
of contingent assets and expenses in the reporting
period.
Assessments and judgements are based on past
experience and other factors that are considered reasonable
in the given circumstances and on the basis
of which the judgements on the carrying amount of
assets and liabilities are expressed. Since the assessments
and assumptions are subject to subjective
judgement and certain level of uncertainty, subsequent
actual results can differ from assessments. The
assessments are examined on regular basis. Changes
in accounting estimates are recognised in the period
in which the assessments were changed if the change
affects only that period or in the period of change and
in future periods in case the change affects future periods.
Assessments and assumptions are present at least
at the following judgements:
5.5.7 Significant accounting policies
The company’s financial statements are prepared on
the basis of accounting policies presented below. The
abovementioned accounting policies are used for all
years presented, unless otherwise indicated.
The comparative data was adopted when needed
so that they are in accordance with the presentation of
data in the current year.
5.5.7.1 Basis for consolidation
Consolidated financial statements comprise financial
statements of the controlling company and subsidiaries.
Subsidiaries are companies controlled by the
Group. This means that the Group is able to decide on
financial and business orientations of the company for
obtaining benefits from its operations. Financial statements
of subsidiaries are included in consolidated financial
statements from the date when the controlling
begins to the date when it stops.
Transactions with the owners of non-controlling
share are considered in a same way as transactions
with external partners. Profits and losses of the owners