Annual report 2005 - Sava dd

| notes to the consolidated financial statements in accordance with IFRS |
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b) Basis of preparation
The financial statements are presented in Slovene tolars,
rounded to the nearest thousand.
They are prepared on the historical cost basis except
property, plant and equipment that are stated at their
carrying amount on the date of transition to IFRS and
financial instruments classified as available for sale that
are stated at their fair value.
Cost of property, plant and equipment on the day of
transition to IFRS is considered the fair value of these
assets. In past the carrying amount of property, plant and
equipment was stated at cost which until 2001 had been
enhanced by annual price indices and impaired on the
basis of individual value assessments according to IAS 36.
The preparation of financial statements in conformity
with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated
assumptions are based on historical experience and
various other factors that are believed to be reasonable
under the circumstances, the results of which form the
basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the
period of the revision and future periods if the revision
affects both current and future periods.
The accounting policies set out below have been applied
consistently to all periods presented in these
consolidated financial statements and in preparing an
opening IFRS balance sheet at 1 January 2004 for the
purposes of the transition to IFRSs.
The accounting policies have been applied consistently
by Sava Group entities.
c) Basis of consolidation
The Sava Group includes the parent company Sava d.d.,
32 subsidiaries, 3 jointly controlled entities. The
consolidated financial statements of the Group include
the financial statements of all these entities. A detailed
survey of the Group and changes is presented in the
Annual Report under chapter 2 Composition of the Sava
Group.
Subsidiaries
Subsidiaries are entities controlled by Sava d.d. Control
exists when the parent company has the power to govern
the financial and operating policies of an entity so as to
obtain benefits from its activities. In all subsidiaries the
capital and voting rights are in accord.
The financial statements of subsidiaries are included in
the consolidated financial statements from the date that
control commences until the date that control ceases.
Joint ventures
Joint ventures are those entities over whose activities the
Group has joint control, established by contractual
agreement between the Group and the contractual
partner. The consolidated financial statements include
the Group’s proportionate share of the entities’ assets,
liabilities, revenue and expenses with items of a similar
nature on a line by line basis, from the date that joint
control commences until the date that joint control
ceases.
Associates
Associates are those entities in which the Sava Group
has significant influence, but not control, over the
financial and operating policies. The consolidated
financial statements include the Sava Group’s share of
the total recognised gains and losses of associates on an
equity accounted basis, from the date that significant
influence commences until the date that significant
influence ceases. When the Group’s share of losses
exceeds its interest in an associate, the Group’s carrying
amount is reduced to nil and recognition of further
losses is discontinued except to the extent that the Group
has incurred legal or constructive obligations or made
payments on behalf of an associate.