Annual report - HSE

4.5.6 Branch and representative offices
The company has two foreign branch offices - in the Czech Republic and in Slovakia, and
a representative office in Romania. In 2012, the company did not perform any transactions
through subsidiaries since the trade with electricity was transferred to the sole company.
The operations of branch and representative offices are included in financial statements
of the company.
4.5.7 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 both years
presented, unless otherwise indicated.
In the event that comparable data is not disclosed under the same item as for the current
year, such information is provided.
4.5.7.1 Intangible assets
Intangible assets are long-term assets enabling performance of the company’s registered
activities, whereas physically they do not exist. The company’s intangible assets comprise
long-term property rights and emission coupons for the purposes of electricity production
in the HSE Group. Emission coupons for trading are disclosed among inventories.
Upon initial recognition, an intangible asset is measured at cost. Cost includes costs that
can be directly attributed to the acquisition of an item of intangible assets. The company
did not finance purchases of intangible assets through loans; therefore, historical cost does
not comprise costs of borrowing.
Intangible assets are subsequently measured using the cost model.
The company has no intangible assets, for which it would record the residual value when
purchased.
Amortisation is accounted for on a straight-line basis, taking into account the useful life
of each individual (integral) part of an intangible asset. The amortisation begins to be
calculated from the cost when an asset is available for use.
Emission coupons are not amortised, since they are purchased for individual periods in
which they are used.
Useful life of groups of intangible assets are examined at the end of each financial year
and adapted, if needed. In the event their useful life is extended, the cost of amortisation
in the current year is decreased. If useful life is shortened, amortisation cost increases. The
adjustment of useful life has to be calculated in a manner that the asset will be depreciated
in the new predicted useful life. The change in useful life is considered as a change in
accounting estimate and it affects solely the period in which the accounting estimate was
changed and every following period of the remaining useful life.
Individual items of intangible assets have the following useful lives:
Intangible assets Amortisation rate (%) Useful life in years
Computer software 5-33.33% 3-20
Subsequent costs in relation to intangible assets are capitalised only in cases when they
increase future economic benefits arising from an asset to which the costs refer. All other
costs are recognised in profit or loss as expenses as soon as they are incurred.
Annual Report HSE 2012
4 Financial Report of the company HSE
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