Annual report - HSE

4.5.7.7 Equity
Total equity of the company represents its liability to owners which falls due if the
company ceases to operate, whereby the amount of equity is adjusted with respect to the
then attainable price for the company’s net assets. It is determined by both the amounts
invested by owners and the amounts generated in the course of operation that belong to
the owners. It is decreased by the loss incurred in the course of operations and increased
by the profit in the period.
Nominal capital and capital surplus represent owner’s cash contributions and contributions
in kind.
As at 31 December 2002, the general equity revaluation adjustments included the
revaluation of share capital before 2002 in accordance with then applicable Slovene
Accounting Standards. The adjustment due to the transfer to new Slovene Accounting
Standards has been transferred to capital surplus. The amount can only be used for
increase in share capital.
Other reserves are purposely retained earnings from the previous years. They are created
on the basis of the decision by relevant supervisory body or owner.
Fair value reserve represents the revaluation amounts of individual categories of assets.
Retained earnings include unallocated profit of the current year.
4.5.7.8 Provisions for jubilee and termination benefits
In accordance with legal regulations, collective agreement and internal rules, the company
is obliged to pay jubilee benefits to employees and termination benefits on their retirement
for which long-term provisions are created. There are no other existing pension liabilities.
Provisions are created in the amount of estimated future payments for termination and
jubilee benefits discounted at the end of the financial year. The calculation is prepared
for each employee by taking into account the costs of termination benefits on retirement
and costs of all expected jubilee benefits until retirement. The calculation with the use of
projected unit is prepared by actuary. Payments for termination benefits on retirement and
jubilee benefits decrease the created provisions.
4.5.7.9 Other provisions
Provisions are recognised when the company has a legal or constructive obligations arising
from past event, which can be reliably assessed, and when it is likely that that an outflow of
resources embodying economic benefits will be required to settle the liability.
The amount of the provision must be equal to the present value of the expenditure
expected to be required to settle the liability. Since provisions are intended for covering
probable, but not certain obligations, the amount recognised as a provision is merely the
best estimate of the expenditure needed for the settlement of obligation existing on the
date of the statement of financial position. In reaching the best estimate of a provision, the
risks and uncertainties that inevitably surround the events and circumstances are taken into
account.
Provisions are directly decreased by costs or expenses, for which they were created to
cover. This means that in the financial year such costs or expenses do not appear in the
profit or loss anymore.
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If the expected liabilities do not occur, the amount of created provisions is reversed and
recognised under other operating revenue.
4.5.7.10 Other assets and liabilities
Other assets include short-term deferred costs and accrued revenue. Deferred costs
represent the amounts incurred but not yet charged against the profit or loss. Accrued
revenue is revenue that is taken into account in the profit or loss, although it has not been
charged yet.
Other liabilities include long-term and short-term accrued costs and deferred revenue.
Accrued costs are amounts that have not occurred yet, but they will in the future and are
already influencing the profit or loss.