Annual report - HSE

4.5.7.11 Contingent liabilities and assets
Contingent liability is:
• a possible liability arising from past events and whose existence is confirmed solely
by the occurrence or non-occurrence of one or more uncertain future events that the
company does not fully control; or
• a present obligation arising from past events, which is not recognised, since it is not
probable that the outflow of resources embodying economic benefits will be required to
settle the obligation or the amount of obligation cannot be reliably measured.
Contingent liabilities include the guarantees granted and parent guarantees.
A contingent asset is a possible asset arising from past events and whose existence is
confirmed solely by the occurrence or non-occurrence of one or more uncertain future
events that the company does not fully control.
Contingent assets comprise the amounts of lawsuits in which the company acts as plaintiff.
The company does not recognise contingent assets and liabilities in the statement of
financial position.
4.5.7.12 Revenue
The sales revenue is recognised at fair value of the received payment of receivables,
namely decreased by discounts. The revenue is disclosed when the buyer assumes all
significant types of risks and benefits related to the ownership of the asset, when there is a
certainty in relation to recoverability of a fee and related costs or possibility of repayment
of products and when the company stops deciding on products sold.
Sales of goods are recognised when the company delivers the products to the client. The
client accepts the products, while the collectability of associated receivables is reasonably
ensured. In case the company has more positive than negative operating foreign exchange
differences, they are recorded as net revenue from the sales of merchandise at net principle.
Sales of services is recognised in the accounting period in which the services are performed
as regards the conclusion of the transaction estimated on the basis of actually performed
service as the proportional portion of all services performed.
Revenue arising from default interests charges and related receivables are recognised
upon occurrence if it is probable that the economic benefits related to transaction will
inflow to the company. On the contrary, default interest charges are recorded as contingent
assets and are recognised in the company’s books of account upon payments. Recording
of default interest is considered individually.
Other operating revenue related operating effects is revenue from the lawsuits won,
reversal of provisions, revenue from default interests, gains arising from sales of fixed
assets, received compensations and contractual penalties and similar revenue.
Financial revenue comprises revenue from investment shares, interest of loans and
deposits granted and revenue from parent guarantees granted. Interest revenue is
recognised upon its occurrence, in the amount of agreed-upon interest rate.
4.5.7.13 Expenses
Expenses are recognised if a decrease in economic benefits in the accounting period gives
rise to a decrease in assets or increase in debt and this decrease can be reliably measured.
Operating expenses are recognised once the merchandise has been sold.
Costs of goods sold includes expenses related to the sales of electricity, trading emission
coupons and dependent costs of electricity. In case the company has more negative than
positive operating foreign exchange differences, they are recorded as costs of goods sold.
Costs of materials are historical costs of materials purchased, namely costs of protection
equipment, small tools, whose useful life does not exceed one year, electricity and fuel,
office material, technical literature and other materials.
Annual Report HSE 2012
4 Financial Report of the company HSE
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