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Dalekovod d.d. Annual Report 2013
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Annual Report
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ANNUAL REPORT AND FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR'S REPORT 31 DECEMBER 2013
ANNUAL REPORT AND FINANCIAL STATEMENTS WITH INDEPENDET AUDITORS' REPORT - 31 DECEMBER 2013
| ANNUAL REPORT | |
|---|---|
| RESPONISBILITIES OF THE MANAGEMENT BOARD | |
| INDEPENDENT AUDITORS' REPORT | |
| INCOME STATEMENT | |
| STATEMENT OF COMPREHENSIVE INCOME | |
| STATEMENT OF FINANCIAL POSITION | |
| STATEMENT OF CHANGES IN EQUITY | |
| STATEMENT OF CASH FLOWS | |
| NOTES TO THE FINANCIAL STATEMENTS | |
ANNUAL REPORT
The presentation of the audited financial statements of the Group Dalekovod (hereinafter referred to as "the Group") and Dalekovod d.d. (hereinatter referred to as "the Company") for the year 2013 is presented below. All information is presented in Kuna, unless other company for
Business overview
In year 2013 the Group generated total revenues of HRK 1,170 million, which represents a decrease of 9% compared to the same period last year, while the Company generated revenues of HRK 831 million, which represents a decrease of 11% compared to the year 2012. The decrease of revenue was primarily influenced by a drop in the domestic market, i.e. the absence of planned investments in Croatia. In the year 2013 a loss from operations in the amount of HRK 1594 million was incurred, while the loss of the Group amounted to HRK 122,2 million.
During 2013 Dalekovod d.d. was in the process of pre-bankruptcy settlement and that fact had a settlement process was anoned by the company and obtaining engagements. Pre-bankruptcy settlement process was opened by the decision of Final on 20 December 2012. During this process the Management Board continuously negotiated with creditors and reached a settlement at a hearing on 2 April 2013. Pre-bankruptcy settlement plan established deadlines and manner of debt repayment to of creditors and basic measures of financial and operational restructuring of the Company, with the aim of continuing operations of Dalekovod d.d. After hearings at the Commercial Court were not held, Dalekovod d.d. used legal instruments to return their case to the Commercial Court in Zagreb and on Implementation of the rinal decision on the conclusion of pre-bankruptcy settlement. Implementation of the pre-bankruptcy settlement in year 2014 is progressing according to plan.
Changes in Management: In September 2013, after the resignation of Mr. Matjaž Gorjup, the President of the Management Board, Mr Goran Brajdić, former member of the Board became President of the Management Board.
The introduction of monthly reporting and improvement of the controlling system: In order to preserve introduced of each reseints and advance operations, reporting on a monthly basis was introduced of cash receipts and expenditures of the Group, comparison with the plan, expected revenues for the future period and repayment schedule of financial debt (according to the focus and the effectively monited to impline also intends to improve the controlling system in order to effectively monitor the implementation of savings measures and their influence on the profitability of the Group.
Significant engagements obtained: During year 2013 and the beginning of 2014 Dalekovod d.d., signed new contracts abroad amounting to EUR 170 million; in the Kosovo market in the amount of EUR 30 million, in the Ukrainian market in the amount of EUR 30 million and in the Polish market in the amount of EUR 110 million. All contracts relate to construction of transmission networks in these countries.
Guiding principles for the upcoming periods
The business plan for the future anticipates a gradual recovery of operating revenues, by refocusing on the segment of power projects in the domestic market, regional market and foreign markets where the the domestic meetics the experience and references (primarily Scandinavia and CIS etc.). In the domestic market there are still plans for a significant revenues in transmission lines, substations and roads, although much lower than in the previous years.
A precondition for the achievement of the assumed level of revenue is to obtain guarantees for the proper performance of the work and advances in the international projects, as well as a proof of adequate liquidity available.
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ANNUAL REPORT (continued)
In addition, business projections predict a significant reduction of fixed costs, administrative costs and other overhead expenses.
The projections of a business plan anticipate improving operating (EBITDA) results to a level of about HRK 13 million during the year 2014, and a gradual increase to a level of about HRK 100 million to efficiency. With a starter a careery of revenue and gross margin and planned cost significant reduction in in annual depreciation in the projected five-year period and a significant reduction in interest on restructured debt. Dalekovod achieves net profit after the year 2014.
Treasury shares
In the year 2013 there was no acquisition or disposal of shares.
Investments in subsidiaries and associated companies and joint ventures
During the year 2013 the company Dalekovod Norge AS was established. A subsidiary, Dalekovod Production Ltd., established a subsidiary DalProizvodnja d.o.o. during 2013. Investments in subsidiaries are detailed in note 18 of the financial statements.
Investments in associates are detailed in note 19 of the financial statements.
Investments in joint ventures are detailed in note 20 of the financial statements.
Subsequent events
Subsequent events are presented in more detail in note 34 of the financial statements.
The goals and policies related to the management of financial risk and capital risk
The Company and the Group are exposed to market, price, credit and liquidity risk which is, together with the management of capital risk, detailed in note 3 of the financial statements.
Code of Corporate Governance
The Company voluntarily applies the Code of Corporate Governance issued by the Croatian Financial Services Supervisory Agency (HANFA) and the Zagreb Stock Exchougs.
In the year 2013 the Company followed and applied the recommendations set forth by the Code, by publishing any information whose disclosure is provided by positive regulations and information that are in the interests of shareholders. Explanations related to significant deviations, if any, of certain recommendations of the Code, the Company publishes in its annual questionnaire addressed to the Zagreb Stock Exchange.
In accordance with the provisions of the Companies Act, the Supervisory Board oversees the Company's holding of regular meetings at which management presents relevant reports. At the meetings of the Supervisory Board is discussed and decided on all matters within the jurisdiction of that body prescribed by the Companies Act and the Articles of Association.
ANNUAL REPORT (continued)
Report of the Supervisory Board on the review of the operations is part of the Company's annual report to be submitted to the General Assembly. In addition, the Supervisory Board performs internal control and supervision by the Audit Subcommittee, which provides tochnical support the the Supervisory Board and the Management Board in the effective excution of the obligations of corporate governance, risk management, financial reporting and control of the Company. In addition to the Audit Subcommittee, the Supervisory Board includes Subcommittee on appointient and remuneration and the Subcommittee on strategy. Management is required to monitor that the Company maintains business and other books and records, prepares accounting documents, recoming estimates assets and liabilities, drafts financial and other statements in accordance with readstang regulations and standards and applicable laws and regulations.
Ownership structure as at 31 December 2013:
| INDIVIDUALS | 1,482,238 |
|---|---|
| PENSION FUNDS | 638,891 |
| BANK | 315.036 |
| TELEGRA d,o.o. | 164,753 |
| OTHERS | 222 413 |
| OWN SHARES | 43.934 |
| TOTAL | 2,867,265 |
In the accordance with the Articles of Association, the shareholders voting rights are not limited to a certain percentage or number of votes, and there are no time limits for the exercise of voting to a Each ordinary share carries the right to one vote at the General Assembly.
The rights and liabilities arising from the acquisition of own shares is exercised in accordance with the provisions of the Companies Act and the Articles of Association of the Company.
The Management Board is composed of four members, the President and three members of the Board. The duty of the President of the Board performs Goran Brajdić, while three remaining members of the Board are Krešimir Anušić, Željko Lekšić and Marko Jurković.
Management manages the operations of the Company in accordance with applicable regulations, Articles of Association and Rules of Procedure of the management.
Management Board is appointed and dismissed by the Supervisory Board, which at 31 December 2013 was composed of the following members:
Marijan Pavlović (President) Viktor Miletić Nataša Ivanović Dubravko Stimac Davor Doko Ante Čurković
Zagreb, 23 June 2014
Goran Brajdié President of the Management Board
Hrvatska, p.p. 128, MB 3273555571
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RESPONSIBILITIES OF THE MANAGEMENT BOARD
The Management Board is required to prepare financial statements and consolidated financial statements for each financial year which give a true and fair view of the financial position, results of operations and cash flows for the period in accordance with applicable accounting standard, and is responsible for maintaining proper accounting records to enable the preparation of such financial statements and consolidated financial statements at any time. The Management Board has a general responsibility for taking such steps which are reasonably available to it to safeguard the assess of the Company and to prevent and detect fraud and other irregularities.
The Management Board is responsible for selecting suitable accounting policies to conform with applicable accounting standards and then apply them consistently, make judgements and estimates that are reasonable and prudent; and prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.
Management Board is responsible for the submission of the financial statements and consolidated financial statements to the Supervisory Board, following which the Supervisory Board is required to approve the annual financial statements and consolidated financial statements for submission to the General Assembly of Shareholders for adoption.
The financial statements set out on pages 8 to 75 were authorised by the Management Board on 23 June 2014 for issue to the Supervisory Board and are signed below to signify this.
Goran Brajdić President of Management Bøard
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Emst & Young d.o.o. Radnička cesta 50 10 000 Zeareb Hivatska / Croatis MBS: 080435407 OB 5 5 9 96 0 1 2277 9 PDV br. / VAT no .: HR58960122779
Tel: +385 1 5800 800 Fax: +385 1 5800 888 www.ey.com/hr
Benka / Bank: Erste & Stelermärkische Bank d.d. Jadranski trg 3A, 51000 Rijeka, Hrvatska / Croatia IBAN: HR3324020061100280716 SWIFT: ESBCHR22
INDEPENDENT AUDITORS' REPORT
To the Management Board and the shareholders of Dalekovod d.d.:
Report on the financial statements
We have audited the accompanying financial statements ("the financial statements") of Dalekovod d.d. ("Dalekovod", or "the Company"), and consolidated financial statements of the company Dalekovod d.d. and its subsidiaries ("the Group"), which comprise the statement of financial position as at 31 December 2013 and consolidated states of the financial position as at 31 December 2013, income statement and consolidated income estatement of comprehensive income and consolidated statement of comprehensive income, statement of changes in equility of consolidated statement of changes in equity and cash flow statement and consolidated cash-flow stort the year then ended and a summary of significant accounting policies and other explanatory information (as set out on pages 8 to 75).
Management Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by European Union, and for such Internal control as management whather is necessary to enable the preparation of financial statements that are free from from from from from from from from from from from from from from from fro misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit Involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk, the auditor considers internal controls relevant to the entity's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of excressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateress of accounting policies used and the reasonableness of accounting estimates made by management, as well as on the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Basis for qualified opinion
1) In statement of financial position and consolidated statement of financial position for the year end 31 December 2013 the Company and Group disclosed receivables and liabilities arising in branch offices on net principle in he amount of HRK 45,758 thousand and HRK 51,122 thousand respectively (as at 31 December 2015, HRK 11,59 thousand and HRK 28,434 thousand respectively) as stated in Note 25 to the financial statements and consolidated financial statements. Off-setting receivables and liabilities represents departure from IAS 1 - Presentation of Francel Statements, therefore as of 31 December 2013 the Company and Group has understated assets and Rabilities by HRK 171,683 thousand and HRK 177,047 thousand respectively (as at 31 December 2012. HRK 99,343 thousand and HRK 106,238 thousand respectively).
2) As at 31 December 2013 the Company reported in its financial statements investment and receivables from related party Dalekovod ulagaŋja d.o.o., Zagreb in total net book value amount of HRK 75.032 thousand, whille in its consolidated financial statements Group reported non-current tangible assets under construction in the amount of HRK 373,028 thousand. According to International accounting standard 36 - Impairment of assets, the Company and Group shall assess at each reporting date whether there is any indication that an assets may be impaired. As of 3 December 2013 the Company and Group did not asses whether there is any indication that any be innaired. A cccrdingly, we could not convince ourselves into recoverability of net book value of the investments and receivables of the Comign, vic the amount of HRK 75,032 thousand, neither into recoverability of the net book value of norvourent tandble assets under construction of the Group in the amount of HRK 373,028 thousand.
INDEPENDENT AUDITORS' REPORT (continued)
3) As of 31 December 2013 the Company reported land and buildings in the net book amount of HRK 221,549 thousand measured at amounts revalued in 2010 based on the revaluation report of independent valuator. Accounting policy of the Company for measuring of land and buildings states that revaluation of land and buildings is performed at least every three years. As at 31 December 2013 the Company has not prepared revaluation of the land buildings and therefore we could not convince ourselves into fair value of land and buildings reported in financial statements ending 31 December 2013 in the net book amount of HRK 221,549 thousand nor in the amount of revaluation reserves in the amount of HRK 40,015 thousand reported within the equity in the financial statements of the Company as at 31 December 2013.
4) As of 31 December 2013 the Group reported land and buildings in the net book amount of HRK 523,458 thousand. Accounting policy of the Group for measuring of land and buildings states that revaluation of land and buildings is performed at least every three years. As at 31 December 2013 the Group has not prepared revaluation of the land and buildings, as well some subsidiaries reported land buildings at historical cost in consolidated financial statements and therefore we could not convince ourselves into fair value of land and buildings reported in consolidated financial statements ending 31 December 2013 in the net book amount of HRK 523,458 thousand nor in the amount of revaluation reserves in the amount of HRK 40,015 thousand reported within the consolidated financial statements of the Group as at 31 December 2013.
5) As of 31 December 2013 the Company reported investment property (land and buildings) in the net book amount of HRK 220,874 thousand measured based on accounting policy disclosed at historical cost. In addition, the Company has measured land and buildings from one location within the Investment property class in the net book amount of HRK 90,759 thousand at revalued amounts based on appraisal report prepared by independent valuator during January 2011, thus representing departure from IAS 40 Investment property according to which an entity shall choose as its accounting policy either the fair value model or the cost model and shall apply that policy to all of its investment property. Based on review of accounting records we could not convince ourselves for how much investment property of the Company is overstated because instead of historical cost the Company applied revaluation method for measuring of land and buildings in Investment property.
6) As of 31 December 2012 the Company and Group reported revaluation reserves arising on revaluation of land and buildings in the amount of HRK 50,019 thousand and HRK 64,444 thousand respectively, which represents difference between the carrying amount of revalued assets and its fair value. According to IAS 12 Income taxes the Company and Group should recognize deferred tax liability arising on revaluation of assets, but they did not. As a result of that the Company and Group has as of 31 December 2012 overstated revaluation reserves within the equity by the HRK 10.004 thousand and HRK 11,446 thousand respectively and understated deferred tax liability for the same amounts.
7) As of 31 December 2012 the Group and the Company has reported receivables arising from construction contracts in the amount of HRK 53,333 thousand. The Group and the Company has not applied determinants of IAS 11 Construction confracts in calculation of construction of construction contract what resulted in overstatement of receivables by an amount of HRK 16,714 thousand as of 31 December 2012 and overstated result for the year 2012 for same amount, as well result for the year 2013 is understated for the same amount.
8) As of 31 December 2013 the Company has recognized revenue from services in the amount of HRK 4,350 thousand, although services were rendered in prior year and criteria from IAS 18 Revenues for recognition of revenues were met as of prior year end. As a result of this the Company has overstated revenues for the year 2013 in the amount of HRK 4,350 thousand and understated accrued income as of 31 December 2012 and revenue from services for the year 2012 by the same amount.
9) As of 31 December 2013 the Group reported tangible assets under constructions in the amount of HRK 376,893 thousand which includes also penalty interest capitallzed in the amount of HRK 6,878 thousand, out of which an amount of HRK 2,917 thousand is capitalized in year 2012. According to IAS 23 Borrowing cost, penalty interests are not eligible for capitalization. Because of that, the Group has as of 31 December 2013 overstated assets under construction by HRK 6,878 thousand and overstated result for the year 2013 by an amount of HRK 3,961 thousand as well result for the year 2012 by an amount of HRK 2,917 thousand.
INDEPENDENT AUDITORS' REPORT (continued)
10) As of 31 December 2013 the Group reported investment into Joint Ventures in the amount of HRK 70,514 thousand. In prior years the Group represently applied equity method in the amount of HRK 70,514
venture and as a reeult of the Croup spares in the John valuation of Investme venture and as a result of the Group recognized in current vear loss in investment into Joint Ventures in the amount of HRS 5 067 the order it current in current year in Tivestment into Joint Ventures in the more in the resulting in overstated in profit that loss stucentents, although the loss related and the 2012 this year 2013.
11) The Company and the Group recognized prior period expenses in the amount of HRK 5,685 thousand and HRK 7,985 respectively in 2013 out of which HRK 2,768 relates to periods before 2012 for both the Company and the Group. As a result of that the Contriller in the enderstand current by HRK 5,685 thousand and the Company and the Company and the Company and the overstated prior period result your has and overstated prior period opening balance of retained and by HRK 2,768 thousand. The Group has inderstated current year consolidated income statement by HRK 7,985 thousand and overstated viror people has artistics current year consolution statement by HRK 7,985
reformed earnings by HRK 2,217 thousand and overstated prior period opening retained earnings by HRK 2,768 thousand.
12) Because of the numbers of qualifications, state of the Group records and the fact that we were not auditors of the prior year financial statements, we were unable to decircular we were
comparative information would be necises of the entine whether further adjustments t comparative information would be necessary. Our were the further further adjustments to the financial statements is modified because of the possible effect of this matter on the comparability of the current period's figures and the comparative information.
Qualified opinion
In our opinion, except for the matters described in Basis for qualified opinion paragraph and except for the posible effects of the matters described inder 2), 3), 4), 5), 4), 5), 4), 5), 4p (4 mg (1 m (1 m (1 m m m m m m m m m m m man man man financial statements and consolidated financial statements present fairly, in all material respects, the financial position of the Company and Group as at 31 December 2013 and the first of each institution in the collent of the voltion ended in accordance with International Financial Reporting Standards as adopted by European Union.
Other matter
Financial statements of the Company and the Group for the year ended 31 December 2012 were audited by another auditor who expressed a modified on the enterprise on 14 June 2013 in respect of recoverability of investment into subsidiary Dalekovod Ulaganja d.o.o. and recoverability of property plant and equipment under construction of the Group.
Report on Other Legal Reporting Requirements
Management Board of the prepare of Annual report as set out on pages 1 to 3. The Management Board is responsible for the preparation of the Annual report in accordance with the Croatian Accounting Law is in is in is accuracy. Our responsibility is to five mornities we consider will the Croating Law and for Its Annual report is consistent with the audited francial statements and consolidated financial statements. Our work a auditors was confined to checking million stations and collibiance manch Statements. Our work as
information other than that drawn the audiod assucces and did not include a information other than that drawn from the audited acounting records of the Company and the Group. In our opinion, the accounting information presented in the Annual reports of the Group in che Group. In our ophion,
consistent, in all material with the annual report of t consistent, in all material respects, with the Annual Teport of the Group for the 'year' 2013 is
vear which are presented on pages with the audited financial statements and year which are presented on pages 8 to 75.
Berislav Horvat Certified auditor and procurator Ernst&Young d.o.o. Zagreb, 23 June 2014
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2013
| Dalekovod Group | Dalekovod d.d. | ||||
|---|---|---|---|---|---|
| (all amounts are expressed in thousands of HRK) | Note | 2013 | 2111172 | 2018 | 2017 |
| Sales revenue | 5 | 1,145,501 | 1,253,799 | 808,533 | 901,487 |
| Other income | 5,6 | 23,010 | 27,087 | 22,411 | 29,448 |
| Change in work in progress and finished goods | (23,147) | (19,058) | (222) | (3,380) | |
| Cost of trade goods sold | (87,611) | (45,376) | (30,845) | (114,201) | |
| Cost of materials and services | 7 | (647,293) | (905,214) | (543,112) | (683,071) |
| Staff costs | 8 | (259,971) | (259,414) | (149,776) | (148,682) |
| Depreciation and amortisation | 15, 16, 17 | (48,300) | (50,317) | (33,641) | (39,071) |
| Other operating expenses | 9 | (186,435) | (341,262) | (201,869) | (292,245) |
| Other gains/(losses) - net | 10 | (14,311) | (6,690) | (12,744) | (9,043) |
| Operating loss | (98,557) | (346,445) | (141,265) | (358,758) | |
| Finance income | 11 | 1,325 | 1,397 | 1,203 | 4592 |
| Finance costs | 11 | (4,627) | (79,652) | (6,261) | (78,629) |
| (3,302) | (78,255) | (5,058) | (78,177) | ||
| Share in profit/(loss) of associates and joint | |||||
| ventures | 19, 20 | (7,370) | 2,533 | ||
| Loss before tax | (109,229) | (422,167) | (146,323) | (436,935) | |
| Income tax | 12 | (13,636) | (8,175) | (13,057) | (4,306) |
| Net loss | (122,868) | (430,342) | (159,390) | (441,241) | |
| Net loss attributable to: | |||||
| Equity holders of the Company | (122,216) | (429,924) | (159,390) | (441,241) | |
| Non-controlling interests | (652) | (418) | |||
| Net loss | (122,868) | (430,342) | (159,390) | (441,241) | |
| Basic and diluted loss per share (in HRK) | 13 | (43.29) | (152.28) |
The financial statements set out on pages 8 to 75 were approved by the Management Board on 23 June 2014.
Goran Brajdić President of the Management Board
The accounting policies and notes form an integral part of these financial statements and consolidated
figations and interest would
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
| Dalekovod Group | Dalekovod d.d. | ||||
|---|---|---|---|---|---|
| (all amounts are expressed in thousands of HRK) | Note | 2013 | 2401192 | 2013 | 2012 |
| Net loss | (122,868) | (430,342) | (159,390) | (441,241) | |
| Other comprehensive income/(loss): | |||||
| (Losses)/gains on revaluation of assets | 23 | (14,425) | 14,425 | ||
| Foreign exchange differences | 2,780 | (224) | |||
| Available-for-sale financial assets at fair value |
23 | (9,283) | (9,283) | ||
| Total other comprehensive income/(loss) | (11,645) | 4,918 | (9,283) | ||
| Total comprehensive loss | (134,513) | (425,424) | (159,390) | (450,524) | |
| Comprehensive loss attributable to: | |||||
| Equity holders of the Company | (133,459) | (425,398) | (159,390) | (450,524) | |
| Non-controlling interests | (1,054) | (26) | |||
| Total comprehensive loss | (134,513) | (425,424) | (159,390) | (450,524) |
The accounting policies and notes form an integral part of these financial statements and consolidated financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
| Dalekovod Group | Dalekovod d.d. | ||||
|---|---|---|---|---|---|
| (all amounts are expressed in thousands of HRK) | Note | 2013 | 20172 | 2013 | 2012 |
| ASSIBIL | |||||
| Intangible assets | 15 | 10,235 | 17,343 | 7.072 | 10:370 |
| Property, plant and equipment | 16 | 1,032,266 | 1,035,631 | 295,289 | 321,818 |
| Prepayments | 119 | ||||
| Investment property | 17 | 220,874 | 220,772 | ||
| Investments in subsidiaries | 18 | 314.079 | 410,525 | ||
| Investments in associates | 19 | 16,478 | 20,241 | 20,241 | 20,241 |
| Investments in joint ventures | 20 | 70,514 | 79,129 | ||
| A vailable-for-sale financial assets | 21 | 28,276 | 42,809 | 28,260 | 42,786 |
| Loans and receivables | 23 | 20,692 | 24,404 | 18,036 | 22,794 |
| Non-current assets | 1,178,458 | 1,220,276 | 903,801 | 1,049,300 | |
| Inventories | 24 | 118,169 | 152,780 | 9,444 | 10.339 |
| Trade and other receivables | 25 | 406,064 | 529,136 | 383,036 | 423,305 |
| Financial assets at fair value through profit | |||||
| or loss | 26 | 23 | -24 | 24: | 23 |
| Cash and cash equivalents Income tax receivable |
27 | 30,000 | 17,884 | 5,547 | 9,692 |
| 2,907 | 16 | 264 | 16 | ||
| Current assets | 557,237 | 700,240 | 398,319 | 443,380 | |
| Total assets | 1,735,695 | 1,920,516 | 1,302,120 | 1,492,686 | |
| EQUITY AND LIABILITIES | |||||
| Share capital | 23 | 286,726 | 286,726 | 286,726 | 286,726 |
| Share premium | 23 | 80.479 | 80,479 | 80,479 | 80.479 |
| Legal reserves | 23 | 11,652 | 12,838 | 11,487 | 11,487 |
| Treasury shares | 23 | (7,775) | (7.773) | (7,175) | (7,175) |
| Statutory and other reserves | 23 | 177,735 | 182,201 | 153,417 | 153,417 |
| Revaluation reserves | 23 | 40,015 | 64,444 | 40,015 | 50,019 |
| Trans lation reserves | ા, પ્રયા | (1,461) | |||
| Accumulated loss | (549,760) | (429,924) | (600,631) | (441,241) | |
| Shareholders' equity | 40,795 | 187,530 | (36,280) | 183, 114 | |
| Non-controlling Interests | (215) | 1,203 | |||
| Total equity | 40,280 | 188,733 | (36,280) | 133,114 | |
| Borrowings | 29 | 11,539 | 155,976 | 969 | 147,081 |
| Provisions | 31 | 12,090 | 7,075 | 9,570 | 3,488 |
| Deferred tax liability | 12 | 10,004 | 10,004 | ||
| Non-current liabilities | 33,633 | 163,019 | 20,543 | 150,569 | |
| Borrowings | 29 | 1.115,495 | 944,868 | 841,760 | 717,968 |
| Provisions | 31 | 1,031 | 1,325 | 495 | 225 |
| Trade and other payables | 30 | 544,873 | 22,511 | 475,602 | 490,809 |
| Income tax payable | ਡ | ||||
| Current liabilities | 1,661,482 | 1,568,734 | 1,317,857 | 1,209,003 | |
| Total liabilities | 1,695,115 | 1,731,783 | 1,338,400 | 1,359,572 | |
| Total equity and liabilities | 1,735,695 | 1,920,516 | 1,302,120 | 1,492,686 |
The accounting policies and notes form an integral part of these financial statements and consolidated financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
Group
| Statutory and | Non- | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| full amounts are expressed in thousands of HRK) |
Note | Share capital |
ne urn Share પ્રતિય |
reserves Legal |
Treasury shares |
reserves other |
reserves | Revaluation Translation Accumulated reserve |
loss | Total | controlling Interests |
Total |
| At I January 2012 | 286,726 | 80.479 | 12:38 | (7,773) | 455,045 | 59,302 | (845) | (278,179) | 607,593 | 2,636 | 610 229 | |
| Net loss | (429,924) | (429,924) | (418) | (430,342) | ||||||||
| Other comprehensive income | 5.142 | (615) | 4,526 | 300 | 4,918 | |||||||
| Transactions with owners Total comprehensive loss |
5.142 | (616) | (429,924) | (425,398) | (26) | (425,424) | ||||||
| Effects of consolidation | 3,928 | 3,928 | 3,928 | |||||||||
| Covering losses with reserves | 23 | (276,772) | 278.179 | 1 4.07 | (1,407) | |||||||
| At 31 December 2012 | 286.726 | 80-779) | 12.838 | (7.775) | 182,201 | 64.441 | (1,461) | (429,924) | 187.530 | 1.203 | 188.733 | |
| Net loss | (122,216) | (122,216) | (652) | (122,868) | ||||||||
| Other comprehensive income | (14.425) | 3.182 | (11,243) | (402) | (11,645) | |||||||
| Transactions with owners Total comprehensive loss |
(14,425) | 3,182 | (122216) | (133,459) | (1,054) | (134,513) | ||||||
| Reinvestment of profits | 12 | 16,581 | (16,581) | |||||||||
| Recognition of deferred tax hability | (10,004) | (10,004) | (10,004) | |||||||||
| chects of consolidation | (3,112) | (3,112 | (3,112) | |||||||||
| Recognition within equity | (160) | (160) | (160) | |||||||||
| Schunge rate effect | (364) | (364) | ||||||||||
| Covering losses with statutory and other Covering losses with legal reserves |
(1,186) | 1.186 | ||||||||||
| eserves | ਜੂ いつでは、いつからなくて言える |
(21.047) | 21.047 | |||||||||
| At 31 December 2013 | 286.726 | 30.3799 | 11.659 | (7,773) | 177,735 | 40.015 | 1,721 | (549.760) Company Comment |
40.795 | (215) | で、ややっているとことでするとい 40.580 |
|
The accounting policies and notes form an integral part of these financial statements and consolidated financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
Company
| Statutory and | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| all amounts are expressed in thousands frirk) |
Note | Share GILGBE |
premium Share |
reserves Legal |
Treasury shares |
reserves other |
reserves | Revaluation Accumulated SSBO |
Total |
| 1 1 January 2012 | 286,726 | 80,479 | 11,487 | (7,773) | 430,731 | 59.302 | (277,314) | 583,638 | |
| let loss | (441,241) | (441,241) | |||||||
| Ither comprehensive income | (9,283) | (9,283) | |||||||
| otal comprehensive loss | (9,283) | (441,241) | (450,524) | ||||||
| overing losses with reserves ransactions with owners |
28 | (277,314) | 277,314 | ||||||
| t 31 December 2012 | 286,726 | 80.479 | 11.487 | (7,773) | 153.417 | 50.019 | (441,241) | 133,114 | |
| ssoloss | (159,390) | (159,390) | |||||||
| Ither comprehensive income | |||||||||
| otal comprehensive loss | (159,390) | (159,390) | |||||||
| ransactions with owners | |||||||||
| Covering losses with statutory and other Recognition of deferred tax liability |
(10,004) | (10,004) | |||||||
| eserves | 28 | 403-41 | |||||||
| At 31 December 2013 | 286.726 | 80.479 | :11.487 | (7,773) | 153,417 | 40.015 | (600,631) | (36,280) | |
The accounting policies and notes form an integral part of these financial statements and consolidated financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
| Dalekovod Group | Dale kovod d.d. | ||||
|---|---|---|---|---|---|
| (all amounts are expressed in thousands of HRK) | Note | 2013 | 2012 | 2013 | 2012 |
| Loss before tax | (109,229) | (422,167) | (146,323) | (436,935) | |
| Adjustments: | |||||
| Depreciation and amortisation | 15, 16, 17 | 46,711 | 50,317 | 32,052 | 39,071 |
| Property, plant and equipment writte-off | 9 | 15,025 | 29,172 | 6 | 12,959 |
| Gain on sale of property, plant and equipment Fair value measurement loses of financial assets |
10 | (514) | (2,650) | (200) | (299) |
| available for sale | 10 | 14,536 | 3,415 | 14,526 | 3,415 |
| Impairment of trade receivables and loans | |||||
| receivable | 9 | 16, 122 | 75.276 | 3,493 | 84,521 |
| Impairment of other financial assets | 9 | 2,697 | 40,671 | 3,112 | 41,836 |
| Impairment of investments in subsidiaries | 9 | 397 | 96,502 | 32,995 | |
| Impairment of investments in associates | 9 | 36,175 | |||
| Impairment of non-financial assets | 9 | 774 | 6,247 | 417 | 6,247 |
| Impairment of goodwill | 9 | 3,346 | |||
| Impaiment of inventories | 9 | (7.312) | 11,438 | 4,270 | |
| Effect of change in monitoring other foreign | |||||
| business units | ટરે | (20,052) | (20,052) | ||
| Net change in provisions | 31 | 4,123 | 1,329 | 6,351 | (નંદર) |
| Share in profit/(loss) of associates and joint | |||||
| ventures | 19, 20 | 7,370 | (2,533) | ||
| Unrealised foreign exchange differences | 10,713 | 5,675 | 4,788 | 5,203 | |
| Interest income | 6, 11 | (3,449) | (4,917) | (4,304) | (3,501) |
| Interest expense | 9.11 | 28,788 | 96,214 | 8,015 | 74,092 |
| 30,301 | (95,493) | 18.132 | (156,226) | ||
| Changes in working capital: | |||||
| Trade and other receivables | 78,648 | 249,114 | (7,671) | 300,240 | |
| Inventories | 41,923 | 20,794 | 392 | 2:10 | |
| Trade and other payables | (83,336) | (373) | 18,558 | (43,349) | |
| Net cash generated from operating activities | 67,535 | 174,042 | 29,917 | 101,251 | |
| Interest paid | (23,120) | (62,817) | (8,563) | (53,884) | |
| Tax paid | (3,380) | 17,472 | (2-18) | 21,112 | |
| Net cash flows from operating activities | 11,035 | 128,697 | 21,106 | 68,479 |
The accounting policies and notes form an integral part of these financial statements and consolidated financial statements.
STATEMENT OF CASH FLOWS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
| Dalekovod Group | Dalekovod d.d. | ||||
|---|---|---|---|---|---|
| (all amounts are expressed in thousands of HRK) | Note | 2013 | 2012 | 2013 | 20172 |
| Cash flows from investing activities | |||||
| Acquisition of intangible assets | 15 | (443) | (1.008) | (4) | (14) |
| Acquisition of property, plant and equipment Proceeds from sale of property, plant and |
16 | (68,908) | (109,018) | (2,417) | (4,555) |
| equipment | 1,079 | 2,650 | (2233 | 299 | |
| Deposits given | (4,669) | (1,794) | (139) | (1,794) | |
| Loans given | (18,864) | (25,549) | (82,668) | ||
| Repayments of loans given | 4,247 | 7,560 | 1,437 | 67,560 | |
| Investments in subsidiaries Proceeds from sale of avalable-for-sale financial |
18 | (26) | (16,021) | ||
| assets | 2,862 | 7592 | |||
| Interest received | 1,475 | 9,086 | 2,330 | 9,946 | |
| Net cash flows from / (used in) investing activities |
(67,219) | (108,526) | (24,360) | (26,495) | |
| Cash flows from financing activities | |||||
| Proceeds from borrowings | 45,600 | 31 (32 | 910 | 4,815 | |
| Repayment of commercial papers | (56,974) | (71,801) | |||
| Proceeds of issuance of commercial papers | 48,918 | 61,554 | |||
| Repayment of borrowings | (6,016) | (71,801) | (994) | (39,627) | |
| Repayment of finance lease liabilities | (1,215) | (807) | (17,347) | ||
| Net cash flows from / (used In) financing activities |
38,369 | (48,222) | (891) | (62,406) | |
| Net increase / (decrease) in cash and cash equivalents |
12,185 | (28,051) | (4,145) | (20,422) | |
| 17,884 | 45,935 | 9.692 | 30,114 | ||
| Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year |
27 | 30,069 | 17,884 | 5,547 | 9,692 |
| Net increase / (decrease) in cash and cash | |||||
| equivalents | 12,185 | (28,051) | (4,145) | (20,422) |
The accounting policies and notes form an integral part of these financial statements and consolidated financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 1-GENERAL INFORMATION
The Dalekovod Group (the Group) comprises the parent company Dalekovod d.d., Zagreb and 19 subsidiaries owned by the parent company and additional four companies owned by a subsidiary (2012: 18) - note 18.
Dalekovod d.d., Zagreb (the Company) is privately owned and was incorporated in compliance with the laws and regulations of the Republic of Croatia. The registered office of the Company is in Zagreb, Marijan Cavić 4 street. The Company's shares are listed on the public joint stock company listing on the Zagreb Stock Exchange.
The Company's principal activity is the engineering, production and installation of electric power facilities for road, railroad and mass transit and telecommunication infrastructure.
Management Board members of the Company during 2013 were: Mr Matjaž Gorjup (President of the Management Board, resigned on 17 September 2013), Mr. Krešimir Anušić (Member of the Management Board), Mr. Marko Jurković (Member of the Management Board), Mr. Željko Lekšić (Member of the Management Board) and Mr. Goran Brajdić (President of the Management Board appointed on 17 September 2013, by then Member of the Management Board).
Going concern
The Company went through the pre-bankruptcy settlement procedure, which also includes the financial and operational restructuring plan. Taking into account the Commercial court's approval of the pre-bankruptcy settlement between the Company as debtor and its creditors from 29 January 2014 financial statements have been prepared under the going concern principle.
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies are applicable to both the Group and to the Company and they have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group and the unconsolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) under the historical cost convention, as modified by the revaluation of land, buildings, financial assets at fair value through profit or loss and available for sale financial assets.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's and the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
New and amended standards and interpretations endorsed by the European Union (EU)
The accounting policies adopted are consistent with those of the previous financial year, except for the following standards and amendments to IFRS effective as of 1 January 2013:
- · IFRS I First-time Adoption of International Financial Reporting Standards Government Loans (Amendments);
- IFRS I First-Time Adoption of International Financial Reporting Standards (Amendment) -Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters;
- · IFRS 7 Financial Instruments: Disclosures (Amendment);
- IFRS 13 Fair Value Measurement;
- · IAS 12 Income Taxes (Amendment) Deferred Taxes: Recovery of Underlying Assets;
- · IAS 19 Employee benefits (revised);
- · IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine.
The adoption of the standards or interpretations is described below:
IFRS 1 Government Loans - Amendments to IFRS 1
These amendments require first-time adopters to apply the requirements of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to IFRS. Entities may choose to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for that loan. The exception would give firsttime adopters relief from retrospective measurement loans with a below-market rate of interest. The amendment has no impact on the Company and the Group,
IFRS I First-Time Adoption of International Financial Reporting Standards (Amendment) – Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters
The IASB provided guidance on how an entity should resume presenting IFRS financial statements when its functional currency ceases to be subject to hyperinflation. The amendment had no impact on the Company and the Group.
IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7
These amendments require an entity to disclose information about rights to set-off and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity's financial position. The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. These amendments did not have impact on the Company's ant the Group's financial position or performance.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements, IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Standard did not affect financial position and performance of the Company and the Group but has affected fair value disclosures.
IAS 12 Income Taxes (Amendment) - Deferred Taxes: Recovery of Underlying Assets
The amendment clarified the determination of deferred tax on investment property measured at fair value and introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. It includes the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 should always be measured on a sale basis. The amendment did not affect financial position, performance or disclosures of the Company and the Group.
IAS 19 Employee Benefits (Revised)
The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The amendments did not affect financial position or results of the Company and the Group.
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
This interpretation applies to waste removal costs incurred in surface mining activity, during the production phase of the mine. The interpretation addresses the accounting for the benefit from the stripping activity. The new interpretation did not have an impact on the Company and the Group.
Following standards becomes effective for annual periods beginning on or after January 1, 2013. The endorsement process within EU adopted the standards and decided that standards should be applied, at the latest, as from the commencement date of a financial year starting on or after January 1, 2014.
- · IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)
- IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements
- IFRS 11 Joint Arrangements
- · IFRS 12 Disclosure of Interests in Other Entities
IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)
As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements
IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. Based on the preliminary analyses performed, 1FRS 10 is not expected to have any impact on the currently held investments of the Company and members of the Group.
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Nonmonetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method.
IFRS 12 Disclosure of Interests in Other Entities
1FRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in 1AS 31 and IAS 28. These disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required, but has no impact on the Company's financial position or performance.
Standards endorsed by EU but not yet effective
IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32
These amendments clarify the meaning of "currently has a legally enforceable right to set-off". The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments are not expected to impact the Company's ant the Group's financial position or performance and become effective for annual periods beginning on or after 1 January 2014.
Investment Entities (Amendments to IFRS 10, IFRS 12, IAS 27 and IAS 28)
In October 2012 IASB issued the amendments that are effective for annual periods beginning on or after January 1, 2014. These amendments will apply to investments in subsidiaries, joint ventures and associates held by a reporting entity that meets the definition of an investment entity. An investment entity will account for its investments in subsidiaries, associates and joint ventures at fair value through profit or loss in accordance with IFRS 9 (or IAS 39, as appropriate), except for investments in subsidiaries, associates and joint ventures that provide services that relate only to the investment entity, which would be consolidated or accounted for using the equity method, respectively.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
An investment entity will measure its investment in another controlled investment entity at fair value. Non-investment entity parents of investment entities will not be permitted to retain the fair value accounting that the investment entity subsidiary applies to its controlled investees. For non-investment entities, the existing option in IAS 28, to measure investments in associates and joint ventures at fair value through profit or loss, will be retained. The Company is currently assessing the impact that this standard could have on the financial position and performance.
Recoverable Amount Disclosures for Non-Financial Assets - Amendments to IAS 36 Impairment of Assets
These amendments remove the unintended consequences of IFRS 13 on the disclosures required under IAS 36. In addition, these amendments require disclosure of the recoverable amounts for the assets or CGUs for which impairment loss has been recognized or reversed during the period. These amendments are effective retrospectively for annual periods beginning on or after 1 January 2014 with earlier application permitted, provided IFRS 13 is also applied.
Standards not yet endorsed by EU
The standards and interpretations that are issued, but not yet endorsed by EU, up to the date of issuance of the Company's financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 9, as issued, reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. Most of the requirements in IAS 39 for classification and measurement of financial liabilities and derecognition of financial assets and liabilities were carried forward unchanged to IFRS 9. The standard eliminates categories of financial instruments currently existing in IAS 39: available-for-sale and held-to-maturity. According to IFRS 9 all financial assets and liabilities are initially recognized at fair value plus transaction costs.
Hedge accounting
A new chapter on hedge accounting has been added to IFRS 9. This represents a major overhaul of hedge accounting and puts in place a new model that introduces significant improvements principally by aligning the accounting more closely with risk management. There are also improvements to the disclosures about hedge accounting and risk management.
The standard does not currently indicate the mandatory effective date. The IASB decided to defer the mandatory effective date of IFRS 9 until the date of the completed version of IFRS 9 is known. The standard has not yet been endorsed by EU.
The adoption IFRS 9 will have an effect on the classification and measurement of the Company's financial assets, but will not have an impact on classification and measurements of financial liabilities. The Company will quantify the effect in conjunction with the other phases, when issued and endorsed by EU.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of preparation (continued) 2.1
IFRIC 21 Levies
The interpretation is applicable to all levies other than outflows that are within the scope of other standards (e.g., IAS 12) and fines or other penalties for breaches of legislation. Levies are defined in the interpretation as outflows of resources embodying economic benefits imposed by government on entities in accordance with legislation. The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability is recognized before the specified minimum threshold is reached. The interpretation does not address the accounting for the debit side of the transaction that arises from recognizing a liability to pay a levy. Entities look to other standards to decide whether the recognition of a liability to pay a levy would give rise to an asset or an expense under the relevant standards. The interpretation is effective for annual periods beginning on or after January 1, 2014. The new interpretation will have no impact on the Company and the Group.
22 Consolidation
(a) Subsidiaries (a)
In the non-consolidated financial statements, the Company carries investments in subsidiaries at cost less impairment. Investments are tested annually for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Investments in subsidiaries that suffered an impairment in previous periods are reviewed for possible reversal of the impairment at each reporting date.
Subsidiaries are all entities over which the Group has the power the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group (acquisition date). They are deconsolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. The date of exchange is the acquisition date where a business combination is achieved in a single transaction, and is the date of each share purchase where a business combination is achieved in stages by successive share purchases.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the acquired, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated, unless there is evidence of impairment of transferred assets. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
(b) Changes in ownership of subsidiaries without loss of control
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss, If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(d) Associates
Associates are all entities over which the Group or the Company have significant influence but not control, generally accompanying a shareholding of between 20% of the voting rights. The Group accounts for investments in associates using the equity method and the Company accounts for them at cost.
The Group's share of its associates' post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates are been changed where necessary to ensure consistency with the policies adopted by the Group.
(e) Mergers
The predecessor method of accounting is used to account for the merger of entities under common control. The carrying value of assets and liabilities of the predecessor entity are transferred as balances in the merged entity. On the date of the merger, inter-company transactions, balances and unrealised gains and losses on transactions between the two entities merging are eliminated. Any difference between the carrying value of net assets merged and net assets given up is recorded as equity.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
22 Consolidation (continued)
(f) Joint ventures
The Group's interest in a jointly controlled entity is accounted for using the equity method of accounting and is initially recognised at cost. Under the equity method, the Group's share of postacquisition profits or losses is recognised in the income statement, whereas its share of postacquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.
23 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, responsible for allocating resources and assessing performance of the operating segments, has been identified as the Management Board of the Company.
2.4 Foreign currencies
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency'). The consolidated financial statements are presented in Croatian kuna (HRK), which is the Company's functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement,
(c) Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- (i) assets and liabilities for each balance sheet presented at the closing rate at the date of that balance sheet;
- (ii) income and expenses for each income statement are translated at average exchange rates; and
- (iii) all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to 'Cumulative foreign exchange differences' within shareholders' equity. When a foreign operation is partially disposed of or sold and control over the subsidiary is lost, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.5 Property, plant and equipment
Land and buildings are carried at fair value based on periodic, but at least triennial, valuations by external independent valuers. Other tangible assets are carried in the balance sheet at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Increases in the carrying amount of land and buildings arising on revaluation are credited to other comprehensive income and presented in equity under revaluation reserves. Decreases that offset previous increases of the same asset are charged against revaluation reserves directly in equity; all other decreases are charged to the income statement.
Land and assets under construction are not depreciation of other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
| Useful lives in years | |
|---|---|
| Buildings | 20-40 |
| Equipment | 5 - 10 |
| Machinery | 25 |
The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset less the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life. The residual value of an asset is nil if the Group expects to use the asset until the end of its physical life. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (note 2.8).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. Gains and losses are included in the line item "other (losses)/gains - net" in the income statement.
2.6 Investment properties
Investment property, principally comprising office buildings and land, is held for long-term rental vields or appreciation and is not occupied by the Group. Investment property is treated as a long-term investment unless it is intended to be sold in the next year and a buyer has been identified, in which case it is classified within current assets.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.6 Investment properties (continued)
Investment property is carried at historical cost less accumulated depreciation and provision for impairment, where required. Depreciation for buildings is calculated using the straight-line method to allocate cost over estimated useful life (20 to 40 years).
Subsequent costs are capitalised only when it is probable that future economic benefits associated with it will flow to the Group and the cost can be measured reliably. All other repairs and maintenance costs are expensed when incurred. If an investment property becomes owner-occupied, it is reclassified to property, plant and equipment, and its carrying amount at the date of reclassification becomes its deemed cost to be subsequently depreciated.
2.7 Intangible assets
Goodwill (u)
Goodwill represents the excess of the acquisition cost over the carrying value of the Group's share of the net identifiable assets of the acquired business sector at the acquisition date. Goodwill on acquisition is included in intangible assets.
Goodwill on acquisition of subsidiary is included in intangible assets at acquisition. Separately recognised goodwill is tested annually for impairment, or whenever there are indications of impairment, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified by business segment. If a part of the whole cash generating unit is sold, the related goodwill is included in the carrying amount of net assets sold when determining gain or loss on the transaction.
(b) Computer software
Computer software is capitalised on the basis of the costs incurred to bring to use the specific software. These costs are amortised over their estimated useful lives (5 years).
2.8 Impairment of non-financial assets
Assets that have an indefinite useful life (such as land or goodwill) which are not subject to amortisation are tested annually for impairment. Assets that are subject to amortisation and depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.9 Financial assets
The Group and the Company classify their financial assets in the following categories: at fair value through profit or loss, available-for-sale financial assets and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(a)
Financial assets valued at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term and are classified as current assets.
Financial assets valued at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement.
Gains or losses arising from changes in the 'financial assets at fair value through profit or loss' category are presented in the income statement within the line item 'other (losses)/gains - net' in the period in which they arise.
Available-for-sale financial ussets (b)
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Available-for-sale financial assets are carried at fair value and the transaction costs are recorded in the income statement.
Changes in the fair value of monetary securities and non-monetary securities classified as availablefor-sale are recognised in other comprehensive income.
In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the income statement.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement in line item 'other (losses)/gains - net'.
Interest on available-for-sale securities calculated using the effective interest rate method is recognised in the income statement. Dividends on available-for-sale securities are recognised in the income statement when the right to receive payment is established.
The Group and the Company assess at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).
2.9 Financial assets (continued)
Loans and receivables (c)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are carried at amortised cost using the effective interest method.
Trade and loan receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Group and the Company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement within "other operating expenses". Subsequent recoveries of the provision for impairment of trade receivables are recorded in the income statement within "other operating expenses".
2.10 Leases
(u) The Group and the Company are the lessee
The Group and the Company lease certain property, plant and equipment. Leases of property, plant and equipment, where the Group or the Company has substantially all the risks and rewards of ownership, are classified as finance leases are capitalized at the lease's commencement at the lower of fair value of the leased property or the present value of minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the balance outstanding. The interest element of the finance costs is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life or the lease term.
Leases in which a significant portion of risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.
(b) The Group and the Company are the lessor
Assets under an operating lease where the Group and the Company are the lessor are depreciated over their expected useful lives on a basis consistent with similar owned assets. Rental income is recognised on a straight-line basis over the lease term, even if the proceeds are not balanced, unless there is an alternative basis representing the time in which the benefits of the lease and the depreciation of the leased property are matched.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11 Inventories
Inventories of raw materials and spare parts are stated at the lower of cost, determined using the weighted average method, or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
The cost of work-in-process and finished goods comprise raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity).
Small inventory and tools are expensed when put into use.
Construction contracts 2.12
Contract costs are recognised when incurred.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable.
When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognised over the period of the contract. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
The Group and the Company use the 'percentage of completion method' to determine the appropriate amount to recognise in a given period. The stage of completion is measured by reference to the contract costs incurred up to the balance sheet date as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. Costs are presented as inventories, prepayments or other assets, depending on their nature.
The Group and the Company present as an asset the gross amount due from customers for contract work for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceed progress billings. Progress billings not yet paid by customers and retention are included within 'trade and other receivables'.
The Group presents as a liability the gross amount due to contract work for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses).
2.13 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other short-term highly liquid instruments with original maturities of three months or less.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.14 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where the Company purchases its equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders.
2.15 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of that asset. Other borrowing costs are recognised as an expense in the income statement.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan extent that it is probable that some or all of the facility will be drawn down.
Borrowings are classified as current liabilities unless the Group or the Company have an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
2.16 Income tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. The tax base represents the difference between income and expenses, as determined by the applicable law. Management of the Group periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and consider establishing provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.17 Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets against current tax liabilities and when deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
2.18 Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.19 Employee benefits
(a) Pension obligations and post-employment benefits
In the normal course of business through salary deductions, the Group and the Company make payments to mandatory pension funds on behalf of its employees as required by law. All contributions made to the mandatory pension funds are recorded as salary expense when incurred.
Furthermore, according to the Collective bargaining agreement, the Group and the Company have an obligation to make severance payments to employees at the time of the employees' retirement. The liability recognised in the balance sheet is the present value of defined benefit obligation at the balance sheet date less past service costs with adjustments for unrecognised actuarial gains or losses. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of governmental bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related retirement severance payment.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.19 Employee benefits (continued)
(b) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to their present value.
(c) Other long-term employee benefits
The Group recognises a liability for long-term employee benefits (jubilee awards) evenly over the period the benefit is earned based on actual years of service. The long-term employee benefit liability is determined using assumptions regarding the likely number of staff to whom the benefit will be payable, estimated benefit cost and the discount rate.
2.20 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
2.21 Revenue recognition
Revenue comprises the fair value of the consideration receivable for the sale of goods and services in the ordinary course of the Group's and the Company's activities. Revenue is shown net of value-added tax, estimated returns, rebates and discounts. The Group and the Company recognise revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group's and the Company's activities as described below.
(a) Revenue from construction contracts
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognised over the period of the contract (note 2.12).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.21 Revenue recognition (continued)
(b) Sales of goods
Sales of goods are recognised when the Group and the Company have delivered products to the customer, the customer has accepted the products and collectability of the related receivables is reasonably assured.
(c) Interest income
Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the Group and the Company reduce the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.
(d) Dividend income
Dividend income is recognised when the right to receive payment is established.
2.22 Dividend distributions
Dividend distributions to the Company's shareholders are recognised as a liability in the financial statements in the period in which the dividends are approved by the General Assembly of the Company's shareholders.
2.23 Earnings per share
Earnings per share is determined by dividing the profit or loss attributable to equity holders of the Company by the weighted average number of participating shares outstanding during the reporting year.
2.24 Value added tax
The Tax Authorities require the settlement of VAT on a net basis. VAT related to sales and purchases is recognised and disclosed in the balance sheet on a net basis. Where a provision has been made for impairment of receivables, impairment loss is recorded for the gross amount of the debtor, including VAT.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 3-FINANCIAL RISK MANAGEMENT
Financial risk factors 3.1
The Company's and the Group's activities expose them to a variety of financial risks: market risk (including currency risk and cash flow interest rate risk, credit risk and liquidity risk. The Group and the Company do not have a written risk management programme, but overall risk management in respect of these risks is carried out by the Company's finance department.
(a) Market risk
(i) Currency risk
The majority of foreign sales revenue is denominated in EUROs. Domestic sales revenue is denominated in HRK. The majority of long-term and short-term loans were agreed with a currency clause, i.e. they are linked to the EURO. Any movement in exchange rates between the EURO against the Croatian kuna will have an impact on the Group's and the Company's operating results.
At 31 December 2013, if the EURO had weakened/strengthened by 1.00% against the HRK (2012: 1.00%), with all other variables held constant, the net loss for the reporting period after tax would have been HRK 3,573 thousand (2012: HRK 4,044 thousand) lower/(higher), mainly as a result of foreign exchange gains((losses) on translation of EURO-denominated trade receivables, trade payables, borrowings and foreign cash funds.
(ii) Price risk
The Group is exposed to equity securities fair value and price risk because of investments held by the Group classified on the consolidated balance sheet either as available for sale or at fair value through profit or loss. Equity investments classified as available for sale are not listed, while those classified as fair value through profit or loss are publicly traded but do not have a significant effect on the financial position. To manage its fair value and price risk arising from investments in equity securities, the Group monitors market transactions and performance of investment entities.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 3-FINANCIAL RISK MANAGEMENT (continued)
Financial risk factors (continued) 3.1
Cash flow interest rate risk (iii)
The Group has no significant interest-bearing assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates.
The Group's and the Company's interest rate risk arises from long-term borrowings and commercial papers. Borrowings issued at variable rates expose the Group and the Company to cash flow interest rate risk.
The Group and the Company analyse their interest rate changes on a regular basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the Group and the Company calculate the impact on profit and loss of a defined interest rate shift. As at 31 December 2013, if the effective interest rate on borrowings had increased/decreased by 0.82% on an annual level (2012: 0.82%), the loss after tax would have been higher/lower by HRK 249 thousand (2012: HRK 2,905 thousand) as a result of a higher/lower interest expense.
Credit risk (b)
The Group's and the Company's assets which potentially subject them to concentrations of credit risk primarily include cash, trade and other receivables. The Group has policies in place to ensure that sales of products are made to customers with an appropriate credit history, within previously defined credit limits. A favourable structure of buyers (major buyers are mainly state-owned companies) and the fact that, if necessary, collection from buyers is regulated by bank payment guarantees, bills of exchange, letters of credit and other types of security, almost completely diminishes the risk arising from the collection of trade receivables. A detailed analysis and maximum exposure to credit risk are shown in note 22. Further, judgements and estimates in respect of credit risk exposure and related impairment provisions are described in more detail in note 4(b).
Liquidity risk (c)
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to meet all obligations. The Group aims to maintain flexibility in funding by keeping committed credit lines available.
Trade and other payables as well as short-term borrowings are due within 12 months after the balance sheet date, while the maturity of long-term borrowings is disclosed in note 29.
The restructuring plan as integral part of the pre-bankruptcy settlement is based on decrease and reprogram of liabilities of the Company. Conditions for enforcement of financial restructuring which will significantly affect liabilities of the Companies presented as at 31 December 2013 had been by legal validity of the pre-bankruptcy settlement determined on 14 February 2014. The effect of financial restructuring measures planned as a part of the pre-bankruptcy settlement is shown in note 34.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 3-FINANCIAL RISK MANAGEMENT (continued)
32 Capital risk management
The Company's and Group's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company and the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company and the Group monitor capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including long-term and short-term borrowings, as shown in the balance sheet) less cash and cash equivalents and short-term deposits given. Total capital is calculated as equity, as shown in the balance sheet, plus net debt.
The Company's gearing ratio was as follows:
| (in thousands of HRK) | 31. prosinca 2013. |
31. prosinca 2012. |
|---|---|---|
| Borrowings (note 29) | 842,729 | 865,049 |
| Cash and cash equivalents (note 27) | (5,547) | (9,692) |
| Net debt | 837,182 | 855,357 |
| Equity | (36.280) | 133,114 |
| Total equity and net debt | 800,902 | 988,471 |
| Gearing ratio - Company | 104.5% | 86.5% |
| The Group's gearing ratio was as follows: | ||
| (in thousands of HRK) | 31. prosinca 2013. |
31. prosinca 2012. |
| Borrowings (note 29) | 1,127,034 | 1,100,844 |
| Cash and cash equivalents (note 27) | (30,069) | (17,884) |
| Net debt | 1,096,965 | 1.082,960 |
| Equity | 40,580 | 188,733 |
| Total equity and net debt | 1,137,545 | 1,271,693 |
Gearing ratio - Group
85.2%
96.4%
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 3-FINANCIAL RISK MANAGEMENT (continued)
3.3 Fair value estimation
Effective 1 January 2009, the Group adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. IFRS 7 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The table below present the Group's and the Company's assets at fair value as at 31 December 2013 and 2012:
| (in thousands of HRK) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Group | ||||
| 31 December 2013 | ||||
| Listed entities | 41 | 16,690 | 13 | 16,747 |
| Unlisted entities | 11.554 | 11,554 | ||
| Total | -1-1 | 28,244 | 13 | 28,301 |
| 31 December 2012 | ||||
| Listed entities | ୧୫ | 19,201 | 396 | 19.665 |
| Unlisted entities | - | 23,567 | 23,567 | |
| Total | 68 | 42,768 | 396 | 43,232 |
| Company | ||||
| 31 December 2013 | ||||
| Listed entities | 44 | 16,690 | 16,734 | |
| Unlisted entities | 11,554 | 11,554 | ||
| Total | -1 | 28,244 | 28,288 | |
| 31 December 2012 | ||||
| Listed entities | નર | 19.201 | 19,246 | |
| Unlisted entities | 23.568 | 23,568 | ||
| Total | નેટ | 42,769 | 42,814 |
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 3 - FINANCIAL RISK MANAGEMENT (continued)
The fair value of financial instruments that are not traded in an active market (for example, over-thecounter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
NOTE 4-CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.
(a) Revenue recognition
The Group uses the percentage-of-completion method in accounting for its revenue from construction contracts to determine the appropriate amount to recognise in a given period. The stage of completion is measured by reference to the contract costs incurred up to the balance sheet date as a percentage of total estimated costs for each contract (note 5).
Impairment of loans and receivables (b)
The Group and the Company review the portfolio of loans and receivables on an annual basis to assess impairment. While assessing the recognition of impairment of comprehensive income, the Group and the Company assess whether there is observable data indicating the existence of a measurable decrease in future cash flows of the portfolio of loans and receivables before establishing the impairment of certain loans and receivables in the stated portfolio (note 9).
(c) Useful life of property, plant and equipment
The Company's and the Group companies' managements determine and reassess the useful lives and related depreciation charge for tangible assets. This assessment is based on the estimated remaining useful life of assets and could significantly change as a result of technical innovation and activities of competitors. Management will increase the depreciation charge if it assesses that the useful life of assets is lower than prior to estimates, or it will write off obsolete and discarded property (note 2.5).
Legal claims and disputes (d)
Provisions for legal claims and disputes are recorded based on Management's best estimate of probable losses after consultation with legal counsel (note 31).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 5-SEGMENT INFORMATION
The Group separately monitors and presents business results of basic business segments, Production and Construction, whose operating activities are interrelated for the purpose of realising profit for the Group.
-
- The Production segment includes forging works, the casting plant and the laboratory for quality control and the production and sales of metal frames/structures, as well as the manufacture and sales of suspension and jointing equipment.
-
- The Construction segment includes the services of construction and project documentation preparation of power and distribution facilities, transformer stations, laying submarine and subterranean energy and telecommunication cables, posting public lighting, installing antenna, television and telecommunication posts as well as work relating to the construction of motorways.
Management monitors the operating results of the business segments to make decisions on the allocation of resources and performance assessment. Segment performance assessment is based on the gross segment revenue and realised profit from regular operations, as explained in the following table. The Group manages finance income and costs, share of profit of joint ventures and income tax and they are not allocated by operating segments.
| (in thousands of HRK) | Construction | Production | Other | Total |
|---|---|---|---|---|
| Year ended 31 December 2013 | ||||
| Gross revenues | 1,026,950 | 283.608 | 5,500 | 1,316,058 |
| Inter-segment revenues /i/ | (68,856) | (101,167) | (534) | (170,557) |
| Total revenues Operating profit/(loss) before depreciation and |
958,094 | 182,441 | 4,966 | 1,145,501 |
| amortisation | 8.146 | (48,060) | (10,343) | (50,257) |
| Depreciation and amortisation | (34,872) | (13,235) | (193) | (48,300) |
| Operating loss | (26,726) | (61,295) | (10,536) | (98,557) |
| Year ended 31 December 2012 | ||||
| Gross revenues | 1,226,642 | 388,996 | 5,800 | 1,621,438 |
| Inter-segment revenues /i/ | (339,651) | (27,988) | (367,639) | |
| Total revenues Operating profit/(loss) before depreciation and |
886,991 | 361,008 | 5,800 | 1,253,799 |
| amortisation | (266,747) | (162) | (29,219) | (296,128) |
| Depreciation and amortisation | (40,724) | (9,516) | (77) | (50,317) |
| Operating loss | (307,471) | (9,678) | (29,296) | (346,445) |
Operating results by business segments for the Group
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 5-SEGMENT INFORMATION (continued)
/i/ Inter-segment sales are eliminated on consolidation.
| 2013 | 2012 | |
|---|---|---|
| (in thousands of HRK) | ||
| Segment sales revenue | 1,310,558 | 1,615.638 |
| Inter-segment receivables | (170,023) | (367,639) |
| Unalocated: | ||
| Other | 5,500 | 5,800 |
| Inter-segment receivables | (54) | |
| Total revenues | 1,145,501 | 1,253,799 |
Segment liabilities are not disclosed, since they are reported to the chief operating decision-maker only on the Group level.
/ii/ Sales are allocated based on the country in which the customer is located.
| 2013 | 2012 | ||||
|---|---|---|---|---|---|
| (in thousands of HRK) |
% | (in thousands of HRK) |
% | ||
| Crontia | 459,887 | 40.15 | 601,996 | 48.02 | |
| Norway | 261,035 | 22.79 | 273.371 | 21.80 | |
| Ukraine | 127,161 | 11.10 | 47,856 | 3.82 | |
| Slovenia | 104.672 | 9.14 | 187,317 | 14.94 | |
| Bosnia and Herzegovina | 85,286 | 7.45 | 47.991 | 3.83 | |
| Saudi Arabia | 46,631 | 4.07 | 56,307 | 4.49 | |
| Montenegro | 10,066 | 0.88 | 12.330 | 0.98 | |
| Sweden | 7,582 | 0.66 | 12,832 | 1.02 | |
| Oman | ર,496 | 0.48 | 7,769 | 0.62 | |
| Serbia | 3.411 | 0.30 | 4,063 | 0.32 | |
| Other abroad | 34.274 | 2.98 | 1,967 | 0.16 | |
| Total | 1,145,501 | 100.00 | 1,253,799 | 100.00 |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 5-SEGMENT INFORMATION (continued)
/iii/ Sales revenues by sectors are as follows:
| 2013 | 2012 | |
|---|---|---|
| (in thousands of HRK) | ||
| Energetics | 668,812 | 725,894 |
| Roads | 253,903 | 174,889 |
| Properties | 18,603 | 97,243 |
| Railroads | 8,682 | 28,289 |
| Telecomunications | 2,691 | 288 |
| Sale of metal constructions | 72,992 | 78,856 |
| Sale of suspension and jointing equipment | 94.072 | 117,406 |
| Other | 25,746 | 30,934 |
| Total | 1,145,501 | 1,253,799 |
Revenue from construction contracts amounts to HRK 958,094 thousand (2012: HRK 886,991 thousand).
Advances received for projects under construction that are active at the reporting date are presented within advances in note 30 and amounts to HRK 9,565 thousand (2012: HRK 9,502 thousand).
Out of total amount of guarantee deposits shown within notes 23 and 25, HRK 30,064 thousand relates to guarantee deposits (retentions) for construction that are active at the reporting date (2012: HRK 24,456 thousand).
NOTE 6-OTHER INCOME
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Interest income | 2,086 | 3,520 | 3,101 | 3,049 |
| Income from penalty interest | 38 | 5511 | 5,511 | |
| Insurance claims proceeds | 816 | 2,710 | 749 | 2,593 |
| Rental income | 299 | 724 | 4,831 | 5,310 |
| Income from revers al of provisions | ને નંદર્શ્વર | 123 | 3,096 | 43 |
| Inventory surpluses | 1.066 | 802 | 39 | |
| Other operating income | 14.220 | 13.697 | 10.634 | 12.898 |
| 23,010 | 27,087 | 22,411 | 29,448 |
Rental income of the Company are realised based on investment property (note 17).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 7-COST OF MATERIALS AND SERVICES
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Raw materials and supplies | ||||
| Raw materials and supplies | 173,101 | 386,760 | 1-40 -72 | 185,967 |
| Energy | 21,355 | 21,810 | 11,170 | 12,646 |
| Spare parts and small inventory | 6,165 | 3.646 | 4,023 | 2,196 |
| 200.621 | 412,216 | 155,515 | 200,809 | |
| External services | ||||
| Subcontractor services | -107.631 | 456,363 | 363,620 | 463,320 |
| Transportation | 11.871 | 12.296 | 5,612 | 4,330 |
| Repairs and maintenance | 12,820 | 10,164 | 10,121 | 7,982 |
| Advertising and promotion | 246 | 1,375 | 10 | 626 |
| Rental expense | 8,616 | 7,360 | 5.823 | 3,142 |
| Other | 5,488 | 5,440 | 2,406 | 2,862 |
| 446,672 | 492.998 | 387,597 | 482,262 | |
| Total cost of materials and services | 647,293 | 905,214 | 543,112 | 683,071 |
NOTE 8-STAFF COSTS
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Net salaries | 154.748 | 158,604 | 93,615 | 95,702 |
| Taxes and contributions on and from salaries | 75,865 | 87,443 | 40,698 | 46,924 |
| Severance costs | 15,555 | 1,024 | 12810 | 166 |
| Unused vacation days | 2,750 | 3.614 | 102 | 3,614 |
| Other staff costs | 10.490 | 8 349 | 2,153 | 2,139 |
| Supervisory Board compensation | રેક્ટ્રિ | 330 | 398 | 137 |
| 259,971 | 259,414 | 149,776 | 148,682 |
Taxes and contributions include contributions paid into mandatory pension funds in the amount of HRK 29,165 thousand (2012: HRK 23,333 thousand) for the Group, and HRK 15,456 thousand for the Company (2012: HRK 13,373 thousand). Contributions are calculated as a percentage of the employees' gross salaries.
Other staff costs include gifts, jubilee awards and other benefits.
As at 31 December 2013, the Group had 1,476 employees (2012: 1,690 employees), and the Company had 620 employees (2012: 743 employees).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 9-OTHER OPERATING EXPENSES
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 20112 | 2013 | 2012 |
| Intellectual and non-production services | 31,654 | 29,859 | 15,349 | 16,282 |
| Daily allowances and travel cost | 38,462 | 19,488 | 36,445 | 13,957 |
| Bank charges | 5,358 | 11.353 | 3,761 | 8,603 |
| Entertainment | 2,049 | 2,483 | 356 | 1,940 |
| Taxes and contributions | 4,178 | 6,210 | 3,346 | 4,564 |
| Insurance | 4,330 | 5,979 | 2,997 | 5,211 |
| Sponsorships, donations and other aids | 013 | 1,326 | 77(0) | 1,245 |
| Impairment and write-off of property, plant and equipment |
15.025 | 26,079 | 6 | 13,534 |
| Impairment of trade receivables and loans - net (note 23 and note 25) |
16,122 | 75,276 | 3,493 | 84,521 |
| Impairment of investmets in associates (note 19) | 36,175 | |||
| Impairment of other financial assets (note 23 and note 25) | 2,697 | 40,671 | 3,112 | 41,836 |
| Impairment of non-financial assets (note 25) | 774 | 6,247 | 417 | 6,247 |
| Impairment of investments in subsidiaries (note 18) | 897 | 96,502 | 32,995 | |
| Impairment of goodwill (note 15) | 3,346 | |||
| Impairment of inventories | 7,312 | 11,438 | 4,270 | |
| Inventory shortages | 3,304 | 3,934 | 30 | 297 |
| Interest from suppliers | 2,092 | 4,828 | 1,754 | 4,662 |
| Fines and penalties | 99 | રિક્રી | 657 | |
| Court cases and additional taxes per Tax authorities' decision |
7,014 | 7,014 | ||
| Other | 41,706 | 28,362 | 26,007 | 51,424 |
| 186,435 | 341,262 | 201,869 | 292,245 |
NOTE 10 - OTHER GAINS/(LOSSES) - NET
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2017 | 2013 | 2012 |
| Net foreign exchange loss from operating activities | (289) | (5,925) | 1,282 | (5,927) |
| Fair value losses of financial assets available-for-sale (note 21) |
(14,536) | (3,415) | (14,526) | (3,415) |
| Net gain on sale of property, plant and equipment | 514 | 2 650 | 50.0 | 299 |
| (14,311) | (6,690) | (12,744) | (9,043) |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 11 - FINANCE INCOME AND COSTS - NET
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2017 |
| Interest income on bank deposits | 1,325 | 1.397 | 1,203 | 4592 |
| Finance income | 1,325 | 1,397 | 1.203 | -152 |
| Net foreign exchange differences (financing activities) | 1.128 | (4,551) | (4,537) | |
| Interest expense | (26,696) | (96,214) | (6,261) | (74,092) |
| Less capitalised interest (note 16) | 20.941 | 21,113 | L | |
| Finance costs | (4,627) | (79.652) | (6,261) | (78,629) |
| (3,302) | (78,255) | (5,058) | (78,177) |
NOTE 12-INCOME TAX
The reconciliation of accounting income and taxable income is detailed in the table below:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Loss before tax | (109,229) | (422,167) | (146,323) | (436,935) |
| Tax calculated at the domestic tax rate applicable to profits in the respective countries |
(40,520) | (81,524) | (20,941) | (85,424) |
| Effect of non-taxable income | (261) | (766) | (214) | (113) |
| Effect of non-deductible expenses | 37,534 | 22,990 | 25.191 | 19,629 |
| Effect of reinvestment of profit /i/ | (977) | (3,894) | ||
| Effect of tax losses not recognised as deferred tax assets | 17.863 | 71-369 | 9031 | 70,214 |
| Income tax expense | 13,639 | 8,175 | 13,067 | 4,306 |
| Effective tax rate | -12.5% | -1.9% | -8.9% | -1.0% |
/i/ In 2012, some Group members utilised a tax exemption pursuant to the reinvestment of profit and as a result of utilising the incentive they were obliged to increase their share capital in 2013 by HRK 19,470 thousand. One member did not fulfil all conditions so the realised increase of share capital amounts to HRK 16,851 thousand, while the remaining HRK 2,889 thousand were taxable. Tax exemption pursuant to the reinvestment in 2013. Amounts to HRK 7,776 thousand. This amount represents the amount by which the share capital of the Group utilising the incentive will be increased.
In accordance with the regulations of the Republic of Croatia, the Tax Authority may at any time inspect the Company's books and records within 3 years following the year in which the tax liability is reported, and may impose additional tax assessments and penalties. The same regulations apply to other subsidiaries of the Group in Croatia. Foreign subsidiaries abroad must comply with tax regulations of the country in which they operate. During the year there were no changes in tax rates in countries where members of the Group operate.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 12 - INCOME TAX (continued)
The recorded income tax expense in the Company includes income tax expense recorded in the foreign business units in accordance with the laws of the countries in which they operate.
Overview of tax losses for which deferred tax asset has not been recognised is as follows:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Unutilised tax losses | ||||
| Tax loss from 2008 - expires 2013 | 2 | |||
| Tax loss from 2009 - expires 2014 | 301 | 301 | ||
| Tax loss from 2010 - expires 2015 | 6.636 | 6.636 | ||
| Tax loss from 2011 - expires 2016 | 271.879 | 271.879 | 261,433 | 261,433 |
| Tax loss from 2012 - expires 2017 | 352.437 | 352,437 | 351,073 | 351,073 |
| Tax loss from 2013 - expires 2018 | 97,739 | -15, 157 | ||
| 728,992 | 631,255 | 657,663 | 612,506 |
The Company and the Group did not recognise deferred tax asset as it is not probable that future taxable profits will be available to utilize the tax losses.
During the year the Company and the Group recognised deferred tax liability on revaluation of assets (note 28).
Movement in deferred tax liability
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| At beginning of year | 0 | |||
| Charged to revaluation reserves | 10,004 | 10.004 | ||
| At end of year | 10.004 | 10,004 |
NOTE 13- BASIC AND DILUTED LOSS PER SHARE
Basic earnings per share are calculated on the basis of the Company's net profit attributable to the Company shareholders and the weighted average number of ordinary shares in issue, excluding treasury shares. There are no dilutable potential ordinary shares.
| Dalekovod Group | |||
|---|---|---|---|
| 2013 | 2012 | ||
| Net loss attributable to shareholders (in thous. of HRK) | (122216) | (429,924) | |
| Weighted average number of shares | 2.823.331 | 2.823.331 | |
| Basic/diluted loss per share (in HRK) | (43.29) | (152.28) |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 14- DIVIDEND PER SHARE
Unpaid dividends in the amount of HRK 1,900 thousand (2012; HRK 1,900 thousand) are presented as dividend payable within "trade and other payables" (note 30), and it relates to dividends for shareholders who did not submit the required data for payment.
NOTE 15-INTANGIBLE ASSETS
Group
| (in thousands of HRK) | Goodwill | Software | Total |
|---|---|---|---|
| .At 1 January 2012 | |||
| Cost | 4,559 | 43,370 | 47,929 |
| Accumulated amortisation and impairment losses | (20,446) | (20,446) | |
| Net book value | ને રહેલ | 22,924 | 27,483 |
| Year ended 31 December 2012 | |||
| At 1 January | ને રહેવ | 22,924 | 27,483 |
| Additions | 1,008 | 1,008 | |
| Disposals | (3.930) | (3,930) | |
| Amortisation | 11 | (7,218) | (7,218) |
| At 31 December | 4,559 | 12,784 | 17,343 |
| At 31 December 2012 | |||
| Cost | 4.559 | 40,368 | 44,927 |
| Accumulated amortisation and impairment losses | (27,584) | (27,584) | |
| Net book value | 4,559 | 12,784 | 17,343 |
| Year ended 31 December 2013 | |||
| At I January | 4,559 | 12,784 | 17,343 |
| Additions | નીકે | -13 | |
| Amortisation | (4.205) | (4,205) | |
| Impairment loss | (3,346) | (3,346) | |
| At 31 December | 1,213 | 9,022 | 10,235 |
| At 31 December 2013 | |||
| Cost | ને રહ્યુ | 40,811 | 45,370 |
| Accumulated amortisation and impairment losses | (3,346) | (31,789) | (35,135) |
| Net book value | 1,213 | 9,022 | 10,235 |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 15 - INTANGIBLE ASSETS (continued)
Group (continued)
Goodwill is allocated entirely to the Production segment.
Goodwill is tested annually for impairment as stated in note 2.8.
The recoverable amount of cash generating units is determined based on value-in-use calculations. These calculations use cash flow projections from financial budgets approved by the management covering a five-year period. The terminal growth rate used to extrapolate the cash flows beyond the five-year period is 3%, and the present value of future cash flows is calculated using a discount rate of 9,88%. The growth rate assumption was based on the historical data and the management's expectations for market development. The discount rate used is based on the Group's weighted average cost of capital.
During 2013 goodwill impairment loss in the amount of HRK 3,346 thousand have been recognised in the income statement (note 9).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 15 - INTANGIBLE ASSETS (continued)
Company
| (in thousands of HRK) | Software |
|---|---|
| At 1 January 2012 | |
| Cost | 37,687 |
| Accumulated amortisation | (19,539) |
| Net book value | 18,148 |
| Year ended 31 December 2012 | |
| At 1 January | 18,148 |
| Additions | 14 |
| Disposals | (1.524) |
| Amortisation | (6,268) |
| At 31 December | 10,370 |
| At 31 December 2012 | |
| Cost | 36,177 |
| Accumulated amortisation | (25,807) |
| Net book value | 10,370 |
| Year ended 31 December 2013 | |
| At 1 January | 10,370 |
| Additions | 4 |
| Amortisation | (3,352) |
| At 31 December | 7,022 |
| At 31 December 2013 | |
| Cost | 36,181 |
| Accumulated amortisation | (29,159) |
| Net book value | 7,022 |
.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 16-PROPERTY, PLANT AND EQUIPMENT
Group
| (in thousands of HRK) | Land | Buildings | Plant and equipment |
Assets under construction |
Total |
|---|---|---|---|---|---|
| At 1 January 2012 | |||||
| Cost or deemed cost | 284,333 | 352,064 | 251,693 | 248,725 | 1,136,815 |
| Accumulated depreciation | (81,884) | (70,942) | (152,826) | ||
| Net book value | 284,333 | 270,180 | 180,751 | 2-18,725 | 983,989 |
| Year ended 31 December 2012 | |||||
| At I January | 284,333 | 270,180 | 180,751 | 248,725 | 983,989 |
| Additions | 1,380 | 10,128 | 97.510 | 109,018 | |
| Transfer | 5 | (5) | |||
| Revaluation surplus | 129 | 13.696 | 14,425 | ||
| Disposals and write-offs | (4,381) | (8,637) | (17,176) | (30,194) | |
| Foreign exchange differences | 147 | 147 | |||
| Depreciation | (9,228) | (32,526) | (41,754) | ||
| At 31 December | 285,062 | 271,794 | 149,721 | 329,054 | 1,035,631 |
| At 31 December 2012 | |||||
| Cost or deemed cost | 285.062 | 469,406 | 377,291 | 329,054 | 1,460,813 |
| Accumulated depreciation | (197,612) | (227,570) | (425,182) | ||
| Net book value | 285,062 | 271,794 | 1-49,721 | 329,054 | 1,035,631 |
| Year ended 31 December 2013 | |||||
| At 1 January | 285,062 | 271,794 | 149,721 | 329,054 | 1,035,631 |
| Additions | 5,947 | 62,961 | 68,908 | ||
| Trans fer | 256 | 1,668 | (1.924) | ||
| Disposals and write-offs | (34) | (531) | (565) | ||
| Foreign exchange differences | 76 | 23 | 4 | 5 | 113 |
| Depreciation | (13,307) | (29.199) | (42,506) | ||
| Impairment loss | (129) | (19,688) | (3,292) | (5.606) | (29.315) |
| At 31 December | 284,409 | 239,049 | 124,318 | 384,490 | 1,032,266 |
| At 31 December 2013 | |||||
| Cost or deemed cost Accumulated depreciation and |
285,138 | 462 277 | 380,253 | 384,490 | 1,512,478 |
| impaiment losses | (129) | (273,548) | (255,935) | (480,212) | |
| Net book value | 284,409 | 239,049 | 124,318 | 384,490 | 1,032,266 |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 16-PROPERTY, PLANT AND EQUIPMENT (continued)
Company
| (in thousands of HRK) | Land | Buildings | Plant and equipment |
Assets under construction |
Total |
|---|---|---|---|---|---|
| At 1 January 2012 | |||||
| Cost or deemed cost | 164,914 | 123,862 | 273,862 | 7,100 | 569,738 |
| Accumulated depreciation | (52,401) | (162,036) | (214,437) | ||
| Net book value | 164,914 | 71,461 | 111,826 | 7,100 | 355,301 |
| Year ended 31 December 2012 | |||||
| At I January | 164,914 | 71,461 | 11,826 | 7,100 | 355,301 |
| Additions | 3,915 | 3,915 | |||
| Trans fer from investment property | 85 | 35 | |||
| Trans fer | 5 | (5) | |||
| Disposals and write-offs | (1.695) | (4,972) | (7,095) | (13,762) | |
| Depreciation | (2,854) | (20,867) | (23,721) | ||
| At 31 December | 164,914 | 66,997 | 89,907 | 321,818 | |
| At 31 December 2012 | |||||
| Cost or deemed cost | 164,914 | 122,205 | 267,355 | 554,474 | |
| Accumulated depreciation | (55,208) | (177,448) | (232,656) | ||
| Net book value | 164,914 | 66,997 | 89,907 | 321,818 | |
| Year ended 31 December 2013 | |||||
| At I January | 164,914 | 66,997 | 89,907 | 321,818 | |
| Additions | 2,417 | 2,417 | |||
| Transfer to investment property | (8,674) | (8,674) | |||
| Transfer | 256 | (256) | |||
| Disposals and write-offs | (144) | (144) | |||
| Depreciation | (1.944) | (18,184) | (20,128) | ||
| At 31 December | 164,914 | 56,635 | 73,740 | 295,289 | |
| At 31 December 2013 | |||||
| Cost or deemed cost | 164,914 | 113,745 | 256,571 | 535,230 | |
| Accumulated depreciation | (57,110) | (182.831) | (239,941) | ||
| Net book value | 164,914 | 56,635 | 73,740 | 295,289 |
48
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 16-PROPERTY, PLANT AND EQUIPMENT (continued)
Assets under construction mainly relate to Sky Office property.
In 2013, capitalised interest on assets under construction amounted to HRK 20,941 thousand (2012; HRK 21,113 thousand) using a rate of 4.79% (2012: 7.35%).
Had revaluation not been performed, the carrying amount of land and buildings of the Group would have amounted to HRK 464,912 thousand at 31 December 2013 (2012: HRK 495,189 thousand), while the carrying amount of land and buildings of the Company would have amounted to HRK 171,530 thousand (2012: HRK 181,890 thousand).
As at 31 December 2013, land, buildings and equipment of the Group and the Company with a net book value of HRK 335.352 thousand (2012: HRK 341,829 thousand) were pledged as security for borrowings (note 29).
At 31 December 2013, assets under a finance lease where the Company are the lessee amounted to HRK 51.066 thousand (2012: HRK 60,935 thousand) - see note 29.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 17 - INVESTMENT PROPERTY
Company
| (in thousands of HRK) | Land | Bulldings | Total |
|---|---|---|---|
| At 1 January 2012 | |||
| Cost | |||
| Accumulated depreciation | 72,209 | 263,871 (105,501) |
336,080 |
| Net book value | 72,209 | 158,370 | (105,501) 230,579 |
| Year ended 31 December 2012 | |||
| At January | 72,209 | 158,370 | 230,579 |
| Additions | 640 | 6-10 | |
| Transfer to property, plant and equipment | 2 | (85) | (85) |
| Disposals and write-offs | S | (2,625) | (2,625) |
| Depreciation | (7,157) | (7,757) | |
| At 31 December | 72,209 | 148,563 | 220,772 |
| At 31 December 2012 | |||
| Cost | 72,209 | 261,801 | 334,010 |
| Accumulated depreciation | (113,238) | (113,238) | |
| Net book value | 72,209 | 148,563 | 220,772 |
| Year ended 31 December 2013 | |||
| At I January | 72,209 | 1-18-263 | 220,772 |
| Transfer from property, plant and equipment | 8,674 | 8.674 | |
| Depreciation | (8,572) | (8,572) | |
| At 31 December | 72,209 | 148,665 | 220,874 |
| At 31 December 2013 | |||
| Cost | 72.209 | 270.475 | 342,684 |
| Accumulated depreciation | (121,810) | (121,810) | |
| Net book value | 72,209 | 1-48,665 | 220,874 |
Land and buildings with a carrying amount of HRK 123,091 thousand (2012: HRK 127,664 thousand) have been pledged as security for the repayment of the finance lease (note 29).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 18- INVESTMENTS IN SUBSIDIARIES
| (in thousands of HRK) | Dalek ovod Group | Dalekovod d.d. | ||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| At I January | 971 | 410,525 | 427,498 | |
| Additions /i/ | 56 | 16,022 | ||
| Decrease | ||||
| Consolidation of Dalekovod Ukrajina d.o.o. | 0 | (74) | ||
| Impairment /i/ | (897) | (96,502) | (32,995) | |
| At 31 December | 314,079 | 410.525 |
At 31 December, the Company owns shares in the following subsidiaries:
| Name | Country of incorporation |
2013 | 2012 | 2013 | 2012 |
|---|---|---|---|---|---|
| Holding in % | (in thousands of HRK) | ||||
| Dalekovod d.o.o., Ljubljana | Slovenia Bosnia and |
100.00 | 100,00 | 2.075 | 2.075 |
| Dalekovod d.o.o., Mostar Dalekovod Proizvodnja d.o.o., |
Herzegovina | 100,00 | 100,00 | 210 | 210 |
| Dugo Selo | Croatia | 100.00 | 100,00 | 222.758 | 222,758 |
| Dalekovod-projekt d.o.o., Zagreb Dalcom Engineering CmbH, |
Croatia | 100.00 | 100,00 | 4.614 | 4.614 |
| Freilassing | Germany | 100.00 | 100,00 | 372 | 372 |
| Dalekovod-Polska S.A., Warsaw /ii/ | Poland Bosnia and |
100,00 | 100,00 | 2.597 | 2597 |
| Dalekovod TKS a.d., Doboj /ü/ | Herzegovina | 97,25 | 97.25 | 203-14 | 20.3-44 |
| Dalekovod Professio d.o.o., Zagreb | Croatia | 100,00 | 100,00 | 77.029 | 77.029 |
| Denacco Namibia (PTY) Ltd /ii/ | Namibia | 60,00 | 60,00 | 18 | 18 |
| Dalekovod TIM Topusko d.d. | Croatia | 95.81 | 95,81 | 28.059 | 28.059 |
| Dalekovod - ulaganja d.o.o. Zagreb | Croatia Bosnia and |
100.00 | 100,00 | 38. 120 | 38.120 |
| Cindal d.o.o. Doboj /ii/ | Herzegovina | 95,01 | 95,01 | 5.191 | 5.191 |
| Dalekovod-Adria d.o.o. Zagreb /ül | Croatia | 100,00 | 100.00 | 32,098 | 32.098 |
| Dalekovod EMU d.o.o. Zagreb | Croatia | 100,00 | 100,00 | 11.063 | 11.063 |
| EL-RA d.o.o.o. Zagreb Dalekovod Libya za inženjering, |
Croatia | 100.00 | 100,00 | -192 | 492 |
| zajedničko poduzeće, Libya /ii/ | Libya | 65,00 | 65,00 | 879 | 879 |
| Dalekovod Ukrajina d.o.o. | Ukraine | 100,00 | 100.00 | 74 | 74 |
| Dalekovod ApS. Grenland | Gren and | 100.00 | 100,00 | 124 | 124 |
| Dalekovod Norge AS /i/ | Norway | 100,00 | 56 | ||
| Impairment of investments /ii/ | (132.094) | (35.592) | |||
| 314.079 | 410,525 |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 18 - INVESTMENTS IN SUBSIDIARIES (continued)
- /i/ During 2013 subsidiary Dalekovod Norge AS was incorporated.
- /ii/ During 2013 the Company fully impaired investments in subsidiaries Dalekovod TKS a.d., Doboj i Cindal d.o.o., Doboj and partially impaired investments in subsidiaries Dalekovod Proiz odoja d.o.o. i Dalekovod TIM d.d. During 2012, the Company impaired investments in subsidiares Denacco Namibia (PTY) Ltd, Dalekovod-Adria d.o.o. and Dalekovod Libya, while investment in Dalekovod-Polska S.A. had been impaired in 2009. The impairment of HRK 96,502 houssad (2012: HRK 32,995 thousand) was recorded in the income statement (note 9).
A Group member (Dalekovod Professio d.o.o.) owns shares in the following subsidiaries:
| Name | Country of incorporation |
2013 | 2017 |
|---|---|---|---|
| Holding in % | |||
| Dalekovod OlE d.o.o., Zagreb | Croatia | 100.00 | 00.00 |
| Voštane j.d.o.o., Zagreb | Croatia | 100.00 | 100.00 |
| Dalekovod breze j.d.o.o., Zagreb | Croatia | 100.00 | 100.00 |
| Otrić j.d.o.o., Zagreb | Croatia | 100.00 | 100.00 |
The companies Voštane j.d.o.o., Dalekovod breze j.d.o.o. and Otrić j.d.o.o. are not included in consolidation due to immaterial assets and operating volume.
Additionally, as at 22 October 2013 a member of Group (Dalekovod Proizvodnja d.o.o.) founded subsidiary DalProizvodnja d.o.o., Doboj, Bosnia and Herzegovina. DalProizvodnja did not have any operations during 2013.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 19 - INVESTMENTS IN ASSOCIATES
| (in thousands of HRK) | Dalekovod Group | Dalekovod d.d. | ||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| At beginning of year | 20,241 | 56,416 | 20.241 | 20,241 |
| Share in profit/(loss) | (3,763) | |||
| Impairment (note 9) | (36,175) | |||
| At end of year | 16,478 | 20,241 | 20,241 | 20,241 |
Associates are as follows:
| (in thousands of HRK) | Dalekovod Group | Holding in % | ||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| TLM Group Members | 1 | 7 | 25-47 | 25-47 |
| Unidal d.o.o., Vinkovci | 16,471 | 20,234 | 49 | 4 |
| Total | 16,478 | 20,241 |
Financial information about associate is summarised below:
| (in thousands of HRK) | Assets | Liabilities / | Revenues Net gain / (loss) | |
|---|---|---|---|---|
| At 31 December 2013 | ||||
| Unidal d.o.o. | 64,426 | 49.038 | 62,864 | (2.353) |
| At 31 December 2012 | ||||
| Unidal d.o.o. | 69,459 | 51,713 | 68,691 | 248 |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 20 - INVESTMENTS IN JOINT VENTURES
| Dalekovod Group | |||
|---|---|---|---|
| (in thousands of HRK) | 2013 2017 |
||
| At beginning of year | 79,729 | 76,640 | |
| Additional investments | 9,938 | ||
| Consolidation of Dalekovod OIE d.o.o. | (9,780) | ||
| Share in profit/(loss) | (3,607) | 2,533 | |
| Other | (5,608) | 398 | |
| At end of year | 70,514 | 79,729 |
During 2012, the Group invested an additional amount of HRK 9,938 thousand in these joint ventures via conversion of receivables to equity.
The list of investments in joint ventures is as follows:
| Dalekovod Group | Holding in % | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Velika Popina d.o.o. | 18,075 | 21,950 | 50 | 50 |
| Eko d.o.o. | 52.421 | 57,761 | 50 | 50 |
| OIE Makedonija | 18 | 18 | 50 | 50 |
| Total | 70,514 | 79.729 |
Financial information of joint ventures is summarised below:
| (in thousands of HRK) | Assets | Liabilities | Revenues Net galn / (loss) | |
|---|---|---|---|---|
| At 31 December 2013 | ||||
| Velika Popina d.o.o. | 107 567 | 75,284 | 22,825 | (3,159) |
| Eko d.o.o. | 415,702 | 323,251 | 86,320 | (4,055) |
| OIE Makedonija | 19 | (5) | ||
| 523,288 | 398,535 | 109,145 | (7,219) | |
| At 31 December 2012 | ||||
| Velika Popina d.o.o. | 119,453 | 84.384 | 20,102 | 2,253 |
| Eko d.o.o. | 443,679 | 347,174 | 85,340 | 3,393 |
| OIE Makedonija | 24 | (10) | ||
| 563,156 | 431,558 | 105,442 | 5.636 |
Joint venture OIE Macedonia did not start with business operation.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 21 - AVAILABLE-FOR-SALE FINANCIAL ASSETS
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| At beginning of year | 42,809 | 40,198 | 42,786 | 38,090 |
| Increase /V | 0 | 18,171 | 18,147 | |
| Decrease | (2,862) | (753) | ||
| Adjustment to fair value /ii/ | (14,536) | (12,698) | (14,526) | (12,698) |
| At end of year | 28,273 | 42,809 | 28,260 | 42,786 |
/i/ During 2012, in exchange for bad debts the Company acquired rights of the Ministry of Finance and the Ministry of Public Works, Reconstruction and Construction. These rights include rights to certain shares/holdings from the portfolio of the Agency for State Property Management.
/ii/ At 31 December 2013, the Company performed a valuation of available for sale financial assets and adjusted them to fair value. The fair value loss of HRK14,526 thousand was recognised in the income statement (note 10). During 2012, the fair value loss of HRK 9,283 thousand was recorded in revaluation reserves within other comprehensive income (note 28) and the remaining fair value loss of HRK 3,415 thousand was recorded in the income statement (note 10).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 22 - FINANCIAL INSTRUMENTS BY CATEGORY
The accounting policies for financial instruments have been applied to the line items below:
Group
| (in thousands of HRK) | Note | Loans and receivables |
at fair value through profit or oss |
Available for sale financial assets |
Total |
|---|---|---|---|---|---|
| 31 December 2013 | |||||
| Financial assets | |||||
| Trade receivables | 25 | 201,411 | 201,411 | ||
| Receivables by construction contracts | 25 | 42,492 | - | 42,492 | |
| Loans receivable and deposits | 23, 25 | 61,140 | 61,140 | ||
| Interest receivable Receivables from other foreign business units for unpaid profit and loans |
25 | 317 | 317 | ||
| receivable | 25 | 51,122 | 51,122 | ||
| Other receivables | ટક | 39,170 | - | 39,170 | |
| Available for sale financial assets Financial assets at fair value through |
21 | - | - | 28,273 | 28,273 |
| profit or loss | 26 | 23 | 28 | ||
| Cash and cash equivalents | 27 | 30.069 | 30,069 | ||
| Total | 425,721 | 28 | 28,273 | 454.1792 |
| (in thousands of HRK) | Note | Other financial liabilities |
|
|---|---|---|---|
| 31 December 2013 | |||
| Financial liabilities | |||
| Loans | 29 | 942,466 | |
| Commercial papers | 29 | 43,278 | |
| Finance lease | 29 | 141.290 | |
| Trade payables | 30 | 355.972 | |
| Other payables | 30 | 103,869 | |
| Total | 1,586,875 |
Financial instruments do not include transactions with employees, receivables/payables for contributions, taxes and receivables/payables for advances received.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 22 - FINANCIAL INSTRUMENTS BY CATEGORY (continued)
Group
| (In thousands of HRK) | Note | Loans and receivables |
Financial assets at fair value through profit or loss |
Available for sale financial assets |
Total |
|---|---|---|---|---|---|
| 31 December 2012 | |||||
| Financial assets | |||||
| Trade receivables | 25 | 355,242 | 355,242 | ||
| Receivables by construction contracts | 25 | 53,333 | 53,333 | ||
| Loans receivable and deposits | 23, 25 | 35,590 | - | 35,590 | |
| Interest receivable Receivables from other foreign business units for unpaid profit and loans |
25 | 1,832 | 1,832 | ||
| receivable | 25 | 28,434 | 28,434 | ||
| Other receivables | 25 | 41,631 | - | 41,631 | |
| Available for sale financial assets Financial assets at fair value through |
21 | 42,809 | 42,809 | ||
| profit or loss | 26 | -124 | -12-1 | ||
| Cash and cash equivalents | 27 | 17.884 | 17,884 | ||
| Total | 533,946 | -124 | 42,809 | 577,179 |
| (in thousands of HRK) | Note | Other financial liabilities |
||
|---|---|---|---|---|
| 31 December 2012 | ||||
| Financial liabilities | ||||
| Loans | 29 | 916.424 | ||
| Commercial papers | 29 | 44,116 | ||
| Finance lease | 29 | 140,304 | ||
| Trade payables | 30 | 387,681 | ||
| Other payables | 30 | 128,756 | ||
| Total | 1,617,281 |
Financial instruments do not include tax payables to employees, taxes and contributions and advances received.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 22 - FINANCIAL INSTRUMENTS BY CATEGORY (continued)
Company
| (in thousands of HRK) 31 December 2013 |
Note | Loans and receivables |
Financial assets at fair value through profit or oss |
Available for sale financial assets |
Total |
|---|---|---|---|---|---|
| Financial assets | |||||
| Trade receivables | 25 | 175,541 | 175,541 | ||
| Receivables by construction contracts | 25 | 40,779 | 40,779 | ||
| Loans receivable and deposits | 23, 25 | 86,558 | - | 86,558 | |
| Interest receivable Receivables from other foreign business units for unpaid profit and loans |
25 | 5,090 | 5,090 | ||
| receivable | 25 | -15.758 | 45,758 | ||
| Other receivables | 25 | 31,170 | 31,170 | ||
| Available for sale financial assets Financial assets at fair value through |
21 | 28,260 | 28,260 | ||
| profit or loss | 26 | 23 | 28 | ||
| Cash and cash equivalents | 27 | 5,547 | 5,547 | ||
| Total | 390,443 | 28 | 28,260 | 418,731 |
| (in thousands of HRK) | Note | Other financial liabilities |
||
|---|---|---|---|---|
| 31 December 2013 | ||||
| Financial liabilities | ||||
| Loans | 29 | 645,375 | ||
| Commercial papers | 29 | 57,005 | ||
| Finance lease | 29 | 140-349 | ||
| Trade payables | 30 | 347,546 | ||
| Other payables | 30 | 7-2491 | ||
| Total | 1,264,566 |
Financial instruments do not include tax payables to employees, taxes and contributions and advances received.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 22 - FINANCIAL INSTRUMENTS BY CATEGORY (continued)
Company
| (in thousands of HRK) | Note | Loans and receivables |
Financial assets at fair value through profit or loss |
Available for sale financial assets |
Total |
|---|---|---|---|---|---|
| 31 December 2012 | |||||
| Financial assets | |||||
| Trade receivables | 25 | 231,435 | 231,435 | ||
| Receivables by construction contracts | 25 | 53,333 | 53,333 | ||
| Loans receivable and deposits | 23, 25 | 91,543 | - | 91,543 | |
| Interest receivable Receivables from other foreign business units for unpaid profit and loans |
25 | 4,101 | 4,101 | ||
| receivable | 25 | 21,539 | 21,539 | ||
| Other receivables | 25 | 30,949 | 30,949 | ||
| Available for sale financial assets Financial assets at fair value through |
21 | 42.786 | 42,786 | ||
| profit or loss | 26 | 28 | 28 | ||
| Cash and cash equivalents | 27 | 9,692 | 9,692 | ||
| Total | 442,592 | 28 | 42,786 | 485,406 |
| (in thousands of HRK) | Note | Other financial llabilities |
|---|---|---|
| 31 December 2012 | ||
| Financial Ilabilities | ||
| Loans | 29 | 668.841 |
| Commercial papers | 29 | 56.759 |
| Finance lease | 29 | 139,456 |
| Trade payables | 30 | 338.427 |
| Other pay ables | 30 | 94 085 |
| Total | 1,298,461 |
Financial instruments do not include tax payables to employees, taxes and contributions and advances received.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 23 - LOANS AND RECEIVABLES
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Long-term deposits | 2566 | 1.827 | 2.566 | 1.827 |
| Long-term guarantee deposits | 17.096 | 18.738 | 15.890 | 18.738 |
| Long-term loans receivable: | ||||
| - loans to subsidiaries | 1.402 | 1.385 | ||
| - housing loans and other loans to employees | 2.722 | 2318 | 1.272 | 2.229 |
| - loans to other companies | 8.600 | 11-566 | 8.600 | 8.660 |
| Impairment of long-term deposits and loans receivable |
(10.055) | (8.660) | (10.055) | (8.660) |
| Total long-term deposits and loans receivable | 20.929 | 25.789 | 19675 | 24.179 |
| Current portion of long-term loans and deposits (note 25) |
(237) | (1.385) | (1.639) | (1.385) |
| Long-term loans and deposits given | 20.692 | 24.404 | 18.036 | 22.794 |
Deposits
Deposits are denominated in HRK. During the year, the effective interest rates for deposits ranged from 0.5% to 3.5%. Long-term deposits mature in 2015.
Housing loans
Housing loans to employees carry an average effective interest rate of 6%, and are repayable over 2 to 25 years through deductions from employee salaries. Housing loans are denomined in HRK with currency clauses (EUR).
Loans to other companies
During 2008, the Company concluded a Loan Agreement with TPN Sportski grad from Split, according to which a revolving loan facility was agreed in the total amount of HRK 9,000 housand, and the debtor drew down HRK 8,660 thousand on this facility. The loan was granted with a discount rate which was 9% annually at the date of Agreement. The four mas grained while in the installinen in 2008, while interest is calculated over the entire period and will be repaid from 31 October 2010. In the to the uncertainty of receivables collection under this loan, the Company impaired this boarduring 2012.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 23 - LOANS AND RECEIVABLES (continued)
Movements in the provision for impairment of long-term deposits and loans receivable are as follows:
| Dalekovod Group | Datekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| At I January | 8,660 | 8.660 | ||
| Collection of impaired receivables (note 9) | (60) | (60) | ||
| Provision for impairment of trade receivables and other financial assets (note 9) |
1.455 | 8.660 | 1.455 | 8.660 |
| At 31 December | 10,055 | 8,660 | 10,055 | 8,660 |
NOTE 24- INVENTORIES
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Raw materials | 57,375 | 52,937 | 7,135 | 6,329 |
| Finished and semi-finished goods and work in progress | 49,818 | 76,385 | 963 | 1,954 |
| Spare parts and small inventories | 1.572 | 5,437 | 1.346 | 1,819 |
| Trade goods | 9.099 | 17,747 | 237 | |
| Advances for inventories | 305 | 274 | ||
| 118,169 | 152,780 | 9,444 | 10,339 |
Cost of raw materials and supplies recognised in the income statement is disclosed in note 7.
Impairment of inventories recognised in the income statement is disclosed in note 9.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 25 - TRADE AND OTHER RECEIVABLES
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Domestic trade receivables | 231,436 | 404,466 | 226,119 | 275,065 |
| Foreign trade receivables | 78,656 | 45,866 | 39,875 | 44,366 |
| Impairment of trade receivables | (108,681) | (95,090) | (90,453) | (87,996) |
| 201,411 | 355,242 | 175,541 | 231,435 | |
| Receivable from customers for contract work | 42,492 | 53,333 | 40,779 | 53,333 |
| Guarantee deposits - current portion | 32,189 | 6.567 | 15,021 | 6,567 |
| Short-term deposits /uil/ | 7,200 | 3,270 | ||
| Current portion of long-term loans (note 23) | 237 | 1,385 | 1,639 | 1,385 |
| Loans to subsidiary (note 32) | 63,093 | 71,153 | ||
| Other short-term loans /i/ | 3.279 | 4.964 | 2,913 | 2,913 |
| Interest receivable | 6,806 | 4,832 | 11,579 | 9.605 |
| Receivables from other foreign business units for unpaid profit and loans receivable /iv/ |
51,122 | 28,434 | 45,758 | 21,539 |
| Other receivables | 48,039 | 49,734 | 40,039 | 40,257 |
| Impairment of other financial assets | (17,815) | (16. 103) | (29.502) | (28,081) |
| Total financial assets | 374.960 | 491,658 | 366,860 | 410,106 |
| Advances /ii/ | 23,787 | 35,462 | 12,645 | 14,780 |
| Receivable from employees | 373 | 646 | 210 | 507 |
| VAT receivable | 2.676 | |||
| Outstanding VAT receivable | 5,690 | 2,017 | 5,082 | 1,207 |
| Prepaid expenses | 4,870 | 5,600 | 4,486 | 2,952 |
| Impairment of non-financial assets | (6,247) | (6,247) | (6,247) | (6,247) |
| Total non-financial assets | 31,104 | 37,478 | 16,176 | 13,199 |
| 406,064 | 529,136 | 383,036 | 423,305 |
/i/ Other short-term loans and loans to subsidiaries represent primarily trade receivables converted to loans and loans given to sports organisations with annual interest rates from 3%-6%. The loans re generally granted for periods from 3 to 12 months and are secured by bills of exchongs and promissory notes.
/ii/ Advances were granted to suppliers for the purchase of material and equipment, as well as for project design services.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 25 - TRADE AND OTHER RECEIVABLES (continued)
/iii/ Short-term deposits are contracted with fixed maturities and variable interest rates that are approximately equal to market rates. All deposits have maturities of one year after the balance sheet date. During the year, the effective interest rate for deposits ranged of one year and 110% to 2.25%.
/iv/ During 2012, the Company changed the method of monitoring foreign branch offices. In the financial statements for the year 2011, assets and liabilities of certain branch offices were recorded on a gross basis, while in 2012 they were recorded on a net basis. The effect of these changes can be seen in the table below:
| (in thousands of HRK) | 2013 | 2012 |
|---|---|---|
| Intangible assets | 53 | 57 |
| Plant and equipment | 6.150 | 4,962 |
| Loans and receivables | 1.460 | 16.406 |
| Inventories | 7.255 | 1,655 |
| Trade receivables | 95,268 | 38,173 |
| Other receivables | 60 358 | 47,349 |
| Cash | 46.897 | 12,280 |
| Total assets | 217,441 | 120,882 |
| Non-current liabilities | 1.321 | 67 |
| Trade payables | 70, 142 | 67,514 |
| Other payables | 100,220 | 31,762 |
| Total Ilabilities | 171,683 | 99,343 |
| Net receivables | 45,758 | 21,539 |
The ageing of trade receivables is as follows:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Not due | 70.391 | 205,830 | 34,196 | 11,624 |
| Up to 90 days | 47,468 | 98.859 | 20.358 | 73,619 |
| From 91 to 180 days | 39.156 | 10.998 | 45,874 | 10,803 |
| Over 180 days | 44.396 | 39,555 | 75,113 | 35.389 |
| 201,411 | 355,242 | 175,541 | 231.435 |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 25- TRADE AND OTHER RECEIVABLES (continued)
Movements on the provision for impairment of trade receivables and other financial assets are as follows:
| (in thousands of HRK) | Dalekovod Group | Dalekovod d.d. | ||
|---|---|---|---|---|
| 2013 | 20172 | 2013 | 2012 | |
| At 1 January | 111,193 | 34.121 | 116,077 | 26,723 |
| Impairment of trade receivables and other financial | ||||
| assets (note 9) | 18.507 | 78,499 | 5,211 | 89,570 |
| Collected amounts (note 9) | (1,957) | (1,418) | (351) | (216) |
| Receivables written-off during the year as uncollectible | (1,247) | (9) | (982) | |
| At 31 December | 126,496 | 111,193 | 119,955 | 116,077 |
| Direct write-off of trade receivables and other financial | ||||
| assets (note 9) | 874 | 30,206 | 350 | 28,343 |
The carrying amounts of the Group's and the Company's financial assets are denominated in the following currencies:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| HRK | 227,922 | 366.734 | 263,997 | 344,231 |
| HUR | 139,690 | 110.847 | 53.410 | 52,090 |
| Other currencies | 7.348 | 14.077 | 49,453 | 13,785 |
| Total | 374,960 | 491,658 | 366,860 | 410,106 |
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group or the Company hold collaterals as security.
The fair value of trade receivables approximates their carrying amount.
NOTE 26 - FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets at fair value through profit or loss relate to investment in domestic cash funds.
As at 31 December 2013, the fair value of these assets in the Group amounted to HRK 28 thousand (2012: HRK 424 thousand), and in the Company to HRK 28 thousand (2012: HRK 28 thousand). During 2013 and 2012, the Company did not realise any gain on the fair valuation of asses.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 25 - CASH AND CASH EQUIVALENTS
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Cash at bank and petty cash in domestic currency | 6,862 | 3,837 | 3,087 | 3.067 |
| Cash at bank and petty cash in foreign currency | 11,919 | 14.047 | 2.460 | 6.625 |
| Deposits at bank in domestic currecny | 1.239 | |||
| Deposits at bank in foreign currecny | 10.029 | |||
| 30,069 | 17,884 | 5,547 | 9.692 |
As at 31 December 2013, the average effective interest rate for short-term deposits with banks was 0.72% (2012: no deposits held at bank that are deposited on a period less than 3 posits whiles).
Cash and cash equivalents are denominated in the following currencies:
| (in thousunds of HRK) | Dalekovod Group | Dalekovod d.d. | ||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| EUR | 19,283 | 13,126 | 2,460 | 5,872 |
| NOK | 1,842 | |||
| UAH | 115 | 168 | ||
| Other currencies | 728 | 753 | 753 | |
| Total | 21,968 | 14,047 | 2,460 | 6,625 |
NOTE 28 - SHAREHOLDERS' EQUITY
Share capital
The share capital as at 31 December 2013 amounts to HRK 286,726 thousand (2012; HRK 286,726 thousand) and consists of 2,867,265 shares. Nominal value of a share amounts to HRK 100.
The structure of shareholders as at 31 December is as follows:
| Number of shares | Holding | ||||
|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||
| Individuals | 1.482.238 | 1.430.432 | 51,70% | 49.89% | |
| Pension funds | 638.891 | 638.891 | 22,28% | 22,28% | |
| Banks | 315.036 | 338.751 | 10,99% | 11,81% | |
| Telegra d.o.o. | 164.753 | 16-153 | 5,75% | 5.75% | |
| Others | 222,413 | 250.504 | 7,76% | 8,74% | |
| Treasury shares | 43.934 | 43.934 | 1.53% | 1.53% | |
| 2.867.265 | 2.867.265 | 100,00% | 100,00% |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 28-SHAREHOLDERS' EQUITY (continued)
Share premium
Share premium as at 31 December 2013 amounts to HRK 80,479 thousand (2012: HRK 80,479 thousand) and it arose by issuance of shares in 2011 when the Company realised a premium of HRK 83,151 thousand, which was reduced by the cost of issuing new shares of HRK 2,672 thousand.
Legal reserves
The legal reserve is required under Croatian law and must be built up at a minimum of 5% of the profit for the year until the total legal reserve reaches 5% of the Company's share capital. Legal reserves are not distributable.
Treasury shares
As at 31 December 2013, the Company owns 43,934 treasury shares (2012: 43,934 treasury shares).
Statutory and other reserves
During 2012, according to the decision of the Company's Annual General Meeting and the reallocation of loss, the statutory and other reserves were decreased by HRK 277,314 themsed other reserves consist of profits from previous periods set aside by the decision of the General Maati: Oand treasury shares reserves.
Revaluation reserves
As at 31 December 2012, the Group and the Company remeasurd to fair value its available for sale financial assets (shares and interests in an investment fund - note 21) and, consequently a reograms a decrease in revaluation reserves of HRK 9,282 thousand
During 2011, the Group and the Company performed a revaluation of land and buildings on the sites in Velika Gorica and Žitnjak based on the assessment of an authorised extransmissen The Stusi value of land and buildings at the site in Velika Gorica was determined using the revenue method based on future rental fees, while the fair value of land and buildings at the site in Zitter was determined using the cost method based on active market prices and recent arm's length market transactions. The increase in the value of land and buildings in the amount of HRK 50,019 thoussand was recorded in other comprehensive income. At the end of 2012, the subsidiary Dalekovod TKS from Doboj performed a revaluation of land and buildings and increased the value of its non-current tangible assets in the amount of HRK 14,425 thousand (note 16) which was vecorded in the statement of comprehensive income. During 2013 in accordance with business results and insolvency of Dalekovod TKS and in accordance with market situation impairment was recognised and the revaluation reserve utilised in full amount.
During 2013 deferred tax liability related to revaluation in the amount of HRK 10.004 thousand have been recognised resulting with the revaluation reserve of HRK 40.015 thousand at 31 December.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 29 - BORROWINGS
| Average Interest |
Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|---|
| (in thousands of HRK) | rate | 2013 | 2012 | 2013 | 2012 |
| Non-current | |||||
| Loans from banks and subsidiaries | 6.08% | 10,059 | 42.449 | 34,402 | |
| Finance lease /i/ | 5.14% | 1,480 | 113,527 | વેચે છે. | 112,679 |
| 11,539 | 155,976 | 969 | 147,081 | ||
| Current | |||||
| Loans from banks and subsidiaries | 7.19% | 932,407 | 873,975 | 645,375 | 634,439 |
| Commercial papers | 8.75% | 43,278 | 44,116 | 57,005 | 56,752 |
| Finance lease /i/ | 5.14% | 139,810 | 26, 177 | 139,380 | 26,777 |
| 1,115,495 | 944,868 | 841,760 | 717,968 | ||
| Total borrowings | 1,127,034 | 1,100,844 | 842,729 | 865,049 |
/i/ Gross liabilities under the finance lease - minimum lease payments:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Up to I year | 147,085 | 31,858 | 146,595 | 31,858 |
| Between I to 5 years Over 5 years |
12,367 | 126.359 e |
11,761 | 125,375 |
| 159,452 | 158,217 | 158.356 | 157,233 | |
| Future finance costs under finance lease | (18,162) | (17,913) | (18,007) | (17,777) |
| Present value of liabilities under finance lease | 141,290 | 140,304 | 140,349 | 139,456 |
During 2012, the Company issued commercial papers in the amount of HRK 56.7 million for a period of 364 days from the day of issuance with an average annual nominal yield of 8.75% Commercial papers have not been repaid.
Bank borrowings are secured with bills of exchange and by mortgage over property, plant and equipment and investment property (notes 16 and 17).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 29 - BORROWINGS (continued)
The Group's borrowings totalling HRK 1,008,899 thousand (2012: HRK 714,569 thousand) are exposed to interest rate changes, since the contracted interest rate is variable. Other borrowings in the amount of HRK 118,135 thousand (2012: HRK 386,275thousand) have fixed interest rates and are exposed to interest rate changes upon maturity of the principal.
The borrowings are denominated in the following currencies:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| FAUR | 669,982 | 679.780 | 369,851 | 407,460 |
| HRK | 457,052 | 421,064 | 472,878 | 457,589 |
| Total | 1,127,034 | 1,100,844 | 842,729 | 865,049 |
The maturity of long-term borrowings is as follows:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Between I to 5 years | 10,059 | 42,449 | C | 34,402 |
| Over 5 years | 0 | t | ||
| 10,059 | 42,449 | 34,402 |
The pre-bankruptcy settlement (note 34) defined new debt exposure of the Company (consequently of the Group as well), as well as the new repayment plans of borrowings.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 30 - TRADE AND OTHER PAYABLES
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| Domestic trade payables | 332,432 | 356,086 | 335,207 | 318,039 |
| Foreign trade payables | 23,540 | 31,595 | 12,339 | 20,388 |
| 355,972 | 387,681 | 347,546 | 338,427 | |
| Interest payable | 49,760 | 44,092 | 26,784 | 27,332 |
| Bills of exchange | 919 | 919 | 919 | 919 |
| Dividends payable (note 14) | 1,900 | 1.900 | 1,900 | 1,900 |
| Contracted liabilities from acquisition | 2,810 | 2810 | 2,810 | 2,810 |
| Other accruals and liabilities | 25,625 | 56,767 | 19,023 | 39,756 |
| Due to banks arising from collected guarantees | 22,855 | 22,268 | 22,855 | 22,268 |
| Financial Habilities | 459,841 | 516,437 | 421,837 | 433,412 |
| Advances | 26,536 | 54.600 | 21,371 | 31.859 |
| Due to employees | 26,075 | 18.421 | 9,175 | 9,504 |
| VAT payable | 13,274 | 13.099 | 12,460 | 8,066 |
| Taxes and contributions | 12,784 | 16.370 | 7,043 | 4,354 |
| Unused vacation days | 6.363 | 3,614 | 3,716 | 3,614 |
| Non-financial Habilities | 85,032 | 106,104 | 53,765 | 57,397 |
| 544,873 | 622,541 | 475,602 | 490,809 |
The Group's and the Company's financial liabilities are denominated as follows:
| Dalekovod Group | Dalekovod d.d. | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2013 | 2012 | 2013 | 2012 |
| HRK | 346,877 | 409,829 | 377,560 | 377,640 |
| EUR | 104.918 | 103.856 | 43,366 | 54.867 |
| USD | 571 | 649 | 239 | 649 |
| Other currencies | 7.45 | 2 103 | 672 | 256 |
| Total | 459,841 | 516,437 | 421,837 | 433,412 |
The pre-bankruptcy settlement (note 34) defined new amounts of trade payables and liabilities to other creditors of the Company (consequently of the Group as well), as well as new delt maturities.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 31 - PROVISIONS
Group
| (in thousands of HRK) | Jubilee awards |
Severance payments |
Other provisions |
Total |
|---|---|---|---|---|
| At 1 January 2013 | 4,104 | 2,693 | 1,601 | 8,398 |
| Increase | 397 | 139 | 7,087 | 7,623 |
| Decrease | (195) | (491) | (1.613) | (2,900) |
| At 31 December 2013 | 3,705 | 2,341 | 7,075 | 13,121 |
| Analysis: | 2013 | 2012 | ||
| Non-curresnt portion | 12,090 | 7,073 | ||
| Current portion | 1.031 | 1,325 | ||
| Total | 13,121 | 8,398 | ||
| Company | ||||
| lin thereamende = UDV | Jubilee | Severance | Other |
| 1110 Cloudinational Of Claur) | awards | payments | provisions | Total |
|---|---|---|---|---|
| At 1 January 2013 | 2,257 | 1,457 | 3,714 | |
| Increase | 44 | 7.014 | 7,014 | |
| Decrease | (388) | (275) | (663) | |
| At 31 December 2013 | 1,869 | 1,182 | 7,014 | 10,065 |
| Analysis: | 2013 | 2012 | ||
| Non-curresnt portion | 9,570 | 3,488 | ||
| Current portion | -195 | 226 | ||
| Total | 10,065 | 3,714 |
Provisions for jubilee awards and severance payments
These provisions relate to estimated long-term employee benefits for jubilee awards and severance payments at the time of retirement according to the Collective bargaining agreement. The Isbility is calculated by independent actualies. Significant assumptions used by the actuary are as follows: an annual leaver's rate of 5.30% for the Group, and 2.0% for the Company (2012: Group 5.68%, Company 2.00%), an annual discount rate of 5.4% (2012: 4.4%); the age of retirement is determined for each individual employee taking into account their present age and the overall realised years of service (the average age of retirement used in the calculation is 61 years for men and 60 years for women).
Other provisions
Other provisions relate to provisions for court cases and additional tax liability as per Tax authorities decision.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 32 - RELATED PARTY TRANSACTIONS
Parties are considered to be related if one of the parties has the power to exercise control over the other party, is under common control or if it has significant influence over the other party's operations.
In the ordinary course of business operations, the Company enters into related party transactions, which include the purchase of goods and services and loans. The nature of services with related parties, is based on arm's length terms. In addition to the subsidiaries presented in note 18, associates presented in note 19 and joint ventures presented in note 20, the Company's related parties include its Management Board and executive directors. The Company has no ultimate owner.
Items in the income statement for the year and balances in the statement of financial position at the end of the year that relates to subsidiaries are as follow:
Revenues and expenses
| (in thousands of HRK) | 2013 | 2012 |
|---|---|---|
| Sales revenue | 49,489 | 131,865 |
| Rental income | 4.613 | 1,322 |
| Interest income | 2,051 | 2,281 |
| Other operating income | 4,350 | 1.215 |
| 60,503 | 136,683 | |
| Cost of raw materials and supplies | 26.149 | 23,075 |
| Subcontractor services | 39,018 | 58.275 |
| Other operating expenses | 696 | 235 |
| Interest expesne and foreign exchange losses | રતેર | 943 |
| 66,459 | 82,578 |
Receivables, payables and loans
| (in thousands of HRK) | 2013 | 2012 |
|---|---|---|
| Trade receivables | 62,518 | 51,927 |
| Other receivables | 6,974 | 4,773 |
| Loans receivable | 52,807 | 72,537 |
| 122,299 | 129,237 | |
| Trade payables | 66,671 | 48,978 |
| Interest payable | 77 | 80 |
| Commercial papers liability | ||
| Loans payable | 13,727 | 12,636 |
| 38.681 | 46,927 | |
| 119,156 | 108,621 |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 32 - RELATED PARTY TRANSACTIONS (continued)
Items in the income statement for the year and balances in the statement of financial position at the end of the year that relates to associates are as follow:
Revenues and expenses
| (in thousands of HRK) | 2013 | 2012 |
|---|---|---|
| Sales revenue | ||
| Interest income | 393 | |
| 17 | ||
| 393 | 17 | |
| Receivables, payables and loans | ||
| (in thousands of HRK) | 2013 | 2012 |
| Trade receivables | 672 | 517 |
| Loans receivable | 312 | 312 |
| 984 | 829 | |
| Trade payables | ||
| Loans payable | 4,495 6 |
4,590 |
| 1,875 | 1,875 | |
| 6.370 | 6.465 |
The Company has no transactions with joint ventures
In addition to the Company, other Group members have dealings with associates. Items in the income statement for the year and balances in the statement of financial position of the Group at the end of the year that arise from transactions with associates are as follow:
Revenues and expenses
| (in thousands of HRK) | ||
|---|---|---|
| 2013 | 2012 | |
| Sales revenue | 3,707 | 4,442 |
| Other income | 41 | |
| Interest income | 17 | |
| 3,707 | 4,500 | |
| Cost of raw materials and supplies | 3,194 | 4,292 |
| Subcontractor services | 44 | 63 |
| 3,238 | 4,355 | |
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 32 - RELATED PARTY TRANSACTIONS (continued)
Receivables, payables and loans
| 2013 | 2012 |
|---|---|
| 3,194 | |
| 312 | 312 |
| 1,153 | 3,506 |
| 10,572 | |
| 1,875 | 1,875 |
| 8,588 | 12,447 |
| 841 6,713 |
Certain Group members have dealings with joint ventures as well. Items in the income statement for the year and balances in the statement of financial position of the Group ut the end of the year that arise from transactions with joint ventures are as follow:
Revenues and expenses
| (in thousands of HRK) | 2013 | 2012 |
|---|---|---|
| Sales revenue | 5,500 | 5,800 |
| 5,500 | 5,800 | |
| Receivables, payables and loans | ||
| (in thousands of HRK) | 2013 | 2012 |
| Trade receivables | 3.075 | 2.000 |
| 3,075 | 2,000 |
Transactions with key management
Key management consists of Management Board and Executive Directors. Remuneration to key management at Group's level amounted to HRK 16,461 thousand (2012: HRK 12,476 thousand), while remuneration at the level of the Company amounted to HRK 12,722 thousand (2012-17,447 thousand).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 32 - CONTINGENCIES AND COMMITMENTS
As at 31 December 2013, the Group has numerous contracts for the provision of construction services which have commenced, but have not been completed. Costs to be incurred in the future arising from these contracts are estimated in the amount of HRK 684,214 thousand (2012: HRK 1,101,090 thousand).
Future minimum lease payments under non-cancellable operating lease are as follows:
| (in thousands of HRK) | Dalekovod Group | Dalekovod d.d. | ||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| Up to I year | 895 | રેજેવ | 802 | રુજર |
| Between I to 5 years | 876 | 144 | 876 | 144 |
| Over 5 years | ||||
| 1,771 | 737 | 1,771 | 737 |
Future As at 31 December 2013, the Group and the Company are exposed to potential liabilities arising from issued bank guarantees (as collateral for collection and security for the quality of work performed) in the total amount of HRK 432,614 thousand and HRK 401,621 thousand (2012: HRK 494.179 thousand Group and HRK 491,058 thousand Company). They are additionally exposed as subsidiaries' co-debtors in the total amount of HRK 496,599 thousand (2012; HRK 523,574 thousand).
In the ordinary course of operations, the Group was plaintiff and defendant in several legal disputes. Based on Management Board and legal counsel believes, provision have been created for those court cases that with losses and were those losses can be estimated (note 31). In addition to those court court cases for which provision have been made there are some legal disputes will not result in significant losses.
NOTE 34 - EVENTS AFTER THE BALANCE SHEET DATE
In October 2012, the Law on Financial Operations and Pre-Bankruptcy Settlement came into force (the "Law"), which clearly defines the conditions under which companies must initiate pre-bankruptcy procedures. Shortly thereater, Dalekovod d.d. became insolvent as the value of assets did not cover in the series and of the Of liquid assets of approximately HRK 169.1 million). It was estimated that in the coming period the Company would not be able to properly fulfil its due obligations. As a result on 20 December 2012, the Company initiated the pre-bankruptcy settlement procedure before the competent institutions (the Financial Agency - FINA).
Financial restructuring measures include the following activities:
- · Partial transfer of bank debt into "mezzanine" financing (payables with the conditional right of conversion into equity or transfer to senior debt under special conditions).
- · Long-term rescheduling of outstanding debt (outside the mezzanine) towards banks and other financial institutions.
- · Conversion of part of debt to creditors (suppliers, state) into equity.
- · Release of certain co-debtor relations encumbering the Company or its subsidiaries.
- Sale of non-core assets.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE 34 - EVENTS AFTER THE BALANCE SHEET DATE (continued)
- · Decrease in share capital for the purpose of covering accumulated losses.
- · Capital increase in the amount of HRK 210 million through payment in cash to finance business development (HRK 150 million) and partial financing of working capital (HRK 60 million).
The effects of financial restructuring measures are as follows:
- · Decrease in the Company's indebtedness (through mezzanine financing and the conversion of payables into equity) of HRK 338 million.
- · Rescheduling of the remaining short-term debt into long-term debt, including financial lease in liabilities, totalling HRK 434 million.
- · Write-off/forgiveness of interest and financing fees in the amount of HRK 61 million.
- · Decrease in liabilities arising from co-debtor guarantees totalling HRK 1,525.9 million.
Furthermore, operational restructuring measures were proposed that include work process optimisation, an increase in project execution control, as well as the reorganisation of processori aimed at increasing targeted and realised margins on projects and reducing expenses of operating support processes and overhead costs.
Based on the aforementioned measures, a five-year business plan, including cash flows, was prepared which anticipates a gradual increased a revenues (7.8% annually), concentrating on the segment of power projects with a four on the international market provided that bank guarantees are secured for the proper execution of work as well as advances on foreign projects. The plan envisages an improvement of EBIDTA margin from 1.2% to 9.5%. The business plan does not take into account the effects of fair valuing of the "Mezzanine" financing nor its classification into debt and/or equity.
Since the date of initiating the pre-bankruptcy settlement procedure, the Company was involved in negotiations with all creditors in order to obtain their acceptance of the Financial Restructuring Plan. On 9 April 2013, FINA issued a decision stating the Financial Restructuring Plan is considered to be accepted and that it is to be implemented in accordance with the provisions of the Law. The prebankruptcy settlement procedure was formally completed at 14 February 2014 by issuance of the final legally valid decision.
In accordance with financial restructuring measures outlined in the pre-bankruptcy settlement, on 28 March 2014 share capital was increased by payment of cash contribution of HRK 150 million by the investor Konsolidator d.o.o. and by contribution in rights made by converting the claims of the claims of the creditors in the pre-bankruptcy settlement arguinst the Company to share of the claims of the 8,521,680. The Management Board is authorized by the General Assembly to increase the Company's share capital up to HRK 60 million in cash contributions by issuing new shares having a nominal value of HRK 10 each, to the exclusion of the pre-emption right granted to Konsolidator d.o.o. Both the Company and Konsolidator d.o.o. support increase in share capital.
Dalekovod TKS a.d. Doboj
Further to the prepared Restructuring Plan for Dalekovod d.d., the conclusion has been made that business expenses and debts of Dalekovod TKS a.d. Doboj, incurred from 2009 to 2012, were too large for the production to continue so the Management Board of Dalekovod TKS a.d. Doboj has submitted the Proposal to initiate bankruptcy proceedings to the Commercial Court in Doboj on 28 April 2014.