The Company’s accounting books and records are maintained and the financial statements were prepared in accordance with the Accounting Act 563/1991 Coll., as amended; the Regulation 500/2002 Coll. which provides implementation guidance on certain provisions of the Accounting Act for reporting entities that are businesses maintaining double-entry accounting records, as amended, and Czech Accounting Standards for Businesses, as amended.
The accounting records are maintained in compliance with general accounting principles, specifically the historical cost valuation basis, the accruals principle, the prudence concept, and the going concern assumption.
The Company’s financial statements have been presented as of the balance sheet date, ie 31 December 2012. These financial statements are presented in thousands of Czech crowns (“CZK thousand”), unless stated otherwise.
2.1. Tangible and Intangible Fixed Assets
Fixed assets include assets with an estimated useful life greater than one year and an acquisition cost greater than CZK 40 thousand in respect of tangible assets, and CZK 60 thousand in respect of intangible assets, on an individual basis. Fixed assets include assets with the cost between CZK 10 thousand and CZK 40 thousand if they have the characteristics of fixed assets and their useful life exceeds one year. Purchased tangible and intangible fixed assets are stated at cost less accumulated depreciation and provisions, if any.
The valuation differences on acquired assets arose from the demerger of Nemocnice Podlesí a.s. through spin-off of part of its net assets and the amalgamation of this part with Agel a.s. and are depreciated on a straight line basis over 180 months.
Assets acquired through purchase after the expiration of the lease contract are stated at replacement cost. The cost of fixed asset improvements exceeding CZK 40 thousand for individual tangible assets and intangible assets for the taxation period, increases the acquisition cost of the related fixed asset.
Depreciation is charged so as to write off the cost of tangible and intangible fixed assets, other than land and assets under construction, over their estimated useful lives on the following basis:
Type of assets Depreciation method Number of years
Software Straight line 3
Office and copying technology Straight line 3
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Footnotes to the Financial Statements
for the Year Ended 31 December 2012
Type of assets Depreciation method Number of years
Vehicles Straight line 5
Constructions Straight line 30
Furniture and fixtures Straight line 5
Low value fixed assets Straight line 2
2.2. Financial Assets
Financial assets with maturity or intent to hold exceeding one year are reported as non-current; financial assets with maturity or intent to hold up to one year are considered current.
Valuation of Financial Assets upon Acquisition
Upon acquisition, investments, securities and derivatives are stated at cost including the share premium and indirect acquisition costs.
Valuation of Financial Assets at the Balance Sheet Date
Equity investments in subsidiaries or associates are stated using the equity method of accounting (share of equity of the owned company). Other equity investments are stated at cost less provisions.
2.3. Receivables
Upon origination, receivables are stated at their nominal value as subsequently reduced by provisions, if any. Long-term receivables are receivables with maturities exceeding one year at the financial statements date and a deferred tax asset. Short-term receivables are receivables with maturities of one year and shorter as of the financial statements date.
Provisioning
Provisions against receivables are recognised on the basis of an assessment of their maturity. Receivables past due for more than 180 days are provided for at 50 percent of their carrying amount while receivables past due by more than 365 days are provided for in full.
2.4. Payables
Payables are stated at their nominal value.
Long-term payables are payables with maturities exceeding one year at the financial statements date and a deferred tax liability. Short-term payables are due within one year.
6.5
Footnotes to the Financial Statements
for the Year Ended 31 December 2012
2.5. Reserves
Reserves are intended to cover future risks and expenditure the nature of which is clearly defined and which are likely to be incurred but uncertain as to their amount or as to the date on which they will arise. Reserves are recognised and accounted for through expenses predominantly for potential risks arising from legal disputes as equal to the risk exposure based on the consultation with legal counsel.
2.6. Loans
Loans are stated at their nominal value.
Short-term loans are loans repayable within one year from the date of their origination. The portion of long-term loans maturing within one year from the balance sheet date is included in short-term loans. Interest on loans is charged to expenses in accordance with the accruals principle.
2.7. Taxation
Depreciation of Fixed Assets for Tax Purposes
Depreciation of tangible fixed assets is calculated using the accelerated method for tax purposes. Intangible fixed assets are amortised for tax purposes in accordance with Section 32a of the Income Taxes Act. Current Tax Payable
The tax liability for the year ended 31 December 2012 was calculated based on tax calculation which follows from its understanding of the interpretation of Czech tax legislation valid at the financial statements date and believes that the amount of tax is correct in compliance with the effective Czech tax regulations. Since various interpretations of tax laws and regulations by third parties, including state administrative bodies, exist, the income tax payable reported in the Company’s financial statements may change based on the ultimate opinion of the tax authorities.
Deferred Tax
Deferred tax is accounted for using the balance sheet liability method.
2.8. Foreign Currency Translation
Transactions denominated in foreign currencies during the year are translated using the exchange rate of the Czech National Bank prevailing on the date of the transaction.
At the balance sheet date, the relevant assets and liabilities are translated at the Czech National Bank’s exchange rate prevailing as of that date.
6.5
Footnotes to the Financial Statements
for the Year Ended 31 December 2012
2.9. Finance Leases
A finance lease is the acquisition of a tangible fixed asset such that, over or after the contractual lease term, ownership title to the asset transfers from the lessor to the lessee; pending the transfer of title the lessee makes lease payments to the lessor for the asset that are charged to expenses. The initial lump-sum payment related to assets acquired under finance leases is amortised and expensed over the lease period.
2.10. Revenue Recognition
Revenues from management activities (which are invoiced on an upfront payment basis during the year) are recognised monthly always as of the last day in the month as an estimated item. The final amount of the remuneration for provided services is determined and recognised based on the actual supporting documentation identified in the accounting records as of the date of the final version of the financial statements for the calendar year.
Other revenues are recognised when the service is rendered (accounting transaction realised) always in the period to which the revenue relates on an accrual basis.
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.
2.11. Use of Estimates
The presentation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management of the Company has made these estimates and assumptions on the basis of all the relevant information available to it. Nevertheless, pursuant to the nature of estimates, the actual results and outcomes in the future may differ from these estimates.
2.12. Year-on-Year Changes in Valuation, Depreciation or Accounting
Policies
There were no year-on-year changes in the valuation or accounting policies in the year ended 31 December 2012.
2.13. Group VAT registration
With effect from 1 January 2009, the AGEL group has been registered as a VAT payer in terms of Section 95a of Act No. 235/2004 Coll. on Value Added Tax. AGEL a.s. is the representative member of the group. The group is registered under tax ID CZ699000899.
Members of the VAT group registration: P&R LAB a.s., Repharm, a.s., Nemocnice Nový Jičín a.s., Nemocnice Český Těšín a.s., Transfúzní služba a.s., Nemocnice Valašské Meziříčí a.s., Středomoravská nemocniční a.s.,
6.5
Footnotes to the Financial Statements
for the Year Ended 31 December 2012
Podhorská nemocnice a.s., MARTEK MEDICAL a.s., Šumperská nemocnice a.s., Nemocnice Podlesí a.s., Vítkovická nemocnice a.s., ZENAGEL a.s., 1.Oční s.r.o., Dopravní zdravotnictví a.s. and Medical Systems a.s. New members of the VAT group registration as of 1 January 2012: Kardiologické centrum AGEL s.r.o. As a result of the group VAT registration, the Company reports a receivable (payable) arising from VAT on behalf of the entire registered group. Relations arising from VAT between the representative member of the group (AGEL a.s.) and other members of the registered group are reported under ‘Receivables – controlling entity’ or ‘Payables – controlling entity’ as appropriate.
2.14. Organisational Branch of AGEL a.s.
Pursuant to the resolution of the General Meeting dated 16 August 2011, an organisational branch of AGEL with its registered office at Prepoštská 2088/6, Bratislava was formed. Milan Leckéši was appointed as the head of the organisational branch.
The Company provides management for members of the group in Slovakia through the Slovak branch.
2.15. Cash Flow Statement
The cash flow statement is prepared using the indirect method. Cash equivalents include current liquid assets easily convertible into cash in an amount agreed in advance. Cash and cash equivalents can be analysed as follows:
(CZK ‘000) 31.12.2012 31.12.2011
Cash on hand 2 422 403
Cash equivalents 115 68
Current bank accounts and cash in transit 716 451 584 493
Term deposits 0 0
Deposit bills of exchange 0 0
Total cash and cash equivalents 718 988 584 964
Cash flows from operating, investment and financial activities presented in the cash flow statement are not offset.