Objetivos Específicos:

The following types of long-term employee beneÔts are included in the provision for other long-term employee beneÔts: – service jubilee

– other long-service beneÔts

The entitlement to these beneÔts is usually conditional on the employee remaining in service for a certain service period or up to the moment of a certain work anniversary of the employee. The amount of provision corresponds with the present value of long- term employee beneÔts for past service at the balance sheet date determined using the projected unit credit method.

These obligations are valued annually by independent qualiÔed actuaries. Actuarial gains and losses arising from changes in actuarial assumptions and experience adjustments are charged or credited to the income statement.

The present value of long-term employee beneÔts is determined by discounting the estimated future cash outÓows arising from their settlement using interest rates equalling market yield of treasury bonds because there is no deep market of high-quality corporate bonds denominated in CZK. The term and currency of these corporate or treasury bonds are consistent with the currency and term of the respective other long-term employee beneÔts.

Not es t o t he Separat e Financial St at ement s 2015

2.10 Ot her provisions

In accordance with IAS 37, provisions are recognised where a present obligation exists to third parties as a result of a past event; where a future outÓow of resources is probable; and where a reliable estimate of that outÓow can be made. Future outÓows are estimated with respect to particular speciÔc risks. Provisions not resulting in an outÓow of resources within one year are recognised at their settlement value discounted to the balance sheet date. Discounting is based on current market interest rates. Where there is a number of similar obligations, the likelihood that an outÓow occurs upon the settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outÓow with respect to any one item included in the same class of obligations may be small.

2.11

Revenue and expense recognit ion

Revenue comprises the fair value of consideration received or receivable for the goods sold and services provided, net of value- added tax, rebates and discounts.

Sales of goods are recognised only when the goods have been delivered, that is, when the signiÔcant risks and rewards have passed to the customer, the sales price is agreed or determinable and receipt of payment is probable. This corresponds generally to the date when the products are provided to dealers outside the Company or to the delivery date in the case of direct sales to consumers.

Revenues from one-off licences are recognised only when the intellectual rights are transferred or when partial delivery has been completed (e.g. delivery of technical documentation, technical support, etc.). Revenues from per-piece licences are recognised based on the number of cars produced in the current accounting period. Dividend income is generally recognised on the date at which the dividend is legally approved and when the payment is probable.

Revenue arising from rendering of services, which are separable from the product (e.g. revenue from the sale of extended guarantee), which will be provided in future periods are recognized when the services are rendered respectively on a straight-line basis over the period of time when the services are provided via an indeterminate number of acts over a speciÔc time period. Costs of sales include production costs, costs of goods purchased for resale, and additions to warranty provisions. Research and development costs not eligible for capitalisation in the period, depreciation and impairment charges for capitalised development costs and production equipment are likewise presented as cost of sales.

Distribution expenses include personnel and material costs, and depreciation and amortisation applicable to the distribution function, as well as the costs of shipping, advertising, sales promotion, market research and customer service.

Administrative expenses include personnel costs and overheads as well as depreciation and amortisation applicable to administrative functions.

2.12 Leases

Leases in which a signiÔcant portion of the risks and rewards of ownership are retained by the lessor are classiÔed 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.

2.13 Subsidies

Subsidies of entrepreneurial activities and of employee training and retraining costs are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants, including non-monetary grants related to the purchase of tangible and intangible assets, are recognised at fair value as reduction in the value of tangible and intangible assets.

Not es t o t he Separate Financial St at ements 2015

2.14 Relat ed part ies

A related party is a person that has control or joint control over the reporting entity; has signiÔcant inÓuence over the reporting entity; or is member of the key management personnel of the reporting entity or of a parent of the reporting entity. A related party is also an entity which is a member of the same group as the reporting entity and other entities as deÔned by IAS 24 article 9 par. b.

2.15 Share capit al

The substance of a Ônancial instrument, rather than its legal form, governs its classiÔcation in the Company’s statement of Ônancial position. Ordinary shares are classiÔed as share capital. The Company typically incurs various costs in issuing or acquiring its own equity instruments. Those costs might include registration and other regulatory fees, amounts paid to legal, accounting and other professional advisers, printing costs and stamp duties.

The transaction costs of an equity transaction are accounted for as a deduction from equity (net of related income tax deduction) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense.

Share premium is represented by the difference between the nominal value of shares issued on share capital increase and the market price of shares and is recognised within equity.

2.16

Crit ical account ing est imat es and assumpt ions

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by deÔnition, seldom equal the related actual results. The estimates and assumptions are continuously assessed by management. The estimates and assumptions are based on historical experience and other factors, including the realistic assessment of future developments. Estimates and assumptions that have a signiÔcant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next Ônancial year are discussed below.