Financial statement for 2012

MAIN FINANCIAL DATA

DESCRIPTION / PLN / EUR
2012 / 2011 / 2012 / 2011
Statement
Revenues from sales of products, goods and materials / 183 411 / 156 092 / 43 946 / 37 702
Revenues from sales of products, goods and materials / 183 411 / 156 092 / 43 946 / 37 702
Profit from operating activity / 28 204 / 11 863 / 6 758 / 2 865
Gross profit / 54 320 / 39 790 / 13 015 / 9 611
Net profit / 70 344 / 37 731 / 16 855 / 9 114
Weighted average number of shares / 33 669 870 / 35 107 028 / 33 669 870 / 35 107 028
Net profit per ordinary share [PLN/ share]: / 2,09 / 1,07 / 0,50 / 0,26
Cash flows from operating activity / 23 218 / 1 095 / 5 679 / 248
Cash flows from investing activity / 36 587 / (548) / 8 949 / (124)
Cash flows from financing activity / (55 319) / (1 150) / (13 531) / (260)
Total cash flows / 4 486 / (603) / 1 097 / (137)
Statement / 31.12.2012 / 31.12.2011 / 31.12.2012 / 31.12.2011
Total assets / 273799 / 256 274 / 66 973 / 58 023
Fixed assets / 221 493 / 188 150 / 54 179 / 42 599
Current assets / 52306 / 68 124 / 12 794 / 15 424
Equity / 199 082 / 165 192 / 48 697 / 37 401
Share capital / 3 311 / 3 511 / 810 / 795
Long term liabilities and provisions / 5 609 / 21 746 / 1 372 / 4 923
Short term liabilities and provisions / 69 108 / 69 336 / 16 904 / 15 698
Weighted average number of shares / 33 669 870 / 35 107 028 / 33 669 870 / 35 107 028
Net book value per ordinary share [PLN/ share]: / 5,91 / 4,71 / 1,45 / 1,07

The items of assets, liabilities, and the cash flows in the statement are translated pursuant to the average exchange rate as of the date of this report.

The items of the statement of comprehensive income were translated pursuant to the average exchange rate constituting the arithmetic average of average exchange rates published by the National Bank of Poland applicable as at the last day of the month of the reporting periods.

DESCRIPTION / 2012 / 2011
EUR / PLN / EUR / PLN
Statement of comprehensive income / 4,1736 / 4,1401
Statement of cash flows / 4,0882 / 4,4168
Statement of financial position / 4,0882 / 4,4168

APATOR S.A.

Separate financial statement

for the period since 1st January 2012 till

31st December 2012

SPIS TREŚCI

1.GENERAL INFORMATION

1.1.InformaTION ON THE ENTITY

1.1.1.SUBJECT OF ACTIVITY OF THE ENTITY

1.1.2.THE COMPOSITION OF THE eXECUTIVE bOARD AND THE sUPERVISORY BOARD

2.INFORMATION ON THE BASIS FOR THE FINANCIAL STATEMENT, REPORTING CURRENCY AND ROUNDING APPLIED

2.1.THE BASIS FOR PREPARING THE FINANCIAL STATEMENT

The financial statement of APATOR S.A. has been prepared in accordance with International Accounting Standards, International Finance Reporting Standards and referred to them interpretations published in form of decrees of European Commission.

The financial statement of Apator SA covers the year 2012 and it contains comparative data for 2011.

2.2.REPORTING CURRENCY AND ROUNDING APPLIED

The reporting currency of the financial statement is the Polish zloty and all amounts are quoted in thousands Polish zloty (if not stated otherwise)

2.3.DURATION OF ACTIVITY OF THE ENTITY

2.4.APPROVAL OF THE FINANCIAL STATEMENT

2.5.STATEMENT OF FINANCIAL POSITION

2.6.STATEMENT OF COMPREHENSIVE INCOME

2.7.statement of changes in equity

2.8.Statement of cash flows

3.PRINCIPLES FOR INTERNATIONAL FINANCIAL REPORTING STANDARDS APPLIED

3.1.STANDARDS AND INTERPRETATION TO BE approvED BY EUROPEAN UNION

3.2.first-time adopted standards

3.3.earlier adopted standards and interpretations

4.ACCOUNTING PRINCIPLES APPLIED

4.1.GENERAL PRINCIPLES

4.2.DETAIL PRINCIPLES FOR THE MEASUREMENT OF ASSETS AND LIABILITIES

4.2.1.INTANGIBLE ASSETS, COSTS OF RESEARCH AND DEVELOPMENTS

4.2.2.TANGIBLE FIXED ASSETS

4.2.3.InVestMENTS IN SUBSIDIARIES

4.2.4.Leasing

4.2.5.INVESTMENT PROPERTY

4.2.6.FIXED ASSETS AND GROUPS OF NET ASSETS FOR SALE

4.2.7.INVENTORY

4.2.8.COSTS OF EXTERNAL FINANCING

4.2.9.GOVERNMENT SUBSIDIES

4.2.10.TRADE RECEIVABLES

4.2.11.finanCIAL INSTRUMENTS

4.2.12.BANK CREDITS

4.2.13.trade liabilities

4.2.14.PROVISIONS

4.2.15.REVENUES

4.2.16.TAXES

4.2.17.EQUITY

5.BASIC ACCOUNTING JUDGMENTS AND BASES FOR UNCERTAINTY ESTIMATION

6.InformaTION ON SEASONAL SALES

7.explanatory notes to the financial statement

7.1.operating segments

7.2.INTANGIBLES

7.3.TANGIBLE FIXED ASSETS

7.4.INVESTMENT PROPERTIES

7.5.OTHER FINANCIAL ASSETS

7.6.inventories

7.7.TRADE AND OTHER RECEIVABLES

7.8.GRANTED LOANS

7.9.cash and cash equivalents

7.10.accruals and prepayments

7.11.fixed assets held for sale

7.12.share capital

7.13.other capitals

7.14.credits and loans

7.15.provisions for liabilities

7.16.liabilities

7.17.income tax

expenses by nature

7.18.other revenues and operating costs

7.19.revenues and financial costs

7.20.explanations to the statement of cash flows

7.21.finance lease

7.22.FUTURE PAYMENTS DUE TO THE OPERATING LEASE LIABILITIES NOT RECOgNIZED IN THE statement of financial position

7.23.financial instruments

7.24.FINANCIAL DERIVATIVES, HEDGE ACCOUNTING

7.25.PURPOSES AND PRINCIPLES FOR FINANCIAL RISK MANAGEMENT

7.26.Information on related entities

7.27.CONTINGENT ITEMS AND OTHER ITEMS NOT RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION

7.28.Structure of employment

7.29.REMUNERATION FOR THE ENTITY AUTHORIZED TO AUDIT FINANCIAL STATEMENT

7.30.subsidies

7.31.AMENDMENTS TO ACCOUNTING PRINCIPLES

7.32.EVENTS AFTER THE REPORTING PERIOD

  1. GENERAL INFORMATION
  2. InformaTION ON THE ENTITY

APATOR Joint Stock Company with the headquarters in Toruń (ul.Gdańska 4a lok C4) was established by the employees of former state owned company under the name of Zakłady Aparatury Elektrycznej Apator in Toruń. The entity was registered at District Court in Toruń at V Economic Department on 14th January 1993 under registration number RHB 1364. On 24th October 2001 the entity was entered into Register of Entrepreneurs at District Court in Toruń, VII Economic Department of National Register Court under number of 0000056456. The entity runs business in the territory of Poland based on regulations of the Polish Commercial Companies Code.

1.1.1.SUBJECT OF ACTIVITY OF THE ENTITY

In accordance with the Statute the main activity of the entity is manufacturing and service of electrical distribution and control equipment and sales of metering equipment and systems. Shares of APATOR S.A. are quoted on primary market – sector is according to Warsaw Stock Exchange in Warsaw classification „electrical machines”.

1.1.2.THE COMPOSITION OF THE eXECUTIVE bOARD AND THE sUPERVISORY BOARD

The Executive Board

Janusz Niedźwiecki – President of Executive Board

Tomasz Habryka – Member of Executive Board

Jerzy Kuś – Member of Executive Board

The Supervisory Board

Janusz Marzygliński – Chairman of Supervisory Board

Mariusz Lewicki– Deputy Chairman of Supervisory Board

Danuta Guzowska – Member of Supervisory Board

Ryszard Wojnowski– Member of Supervisory Board

Krzysztof Kwiatkowski – Member of Supervisory Board

Eryk Karski – Member of Supervisory Board

  1. INFORMATION ON THE BASIS FOR THE FINANCIAL STATEMENT, REPORTING CURRENCY AND ROUNDING APPLIED
  2. THE BASIS FOR PREPARING THE FINANCIAL STATEMENT

The financial statement of APATOR S.A. has been prepared in accordance with International Accounting Standards, International Finance Reporting Standards and referred to them interpretations published in form of decrees of European Commission.

The financial statement of Apator SA covers the year 2012 and it contains comparative data for 2011.

2.2.REPORTING CURRENCY AND ROUNDING APPLIED

The reporting currency of the financial statement is the Polish zloty and all amounts are quoted in thousands Polish zloty (if not stated otherwise)

2.3.DURATION OF ACTIVITY OF THE ENTITY

Duration of the activity of APATOR S.A. is indefinite.

The financial statement was prepared based on the assumption that business activity will be continued in the near future that is for the period not shorter than 12 months since the end of the reporting period. No circumstances have been found that could indicate the threat of activity to be discontinued.

2.4.APPROVAL OF THE FINANCIAL STATEMENT

The financial statement was approved and signed by the Executive Board of the entity on 22nd April 2013

2.5.STATEMENT OF FINANCIAL POSITION

DESCRIPTION / NOTE / DAY
31.12.2012 / 31.12.2011
restated
Fixed assets / 221 493 / 188 150
Intangible assets / 2 / 3 057 / 3 173
Tangible fixed assets / 3 / 69 272 / 56 240
Investment property / 4 / 1 303 / 1 405
Other long-term financial assets / 5 / 126 380 / 125 862
- in related entities / 5 / 125 863 / 125 862
- in other entities / 5 / 517 / -
Long-term loans granted
- to related entities / 8 / 83 / 324
Long –term receivables
- from other entities / 7 / 943 / 1 117
Deferred income tax assets / 17 / 20 455 / 29
Current assets / 52306 / 68 124
Inventories / 6 / 18 898 / 22 289
Trade receivables / 7 / 25 675 / 31 534
- from related entities / 7 / 1 946 / 6 603
- from other entities / 7 / 23 729 / 24 931
Receivables due to income tax of legal entities / 7 / 372
Receivables due to other taxes, customs duties and social insurance / 7 / 1666 / 4327
Other short-term receivables / 7 / 415 / 1 259
- from related entities / 7 / 12 / 9
-from other entities / 7 / 403 / 1 250
Other short-term financial assets
- in other entities / 5 / 131 / -
Short-terms loans granted
- to related entities / 8 / 214 / 230
Cash and its equivalents / 9 / 4 566 / 80
Short term prepayments / 10 / 741 / 391
Fixed assets classified as held for sales / 11 / - / 7 732
TOTAL ASSETS / 273 799 / 256 274
DESCRIPTION / NOTE / Day
31.12.2012 / 31.12.2011
restated
Equity / 199 082 / 165 192
Share capital / 12 / 3 311 / 3 511
Other capitals / 13 / 138 311 / 125 410
Capital from the measurement of hedge transactions / 359 / (1 460)
Undistributed financial result / 57 101 / 37 731
- result of current period / 70 344 / 37 731
- write off from the result of current year / (13 243) / -
Liabilities / 74 717 / 91 082
Liabilities and long -term provisions / 5 609 / 21 746
Long-term credits and loans
- from other entities / 14 / - / 15 000
Long-term liabilities
- to other entities / 16 / 1 024 / 2 190
Long-term provisions for liabilities due to employee benefits / 15 / 4 585 / 4 556
Liabilities and short-term provisions / 69 108 / 69 336
Short-term credits and loans
- from other entities / 14 / 35 358 / 35 147
Trade liabilities / 16 / 13 092 / 14 406
- to related entities / 16 / 2 893 / 3 406
- to other entities / 16 / 10 199 / 11 000
Liabilities due to income tax of legal entities / 16 / 4009
Liabilities due to other taxes,customs duties and social insurance
Other short-term liabilities / 16 / 11 545 / 9 434
- to related entities / 16 / 212 / 417
- to other entities / 16 / 11 334 / 9 017
Short-term provisions for liabilities due to employee benefits / 15 / 2 459 / 1 618
Other short-term provisions / 15 / 575 / 452
Liabilities related to fixed assets classified as held for sales / 11 / - / 7 000
TOTAL LIABILITIES / 273 799 / 256 274

2.6.STATEMENT OF COMPREHENSIVE INCOME

DESCRIPTION / NOTE / Period
01.01.2012 / 01.01.2011
31.12.2012 / 31.12.2011
Revenues from sales / 1 / 183 411 / 156 092
Revenues from sales of products and services / 151 346 / 120 913
- to related entities / 28 206 / 34 673
- to other entities / 123 140 / 86 240
Revenues from sales of goods and materials / 32 065 / 35 179
- to related entities / 6 421 / 5 030
- to other entities / 25 644 / 30 149
Cost of products sold / (140 438) / (113 830)
Cost of products and services sold / (112 164) / (82 186)
- to related entities / (23 029) / (24 893)
- to other entities / (89 135) / (57 293)
Cost of goods and materials sold / (28 274) / (31 644)
- to related entities / (5 761) / (4 281)
- to other entities / (22 513) / (27 363)
Gross profit from sales / 42 973 / 42 262
Selling costs / (10 220) / (12 912)
Overheads / (24 163) / (19 288)
Profit from sales / 8 590 / 10 062
Other operating revenues (costs), including: / 19 / 19 614 / 1 801
Revenues / 23 698 / 3 766
Costs / (4 084) / (1 965)
Profit from operating activity / 28 204 / 11 863
Financial revenues (costs) ,including: / 20 / 26 116 / 27 927
Revenues / 29 260 / 32 105
Costs / (3 144) / (4 178)
Profit before tax / 54 320 / 39 790
Current income tax / 17 / (4 829) / (1 683)
Deferred income tax / 17 / 20 853 / (376)
Net profit / 70 344 / 37 731
Other comprehensive income
Other net comprehensive income / 1 819 / (1 460)
Result of hedge accounting / 2 246 / (1 803)
Income tax related to other comprehensive income / (427) / 343
Comprehensive income in total / 72 163 / 36 271
Net profit per ordinary share:
- basic / 2,09 / 1,07
- diluted / 2,09 / 1,07
Weighted average number of shares / 33 669 870 / 35 107 028

2.7.statement of changes in equity

DESCRIPTION / Share capital / Other capitals / Capital from measurement of hedge transactions / Undistributed financial result / TOTAL EQUITY
Balance at 01.01.2011 / 3 511 / 111 383 / - / 32 483 / 147 377
Changes in principles of accounting / - / (6 169) / - / - / (6 169)
Balance after changes / 3 511 / 105 214 / - / 32 483 / 141 208
Changes in equity in the period since 01.01.2011 till 31.12.2011
Hedge instruments of cash flows, including: / - / - / (1 803) / - / (1 803)
- profits (loss) included in measurement of reporting value of hedged items / - / - / (1 803) / - / (1 803)
Tax related to the items presented in capital or transferred from capital / - / - / 343 / - / 343
Net profit in the period since 01.01.2011 till 31.12.2011 / - / - / - / 37 731 / 37 731
Comprehensive income recognized in the period since 01.01.2011 till 31.12.2011 / - / - / (1 460) / 37 731 / 36 271
Dividends / - / - / - / (21 064) / (21 064)
Settlement of interim dividend from previous year / - / - / - / 8 777 / 8 777
Distribution of the result into supplementary capital / - / 20 196 / - / (20 196) / -
Balance at 31.12.2011 / 3 511 / 125 410 / (1 460) / 37 731 / 165 192
Balance at 01.01.2012 / 3 511 / 125 410 / (1 460) / 37 731 / 165 192
Changes in equity in the period since 01.01.2012 till 31.12.2012
Hedge instruments of cash flows, including: / - / - / 2 246 / - / 2 246
- profits (losses) included in measurement of reporting value of hedge items / - / - / 2 246 / - / 2 246
Tax related to items presented in capital or transferred from capital / - / - / (427) / - / (427)
Net profit in the period since 01.01.2012 till 31.12.2012 / - / - / - / 70344 / 70344
Comprehensive income recognized in the period since 01.01.2012 till 31.12.2012 / - / - / 1 819 / 70 344 / 72163
Dividends / - / - / - / (24 830) / (24 830)
Interim dividend paid / - / - / - / (13 243) / (13 243)
Purchase of own shares / - / (200) / - / - / (200)
Redemption of own shares / (200) / 200 / - / - / -
Distribution of the result into supplementary capital. / - / 12 901 / - / (12 901) / -
Balance at 31.12.2012 / 3 311 / 138 311 / 359 / 57101 / 199 082
Name of entity: / APATOR SA / Page 1
Period included in reporting period: / 01.01.2012 – 31.12.2012 / Reporting currency: / Polish zloty (PLN)
Rounding: / All amounts are quoted in thousands of Polish zloty (if not stated otherwise)

Financial statement for 2012

2.8.Statement of cash flows

DESCRIPTION / NOTE / Period
01.01.2012 / 01.01.2011
31.12.2012 / 31.12.2011
restated
Cash flows from operating activity
Profit before tax / 54 320 / 39 790
Adjustments: / (46 441) / (22 797)
Amortization of intangible assets / 1 029 / 870
Depreciation of tangible fixed assets / 6 163 / 5 040
(Profit) loss on sales of tangible fixed assets and intangibles / (27 666) / (93)
(Profit) loss from the measurement of investment property under fair value / 102 / (64)
(Profit) loss due to the amendment of fair value of derivatives / (613) / 1 571
Interest cost / 2 354 / 1 685
Interest revenues / (13) / (18)
Dividend revenues / (28 200) / (30 652)
Other adjustments / 21 / 403 / (1 136)
Cash from operating activity before changes in current capital / 9 502 / 16 993
Changed in inventory / 3 391 / (7 371)
Change in receivables / 21 / 9 466 / (5 001)
Change in liabilities / 21 / 2 288 / (1 920)
Change in provisions / 21 / 993 / 322
Change in accruals and prepayments / (350) / (50)
Cash generated during operating activity / 23 667 / 2 973
Income tax paid / (449) / (1 878)
Net cash from operating activity / 23 218 / 1 095
Cash flows from investing activity
Expenses for the acquisition of intangible assets / (739) / (1 288)
Expenses for the acquisition of tangible fixed assets / (17 546) / (31 395)
Proceeds from sales of tangible fixed assets / 29 422 / 135
Investment in subsidiaries / - / (5 000)
Received repayments of loans granted / 222 / 160
Interest received / 14 / 16
Dividends received / 28 200 / 30 649
Other proceeds (expenses) / 21 / (2 986) / 6 175
Net cash used from investing activity / 36 587 / (548)
Cash flows from financing activity
Proceeds due to credits and loans taken / 26 150 / 38 841
Repayment of credits and loans / (41 000) / (26 000)
Interest paid / (2 273) / (1 674)
Dividends paid / (38 059) / (12 286)
Payment of liabilities due to financial lease / (116) / (27)
Other proceeds (expenses) / 21 / (21) / (4)
Net cash from financing activity / (55 319) / (1 150)
Increase (decrease) of cash and its equivalents / 4 486 / (603)
Cash and its equivalents at the beginning of the period / 80 / 683
Cash and its equivalents at the end of the period / 4 566 / 80
  1. PRINCIPLES FOR INTERNATIONAL FINANCIAL REPORTING STANDARDS APPLIED
  2. STANDARDS AND INTERPRETATION TO BE approvED BY EUROPEAN UNION

At the day of publication of financial statement the following standards and interpretations wait to be approved by European Union:

  • IFRS 9 „Financial instruments” – is applied to annual periods beginning from

1stJanuary 2015 or later;

The Executive Board currently analyzes the consequences and the influence of adoption of the new standard on financial statement but it does not expect significant influence on financial statement of the Company.

3.2.first-time adopted standards

APATOR SA during preparation of the financial statement adopted for the first time changes to IFRS 7 „Financial instruments: disclosure of information”.

The adoption of the above changes did not cause any significant changes in accounting policy of the Company neither in presentation of data in the financial statements.

3.3.earlier adopted standards and interpretations

At the day of preparation of the report the following standards and interpretations and their amendments were approved:

  • Amendments to IAS 19 „Employee benefits”, that are applied to annual periods beginning on 1st January 2013 or later;
  • Amendments to IAS 1 „Presentations of financial statements”, that are applied to annual periods beginning on 1st July 2012 or later;
  • IFRS 10 „Consolidated financial statements” – are applied to annual periods beginning on 1st January 2014 or later;
  • IFRS 11 „Joint agreements” – are applied to annual periods beginning on 1st January 2014 or later;
  • IFRS 12 „Disclosure of interest in other entities” – is applied to annual periods beginning on 1st January 2014 or later;
  • Amendments to IAS 27 “Separate financial statement” – are applied to annual periods beginning on 1st January 2014 or late;
  • Amendments to IAS 28 “Investments in associates and joint ventures” – are applied to annual periods beginning on 1st January 2014 or later;
  • Amendments to IFRS 1 „First –time adoption of International Financial Reporting Standards” – are applied to annual periods beginning on

1st January 2013 or later;

  • Amendments to IAS 12 „Income taxes –deferred income tax” – are applied to annual periods beginning on 1st January 2013 or later;
  • IFRS 13 „Fair value measurement” – are applied to annual periods beginning on 1st January 2013 or later;
  • IFRIC 20 “Stripping costs in the production Phase of a Surface Mine” – is applied to annual periods beginning on 1st January 2013 or later.
  • Amendments to IFRS 7 “Financial instruments: disclosures –compensation of financial assets and liabilities - are applied to annual periods beginning on 1st January 2013 or later;
  • Amendments to IAS 32 “ Financial instruments: presentation” - are applied to annual periods beginning on 1st January 2014 or later;

The Executive Board did not make use of possibility of their earlier adoption. However, it is not expected that new standards and amendments to current ones could have significant influence on the financial statement of the Company.

  1. ACCOUNTING PRINCIPLES APPLIED
  2. GENERAL PRINCIPLES

Financial statement is prepared in accordance with the conception of historical cost, except for measurement of some fixed assets and financial assets that according to IFRS were valuated according to fair value.

The most significant accounting principles adopted by the entity were presented in points from 5.2.1 to 5.2.19.

Policy of accounting presented below was applied to all the periods presented in financial statement by the Company. Some comparative data were reclassified in order to obtain the conformity with presentation of current period (see Note 32 – point 8.32).

4.2.DETAIL PRINCIPLES FOR THE MEASUREMENT OF ASSETS AND LIABILITIES

4.2.1.INTANGIBLE ASSETS, COSTS OF RESEARCH AND DEVELOPMENTS

Intangibles are assets that meet the following criteria:

- they can be excluded or separated from the entity, sold, licensed or given for payment usage to third persons both individually or with related to them contracts, elements of assets or liabilities or

-- they are resulted from the contracts or other regulations regardless they are transferable or it is possible to separate them from the entity or due to other reasons or liabilities.

Intangibles acquired in separate transaction are included is the statement of financial position according to purchase price.

Intangibles acquired in transaction regarding the takeover of the entity are recognized in balance sheet according to fair value on the day of receipt.

After initial recognition, the intangibles are valuated according to purchase price or costs of manufacturing reduced by redemption and write downs due to decrease of the value.

The period of use of intangibles depending on their kind is valuated and recognized as limited or not defined one.

Intangibles with not defined period of use and those have not yet been used are subject every year to verification in respect of possible loss of the value at assets or at the level in relation to the particular assets or at the level of the centre earning the cash.

In case of the remaining intangibles annual measurement is carried out to check if there are circumstances that can prove the loss of their values.

The periods of use of particular intangibles are subject to annual verification and if necessary they are adjusted from the beginning of the next financial year.

For the amortization of intangibles with specified period of use is the method of line amortization. The periods of use for particular elements of intangibles are as follows:

Patents and licensesfrom 2 to 5 years

R&Dfrom 3 to 5 years

Costs of research and developments

Costs of research and developments are not subject to activation and they are represented in the statement of comprehensive income as the costs in the period they were incurred.

Costs of research and developments are capitalized only in situation when:

- project being performed is exactly defined (for instance – the software );

- it is likely that the element of assets will bring economic profits in the future;

- costs related to the project can be reliably estimated

Costs of research and development are amortized by the line method during expected period of their usefulness.

In case when it is not possible to separate self-manufactured element of assets, the costs of research and development are recognized in income statement in the period when they were incurred.

4.2.2.TANGIBLE FIXED ASSETS

Tangibles are tangible assets being in possession of the entity in order to make use of them in manufacturing, provision of goods and services, giving for renting by third persons or for administration purposes which is expected to be used for more than one period. They are valuated according to purchase price, cost of manufacturing or in calculated value (after revaluation of tangible fixed assets) reduced by depreciation write-offs or redemption and write-offs of permanent loss of the value. According to the approach based on elements, the entity accepts different amortization rates for significant elements of tangible fixed asset. Tangible fixed assets in the entity cover tangibles with predicted period of their economic usage longer than one year. The commencement of the amortization is after a monthof usage. During the establishment of annual amortization rates the economic period of the usage of tangible fixed asset is taken into consideration. In case of establishment of annual amortization rates, economical period of use of fixed asset is taken into account. The correctness of periods and amortization rates used by the entity are periodically verified by managers of manufacturing departments. For amortization purposes of fixed assets line method of amortization has been adopted. The period of use for particular fixed assets is as follows: