A.4. Basis of preparation

Local accounting legislation requires that the Group prepares these consolidated financial statements in accordance with IFRS (as adopted by EU). The Parent Company also prepares separate financial statements for the same period in accordance with IFRS as adopted by the EU.

The consolidated financial statements are presented in Czech koruna (“CZK”) which is the Parent Company’s functional currency.

The financial statements have been prepared on the historical cost basis except for the following assets and liabilities which are stated at their fair value: derivative financial instruments, financial instruments at fair value through profit or loss, financial instruments classified as available-for-sale and investment properties.

The preparation of the financial statements in accordance with IFRS requires that management make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that cannot readily be determined from other sources. The actual values may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period or in both the period of the revision and future periods if the revision affects both the current and future periods.