ANNUAL REPORT 2020

Železiarne Podbrezová a.s. ANNUAL REPORT 2020 23 FINANCIAL MANAGEMENT To finance its OPEX and CAPEX needs, Železiarne Podbrezová a.s. uses syndicated bank financing, allowing it to use a long-term non-amortised loan and short-term fixed tranches with maturity in July 2024, with a total credit line of EUR 30 million. The Company’s credit facility is supplemented by separate contractual relationships for short- term financing with two commercial banks, so the credit line totals EUR 48.3 million. This method of financing guarantees the Company’s financial stability, unifies the lending terms and reduces the complexity of loan management. The gearing ranged between 7% and 11% in 2020 and the average loan drawdown amounted to EUR 22.6 million. Bank loan interests are tied to the variable Euribor market rate. The average interest rate on drawn loans was 1.35% p. a. Credit facilities are secured by a pledge over the Company’s movable and immovable assets. The value of the assets pledged is proportionate to the Company’s credit exposure with a bank. A significant source of the Company’s external funding were loans from natural and legal persons totalling EUR 15.4 million, which supported the Company’s financial stability. As at 31 December 2020, the Company recorded open derivative positions under currency swaps and currency forwards at a face value of EUR 3.36 million and EUR 0.53 million, respectively. As at 31 December 2020, the fair value of the open derivative positions amounted to EUR 87 thousand. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS AND FINANCIAL PERFORMANCE IN 2020 AND INFORMATION ON THE BUSINESS PLAN SETTLEMENT OF PAYABLES The Company’s financial situation was balanced and stable despite the loss for 2020 and the Company fulfilled its obligations to financial institutions, state and public authorities, employees, shareholders and suppliers in a due and timely manner and in the agreed amounts. EXPENSES, REVENUES AND PROFIT/(LOSS) In 2020, the Company generated a loss of EUR 3 011 thousand, recognised as the difference between total revenues (EUR 220 475 thousand) and total expenses (EUR 223 486 thousand). Operating revenues contributed most (almost 98%) to the Company’s total revenues. Financial income of EUR 5 368 thousand amounted to 2% of total revenues and mainly consisted of dividends received from subsidiaries, interest income and foreign exchange gains. There were minor changes to the structure of expenses compared to the previous year. The share of expenses for raw materials and consumables used of total operating expenses decreased again, from 59% to 56%. On the other hand, the share of personnel expenses increased from 28% to 29% of total operating expenses and the share of services increased from 8.7% to 9.4%. Total operating expenses for 2020 decreased by almost EUR 37 million (14%), mainly due to the decrease in production volume and the decrease in prices of input raw materials. The return on total revenues and total expenses was negative due to the loss reported for 2020 (-1.4% and -1.3%, respectively).