ANNUAL REPORT 2020

Železiarne Podbrezová a.s. ANNUAL REPORT 2020 52 8 - Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measurement” and IFRS 7 “Financial Instruments: Disclosures” – Interest Rate Benchmark Reform – adopted by the EU on 15 January 2020 (effective for annual periods beginning on or after 1 January 2020), - Amendments to IFRS 16 “Leases” – Covid - 19 - Related Rent Concessions – adopted by the EU on 9 October 2020 (effective for annual periods beginning on or after 1 January 2020, no later than on 1 June 2020), - Amendments to References to the Conceptual Framework in IFRS Standards – adopted by the EU on 29 November 2019 (effective for annual periods beginning on or after 1 January 2020). Theadoption of these new standards, amendments to the existing standards and interpretation has not ledto any materialchanges in thefinancial statements of the Company. New and amended IFRS standards issued by the IASB and adopted by the EU but not yet effective Atthe date of authorisation ofthesefinancialstatements,thefollowing amendmentstothe existing standardswere issued bythe IASBandadopted by the EU and are not yet effective: - Amendments to IFRS 4 “Insurance Contracts” – Extension of the Temporary Exemption from Applying IFRS 9 – adopted by the EU on 15 December 2020 (effective for annual periods beginning on or after 1 January 2021), - Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measurement”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases” – Interest Rate Benchmark Reform – Phase2 – adopted by the EU on13 January 2021 (effective for annual periods beginning on or after 1 January 2021). The Group has elected not to adopt these new standards, amendments to the existing standards and new interpretation in advance of their effective dates. New and amended IFRS standards issued by the IASB but not yet adopted by the EU At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the IASB, except for the following new standards and amendments to the existing standards, which were not endorsed for use in the EU as at the reporting date (the effective dates stated below are for IFRS as issued by the IASB): - IFRS 17 “Insurance Contracts” and Amendments to IFRS 17 (effective for annual periods beginning on or after 1 January 2023), - Amendmentsto IAS 1“PresentationofFinancial Statements” – ClassificationofLiabilitiesas Current orNon - current(effectiveforannualperiods beginning on or after 1 January 2023), - Amendments to IAS 1 “Presentation of Financial Statements” – Disclosure of Accounting Policies (effective for annual periods beginning on or after 1 January 2023), - Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” – Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023), - Amendments to IAS 16 “Property, Plant and Equipment” – Proceeds before Intended Use (effective for annual periods beginning on or after 1 January 2022), - Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” – Onerous Contracts – Cost of Fulfilling a Contract (effective for annual periods beginning on or after 1 January 2022), - Amendments to IFRS 3 “Business Combinations” – Reference to the Conceptual Framework with Amendments to IFRS 3 (effective for annual periods beginning on or after 1 January 2022), - Amendments to various standards due to “Annual Improvements to IFRS Standards (2018 – 2020 Cycle)” resulting from the annual IFRS improvement project (IFRS 1, IFRS 9, IFRS 16 and IAS 41) primarily with a view to removing inconsistencies and clarifying wording (The amendments to IFRS 1, IFRS 9 and IAS 41 are effective for annual periods beginning on or after 1 January 2022. The amendment to IFRS 16 only relates to an illustrative example, so no effective date is stated.), - IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January 2016) – the European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final standard, - Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates andJointVentures” – Sale orContribution of Assets between an Investor and its Associate or Joint Venture and further amendments (effective date deferred indefinitely until the research project on the equity method has been concluded). The Group anticipates that the adoption of these new standards, amendments to the existing standards and new interpretations will have no material impact on the consolidated financial statements of the Group in the period of initial application. Hedge accounting for a portfolio of financial assets and liabilities whose principles have not been adopted by the EU remains unregulated. According to the Group’s estimates, the application of hedge accounting to a portfolio of consolidated financial assets or liabilities pursuant to IAS 39 “Financial Instruments: Recognition and Measurement” would not significantly impact the consolidated financial statements if applied as at the reporting date. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance The consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU and on the going concern assumption. IFRS as adopted by the EU do not currently differ from IFRS as issued by the IASB, except for certain standards and interpretations that have not been endorsed by the EU as described above. (b) Basis of preparation of the consolidated financial statements The consolidated financial statements are prepared under the historical cost convention, except for certain financial instruments and business combinations under IFRS 3 “Business Combinations”. The principal accounting policies adopted are set out below. The accompanying consolidated financial statements reflect certain adjustments and reclassifications not recorded in the accounting records of the Group companies in order to conform the Slovak statutory and other financial statements to financial statements prepared in accordance with IFRS as adopted by the EU. The reporting currency is the euro. The data in the consolidated financial statements are reported in euros unless otherwise stated. The accounting policies have been consistently applied by the Group and are consistent with those of the previous year. The preparation of the financial statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management to exercise its judgment in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. The consolidated financial statements were prepared under the assumption that the Group will continue as a going concern despite the fact that Group management anticipates a negative result of operations (loss) in 2021. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (IN EUROS)