ANNUAL REPORT 2020

Železiarne Podbrezová a.s. ANNUAL REPORT 2020 67 23 Thesensitivityanalysis (see below) has been determined based onthe exposureto interest ratesfor both derivativeand non - derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year. If interestrates had been50basispoints higher/lowerandall othervariableswere heldconstant,the Group’sprofitfortheyearended31December 2020 would increase/decrease by EUR 283 thousand (2019: increase/decrease by EUR 258 thousand). This is mainly attributable to the Group’s exposure to interest rates for variable rate borrowings. Foreign currency risk The Group incurs foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency. The Group uses forward currency contracts and options to hedge its foreign currency risk. Most of the derivatives have maturities of less than one year after the reporting date. The Group has a number of financial investments in foreign subsidiaries whose net assets are exposed to currency translation risk. The Group records currency derivatives as trading instruments with fair value adjustments recorded in the statement of comprehensive income, and as instruments designed as cash flows hedges where changes in fair value are recorded in equity. The carrying amount of cash assets and cash liabilities of the Group denominated in a foreign currency as at the reporting date is as follows: Liabilities Assets 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019 USD 1 157 148 966 671 7 938 739 6 444 824 CZK 156 077 942 269 1 805 366 3 001 788 PLN 822 964 61 281 7 590 182 8 503 741 The following table presents the Group’s sensitivity to a 25% increase/decrease in the euro against the US dollar, a 20% increase/decrease in the euroagainsttheCzech crown and Polishzloty.The sensitivityanalysis includes monetary items denominated inforeigncurrencies,and adjusts their translation at the end of the reporting period for the aforementioned change in foreign currency rates. Positive balances indicate an increase in profit and other equity items upon the decrease of the euro against the respective currency. Appreciation of the euro against the respective currency would result in a similar, however opposite impact on profit and other equity items, while the data presented below would be negative. USD CZK PLN 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019 Profit or loss 1 695 398 1 369 538 329 858 411 904 1 353 444 1 688 492 To decrease risks resulting from fluctuations in foreign currency exchange rates, the Group uses financial derivatives. Liquidity risk Prudent liquidity risk management implies maintaining sufficientcash with adequate due date and marketable securities,the availability of funding through an adequate amount of committed credit lines, and the ability to close out market positions. Thefollowing tablessummarise theresidual maturity period ofthe Group’snon - derivativefinancial liabilities. Thetables have been prepared based on undiscounted cash flowsfrom financial liabilities, assuming the earliest possible date on which the Group can be requiredto settle the liabilities. The table includes cash flows from both interest and principal during the term of a loan agreement. Weighted average effective interest rate Up to 1 year 1–5 years 5+ years Total 2020 Interest - free liabilities 33 188 140 3 244 758 - 36 432 898 Floating interest rate instruments (loans) 0.97% 50 158 389 15 052 482 - 65 210 871 Fixed interest rate instruments (loans) 3.20% 7 708 867 26 526 056 1 754 905 35 989 828 Finance lease obligations 1 599 859 3 837 488 4 715 947 10 153 294 92 655 255 48 660 784 6 470 852 147 786 891 2019 Interest - free liabilities 31 665 713 3 199 159 - 34 864 872 Floating interest rate instruments (loans) 1.43% 37 971 489 12 717 144 - 50 688 633 Fixed interest rate instruments (loans) 3.01% 12 760 966 23 683 994 - 36 444 960 Finance lease obligations 1 575 471 4 085 479 5 047 983 10 708 933 83 973 639 43 685 776 5 047 983 132 707 398 b) Fair value estimation The fair value of publicly - traded derivatives and available - for - sale investments is based on quoted market prices at the reporting date. The fair value of currency swap contracts, forwards and options is determined using foreign exchange rates at the reporting date. In assessing the fair value of non - traded derivatives and other financial instruments, the Group uses a variety of methods and market assumptions that are based on the market conditions existing at the reporting date. Other techniques, mainly the estimated discounted value of future cash flows, are used to determine the fair value for the remaining financial instruments. The face values of financial assets and liabilities less any estimated credit adjustments with a maturity of less than one year are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments. Fair value measurement in the Statement of Financial Position The fair value measurement of the recognised financial instruments refers only to those that are derived from inputs other than quoted prices (unadjusted) in activemarkets for identical assets or liabilitiesthat are observable on themarket for the asset or liability, directly or indirectly (Level 2 hierarchy as applied by IFRS 7). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (IN EUROS)