ANNUAL REPORT 2020

Železiarne Podbrezová a.s. ANNUAL REPORT 2020 10 10 (j) Cash and cash equivalents Cash and cash equivalents comprise cash in hand, cash in bank accounts, placements and other highly - liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. (k) Impairment of assets At each reporting date, the Company reviews the carrying amounts of its non - current tangible and intangible assets to determine whether there is any indication that those assets have suffered impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to determine the recoverable amount of an individual asset, the Company determines the recoverable amount of the cash - generating unit to which the asset belongs. The recoverable amount is the higher of the fair value less costs to sell and the value - in - use. In assessing the value - in - use, the estimated future cashflowsare discounted to their present value using a pre - tax discount rate that reflects current market assessments ofthe time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash - generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash - generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit and loss (other operating expenses). Where an impairment loss subsequently reverses, the carrying amount of the asset (cash - generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash - generating unit) in prior years. A reversal of an impairment loss is recognised directly in the statement of profit and loss. The recoverable amount of the Company’s receivables is calculated as the present value of expected future cash flows, discounted by the original effective interest rate inherent in the asset. Current receivables are not discounted. The recoverable amount of other assets is the greater of their net selling price and their value - in - use. In assessing the value - in - use, the estimated future cash flows are discounted to their present value using a pre - tax discount rate that reflects the current market value of the time value of money and the risks specific to the asset. In accordance with IFRS 9, the Company implemented a simplified model for the impairment of trade receivables, under which the Company creates provisions for trade receivables without a significant element of financing in an amount equal to lifetime expected losses. (l) Dividends Dividends are recognised in the period in which they are declared. (m) Interest-bearing loans and borrowings Interest - bearing loans and borrowings are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method. Any difference between the cost and the redemption value of the borrowing on an effective interest rate basis is recognised in the statement of profit and loss over the period of the borrowings on a straight - line basis. (n) Provision for employee benefits The Company operates a defined long - term benefit programme – a defined benefit plan consisting of a one - off contribution upon retirement, a loyalty benefit for the number of years of service and jubilee benefits, for which no separate funds were allocated. According to IAS 19 “Employee benefits”, the employee benefits costs are assessed using the projected unit credit method. Under this method, the cost of providing pensions is charged to the statement of profit and loss so as to spread the regular cost over the service lives of employees. The liabilities related to the benefits are measured at the present value of the estimated future cash outflows discounted by market yields on Slovak government bonds, which have maturity periods approximating the maturity periods of the related liability. All actuarial gains and losses are recognised in the statement of comprehensive income. Past service cost is recognised when incurred up to the amount of benefits paid, and the remaining amount is amortised on a straight - line basis during the average period until the moment of the settlement of benefits. (o) Social security and pension schemes The Company is required tomake contributionsto various obligatory government insurance schemes, together with contributions by employees. The cost of social security payments is charged to the statement of profit and loss in the same period as the related salary cost. The Company contributes to a supplementary pension plan administered by a private pension fund, based on the employment period of the employee. No further liabilities arise for the Company from the payment of pensions to employees in the future. (p) Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made. A provision is measured on the basis of the best estimate made by management of the cost of the liability settlement as at the reporting date. If the effect is material, provisions are determined by discounting the expected future cash flows by a pre - tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (q) Accruals The Company makes an estimate of the expenses and liabilities that have not been invoiced at the reporting date. These expenses and liabilities are recorded in the accounting records and reported in the financial statements of the periods to which they relate. (r) Trade and other payables Trade and other payables are initially measured at fair value and subsequently at amortised cost using the effective interest rate method. (s) Revenue recognition (i) Goods sold and services rendered In relation to the sale of goods and merchandise, revenues are recognised when all significant risks and rewards of ownership have been transferred tothe buyer and no significant uncertainties remain regarding the collection ofthe consideration, associated costsand possible claims or returning of goods. Revenues are stated net of taxes and discounts. No revenue is recognised if there are significant uncertainties regarding the settlement of the consideration due, the associated costs or the possible return of goods, or regarding the continuous involvement of the Company in the management of the goods. Revenues from the provision of services are recognised when the relevant services are rendered in proportion to the stage of completion of the transaction at the reporting date. NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (IN EUROS)