ANNUAL REPORT 2021

Annual report 2021 Železiarne Podbrezová a.s. 22 23 30 FINANCIAL RISK MANAGEMENT POLICIES 30.1 Capital risk management The Company manages its capital to ensure that the Company is able to continue as a going concern with the objective of achieving an optimal debt and equity balance. The Company’s overall strategy remains unchanged from 2020. The gearing ratio at the year - end was as follows: 31 December 2021 31 December 2020 Debt (i) (61 628 198) (47 922 374) Cash and cash equivalents 175 998 479 260 Net debt (61 452 200) (47 443 114) Equity (211 297 988) (205 638 965) Net debt to equity ratio 29 % 23 % (i) Debt is defined as current and non-current interest bearing loans and borrowings. 30.2 Categories of financial instruments 31 December 2021 31 December 2020 Available - for - sale investments - 94 387 Loans and receivables (including cash and cash equivalents) 52 005 975 41 109 279 Financial assets 52 005 975 41 203 666 Bank loans and borrowings recognised at amortised costs 61 628 198 47 922 374 Trade payables and other liabilities 39 531 310 24 393 402 Financial liabilities 101 159 508 72 315 776 a) Financial risk factors The Company’s activities expose it to a variety of financial risks, which include the effects of changes in foreign currency exchange rates and loan and bond interest rates. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance. Credit risk Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Company does not require collateral in respect of financial assets. At the reporting date there were no significant concentrations of credit risk. Cash transactions are only carried out using renowned financial institutions. Interest rate risk The Company’s operating income and operating cash flows are relatively independent of changes in market interest rates. Interest rate risk arises on long - term borrowings, which are issued at variable interest rates and expose the Company to a fair value interest rate risk. The sensitivity analysis (see below) was determined based on the exposure to interest rates for both derivative and non - derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared under the assumption that the amount of liability outstanding at the reporting date was outstanding for the whole year. If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company’s profit for the year ended 31 December 2021 would have increased/decreased by EUR 199 thousand (2020: increase/decrease by EUR 113 thousand). This is mainly attributable to the Company’s exposure to interest rates for variable rate borrowings. Foreign currency risk The Company incurs foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the euro. The carrying amount of the Company’s cash assets and cash liabilities denominated in a foreign currency as at the reporting date is as follows: Liabilities Assets 31 December 2021 31 December 2020 31 December 2021 31 December 2020 USD 1 105 833 142 935 859 010 294 257 CZK 244 703 3 431 1 882 399 1 153 335 PLN 45 231 103 4 894 283 3 147 847 CHF - - 3 371 3 224 The following table presents the Company’s sensitivity to a 25% increase/decrease in the euro against the US dollar, a 20% increase/decrease in the euro againstthe Czech crown, Polish złoty and Swissfranc. The sensitivity analysis includes monetary items denominated in foreign currencies and adjuststheir translation atthe end of the reporting period for theaforementioned change inforeigncurrency rates. Positive balances indicate an increase in profit and other equity items upon a decrease of euro against the relevant currency. Appreciation of the euro against the relevant currency would result in a similar but opposite impact on profit and other equity items, while data presented below would be negative. USD CZK PLN CHF 31 December 31 December 31 December 31 December 2021 2020 2021 2020 2021 2020 2021 2020 Profit or loss (61 706) 37 831 327 539 229 981 969 810 629 549 674 645 Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash 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. NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (IN EUROS)