ANNUAL REPORT 2021

13 14 4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATE UNCERTAINTY In the process of applying the Company’s accounting policies, which are described in Note 3, the Company’s management has made the following judgements concerning uncertainties and estimates that have an effect on the amounts recognised in the financial statements. There is a risk of potential adjustments in future periods relating to such matters, including the following: Impairment of property, plant and equipment The Company calculated and recognised a loss on the impairment of property, plant and equipment based on the assessment of their future use, planned disposals and sales. The Company does not believe that any material adjustments are needed in the future owing to the impairment of the Company’s assets considering the production and sales levels (see also Note 5). Litigation The Company is involved in various legal proceedings for which management has assessed the probability of a loss that would result in a cash outflow for the Company. In making this assessment, the Company has relied on the advice of external legal counsel, on the latest available information on the status of the court proceedings, and on an internal evaluation of the likely outcome. The final amount of any potential losses in relation to legal proceedings is not known and based on the management judgement will not result in a material adjustment to previous estimates. Details of the legal cases are included in Note 32.3. Depreciation Non - current tangible assets are depreciated on a straight - line basis over the estimated useful life of individual items of the non - current tangible assets. Land and assets under construction are not depreciated. The estimated useful lives are as follows: - Buildings, halls and structures 12 – 80 years, - Plant, equipment and vehicles 4 – 20 years. Non - current tangible assets acquired under a finance lease are depreciated over their expected useful lives on the same basis as owned assets. The gain or loss arising on the disposal or retirement of an item of non - current tangible assets is fully reflected in the statement of profit and loss. Software is depreciated on a straight - line basis over the estimated useful life from 4 – 5 years. Provision for employee benefits The Company uses a model to calculate employee benefits (see Note 3(n) above), which reflects the expected employee turnover, wage growth, discount factor and all of the benefits the Company plans to pay to the employees. 5 PROPERTY, PLANT AND EQUIPMENT Land and buildings Plant and equipment Assets under construction Total Cost At 1 January 2021 128 545 472 220 808 783 7 052 285 356 406 540 Additions - - 11 271 017 11 271 017 Disposals (29 505) (3 601 226) (73 045) (3 703 776) Transfers 2 439 570 11 274 507 (13 714 077) - At 31 December 2021 130 955 537 228 482 064 4 536 180 363 973 781 Accumulated depreciation, provisions At 1 January 2021 76 557 256 163 112 033 46 296 239 715 585 Depreciation, recognition of the net book value 2 561 396 6 666 395 - 9 227 791 Impairment loss (5 241) - (13) (5 254) Disposals (2 804) (3 601 227) - (3 604 031) Transfers - - - - At 31 December 2021 79 110 607 166 177 201 46 283 245 334 091 Carrying amount At 1 January 2021 51 988 216 57 696 750 7 005 989 116 690 955 At 31 December 2021 51 844 930 62 304 863 4 489 897 118 639 690 The Company does not use any manufacturing equipment leased under a finance lease. As at 31 December 2021, the cost of fully - depreciated items of property, plant and equipment that are still in use was EUR 45 343 thousand (31 December 2020: EUR 50 388 thousand). Property, plant and equipment include the Slovenská Ľupča castle at a net book value of EUR 2 854 thousand (31 December 2020: EUR 2 926 thousand), which is partly open to the public and partly used for representation purposes. Based on the assessment of indications of impairment as per IAS 36 – Impairment of Assets, the Company decided that there was no need to quantify the impairment loss with regard to the castle. In 2007, the Company began to revise the remaining estimated useful lives of non - current tangible assets and for the purpose of depreciation, it broke down material items of assets into material parts as required by IAS 16 – Property, Plant and Equipment. As a result of a reassessment of useful life, depreciation charges for non - current tangible assets were increased by EUR 199 thousand in 2021. Major additions to non - current tangible assets in 2021 included technical improvements to tube production – replacement of a hydraulic press at acost of EUR861 thousand, and technical improvements toa straightening line at acost of EUR 3 776thousand.Hall lighting was reconstructed and skylights were replaced in the tube drawing mill at a cost of EUR 1 394 thousand. A significant increase in the acquisition of new assets comprises a tube division device for parting - off – REIKA at a cost of EUR 1 228 thousand, and heavy fuel oil replacement at a cost of EUR 935 thousand. Assets under lien As at 31 December 2021,the net book value ofthe Company’s non - current tangible assets pledged tosecure bank loans amounted to EUR 35 567 thousand (fair value of approx. EUR 65 million). The net book value of non - current tangible assets with restricted handling by the Company (easement) was EUR 2 349 thousand. Insurance of assets Non - current assets are insured with Allianz - Slovenská poisťovňa a.s. against all risks up to the amount of their cost. Costs of non - current assets are updated to new values that were calculated by re - indexing original costs to amounts corresponding to the fair value of insured assets. NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (IN EUROS)