ANNUAL REPORT 2023

62 ŽELEZIARNE PODBREZOVÁ A.S. ANNUAL REPORT 2023 12 employees. The liabilities related to the benefits are measured at the present value of the estimated future cash outflows discounted by market yields on government bonds, which have maturity periods approximating the maturity periods of the related liability. All actuarial gains and losses from lump - sum payments upon retirement are recognised in Other comprehensive income. Other employee benefits 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 themoment of the settlement of benefits. (q) Social security and pension schemes The Group is required tomake contributions to various obligatory Government insurance schemes, together with contributions by employees. The cost of social security payments is charged to the statement of comprehensive income in the same period as the related salary cost. The Group contributes to a supplementary pension plan administered by a private pension fund, based on the employment period of the employee. No additional liabilities arise to the Group from the payment of pensions to employees in the future. (r) Provisions Provisions are recognised when theGroup has a present legal or constructive obligation as a result of past events, it is probable that an outflowof resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can bemade. A provision is measured on the basis of the best estimatemade by themanagement 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. (s) Accruals The Group makes an estimate of expenses and liabilities that have not been invoiced at the reporting date. These expenses and liabilities are recorded in the accounting records on an accrual basis and recognised in the financial statements in the period to which they relate. (t) Trade and other payables Trade and other payables are initially measured at fair value and subsequently at amortised cost using the effective interest ratemethod. (u) Revenue recognition (i) Revenues from contracts with customers In relation to the sale of goods and merchandise, revenues are recognised when the control of ownership is transferred to the buyer and no significant uncertainties remain regarding the collection of the consideration, associated costs and possible claims or returning of goods andmerchandise. Revenues are stated net of taxes and discounts, after eliminating sales within the Group. No revenue is recognised if there are significant uncertainties regarding the settlement of the consideration due, the associated costs or the possible return of merchandise, or regarding the continuous involvement of the Group in the management of the merchandise. Revenues from the provision of services are recognised when the relevant services are rendered in proportion to the stage of their completion at the reporting date. (ii) Subsidies Subsidies are not recognised unless there is a reasonable assurance that the Group will meet the subsidy - related conditions. Subsidies are systematically recognised in the statement of comprehensive income in the periods in which the Group recognises as costs the related expenditures to be compensated by the subsidies. In particular, subsidies whose principal condition is for the Group to acquire, construct or otherwise obtain non - current assets are reported as deferred income in the statement of financial position and recognised on a systematic basis in the statement of comprehensive income over the useful life of the related assets. The subsidies which are to be received as compensation for expenditures or losses already incurred or the aim of which is to provide immediate financial aid to the Group without related future expenditures are recognised in the statement of comprehensive income on an accrual basis. (v) Expenses (i) Financial costs and financial income Financial costs and financial incomecomprise interest payable on borrowings calculated using the effective interest ratemethod, interest received, dividend income, proceeds on the sale of financial investments, foreign exchange gains and losses, and bank fees. Borrowing costs directly related to the acquisition of non - current tangible assets are included in the cost of the assets. Interest income is recognised in the statement of comprehensive income as it occurs using the effective yieldmethod. Dividend income is recognised in the statement of comprehensive income on the date when the dividend is declared. (w) Taxation Income tax for the year comprises current and deferred tax. Current tax is calculated from the taxable income for the year using tax rates enacted at the reporting date, and any adjustments to current tax in respect of previous years. Deferred income tax is calculated, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is calculated at the income tax rates that are expected to apply to the period when the asset is to be realised or the liability settled. Deferred tax is charged or credited to the statement of comprehensive income, except for those items of receivables and payables that are credited or charged directly to equity. Deferred tax is not calculated for the following temporary differences: - Arising from goodwill – not deductible for tax purposes; - Arising from the initial recognition of assets or liabilities that neither affect accounting nor taxable profit, are attributable to other than business combination transactions, and do not give rise to taxable and tax - deductible temporary differences; and - Arising from investments in subsidiaries and the joint venture, where the Group controls the settlement of temporary differences and temporary differences are unlikely to be utilised in the near future. When calculating deferred tax, the expected method of realisation or settlement of the carrying amount of assets and liabilities is also considered. A deferred tax asset is recognised only to the extent that it is probable that the Group will generate a sufficient tax base in the future against which the asset can be utilised. Carrying amounts of deferred tax assets are always assessed as at the reporting date. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities andwhen they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Notes to the Consolidated Financial Statements For the year ended 31 December 2023 (in euros)