Annual Report 2008

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2008 (in thousands of SKK) 31 . COMMITMENTS AND CONTINGENCIES 31.1. Environmental matters The management believes that the Group complies with relevant existing legislation in all material respects. lt is not expected that the Group may become liable to make significant payments relating to the environment in the future. 31.2. Capital expenditure The Company prepared a capital expenditure pian for 2009 at SKK 135 025 thousand of which an amount of SKK 95 167 thousand is covered by contracts as al 31 December 2008. 31.3. Litigation and potential losses At present, the Group is involved in a number of legal cases and other disputes that arise as a result of ordinary business activities. In the accompanying consolidated financial statements, the Company recorded no provisions far litigation as the Company's management, based on the advice of its legal counsel, believes that the final outcome of the litigations is uncertain, and no material negative impact, individually or in aggregate, is anticipated on the Company's consolidated financial statements. 31.4. Emission rights During 2005, the European Union-wide greenhouse gas emission rights trading scheme came into effect together with the Act on Emission Rights Trading passed by the Slovak Parliament in order to implement the related EU Directive in Slovakia. Under this legislation, the Company is required to deliver emission rights to the Slovak Environmental Office to offset actual greenhouse gas emissions. A similar obligation applies to the subsidiary ŽĎAS, a.s„ in the Czech Republic. The Group has opted to record emission rights received ata nominal amount and does not record any asset or liability far actual emissions on the basis that the Group has received adequate emission rights to cover its actual emissions. The Group has an obligation to deliver emission rights for actual emissions. This obligation will be fulfilled by delivery of emission rights far the period under review in 2008 by 30 April 2009. The Company acquired the 2008 emission rights (period under review) in July 2008. 32. POST BALANCE SHEET EVENTS 32.1. Change of Repayment Schedule The Company reached an agreement with CPA s.r.o. on a modification of the repayment schedule in respect of the non-current liability arising trom the acquisition of the subsidiary ŽP EKO QELET a.s. in 2007. Some instalments were rescheduled to 2010. 32.2. Re-assessment of the Subsid iary's Production Activities In connection with the current economic conditions, the Company decided to reassess and curtail for a limited period of time the production activities of its subsidiary ŽP Tažírny trub Svinov spol. s r.o. The decision was adopted in March 2009 and ii will come into force in the following months. As at 31 December 2008, the registered capital of ŽP Tažirny trub Svinov spol. s.r.o. amounted to SKK 102 171 thousand, the investment was recognised in the Company's Balance Sheet in the amount of SKK 136 394 thousand and liabilities in the amount of SKK 34 223 thousand. 32.3. Stati Reductions The Company adopted a decision on the gradual partial reduction of its headcount in 2009. 32.4. Change of Legal Form and Decrease ot Registered Capital in the Subsidiary ŽP-lnvest (subsidiary) changed its legal form from a limited liability company to a joint stock company with effect trom 12 March 2009. As at 12 March 2009, Železiarne Podbrezová a.s. (parent company) decreased the registered capital of ŽP-lnvest a.s. trom SKK 65 200 thousand to SKK 37 055 thousand. 33. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial staternents were prepared and approved for release on 25 March 2009.