Annual report 2017

Železiarne Podbrezová a.s. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2017 (In whole euros) These notes are an integral part of the consolidated financial statements. This is an English language translation of the original Slovak language document. 9 Given the nature of the Group’s transactions and types of financial instruments held by the Group, and based on management assessment, there will be no material changes to the classification and measurement of financial instruments at the initial application of IFRS 9.  IFRS 15 “Revenue from Contracts with Customers” and amendments to IFRS 15 “Effective Date of IFRS 15” – adopted by the EU on 22 September 2016 (effective for annual periods beginning on or after 1 January 2018); IFRS 15 specifies how and when an IFRS reporter must recognise revenue and requires such entities to provide users of financial statements with more informative, relevant disclosures. This standard supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations. Application of the standard is mandatory for all IFRS reporters and applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. The core principle of the new standard is for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (ie payment) which the company expects to be entitled to in exchange for such goods or services. The new standard will also result in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively (eg service revenue and contract modifications) and improves guidance for multiple-element arrangements. Given the nature of the Group’s transactions and type of revenues recorded by the Group, and based on management assessment, there will be no material changes to the moment and recognition of revenues and their measurement upon the initial application of IFRS 15.  IFRS 16 “Leases” – adopted by the EU on 31 October 2017 (effective for annual periods beginning on or after 1 January 2019); Under IFRS 16, a lessee recognises a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if such can be readily determined. If such a rate cannot be readily determined, the lessee must use their incremental borrowing rate. Under IFRS 16 as well as under its predecessor, IAS 17, lessors must classify leases according to their nature as operating or finance. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise, a lease is classified as an operating lease. For finance leases, a lessor recognises finance income over the lease term, based on a pattern reflecting a constant periodic rate of return on the net investment. A lessor recognises operating lease payments as income on a straight-line basis or on another systematic basis if more representative of the pattern in which benefit from use of the underlying asset is diminished. The Group does not anticipate that the new standard will have an impact on the financial statements upon its initial application.  Amendments to IFRS 4 “Insurance Contracts” – Applying IFRS 9 “Financial Instruments” with IFRS 4 “Insurance Contracts” – adopted by the EU on 3 November 2017 (effective for annual periods beginning on or after 1 January 2018 or when IFRS 9 “Financial Instruments” is applied for the first time);  Amendments to IFRS 15 “Revenue from Contracts with Customers” – Clarifications to IFRS 15 “Revenue from Contracts with Customers” – adopted by the EU on 31 October 2017 (effective for annual periods beginning on or after 1 January 2018).