Annual Report 2008

NOTES TO THE SEPARATE FINANCIAL STATEMENTS Far the year ended 31 December 2008 (in thousands of SKK) b) Fair value estimation The fair value ot publicly traded derivatives and available-for-sale securities is based on quoted market prices at the reporting date. The fair value of interes! swaps is calculated as the present value of the estimated future cash fiows. The fair value of forward foreign exchange contracts is determined using forward exchange marl<et rates at the reporting date. In assessing the fair value of non-traded derivatives and other financial instruments, the Company uses a variety of methods and market assumptions that are based on market conditions existing al the reporting date. Other techniques, mainly estimated discounted value ot future cash fiows, are used to determine fair value far the remaining financial instruments. The face values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values. The fair value of financial liabilities far disclosure purposes is estimated by discounting the future contractual cash flows al the currenl market interes! rate available to the Company far similar financial instruments. 30. RELATED PARTY TRANSACTIONS 30.1. Members ot statutory and supervisory bodies Remuneration paid to the members of the Company's Board of Directors and Supervisory Board far the year ended 31 December 2008 amounted to SKK 11 310 thousand (year ended 31 December 2007: SKK 13 612 thousand). Remuneration is included in personnel expenses. 30.2. Other related parties CPA s.r.o., Slovak Republic is the parent of ŽP. During 2008, the Company entered into the following transactions with related parties: Receivables Payables Sa/es of Purchases asat as at goods and ofgoods 31 December 31 December services in and services 2008 2008 2008 in 2008 CPA s.r.o. - parent company 680 233 841 6 716 2 893 Subsidiaries and joint ventures 511 837 256 507 4 243 573 2 381 567 Fellow subsidiaries 25451 21 361 1893836 12 751 Associates 2 978 24 389 4 474 668 013 540 946 536 098 6 148 599 3 065 224 During 2007, the Company entered into the following transactions with retated parties: Receivables Payab/es Sa/es of Purchases as at as at goods and ofgoods 31 December 31 December servlces in and servíces 2007 2007 2007 in 2007 CPA s.r.o. - parent company 1 325 510 563 6 791 2450 Subsidiaries and joint ventures 662 159 162 734 4 472 633 1 823 790 Fellow subsidiaries 136 399 10 903 1018815 58 339 Associates 9665 64 871 10 436 632 628 809 548 749 071 5 508 675 2 517 207 Transactions with the parent company represent advisory services. rent of premises and acquisition of financial investments. Transactions with subsidiaries represent sale of t.P products. finance leases, catering services. IT services, accommodation, leisure-time services and purchase ot metal scrap. Transactions with associates represent mainly the purchase of scrap. Transactions with joint ventures mainly represent transportation services. 31 . COMMITMENTS AND CONTINGENCIES 31.1. Environmental matters The management believes that the Company complies with the retevant existing legislation in all material respects. lt is not expected that the Company may become liable to make significant payments relating to the environment in the future. 31.2. Capitat expenditure The Company prepared a capital expenditure pian for 2009 al SKK 135 025 thousand of which an amount of SKK 59 167 thousand is covered by contracts al 31 December 2008. 31.3. Litigation and potentlal losses At present, the Company is involved in a number of legal cases and other disputes that arise as a result of ordinary business activities. lt is not expected that they should have a significant negative impact, individually or jointly, on the accompanying separate financial statements. In the accompanying separate financial statements, the Company recorded no provisions for litigation as the Company's management, based on the advice of its legal counsel, believes that the final outcome ot the litigation is uncertain. 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, žp is required to deliver emission rights to the Slovak Environmental Office to offset actual greenhouse gas emissions.