Annual report 2016

ANNUAL REPORT 2016 • Železiarne Podbrezová a.s. 22 Throughout the period, overdue trade receivables and overdue trade payables were at no time a significant percentage of total trade receivables and payables. The equity-to-total assets ratio increased to 76.6%. FINANCIAL MANAGEMENT To finance its operations and CAPEX needs, Železiarne Podbrezová a.s. uses “club financing” provided by sev - eral banking institutions, which helps to maintain fi - nancial stability, unify the terms for its provision, and facilitate loan management. Under the integrated doc- umentation, the Company can draw variable amounts from the financial funds provided as long-term loans, and fixed tranches. The remaining credit limit is opti - mally complemented by separate contractual arrange- ments for short-term financing via overdraft facilities with two commercial banks. The Company’s gearing significantly decreased in 2016. The Company’s credit exposure decreased y/y from 12% to 1.2%, inter alia, due to the early repayment of loans totalling EUR 21 323 thousand. The credit fa- cility amounted to EUR 20 300 thousand as at the year- end, and the Company only drew EUR 3 000 thousand. The average drawing amounted to EUR 22 681 thou- sand during 2016. Bank loan interest is derived from the Euribor variable market interest rate. Thanks to low (negative) Euribor rates in 2016, the average interest rate was 1.47% p.a. and the total amount of paid inter- est was EUR 333 thousand. As at 31 December 2016, the Company recorded no open derivative positions. Credit facilities are secured by a pledge over the Com- pany’s movable and immovable assets. The value of the assets pledged in favour of a bank is proportionate to the Company’s credit exposure with the bank. To ensure financial stability, the Company received loans from individuals and legal entities totalling EUR 16 570 thousand, which significantly contributes to en - suring financial stability. REPORT ON ASSETS AND FINANCIAL MANAGEMENT ASSETS AND FUNDS The Company’s total assets recognised as at 31 Decem- ber 2016 in accordance with International Financial Reporting Standards (IFRS) amounted to EUR 258 319 thousand, a y/y decrease of EUR 12 451 thousand. The disposal of assets was due to a decrease in non-cur- rent assets by EUR 22 473 thousand, most of which comprised the disposal of investments in subsidiaries amounting to EUR 20 434 thousand related to the sale of Czech subsidiaries ŽĎAS a.s. and TS Plzeň a.s. Prop - erty, plant and equipment also decreased by EUR 1 896 thousand as investments were lower than the depreci- ation of the given assets. In contrast, current assets in- creased by EUR 10 022 thousand, of which receivables increased by EUR 10 267 thousand. Company cash de- creased marginally by EUR 170 thousand. As regards equity and liabilities, equity increased by EUR 7 625 thousand in 2016, despite paid dividends amounting to EUR 28 610 thousand. Equity increased due to a profit of EUR 36 235 thousand. As a result, the structure of liabilities further improved as the equi- ty to total assets ratio increased from 70.3% to 76.6%. The increase in the equity ratio resulted from higher equity and a decrease of EUR 20 076 thousand in to- tal liabilities. Long-term interest-bearing loans and borrowings decreased by EUR 19 583 thousand in 2016, and short-term interest-bearing loans and borrowings were repaid. In total, interest-bearing loans decreased by EUR 29 923 thousand, and gearing was 7.6% as at 31 December 2016. As at 31 December 2016, the Company’s trade receiv- ables amounted to EUR 37 352 thousand, an increase of EUR 10 267 thousand over the previous year. Trade payables also increased by EUR 2 049 thousand to EUR 18 960 thousand. As at the year-end, the Company also recognised a current tax liability of EUR 7 186 thou- sand, which was settled as at 31 March 2017. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2016 AND INFORMATION ON THE BUSINESS PLAN