Annual report 2017

2017 ANNUAL REPORT Železiarne Podbrezová a.s. 22 REPORT ON ASSETS AND FINANCIAL MANAGEMENT ASSETS AND FUNDS The Company’s assets recognised as at 31 December 2017 in accordance with International Financial Reporting Standards (IFRS) amounted to EUR 269 029 thousand, a year-on-year increase of EUR 10 711 thousand. Total assets grew by EUR 1 598 thousand despite a decrease in non-current assets. Property, plant and equipment were the main source of the decrease of EUR 2 741 thousand due to lower investments compared with the depreciation and amortisation of the given assets. By contrast, investments in subsidiaries grew by EUR 756 thousand. Current assets increased by EUR 12 308 thousand, of which receivables increased by EUR 9 292 thousand and inventories by EUR 5 099 thousand. The Company’s cash decreased by EUR 2 307 thousand. As regards the Company’s asset coverage funding as at 31 December 2017, equity increased by EUR 1 664 thousand to EUR 199 548 thousand. The equity increased as the profit for 2017 amounted to EUR 4 048 thousand and dividends amounting to EUR 2 384 thousand were paid in 2017. The considerable increase in assets compared to the increase in equity reduced the equity-to-total-assets ratio from 76.6% to 74.2%. A higher portion of the assets was covered by external funding, which grew by EUR 9 046 thousand. The highest growth was recorded in short-term interest- bearing loans and borrowings (EUR 10 282 thousand) and trade payables (EUR 4 500 thousand). By contrast, a current tax liability associated with the 2016 profit decreased by EUR 6 974 thousand and was paid as at 31 March 2017. In total, interest-bearing loans amount to EUR 29 852 thousand, and gearing was 11.1% as at 31 December 2017. As at 31 December 2017, the Company’s trade receivables amounted to EUR 46 645 thousand, an increase by EUR 9 292 thousand over the previous year. Inventories amounted to EUR 42 760 thousand and trade payables also increased to EUR 23 460 thousand as at 31 December 2017. Throughout the period, overdue trade receivables and overdue trade payables outside the ŽP GROUP companies were at no time a significant percentage of total trade receivables and payables. The equity-to-total-assets ratio slightly decreased to 74.2%. FINANCIAL MANAGEMENT To finance its operations and CAPEX needs, Železiarne Podbrezová a.s. uses syndicated bank financing, allowing it to use a long-term non-amortised loan and short-term fixed tranches. The credit facility is supplemented by separate contractual relationships for short-term financing with two commercial banks. This method of financing helps to maintain financial stability, unifies the loan terms and reduces the complexity of loan management. The gearing ranged between 1% and 5% in 2017, and an average loan amounted to EUR 7 675 thousand. The contracted credit facility at the year-end amounted to EUR 22 300 thousand and the Company used EUR 13 282 thousand as at 31 December. Bank loan interests are tied to the variable Euribor market rate. The average interest rate on loans was 1.31% p.a., i.e. the absolute amount of interest paid was EUR 101 thousand. The loans are secured by a lien on movable and immovable assets of the Company, which is proportional to the Company’s exposure in a particular bank. A significant source of the Company’s external funding were loans from natural and legal persons totalling EUR 16 570 thousand, which has a positive impact on the financial management stability. As at 31 December 2017, the Company recorded no open derivative positions. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2017 AND INFORMATION ON THE BUSINESS PLAN