Annual report 2018

Železiarne Podbrezová a.s. ANNUAL REPORT 2018 22 REPORT ON ASSETS AND FINANCIAL MANAGEMENT ASSETS AND FUNDS The Company’s assets recognised as at 31 December 2018 in accordance with International Financial Reporting Standards (IFRS) amounted to EUR 289 609 thousand, a year-on-year increase of EUR 20 580 thousand. Total non-current assets increased by EUR 4 663 thousand owing to higher investments in property, plant and equipment, which exceeded the depreciation and amortisation by EUR 4 933 thousand (5%). Investments in subsidiaries only increased slightly due to an increase of EUR 41 thousand in the Company’s share in a trade company. Current assets increased by EUR 15 917 thousand, of which inventories increased by EUR 10 511 thousand and receivables by EUR 4 945 thousand, mainly owing to a major revenue growth and an increase in the sales prices of input raw materials and finished goods. The Company’s cash decreased by EUR 222 thousand. There was also an increase in the Company’s asset coverage funding as at 31 December 2018, as equity increased by EUR 8 538 thousand to EUR 208 086 thousand. The equity increased as the profit for 2018 significantly exceeded the amount of dividends paid. The higher increase in assets compared to the increase in equity reduced the equity-to- total-assets ratio from 74.2% to 71.9% as at 31 December 2018. A higher portion of the assets was covered by external funding, which grew by EUR 12 042 thousand. The highest growth was recorded in short-term interest-bearing loans and borrowings (EUR 6 081 thousand) and trade payables (EUR 2 883 thousand) and a current tax liability, which grew by EUR 2 464 thousand due to higher profitability and, as a result, higher current income tax. The tax liability was repaid as at 31 March 2019. In total, interest-bearing loans and borrowings amount to EUR 35 933 thousand, and gearing was 12.4% as at 31 December 2018. As at 31 December 2018, the Company’s trade receivables amounted to EUR 51 590 thousand, an increase of EUR 4 945 thousand over the previous year. Inventories amounted to EUR 53 271 thousand and trade payables also increased to EUR 26 343 thousand as at 31 December 2018. Throughout the period, the Company’s 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 slightly decreased to 71.9%. 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 3% and 7% in 2018, and an average loan amounted to EUR 13 634 thousand. The contracted credit facility at the year-end amounted to EUR 30 800 thousand. The Company drew bank loans amounting to EUR 19 363 thousand and used guarantees amounting to EUR 1 679 thousand as at 31 December. Bank loan interests are tied to the variable Euribor market rate. The average interest rate on loans was 1.27% p. a., ie the absolute amount of interest paid was EUR 173 thousand. The loans are secured by a lien over movable and immovable assets of the Company, whose value is proportional to the Company’s exposure in a particular bank. A significant source of the Company’s external funding ensuring its financial stability were loans from natural and legal persons totalling EUR 16 570 thousand. As at 31 December 2018, the Company recorded no open derivative positions. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2018 AND INFORMATIONON THE BUSINESS PLAN