Annual report 2018

9 Železiarne Podbrezová a.s. ANNUAL REPORT 2018 9 - Amendments to IAS 19 “Employee Benefits” – Plan Amendment, Curtailment or Settlement (effective for annual periods beginning on or after 1 January 2019); - Amendments to various standards due to “Improvements to IFRSs (cycle 2015 – 2017)” resulting from the annual improvement project of IFRS (IFRS 3, IFRS 11, IAS 12 and IAS 23) primarily with a view to removing inconsistencies and clarifying wording (effective for annual periods beginning on or after 1 January 2019); - Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or after 1 January 2020). The Company anticipates that the adoption of these new standards, amendments to the existing standards and new interpretations will have no material impact on the financial statements of the Company in the period of initial application. Hedge accounting for a portfolio of financial assets and liabilities whose principles have not been adopted by the EU remains unregulated. According to the Company’s estimates, the application of hedge accounting to a portfolio of financial assets or liabilities pursuant to IAS 39: “Financial Instruments: Recognition and Measurement” would not significantly impact the financial statements if applied as at reporting date. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance The separate financial statements have been prepared in accordance with the Act on Accounting and IFRS as adopted by the EU and on the going concern assumption. IFRS as adopted by the EU do not currently differ from IFRS as issued by the IASB, except for certain standards and interpretations that have not been endorsed by the EU as described above. Under the Slovak Act on Accounting No. 431/2002 Coll. as amended, the Company is also required to prepare its consolidated financial statements in compliance with IFRS as adopted by the EU (see also Note 1.7). (b) Basis of preparation of the separate financial statements The separate financial statements are prepared under the historical cost convention, except for certain financial instruments. The principal accounting policies adopted are set out below. In order that the Slovak statutory financial statements conform to IFRS as adopted by the EU, the accompanying separate financial statements reflect certain adjustments and reclassifications not recorded in the accounting records of the company. The reporting currency and the functional currency is the euro (EUR). The data in the separate financial statements are reported in euro unless stated otherwise. The preparation of the financial statements in conformity with IFRSrequiresthe use of certain accounting estimates. It also requiresmanagement to exercise its judgment in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant for the separate financial statements are disclosed in Note 4. The financial statements have been prepared under the going concern assumption. (c) Transactions in foreign currencies Cash items denominated in a foreign currency are translated to euro using the reference exchange rate determined and announced by the European Central Bank (ECB) or the National Bank of Slovakia(NBS) on the date preceding the transaction date. At each end of a reporting period, cash items denominated in a foreign currency are translated to euro using the reference exchange rate determined and announced by the European Central Bank (ECB) or the National Bank of Slovakia (NBS) on the reporting date. Non - refundable advances received and made in a foreign currency are not translated as at the reporting date. Non - cash items measured at a fair value and denominated in a foreign currency are translated using the exchange rate prevailing at the date of the fair value measurement. Non - cash items measured at a historical cost and denominated in a foreign currency are not translated. For foreign currency purchases and sales in euro, and upon the transfer of funds from an account established in a foreign currency to an account established in euro and from an account established in euro to an account established in a foreign currency, the exchange rates at which these amounts were purchased or sold were applied. If the sale or purchase of a foreign currency is performed at an exchange rate other than the one offered by a commercial bank in its foreign exchange list, the exchange rate offered by such commercial bank in its foreign exchange list on the transaction settlement date is used. If the sale or purchase is not performed with a commercial bank, the reference exchange rate determined and announced by the ECB or the NBS on the date preceding the transaction settlement date is used. (d) Financial instruments Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Group becomes a party to the contractual provisions of a financial instrument. The Company’s financial instruments represent available - for - sale investments, receivables, interest - bearing loans and borrowings, payables and financial derivatives. (e) Property, plant and equipment (i) Owned assets Property, plant and equipment (the “non - current tangible assets”) are carried at cost less any accumulated depreciation and provisions (impairment loss). Cost includes all costsdirectly attributable to bringing the asset to working conditionsfor its intended use. Internally - generated non - current tangible assets are measured at own costs, which include the cost of raw materials, direct wages and overhead costs directly associated with the production of non - current tangible assets, until the asset is put into use. Where some significant parts of non - current assets have different useful lives, they are recognised and depreciated as separate items. (ii) Subsequent expenditures Any subsequent expenditures incurred to replace a component of non - current tangible assets that is recognised separately, including inspections and general overhauls, are capitalised provided that they meet the basic criteria for the recognition of non - current tangible assets, and the cost of the component can be measured reliably. All other expenditures made, after the acquisition of non - current tangible assets, to restore or maintain the extent of future economic benefits are recognised as expenses when incurred (insignificant repairs and maintenance). (f) Non-current intangible assets (i) Software Software is measured at cost less accumulated depreciation. Software is depreciated using linear depreciation over the expected useful life, which is 4 – 5 years. NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 (IN EURO)