Annual report 2019

23 Železiarne Podbrezová a.s.: ANNUAL REPORT 2019 REPORT ON ASSETS AND FINANCIAL MANAGEMENT ASSETS AND FUNDS The Company’s assets recognised as at 31 December 2019 in accordance with International Financial Reporting Standards (IFRS) amounted to EUR 280 642 thousand, a year-on-year decrease of EUR 8 967 thousand. Despite the overall decrease in the amount of assets, non-current assets increased by EUR 7 148 thousand due to higher investments in machinery, equipment and buildings, exceeding depreciation charges by EUR 5 314 thousand (5%). The second reason for the growth of non-current assets was a financial investment of EUR 2 032 thousand. Current assets decreased by EUR 16 115 thousand despite the increase in inventories by EUR 1 581 thousand. The total decrease in current assets was caused mainly by a decrease in receivables by EUR 18 535 thousand (36%), which decreased due to significantly lower sales in the second half of the financial year and lower prices compared to the previous period. The Company’s cash decreased by EUR 230 thousand. As at 31 December 2019, the Company’s equity increased by EUR 2 948 thousand to EUR 211 034 thousand, thanks to the 2019 profit, which exceeded the amount of paid dividends. The decrease in assets combined with an increase in equity resulted in a higher equity-to-assets ratio from 71.9% to 75.2% as at 31 December 2019. Liabilities decreased by EUR 11 915 thousand. The highest decrease was recorded in short- term interest-bearing loans and borrowings (EUR 11 503 thousand), trade payables (EUR 5 884 thousand) and the current tax liability, which decreased to EUR 0 as at 31 December 2019, as the Company had no current income tax. In total, interest-bearing loans andborrowings amounted to EUR 32 230 thousand, and their share of total funds was 11.5% as at 31 December 2019. As at 31 December 2019, the Company’s trade receivables amounted to EUR 33 056 thousand, a decrease of EUR 18 535 thousand over the previous year. Inventories amounted to EUR 54 851 thousand and trade payables amounted to EUR 20 460 thousand as at 31 December 2019. 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 trade payables. The equity-to-assets ratio increased to 75.2%. FINANCIAL MANAGEMENT To finance its OPEX and CAPEXneeds, Železiarne Podbrezová a.s. uses syndicated bank financing, allowing it to use a long-term non-amortised loan and short-term fixed tranches. Before the end of 2019, the Company successfully extended the syndicated loan with the original maturity in July 2020 to a new maturity by July 2024 and increased the credit facility from EUR 18 million to EUR 30 million. The Company’s credit facility is supplemented by separate contractual relationships for short-term financing with two commercial banks. This method of financing guarantees the Company’s financial stability, unifies the lending terms and reduces the complexity of loan management. The gearing ranged between 3% and 7% in 2019, the average loan drawdown amounted to EUR 14 989 thousand and the contracted credit facility amounted to EUR 42 800 thousand. As at 31 December, the Company drew EUR 18 536 thousand of bank loans and guarantees. Bank loan interests are tied to the variable Euribor market rate. The average interest rate on drawn loans was 1.28% p. a. Credit facilities are secured by a pledge over the Company’s movable and immovable assets. The value of the assets pledged is proportionate to the Company’s credit exposure with a bank. A significant source of the Company’s external funding were loans from natural and legal persons totalling EUR 15 370 thousand, which supported the Company’s financial stability. As at 31 December 2019, the Company recorded no open derivative positions. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS AND FINANCIAL PERFORMANCE IN 2019 AND INFORMATION ON THE BUSINESS PLAN