Annual report 2019

52 Železiarne Podbrezová a.s.: ANNUAL REPORT 2019 8 - Amendments to IAS 28 “Investments in Associates and Joint Ventures” – Long - term Interests in Associates and Joint Ventures – adopted by the EU on 8 February 2019 (effective for annual periods beginning on or after 1 January 2019), - Amendments to various standards due to “Annual Improvements to IFRS Standards (2015 – 2017 Cycle)” resulting from the annual IFRS improvement project (IFRS 3, IFRS 11, IAS 12 and IAS 23) primarily with a view to removing inconsistencies and clarifying wording – adopted by the EU on 14 March 2019 (effective for annual periods beginning on or after 1 January 2019), - IFRIC 23 “Uncertainty over Income Tax Treatments” – adopted by the EU on 23 October 2018 (effective for annual periods beginning on or after 1 January 2019). The adoption of these new standards, amendments to the existing standards, and the interpretation has not led to any material changes in the Group’s consolidated financial statements except for the effect of adoption of IFRS 16 – Leases. New and amended IFRS standards issued by IASB and adopted by the EU but not yet effective At the date of authorisation of these financial statements, the following amendments to the existing standards were issued by IASB and adopted by the EU and are not yet effective: - Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” – Definition of Material – adopted by the EU on 29 November 2019 (effective for annual periods beginning on or after 1 January 2020), - Amendments to References to the Conceptual Framework in IFRS Standards – adopted by the EU on 29 November 2019 (effective for annual periods beginning on or after 1 January 2020), - Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measurement” and IFRS 7 “Financial Instruments: Disclosures” – Interest Rate Benchmark Reform – adopted by the EU on 15 January 2020 (effective for annual periods beginning on or after 1 January 2020). The Group has elected not to adopt these new standards, amendments to the existing standards and new interpretation in advance of their effective dates. New and amended IFRS standards issued by IASB but not yet adopted by the EU At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by IASB, except for the following new standards and amendments to the existing standards, which were not endorsed for use in the EU as at the reporting date (the effective dates stated below are for IFRS as issued by IASB): - IFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1 January 2021), - Amendments to IFRS 3 “Business Combinations” – Definition of a Business (effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period), - Amendmentsto IAS1 “PresentationofFinancialStatements” – ClassificationofLiabilities asCurrent orNon - current(effectiveforannualperiods beginning on or after 1 January 2022), - IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January 2016) – the European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final standard, - Amendmentsto IFRS 10 “Consolidated FinancialStatements” and IAS 28 “Investments in Associates and Joint Ventures” – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and further amendments (effective date deferred indefinitely until the research project on the equity method has been concluded). The Group anticipates that the adoption of these new standards, amendments to the existing standards and new interpretations will have no material impact on the consolidated financial statements of the Group 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 Group’s estimates, the application of hedge accounting to a portfolio of consolidated financial assets or liabilities pursuant to IAS 39 “Financial Instruments: Recognition and Measurement” would not significantly impact the consolidated financial statements if applied as at the reporting date. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance The consolidated financial statements have been prepared in accordance with 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. (b) Basis of preparation of the consolidated financial statements The consolidated financial statements are prepared under the historical cost convention, except for certain financial instruments and business combinations under IFRS 3 “Business Combinations”. The principal accounting policies adopted are set out below. The accompanying consolidated financial statements reflect certain adjustments and reclassifications not recorded in the accounting records of the Group companies in order to conform the Slovak statutory and other financial statements to financial statements prepared in accordance with IFRS as adopted by the EU. The reporting currency is the euro. The data in the consolidated financial statements are reported in euros unless otherwise stated. The accounting policies have been consistently applied by the Group and are consistent with those of the previous year. Thepreparation of thefinancialstatements inconformity with IFRS requires the useof certain accountingestimates. It alsorequires management 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 to the consolidated financial statements are disclosed in Note 4. The consolidated financial statements were prepared under the going concern assumption. The Group’s management expects negative results of operations in 2020. (c) Basis of consolidation (i) Subsidiaries The consolidated financial statements incorporate the financialstatements of controlled reporting entities (“subsidiaries”). The control arises if the reporting entity: - Has power over an investee; - Has an exposure or rights to variable returns from its involvement with the investee; and - Has the ability to use its power over the investee to affect its returns. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (IN EUROS)