Annual report 2019

68 Železiarne Podbrezová a.s.: ANNUAL REPORT 2019 24 28 COMMITMENTS AND CONTINGENCIES 28.1 Environmental matters The Company’s management believes that the Group complies with the relevant existing legislation in all material respects. It is not expected that the Group may become liable to make significant payments relating to the environment in the future. 28.2 Capital expenditure The Group prepared a capital expenditure plan for 2020 amounting to EUR 22 813 thousand, of which EUR 2 755 thousand is contracted as at 31 December 2019. 28.3 Litigation and potential losses At present, the Group is involved in a number of legal cases and other disputes that arise as a result of ordinary business activities. The Group created a provision for litigation against PIPEX ITALIA S.p.A. in the amount of EUR 796 thousand. The Group did not create a provision for other Group litigations in the accompanying consolidated financial statements, and based on the advice of its legal counsels, believes that the final outcome of the litigations is uncertain, and no material negative impact, individually or in aggregate, is anticipated on the Company’s consolidated financial statements. 28.4 Emission rights During2005, theEU - wide greenhouse gas emissionrights tradingschemecame into effect together withthe Act onEmissionRights Trading passed by the Slovak Parliament in order to implement therelated EU Directive inSlovakia. Under this legislation, theGroup is required to deliver emission rights to the Slovak Environmental Office to offset actual greenhouse gas emissions. The Group has opted to recognise the allocated emission rights at a nominal amount. In 2019, the Group received a pro rata share of emission rights, but the Group’s emission production in 2019 exceeded this share. The difference of EUR 293 thousand is recognised in profit or loss. The Group expects similar development until the end of the 3 rd trading period (2020) and, therefore, decided to purchase emission rights in the amount of EUR 375. The Group has an obligation to deliver emission rights for actual emissions. This obligation was fulfilled by the delivery of emission rights for the 2019 monitored period in March 2020. 28.5 Guarantee for loans provided to other entities The Group provides its assets as collateral for the liabilities of joint debtors ŽP Informatika s.r.o. and ŽIAROMAT a.s. under a loan agreement with SLSP up to EUR 6 million. The outstanding principal as at 31 December 2019 amounts to EUR 4.8 million. The Company’s management believes given the financial positions of ŽP Informatika s.r.o. and ŽIAROMAT a.s. that the subsidiaries will repay the loans, therefore the Group recorded no provision in the accompanying consolidated financial statements. 29 EVENTS AFTER THE REPORTING PERIOD From 31 December 2019 up to the issue date of the financial statements, there were no such events that would have a significant impact on the Group’s assets and liabilities, except for those resulting from the ordinary course of business operations. The rapid development of the SARS - CoV - 2 virus and its social and economic impact in Slovakia and worldwide may mean revisions may be needed to the assumptions and estimates used in the preparation of the financial statements. These may cause significant adjustments to the carrying amount of assets and liabilities in the following financial year. At this stage, management is unable to make a reliable estimate of their possible impact, as events are developing dynamically every day. The long - term impact may also affect volumes of business transactions, cash flows and profitability of the Group. However, as at the preparation date of these financial statements, the Group continues to meet its liabilities and expects to continue as a going concern. 30 APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements were prepared and approved for issue on 24 April 2020. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 (IN EUROS)