13.8. Costs

SELECTED ACCOUNTING PRINCIPLES

Costs

Cost of sales includes costs of finished goods, merchandise, raw materials and services sold and inventories written down to net realizable value.

Costs are adjusted for profits or losses from settlement of cash flow hedging instruments related to the above mentioned costs. The costs are also reduced by subsidies, therefore including compensations, regarding to the related cost items.

Distribution expenses include selling brokerage expenses, trading expenses, advertising and promotion expenses as well as distribution expenses as well as the fees incurred by the Group resulting from legal regulations, calculated based on the volumes of certain goods introduced to the market, such as NCR and NCW.

Administrative expenses include expenses relating to management and administration of the Group as a whole.

ESTIMATES

The Group performs estimates with respect to the recognized compensations of indirect costs that are granted to it in accordance with the act on the compensation system for energy-intensive sectors and subsectors. The value of the compensations for a given fiscal year is determined on the basis of available data on actual electricity consumption and production volumes in the sectors covered by the compensation system for each installation, taking into account an estimate of any reductions resulting from the maximum limits of the funds allocated for compensation established in the act.