Annual report 2012

15 The quality management system for serial production of spare parts used in the automotive industry focused mainly on meeting the ISO/TS 16949 standard requirements and the application thereof to the conditions of Železiarne Podbrezová a.s. Supervision audits pursuant to the ISO 9001:2008, VDA 6.1 and ISO TS 16949:2009 standards were successful. We maintained certificates indicating that the production processes are verified and in compliance with the requirements specified in the relevant standards. We also successfully maintained the work safety management system certificate according toOHSAS 18001. In 2012, we sold products, goods and services totalling EUR 264 427 thousand to our customers, of which more than 90% was export. It is a decrease of EUR 11 098 thousand (4%) compared to the previous year.. The reason is the lower sales of precision tubes and steel blocks accompanied with a slight decrease in selling prices. However, we produced steel blocks for a reserve, which will be gradually increased to 36 thousand tonnes. The blocks will be used during the closure of the steel mill's technological facilities due to the reconstruction of the continuous casting facility and the dedusting of furnaces in September 2013. The geographical structure of sales in 2012 did not change significantly compared to previous periods. The dominant market segment continued to be EU countries in the following sequence: Germany, the Czech Republic, Poland, Italy, and Hungary. Amoderate growth in supplies to the US market was recorded in the secondhalf of the year. 34 273 63 613 185 304 10 396 11 822 305 409 Slovakia Czech Republic Other EU countries Other European countries Other exports Total sales 15 766 17 959 87 275 10 912 3 328 135 239 28 551 39 868 128 216 10 750 8 894 216 280 33 970 45 970 174 127 15 687 5 770 275 524 32 090 46 640 155 395 16 906 13 396 264 427 2008 2009 2010 2011 2012 DEVELOPMENT IN TOTAL SALES BY GEOGRAPHICAL STRUCTURE (REVENUES IN EUR '000) Purchaseof Strategic RawMaterials andEnergy Compliance with ISO standards in business relationships with suppliers of raw materials and a stringent payment discipline has enabled us to improve still further our supply activities, especially in terms of quality and delivery times. The purchase price level was volatile in 2012, but it was much more stable compared to the previous year. The atmosphere with a possible return of the economic crisis had a positive impact on purchase prices under long-term supplier-customer relationships. On the other hand, SLOVAKIA STEEL MILLS, a.s. increased its steel production in Eastern Slovakia, interfering with the balanced demand for and supply of scrap steel in Central Europe, with a negative impact on purchase prices, especially the price of scrap steel. This phenomenon will continue to have a negative impact on the economic efficiency of metallurgical production of steel in Železiarne Podbrezová a.s. in the future. In 2012, we purchased raw materials in the total amount of EUR 155 390 thousand, of which 12.5%were imports. As usual, our priorities included the purchase of scrap steel, ferro- additives, and raw iron, as well as heat-resistant materials and spareparts. In 2012, we purchased a total of 317,253 tonnes of scrap steel, of which 88.2% were supplies by our subsidiaries ŽP EKO QELET a.s. andKBZ s.r.o. In 2011, we purchased a total of 219,108 MWh of electricity. Our small hydroelectric power plants and the co-generation unit produced 57,892 MWh of electricity, which represents a 21% share of internal generation in our total annual consumption. 3 In 2012, we purchased 44.4 million m of natural gas from Slovenský plynárenský priemysel, a. s. for our consumption. Compared to the previous year 2011, we recorded an increase in average purchase prices of natural gas by 23.2% and of electricity by 1.9%. ŽELEZIARNE PODBREZOVÁ A.S. ANNUAL REPORT 20 12 REPORT BY THE BOARD OF DIRECTORS ON THE BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2012 AND INFORMATION ON THE BUSINESS PLAN