Annual report 2016

ANNUAL REPORT 2016 • Železiarne Podbrezová a.s. 16 CAPITAL INVESTMENTS AND CARE FOR TECHNOLOGICAL EQUIPMENT As the Company’s business plan for 2016 counted with an operating loss, and as the tube industry was char- acterised by low profitability and excess supply for the second year running, our investments in technology were limited to EUR 6 591 thousand, which did not even cover depreciation charges. However, from an economic perspective, the investments made will be beneficial for the Company. The most significant investments in technology in 2016 included the installation of the tube division sys- tem directly on the drawing bench in the tube draw- ing plant. As a result, two operations were combined and will be carried out in one plant, which reduced the handling of tubes. The rolling bench and stands of the drawing reduction mill (SRW) were modernised. In 2016, we expanded our range of products manufac- tured by the continuous steel casting equipment in the steel plant to include a new type – a 105 mm quadrate, and invested in the modernisation of the preheating of the tundish. In the energy sector, we completed the modernisation of the TG 1 turbine controller at the Dubová hydroelec- tric station. The most significant construction investment was the construction of a new car park for employees with 127 parking spaces, and the refurbishment of the transport building. The Company performed repairs in the total amount of EUR 24 275 thousand, a decrease of EUR 1 087 thou- sand compared to 2015, to ensure the reliable operation of the technical equipment and to maintain the struc- tures and buildings. PURCHASE OF STRATEGIC RAW MATERIALS AND ENERGY Compliance with ISO standards in business relation- ships with suppliers of material inputs and rigorous payment discipline enabled us to maintain a high level of our supply activities in terms of quality and deliv- ery times. Scrap steel and cast iron prices fluctuated during 2016 and increased as at the year-end. In 2016, we purchased raw materials in the total amount of EUR 89 903 thousand, of which 19.4% were imports. Our priorities in 2016 continued to include the purchase of scrap steel, ferro-additives, pig iron, and heat-resistant materials and spare parts. When pur- chasing raw materials, we traded with more than 830 business partners in 2016. In 2016, we purchased a total of 217 633 tonnes of scrap steel, of which 87.9% were supplies from our subsidiar- ies ŽP EKO QELET a.s. and KBZ s.r.o. In 2016, we purchased a total of 162 667 MWh of elec- tricity, a 9.8% decrease compared to the previous year. Our small hydroelectric power plants and the co- generation unit produced 67 761 MWh of electricity, which represents a 30% share of internal generation of our total annual consumption. The purchase price of electricity increased by 3.8% compared to 2015. In 2016, we purchased a total of 40.1 million m3 of natural gas from Slovenský plynárenský priemysel, a. s. for our consumption, a 2% decrease. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2016 AND INFORMATION ON THE BUSINESS PLAN