Annual report 2016

ANNUAL REPORT 2016 • Železiarne Podbrezová a.s. 30 plant, increasing production productivity, increasing revenues by 5% y/y and reflecting increased prices of material inputs in sales prices of finished goods. The maximum use of ŽP GROUP synergies is expect - ed when purchasing goods and inputs. The companies plan to increase the return on sales and EBITDA by in- creasing the share of own products in the Company’s total revenues. The Spanish companies plan to invest EUR 1 820 thousand in improving product quality, cus- tomer service and competitiveness. ŽP EKO QELET a.s. The company’s main activities are purchasing and selling scrap metal and automobile wrecks, and waste metal processing. The company has a dominant posi- tion on the scrap steel market in western and central Slovakia. It is the leader in the collection, sorting and processing of scrap steel in Slovakia. The company is the most important supplier of scrap steel to Železiarne Podbrezová a.s., and its supplies accounted for 66.1% of total scrap steel purchases last year. The most signifi - cant risk faced by the Company is the scrap steel price fluctuations on regional, European and global markets. There is also risk connected with the economic devel - opment and the stability of strategic scrap steel buyers. The company continuously strengthened its position in 2016 by expanding its supplier and customer base, establishing new collection points and ecological sites, and by modernising machinery and handling equip- ment. The company has 41 collection points, including 14 centres and 27 purchase points. The company had 177 employees as at 31 December 2016. In 2016, the company posted revenues of EUR 39 753 thousand, a decrease of 15% compared to 2015. The marked decline in revenues from the scrap met - al sales was due to a considerable price decrease for the second year running. In contrast, sale volumes in- creased by approx. 1% compared to 2015. The company posted a profit of EUR 476 thousand in 2016 and achieved relatively good operational results despite very low scrap steel prices. The key factor for total expenses were expenses for the purchase of mer- chandise and consumption of raw materials and utili- ties, which accounted for 74%. TRANSMESA & TAP The product portfolio of TRANSMESA and TAP (Span- ish companies) strengthens the international position of the ŽP GROUP as regards production and sales of precision cold-drawn steel tubes. The relocation of production to a new production plant in Arenys de Mar in 2015 resulted in 11% y/y production growth in 2016. In the past year TRANSMESA and its subsidiary, TAP, together produced 8 152 tonnes of pre- cision steel tubes and profiles. Both companies supplied their customers with tubes in the total amount of 10 497 tonnes (of which 8 296 tonnes were of own production) and the consolidated revenues from the sale of merchandise, products and services totalled EUR 31 837 thousand (of which EUR 3 544 thousand was from the sale of goods from Žele - ziarne Podbrezová a.s.). The consolidated profit after tax amounted to EUR 1 138 thousand (TRANSMESA: EUR 1 878 thousand and TAP: EUR 260 thousand). In- vestments totalling EUR 2 041 thousand were made in 2016, and consolidated assets as at 31 December 2016 totalled EUR 41 578 thousand, of which current assets amounted to EUR 16 943 thousand. Given continuing low prices of the steel products, 2016 can be considered a successful year in terms of pro- duction and operational results. The Company con- tinued to implement a new internal ERP information system. Of the 30 countries to which TRANSMESA shipped its products, the Spanish market comprised 22% of the sale of own products and 28.8% of total revenues. EU Member States, North America and Australia con- tinued to be the main export markets. The plan for 2017 counts with continued optimisation of production processes at the new Arenys de Mar REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2016 AND INFORMATION ON THE BUSINESS PLAN