Annual_report_2006

Ž E L E Z I A R N E P O D B R E Z O V Á 2 0 0 6 A N N U A L R E P O R T 35 REPORT BY THE BOARD OF DIRECTORS Therefore, the business plan for future periods is based on three main pillars. Within the parent company, we intend to develop core metallurgical production in steel production and seamless steel tubes, and to extend secondary metallurgical pro- duction and the production of precision weld- ed tubes. Our marketing strategy will be further focu- sed on three key objectives: •To satisfy our traditional customers of steel seamless tubes, increase the proportion of more sophisticated tubes (boiler tubes, heat exchanger tubes, bearing tubes, construction and alloyed tubes) with higher market prices distributed to the most profi- table territories; •To increase the proportion of products with higher added value; •To win new customers for welded precision tubes of small diameters and opportunities to open new co-operation facilities, mainly in the car industry at a time when foreign capital is promoting the strong develop- ment of the auto industry in the Central European region and mainly Slovakia. Our long-term financial strategy is focused on the improvement of the ratio between owned and borrowed funds. We intend to hedge our export prices against the persist- ent rising trend in the SKK/EUR conversion rate by derivative bank transactions. With reference to the purchase of raw material, other materials, and services, we will also increase the proportion of contracts entered into in EUR in Slovakia. In the forthcoming periods, we intend to use a new credit line provided by the Institute of Bankers Club at the end of 2005. As for technological development and capital investments, in 2007 we plan to make a total investment of SKK 265.4 million in the improvement of the Company's non-current assets. The investments will be mainly direct- ed into technologies. We will build a new first-rate production line for boiler tubes (SKK 30 million) and a production line for precision tubes. Another significant event will be steel production intensification by means of build- ing in oxygen-fuel burners (SKK 19.5 million). We expect benefits in the form of savings of electricity resulting from the aforementioned modernisation. To accelerate the unloading of steel scrap from lorries, we will build a new road weighing machine at the point of entry into the old plant. In 2007, the next phase of the energy economy rationalization with a fast rate of return is to be realised. In tangible assets maintenance, we intend to make repairs at total costs of SKK 784 mil- lion. Major general repairs include the repair of the walking beam furnace in the rolling mill of seamless tubes, and the general repair of head frame. To support core metallurgical production, we will develop technical background to the con- trolled entities engaged in the processing of waste metal. In 2007, ŽP EKO QELET a.s. will build a new plant for the processing of car wrecks and other steel scrap with the capacity of 92 thousand tons per year in the Hliník nad Hronom industrial zone. Budge- tary costs of construction of a new compre- hensive line equal SKK 430 million. The Recycling Fund of the SR will also participate in this funding. In 2007, we intend to operate and develop the information system, both at the parent company and at subsidiaries, through out- sourced services provided by subsidiary ŽP Informatika s.r.o. In order to guarantee the high quality of our products, we intend to pursue the management system under ISO 9001:2000 - VDA 6.1., ISO/TS 16949 : 2002, and the Environmental Management System under ISO 14 001:2004 standard, thereby creating further opportunities to sell our products to the auto industry. We intend to maintain our programmes of staffing, wages, and social policies for our employees to meet the level established in the previous year. In 2007, we will apply a wage differential to regulate wage growth separately for workers and clerical staff. We will continue to develop the occupational health and safety control system certified under OH SAS 18001 standards. During BUSINESS PLAN The long-term business strategy pursued by Železiarne Podbrezová a.s. is based on diversification.