Annual Report 2007

13 Ž E L E Z I A R N E P O D B R E Z O V Á 2 0 0 7 REPORT BY THE BOARD OF DIRECTORS on business activities, assets, and financial performance in 2007 and information on business strategy Net profit after tax totalling SKK 1 013 280 thousand was recognised in accordance with the International Financial Reporting Standards (IFRS). In 2007 we delivered to our customers products and services totalling SKK 8 639 million, which is a 5.1% increase over previous year. More than 87% of sales were to foreign markets, mainly EU countries. Increased sales prices helped us to eliminate negative impacts of the strengthening of the Slovak currency in relation to world currencies. Favourable sales opportunities supported the optimal utilisation of our production capacities, allowing us to keep operating costs at a reasonable level. In 2007, in order to enhance our control over purchases of input rawmaterials for steel production, we acquired via financial investments ownership interests and shares of major companies involved in steel scrap purchase and processing – ŽP EKO QELET a.s., KBZ s.r.o. Košice, ŽP HUNEX Kft. (Hungary) and the producer of refractory lining ŽIAROMAT a.s. Kalinovo. In addition to the aforementioned strategic acquisitions, we spent considerable financial funds on themodernisation of technology and the improvement of energy infrastructure. Despite considerable capital expenditures, the proportion of equity/asset ratio remained unchanged at 62%. As at 31 December 2007, the equity per share ratio was SKK 2 179. The net earning per share generated in 2007 amounted to SKK 425 and the profitability of sales was 11.7%. The Company’s funding was balanced throughout the year. The strong 2007 profitability opened up the possibility to reinforce strategic capital control over the purchase of rawmaterials and the further modernisation of the technology base. The sale of products were directed by Železiarne Podbrezová a.s. on a central level, managed territorially by the commercial companies of PIPEX International AG, PIPEX ITALIA S.p.A., ŽP Trade Bohemia, a.s., and SLOVRUR Sp. z o. o., which ensured the optimum volume of contracts for manufacturing. The continuing boom of metallurgy enabled the utilisation of technological equipment to the full extent. Volumes of production in our key manufacturing units reached a historical peak. In 2007, we produced 375 393 tonnes of continuously cast steel billets, which is a 3.0% increase over the previous year. This was accomplished thanks to the improvement of our technological equipment. Upon the implementation of oxygen-fuel burners in the electrical arc furnace, hourly outputs increased by more than 5%. Of the above mentioned amount, 122 959 tonnes were sold to end customers and the remaining portion was used for our production of seamless steel tubes. BUSINESS ACTIVITIES Production and sale The Board of Directors of Železiarne Podbrezová rates the financial year 2007 to have been the most successful in the modern history of the company. The traditional basis for the positive 2007 results was our long-term business policy.