Annual Report 2007

17 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 Purchase of strategic raw materials and energy Compliance with ISO standards in business relationships with suppliers of raw materials as well as due payment behaviour have enabled us further improvements in supply activities, especially in terms of quality and delivery terms. In 2007, we purchased raw materials totalling SKK 4 673.4 million; thereof 17.5% were imported goods. As usual, scrap steel, ferro-alloys and raw iron were our priorities in purchasing raw materials, as well as heat-resistant materials and thick tin-sheets and steel tapes. In 2006, we bought a total of 329 750 tonnes of scrap steel for SKK 2 417.8 million, thereof 3.0% was imported supply mainly from Hungary. Through the acquisition of the ownership interests in ŽP EKO QELET a.s., KBZ s.r.o., ŽP Hunex Kft. and ŽIAROMAT a.s., we gained full self-sufficiency in the purchase of the steel scrap and heat-resistant materials necessary for steel production. In 2007, we purchased a total of 218 052 MWh of electricity. Our own hydro power plants and the co-generation unit produced 62 075 MWh of power, 22.9% of our total yearly consumption. Last year, we bought 46 112 thousand m3 of natural gas from Slovenský plynárenský priemysel, a. s. In comparison to 2006, the real growth of prices of purchased electricity represented 13.7%. Non-current assets and technology management In 2007, the Company invested a total of SKK 407 088 thousand in the acquisition of non-current assets. At the same time, the Company disposed of useless and fully depreciated non-current assets totalling SKK 114.8 million, at cost. The most important investment in technology was the modernization of the steel mill. The implementation of wall oxygen-fuel burners intensified steel production. The key benefit was lower demand for power in the production process and the reduction of melting time, both of which resulted in the increase of overall production capacity. Other significant investments in technology comprised a finishing line for first-class quality boiler tubes, enhanced automated operation of the rolling mill, and the modernisation of the production of welded tube elbows by establishing an induction heating at line No 2 replacing the natural gas heating. In 2007, we also completed the first stage of the modernization of the heating facilities in the old plant by implementing 9 local gas boiler rooms and the installation of gas infra red heaters in three production halls to replace the existing steam heating system. Investments in construction included: the reconstruction of the premises of the main entry into the old plant, including the installation of turnstiles in order to have precise records of employees’ arrival and departure times, and the building of a new road vehicle weighing device at the point of entry into the old plant. Additionally, we started the reconstruction of the building in Piesok designated for temporary accommodation and company flats. Overall operating expenses incurred for repairs to technological equipment, buildings, and structures amounted to SKK 791.5 million in 2007. The investment of greatest significance for us represented the complete overhaul of the hearth of the walking-beam furnace before the tube reducing mill in the seamless tubes rolling mill. Other major repairs were made in the tube mill, mainly the repair of the pickling shop, annealing furnaces, and the tubes cutting and straightening line. The largest building works comprised the repairs of both the Private Secondary Apprentice School of Metallurgy in Lopej, and the changing rooms in the sanitary facilities of the seamless tubes rolling mill.