Annual Report 2007

38 A N N U A L R E P O R T REPORT BY THE BOARD OF DIRECTORS The Recycling Fund of the Slovak Republic will continue to largely co-finance the overall completion of the plant, as well as other operations and scrap collection yards throughout Slovakia in 2008. In 2008, we intend to operate and develop the information system, both at the parent company and at subsidiaries, through outsourced 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. In 2008, we plan to invest SKK 8 800 thousand into specific research and development projects, which are primarily aimed at optimising heat processing parameters, enhancing the quality of tubes for the automotive industry, optimising punching press lubrication, extending the useful lives of shaping tools, and the processing of waste in steel and tube production. In addressing technical development tasks, we will continue to closely co-operate with the Institute of Material Research at the Slovak Academy of Sciences in Košice. The HR, payroll, and social policy for the Company’s employees will also be part of meeting the Company’s strategy and its partial objectives in 2008. In 2008, we will apply a wage differential to regulate wage growth separately for workers and clerical staff, with direct relation to performance evaluations. We will continue to develop the occupational health and safety control system certified under OH SAS 18001 standards. During the following years, we will use the Private Apprentice Secondary School of Metallurgy in Lopej to prepare skilled labour for the Company. On 1 September 2008, based on the decision of the Ministry of Education of the SR, we will open the third academic year of the Private Secondary Grammar School of ŽP focusing on sports, and the first school year with IT profile. The business plan for 2008 was developed after taking account of all known risks, such as the rising trend of the Slovak crown vs. foreign currency exchange rates, the on-going increase of electricity and natural gas prices, and the fluctuating purchase prices of steel scrap, ferro-alloys, and pig iron. A serious threat for the business plans for future years is the balance shortage of electricity, which is expected to affect the Slovak energy supply system after the decommissioning of another block of the Jaslovské Bohunice nuclear power plant in 2009. The Slovak Government undertook to do this in accordance with EU accession demands. To meet the business plan objectives for 2008, through our sales agencies we will supply our customers with products and services totalling at least SKK 9 103 million, including exports of over 90%. For 2008, the Board of Directors set up a goal to generate net profit after taxation amounting to SKK 563.5 million, thereof income from financial investments (i.e. dividends received from subsidiaries) amounting to SKK 45.0 million. Profit generated in 2007 by ŽĎAS, a.s. and ŽP Tažírny trub Svinov, spol. s r.o., will represent a major source of financing of their capital investments in 2008. The second main pillar of our diversification business plan includes heavy-engi- neering and metallurgical products. ŽĎAS, a.s., Žďár nad Sázavou, has in its production plan rolling mill equipment, shaping machines, and tools, casts, forged pieces, and models. Along with TS Plzeň a.s. they have created a tandem which ranks among the top heavy-engineering and metallurgical companies in the Czech Republic and which has won worldwide recognition. In 2008 and in the following years, we plan the extensive modernisation of the technological equipment in the both companies, which will help strengthen their competitive- ness - particularly internationally. Their mutual co-operation will allow the further use of the synergic effects resulting from the dominant position in the shaping machine supplies sector.