Annual Report 2008

2004 Slovak Republic 819 Czech Republic 1 641 EU countries 3 269 REPORT BY THE BOARD OF DIRECTORS Regional sales structure developments (Sales in SKK million) 2005 2006 2007 IElm 1 039 1103 1 074 1 033 1 779 2 044 2 007 1 916 4106 4156 4989 5 582 Other European countries 204 248 367 195 313 Other export Total sale 373 575 524 375 356 6306 7 747 8194 8 639 Purchase of Strategic Raw Materials and Energy Being in compliance with ISO standards in business relationships with suppliers of raw materials and having a stringent payment discipline have enabled us to further improve supply activities, especially in terms of quality and delivery terms. In 2008, we purchased raw materials totalling SKK 5 258.6 million (EUR 174.6 million), of which 12.9%were imported goods. As usual, with regard to our purchase of raw materials, scrap steel,ferro-alloys and raw iron were priorities; heat-resistant materials, thick tin-sheets and steel tapes also represent priority purchases. In 2008,we purchased a total of 326 148 tonnes of scrap steel, of which 1.8% represents an imported supply, principally from Hungary. By gaining control over the ownership of ŽP EKO QELET a.s , KBZ s.r.o. 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 2008, we purchased a total of 205 048 MWh of electricity, of which 77% was purchased in the Czech Republic. Our water power plants and co-generation unit produced 59 027 MWh of electricity, representing 23% of our total annual consumption. In 2008, we purchased 43 660 thousand m 3 of natural gas from Slovenský plynárenský priemysel, a. s. In comparison to 2007,the actual growth in the prices of purchased electricity and natural gas represented 12.6% and 30.0%, respectively. Non-Current Assets and Technology Management In 2008, we invested a total of SKK 361.6 million (EUR 12.0 million) in the acquisition of non-current tangible assets. At the same time, we disposed of redundant and fully depreciated non-current assets ata cost of SKK 88.5 million (EUR 2.9 million). In 2008, we spent a total of SKK 238.2 million (EUR 79 million) on new machinery and refurbishing our original technological equipment. The finishing line for steel precision drawn tubes represents our biggest investment. Another major technological investment was second stage of the automated drawn tubes warehouse, which considerably accelerates expedition.