Annual report 2015

Železiarne Podbrezová a.s. Annual report 2015 Business Plan The business strategy pursued by Železiarne Podbrezová a.s. has for many years focused on diversification, in three main areas: metallurgy, heavy engineering, and tourism, with sub - stantial support from its own services. In 2016, the Board of Directors decided to discontinue the heavy engineering business. After negotiations with poten - tial investors a contract was signed on the sale of shares of ŽĎAS, Inc., including its subsidiaries TS Plzeň a.s. and ŽĎAS SGS GmbH, which will become effective after the fulfilment of conditions precedent, ie consent of the funding banks and of the Office for the Protection of Competition in the Czech Republic. The funds from the sale of the shares will be a significant source of profit in 2016 and strengthen the financial situation of Železiarne Podbrezová. The Company’s management will concentrate on the core business of metallurgical production, with a focus on the production of steel, hot-rolled and cold-drawn seamless steel tubes, and secondary metallurgical production. The economic growth outlook in the Company’s business sectors in the most developed countries of the European Union is cautious and limited by trade sanctions against Rus - sia with an uncertain time horizon; therefore, the sales plans of Železiarne Podbrezová a.s. for 2016 count with lower sales compared to 2015 with a negative outlook as regards sales price increases. In 2016, sales of products, merchan - dise and services to all traditional territories via our trading companies totalling EUR 183.7 million are planned. We plan expenses of EUR 5.87 million in the area of capi - tal development. The most important investment projects of technological nature will include modernisation of rolling stands for the rolling mill, modernisation of the reeling mill and introduction a new dimension (105 mm) on the contin - uous casting machine. The most important construction in - vestment in 2016 will be the reconstruction of the Transport Division building. A total of EUR 25.4 million will be spent on the repairs of technical facilities and buildings in 2016. As regards research and development, in 2016, we plan to implement 12 internal research and development projects with planned costs of EUR 140 thousand. The main focus will be on optimising production processes, improving the quality of production and optimising materials for tools in the production of tubes. In 2016, we will continue to im - plement several R&D projects on material engineering, tools and modelling and simulation of production process - es, which will be subsequently used to optimise the Compa - ny’s production processes. In cooperation with our research company ŽP VVC s.r.o. we will focus on researching the prop - erties of tubes with internal ribs suitable for application in the energy sector. This research project will be co-funded by the Slovak Research and Development Agency and we will cooperate with universities. As regards quality assurance, we will continue to strength - en the management system under ISO 9001:2008- VDA 6.1. and ISO/TS 16949:2009, and the environmental manage - ment system under the ISO 14001:2004 standard. In 2016, the personnel, payroll and social policy programme for the Company’s employees will be affected by the em - ployment development from preceding years, and the cor - porate strategy will continue to include an efficient re-as - sessment of headcount in line with the current number of contracts and the volume of auxiliary jobs and services. Ef - ficient spending on the employee social programme will be revised in line with the reforms of the Slovak Government and legislative developments in the relevant field. We will continue to develop the occupational health and safety management system, certified under OHS 18001 Standards. We will also pay close attention to ensuring that the future workforce is of a high quality; therefore, we will continue to support workforce education that has the required qualifica - tions to meet the Company’s needs at ŽP’s Private Secondary Apprentice School of Metallurgy and ŽP’s Private Secondary Grammar School in the future. We will strive to guide stu - dents’ decisions in selecting colleges to ensure that, if they wish to work for our Company, they will always be provided with information on the requested fields of study. The operation and development of the information system at the parent company will continue to be outsourced to our subsidiary, ŽP Informatika s.r.o. in 2016. This company will also provide its services to the largest extent possible to the subsidiaries and will continue to expand its activities for external entities. With regard to the development of application software for Železiarne Podbrezová a.s., the em - phasis in 2016 will be on supporting business activities and unifying them for all trading subsidiaries. After the study is completed, a project on innovation of the production infor - mation system will be started. It will be a key project for the following years and it will significantly improve the monitor - ing, management and planning of production and technical processes. 35 Report by the Board of Directors on Business Activities, Assets, and Financial Performance in 2015 and Information on the Business Plan