Annual report 2017

2017 ANNUAL REPORT Železiarne Podbrezová a.s. 36 The funding of the operational and CAPEX needs of the Company for 2018 is secured by a club credit line of EUR 12 million, which is due in July 2020, and by other separate contracts for short-term funding, which will be used according to the Company’s operational needs. The total credit line is fully sufficient for problem-free funding for the following years. The 2018 financial plan counts with revenues of EUR 261.9 million and the Board of Directors of Železiarne Podbrezová a.s. plans to generate an operating profit of EUR 4.8 million in 2018. The Board of Directors plans to make a profit on financing activities of EUR 2.5 million, consisting mainly of dividends received from subsidiaries. The total planned profit/ (loss) is a profit of EUR 7.4 million. Business activities in tourism are now fully integrated at the subsidiary, Tále a.s., and we plan to further develop this area. By further improving the technical standards of the sports resort and increasing efficiency, we aim to further improve the services provided and further improve our reputation with a wide range of customers. The scope of the business activities of Železiarne Podbrezová a.s. is also supported by the activities of its subsidiaries, which contribute to the consolidated financial results. We plan a profit for most subsidiaries in 2018 and our goal is to develop the companies appropriately, while generating dividends for the parent company. Consolidated revenues from the sale of goods, products and services for 2018 are planned in the amount of EUR 345 million and a profit of EUR 9 million. CONCLUSION The steel industry in Europe and globally has faced considerableuncertaintyandrisksovera longperiod.Extensive unused production capacity and regional differences in steel production and consumption in the world remain a risk factor. In addition, we expect risks in the future as regards steel consumption. The current global trend of growing demand for steel products is a result of low investment in a number of sectors of developed economies over the past decade. However, after this investment momentum stabilises, there may be a downturn, and the World Steel Association predicts a gradual weakening of the currently significant correlation between GDP and global steel consumption. After 2016, which was one of the worst years in the Company’s modern history, Železiarne Podbrezová a.s. had a good 2017 with strong demand and rising sales prices. However, there was also growth in input raw materials and wages and salaries. Despite the uncertainty and risks, we believe given the global development of urbanisation, growing population, continually high demand from the automotive industry and oil and gas mining, that the steel tube production industry will prosper in the future. The Company’s Board of Directors considers the 2017 results to be positive. All employees, including the management and employees of subsidiaries contributed to the Company’s success. The greatest achievements of 2017 were the good operating profit, utilised production facilities and the increase of the real wages of all employees of the parent company and the subsidiaries. The investments in the modernisation of equipment and production processes planned over the next few years will have a long-term effect on our competitiveness and labour productivity. The 2017 profit amounted to EUR 4 048 thousand. Earnings per share amounted to EUR 1.7. Therefore, we propose that the General Meeting also approve the payment of dividends to shareholders from Retained earnings from previous years in this year. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2017 AND INFORMATION ON THE BUSINESS PLAN