Annual report 2019

30 Železiarne Podbrezová a.s.: ANNUAL REPORT 2019 TRANSMESA & TAP The product portfolios of TRANSMESA and TAP (Spanish companies) strengthen and complement the international market position of the ŽP GROUP as regards production and sales of precision cold-drawn steel tubes. Compared to the successful year 2018, the situation on the market of metallurgical products and precision seamless tubes was significantly more difficult last year. Demand for the products gradually decreased, resulting in lower production, lower prices and lower utilisation of the production capacities of both Spanish production plants. In 2019, both TRANSMESA and the subsidiary TAP produced 8 549 tonnes of precision steel tubes and profiles, a slight 1.3% y/y decrease. The total length of produced tubes was 25.1 thousand kilometres, a y/y decrease of less than 1%. Of the total volume, 2 289 tonnes of tubes were finalised by electrolytic galvanising and 2 240 tonnes by mechanical division. In 2019, both manufacturing companies supplied their customers with tubes in a total amount of 10 864 tonnes (of which 8 046 tonnes were of own production) and the consolidated revenues from the sale of merchandise, products and services totalled EUR 34.6 million. The 18% y/y decrease in revenues was driven by a 14% decrease in the sale of own products, and a significant decrease in the sale of products of Železiarne Podbrezová a.s. by 36% (amounting to EUR 5.1 million). In 2019, the companies posted a consolidated profit after tax of EUR 1 503 thousand (TRANSMESA: EUR 1 257 thousand and TAP: EUR 246 thousand). Total assets as at 31 December 2019 amounted to EUR 44 138 thousand. Current assets amounted to EUR 19 845 thousand and equity amounting to EUR 20 303 thousand covered 46% of total assets. In 2019, TRANSMESA shipped its products and merchandise to 37 countries, and the Spanish market comprised 30.5% of its total revenues. EU Member States, North America and Australia continued to be the main export markets. In 2019, the companies implemented several investment projects totallingEUR2860 thousand. The companies invested most in higher automation of production lines, technological equipment, new cranes and a solar photovoltaic system. In 2020, the companies’ management will continue optimising the production processes and will invest in automation of production processes to reduce costs and improve the quality of their products. In 2020, the companies planned invoicing and production volume at the level of the previous year, but the effects of the crisis and the related sales issues caused by the COVID-19 pandemic are currently difficult to predict. Maximum use of ŽP GROUP synergies will be made when purchasing merchandise and entry rods. ŽP EKO QELET a.s. The company’s main activities are purchasing and selling new and collected scrap metal and automobile wrecks, and waste metal processing. The company has a dominant position on the steel waste market in western and central Slovakia and has been a leader in the collection, sorting and processing of steel waste in Slovakia in recent years. ŽP EKO QELET a.s. is the most important supplier of scrap steel to Železiarne Podbrezová a.s., and supplied 68% of total scrap steel purchases last year. The biggest risk for the company is the fluctuation of scrap steel prices on the regional and European market, which has been very significant, especially in recent years. There is also considerable risk connected with the economic development and the stability of strategic scrap steel buyers in the region. The company maintained its position in 2019 and invested mainly in the renovation of machinery and handling facilities and equipment, and in the purchase of the land under its collection points. The company has 47 collection points and one processing plant. The company had 202 employees as at 31 December 2019. REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS AND FINANCIAL PERFORMANCE IN 2019 AND INFORMATION ON THE BUSINESS PLAN