ANNUAL REPORT 2021

37 in functional green technologies for businesses and households. This would likely have a mixed impact for steel tube manufacturers. The hastily- set green targets are pushing up ETS allowance prices, which increases the costs of manufacturers and prices for final consumers. Extending the life of gas or coal-fired power plants, or increasing domestic oil and gas production would translate into long-termdemand for specialised pipes. From the point of view of energy-intensive industries, it will also be very important to appropriately set up the ETS emission allowance system and align it with the carbon duty – CBAM after 2025 and 2030, respectively. Consequently, we do not anticipate a significant decrease in the prices of raw materials and inputs in the coming months. The situation on the markets is tense and the issue of security, i.e. acquiring sufficient key products, is paramount. For consumers, the prices of some products and services are already so high that their consumption will fall which, together with more expensive funds due to higher interest rates, may cause recession in developed economies in the near future. Most industry, including tube production, has been experiencing high demand for its products since last year and orders remain at high levels. On the other hand, the current situation is counteracted by extremely high prices of key input rawmaterials and energy, with added pressure on wage costs. The continued growth in product prices, and pressure fromcentral banks to reduce inflation, will weaken demand from end customers. As a result, we assume that in the second half of the year the price levels of our products will stagnate and demand will falter. For this reason, the Company expects problem-free performance of contracts, without the need to significantly increase our number of employees. The business and financial plan of Železiarne Podbrezová a.s. for 2022 counts with a similar volume of production and sales as in 2021 and a positive operating and financial result. However, given the current situation, actual results may differ substantially in the event of unforeseen circumstances. The investment plan for 2022 in the amount of EUR 17.6 million almost doubles the annual depreciation charges of the Company and is a continuation of the medium-term development plan. The most important technological investments will include a new treatment line for small-diameter tubes in the tube drawing mill and the first stage of modernisation of another drawing bench, including a tube division system. In the tube rolling mill, the Company will invest in carousel furnace recuperators, which will increase energy efficiency and positively impact our environmental goals. In 2022, we will also invest in the automation of the electrical substation and launch a two-year project to modernise the locomotives used for intracompany transport. We plan to spend EUR 36.6 million on repairs and maintenance of technological facilities and buildings in 2022, an increase by EUR 2.5 million compared to 2020. In 2022, our subsidiary ŽP Výskumno-vývojové centrum will carry out 6 internal R&D projects for us, with planned expenses of EUR 867 thousand. The research focuses on long-term improvement of the quality of production, effective use of the materials used in metallurgical ceramics, optimisation of production processes and the processing of waste and scrap materials from production. In 2022, the Company will continue to implement multi-year R&D projects on tools, modelling, simulation of production processes and production data analytics, for application by the Company to production. Companymanagement supportsand improves the quality management system under ISO 9001 and IATF 16949. The Company will continue to develop and optimise the integrated management system that combines the environmental management system under ISO 14001 and the occupational health and safety management system under ISO 45001. In 2022, the Board of Directors will continue the updated personnel, payroll and social policy programme for Company employees. This provides employees with guaranteed benefits over and above legal requirements, such as contributions to the 3rd pension pillar, affordable meals, life insurance, retirement payments and severance pay exceeding the legal minimum. We have been preparing and educating new employees for almost 20 years at our Private United School (Súkromná spojená škola ŽP). REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS AND FINANCIAL PERFORMANCE IN 2021 AND INFORMATION ON THE BUSINESS PLAN