Annual Report 2003

REPORT BY THE BOARD OF DIRECTORS ANNUAL REPORT Ž E L E Z I A R N E P O D B R E Z O V Á 2 0 0 3 33 Before outlining the targets for 2004, we have considered all known risks: Ever-steadier exchange rate of SKK towards foreign currencies in the year of Slovakia's integration within the European Union; Regulated prices of energy, set by an independent Body for regulation of network industries; Inadequate increases in the purchase price of steel scrap, pig iron and ferro-alloys resulting from extraordinary boom in China. To meet the figures planned for 2004, it is inevitable to adopt extraordinary cost reducing measures and to increase sales prices of our products. To meet the planned volume of sales in 2004, we shall supply our customers through our sales organizations with products and services for a total value of at least 5 292 million SKK, of this quantity more than 85 % will be exported. The board of directors have set up the goal for 2004 to produce a net profit of 51,0 million SKK. The second pillar of production within the diversified business field covers products like rolling mill assembly and equipment, forming machines and tools, castings, forged items and models, all these being supplied within its production programme by the company ŽĎAS, a. s., seated in Žďár nad Sázavou, the Czech Republic. Together with newly acquired ŠKODA TS, a. s., Plzeň, these two will work in tandem beginning in 2004 and will become again a major enterprises in heavy machine engineering and metallurgy industry, not only in the Czech Republic but, owing to its appreciable reputation, practically all over the world. Revitalization of ŽĎAS a. s. accomplished in 2003 laid the basis for a dividend policy by which Železiarne Podbrezová plan to provide within five years, the return on funds invested. The daughter company, Tále, a.s, has gradually integrated all activities in the area of tourism and leisure facilities provided by Železiarne Podbrezová through recent years gradually. Today, these pose the third pillar of this diversified company's business. Considerable investment was placed in the reconstruction of the hotels Stupka and Golf, and in motel Tále, as well as in the sport resort including ski centre and an 18-hole golf course, which was completed in 2002 and is the very first in Slovakia. Even if we did not meet the expected results in 2003, we certainly expect a return on invested funds in 2004 and in the years to come. The intention is to upgrade services, to make the operations most effective and to gain a good reputation among a wide range of customers. We will use every acceptable and suitable form to promote and to advertise products and services worldwide of all the companies of the Železiarne Podbrezová Group. The daughter companies and subsidiaries contributing to the consolidated income of the group complement the core business activity of Železiarne Podbrezová. In 2004 we do not plan major changes in the structure of capital participation. Upon meeting the planned revenue from the sale of merchandise, own products and services in the consolidated figure of 11 240 million SKK, we expect in 2004 to produce consolidated profit of 246 million SKK, the share of Železiarne Podbrezová being 173 million SKK.