Annual Report 2004

ANNUAL REPORT 2004 Ž E L E Z I A R N E P O D B R E Z O V Á 29 REPORT BY THE BOARD OF DIRECTORS Production activities of ŽĎAS, a.s. ("ŽĎAS") are organized under five production sections: production of forming machines, rolling mills, metallurgy, tool production, and external assembly. In 2004, ŽĎAS fulfilled its business strategy. The revitalization measures implemented in the past have shown fully their effect, mainly in the area of change management from divisional organization through the distribution of responsibilities to section management. The outsourcing of services from the information department of Železiarne Podbrezová a.s. significantly contributed to increasing the transparency of the entire information system in ŽĎAS, a.s. ŽĎAS has generated income from the sale of merchandise, products and services totaling CZK 2,600,425 thousand (SKK 3,305,140 thousand), an increase by 10.8% compared to 2003. Export increased by 10% to 46% share in sales. After a profitable first year 2004 was also successful. The profit after tax amounted to CZK 99,221 thousand (SKK 126,110 thousand). ŽĎAS has share capital of CZK 1,395,264 thousand (SKK 1,773,381 thousand) with total assets of CZK 2,763,298 thousand (SKK 3,512,152 thousand) and liabilities representing 39.4% of total equity and liabilities. In 2004, ŽĎAS employed 2,904 people, 1.4 % less than in 2003. During 2004, ŽĎAS acquired a majority interest in ŠKODA TS, a.s., which was then subject to financial, organizational and personal restructuring. The result of its operations was a loss due to creation of value adjustments to nontransparent transactions from the past. Nevertheless, we evaluate this acquisition positively in terms of the elimination of competition in the field of heavy machine engineering and in terms of future synergy effects in this area. Tále, a.s. ("Tále") holds a stable position as a tourist and sport destination, offering year-round high quality sport and recreational activities in Slovakia. The services offered by Tále are comparable with the services offered anywhere in Europe and in the world. It is necessary to stress the accuracy of the strategic decision of the Tálemanagement at the end of the last century to build a professional golf course which now attracts solvent clientele to our region. After the organizational changes during the year, result of which was ceased operations of the motel Tále, Tále now comprises 5 separate organizational units. These are: golf course Grey Bear, Sporting resort, Hotel Stupka, Hotel Golf and a travel agency in Banská Bystrica. Due to economic reasons impacting the potential of customers, 2004 was quite difficult for this type of business. Despite all discouraging factors, Tále noted positive trends in all relevant indicators and the Board of Directors considers 2004 successful. In 2004, Tále sold goods and services totaling SKK 124,747 thousand and an increase by 4.4% compared to 2003. Such an increase in revenues enabled Tále to reach profitability after losses incurred in 2003. Tále generated profit after tax of SKK 273 thousand. After the changes in its capital structure and in ownership in 2003, Tále ended the year 2004 with share capital of SKK 340,000 thousand, total assets of SKK 441,910 thousand and 19% share of liabilities in total equity and liabilities. In 2004, 121 people were employed in Tále, 10.4% less than in previous year. ŽĎAS, a. s. Tále, a. s.