Annual_report_2006

A N N U A L R E P O R T 36 REPORT BY THE BOARD OF DIRECTORS the following years, we will use the Private Apprentice Secondary School of Metallurgy in Lopej to prepare skilled labour for the Company. In September 2007, the second year at the sports-oriented ŽP Private Secondary Grammar School will be opened. The business plan for 2007 was developed after taking account of all known risks, such as the rising trend of the Slovak crown vs. foreign currency exchange rates, the on- going increase of electricity and natural gas prices, and the fluctuating purchase prices of steel scrap, ferro-alloys, and pig iron. A serious threat for the business plans for future years is the balance shortage of electricity, which is expected to effect the Slovak energy supply system after the decommissioning of another block of the Jaslovské Bohunice nuclear power plant in 2009. The Slovak Government undertook to do this in accordance with EU accession demands. To meet the business plan objectives for 2007, through our sales agencies we will supply our customers with products and services totalling at least SKK 7 824 million, including exports of over 90%. For 2007, the Board of Directors set up a goal to generate net profit after taxation amounting to SKK 612 million, thereof income from financial investments (i.e. dividends received from subsidiaries) amounting to SKK 173.5 million. The second main pillar of our diversification business plan includes heavy-engineering and metallurgical products. ŽĎAS, a.s., Žďár nad Sázavou, has in its production plan rolling mill equipment, shaping machines, and tools, casts, forged pieces, and models. Along with TS Plzeň a.s. they have created a tandem which ranks among the top heavy- engineering and metallurgical companies in the Czech Republic and which has won worldwide recognition. The successful revitalization of ŽĎAS accomplished during previous years laid the basis of the dividend policy which will enable Železiarne Podbrezová to recover invested funds. In 2007, ŽP PRAKO s.r.o. as the traditional producer of forgings, will continue the modernisation of forging lines. For the overall production enlargement project with capital expenditure of SKK 376.5 million, in December 2006 the government of the SR approved unrecoverable state aid of up to SKK 113 million upon criteria fulfilment. The main objective in 2007 is the revitalization of the Company and success with respect to the kick-off of the new production of precision drop forgings in technological, sales, and personnel terms, and its certifica- tion under ISO standards. During recent years, the Company’s business activities in tourism were gradually integrated in subsidiary Tále a.s. Today, this is the third main pillar of the diversification of business activities. Considerable invest- ments were made into accommodation facilities: Stupka Hotel, Golf Hotel, and the sports facility in Tále which includes a ski resort and an 18-hole golf course completed in 2002. We intend further investments to develop this segment. In 2007, we plan to start the preparation of a project for the construction of the Brezinky golf course and for the reconstruction of the Krpáčovo Hotel. By the effective operation of the recreational and sports premises, we will aim at further improving rendered services and winning recognition from among a wide range of customers. The scope of business activities carried out by Železiarne Podbrezová is also supported by the activities of other subsidiary and associate undertakings, which contribute to the consolidated economic results. Upon meeting the planned revenues from sales of goods, own products, and services of SKK 16.3 billion within the consolidated group, we expect the generation of consolidated profit attributable to Železiarne Podbrezová of SKK 994 million.