Annual Report 2009

Ž E L E Z I A R N E P O D B R E Z O V Á REPORT BY THE BOARD OF DIRECTORS ŽĎAS, a.s. and TS Plzeň a.s. Historically, ŽĎAS, a.s. and TS Plzeň a.s. are leading heavy industry producers and in 2009 they further strengthened their positions compared to their European and global competitors. Given the global economic recession in traditional sales territories, the results achieved in 2009 are considered very successful. The production under ŽĎAS trademark has more than a 50-year history. The production programme includes forming machines for smith and drop forging, hot and cold surface and volume forming, metal scrap, direct casting and nodular iron processing equipment, ingots and smith forgings. ŽĎAS also performs renovations and modernises equipment, from complete manufacturing sets to single machines. All deliveries are provided to customers by own external assembly and high-quality servicing. In 2009, ŽĎAS, a.s. reported total sales from merchandise, products and services in the amount of EUR 109 960 thousand (CZK 2 911 million), which is a 43% drop in sales compared to the prior year. Nevertheless, the Company reported a profit amounting to EUR 3 084 thousand (CZK 81.6 million). In 2009, investments to support and modernise technologies totalled EUR 8 953 thousand (CZK 237 million). Trading was focused on the Russian and Ukrainian markets and on building business contacts with China and India. Modernisation of the technology base facilitates improving the results of its operations in the future, mainly after the revival of the global economy. Despite the financial crisis, FY 2009 in TS Plzeň was the most successful of the last few years. The company did not have to reduce production or dismiss employees. The company successfully implemented a series of challenging projects and won new considerable references with customers. In 2009, the business policy was focused on three core production segments: hydraulic presses, vulcanisation presses, and rolling mills, which are supplemented by cooperation contracts to utilise idle production capacities. The most important project implemented in 2009 was the modernisation of the 113 MN press for Creusot Forge, which is a reputable French nuclear power producer. In 2009, the company's total sales were EUR 20 865 thousand (CZK 552.4 million). The proportion of exports in total sales was 41%. In 2009, the company reported a profit in the amount of EUR 1 042 thousand (CZK 27.6 million). Major Czech customers include, for example, Pilsner Steel s.r.o., Bonatrans Group a.s., Mitas a.s., and Škoda Machine Tool a.s. In 2009, the company completed the most extensive modernisation in its modern history, i.e. the installation of a new machining centre at a cost of EUR 1 133 thousand (CZK 30 million). The company has signed a sufficient number of contracts for 2010 and subsequent years to enable it meet the goals defined in the business plan. Tále, a.s. Tále, a.s. is an integral part of the business of Železiarne Podbrezová a.s. in terms of tourism. It operates a sports resort comprising a ski centre with artificial snow production facilities and the Gray Bear golf centre and an 18-hole championship golf course. The resort includes two hotels, which, apart from standard services, also provide congress tourism and golf vacation packages. In 2009, the company’s sales totalled EUR 3 485 thousand, which is a 15.9% decrease compared to the prior year. The company generated a profit amounting to EUR 18.6 thousand. As at 31 December 2009, the company’s total assets amounted to EUR 15 643 thousand with external debt accounting for 8.5%. The company settled all its liabilities to banks. In 2009 the company’s management structure was subject to restructuring and a set of cost-reduction measures were adopted, which focused mainly on overheads. 31