Annual Report 2004

Ž E L E Z I A R N E P O D B R E Z O V Á ANNUAL REPORT 2004 26 REPORT BY THE BOARD OF DIRECTORS SPECIFIC SUBSEQUENT EVENTS OCCURRING AFTER THE CLOSED ACCOUTING PERIOD The expenses of metallurgical production of Železiarne Podbrezová in 2004 were mostly influenced by the increase in prices of scrap steel which resulted from an increase in the demand for this scrap steel in the Central European region. In the strategic plan of the Company for 2005, we therefore consider the acquisition of companies focused on the purchase and processing of scrap steel. In line with this intention, in April 2005 the Company has bought a 66% share in EKO-QELET, a.s. This company has been operating for a long period of time in the Slovak market and has significant real estate, machinery and equipment and know-how. It is a reliable supplier who is able to fulfill the qualitative parameters and delivery dates. It processes approximately 150 thousand tons of scrap steel annually. Many diverse synergic effects will emerge through this capital investment. Another important event, which will significantly influence the profit in 2005 is the revaluation of the stock of work in progress, semi-finished products and finished products, which was calculated as at 31 March 2005. The increased prices of input materials from the past were progressively transformed in some degree of completion and the result from this revaluation - increase of the total value of stock by SKK 162,709 thousand - will have a direct impact on the profit of Železiarne Podbrezová. Železiarne Podbrezová a.s. has contributed to foundations including the non-profit organizations: SIDERIA - ISTOTA, združená zdravotná poisťovňa (health insurance association) (SKK 5,693 thousand), Doplnková dôchodková poisťovňa Stabilita (supplementary pension insurance company) (SKK 5,438 thousand). Currently these organizations are being transformed in line with the legislation, the "Health service Reform" and "Pension Reform". After this process is completed, Železiarne Podbrezová a.s. will operate only as a minority shareholder in these organizations.