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 33 REPORT BY THE BOARD OF DIRECTORS In developing our business strategy for 2005, we have considered all known risks: Stabilizing exchange rates of SKK towards foreign currencies, activated by speculative capital; Regulated prices of energy, set out by an independent body for regulation of network industries; Fluctuating purchase prices of scrap steel, raw iron and ferro-alloys resulting from an extraordinary boom of metallurgical industry and world-wide globalisation of steel producers. To meet the planned volume of sales in 2005, we shall supply our customers through our sales organisations with products and services totalling at least SKK 7,170 million, of which more than 85% will be exported. The Board of Directors have set up the goal for 2005 to achieve a net profit of SKK 545 million. The second area of production within the diversified business field covers products such as rolling mill assembly and equipment, forming machines and tools, castings, forged items and models, all these being supplied by ŽĎAS, a.s., seated in Žďár nad Sázavou, the Czech Republic. Together with newly acquired ŠKODA TS, a. s., Plzeň, these two companies work in tandem, and have become again a major competitors in heavy machine engineering and the metallurgy industry, not only in the Czech Republic but all over the world. Revitalization of ŽĎAS a.s. accomplished in previous years has laid the basis for a dividend policy by which Železiarne Podbrezová plans a return on funds invested. The business strategy in 2005 predicts revenues from financial investments in total value of SKK 70 million. Tále, a.s, has gradually integrated all its activities in the area of tourism and leisure facilities provided by Železiarne Podbrezová in recent years. Today, these contribute to the third pillar of this diversified company's business. Considerable investment was made 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 as the very first in Slovakia. We intend to invest into these resorts also in the future. The intention is to improve the quality of services, to make the operations effective and to strengthen good reputation among a wide range of cus- tomers. We will use every appropriate advertisement to promote our products and services worldwide. Subsidiaries and associated companies contributing to the consolidated income of the group complement the core business activity of Železiarne Podbrezová. In 2005, we consider necessary to pursue strategic capital investments into the companies focused on the purchase and manufacture of scrap steel. The goal for these activities should be an eminent increase in the company's stability and synergic effects from closed metallurgical operations. Upon meeting the planned revenue from the sale of merchandise, own products and services on a consolidated level of SKK 14,660 million, we expect consolidated profit of SKK 841 million in 2005, the share of Železiarne Podbrezová being SKK 730 million.