Annual Report 2005

During the previous year, the following additions/disposals were posted to accounts of financial investments, having the following impact on respective ownership interests held by Železiarne Podbrezová a.s., in companies concerned: ŽÏAS, a.s. It is without doubt that the Board of Directors of ŽÏAS, a.s. (“ŽÏAS”) assess last year as another success, as the revitalization made it possible for ŽÏAS to become a reliable supplier guaranteeing the expected quality of their products. The implementation of trading policy was a great success, owing to the expansion of the company’s activities outside the European Union. That confirmed the company’s leading position on the Czech and Slovak engineering markets. ŽÏAS is increasingly winning through in the EU and is becoming a significant engineering and metallurgical company. The quality of the business environment in the Czech Republic largely contributed to the standing of the company, as it significantly exceeds the quality of the Slovak business environment. Ongoing support provided by the state through government programmes focused on large companies, among which ŽÏAS, a.s. undoubtedly ranks, was another great contribution. Manufacturing activities of the company are organized into four production sections. The engineering products section involves the production of forming machines, rolling mill equipment and production based on documentation supplied by customers, the proportion of which in total production keeps growing. Other production sections were: metallurgy and tools. ŽÏAS deliver their products to end customers through external assembly, which is the last production section in the company. During last year, ŽÏAS sold goods and manufactured and sold products and services totalling CZK 2 919 million (SKK 3 818 million), which is an increase of 12% compared to 2004. Exports represented 52% of the increase, i.e. 6%. 2005 was the third consecutive year that the company managed to generate profit after taxation, amounting to CZK 146 million (SKK 191 million). The Board of Directors recommended that the company’s General Meeting approve payout of dividends from the 2005 profit. The company’s registered capital amounted to CZK 1 395 million (SKK 1 825 million), with total assets amounting to CZK 2 934 million (SKK 3 838 million) and 40.1% leverage ratio. In 2005, ŽÏAS employed 2886 people, which is a slight decrease compared to the previous year. Tále, a.s. Last year Tále, a.s., (“Tále”) held its stable position as a Slovak tourist and sports destination offering year-round high-quality sports and recreational activities. Quality of services provided by the company are comparable to those provided anywhere in Europe and worldwide. ° Increase in ownership interest in ŽÏAS, a.s. ° Increase in ownership interest in Tále, a.s. ° Purchased ownership interest in ŽP EKO QELET a.s. ° Purchased ownership interest in ŽP PRAKO s.r.o. ° Increase in registered capital of ŽP – Gastroservis, s.r.o. ° Purchase of the remaining portion of ŽP-Invest s.r.o. ° Establishment of ZELPO-INVEST s.r.o. ° Sold share in SLÁVIA CAPITAL Group, a.s. + SKK 268.9 million + SKK 165.9 million + SKK 93.2 million + SKK 41.6 million + SKK 7.0 million + SKK 6.0 million + SKK 0.1 million - SKK 165.0 million REPORT BY THE BOARD OF DIRECTORS Report by the Board of Directors Annual Report 2005 Železiarne Podbrezová 28