Annual Report 2005

The business plan for 2006 was developed after taking account of all known risks, such as the rising trend of the Slovak Crown vs. foreign currency exchange rates, persisting increase in the price of electricity and natural gas, and fluctuating purchase prices of steel scrap, ferro-alloys, and pig iron. A serious threat for the business plans of future years is the balance shortage of electricity, which is expected to effect Slovak energy supply system after the decommissioning of the Jaslovské Bohunice nuclear power plant from 2007 to 2009. The Slovak Government undertook to do this in accordance with EU accession demands. To meet the business plan for 2006, through our sales agencies we will supply our customers with products and services totalling at least SKK 7 661 million, including more than 86% foreign sales. For 2006, the Board of Directors set up a goal to generate net profit after taxation amounting to SKK 587 million, including SKK 115 million income from financial investments (i.e. received dividends from subsidiaries). The second main plank of our diversification business plan includes products such as rolling mill equipment, shaping machines and tools, casts, forged pieces and models, which are included in the production plan of ŽÏAS, a.s., Žïár nad Sázavou. A tandem of ŽÏAS, a.s., Žïár nad Sázavou, and ŠKODA TS, a.s., Plzeò, ranks among the top heavy-engineering and metallurgical companies in the Czech Republic and has won worldwide recognition. The successful revitalization of ŽÏAS accomplished during previous years laid the basis of the dividend policy, which will enable Železiarne Podbrezová to recover invested funds. During the last few years, the Company’s business activities in tourism were gradually integrated in the Tále subsidiary. Nowadays, this is the third main plank of diversification business activities. Considerable investments were made to accommodation facilities: Stupka hotel, Golf hotel, and the sports facility including a ski resort and an 18-hole golf course which was completed in 2002. We intend further investments to develop this segment. The intention is to improve the quality of services, and through the highly efficient operation of the holiday resort and sports facility we aim to win recognition from a wide range of customers. The scope of business activities carried out by Železiarne Podbrezová is also supported by the activities of other subsidiaries and associates, which together contribute to the consolidated economic results. Upon meeting the planned sales from sold goods, own products, and services of SKK 15.1 billion within the consolidated group, we expect the generation of consolidated profit attributable to Železiarne Podbrezová of SKK 888 million. REPORT BY THE BOARD OF DIRECTORS Report by the Board of Directors Annual Report 2005 Železiarne Podbrezová 34