Annual Report 2005

3 A WORD FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS Dear Shareholders, 2005 represented a pinnacle year for Železiarne Podbrezová, as we achieved the best results in the existence of our joint-stock company. Undoubtedly, the business policy prepared as far back as 1994 – 1995, supported by the realisation of a company revitalisation programme, represented a stepping-stone to our achievements. Towards the end of 2004 we observed a positive development of steel product prices and this trend continued in 2005. As a result of the joint effect of several factors, such as a sufficient number of contracts, reasonable production costs, and a robust financial strategy, the Company generated profit before tax of one billion and eighty-six million SKK. This result will definitely help to improve the debt equity ratio and will rank the company among the top entities operating in the area of the production of seamless tubes, and recently also welded tubes with small diameter. The market where we offered our products enabled us to fully utilise our production capacity. Further good news is the fact that the payment behaviour of our customers improved, which is supported by the reduction of losses arising from lost receivables. In contrast, the increase in prices, in particular electricity and gas, represents a negative aspect as it enabled the suppliers to make the best of their monopoly market positions. Dear Shareholders, We realise that in the competitive environment we are to face in the future, we will only be in a good position to continue our excellent performance if we retain healthy labour productivity. Consequently, in addition to managing product quality and meeting contractual deadlines for supplies, the Board of Directors will place continued emphasis on labour productivity enhancement. Naturally, we always keep in mind employee care: this is our priority and forms the foundation stone of our social benefit scheme. We want to express our gratitude to you all, including our suppliers and financial institutions, and in particular to the whole staff of Železiarne Podbrezová, for successfully fulfilling the business and financial plan set by the Company’s management. Železiarne Podbrezová became a major player in the context of the EU. Our share in the sale of precision tubes in this market reached a noteworthy 8.6 per cent, and this year’s development suggests that interest in our Company’s products will continue. Beneficial for the Company’s operation was also the valuable cooperation between subsidiaries in the Group, as this created good conditions for further economic development. The continuous growth of the fair value of Železiarne Podbrezová also offers some comfort for shareholders. The implementation of our dividend policy also represents one way of meeting the Company’s strategic objective, that is to satisfy not only the state (which will receive its share in the form of taxes and contributions), but also the necessities of our employees’ lives and the expectations of our shareholders. This, we believe, is the strategy of good management which we will also continue in the years to come. Ing. Vladimír Soták Chairman of the Board of Directors and CEO A word from the Chairman of the Board of Directors Annual Report 2005 Železiarne Podbrezová