Annual Report 2007

30 A N N U A L R E P O R T REPORT BY THE BOARD OF DIRECTORS In 2007, the following movements relating to the equity participations of Železiarne Podbrezová a.s. in individual companies were recognised on financial investments accounts: • In February 2007, ŽP Informatika s.r.o. was established, with share capital of SKK 25.0 million. It provides hardware modernisation and servicing and software application development for Železiarne Podbrezová a.s. and its subsidiaries. Furthermore, the shares of GAMO a.s. were sold to the original shareholders; • The share capital of Tále, a.s., was increased by SKK 45 million which was used for the reconstruction of the Stupka Hotel; • The remaining 18% share in ŽP PRAKO s.r.o. was purchased for SKK 11.3 mil- lion., making Železiarne Podbrezová a.s. the sole shareholder. Subsequently, the company’s share capital was increased by SKK 50.0 million; • The equity participation in ŽP EKO QELET a.s. was increased by SKK 673.9 mil- lion in total. The increase includes the purchase of an additional 34% share at a discounted price of SKK 540.9 million, increasing the shareholding of Železiarne Podbrezová a.s. to 66.25% and an increase of the company’s share capital by SKK 132.0 million, to finance its future development; • A 50% share in KBZ s.r.o., Košice, was acquired for SKK 90.0 million. This company is also a major steel scrap processor and trader in Eastern and Western Slovakia; • In September 2007, Železiarne Podbrezová a.s. acquired a 100% share in ŽIAROMAT, a.s. for SKK 56.7 million. Subsequently, the company’s share company was increased by SKK 88.3 million; • In December 2007, a 66% share in ŽP HUNEX Kft. was purchased for SKK 2.9 million. The company operates in the steel scrap trading industry in Hungary; • Upon an assessment of the fair value of the Company’s financial investments, as of 31 December 2007 provisions were created for the equity interest in ŽP PRAKO s.r.o. in the amount of SKK 71.0 million, in HRON – AIR s.r.o. in the amount of SKK 3.7 million, and Motor-Car Podbrezová s.r.o. in the amount of SKK 0.5 million; • As of 1 April 2007, Doplnková dôchodková poisťovňa STABILITAwas transformed into a joint stock company and a supplementary pension savings company. The position of Železiarne Podbrezová a.s. changed from a founder to a shareholder of STABILITA d.d.s., a.s., holding a 5.17% share in the registered capital. In economic terms, 2007 can be evaluated as the most successful year in the new history of ŽĎAS, a.s., which thereby met the expectations as regards both prosperity and the Company’s overall dynamic growth. The strategic objectives set by the sole shareholder, Železiarne Podbrezová a.s., were fully met, which helped strengthen the international position of ŽĎAS among European and global competition. In 2007, ŽĎAS, a.s., recorded sales of merchandise, products, and services in the total amount CZK 3 378.5 million (SKK 4 267.0 million), representing an increase of 5.9% vis-ŕ-vis the previous year, of which export accounted for 56.5% compared to 49.3% in 2006. The dynamic growth of all efficiency indicators can also be considered very positive. 2007 was the fifth consecutive year that ŽĎAS, a.s. managed to generate profit after taxation, amounting to CZK 297.9 million (SKK 376.3 million). The closing balance of the company’s registered capital amounted to CZK 1 395.0 million (SKK 1 762.3 million), with total assets of CZK 3 921.3 million (SKK 4 952.6 million) and 56.2% leverage ratio. In 2007, the Company employed 2 751 employees, ŽĎAS, a.s.