Annual Report 2008

REPORT BY THE BOARD OF DIRECTORS basis. Despite the adopted measures, it remains crucial for us to ensure that our employees receive adequate care and work in a sale environment. We will continue developing the occupational health and safety management system certified under the OHSAS 18001 Standards. We must also keep in minci the high-quality preparation of the future workforce. Therefore, we will support educating a qualified workforce for the Company's needs at the Prívale Secondary Apprentice School of Metallurgy in Lopej and the Prívale Secondary Grammar School in the following years. The operation and development of the information system in the parent company, as well as the subsidiaries, will be outsourced to our subsidiary ŽP Informatika s.r.o. in 2009. As Železiarne Podbrezová plans to cut costs for such services, ŽP Informatika s.r.o. will compensate for the shortage by extending the services to external entities. In recent years, the Company's financial situation has been balanced and stable. Despite the difficult conditions, we want to keep it balanced and stable in 2009 and in the years to follow. Therefore, we will efficiently use the credit facility extended by the Bank Club, the terms and conditions of which are valid until 201 O. With regard to ensuring the sale of finished goods in the amount of EUR 151.7 million (SKK 4 569.5 million), the Board of Directors set a goal for 2009: to generate a net profit after taxation in the amount of EUR 693 thousand (SKK 20.9 million). This amount will also include revenues trom financial investments. The dividends to be received trom the subsidiaries in 2009 are estimated at EUR 5.9 million (SKK 177.7 million) and will form a substantial portion of the total profit trom financial activities. We have decided to discontinue the operations of the subsidiaries whose results are not expected to be favourable in 2009 and whose operations do not offer good prospects in the mid-term: - HRON - AIR sr.o. entered into liquidation, which will be completed with no impact on the profit of Železiarne Podbrezová in 2009. - Production will be discontinued in ŽP PRAKO s.r.o. with effect trom 1 June 2009, with massive layoff of all employees and subsequent liquidation (anticipated between 1 September 2009 and the year-end). - Due to an insufficient number of contracts, the production in ŽP Tažírny trub Svinov, spol. s r.o. was discontinued with effect trom 1 Apríl 2009, with massive layoff of almost all employees. A minimum number of employees will run a metallurgical material warehouse in the Ostrava reg ion. - ŽP-lnvest s.r.o. (a limited liability company) was transformed to a joint-stock company, with all shares offered for sale. - A 50%share in Motor-Car Podbrezová s.r.o. is offered for sale. lf the impacts of the crisis on other subsidiaries deteriorate in 2009, Železiarne Podbrezová's Board ot Directors will immediately adopt measures inevitable to mitigate losses. The second main piliar of our diversification business pian includes heavy-engineering and metallurgical products. ŽĎAS, a s , has in its production pian rolling mill equipment, shaping ma– chines and tools, casts, forged pieces and models. Along with TS Plzeň a.s., ŽĎAS, a.s. has created a tandem that ranks among the top heavy-engineering and metallurgical companies in the Czech Republic and has won worldwide recognition. Their mutual cooperation will allow the further use of the synergie effects resulting trom the dominant position in the shaping machine supplies sector. Despite the lower demand for products, especially in the metallurgy sector, both companies have enough contracts for 2009 to meet their business plans and to contribute to improving the consolidated results of Železiarne Podbrezová. In recent years, the Company's business activities in tourism were gradually integrated in the subsidiary Tále a.s. Today, this is the third main piliar of the diversification of our business activities. We intend to further invest in developing this segment. By having efficient operations and