Annual Report 2008

REPORT BY THE BOARD OF DIRECTORS ŽELEZIARNE PODBREZOVÁ rationalising the management structure of the recreational and sports premises, we will aim at further improving rendered services and winning recognition from among a wide range of customers. The scope of the business activities carried out by Železiarne Podbrezová is also supported by the activities of other subsidiaries and associated undertakings, which contribute to the consolidated economic results. Upon meeting the planned revenues from sales of merchandise, finished goods and services at the consolidated group level of EUR 298.7 million (SKK 9.0 billion), we expect to generate a consolidated profit attributable to Železiarne Podbrezová in the amount of EUR 3.0 million (SKK 90.4 million). CONCLUSION We regard the results of operations achieved in 2008 as positive despite the decreased dynamics of the growth of some qualitative indicators of economic efficiency. The global boom of the metallurgical industry continued in the first six months of 2008, resulting in pressure on the growth of the input prices of raw materials, namely steel scrap and ferro-alloys. On the other hand, insufficient sales opportunities in the last quarter resulted in the inefficient use of the technological facilities and increased overhead costs. Despite the difficult limes, however, our profitability in the metallurgy sector amounted to 4.3%. The long-term experience of the personnel, under the leadership of mature management, made good use of the year-long work drive, although the overal! results were impaired by the sales crisis at the year-end. The result, as recognised in the separate financial statements, was net profit of SKK 396 788 thousand (EUR 13.2 million). Based on the requirements of Slovak legislation, Act No. 431/2002 Coli. on Accounting, the Company prepared separate financial statements for the period from 1 January 2008 until 31 December 2008 in accordance with the lnternational Financial Reporting Standards as adopted by the European Union. The subsidiaries and associated undertakings also played an active part in generating profits for Železiarne Podbrezová. The consolidated group generated revenues of SKK 19 512 373 thousand (EUR 647.7 million). The profit of SKK 700 725 thousand (EUR 23.3 million) was assigned to the shareholder, Železiarne Podbrezová, as a consolidating reporting enterprise. The Company's prosperity in the long term represented a guarantee for the successful operation of small- and medium-sized businesses in the region. Jobs and steady income provided by Železiarne Podbrezová and its subsidiaries created an encouraging social background in the district of Brezno. The Board of Directors of Železiarne Podbrezová wishes to express their gratitude and appreciation to all our colleagues, as without their contribution the presented results could not have been achieved. Additionally, we would like to extend our thanks to our suppliers, customers, banks and financial institutions, and to all our business partners for their co-operation. We wish to further promote our good !rade relations in forthcoming periods. Thank you for your confidence. Approved by the decision of the Board of Directors on 15 May 2009.