Annual Report 2010

2010 ANNUAL REPORT r REPORT BY THE BOARD OF DIRECTORS TRANSMESAand TAP With their product portfalio,TRANSMESAand TAP (Spanish companies) strengthen !he international position of ŽP GROUP in !he production and sales of precision cold drawn steel tubes. In comparison to !he prior year, which was severely affected by !he global financial crisis, in 201 O !he market continued to stabilise gradually, which resulted in greater demand far precision tubes and both companies supplied their customers with tubes in !he total amountof9,120 tonnes,which represents an 88% increase in comparison with 2009. Similarly, !he share of sales of merchandise trom Železiarní Podbrezová a.s. in total revenues also increased, as TRANSMESAhas al its disposal an automated warehouse far finished products with a capacity of 5,000 tonnes, which enables flexibly supplying adjacent markets.The revenues trom !he sales of merchandise,products and services totalled EUR 23,761 thousand. The domestic Spanish market covers 31 %of !he realised revenues. Countries of !he European Union, USA and Australia continue to hold their dominant market position. Despite !he positive results, !he companies still have no! reached pre-2009 levels and manufacturing capacities are employed al 70%. Both companies' results were infiuenced by !he successful implementation of measures aimed al increasing profitability, which is proven by meeting !he goals set in !he production pian with a reduced number of employees.The consolidated profit is in !he amount of EUR 506 thousand. Owing to !he increase in production,employees far manufacturing were re-hired and !he administrative organisation was managed successfully even after reducing !he number of white collar workers, which helped increase personnel expense flexibility and savings. In 201 O, !he total amount of EUR 856 thousand was used far the repair and maintenance of technical equipment. With regard to purchases, in 201 O the synergy effectwas strengthened by increasing the number of semi-finished goods purchased trom Železiarne Podbrezová a.s. and ii covers 70%of!he companies' total demand. As at 31 December 2010, the total consolidated assets amounted to EUR 25,009 thousand, ofwhich current assets amounted to EUR 14,785 thousand. As al the year end,the equity to total funds share of the companies represented 60%. With !he increase in new construction contracts and growth in production, in !he future the companies pian to fully utilise !he production facilities and reach sales in !he amount of EUR 27,500 thousand,with !he consolidated profit far both companies in the amountofEUR 1,500thousand. ŽĎAS , a.s. and TS Plzeň a.s. In !he long term, ŽĎAS, a.s. and TS Plzeň a.s. are leading heavy industry producers and in 201 O they strengthened their positions compared to their European and global competitors. The global recession in traditional sales territories in heavy engineering continued in 201 O and negatively impacted both companies'operations. ŽĎAS has more than a 50-year history. The main production programme includes integrated farging sets including manipulators, equipment far processing scrap steel, hydraulic presses, inspection and parting lines, equipment far rolling mills and metallurgy products - mainly special farging and casting production trom cast iron and ductile cast iron. The company also performs renovations and modernisations,trom complete production sets to single machines.All deliveries are provided to customers by !he company'sown external assembly and high-quality servicing departments. In 201 O, ŽĎAS, a.s. reported total revenues trom !he sales trom merchandise, products and services in the amount of EUR 111 ,843 thousand (CZK 2,802.9million). In 201 O, investments to modernise technologies totalled EUR 8.1miIIion (CZK 202 million). The reported profit far 201 O in !he amount of EUR 2,899 thousand (CZK 72.6million) refiects !he hard work of !he management and !he whole personnel and proves good cooperation with suppliers and also customers. The success also results trom sensible and sensitive decisions with regard to the reductions in !he number of employees, good cooperation with monetary institutions, and strengthened efforts by !he sales personnel when acquiring new contracts. The company managed to acquire enough metallurgy contracts and, in comparison with the prior year, the sales in machinery and equipment production also grew. In 201 O, the company traded with customers in Japan, China, Korea,India and several European countries, which refiects the high quality of production and good customer service. The modernised technology base facilitates improving the results of its operations in !he future,mainly after !he revival of the global economy. 1