Annual Report 2010

2010 ANNUAL REPORT REPORT BY THE BOARD OF DIRECTORS With regard to the sales in the amount of EUR 265.6 miliion, !he Board of Directors of Železiarne Podbrezová a.s. seta goal far 2011 to generate net profit after taxation in the amount of EUR 12.6 miliion. This amount wili also include revenues from financial investments. The dividendsto be received from the subsidiaries in 2011 are estimated at EUR 2.6million. We are planning to generate profit in ali subsidiaries in 2011. We expectto seli the production pian! and to complete the liquidation of ŽPTažírny trub Svinov,spol. sr.o. in Ostrava generating apositive salvage value. The second piliar ofour business pian includes heavy-engineering and metallurgical products. ŽĎAS , a.s. in Žďár nad Sázavou and TS Plzeň a.s. have formed aduo that ranks among the top heavy-engineering and metaliurgical companies in the Czech Republic and have won worldwide recognition. This significant cooperation will allow !he further use of the synergie effects resulting from !he dominant position in the shaping machine supplies sector. Both companies have sufficient work contracts far 2011 to meet their business plans and to contribute to improving !he consolidated results of Železiarne Podbrezová a.s. The business activities in tourism, which is the third piliar of our business activities, is now fully integrated in the subsidiary Tále a.s. We pian to further invest in developing this segment. By enhancing the technical standards of !he sports resort and its efficient operations,we wili aim to further improve rendered services and strengthen our reputation among awide range of customers. The scope of Železiarne Podbrezová a.s.'s business 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, products and services at !he consolidated group level of EUR 452,262 thousand,we expect to generate consolidated profit attributable to Železiarne Podbrezová a.s. in the amount of EUR 19,123 thousand. CONCLUSION The Board of Directors considers !he reported results far 201 O to be positive. We have used the opportunities arising from the revival of the market and the profit that was reported has balanced the losses from the crisis period. The measures that were approved during the sales crisis also played an important role as they had a decisive impact on bringing about positive economic results. Greater demand enabled expanding !he workfarce and increasing the average salaries to pre-crisis levels. The work performed by senior management and our workfarce with many years of experience proved to be competent and efficient. In 2010,the company reported profit in the amount of EUR 9,853,677. The profit per share represented EUR 4.13. The subsidiaries and associated undertakings also actively contributed to Železiarne Podbrezová a.s.'s results. The consolidated group generated intercompany revenues of EUR 412,578,754. The profit of EUR 13,794,812 was assigned to the company as a consolidating reporting entity. Even though the company's results still have not reached pre-crisis levels, the company is a guarantee far SMEs in !he reg ion. The market revival enabled increasing employment and therefore also the income ofpeople living in the region.Again, Železiarne Podbrezová a.s. strengthened its position as the most important employer and guarantor of social security in the district of Brezno and the entire Banská Bystrica reg ion. With regard to the overali assessment of 2010, we can state today that the global crisis and the losses reported in 2009 did not considerably weaken the company, but have rather strengthened it. We can learn a lesson from such experience. The approved cost-cutting measures wili continue to bear economic benefits in the future. Thanks to great flexibility,Železiarne Podbrezová a.s. is constantly prepared to react dynamically to new business opportunities. The Board of Directors of Železiarne Podbrezová a.s. wishes to express their gratitude and appreciation to all colleagues, as without their contribution the results could not have been achieved. Additionaliy,we would like to extend our thanks to our suppliers, customers, banks and financial institutions, and to ali our business partners far their cooperation. We wish to further pramate our good !rade relations in future periods. We appreciate your confidence. Approved by the decision ofthe Board of Directors on 3May 2011. 1