Annual Report 2010

2010 ANNUAL REPORT INTRODUCTION PROM THE CHAIRMAN OF THE BOARD OF DIRECTORS Dear Shareholders and Business Partners, 2010 was a year in which a number of events helped us remember our company's rich 170-year old success story. lt was also the first year after the great global economic crisis, which had an immense impact on our company. In 2009,we adopted a number of measures to eliminate the negative impacts not only on Zeleziarne Podbrezová a.s. but also on other members of the ŽP GROUP. The decisions made by the Board of Directors and the Supervisory Board of Železiarne Podbrezová a.s. proved to be right as early as in the first six months of the post-crisis period. The measures adopted throughout the company have not only mitigated the impacts of the crisis; thanks to them, we can also say that this year was successful because we reported aprofit of nearly EUR 1 O million. Because we won new work contracts,we were able to hire new employees in the first half of 201 O, which was very satisfying for us because among the 530 new hires 150were employees who had to be laid offowing to the economic crisis in the previous year and now, they were able to join us again. Many of the new hires, however, lacked experience,which has put pressure on our managers, mainly at the middle management level. The new employees had to be trained and taught our philosophy,which is that the quality of our deliverables and our service for customers is of key importance. We have realised that this approach is what is required by the global and European markets. Dear Shareholders and Business Partners, lf we can say today that the economic results we achieved were very good it is also because we were able to fully use our production capacities in the second half of 201 O. There is no doubt that the efficient interna! communication within the company,as well as the extremely well-working external communication, had apositive effect. lt is very comforting to know that this communication was not disrupted even when facing the adverse consequences of the economic crisis. We have been able to maintai na strong position on the European and global markets and, furthermore, we have gained new customers thanks to our approach to product delivery under short delivery terms that are extremely convenientfor our end consumers and warehouse managers. Positive financial results were also reported by our ŽP GROUP companies. The Board of Directors of Železiarne Podbrezová set the course for the company'sdevelopment for the next five years focusing on its modernisation. In steel production we will focus on capital investment projects,which will enable us to expand our product range. Our goal is also to build acentra! warehouse forfinished goods,which in addition to other benefits should allow us to better use net working times in the main production operations, i.e. in the seamless hot-rolled steel tube mill. Dear Shareholders and Business Partners, Undoubtedly 201 O was also a successful year because of the good cooperation with our suppliers, customers and financial institutions and, on this occasion, 1 would like to thank all of them for that. 1 would also like to thank all of our companies, whose excellent results made a great contribution to our success. We can, therefore, proudly state that 2010 will be remembered as another successful year in Železiarne Podbrezová'shistory. 1 Ing. Vladimír Soták Chairman of the Board of Directors and CEO