Annual Report. ZSNP, a.s.,

Annual Report ZSNP, a.s., 2006

Contents 1. ADDRESS BY DIRECTOR GENERAL 6 2. BASIC INFORMATION ON THE COMPANY AS OF DECEMBER 31, 2006 7 2.1. INFORMATION ON THE REGISTERED CAPITAL 7 2.2. STRUCTURE OF SHAREHOLDERS AS OF DECEMBER 31, 2006 7 2.3. COMPANY STATUTORY AND SUPERVISORY BODIES AS OF DECEMBER 31, 2006 7 3. COMPANY STRUCTURE AND MAIN BUSINESS ACTIVITIES AS OF DECEMBER 31,2006 9 3.1. PRODUCTION DIVISIONS 9 3.2. SERVICE DIVISIONS 9 3.3. ZSNP, A.S. SUBSIDIARIES WITH CONTROLLING INTEREST 9 3.4. ZSNP, A.S. SUBSIDIARIES WITH SUBSTANTIAL INTEREST 9 3.5. ORGANIZATIONS BASED ABROAD 10 3.6. CHANGES OF ORGANIZATIONAL STRUCTURE 10 4. REPORT ON COMPANY BUSINESS ACTIVITIES AND ASSETS POSITION. 11 4.1. SUMMARY OF SELECTED INDICATORS FOR ZSNP, A.S. DIVISIONS 12 4.2. PRODUCT PORTFOLIO OF ZSNP, A.S. 12 5. BUSINESS TRENDS AND FINANCIAL STANDING DATA OF ZSNP, A.S. 15 5.1. FINANCIAL AND OPERATING HIGHLIGHTS 15 5.2. STATEMENT OF FINANCES 15 5.3. STATEMENT BY SUPERVISORY BOARD ON 2006 ACCOUNTS DISCLOSURE AND THE PROPOSAL OF PROFIT DISTRIBUTION FOR THE ACCOUNTING PERIOD 2006 21 5.4. SIGNIFICANT EVENTS THAT OCCURRED AFTER THE END OF 2006 22 5.5. INFORMATION ON THE ANTICIPATED DEVELOPMENT OF ZSNP, A.S., IN 2007 22 6. OTHER INFORMATION 24 6.1. HUMAN RESOURCES AND SAFETY 24 6.2. INTEGRATED MANAGEMENT SYSTEM 25 6.3. ENVIRONMENT 26 7. ANNEX 28

1. Address by Director General Dear Shareholders, ZSNP, a.s. has ended the financial year of 2006 with a profit amounting over SKK 1.1 billion after taxes. This result gives us an opportunity to add the 2006 year to all successful years continuously following since privatisation in 2002. An extremely positive trend in development proves that the restructuring measures and the strategic intentions made by the majority owner private equity Penta Investments had been planned in a highly professional manner and thoroughly implemented. While in the year of privatisation the company indebtedness totalled over SKK 2 billion, in 2005 and 2006 ZSNP, a.s. had not have any bank credits. The economic summary for 2006 reveals positive results mainly from financial activities. The private equity group Penta Investments, the owner of ZSNP, a.s., followed their strategy and acquired new investors for their former division Alufinal and subsidiaries ZSNP FOUNDRY, a.s., TUBAPACK, a.s., and ZSNP RECYKLING, a.s. New investors took over the companies in the previous year and continue in developing production of aluminium profiles, castings, tubes and in recycling used cars. New investors include some significant international companies. In the meantime, ZSNP accomplished very good results also from operating activities and exceeded the planned profit by 70% in this area of business. In 2006, the average monthly salary per employee amounted to nearly 26,000 SKK, it increased by almost 3,300 SKK in comparison with previous year. The earned profit enables to make substantial investments, particularly in environment protection and production development. Elimination of the ancestral environmental load - the mud tailings facility needed 149 million crowns in the last year. In August last year, the first implementation stage of the project for reclamation of mud settling facility started and it was completed in March 2007. The project is funded by the ZSNP, a.s. using mainly its own financial resources. This project is the largest one among other projects being implement by private owned companies for disposal of old environmental loads. The complete reclamation of the mud settling basins is scheduled in 2011 at investments amounting to 1.6 milliard crowns. Further investments exceeding 111 million crowns were made by ZSNP, a.s. in the sphere of production, particularly for two core divisions FINALCAST and ENEVIA. These investments were used for technology innovations and for setting up new workstations. ZSNP, a.s. has again confirmed its position of a well established and prosperous company in all aspects. This is the result of proper management of and corrections in the Company s development by the owner along with highly professional management team and all employees involved. I would like highly appreciate the effort that has resulted in the successful 2006 year. My thanks are addressed to the ZSNP s owners and to all employees who excellently managed their daily duties as skilled professionals. I would like to conclude this address by expressing my gratitude to all business partners and customers for working with us, for their confidence in the Company and fair relations. Ing. Ján Klimko, Director General

2. Basic Information on the Company as of December 31, 2006 Company name: ZSNP, a.s. Registered office: Priemyselná 12 965 63 Žiar nad Hronom Slovak Republic Reg. No.: 30222524 The company is incorporated in the Commercial Register of the District Court of Law in Banská Bystrica, Section Sa, File No. 25/S. The joint-stock company was established by the approval of privatisation project in the form of the Slovak Republic Government Decree No. 406/91 from July 23, 1991 pursuant to 10 of Act No. 92/91 Coll. on the terms and conditions of state property transfer to third persons and by the approval of Deed of Foundation and Articles of Incorporation on August 6, 1991 pursuant to 25 of Act No. 104/90 Coll. on joint-stock companies. It was registered in the Commercial Register on August 16, 1991 ZSNP a.s., is a company with a long-term tradition in the area of aluminium processing. The current product portfolio includes the production of castings from aluminium alloys and the procurement of services for entities based in the ZSNP industrial park. 2.1. Information on the Registered Capital Registered capital: SKK 1,273,622,020 paid in full Number of issued shares: 5,789,191 shares at par value of SKK 220,- Type of shares: ordinary Form of shares: registered shares Appearance of shares: documentary The company owns 43,287 pieces of its own share of which 33,227 pieces at the costs of acquisition SKK 220 per share (21 shares are assigned to 2 shareholder of the joint-stock company ALUFINAL who have not yet expressed their interest in the exchange of the shares., by the virtue of the merger of the joint-stock company ALUFINAL and ZSNP, a.s.) and 8,204 pieces at the costs of acquisition SKK 350 and the remaining 1,856 pieces at the costs of acquisition SKK 400. The company has acquired own shared from the small shareholders on the basis of decision by the General Meeting. 2.2. Structure of Shareholders as of December 31, 2006 Shareholder Share on Registered Capital (in thousands SKK) Share in % PENTA INVESTMENTS LIMITED 1,223,314 96.05% Other legal entities and natural persons 50,308 3.95% 2.3. Company Statutory and Supervisory Bodies as of December 31, 2006 Board of Directors Ing. Jozef Špirko Mgr. Jozef Oravkin Ing. Peter Ondro Ing. Ján Klimko - Chairman of the Board of Directors - Member of the Board of Directors - Member of the Board of Directors - Member of the Board of Directors

Supervisory Board Dr.h.c. Ing. Jozef Pittner, PhD. Dr.h.c. Ing. Jozef Uhrík, CSc. Mgr. Pavel Kúš - Chairman of the Supervisory Board - Member of the Supervisory Board - Member of the Supervisory Board and Representative of Employee

3. Company Structure and Main Business Activities as of December 31,2006 ZSNP, a.s. PRODUCTION DIVISIONS FINALCAST SERVICE DIVISIONS ENERGETIKA NÁRAĎOVŇA DOPRAVA SKLÁDKA ODPADU 3.1. Production Divisions Division FINALCAST production and sale of aluminium alloy low-pressure and gravity die castings 3.2. Service divisions Division ENERGETIKA Division NÁRAĎOVŇA Division DOPRAVA Skládka priemyselného odpadu production and supply of energy sources, industrial and potable water production of tools road and railway transportation operation of specialized landfill for disposal of industrial waste including hazardous waste 3.3. ZSNP, a.s. Subsidiaries with Controlling Interest Name of the Company ZSNP Share Registered Seat ALUPROF spol. s r.o. 100.0% Praha Enviroservis, s.r.o. 100.0% Žiar nad Hronom FINALCAST, a.s. 100.0% Žiar nad Hronom TEPLO, s.r.o. 100.0% Žiar nad Hronom UM, s.r.o. 100.0% Žiar nad Hronom ZAHAS, s.r.o. 100.0% Žiar nad Hronom ZSNP Elektrovodiče, s.r.o. 100.0% Praha ZSNP TRADE, s.r.o. 100.0% Žiar nad Hronom ZUS servis, s.r.o. 100.0% Žiar nad Hronom AVC, a.s. 73.4% Čadca 3.4. ZSNP, a.s. Subsidiaries with Substantial Interest

Name of the Company ZSNP Share Registered Seat Slovalco, a.s. 34,7 % Žiar nad Hronom On March 5, 2007 the ZSNP, a.s. company increased its share in Slovalco, a.s. up to 44,7% 3.5. Organizations based abroad There is no Company organization operating abroad. 3.6. Changes of Organizational Structure The following significant organizational changes were introduced in 2006: 1. In April 2006 the Division Tubapack was detached and transformed into a joint stock company, TUBAPACK, a.s., and consequently sold on June 1, 2006. 2. In June 2006, the Fire Department a Safety and Health Department were transformed into a limited liability company, ZAHAS, s.r.o. 3. In August 2006, the business activity of division Práškové nanášanie hmôt (Powder coating) was terminated due to sale of assets. 4. On November 1, 2006 the service division ÚDRŽBA (Maintenance) was transformed into a limited liability company ZUS servis, s.r.o. 5. In May 2006, the business activity of the Division Sloval was terminated due to sale of assets.

4. Report on Company Business Activities and Assets Position. Year 2006 was very important for ZSNP, a.s. particularly in respect to sustaining trends from previous years - that means making the profit under the conditions of enhanced overall performance, the customer-oriented attitude of individual divisions, the stable and optimal business activities as well as support for the development projects. Year 2006 was the year of significant changes even in the company structure and ZSNP Group. Some subsidiaries (former divisions) such as Alufinal, a.s, ZSNP FOUNDRY, a.s and VUM, a.s were sold. The division Tubapack was transformed into an independent joint-stock company, TUBAPACK, a.s. and sold to the ŽHS, a.s. investor. Similarly, the service division Údržba was transformed into a liability limited company, ZUS service, s.r.o. with the aim to sell and outsource their activities. Thus, Finalcast, Enevia (the former Energetika), and Doprava remain the priority divisions. Each of these divisions serves a specific market and therefore they require an individual attitude to the strategic intentions with them. As far as total sales are considered, so-called service divisions take the lead by serving mainly the domestic market. The export activities are carried out mostly by Division Finalcast which produces aluminium castings and sells them mainly on the German, Czech and Hungarian markets. All efforts at improving division performances and economy effectiveness in combination with the company restructuring being completed have resulted in the positive result of business activities. This goal was accomplished mainly through implementation of continuous cost control and management as well as improvements in fulfilling the customer demands and providing full service to the customers. ZSNP, a.s., is a solvent company able to pay its liabilities on time. On the other side this calls for a strict monitoring of debt collection. It is to say at this point that the rate of unpaid debts has significantly decreased in 2006 what means that the Company has established a vital portfolio of customers. Moreover, ZSNP, a.s has an open credit line available with Citibank (Slovakia) a.s. although no drawings were made as at December 31, 2006. The only non-profit business activity is carried out by Division LKV which, besides routine operation including alkaline waste water treatment and water pumping at the mud settling facility, has started implementing the first stage of the project dedicated to the reclamation of mud settling basins. In 2006, this old environmental load needed to review the existing reserves - creation of additional provisions amounting to SKK 113,5 million.

4.1. Summary of Selected Indicators for ZSNP, a.s. Divisions Division Revenues (60*) 2006 % change compared with 2005 Profit/Loss for the Accounting Period 2006 % change compared with 2005 Average Number of Employees 2006 % change compared with 2005 PRODUCTION 755,627 TSKK -67.3% 107,184 TSKK -80.3% 275-57.8% Tuby 107,237 TSKK -64.6% 40,890 TSKK 28.4% 40-71.0% Finalcast 556,876 TSKK 19.1% 64,266 TSKK -24.2% 219 10.1% Sloval 81,133 TSKK -76.6% 4,376 TSKK 159.6% 8-75.8% Other Production 10,380 TSKK - -2,348 TSKK - 8 - SERVICE 538,243 TSKK 17.5% 86,803 TSKK 144.0% 260-13.3% Energetika 414,047 TSKK 19.8% 44,190 TSKK -23.0% 93-7.9% Náraďovňa 53,170 TSKK 53.7% -2,435 TSKK -739.2% 81-6.9% Doprava 45,583 TSKK -0.7% 25,154 TSKK -12.1% 27-10.0% Other Services 25,444 TSKK - 19,895 TSKK - 59 - ADMINISTRATION 132,384 TSKK 38.6% 933,780 TSKK -28.6% 92-34.3% ZSNP, a.s. 1,426,254 TSKK -50.2% 1,127,766 TSKK -31.9% 627-42.6% Notes: 1. Other Production includes former Divisions Alufinal and VUM. 2. Other Services includes Operations Údržba and LKV. 4.2. Product portfolio of ZSNP, a.s. In 2006, ZSNP, a.s. has significantly reduced its product portfolio, thus reflecting the owner s intentions to prefer independent production units, eventually to transform them into independent legal entities and to develop them to the extent at which they would be attractive for potential investors in this area of business. This resulted in the following changes: The production of secondary aluminium alloys at the Division Sloval had been suspended and the part of assets was sold to the SLOVAL, s.r.o. The Division Tuby producing aluminium and laminate packaging tubes had been transformed into a joint-stock company, TUBAPAK, a.s., which was then sold on July 1, 2006. Similarly, operations Rurkáreň (production of drawn tubes) and Práškové nanášanie hmôt (powder coating) were sold. The Division Údržba (maintenance) was transformed into the independent legal entity ZUS servis, s.r.o. Throughout 2006, the production and services of ZSNP, a.s. were carried by the following divisions and operations: Division FINALCAST: involved in production of castings from aluminium alloys using technologies of lowpressure and gravity die casting. At present, the division is particularly focused on production of machined castings, i.e. castings with added value. In addition to

production, the Division Finalcast provides services related to heat treatment and impregnation. Division ENERGETIKA: involved in production and distribution of energy and utilities such as electricity, heat, gases, industrial and potable water and in operation of waste water treatment plants and sewage systems serving the industrial zone and adjacent surroundings, i.e. mainly within the area of industrial zone. The division is currently the only central producer of heat for Žiar nad Hronom municipality. In 2006, the division was ready to be renamed to Division ENEVIA, effective as from January 1, 2007. Division NÁRAĎOVŇA: involved in production of patterns, casting moulds and tools for metal foundry and extrusion, in particular for producers of aluminium alloy castings, profiles and tubes. In 2006, the division was ready to be renamed to Division NARADEX, effective as from January 1, 2007. Operation DOPRAVA: involved in railway transport on the railway sidings at ZSNP, rental of wagons and maintenance of railway wagons and locomotives. Operation Skládka priemyselného odpadu: involved in disposal of more than 320 types of dangerous waste and approximately 260 types of other waste in accordance with an approved list of wastes for disposal. Operation LKV: involved in treatment a processing of alkaline water from mud settling facility - Mud settling basins. The diagram below includes revenue from aluminium alloys, aluminium and laminate tubes as well as other products and services detached from the product folio during 2006. Revenues by product groups transport 3% moulds, tools 4% other services 9% other income 3% Al and laminate tubes 8% energy 29% Al alloys 6% Al castings 38%

When considering export, the Division Finalcast was the only division making export deals in 2006 and which future sales are significantly export-oriented. Other divisions contributing to product portfolio of ZSNP are mainly the service providers and they are generally domestic-market oriented. The diagram below shows trend in revenues and export at Division Finalcast Revenues and Export Trends in thousands SKK 500 000 400 000 Tržby Export 300 000 200 000 Reevenues Revenues a 100 000 0 2002 2003 2004 2005 2006 Year

5. Business trends and Financial Standing data of ZSNP, a.s. 5.1. Financial and Operating Highlights MU 2004 2005 2006 Revenue from sales (60*) TSKK 3,424,674 2,863,089 1,426,254 out of which export TSKK 1,403,738 1,205,962 586,075 Added value TSKK 894,631 690,230 302,032 Profit/loss from operating activities TSKK -100,978 257,914 317,172 Personnel expenses TSKK 479,850 409,684 267,139 Profit/loss for the accounting period TSKK 144,776 1,655,494 1,127,766 Inventory TSKK 428,067 244,666 158,601 Long-term and short-term receivables TSKK 714,303 1,415,087 1,740,537 Long-term and short-term payables TSKK 1,674,707 1,100,828 273,855 Production TSKK 3,442,369 2,797,595 1,361,482 Investments TSKK 210,269 148,975 111,610 Wages and salaries TSKK 342,928 296,519 194,975 Average salaries SKK 21,241 22,634 25,921 Average number of employees persons 1,345 1,092 627 Productivity from added value on salaries 2.61 2.33 1.55 Productivity from added value per employee and per month 55.43 52.67 40.14 5.2. Statement of Finances Statement of finances in full has been verified by Ernst & Young Slovakia, spol. s r.o., Bratislava, the auditing company and is attached as an integral part of this Annual Report. BALANCE SHEET The value of assets and liabilities as of December 31, 2006 decreased by SKK 219,153 thousand in comparison with the state as of December 31, 2005. Assets A/ The value of fixed assets fell by SKK 642,815 thousand primarily due to decrease in value of long-term financial assets by SKK 505,171 thousand, decrease in long-term intangible assets by SKK 3,161 thousand and decrease in long-term tangible assets by SKK 134,483 thousand. The issues which influenced significantly the movement of long-term assets were as follows: Depreciation amounting to SKK 122,270 thousand, Assets (in kind) contributions to the TUBAPACK, a.s., at the carrying value of SKK 68,395 thousand and to the ZUS servis, s.r.o. at the carrying value of SKK 3,064 thousand,

Decrease in assets due to sales of Operation Práškové nanášanie hmôt to the I.G.C.STROJAL s.r.o., sale of immovable assets to Division Slovalco, and assets of Division Sloval to the SLOVAL, s.r.o. The issues which influenced significantly the movement of long-term financial assets were as follows: Decrease in equity securities held in the controlled entity by SKK 644,274 thousand, which is related to the sale of Sapa Profily a.s. subsidiary to the Sweden SAPA AB, the sale of ZSNP RECYKLING, a.s. and TUBAPACK, a.s. subsidiaries to the ŽHS, a.s., the sale of Fagor Ederlan Slovensko, a.s. to the Spanish FAGOR EDERLAN, the foundation of new companies ZAHAS, s.r.o. and ZUS servis, s.r.o., the purchase of AVC company shares and the increase in deposits in the supplementary pension insurance company DDP STABILITA, Balance of creation and use of reserves and adjustments to long-term financial assets representing the decrease by SKK 3, 438 thousand, Purchase of debt securities issued by Privatbank at the nominal value of SKK 150,000 thousand. B/. The Company s current assets increased by SKK 428,152 thousand. Main factors of the increase were financial accounts - by SKK 188,768 thousand, short-term receivables - by SKK 170,008 thousand and longterm receivables - by SKK 155,441 thousand, while inventories fell by SKK 86,065 thousand. The following caused the increase in current assets: Increase in short-term receivables by SKK 170,008 thousand, which is connected with providing short-term loans to PENTA INVESTMENTS LIMITED at the amount of SKK 656,112 thousand, to AVC at the amount of SKK 9,702 thousand and to VelveTex, a.s. at the amount of SKK 20,000 thousand while trade receivables fell by SKK 590,024 thousand, Increase in long-term receivables towards the controlled entity by SKK 159,646 thousand, which relates to assignation of the receivable from AVC, a.s. C/ Deferred expenses decreased by SKK 4,490 thousand due to accounting for leasing operations (with the concurrent decrease in long-term liabilities). Liabilities A/ Shareholders equity The significant movements of the share equity were as follows: Own shares increase due to purchase of shares from small shareholder at the amount of SKK 6,482 thousand. Revaluation gains or losses settlement of differences from the revaluation of fixed rate term deposits to the fair value at the amount of SKK 26,555 thousand. Increase in revaluation gains or losses from the non-monetary contribution to the TUBAPACK, a.s. and to the ZUS servis, s.r.o., and concurrently decrease in revaluation gains or losses from the sale of Sapa Profily, a.s., Fagor Ederlan Slovensko, a.s., ZSNP RECYKLING, a.s. and TUBAPACK, a.s. at the amount of SKK 283,427 thousand.

Legal reserve fund contribution to legal reserve fund from the distribution of profit for previous accounting period at the amount of SKK 165,550 thousand in accordance with decision by the General Meeting. Retained earnings from previous years allocation of profit balance for 2005 at the amount of SKK 1,440,855 thousand in accordance with decision by the General Meeting. Settlement of deferred tax of SKK 1,330 thousand due to revaluation differences from the sale of Fagor Ederlan Slovensko, a.s. and ZSNP RECYKLING. Accumulated losses from previous years - the General Meeting decided to settle losses amounting SKK 49,090 thousand from the retained earnings from previous years B/ Liabilities decrease by SKK 1,015,564 thousand results from the decrease in short-term liabilities by SKK 679,329 thousand, long-term-liabilities by SKK 147,644 thousand and reserves by SKK 188,591 thousand. On April 6, 2005, ZSNP, a.s. and Solemmy Financial Limited ( Solemmy ) based in British Virgin Island made an agreement on assignation of ZSNP s debt to Slovenská konsolidačná, a.s. company amounting to SKK 1,110,873 thousand. Under the amendment to this agreement dated on June 6, 2005 the parties agreed upon a payoff for taking-over this debt, which amounted to SKK 115,000 thousand at the rate of interest of BRIBOR + 1.5% p.a. with the possibility of premature settlement. ZSNP, a.s. settled this liability on December 27, 2006. Main factors, which influenced the movement of reserves, were as follows: the increase in the reserve for mud settling facility by SKK 85,601 thousand as a consequence of updating the expected expenditures for funding the reclamation of mud settling basins, the decrease in the reserves for alkaline water treatment by SKK 44,109 thousand and the simultaneous increase in reserves for pumping off the alkaline water from mud settling basins by SKK 19,340 thousand, with concurrent reversal of the reserves amounting SKK132,144 thousand. the decrease in emission allowances by abolition of reserves amounting SKK 75, 807 thousand due to fall in the price of emission allowances on Point Carbon exchange. C/ Accruals the decrease by SKK 69,331 thousand. The granted emission allowances were recognized in profit on sale.

BALANCE SHEET (in thousands SKK) as of 31.12.2004 as of 31.12.2005 as of 31.12.2006 TOTAL ASSESTS 4,934,020 6,355,991 6,136,838 Fixed assets 3,630,026 3,920,171 3,277,356 Long-term tangible and intangible assets 1,645,172 1,283,164 1,145,519 Long-term financial assets 1,984,854 2,637,007 2,131,836 Current assets 1,256,066 2,426,924 2,855,076 Inventories 428,067 244,666 158,601 Long-term receivables 103,007 5,184 160,625 Short-term receivables 611,296 1,409,903 1579,912 Financial accounts 113,696 767,171 955,939 Prepayments 47,928 8,896 4,406 TOTAL LIABILITIES 4,934,020 6,355,991 6,136,838 Equity 1,692,252 3,773,389 4,639,132 Registered capital 1,273,617 1269,180 1,262,698 Capital funds -119,455 310,626 53,754 Funds created from profit - 14,477 180,027 Profit/loss of previous years 393,314 523,612 2,014,886 Profit/loss of current accounting period 144,776 1,655,494 1,127,766 Liabilities 3,219,011 2,496,659 1,481,094 Reserves 1,136,946 1,395,831 1,207,240 Long-term liabilities 424,468 208,027 60,383 Short-term liabilities 1,250,239 892,801 213,472 Bank credits and subsidies 407,358 0 0 Accruals 22,757 85,943 16,612

Profit and loss statement In 2006, the Company s total revenues amounted to SKK 1,426,254 thousand which are significantly lower in comparison with the previous year, however they do not include former divisions Alufinal, VUM and Tubapack. Thus, divisions Finalcast and Enevia remain the main source of revenues. Nevertheless, the progress in profit creation has not ceased, primarily due to continuous improvements in company performance and management of cost items including accounting transactions related to creation and reversal of reserves and adjustments. Also profit from financial activities made a significant contribution to overall positive business result - this included recognition of the sale of subsidiaries, Slovalco, a.s. dividend and revenues from hedging activities. The total profit amounting to SKK 1,127,766 has proved the proper way of restructuring process initiated by the new shareholder in 2002 and involving management at all levels and company s employees as well. In 2006, ZSNP, a.s., purchased 36,095 own shares from small shareholders. The Company did not acquire any shares, temporary certificates-bills-notes and/or equity of the controlling person (parent accounting unit) in accordance with 66a of the Commercial Code. ZSNP, a.s. company had no costs in the area of research and development.

PROFIT AND LOSS STATEMENT (In thousands SKK) as of 31.12.2004 as of 31.12.2005 as of 31.12.2006 Revenues from sale of own products and services 3,342,301 2,812,568 1,362,122 Changes in internal inventory 35,968-55,638-13,107 Capitalization 64,100 40,665 12,468 Production 3,442,369 2,797,595 1,361,482 Revenue from the sale of merchandise 82,373 50,521 64,132 Costs of sold goods 63,049 41,074 58,839 Trading margin 19,324 9,447 5,293 Consumed raw materials, energy consumption, and consumption of other non-inventory supplies 2,287,392 1,856,722 860,746 Services 279,670 260,090 203,997 Production costs 2,567,062 2,116,812 1,064,743 Value added 894,631 690,230 302,032 Personnel expenses 479,850 409,684 267,139 Deprecations of long-term intangible and tangible assets 167,115 156,554 153,865 Creation of reserves and adjusting items 522,473 449,345 156,742 Clearing of reserves and adjusting items 267,437 454,038 883,861 Other operating costs 481,456 927,813 1,378,004 Other operating revenues 387,848 1,057,042 1,087,029 Profit/loss from operating activities -100,978 257,914 317,172 Financial costs 173,154 135,714 2,177,685 Financial revenues 419,905 1,765,660 3,017,787 Profit/loss from financial activities 246,751 1,629,946 840,102 Extraordinary costs 100,998 - - Extraordinary revenues 127,513 - - Profit/loss from extraordinary activities 26,515 - - Income tax - due 64,152 83,529 51,232 - deferred -36,640 148,837-21,724 Total income tax 27,512 232,366 29,508 Profit / Loss for the accounting period 144,776 1,655,494 1,127,766

5.3. Statement by Supervisory Board on 2006 Accounts Disclosure and the Proposal of profit distribution for the accounting period 2006 ZSNP, a.s. Board of Directors has duly submitted to Supervisory Board the Accounts Disclosure, along with the proposal of profit distribution for the accounting period 2006. In 2006, ZSNP, a.s. made profit after taxes amounting to SKK 1,127,766,481.31 ZSNP, a.s. Board of Directors suggests that the profit amounting to SKK 1,127,766,481.31 is distributed as follows: - obligatory allocation to lawful reserve fund at the amount of SKK 74,697,451.38 (up to the limit of.20 % of the registered capital), - transfer of SKK 1,053,069,029 to the account - Undistributed profit of previous year. Auditors below have verified the said Statement of finance: Ernst & Young Slovakia, spol. s r.o., Bratislava The Supervisory Board, based on the rights and obligations emanating from the Commercial Code and Articles of Incorporation of ZSNP, a.s., Žiar nad Hronom, has examined the above-mentioned Accounts Disclosure and the proposal of distribution of ZSNP, a.s. company and it recommends that the General Meeting of Shareholders does approve 1. the Company s Statement of finance for 2006 2. the profit distribution according to proposal submitted by the Company s Board of Directors Dr.h.c. Ing. Jozef Pittner, PhD. Chairman of the Board of Directors

5.4. Significant Events that Occurred after the End of 2006 The significant events that occurred after the end of the period covered by this Report are detailed below: - On February 2007, the Company drew down a loan of USD 26,520 thousand. - On March 5, 2007, the Company purchased 10% of Slovalco, a.s. shares to increase percentage of held shares up to 44.7%. 5.5. Information on the Anticipated Development of ZSNP, a.s., in 2007 Anticipated Development Highlights of ZSNP, a.s., in 2007 MU Fact 2006 Plan 2007 % Change Sales (60*) TSKK 1,426,254 1,118,461-21.58% Value added TSKK 302,032 162,378-46.24% Profit/Loss from operating activities TSKK 317,172 25,960-91.82% Personnel costs TSKK 267,139 218,826-18.09% Profit/loss for the accounting period TSKK 1,127,766 482,724-57.20% Inventory TSKK 158,601 176,983 11.59% Non-current and current receivables TSKK 1,740,537 270,955-84.43% Non-current and current liabilities TSKK 273,855 112,637-58.87% Production TSKK 1,361,482 1,122,470-17.56% Investments TSKK 111,610 167,857 50.40% Productivity of value added from wages and salaries 1.55 0.74-52.10% Productivity of value added from wages and salaries per employee per month 40.14 26.12-34.93% The commercial and financial plan for 2007 is based on assumptions defined in strategies for any of individual divisions within the ZSNP, a.s, also named as business entities. All business entities have developed commercial and financial plans in the form of complete document including sales plan, production plan, investment and human resource plan, plan of raw material purchase, marketing plan, etc., while any particular plan takes in consideration methods for accomplishing defined strategy goals. When developing, the commercial and financial plans have been significantly influenced by some external factor such as exchange rate of Slovak crown, costs of energy and LME price for primary aluminium, which is the base for purchase prices of inputs to the Division Finalcast. Plan of revenues in 2007 shows depression caused by detaching some divisions which were still contributing to ZSNP, a.s. revenues in 2007 - this relates particularly to Division Tubapack (reported in the financial statements for January - March as the part of ZSNP, a.s.), further the Division Sloval, which terminated its business activity, and, finally, the Division Práškové nanášanie hmôt (the part of former Division Alufinal). In year-to-year comparison, about SKK 200 million gone away from revenues. Another negative condition to be considered when developing plans was Slovak crown significantly strengthened compared with EUR. This also has a direct impact on the profit subcategory - profits from operating activities.

Creation of resources primarily rests on profit from financial activities which include dividends from Slovalco, a.s. shares, interest revenues from granted loans as well as revenues from forwarding operations (operations for hedging foreign exchange risk in 2007 have been already agreed up in 2006). One of the most important item of capital outlay will be ongoing reclamation of the mud settling basins, alkaline water treatment and pumping of alkaline water within the mud settling facility. Although these items are funded from reserves, they will still be reported in the Cash-flow statement as expenditures.. In spite of lower amount of resources to be created in 2007 and compared with the amount created in the previous year, the Company is ready to make investments and to support projects in the areas of energy and production of aluminium castings, while the amount of planned investments reaches SKK 168 million. In spite of extremely hard conditions and highly demanding tasks in respect to elimination of historical environmental load the Company is expecting to keep the financial stability as well as to enhance competitiveness of products and services in order to affect positively on creation of profit in 2007 and to set up reasonable starting conditions for business activities for future periods.

6. Other Information 6.1. Human Resources and Safety Human Resources The development and management of human resources at ZSNP, a.s. is part of an overall system. The objective is to create an environment that supports individual growth of employees, teamwork and open culture of the company leading to the meeting of strategic goals and support of optimal social environment, stimulating the employees to effective behaviour and performance of their work. In 2006, the Company: in the area of employee motivation: - continued in implementation of Corporate Culture project, - has implemented measurers that resulted from the Employee Satisfaction Survey performed in 2005, - has performed the 3rd Employee Satisfaction Survey - primarily dedicated to find out assessments and opinions of employees regarding individual areas of work life. The project resulted in the measures adopted on the basis of employee s responses and comments. This project repeats on yearly basis. kept employees informed through several communication channels such as: - Hutník - the company news papers, - notice-boards installed at each workstation, - work meetings, - internal intranet, - discussion forum as part of Corporate Culture project, - boxes for anonymous employees suggestions - database of HR informs. in the area of human resources development and education it provided retraining, training and professional education for 1,114 employees in the form of: - management education, - basic and periodical retraining within the scope of applicable regulations, - education in the area of quality, - language schools, - additional education of employed adults, - professional conferences, seminars and congresses. Targets for 2007:

to continue in implementation of particular elements of the Corporate Culture that should promote positive image of our Company in a competitive environment, to follow-up measures resulting from the Employee Satisfaction Survey project, to provide trainings and qualification courses for employees so that they meet requirements for working positions and for personal and professional development, to realize activities within the scope of social plan, such as: - health care (Cancer plan, Flu vaccination ), - catering, - wellness and regeneration activities, - anniversaries, - cultural, social and sport events, - social subsidies, - other events for employees and their family members (International Children s Day, Mother s Day, Father s Day, etc.,,). Safety and Health Protection at Work Through implementing the Safety and Health Management System the Company has set up reasonable preconditions for safety and health protection at work. The efficiency of the system approved itself in the decrease in work-related accident rate, number of hazardous workplaces, occupational sickness cases and lost day cases, which is closely related to the increase in work productivity and economic growth. The most important indicators endorsing the Company s commitment to provide a safe workplace are decreasing trends in the lost time accident rate and the recordable accident rate, which both result from proper performance of Safety and Health work within the company. As a result of this, the number of workrelated incidents fell from 47 in 2000 to 5 in 2006. The Safety and Health work also includes keeping database of near-miss accidents. The database is used to define and take corrective actions in order to prevent occurrence of such high potential near misses. 6.2. Integrated Management System ZSNP, a.s. has established an Integrated Management System (IMS) certified according to requirements of ISO 9001, ISO 14 001 a OHSAS 18 001 standards. In 2006 the TÜV CERT certification body, based in Munich, had performed a control audit which confirmed validity of the certificate. The intention of our company is to fulfil requirements of our customers, consequently keep them satisfied and at the same time improve quality of processes and products throughout the entire spectrum of our activities. Our near future goal is to prove our commitment to environmental issues, protection of employee health and creation of safe working environment for employees. ZSNP, a.s., considers environmental protection to be one of its main priorities. The company endeavours to gradually decrease the adverse impacts from production activities and to eliminate historical environmental loads from the production of primary aluminium. We are responsible for the development and greening of the company at present as well as in future.

Accomplishment of these goals is based on the following policy: - customer s satisfaction is our motto, therefore we have to meet their needs as to quality, environment and safety so that we gain their confidence and hence our stable position on the market, - compliance with all applicable quality, environmental, safety and health laws and regulations, - proper communication and cooperation with authorities responsible for compliance with quality, environmental, safety and health at work requirements, - fair and regular communication of our strategies, policies, targets and accomplished goals to all involved parties, professional groups and other public, - development and implementation of quality, environmental, safety and health projects leading to continuous improvements in the Integrated Management System, - systematic education and proper motivation of employees resulting in improved working performance and control of management systems applied in all control, production and supporting processes, - enhancement of the company s image through the lower production of wastes, high quality of products and elimination of pollution of the living and working environments. - company s policy, strategy and targets are documented, disclosed, implemented, maintained and regularly reviewed, if appropriate. Such defined policy represents commitment of the ZSNP, a.s. top management to ongoing improvements in efficiency of the integrated management in all identified processes. Our objective for 2007 is to confirm in the second control audit our compliances with requirements of the Integrated Management System, i.e we have to pass the external audit of IMS according to ISO 9001:2000, ISO 14 001:2004, OHSAS 18 001:1999 standards. At the same time we are going to certify part of the ZNSP, a.s. according to ISO/TS 16 949:2002 in order to meet requirements applicable to suppliers of products to the automotive industry. 6.3. Environment Total emissions of polluting substances from all operations within the ZSNP.a.s fell by 359.7 tons in 2006 when compared with 2005. We can say that the current emission situation is stabile, and some deviations are inherent with production processes. Continuous monitoring of polluting substances was provided in limited range by the State Health Institute in Žiar nad Hronom. According to Pollution Index the air quality in the Žiar region is rated as low. Due to repeated exceeding the approved limit for Particulate Matter (PM10), the Žiar nad Hronom and Ladomerská Vieska municipalities were declared as environmentally affected area. Production of wastes at ZSNP, a.s. decreased by 55% in 2006 when compared with 2005, while the amount of recycled waste represented 8% of the total volume produced. The most significant increase in volume of the produced waste in comparison with the previous year was recorder for the fly ash disposed on the Fly ash landfill, which was caused by abnormally long heating season at the beginning of 2006. Technology for processing of alkaline water was running in trial operation even in 2006. Simultaneously, a new evaporation unit was put into operation which increases processing capacity from initial 100,000 m3 per year up to 240,000 m3.per year. This fact had reflected in the total volume of 172 thousand m3 of alkaline water processed by all ZSNP, a.s. facilities in 2006. In 2006, the project for reclamation of the mud settling facility continued with realizing the I. stage of reclamation works which included dewatering and sealing the top cap of the KP II (the settling basin II),

construction of the service lane around the KP II, construction of the service road leading from the slope toe of the mud settling facility up to the top cap of the KP II, construction of the stilling tank for rainwater equipped with a device for continuous monitoring of water quality, and piping the gravity channel on its south and west-south branches. All works except for piping the channel were finished in December 2006.