Annual report of OKD, a. s. 2005

EXTRACT FROM THE ANNUAL REPORT OKD, a. s.

2005

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Annual report of OKD, a. s. 2005

Contents: Introduction of the chairman of the board of directors 3 Basic information about the Company 4-6 Corporate bodies 7-8 Basic structure of RPG group 9 Registered capital, shares, major events 10-13 Report of the board of directors on business activities and its assets and liabilities For the period from 1 January 2005 to 30 June 2005 14-23 ¾ Activities 14-17 ¾ Assets and liabilities and financial position 18-19 ¾ Personnel and social expenses 20 ¾ Financial statements 21-23 Report of the board of directors on business activities and its assets and liabilities For the period from 1 July 2005 to 31 December 2005 24-36 ¾ Activities 24-28 ¾ Assets and liabilities and financial position 29-30 ¾ Personnel and social expenses 31 ¾ Anticipated development of the economic and financial position 32-33 ¾ Financial statements 34-36 Organisational structure 37-38 Auditor’s report 39 Contact information 40

Appendices: Financial statements for the period from 1 January 2005 to 30 June 2005 Financial statements for the period from 1 July 2005 to 31 December 2005 Report on relations between the controlling and the controlled person and on relations between the controlled person and other persons controlled by the same controlling person Investments in group undertakings and associated companies Consolidated financial statements

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Annual report of OKD, a. s. 2005

INTRODUCTION OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Ladies and gentlemen, The Annual Report of OKD, a. s presents the achieved results of the business of our joint stock company and of the most important controlled companies in 2005. In 2005, our joint stock company underwent major changes and we became a part of the international group RPG. The shareholder structure has also changed and KARBON INVEST, a.s. has become our sole shareholder. On 1 July 2005, OKD, a. s. merged with ČMD, a. s., K. O. P., a.s. and OKD, Podnikatelská, a.s. The ČSM mine, producing quality black coke, also became a part of our company. Due to the significant change in organisational structure and in accordance with the relevant statutory provisions, the results of operations for the first and second half of 2005 are presented separately in this annual report. The results for the second half of the year include the results of the ČSM mine. OKD, a. s. extracted and prepared for the needs of our business partners a total of 5 398.9 kilo-tonnes of quality black coal in the first half of 2005 and 6 072.9 kilo-tonnes in the second half of 2005. Most was extracted by the Darkov mine, i.e. 36% of the total mining production in the first half of 2005 and 32% in the second half of the year. The economic goals of the business plan were met and during 2005 the Company provided balanced and stable financial conditions for its operations and established a good initial position for its business operations in 2006. OKD, a. s. employed on average 15 477 employees in the first half of 2005 with an average monthly wage of CZK 22 966. In the second half of 2005, following the acquisition of the ČSM mine, OKD a.s. employed on average 18 625 employees with an average monthly wage of CZK 26 344. In 2005, social benefits to our employees were provided in accordance with the collective agreement and the Company fulfilled all of its obligations. The obligations arising from the collective agreement with the employees of the ČSM mine were not affected by the merger with OKD, a. s. Our Company uses high-quality, powerful and well-maintained mining equipment for mining and preparing the coal to ensure it is delivered to the consumers in time and in the required quality. The Company invested MCZK 871.6 in the first half of 2005 and an additional MCZK 1 549.3 in the construction of mining works to exploit further black coal reserves and in the purchase of mining technology. The results of operations confirm that we have fulfilled the business plans for 2005. The goals we have set for 2006 are very ambitious, even more so when viewed in the light of the decrease in the market prices of coal and coke at the end of 2005, which is likely to continue in 2006. We believe that in 2006 and the upcoming years, OKD, a. s. will establish itself as a major mining company which focuses on efficient mining, processing and sale of black coal. Accordingly, the extensive residential property, leased commercial property and land not connected with the extraction activities of active mines will be transferred to independent sister companies within the RPG group. Following a thorough analysis of its operating effectiveness, we have decided to close the Dukla mine with effect from 1 January 2007 and to prepare social schemes for the workers who will be gradually laid off. Ladies and gentlemen, I consider that 2005 was a very successful year for us, even better than the previous year. I believe that the upcoming years will bring further prosperity for OKD a.s. and that we will be successful in fulfilling our business plans. Ing. Josef Goj Chairman of the Board of Directors 3

Annual report of OKD, a. s. 2005

BASIC INFORMATION ABOUT THE COMPANY Name:

OKD, a. s.

Registered office:

Prokešovo náměstí 6/2020, Ostrava – Moravská Ostrava, post code 728 30

Identification number:

00002593

Legal form:

joint stock company

OKD, a. s. is the legal successor of the state owned enterprise Ostravsko – karvinské doly with its registered office in Ostrava and was established by Decision No. 208/1990 of the Ministry of Finance of the Czech Republic dated 29 December 1990, file No. 1804/401, effective from 21 January 1991. The company was established for an indefinite period. OKD, a. s. was entered in the Commercial Register maintained by the Regional Court in Ostrava, section B, insert 122. On 22 August 2005, the Company’s name changed from OKD, a. s., člen koncernu KARBON INVEST, a.s. to OKD, a. s. The Company’s business, as defined in Article 5 of the Articles of Association of OKD, a. s. dated 27 June 2005 was as follows: 1. Mining activities Pursuant to the provisions of s. 2 (a) – (i) of Act No. 61/1988 Coll., regulating mining activities, explosives and state mining administration, as amended: a) prospecting and research into deposits of reserved minerals (“reserved deposits”) b) opening, preparation and extraction of reserved deposits c) establishing, operation and liquidation of mining works d) preparation and refining of minerals e) establishment and operation of mullock tips, hoppers and sludge beds in connection with activities a) - d) f) special interventions into the earth’s crust g) securing and removal of old mining works h) mining rescue services i) geodetic mining activities 2. Other activities Pursuant to the provisions of s. 3 (a), (c), (e), (h) and (i) and s. 5 of Act No. 61/1988 Coll., regulating mining activities, explosives and state mining administration, as amended a) extraction of deposits of unreserved minerals including their preparation and refinement; prospecting for deposits of unreserved minerals for this purpose c) work to ensure the stability of underground spaces (underground redevelopment work) e) earthwork carried out using machines and explosives if more than 100,000 cubic meters are moved at a single site, except for foundation engineering h) work to enable access to old mining works or permanently abandoned mining works and to keep them safe i) underground work - digging of mine pits and wells, driving of tunnels and creation of underground spaces larger than 300 cubic meters − designing buildings and facilities used for mining or similar activities 3. − − − −

Commercial and other activities Manufacturing, installation and repair of electrical machinery and equipment Road cargo transport Road passenger transport management and maintenance of real estate 4

Annual report of OKD, a. s. 2005

− − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − −

assembly, maintenance and servicing of telecommunications equipment assembly, repair, adjustment and testing of reserved electrical equipment provision of telecommunications services engineering activities in respect of developer’s constructions forwarding agency manufacturing of low voltage and battery switchboards, cables and conductors manufacturing, repair and assembly of measuring tools manufacturing of coke and crude tar wholesale specialized retail accommodation services operation of restaurants lease and rent of movables data processing, database services, network administration provision of software and hardware and software consultancy advertising activity and marketing copying services organization of workshops, training and other educational activities, including lecturing activity testing, measuring and analyses distribution of electricity trade with electricity storing of goods and handling manufacturing and processing of fuel and lubricants wholesale purchase, sale and storage of fuels and lubricants including their import except for the exclusive purchase, sale and storage of fuels and lubricants in consumer packaging weighing up to 50 kg per package manufacturing, installation and repair of electronic equipment activities of business, financial and organizational consultants activities of accounting consultants, bookkeeping, tax documentation activities of technical consultants in the building industry land surveying activities operation of water mains and sanitation for public needs heat production heat distribution foreign exchange manufacturing and import of chemical substances and chemical formulations classified as combustible, hazardous to health, caustic, irritating, or sensitising operation of petrol stations (sale of fuels and lubricants) provision of tourist services representation in customs proceedings real estate services treatment and distribution of industrial water administrative management services, organisational and economic support to individuals and corporations purchase and sale of explosives provision of technical services retail of tobacco products operation of cultural and educational centres organisation of cultural events, entertainment and operation of entertainment centres 5

Annual report of OKD, a. s. 2005

− operation of physical training and sports centres and recuperative and rehabilitation centres − operation of private medical centres, provision of balneological, medical rehabilitation and physiatrical services − massage, recuperative and rehabilitation services − preparation of construction sites With effect from 1 January 2006, the commercial and other activities of OKD a.s. include also the following activities: − keeping registry − mediation of trade and services − assembly, repair, reconstruction, overhaul and examination of selected pressure equipment and periodic examination of gas tanks − disposal of waste (excl. hazardous waste) − production of metal constructions, tanks, casings and containers

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Annual report of OKD, a. s. 2005

STATUTORY BODIES (as at 31 December 2005)

Board of Directors Chairman: Vice-chairman: Member: Member: Member:

Ing. Josef Goj Ing. Petr Motloch Prof. Ing. Evžen Kočenda, Ph.D. Dr. Milan Jelínek Ing. Zdeněk Durčák

Supervisory board Chairman: Vice-chairman: Member: Member: Member: Member: Member: Member: Member:

Ing. Petr Otava, CSc. Ing. Evžen Tošenovský Prof. RNDr. Jan Hanousek, CSc. Luboš Řežábek Petr Skrla Ing. Petra Sokolová Miroslav Syrový Josef Nejezchleba Pavel Hliněný

Changes in the Board of Directors and Supervisory Board in 2005 March Subsequent to the written statement of Ing. Jiří Kubica announcing his resignation as a member of the Supervisory Board, the Supervisory Board of OKD, a. s. at its meeting held on 22 March 2005, in accordance with art. 23 (4) of the Articles of Association, discussed the resignation and approved the termination of his membership as at 22 March 2005. In accordance with art. 23 (1) of the Articles of Association, the Supervisory Board appointed Prof. ing. Evžena Kočenda, Ph.D. as an interim member of the Supervisory Board until the next general meeting. At the same time, Jonathan A. Zimmerman was elected chairman of the Supervisory Board. May At its extraordinary meeting held on 13 May 2005, the Board of Directors, in accordance with art. 16 (4) of the Articles of Association, discussed the resignations of ing. Josef Goj, ing. Lubomír Langr and ing. Petr Mokroš as members of the Board of Directors and approved the termination of their membership as at 27 June 2005. At its regular meeting held on 31 May 2005, the Supervisory Board, in accordance with art. 23 (4) of the Articles of Association, discussed the resignations of JUDr. Petra Nováková, ing. Marek Sosna, ing. Simona Thomasová and ing. Martina Tichá as members of the Supervisory Board and approved the termination of their membership as at 27 June 2005. June The regular general meeting held on 27 June 2005 decided to appoint ing. Petr Otava, CSc., ing. Petra Sokolová, Prof. RNDr. Jan Hanousek, CSc., Luboš Řežábek, Petr Skrla and ing. Evžen Tošenovský as new members of the Supervisory Board and to appoint ing. Josef Goj, ing. Petr Motloch, ing. Zdeněk Durčák, Dr. Milan Jelínek and Prof. ing. Evžen Kočenda Ph.D. as members of the Board of Directors. At the same time, the Supervisory Board elected ing. Petr Otava, CSc. as chairman of the Supervisory Board and ing. Evžen Tošenovský as vice-chairman of the Supervisory Board. Ing. Josef Goj was elected as chairman of the Board of Directors and ing. Petr Motloch as vice-chairman of the Board of Directors. 7

Annual report of OKD, a. s. 2005

Changes in the Board of Directors since the effective date of 31 December 2005 At its meeting held on 21 March 2006, the Board of Directors of OKD, a. s. discussed the resignation of ing. Zdeněk Durčák as a member of the Board of Directors of OKD, a. s., and noted that on 21 March 2006, his membership expired in accordance with art. 16 (4) of the Articles of Association. Subsequently, the Board of Directors of OKD, a. s. appointed ing. Petr Havlíček as an interim member of the the Board of Directors, in accordance with art. 16 (3) of the Articles of Association, for a limited term until the next general meeting.

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Annual report of OKD, a. s. 2005

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Annual report of OKD, a. s. 2005

REGISTERED CAPITAL AND SECURITIES Registered capital The registered capital of the Company amounts to TCZK 24,300,000 and was paid upon the establishment of the Company in the form of a founder’s contribution as described in the Memorandum of Association. Shareholder structure As at 31 December 2005, OKD, a. s. was a member of the RPG group (see the RPG group structure above). The sole shareholder of OKD, a. s. is KARBON INVEST, a.s., with its registered office in Prague, Štěpánská 621/34, postcode 112 17, identification number 25691431. No controlling agreement has been concluded for 2005 between OKD, a. s. and KARBON INVEST, a.s. or between OKD, a. s. and the person controlling KARBON INVEST, a.s. Delisting of OKD, a. s. shares from the official market KARBON INVEST, a.s. and persons acting in concert with it whose share in the registered capital and voting rights of OKD, a. s. total 95%, decided on 1 December 2004 to make a redemption offer in respect of minority interests pursuant to s. 183h (3) of Act no. 513/1991 Sb., the Commercial Code. It was also decided that once the commitments arising from the redemption offer were satisfied, OKD, a. s. shares ISIN CZ0005100651 would be delisted from the official markets organised by the Prague Stock Exchange, a. s. and RM-SYSTÉM, a. s. Based on the application of the issuer, OKD, a. s., and once all legal requirements were fulfilled, the shares of OKD, a. s. ISIN CZ0005100651 were delisted on 14 June 2005 from both of the above mentioned official markets. The last trading day was 13 June 2005. Exercise of option to buy out participating securities The extraordinary general meeting of OKD held on 25 July 2005 decided to transfer all other shares to the principal shareholder KARBON INVEST, a.s. with 98.0997% of the shareholders of OKD, a. s. voting in favour of the transfer. The resolution of the extraordinary general meeting was filed in the Commercial Register maintained by the Regional Court in Ostrava on 29 July 2005 and published in the Official Journal on 17 August 2005. On 17 September 2005, i.e. on the day the ownership title to the shares held by the minority shareholders of OKD, a. s. was transferred to the principal shareholder, KARBON INVEST, a.s. became the sole shareholder of OKD a. s. Change to the form and type of shares of OKD, a. s. On 22 September 2005, the sole shareholder KARBON INVEST, a.s., exercising the powers of the general meeting of OKD, a. s., decided to: - change the form of 23 186 502 bearer shares with a nominal value of CZK 1 000 per share and 1 113 498 shares with a nominal value of CZK 1 000 per share, from uncertificated to certificated shares, - change the type of 23 186 502 bearer shares with a nominal value of CZK 1 000 per share from bearer shares to registered shares The changes were entered in the Commercial Register on 30 September 2005. In accordance with the issuer’s instructions and the opinion of the Czech Securities Commission, the uncertificated share issues ISIN CZ0005100651 and ISIN CZ0005100768 were cancelled with the Prague Securities Centre on 16 December 2005. On 19 December 2005, OKD, a. s. issued, in accordance with the Articles of Association, two collective certificates replacing 23 538 621 ordinary registered shares with a nominal value of CZK 1 000 per share, and 761 379 ordinary registered shares with a nominal value of CZK 1 000 per share. 10

Annual report of OKD, a. s. 2005

Conclusions of the regular general meeting of OKD, a. s. The shareholder structure as at 22 June 2005, i.e. on the decisive day for participation in the general meeting, was as follows:

Other legal entities 0.33%

Individuals 1.57%

Ii

KARBON INVEST, a.s. 98.10%

The regular general meeting of OKD, a. s. held on 27 June 2005 in the registered office of OKD, a. s. approved: -

-

The report on the Company’s business activities and its assets and liabilities in 2004 The report on relations between the controlling and controlled person and on relations between the controlled person and other persons controlled by the same controlling entity for 2004 The statutory and consolidated financial statements for 2004 The decision on distribution of the profits for 2004, including the proposed payment of dividends as follows: • Transfer to statutory reserve fund CZK 255 355 872.00 • Retained earnings CZK 5 659 369.17 • dividends CZK 4 846 102 192.75 The regular general meeting decided to pay dividends of CZK 212 before tax. The decisive day for the entitlement to receive dividends was set as 27 June 2005 and the day on which payment would commence was set as 30 June 2005. The decision to amend the Articles of Association as proposed The decision to appoint ing. Josef Goj, ing. Petr Motloch, ing. Zdeněk Durčák, Dr. Milan Jelínek and Prof. Ing. Evžen Kočenda, Ph.D. as members of the board of directors The decision to appoint ing. Petr Otava, Csc., ing. Petra Sokolová, Prof. RNDr. Jan Hanousek, Csc., Luboš Řežábek, Petr Skrla and ing. Evžen Tošenovský as members of the supervisory board The decision on bonuses to be paid to members of the board of directors and supervisory board, the decision approving the contracts with the board members and the decision on any non-statutory payments made by the Company to the benefit of these persons.

Merger of OKD, a. s., ČMD, a. s., K. O. P., a. s. and OKD, Podnikatelská, a. s. On 12 September 2005, the board of directors of OKD, a. s. approved the merger plan of OKD, a. s., ČMD, a. s., K. O. P., a. s. and OKD, Podnikatelská, a. s. Subsequently, on 10 October 2005, the board of directors of OKD, a. s. approved the draft merger contract and filed it in the Collection of Deeds. The notification of publication of the draft merger contract was published in the Official Journal on 19 October 2005. On 21 November 2005, following the decision of the respective sole shareholders exercising the powers of the general meeting, the concerned companies concluded the merger contract in the form of a notarial deed. The regional court in Ostrava recorded the merger of OKD, a. s. (the successor company) and 11

Annual report of OKD, a. s. 2005

K. O. P., a. s., ČMD, a. s. and OKD, Podnikatelská, a. s. (the companies dissolving without liquidation) on 30 November 2005. Material events that occurred in 2005 relating to 2006 Approval of controlling agreements On 1 December 2005, KARBON INVEST, a.s., with its registered office Prague 1, Štěpánská 621/34, post code 112 17, id. no.: 25691431, as the sole shareholder of OKD, a. s. exercising the powers of the general meeting, approved the controlling agreement concluded between OKD, a. s., as the controlled person, and RPG Industries, a.s., with its registered office in Prague 1, Na Příkopě 1096/21, post code 110 00, id. no.: 27378039, as the controlling person. On the same day, OKD, a. s., as the sole shareholder of METALIMEX a. s., with its registered office in Prague 1, Štěpánská 621/34, post code 112 17, id. no.: 00000931; OKD, Doprava, a joint stock company with its registered office in Ostrava - Moravská Ostrava, Nádražní 93/2967, opst code 702 62, id. no.: 47675977 and OKD, DPB, a.s., with its registered office in Paskov, Rudé armády 637, district Frýdek - Místek, post code 739 21, id. no.:00494356, approved the controlling agreements between METALIMEX a. s., OKD, Doprava, and OKD, DPB, a.s. as the controlled persons and RPG Industries, a.s., with its registered office in Prague 1, Na Příkopě 1096/21, post code 110 00, id. no.: 27378039, as the controlling person. All of the above mentioned controlling agreements were concluded with effective from 1 January 2006. Approval of the plan to divide OKD, a. s. On 19 December 2005, the board of directors of OKD, a. s. adopted a plan to divide the Company. This is the first phase of the restructuring process which began in June 2005. The aim is to adopt such a structure that will better suit the needs of day-to-day management and will be simpler, more comprehensive, more efficient and more transparent from the point of view of the owners and business partners of the companies in the group. The aim of the plan is to separate all mining related activities from other activities (trading activities, transport-related activities, real-estate activities and production of gas). All companies established by the division will be controlled by the investment group RPG. The ultimate objective of the division is to rationalise the management of all controlled companies, to achieve the highest quality of provided services and to better exploit growth opportunities in the individual business areas in which the companies in the OKD group operate. The implementation of the plan requires that a number of legal and administrative tasks are completed successfully and is planned to be completed by the end of the first half of 2006. Material events after 31 December 2005 Sale of share in Služby dolů a.s. On 28 February 2006, based on a contract on the transfer of a security for a consideration, one ordinary share with a nominal value of CZK 108,104,000, issued as a certificated share by Služby dolů a.s., with its registered office Kladno, Víta Nejedlého 1575 (i.e. a 100% share in the registered capital) was sold. Sale of share in KOVONA KARVINÁ, a.s. At its meeting on 21 March 2006, the board of directors of OKD, a. s. approved the sale of its 97.1% share in KOVONA KARVINÁ, a.s. based on a contract on the transfer of securities for a consideration, on the condition that the buyer, MORAVSKOSLEZSKÉ DRÁTOVNY, a.s., 12

Annual report of OKD, a. s. 2005

would take over the liability which guarantees the investment loan provided to KOVONA KARVINÁ, a.s. Termination of mine extraction in Dukla unit On 27 February 2006, board of directors decided to close the Dukla mine, a part of the internal unit Paskov mine, as of 31 December 2006 and begin to wind down this unit with effect from 1 January 2007. The wind down of Dukla unit will include social schemes for the workers who will be gradually laid off.

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Annual report of OKD, a. s. 2005

BOARD OF DIRECTORS' REPORT ON THE BUSINESS ACTIVITIES OF THE COMPANY AND ITS ASSETS AND LIABILITIES For the period from 1 January 2005 to 30 June 2005 ACTIVITIES The principal activities of OKD, a. s. are exploration, extraction, preparation, valorisation and sale of black coal with low sulphur content and products closely related to coal production. The mining organization OKD, a. s. is the largest black coal producer in the Czech Republic. Currently, the coal is mined in the active part of the basin in eight areas worked by the mines Darkov, Lazy, ČSA and Paskov covering an area of 109.92 km2. The coal is of Paleozoic age (Carbon) and, OKD, a. s., extracts it from the Ostrava and Karviná coal faces. The thickness of the mined Ostrava seams (extracted by Důl (Mine) Paskov – the Staříč plant and Důl Lazy – the Dukla plant) ranges from 0.8 to 1.3 meters. The thickness of the Karviná seams ranges from 1 to 6.5 meters. The longwall method is used to extract the coal, working along the strike for controlled caving, and coal is extracted from the coal faces using shearers (85.0%) and ploughs (15.0%). Walking supports have been used at 89.4% of the coal faces; individual hydraulic supports are used at the remaining 10.6%. The extracted coal is prepared in the coal washing plants of the individual mines and the coal is separated into coking coal and boiler coal based on defined quality parameters. The extraction areas in which mining activities are carried out in compliance with defined conditions, is determined for the individual mines by the relevant authorities. A partial permit for driving and extracting operations is approved by the Regional Mining Office in Ostrava pursuant to the decree of the Czech Mining Office No. 104/1988 Sb. once the environmental impact of the extraction is assessed pursuant to Act No. 244/1992 Sb. The extraction of 12.6 to 12.9 million tonnes of coal is planned for the period 2006 - 2009. A gradual reduction in the volume extracted at the individual mines until all the available resources are extracted is planned in accordance with the approved fuel and power policy of the Czech Republic. Coal production The production objectives set for the first half of 2005 were met. In the first half of 2005, 5 398.9 kt of saleable coal were extracted. A total of 36 150 meters of mining works were driven of which the investment drivage totalled 2 635 metres. The saleable coal output (incl. sludges) reached 5 689.3 kt. This was made up of 2 607.0 kt of coking coal and 3 082.3 kt of boiler coal (incl. sludges). In the first half of 2005, the basic ratios of OKD, a. s. developed as follows: the daily output from a single coal face amounted to 1 328 tonnes; the average number of coal faces was 28.4; the average coal face output per shift was 21.698 tonnes and the average daily area cut per coal face was 377.4 m2. In 2005, there were no major changes that would have a significant impact on the businesses activities, in respect of production processes, or research and development of new products.

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Annual report of OKD, a. s. 2005 Saleable coal output per mine for 1-6/2005 Mine Paskov 9% Mine Darkov 36%

Mine Lazy 27%

Mine ČSA 28%

Sale of products and services Coal sales In the first half of 2005, as in the previous years, all production of the OKD, a. s. mines was sold to large metallurgical and energy customers in the Czech Republic and the Slovak Republic by an internal unit – a unit not entered in the Companies’ Register - Báňská obchodní (Mining Commercial). Export deliveries were made through METALIMEX a. s. Deliveries of products to other minor domestic customers were carried out by wholesale companies. Coal sales (excl. sludges) Total sales • UVPK • EU Of which: ESP ETP Dust coal Shed coal

From 1 January 2005 to 30 June 2005 TOTAL (kt) Domestic market (kt) Export (kt) 5 163.0 3 059.1 2 103.9 2 371.5 1 351.4 1 020.1 2 791.5 1 707.7 1 083.8 983.2 155.9 827.3 38.7 24.3 14.4 1 301.3 1 059.2 242.1 468.3 468.3 0.0

UVPK: coking coal , EU: boiler coal, ESP: boiler coal mix washed, ETP: boiler coal washed sized

In the first half of 2005, 5 163.0 kt of coal (excl. sludges) was sold of which 2 371.5 kt was coking coal and 2 791.5 was different kinds of boiler coal. Sales in the domestic market accounted for 3 059.1 kt (59.3%) while the remaining 2 103.9 kt (40.7%) was exported to traditional foreign customers. These include Austria, Slovakia, Poland, Germany, Hungary and Bosnia and Herzegovina. Boiler coal accounted for 51.5% of the exported coal. Domestic sales accounted for 57% of the total coking coal and 61.2% of the boiler coal. Of the total domestic sales, 44.2% was coking coal and 55.8% was boiler coal. The major customers in the first half of 2005 include: Mittal Steel Ostrava a.s., Dalkia Česká republika, a. s., OKD, OKK, a.s., ČEZ, a.s., MORAVIA STEEL, a.s., U.S. Steel Košice, s.r.o. and METALIMEX a.s.

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Annual report of OKD, a. s. 2005

Revenues of OKD, a. s. In TCZK Revenue (from ordinary activity) Revenues from UVPK Revenues from EU Revenues from goods (coal and coke) Revenue from services Subsidies Other TOTAL

From 1 January 2005 to 30 June 2005 Domestic market export 3 797 110 2 275 265 2 673 670 1 338 865 5 739 3 891 564 13 982 213

2 918 787 2 004 929 3 620 483 3 0 0 8 544 202

Revenue from services includes in particular rent from flats and revenues from services related to the use of flats and non-residential premises (TCZK 762 790). Other revenues include compensation for accidents at work received from the insurance company (TCZK 321 357), subsidies (TCZK 5 739 of which TCZK 4 920 is a subsidy for interest on loans to redevelop apartment buildings), revenues from fixed assets (TCZK 175 365), revenues from the sale of raw materials (TCZK 523 684) and revenues from rent (TCZK 70 698). Mining activities and the environment Underground coal mining causes damage to the environment and the surrounding landscape. Extensive land subsidence causes damage to the natural environment, as well as man-made structures and energy distribution systems. OKD, a. s. tries to mitigate these effects and minimize the damage caused by mining. It takes appropriate advance measures in relation to the development of activities in areas where mining activities are planned. The actual mining activities are carried out in compliance with the approved layout plans of the towns and municipalities and with the E.I.A. (Environmental Impact Assessment) guidelines. The Company establishes provisions for the repair of damage caused by mining and for renewal and restoration in compliance with the provisions of the Mining Act. In the first half of 2005, OKD, a. s. incurred expenses of MCZK 53.5 on mitigating the effects of mining activities. These included compensation for damage caused by coal extraction and the costs of renewal and restoration of the affected area. Restructuring of extraction activities, subsidies from the State budget In the first half of 2005, there was a reduction in extraction activity and inefficient parts of the extraction area in Darkov and ČSA were shut down. The closures were carried out in accordance with the mid-term plan, the approved liquidation plan, the project documentation and the approved business plan of the company for 2005. The Company received no subsidies in respect of the closures or to mitigate the social and environmental implications. ¨

In the first half of 2005, the costs of shutting down the inefficient part of the OKD, a. s. mines were covered from the Company’s own resources and amounted to MCZK 41.6. Investments Tangible and intangible assets In the first half of 2005, investments comprised the following: -

Mining and construction works of MCZK 290.2 connected with the development of new coal deposits and securing the technical and transportation facilities connected with the mining works and coal faces, 16

Annual report of OKD, a. s. 2005

-

-

-

-

Surface construction works of MCZK 95.8 – continuing modernization and reconstruction of the residential property of OKD, a. s., measures adopted in relation to energy audits in active mines and non-mining companies, washery programs and machinery and power facilities at active mines and reconstruction of buildings belonging to non-mining companies, Supplies of equipment of MCZK 36.4 – delivery and assembly of machinery and electrical equipment related to extraction and transport, washery equipment, machinery and power facilities and transport equipment at active mines, incl. microclimatic controls at mining facilities, reconstruction and modernisation of mining machinery in collieries, reconstruction of equipment for washery and power facilities in active mines, Machinery and equipment acquired individually of MCZK 426.2, in particular additional purchases of walking supports and tracks for the plough extracting system, armoured belt conveyors for all active mines, continuing modernization and reconstruction of the walking supports, extraction, drilling and transport technology, purchases of cooling equipment to improve microclimatic conditions, electrical equipment, safety and pumping technology, computing equipment Other investments in the amount of MCZK 6.9 comprise design work, redemption of land, acquisition of software, etc. Investments related to mine closures in the amount of MCZK 16.0

Overall, the Company made investments totalling MCZK 855.5 during the first half of 2005, excluding investments connected with the closures. New tangible fixed assets were financed through depreciation of existing tangible fixed assets and all investments were made in the Czech Republic. Long-term investments As at 30 June 2005, the balance of long-term investments was TCZK 13 951 090 (gross)/ TCZK 12 973 124 (net) of which TCZK13 798 213 (gross)/ TCZK 12 843 499 (net) represents investments in group undertakings. In the first half of 2005, there were no changes in respect of investments in group undertakings.

17

Annual report of OKD, a. s. 2005

THE COMPANY’S ASSETS AND LIABILITIES AND FINANCIAL POSITION Result of operations The development of the Company in the first half of 2005 was very favourable in terms of the positive results of operations and fulfilment of the business plan. In the first half of 2005, the Company achieved a profit before tax of MCZK 5 642.4. The profit after tax totals MCZK 4 519.0. The operating profit was MCZK 4 072.2. The most significant items in the operating profit are the proceeds from the sale of goods and from the sale of own products and services. Proceeds from the sale of own products and services in the first half of 2005 totalled MCZK 12 431.4 and proceeds from the sale of goods were MCZK 6 722.5. The development in the profit from financial activities was also favourable and totalled MCZK 1 576.1. This was mainly due to the revenue from investments in controlled persons in the amount of MCZK 1 408.2. The extraordinary operating loss for the first half of 2005 totalled MCZK 5.9. Financial position The positive result of operations had an impact on the financial position of the Company. The net cash flow from operating activity before changes in the working capital amounted to MCZK 5 303.9, which is an increase of MCZK 2 130.6 compared to the first half of 2004. The profit from ordinary activity before tax of MCZK 4 234.4 (excluding revenues from dividends, changes in provisions and adjustments, profit/loss from the sale of fixed assets and recognised interest expenses and revenues) and the depreciation of fixed assets and receivables of MCZK 1 069,6 contributed to the operating cash flow. As regards working capital, the most significant changes in the first half of 2005 concern receivables. Trade receivables increased by MCZK 929.3 from the end of 2004 as a result of the increase in invoiced output. The trade receivables’ turnover period at the end of June 2005 totalled 45 days. Overdue trade receivables at the end of June 2005 totalled MCZK 62.5 which is a decrease of MCZK 53.3 compared to the beginning of the year. Short-term payables increased by MCZK 472.0 from the beginning of 2005, in particular as a result of the increased cost of goods sold. The trade payables’ turnover period at the end of June 2005 was 57 days. The Company recorded no overdue payables. Part of the generated financial resources are represented by receivables and another part by inventories the balance of which increased by MCZK 678.2 from the beginning of the year, in particular due to the increase of MCZK 544.8 in the amount of coal in store. Net cash flow from operating activities before tax and extraordinary items for the first half of totalled MCZK 3 679.0. Dividend income from controlled persons amounted to MCZK 1 522.2, income from the sale of fixed assets amounted to MCZK 175.4 and repayments of loans provided to controlled persons amounted to MCZK 15.0. The most significant item of the financial expense account was paid dividends of MCZK 5 151.6. Corporate income tax liability for 2004 totalled MCZ K 1 041.1 and MCZK 818.7 has been invested. Short-term financial assets decreased by MCZK 1 561.1 during the first half of 2005 to MCZK 4 617.3. The financial liquidity ratio of OKD, a. s. reached 2.0 in the first half of 2005. This shows that the Company has enough liquid assets to cover all of its short-term liabilities. Assets and liabilities The total value of the Company’s assets as at 30 June 2005 totalled MCZK 43 525.5 and includes fixed assets of MCZK 31 748.4. Fixed assets comprise intangible fixed assets of MCZK 11.5, tangible fixed assets of MCZK 18 763.8 and long-term investments of MCZK 18

Annual report of OKD, a. s. 2005

12 973.1. Current assets amount to MCZK 11 627 and comprise inventories of MCZK 1 366.3, long-term receivables of MCZK 7, short-term receivables of MCZK 5 636.4 and short-term financial assets of MCZK 4 617.3. Accruals and deferrals recognised in assets amount to MCZK 150.1. Equity of MCZK 33 992.6 is subdivided into the registered capital of MCZK 24 300, capital contributions of MCZK 2 852.1, statutory reserve fund and other funds of MCZK 2 315.8, the profit for prior periods of MCZK 5.7 and the current period profit of MCZK 4 519.0. Liabilities amount to MCZK 9 530.8 and comprise provisions of MCZK 3 603.6, long-term liabilities of MCZK 494.8, short-term liabilities of MCZK 5 186.8 and bank loans and financial liabilities of MCZK 245.5. Accruals and deferrals recognised in liabilities amount to MCZK 2.1.

19

Annual report of OKD, a. s. 2005

PERSONNEL AND SOCIAL EXPENSES Social expenses In 2005 as in preceding years, the personnel and social policy of OKD, a. s. was governed by the obligations and agreements specified in the collective agreement. Based on the collective agreement, the Company pays voluntary contributions to the supplementary pension insurance scheme on behalf of its employees and provides them with meal allowances, recuperation periods for the miners, holiday and Christmas bonuses, recreation allowances for employees’ children, allowances for contractual transport, allowances for cultural and social activities and activities organised by the working teams and company rewards. In addition, employees are entitled to 1 extra week of holiday in addition to the statutory minimum, redundancy pay in excess of the limits defined by the statutes and severance pay upon the termination of employment due to ill-health or as a result of having achieved the highest admissible exposure. In the first half of 2005, the Company incurred social expenses of MCZK 264.2. Employees In the first half of 2005, the average number of employees was 15 477 of which 14 211 were employed in mining internal units and 1 266 in non-mining internal units. The total number consists of 9 980 workers in mines, 3 377 surface workers and 2 120 administrative and support staff. The development of wages and salaries corresponded to the arrangements made in the collective agreement for 2005 and reflected the economic results of the Company. The average monthly employee earnings in 2005 were CZK 22 966. Labour productivity in the first half of 2005 reached CZK 90 294 per employee per month. The increase in the labour productivity is due to the implemented cost-saving measures and the favourable market conditions for the sale of coal and coal products.

20

Annual report of OKD, a. s. 2005

FINANCIAL STATEMENTS BALANCE SHEET – ASSETS as at 30 June 2005

A. B. B.I. B.I.1. B.I.2. B.I.3. B.I.4. B.I.5. B.I.6. B.I.7. B.I.8. B.II. B.II.1. B.II.2. B.II.3. B.II.4. B.II.5. B.II.6. B.II.7. B.II.8. B.II.9. B.III. B.III.1. B.III.2. B.III.3. B.III.4. B.III.5. B.III.6. B.III.7. C. C.I. C.I.1. C.I.2. C.I.3. C.I.4. C.I.5. C.I.6. C.II. C.II.1. C.II.2. C.II.3. C.II.4. C.II.5. C.II.6. C.II.7. C.II.8. C.III. C.III.1. C.III.2. C.III.3. C.III.4. C.III.5. C.III.6. C.III.7. C.III.8. C.III.9. C.IV. C.IV.1. C.IV.2. C.IV.3. C.IV.4. D.I. D.I.1. D.I.2. D.I.3.

31.12.2004

Current accounting period

in thousands of CZK

row

Total assets Receivables for capital subscription Fixed assets Intangible fixed assets Incorporation expenses Intangible results of research and development Software Royalties Goodwill Other intangible fixed assets Intangible fixed assets under construction Advance payments for intangible fixed assets Tangible fixed assets Land Structures Property, plant and equipment Cultivated areas Livestock Other tangible fixed assets Tangible fixed assets under construction Advance payments for tangible fixed assets Adjustments to acquired assets Long-term investments Investments in group undertakings Investments in associated companies Other long-term securities and ownership interests Inter-company loans Other long-term investments Long-term investments (provisional value) Advance payments for long-term investments Current assets Inventories Materials Work in progress and semi- finished products Finished products Livestock Goods for resale Advance payments for inventory Long-term receivables Trade receivables Receivables from group undertakings Receivables from associate companies Receivables from shareholders/ alliance partners Long-term advances paid Estimated receivables Other receivables Deferred tax asset Short-term receivables Trade receivables Receivables from group undertakings Receivables from associate companies Receivables from shareholders/ alliance partners Social security and health insurance Tax liabilities Short-term advances paid Estimated receivables Other receivables Short-term financial assets Cash Bank accounts Short-term securities and ownership interests Short-term financial assets (provisional value) Accruals and deferrals Prepaid expenses Complex prepaid expenses Accrued revenue

001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 017 018 019 020 021 022 023 024 025 026 027 028 029 030 031 032 033 034 035 036 037 038 039 040 041 042 043 044 045 046 047 048 049 050 051 052 053 054 055 056 057 058 059 060 061 062 063 064 065 066

21

Gross Adjustments 77 747 258 -34 221 766

Net 43 525 492

net 43 626 591

65 755 487 198 931

-34 007 107 -187 473

31 748 380 1 458

32 046 220 15 055

298 196 960 890

-25 -186 920 -528

273 10 040 362

298 13 456 424

783

877

783 51 605 466 3 158 394 24 877 186 22 241 475

-32 841 668 -13 945 -14 325 080 -18 418 331

18 763 798 3 144 449 10 552 106 3 823 144

19 057 041 3 165 301 10 585 236 3 992 150

25 269 1 293 032 10 110

-5 746 -68 456 -10 110

19 523 1 224 576

20 209 1 192 236 101 909

13 951 090 13 798 213 80 600 28 277 44 000

-977 966 -954 714

12 973 124 12 843 499 80 600 5 025 44 000

12 974 124 12 843 499 80 600 5 025 45 000

11 841 706 1 454 163 570 469 327 242 505 116

-214 659 -87 883 -25 640

11 627 047 1 366 280 544 829 327 242 442 873

11 569 718 690 344 439 942 72 793 150 046

51 336

51 336

27 563

6 995 5 572

6 995 5 572

8 071 6 787

460

460

273

963

963

1 011

5 636 433 4 743 035 662

4 692 886 3 797 485 14 691

31 001 193 922 667 813 4 617 339 12 302 1 865 293 2 739 744

35 735 77 170 767 805 6 178 417 12 090 4 295 303 1 871 024

150 065 20 318

150 065 20 318

10 653 10 263

129 747

129 747

390

5 763 209 4 838 172 662

31 001 193 922 699 452 4 617 339 12 302 1 865 293 2 739 744

-23 252

-62 243

-126 776 -95 137

-31 639

Annual report of OKD, a. s. 2005 BALANCE SHEET – LIABILITIES as at 30 June 2005 in thousands of CZK Total liabilities A. Equity A.I. Registered capital A.I.1. Registered capital A.I.2. Own shares held (-) A.I.3. Changes in registered capital A.II. Capital contributions A.II.1. Share premiums A.II.2. Other capital contributions A.II.3. Revaluation of assets and liabilities A.II.4. Revaluation reserve on transformations A.III. Reserve funds A.III.1. Statutory reserve fund / Undistributable reserves A.III.2. Statutory and other reserves A.IV. Profit (loss) - previous years (+/-) A.IV.1. Retained earnings from previous years A.IV.2. Accumulated losses from previous years (-) A.V. Profit (loss) - current period (+/-) B. Liabilities B.I. Provisions B.I.1. Tax deductible provisions B.I.2. Provision for pensions and other similar payables B.I.3. Income tax provision B.I.4. Other provisions B.II. Long-term liabilities B.II.1. Trade payables B.II.2. Liabilities to group undertakings B.II.3. Liabilities to associate companies B.II.4. Liabilities to shareholders/ owners and alliance partners B.II.5. Long-term advances received B.II.6. Debentures and bonds issued B.II.7. Long-term bills of exchange payable B.II.8. Estimated payables B.II.9. Other long-term payables B.II.10. Deferred tax liability B.III. Short-term liabilities B.III.1. Trade payables B.III.2. Liabilities to group undertakings B.III.3. Liabilities to associate companies B.III.4. Liabilities to shareholders/ owners and alliance partners B.III.5. Payables to employees B.III.6. Payables to social security and health insurance B.III.7. Tax liabilities B.III.8. Short-term advances received B.III.9. Debentures and bonds issued B.III.10. Estimated payables B.III.11. Other short-term payables B.IV. Bank loans and overdrafts B.IV.1. Long-term bank loans B.IV.2. Short-term bank loans B.IV.3. Short-term financial liabilities C.I. Accruals and deferrals C.I.1. Accrued expenses C.I.2. Deferred revenues

¨

22

row 067 068 069 070 071 072 073 074 075 076 077 078 079 080 081 082 083 084 085 086 087 088 089 090 091 092 093 094 095 096 097 098 099 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120

30.6.2005

31.12.2004

43 525 492 33 992 595 24 300 000 24 300 000

43 626 591 34 624 243 24 300 000 24 300 000

2 852 117

2 851 152

2 852 117

2 851 152

2 315 832 2 309 199 6 633 5 659 5 659

2 060 476 2 053 843 6 633 305 498 305 498

+ 4 518 987 9 530 772 3 603 622 2 177 807

+ 5 107 117 8 999 881 3 283 650 2 116 237

1 139 665 286 150 494 825

1 024 763 142 650 519 005

384

394

120 574 373 867 5 186 833 3 864 878

112 209 406 402 4 941 174 3 392 892

13 873 498 938 230 811 226 618 30 470

478 019 290 524 237 057 10 952

314 035 7 210 245 492 224 372 21 120

497 916 33 814 256 052 234 932 21 120

2 125 79 2 046

2 467 90 2 377

Annual report of OKD, a. s. 2005 PROFIT AND LOSS ACCOUNT in thousands of CZK I. A. + II. II.1. 2. 3. B. B.1. B.2. + C. C.1. C.2. C.3. C.4. D. E. III. III.1. III.2. F. F.1. F.2. G. IV. H. V. I. * VI. J. VII. VII.1. 2. 3. VIII. K. IX. L. M. X.. N. XI. O. XII. P. * Q. Q.1. Q.2. ** XIII. R. S. S.1. S.2. * T. *** ****

Revenues from goods Costs of goods sold Gross profit Revenue from production Revenue from own products and services Change n inventory of own production Own work capitalised Cost of sales Materials and consumables Services Added value Personnel expenses Wages and salaries Remuneration of board members Social security and health insurance expenses Social expenses Taxed and charges Depreciation f tangible and intangible fixed assets Proceeds from disposals of fixed assets and raw materials Proceeds from disposals of fixed assets Proceed from disposals of raw material Net book value of fixed assets and raw materials sold Net book value of fixed assets sold Raw materials sold Change in provisions and adjustments relating to operating activity and change in complex prepaid expenses Other operating revenues Other operating expenses Adjustments to operating revenues Adjustments to operating expenses Operating profit/loss Proceeds from sale of securities and ownership interests Securities and ownerships interests sold Revenue from long-term investments Revenue from intercompany securities and ownership interests Revenue from other long-term securities and ownership interests Revenue from other long-term financial assets Revenue from short-term financial assets Financial assets expenses Revenue from revaluation of securities and derivatives Expenses on evaluation of securities and derivatives Change in provisions and adjustments relating to financial activity Interest revenue Interest expenses Other financial revenue Other financial expenses Adjustments to financial revenues Adjustments to financial expenses Profit/ loss from financial operations Income tax on ordinary profit/loss - current - deferred Profit/loss on ordinary activities after taxation Extraordinary revenue Extraordinary expenses Income tax on extraordinary activity - current - deferred Extraordinary profit/loss Transfer of profit or loss to partners (+/-) Profit/loss for the accounting period (+/-) Profit/loss before tax (+/-)

23

row

30.6.2005

31.12.2004

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

6 722 464 5 969 255 753 209 13 015 638 12 431 362 544 828 39 448 5 383 986 2 401 525 2 982 461 8 384 861 3 157 422 2 123 959 828 768 407 264 228 58 293 1 084 687 699 049 175 365 523 684 548 832 59 392 489 440 177 075

10 940 152 9 171 114 1 769 038 21 528 395 21 421 273 -23 891 131 013 9 754 428 4 520 739 5 233 689 13 543 005 6 672 440 4 516 099 1 693 1 624 448 530 200 116 670 2 398 947 1 290 358 54 343 1 236 015 1 152 601 15 575 1 137 026 -186 076

26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61

426 758 412 118

846 972 935 938

4 072 241

1 408 245 1 408 245

4 589 815 1 380 680 1 008 257 1 008 257

2 886

1 843

75 284 8 452 176 091 77 950

-824 712 79 101 60 474 217 266 407 149

1 576 104 1 123 471 1 156 006 -32 535 4 524 874 1 562 7 449

1 664 256 1 160 567 1 024 763 135 804 5 093 504 16 993 3 380

-5 887

13 613

+ 4 518 987 +5 642 458

+ 5 107 117 + 6 267 684

Annual report of OKD, a. s. 2005

BOARD OF DIRECTORS' REPORT ON THE BUSINESS ACTIVITIES OF THE COMPANY AND ITS ASSETS AND LIABILITIES For the period from 1 July 2005 to 31 December 2005 ACTIVITIES The principal activities of OKD, a. s. are exploration, extraction, preparation, valorisation and sale of black coal with low sulphur content and products closely related to coal production. In the second half of 2005, the mining organization OKD, a. s. was the largest black coal producer in the Czech Republic. Currently, the coal is mined in the active part of the basin in nine areas worked by the mines - Darkov, Lazy, ČSA, Paskov and ČSM covering an area 133.65 km2. The coal is of Paleozoic age (Carbon) and, OKD, a. s., extracts it from the Ostrava and Karviná coal faces. The thickness of the mined Ostrava seams (extracted by Důl (Mine) Paskov – the Staříč plant and Důl Lazy – the Dukla plant) ranges from 0.8 to 1.3 meters. The thickness of the Karviná seams ranges from 1 to 6.5 meters. The longwall method is used to extract the coal, working along the strike for controlled caving, and coal is extracted from the coal faces using shearers (86.4%) and ploughs (13.6%). Walking supports have been used at 91.5% of the coal faces; individual hydraulic supports are used at the remaining 8.5%. The extracted coal is prepared in the coal washing plants of the individual mines and the coal is separated into coking coal and boiler coal based on defined quality parameters. The extraction areas in which mining activities are carried out in compliance with defined conditions, is determined for the individual mines by the relevant authorities. A partial permit for driving and extracting operations is approved by the Regional Mining Office in Ostrava pursuant to the decree of the Czech Mining Office No. 104/1988 Sb. once the environmental impact of the extraction is assessed pursuant to Act No. 244/1992 Sb. The extraction of 12.6 to 12.9 million tonnes of coal is planned for the period 2006 - 2009. In the following period, a gradual reduction in the volume extracted at the individual mines until the available resources are extracted is planned in accordance with the approved fuel and power policy of the Czech Republic. Coal production The production objectives set for the second half of 2005 were met. In the second half of 2005, 6 072.9 kt of saleable coal were extracted. A total of 47 031meters of mining works were driven of which the investment drivage totalled to 2 765 metres. The saleable coal output (incl. sludges) reached 6 255.7 kt. This was made up of 3 310.9 kt of coking coal and 2 944.5 kt of boiler coal (incl. sludges). In the second half of 2005, the basic ratios of OKD, a. s. developed as follows: the daily output from a single coal face amounted to 1 167 tonnes, the average number of coal faces was 34.9; the average coal face output per shift was 19.483 tonnes and the average daily area cut per coal face was 359.8 m2. In the first half of 2005, there were no major changes that would have a significant impact on the businesses activities in respect of production processes, or research and development of new products.

24

Annual report of OKD, a. s. 2005 Saleable coal output for 7-12/2005 Mine ČSM 19%

Mine Darkov 32%

Mine Paskov 8%

Mine ČSA 19%

Mine Lazy 22%

Sale of products and services Sale of coal In the second half of 2005, as in the previous years, all production of the OKD, a. s. mines, including ČSM mine, was sold to large metallurgical and energy customers in the Czech Republic and Slovak Republic by an internal unit – a unit not entered in the Companies’ Register - Báňská obchodní (Mining Commercial). Export deliveries were made through METALIMEX a. s. Deliveries of products to other minor domestic customers were carried out by wholesale companies. Coal sales (excl. sludges) Total sales • UVPK • EU Of which: ESP ETP Dust coal Shed coal

Period from 1 July 2005 to 31 December 2005 Total (kt) Domestic sales (kt) Export (kt) 6 385,4 3 869,6 2 515,8 3 424,3 1 857,6 1 566,7 2 961,1 2 012,0 949,1 815,2 163,3 651,9 48,2 34,9 13,3 1 551,6 1 267,7 283,9 546,1 546,1 0,0

UVPK: coking coal , EU: boiler coal, ESP: boiler coal mix washed, ETP: boiler coal washed sized

In the second half of 2005, 6 385.4 kt of coal (without sludges) was sold, of which 3 424.3 kt was coking coal and 2 961.1 kt was different kinds of boiler coal. Sales in the domestic market amounted to 3 869.6 kt (60.6%) and the remaining 2 515.8 kt (39.4%) was exported to traditional foreign customers. These include Austria, Slovakia, Poland, Germany, Hungary and Bosnia and Herzegovina. Boiler coal accounted for 62.3% of the exported coal. Domestic sales accounted for 54.2% of the total coking coal and 67.9% of the boiler coal. Of the total domestic sales, 48.02% was coking coal and 52% was boiler coal. The major customers in the first half of 2005 include: Mittal Steel Ostrava a.s., Dalkia Česká republika, a. s., OKD, OKK, a.s., ČEZ, a.s., MORAVIA STEEL, a.s., U.S. Steel Košice, s.r.o. and METALIMEX a.s.

25

Annual report of OKD, a. s. 2005

Revenues of OKD, a. s. Revenue (from ordinary activity) Revenues from UVPK Revenues from EU Revenues from goods (coal and coke) Revenue from services Subsidies Revenue from revalution of derivatives Other TOTAL

In TCZK Period from 1 July 2005 to 31 December 2005 Domestic market export 5 345 728 3 958 435 2 691 546 1 658 978 580 056 2 399 763 1 169 701 5 11 646 0 123 346 0 2 938 108 0 12 860 131 8 017 181

Revenue from services includes in particular rent from flats and revenues from services related to the use of flats and non-residential premises (TCZK 737 851). Other revenues include in particular compensation for accidents at work received from the insurance company (TCZK 389 325), release of emission rights acquired free of charge of TCZK 155 581, revenues from sales of fixed assets (TCZK 64 381), revenues from the sale of raw materials (TCZK 187 548), revenues from rent (TCZK 73 887) and financial bonuses and discounts of TCZK 30 057. Mining activities and the environment Underground coal mining causes damage to the environment and the surrounding landscape. Extensive land subsidence causes damage to the natural environment, as well as man-made structures and energy distribution systems. OKD, a. s. tries to mitigate these effects and minimize the damage cause by mining. It takes appropriate advance measures in relation to the development of activities in areas where mining activities are planned. The actual mining activities are carried out in compliance with the approved layout plans of the towns and municipalities and with the E.I.A. (Environmental Impact Assessment) guidelines. The Company establishes provisions for the repair of damage caused by mining and for renewal and restoration in compliance with the provisions of the Mining Act. In the second half of 2005, OKD, a. s. incurred expenses of MCZK 252.9 on mitigating the effects of mining activities. These included compensation for damage caused by coal extraction and the costs of renewal and restoration of the affected area. Restructuring of extraction activity, subsidies from the State budget In the second half of 2005, there was a reduction in extraction activity and inefficient parts of the extraction area in Darkov and ČSA were shut down. The closures were carried out in accordance with the mid-term plan, the approved liquidation plan, the project documentation and the approved business plan of the company for 2005. The Company received no subsidies in respect of the closures or to mitigate the social and environmental implications. ¨

In the second half of 2005, the costs of shutting down the inefficient part of the OKD, a. s. mines were covered from the Company’s own resources and amounted to CZK 168.3. Investments Tangible and intangible fixed assets In the first half of 2005, investments comprised the following:

26

Annual report of OKD, a. s. 2005

-

-

-

Mining and construction works of MCZK 325.5 connected with the development of new coal deposits at active mines and securing the technical and transportational facilities connected with the mining works and coal faces, Surface construction works of MCZK 120.7 continuing modernization and reconstruction of the residential property of OKD, a. s., measures adopted in relation to the energy audits in active mines and non-mining companies, washery programs and machinery and power facilities at active mines and reconstruction of buildings belonging to non-mining companies, Supplies of equipment and machinery and equipment acquired individually of MCZK 934.6 focused on delivery and assembly of machinery and electrical equipment related to extraction and transport, washery equipment, machinery and power facilities and transport equipment at active mines, scrape and belt conveyers for all active mines, modernization and reconstruction of the walking supports, extraction, drilling and transport technology, purchases of cooling equipment to improve the microclimatic conditions, electrical equipment, safety and pumping technology, computing equipment. Other investments in the amount of MCZK 42.7 comprise design work, redemption of land, acquisition of software, etc. Investments related to the closures of MCZK 125.8

Overall, the Company made investments totalling MCZK 1 423.5 during the second half of 2005, excluding investments connected with the closures. New tangible fixed assets were financed by depreciation of existing tangible fixed assets and all investments were made in the Czech Republic. Long-term investments As at 31 December 2005, the balance of long-term investments was TCZK 6 627 089 (gross)/ TCZK 6 222 793 (net) of which TCZK 6 468 595 (gross)/ TCZK 6 142 193 (net) represents investments in group undertakings. In the second half of 2005, the following changes were made in respect of investments in group undertakings and interests in entities under substantial influence: -

-

-

-

Based on the contract to transfer a business share dated 1 July 2005, OKD, a. s. purchased a 100% business share in KARBONIA PL Sp. z o.o. from KARBON INVEST, a.s., Based on the contract to settle contentious rights and obligations from 2005, shares in Havířovské teplárenské společnosti, a.s. were transferred in return for a consideration, Based on the contract dated 11 October 2005 to transfer shares in return for a consideration, 97 certificated registered shares with a nominal value of CZK 500 per share, issued by Hornický penzijní fond Ostrava, a.s. (i.e. a 100% share in the registered capital) were sold, Based on the contract dated 14 October, 2005 to transfer securities in return for a consideration, the Company sold 1 ordinary certificated registered share with a nominal value of TCZK 50 000 and 1 ordinary certificated registered share with a nominal value of CZK 1 000 issued by ČM kapitálová, a.s. (i.e. a 100% share in the registered capital), Based on the contract to sell shares dated 17 October 2005, 10 certificated bearer shares with a nominal value of TCZK 100 per share (held by K. O. P., a.s.) and 10 certificated bearer shares with a nominal value of TCZK 70 000 per share (held by OKD, a. s.) issued by AL INVEST Břidličná, a.s. (i.e. a 100% share in the registered capital) were sold, Based on the contract to purchase shares dated 21 October 2005, 5 certificated registered shares with a nominal value of TSKK 100 000 per share and 1 certificated registered share with a nominal value of TSKK 22 067 per share issued by OKD, 27

Annual report of OKD, a. s. 2005

-

Tatranský Permon, akciová spoločnosť (i.e. a 100% share in the registered capital) were sold, Based on the decision of the sole shareholder of OKD, Energo, a.s. exercising the powers of the general meeting, the registered capital was reduced by TCZK 48 000 as a result of planned business activities that were not carried out and subsequent closures.

28

Annual report of OKD, a. s. 2005

THE COMPANY’S ASSETS AND LIABILITIES AND FINANCIAL POSITION Results of operation The development of the Company in the second half of 2005 was very favourable in terms of the positive results of operations and fulfilment of the business plan. In the period from 1 July 2005 to 31 December 2005, the achieved profit before tax was MCZK 3 045.5. The profit after tax totals MCZK 2 268.9. The operating profit was MCZK 2 522.6. The most significant items in the operating profit are the proceeds from the sale of goods and from the sale of own products and services. Proceeds from the sale of own products and services in the first half of 2005 totalled MCZK 14 922.5 and sales of goods reached MCZK 3 366.9. The development in the profit from financial activities was also favourable and totalled MCZK 530.8. The extraordinary operating loss in the second half of 2005 amounted to MCZK 7.9. Financial position The positive result of operations had an impact on the financial position of the Company. The net cash flow from operating activity before changes in the working capital amounted to MCZK 3 597.0 in the second half of 2005. The profit from ordinary activity before tax of MCZK 2 224.7 (excluding revenues from dividends, changes in provisions and adjustments, profit/loss from the sale of fixed assets and recognised interest expense and revenue) and depreciation of fixed assets of MCZK 1 372.3 contributed to the operating cash flow. As regards working capital, the most significant changes in the second half of 2005 concern receivables. Trade receivables decreased by MCZK 645.8 to MCZK 4 241.6 as a result of the decrease in invoiced output. The trade receivables’ turnover period at the end of 2005 totalled 41 days. Overdue trade receivables at the end of 2005 totalled MCZK 139.4, i.e. 3.3% of the overall balance of receivables. Short-term trade payables in the second half of 2005 increased by MCZK 609.0 to MCZK 4 169.4, as a result of the increased purchases and investments which will be settled in 2006. The trade payables’ turnover period was 65 days at the end of 2005. The Company records no overdue liabilities. The net cash flow from operating activities before tax and extraordinary items totalled MCZK 5 145.1. This was further increased by the proceeds from the sale of tangible fixed assets of MCZK 1 353.7 and repayments of loans to controlled entities of MCZK 39.0. The most significant item of the financial expenses account was the corporate income tax of MCZK 2 116.3. Investments amounted to MCZK 1 685.2. Short-term financial assets increased by MCZK 2 822.7 to MCZK 11 718.4 in the second half of 2005. The financial liquidity ratio of OKD, a. s. reached 2.8 at the end of 2005. This shows that the Company has sufficient liquid assets to cover all of its short-term liabilities. In 2005, OKD, a. s. settled all due liabilities to state and social security and health insurance authorities. Assets and liabilities As at 31 December 2005, the total value of assets was MCZK 62 459. The balance of fixed assets of MCZK 44 334.7 comprises intangible fixed assets of MCZK 28.5, tangible fixed assets of MCZK 38 083.4 and long-term investments of MCZK 6 222.8. Current assets total MCZK 18 101.7 and comprise inventories of MCZK 1 196.6, long-term receivables of MCZK 25.6, short-term receivables of MCZK 5 161.1 and short-term financial assets of MCZK 11 718.4. Accruals and deferrals recognised in assets total MCZK 22.6. 29

Annual report of OKD, a. s. 2005

Equity amounts to MCZK 48 577.2 and comprises registered capital of MCZK 24 300, capital contributions of MCZK 14 765.5, statutory reserve fund other funds of MCZK 2 315.8, the results of operations of prior periods of MCZK 4 927 and the result of operations of the current year of MCZK 2 268.9. Liabilities amount to MCZK 13 878.2 and comprise provisions of MCZK 3 142.7, long-term liabilities of MCZK 4 469.4, short-term liabilities of MCZK 6 031.2 and bank loans and financial liabilities of MCZK 234.9. Accruals and deferrals recognised in liabilities total MCZK 3.6. A stock taking of all assets of OKD, a. s. was duly carried out in the second half of 2005 and the identified stock-take differences were recognised in the financial statements as at 31 December 2005.

30

Annual report of OKD, a. s. 2005

PERSONNEL AND SOCIAL EXPENSES Social expenses In the second half of 2005, as in preceding years, the personnel and social policy of OKD, a. s. was governed by the obligations and agreements specified in the collective agreement. The contractual parties consider the obligations and agreements arising from the collective agreement for 2005 to have been fulfilled, including the commitment to increase wages. Some minor issues relating to the fulfilment of certain provisions were solved by the appropriate measures being taken by the internal units concerned. Based on the collective agreement, the Company pays voluntary contributions to the supplementary pension insurance scheme on behalf of its employees and provides them with meal allowances, recuperation periods for the miners, holiday and Christmas bonuses, recreation allowances for employees’ children, allowances for contractual transport, allowances for cultural and social activities and activities organised by the working teams and company rewards. In addition, the employees are entitled to 1 extra week of holiday in addition to the statutory minimum, redundancy pay in excess of the limits defined by the statutes and severance pay upon the termination of employment due to ill-health or as a result of having achieved the highest admissible exposure. In the second half of 2005, the Company incurred social expenses of MCZK 326. Employees In the second half of 2005, the average number of employees was 18 625 of which 17 290 were employed in mining internal units and 1 335 in non-mining internal units. The total number consists of 12 091 workers in mines, 4 032 surface workers and 2 502 administrative and support staff. The development of wages and salaries corresponded to the arrangements made in the collective agreement for 2005 and reflected the economic results of the Company. The average monthly employee earnings in the second half of 2005 were CZK 26 344. Labour productivity in the second half of 2005 reached CZK 74 233 per employee per month.

31

Annual report of OKD, a. s. 2005

ANTICIPATED DEVELOPMENT OF THE ECONOMIC AND FINANCIAL POSITION Production and sale of products To ensure optimum development of the Company’s economic and financial position in 2006, the required volume of production has been set as 12 700 kt of saleable coal. According to the approved business plan for 2006, 12 900 kt of coal will be sold, consisting of 7 504 kt of coking coal and 5 396 kt of boiler coal. The individual mines should supply the following percentages of the saleable output: Důl Darkov – 31.5%, Důl Lazy – 20.1%, Důl ČSA – 19.6%, Důl ČSM – 17.7% and Důl Paskov – 11.1%. The Company estimates that 92 170 m of mine works will be excavated of which 3 846 m should be the investment drivage. OKD, a. s. predicts that it will sell 12 973.8 kt of coal in 2006. The planned volume of sales, 12 900 kt, means that the coal reserves will decrease by 73.8 kt. The total estimated sales will be made up of 7 280 kt of coking coal and 5 693.8 kt of various kinds of boiler coal. The structure of sold products should change; the percentage of coking coal should increase (due to the merger with ČMD, a. s.) to 56.1% and the ratio of exported coal to total sales should increase, from 41.2% in 2005 to 44.7% in 2006. Out of the total estimated sales of coal, domestic sales should account for 7 168.5 kt while 5 805.3 kt should be exported. Investments The volume of planned investments in tangible and intangible assets in 2006, excluding investments connected with the closures, is MCZK 1 945.2. The investment scheme included in the business plan for 2006 covers the following areas: Mining and construction works connected with the development of new coal deposits in active mines (MCZK 800.3), Surface construction works – continuing modernisation and reconstruction of the residential property of OKD, a. s. (delivery and assembly of machinery and electrical equipment related to extraction and transport, washery equipment, machinery and power facilities and transport equipment at active mines, incl. microclimatic controls at mining facilities, reconstruction and modernisation of mining machinery in collieries, reconstruction of washery equipment and power facilities in active mines) (MCZK 300.7), Purchase of machinery and equipment – purchase of a new plough system for working the seams in Ostrava, purchase of cutting machine, modernisation of cutting and driving machinery, modernization of existing mechanized supports, purchase of new transport technology (MCZK 844.2). These investments will be financed from the depreciation of tangible fixed assets as in previous years. Financial investments will be made using available financial funds and in accordance with the development strategy of the Company. Results of operations In 2006, the Company expects to achieve a profit before tax of MCZK 5 706.3; the net profit should amount to MCZK 4 507.6. Planned expenses total MCZK 31 288.5, planned revenues total MCZK 35 796.1 and the planned operating profit is MCZK 4 889.1. The expected development according to the approved business plan for 2006 considers all effects of expense and revenue items such as the increase in energy prices, growth of average earnings, current price level of coal and coke, etc.

32

Annual report of OKD, a. s. 2005

Financial position In 2006, the financial position of the Company should remain stable and the liquidity ratio should remain high. The operating profit should reach approximately MCZK 7 356.8. As regards working capital, the balance of receivables will increase as a result of recognition of the prepayments for corporate income tax. Trade receivables will decrease reflecting the decrease in sales. Short-term payables will decrease as a result of decrease in purchased goods, cost of sales and investments. The cash flows will comprise income from dividends paid by controlled entities, payment of corporate income tax for the second half of 2005 and income tax prepayments for 2006. Net operating cash flows will amount to MCZK 5 304.1. Capital expenditures will amount to MCZK 1 990.2. As regards investments, no changes are planned. The financial forecast includes potential payment of dividends for 2005 of MCZK 8 164.8. The availability of sufficient financial funds means it will not be necessary to draw any new loans. The overall objective of the Company for 2006 is to achieve a balance of financial assets of MCZK 6.5. Personnel and social policy The planned development of the personnel and social policy in 2006 is governed by the obligations arising from the collective agreement. The collective agreement concluded in November 2005 unified the payroll and social requirements of the merged companies OKD, a. s. and ČMD, a. s. The collective agreement is binding until 2008, with the exception of the provisions governing the increases of wages, tariffs and social expenses, which are amended annually. For 2006, a year-to-year wage increase of 5% was agreed. The Company expects to incur social expenses amounting to MCZK 653.3 in 2006. In 2006, the average number of employees should be 18 289, of which 16 946 will be employees working in mining internal units and 1 343 will be working in non-mining internal units. The planned labour productivity is CZK 73 219 per employee per month. The decrease compared to 2005 is due to the decrease in the prices of coal and coke.

33

Annual report of OKD, a. s. 2005

FINANCIAL STATEMENTS BALANCE SHEET – ASSETS as at 31 December 2005

A. B. B.I. B.I.1. B.I.2. B.I.3. B.I.4. B.I.5. B.I.6. B.I.7. B.I.8. B.II. B.II.1. B.II.2. B.II.3. B.II.4. B.II.5. B.II.6. B.II.7. B.II.8. B.II.9. B.III. B.III.1. B.III.2. B.III.3. B.III.4. B.III.5. B.III.6. B.III.7. C. C.I. C.I.1. C.I.2. C.I.3. C.I.4. C.I.5. C.I.6. C.II. C.II.1. C.II.2. C.II.3. C.II.4. C.II.5. C.II.6. C.II.7. C.II.8. C.III. C.III.1. C.III.2. C.III.3. C.III.4. C.III.5. C.III.6. C.III.7. C.III.8. C.III.9. C.IV. C.IV.1. C.IV.2. C.IV.3. C.IV.4. D.I. D.I.1. D.I.2. D.I.3.

row

Total assets Receivables for capital subscription Fixed assets Intangible fixed assets Incorporation expenses Intangible results of research and development Software Royalties Goodwill Other intangible fixed assets Intangible fixed assets under construction Advance payments for intangible fixed assets Tangible fixed assets Land Structures Property, plant and equipment Cultivated areas Livestock Other tangible fixed assets Tangible fixed assets under construction Advance payments for tangible fixed assets Adjustments to acquired assets Long-term investments Investments in group undertakings Investments in associated companies Other long-term securities and ownership interests Inter-company loans Other long-term investments Long-term investments (provisional value) Advance payments for long-term investments Current assets Inventories Materials Work in progress and semi- finished products Finished products Livestock Goods for resale Advance payments for inventory Long-term receivables Trade receivables Receivables from group undertakings Receivables from associate companies Receivables from shareholders/ alliance partners Long-term advances paid Estimated receivables Other receivables Deferred tax asset Short-term receivables Trade receivables Receivables from group undertakings Receivables from associate companies Receivables from shareholders/ alliance partners Social security and health insurance Tax liabilities Short-term advances paid Estimated receivables Other receivables Short-term financial assets Cash Bank accounts Short-term securities and ownership interests Short-term financial assets (provisional value) Accruals and deferrals Prepaid expenses Complex prepaid expenses Accrued revenue

001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 017 018 019 020 021 022 023 024 025 026 027 028 029 030 031 032 033 034 035 036 037 038 039 040 041 042 043 044 045 046 047 048 049 050 051 052 053 054 055 056 057 058 059 060 061 062 063 064 065 066

34

1.7.2005

Current accounting period

in thousands of CZK

Gross Adjustments 101 085 174 - 38 626 156

Net 62 459 018

net 44 870 904

82 688 949 244 697

- 38 354 221 - 216 180

44 334 728 28 517

29 307 813 11 864

443 222 176 4 503

- 50 - 211 927 -4 203

393 10 249 300

273 10 446 362

16 973 602

783

16 973 602 75 817 163 3 275 184 29 615 356 26 110 671

- 37 733 745 - 13 848 - 16 462 561 - 21 172 255

38 043 418 3 261 336 13 152 795 4 938 416

22 147 710 3 250 947 12 469 755 4 595 066 16

26 646 1 105 854 10 110 15 673 342 6 627 089 6 468 595 80 600 77 894

- 6 515 - 68 456 - 10 110

20 131 1 037 398

20 383 1 811 543

- 404 296 - 326 402

15 673 342 6 222 793 6 142 193 80 600

- 77 894

7 148 239 6 823 215 80 965 173 675 44 000

- 63 310

18 101 669 1 196 591 415 100 269 321 367 800

26 384 15 412 300 1 442 005 545 015 328 075 517 256

- 39 581

144 370

51 659

25 951 4 996

25 591 4 996

7 284 5 572

726

726

732

19 869

19 869

980

5 161 111 4 132 740 5 850

5 067 327 4 783 221 662

658 102 58 294 275 177 30 948 11 718 376 5 625 4 702 522 7 010 229

3 909 39 357 209 288 30 890 8 895 684 13 712 2 092 140 6 789 832

22 621 13 753

22 621 13 753

150 791 21 044

8 868

8 868

129 747

18 373 604 1 328 818 444 436 269 321 431 110

- 271 935 - 132 227 - 29 336

183 951

5 300 819 4 236 597 5 850

658 102 58 294 275 177 66 799 11 718 376 5 625 4 702 522 7 010 229

- 139 708 -103 857

- 35 851

Annual report of OKD, a. s. 2005 BALANCE SHEET – LIABILITIES as at 31 December 2005 in thousands of CZK Total liabilities A. Equity A.I. Registered capital A.I.1. Registered capital A.I.2. Own shares held (-) A.I.3. Changes in registered capital A.II. Capital contributions A.II.1. Share premiums A.II.2. Other capital contributions A.II.3. Revaluation of assets and liabilities A.II.4. Revaluation reserve on transformations A.III. Reserve funds A.III.1. Statutory reserve fund / Undistributable reserves A.III.2. Statutory and other reserves A.IV. Profit (loss) - previous years (+/-) A.IV.1. Retained earnings from previous years A.IV.2. Accumulated losses from previous years (-) A.V. Profit (loss) - current period (+/-) B. Liabilities B.I. Provisions B.I.1. Tax deductible provisions B.I.2. Provision for pensions and other similar payables B.I.3. Income tax provision B.I.4. Other provisions B.II. Long-term liabilities B.II.1. Trade payables B.II.2. Liabilities to group undertakings B.II.3. Liabilities to associate companies B.II.4. Liabilities to shareholders/ owners and alliance partners B.II.5. Long-term advances received B.II.6. Debentures and bonds issued B.II.7. Long-term bills of exchange payable B.II.8. Estimated payables B.II.9. Other long-term payables B.II.10. Deferred tax liability B.III. Short-term liabilities B.III.1. Trade payables B.III.2. Liabilities to group undertakings B.III.3. Liabilities to associate companies B.III.4. Liabilities to shareholders/ owners and alliance partners B.III.5. Payables to employees B.III.6. Payables to social security and health insurance B.III.7. Tax liabilities B.III.8. Short-term advances received B.III.9. Debentures and bonds issued B.III.10. Estimated payables B.III.11. Other short-term payables B.IV. Bank loans and overdrafts B.IV.1. Long-term bank loans B.IV.2. Short-term bank loans B.IV.3. Short-term financial liabilities C.I. Accruals and deferrals C.I.1. Accrued expenses C.I.2. Deferred revenues

¨

35

row 067 068 069 070 071 072 073 074 075 076 077 078 079 080 081 082 083 084 085 086 087 088 089 090 091 092 093 094 095 096 097 098 099 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120

31.12.2005

1.7.2005

62 459 018 48 577 238 24 300 000 24 300 000

44 870 904 34 395 027 24 300 000 24 300 000

14 765 466

2 852 117

2 853 726

2 852 117

11 911 740 2 315 832 2 309 199 6 633 4 927 042 4 927 042

2 315 832 2 309 199 6 633 408 091 408 091

+ 2 268 898 13 878 199 3 142 698 2 295 484

+ 4 518 987 10 473 738 3 892 680 2 360 415

680 579 166 635 4 469 410

1 217 263 315 002 593 332

186

384

130 411 4 338 813 6 031 159 4 169 411

120 574 472 374 5 742 234 3 560 397

46 196 525 100 351 485 257 795 8 790

36 210 563 531 266 239 542 701 30 627

559 074 113 308 234 932 213 812 21 120

353 509 389 020 245 492 234 932 10 560

3 581 111 3 470

2 139 79 2 060

Annual report of OKD, a. s. 2005 PROFIT AND LOSS ACCOUNT

I. A. + II. II.1. 2. 3. B. B.1. B.2. + C. C.1. C.2. C.3. C.4. D. E. III. III.1. III.2. F. F.1. F.2. G. IV. H. V. I. * VI. J. VII. VII.1. 2. 3. VIII. K. IX. L. M. X.. N. XI. O. XII. P. * Q. Q.1. Q.2. ** XIII. R. S. S.1. S.2. * T. *** ****

in thousands of CZK Revenues from goods Costs of goods sold Gross profit Revenue from production Revenue from own products and services Change n inventory of own production Own work capitalised Cost of sales Materials and consumables Services Added value Personnel expenses Wages and salaries Remuneration of board members Social security and health insurance expenses Social expenses Taxed and charges Depreciation f tangible and intangible fixed assets Proceeds from disposals of fixed assets and raw materials Proceeds from disposals of fixed assets Proceed from disposals of raw material Net book value of fixed assets and raw materials sold Net book value of fixed assets sold Raw materials sold Change in provisions and adjustments relating to operating activity and change in complex prepaid expenses Other operating revenues Other operating expenses Adjustments to operating revenues Adjustments to operating expenses Operating profit/loss Proceeds from sale of securities and ownership interests Securities and ownerships interests sold Revenue from long-term investments Revenue from intercompany securities and ownership interests Revenue from other long-term securities and ownership interests Revenue from other long-term financial assets Revenue from short-term financial assets Financial assets expenses Revenue from revaluation of securities and derivatives Expenses on evaluation of securities and derivatives Change in provisions and adjustments relating to financial activity Interest revenue Interest expenses Other financial revenue Other financial expenses Adjustments to financial revenues Adjustments to financial expenses Profit/ loss from financial operations Income tax on ordinary profit/loss - current - deferred Profit/loss on ordinary activities after taxation Extraordinary revenue Extraordinary expenses Income tax on extraordinary activity - current - deferred Extraordinary profit/loss Transfer of profit or loss to partners (+/-) Profit/loss for the accounting period (+/-) Profit/loss before tax (+/-)

36

row

1.7. - 31.12.2005

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

3 366 925 3 509 154 -142 229 14 788 449 14 922 494 -207 144 73 099 6 358 688 2 897 900 3 460 788 8 287 532 4 420 875 2 997 008 16 619 1 081 284 325 964 94 838 1 371 684 251 929 64 381 187 548 167 143 33 173 133 970 -276 391

26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61

674 482 913 191

2 522 603 1 289 310 1 425 527

4 897 123 346 - 495 940 107 284 12 122 270 690 323 049

530 769 776 619 671 782 104 837 2 276 753 2 775 10 630

- 7 855 + 2 268 898 + 3 045 517

Annual report of OKD, a. s. 2005

ORGANISATIONAL STRUCTURE Organisational structure as at 30 June 2005:

GENERAL MEETING SUPERVISORY BOARD

BOARD OF DIRECTORS SECRETARIAT

Head division for f internal audit

OFSEKRETARIÁT THE BOARD OF DIRECTORS

AUTHORISED MEMBERS OF THE BOARD OF DIRECTORS MANAGE INDIVIDUAL DEPARTEMENTS DEP.

DEP.

PRODUCTION

Head division for Production and technology

Head division for revitalization

DEP.

TRADE

IU ČSA Mine

FINANCE AND MANAGEMENT

IU Trade services

IU Darkov Mine

IU Supplies

Head division for finance and economy

Head division for Property

IU Lazy Mine

Head division for lHuman

IU Paskov Mine

Head division for Investment

IU Energetics

IU Property IU IT

Head division for Internal control

IU IMGE

Changes to the organisation structure during 2005 On 1 June 2005, a major organisational change was implemented. The existing management structure changed to a departmental structure and new head divisions were incorporated in the organisational structure. In the course of 2005, the organisational structure developed as follows: - on 1 September 2005, the head division for internal audit was established, which is directly accountable to the board of directors of OKD, a. s., - on 1 December 2005, new internal units – units not entered in the Commercial Register Komerční majetek and Pozemky – were established and were incorporated into the finance and administration department, - on the same day, the production unit Důl ČSM was integrated into the organisational structure of OKD, a. s. as a result of the merger of the dissolved ČMD, a. s. with the successor company OKD, a. s.

37

Annual report of OKD, a. s. 2005

Organisational structure as at 31 December 2005:

VALNÁ HROMADA GENERAL MEETING DOZORČÍ SUPERVISORY RADABOARD PŘEDSTAVENSTVO BOARD OF DIRECTORS ÚtvarHead ředitele pro for division interní t internal řaudit dit laudit

SEKRETARIÁT SECRETARIAT PŘEDSTAVENSTVA OFRETARIÁT THE BOARD OF DIRECTORS

ÚtvarHead ředitele pro for division právníLegal službu services ŘÍZENÍ JEDNOTLIVÝCH DIVIZÍ ZAJIŠŤUJE POVĚŘENÝ ČLEN PŘEDSTAVENSTVA AUTHORISED MEMBERS OF THE BOARD OF DIRECTORS MANAGE INDIVIDUAL DEPARTMENTS

DIVIZE PRODUCTION VÝROBNÍ DEP. DIVIZE ÚtvarHead ředitele pro for division výrobu a techniku Production and

VOJ IU Důl ČSA ČSA Mine

ÚtvarHead ředitele pro for division revitalizaci revitalization

VOJ IU Důl Darkov Darkov mine

technology

DIVIZE TRADE OBCHODNÍ DEP. VOJ IU Obchodní servis Trade services VOJ IU Zásobování Supplies

DIVIZE DEP. FINANCE A AND SPRÁVA FINANCE MANAGEMENT Útvar ředitele pro Head division for finance a ekonomiku finance and economy

VOJ IU Důl Lazy Lazy mine

Útvar ředitele pro Head division for ochranu majetku Property t ti Útvar ředitele pro Head division for lidské zdroje Human

VOJ IU Důl Paskov Paskov mine

Útvar ředitele pro Head division for kapitálové účasti Investments

VOJ IU Důl ČSM ČSM mine

VOJ IU Správa majetku Property t VOJ IU Komerční majetek Commercial VOJ t IU Pozemky Land VOJ

IU Informační technologie IT

Útvar ředitele pro Head division for vnitřní kontrolu Internal control

VOJ IU Energetika Energetics VOJ IU IMGEIMGE

Changes to the organisational structure after 31 December 2005 In 2006, the organisational restructuring continued. On 1 January 2006, the head division for the establishment of REAL ESTATE was created in the finance and administration department. The aim of the division is to provide methodological management of the Správa majetku, Komerční majetek and Pozemky internal units.

38

Annual report of OKD, a. s. 2005

39

Annual report of OKD, a. s. 2005

CONTACT INFORMATION

Commercial name:

OKD, a. s.

Registered office:

Ostrava-Moravská Ostrava, Prokešovo náměstí 6/2020

Post code:

728 30

Identification number:

00002593

Tax registration number:

CZ00002593

Telephone:

00420/59 626 1111, 59 626 2020

Fax:

00420/59 611 8890, 59 611 8844

E-mail:

[email protected]

Web page:

www.okd

Bank:

Česká spořitelna, a. s.

Account number:

1641387369/0800

40