annual report 2004 - Severočeské doly a.s.

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Company Profile
Severočeské doly a.s., company registration number: 49901982, is a company established by a decision
to privatize significant parts of the assets of two state enterprises, Doly Nástup Tušimice and Doly
Bílina, of 1 January 1994, based in Chomutov. The company was established in accordance with
the Commercial Code (Act No 513/1991), as amended, pursuant to generally binding legal regulations
in force in the Czech Republic. The company’s core business is the excavation, processing, and
sale of brown coal and by-products. Information about the company is entered in the Commercial Register
kept by the Regional Court in Ústí nad Labem under Section B, Entry 495. The company’s majority shareholders
are the National Property Fund of the Czech Republic (55.4%) and ČEZ, a.s. (37.2%).
The company’s mining activities take place in two separate localities in the North Bohemian brown-coal
basin, Tušimice and Bílina. Doly Bílina produces low-sulphur graded and boiler coal. Doly Nástup Tušimice
mainly produces boiler coal. Although the two localities differ in terms of specific natural and historical
characteristics, they were successfully integrated right at the beginning of the company’s ten-year history.
Proof of this is the company’s leading position on the brown coal market, where it enjoyed a market
share of 44.9% in 2004. Further developments on the fuel market will be influenced by the Government
Energy Concept as the basic document expressing targets in the energy sector. The liberalization of the energy
markets in the EU is in full swing, and will gradually spread to the Czech Republic under the relevant
measures which have been adopted. These factors, which influence the consumption of energy in the Czech
Republic and have an impact on the demand for coal, are a decisive element in determining how the business
activities of Severočeské doly will progress in the future. The company is prepared to be one of the stable
pillars of the Czech and European energy sectors in the decades to come.
In relation to customers, a large emphasis is placed on the quality and reliability of supplies and
on accommodating other customer requirements. The dominant customer is ČEZ, a.s. The company’s
production range is very broad; the structure of customers, who benefit from guaranteed quality
and standards of coal produced by the company, is just as wide and diverse. The company annually
produces approximately 20 million tonnes of coal, making it the market leader. Significant competitors
remain Mostecká uhelná společnost, a.s., právní nástupce, and Sokolovská uhelná, a.s.
The company’s mission is not just the excavation of coal for the energy sector. The company is
fully aware of the need to compensate for the natural sources it exploits by cleaning up the consequences
of its mining activities. The thorough preparation and implementation of re-landscaping and
restoring environmental stability on completion of brown-coal mining is one of the company’s basic
areas of activity. To this end, the company creates financial reserves for cleanup and reclamation
and provisions to settle mining damage. The company invests resources from these reserves into financial
instruments in accordance with a suitably conservative risk policy.
The company pays considerable attention to its human resources policy and communication with
trade unions, especially during collective bargaining. In this respect, the company also strives to protect
the health and safety of its employees and the inhabitants in all municipalities affected by mining
activities. The company has a headcount of approximately 3,700 employees; thousands of other people
have found work at subsidiaries and supplier companies. In terms of its economic and social power,
Severočeské doly is also a stabilizing element in the region, and helps to find solutions to a number
of problems faced by local municipalities. In its communications, the company respects the principle
of the openness of information, not only in relation to employees and shareholders, but also in relation
to business partners and the public.
The company’s main goals include, but are not limited to:
long-term and stable increases in the capital invested by shareholders, reinforcement of the company’s
market position, preservation of the company’s financial stability, the posting of reasonable yields
on disposable financial assets, an increase in the profitability of assets, consolidation of social
peace within the company, the fulfilment of environmental protection requirements, the cleanup
and reclamation of land affected by mining, the reinforcement of good relations with municipalities.