Economic results for - AŽD Praha, sro

Economic results for - AŽD Praha, sro

Annual report2005 / 2006AŽD Praha

Central dispatchers‘ workplace CDP) in Přerov

Railyard at Bohumín railway junction


Signalised intersection in Kuřim

ContentsGeneral Manager‘s Foreword . . . . . . . . . . . . . . . . 9Fields of Business . . . . . . . . . . . . . . . . . . . . 12The Company Organisational Structure and bodies . . . . . . . . 15Organisational chart . . . . . . . . . . . . . . . . . . . 16Integrated Management System . . . . . . . . . . . . . . . 20Production . . . . . . . . . . . . . . . . . . . . . . . 22Manufacturing Activitie . . . . . . . . . . . . . . . . . . 28Installation Activities . . . . . . . . . . . . . . . . . . . 30Division of Teleinformatics . . . . . . . . . . . . . . . . . 32Division of Telecommunication and Signalling Technology Service . . 34Division of Road Technology Automation . . . . . . . . . . . . 36Housing Development and Engineering . . . . . . . . . . . . 38The Company Logistic Centre . . . . . . . . . . . . . . . . 40Socially Beneficial activities . . . . . . . . . . . . . . . . . 42Installations achieved and other activities . . . . . . . . . . . 44Company Financial Results . . . . . . . . . . . . . . . . . 52Main Financial Indicators . . . . . . . . . . . . . . . . . . 54Balance sheet . . . . . . . . . . . . . . . . . . . . . . 57Profit and loss statement . . . . . . . . . . . . . . . . . 64Auditor’s Report . . . . . . . . . . . . . . . . . . . . . 68Supervisory Board’s Annual Report . . . . . . . . . . . . . 69

General Manager‘s ForewordDear Business Partners,Associates,and Colleagues:With pleasure and satisfaction, I am happy to state thatwe have completed our second fiscal year, again in linewith the approved plan. We have not only met, but evenslightly surpassed, the monitored indicators. Hence, itis evident that the successful work of our Company continues,and, moreover, the Company is developing further.The strategic plan for the Company’s developmentis being met.Again, we can be proud of significant technical advances,an expansion in our line of business, the executionof many construction projects both domestically andabroad, as well as of other achievements. Our Companyhas become a professional, stable, and fair partner onthe European playing field. The fact that the Company isdeveloping Czech technologies, supporting universitiesas well as secondary schools, connecting industry witheducation, and investing significant funds into technicaldevelopment, places it among those organisations thatcontribute significantly to the education and skill of theCzech people. The fact that we are a successful CzechCompany is not well accepted by some of our foreignpartners, who do not hesitate to use various methodsto change it. Their efforts can be countered, above all,by professionalism, fairness, and by fulfilling all of ourundertakings. Let us, therefore, have a look back atsome of the significant milestones of the past year.In the technical area, we completed the activation of thetraffic remote control system on the Plzeň–Žatec line,which was one of the so-called “rationalisation projects”.The goal was to increase the technical standard of operationsand effectiveness of railway lines. The projectaction turned out extremely well and now it stands asa model for the next possible use of this system. Thegood news is also the commissioning of the centraldispatcher workplace in Přerov, which remotely controlsthe line between Přerov and Břeclav. Now we are ableto offer remote control on both corridor and regionallines including the optimum technology at reasonableprice and fully failsafe operation. The third major goalwas to put into operation a new version of the provenESA ® interlocking version ESA ® 33) at the Hluboká nadVltavou and Jeřmanice railway stations. This allows fora higher application of electronics and the implementationof hot standby in station interlocking equipment. Wehave developed and now we are offering the new trackcircuit type, the KOA-1, designed to meet the preparedEuropean TSI requirements with regard to resistance tointerfering currents in both existing and future tractionrailway vehicles.Naturally, works initiated in the previous fiscal year arecontinuing, above all i.e. the participation with the Italiancompany ANSALDO in the pilot project for the activationof the unified European systems ERTMS/ETCS. Furthermorewe could present to the professional public thefirst results of the radio block, equipment prepared forsecondary lines. The designed system of the top failsafestandard can improve performance and effectiveness atregional lines and significantly increase the traffic safety.After the initial problems with putting into operation thePendolino train sets we contributed significantly to the9

introduction of these modern EMUs to Czech Railwaysby developing the compensator of dangerous currentsawarded the gold medal at the International EngineeringFair in Brno. At present these trains are now taking passengersto capitals of neighbouring states as well – toVienna and Bratislava.In the field of construction for Railway InfrastructureAdministration SŽDC), we realized part of work onCorridor III and IV between Prague, České Budějoviceand Cheb in the previous year. In Moravia we completedworks on the Česká Třebová–Přerov line. We participatedon modernisation of the Kadaň–Karlovy Vary lineand several other lines. We also conducted a numberof other activities, which, although smaller in size, werefar from being insignificant. These for instance includedsupplies of level crossing systems nearby the towns ofthe Benešov and Vlašim.We also continue to pursue our activities abroad. InSlovakia, we won contracts for the station interlockingequipment in the stations Poprad-Tatry and Prešov; weparticipated in the now-completed project for modernizationof the Zvolen–Banská Bystrica line; and work wasresumed in the area of Vranov nad Topľou. In India, themajor part of the contract for the delivery of the electronicstation interlocking equipment for 11 stations in theAndhra Pradesh state was fulfilled in this fiscal year theproject has now been fully completed). The long-preparedproject for the modernization of Nikšić–Podgoricaline in Montenegro is now under way in cooperation withOHL ŽS Brno. We won a new contract in Belarus, wherewe will deliver the interlocking equipment for the Polockrailway station. The first stage of the work was the adaptationof the ESA ® 11 interlocking to local standards andobtaining the required technical and safety approvals.As we are used to make a business abroad, we haveestablished manufacturing cooperation with a local signallingequipment manufacturer located in the city ofBrest. With the official participation of local politicianswe opened the newly erected production and administrativebuildings of our subsidiary, BALKAN SAST, inSophia. We have already order intake there but we arealso considering the transfer of certain parts of productionfor our entire AŽD group to Bulgaria.In the last fiscal year, we also made preparations forbrand new activities and plans. It is my pleasure toinform you that these plans have become reality. Firstof all, we became involved in the Czech Railways plan torevitalise several railway station buildings. In line with thePPP economic principle, we are becoming investor andoperator of the commercial activities in the buildings forthree decades. In this regard, we have already signeda contract for the revitalisation of the railway stationbuilding in Havlíčkův Brod and are now expecting to signa contract for the Kolín railway station. In the last yearwe were preparing plans for taking over the maintenance/serviceof signalling and interlocking equipment onsome railway lines. Currently we have already taken overthis activity on two lines of the Czech Railway network.The residential housing development project carried outby our subsidiary, AŽD – Harmonie, in Beroun and KrálůvDvůr is also under way.In 2006, we also participated in two major internationalexhibitions, namely the traditional International EngineeringFair in Brno and, most importantly, in the global10

international railway technology fair InnoTrans 2006 inBerlin. We had our stand in the “Czech Town” – a complexof interconnected stands of the Czech Railway IndustryAssociation member companies. This grouping ofCzech companies raised not only the interest of a numberof Czech visitors but also the European public.Doing business it also means participating in publiclybeneficial activities. I can state with satisfaction thatour Company is active in this area, too. Our philosophyis to provide real help to those who need it regardlessof an external effect. We have supported organisationssuch as the Jedlička Institute for the Physically Handicapped,as well as a number of sport organisations andindividual events. We are sponsors of a number of universitiesand secondary schools, we support a numberof cultural organisations, and we are also partners ina number of cultural events – children’s festivals, concerts,exhibitions and number of historical activities. Wesupport athletes from amongst our employees, and takejoy in their success. Our Company is recognized in professionalcircles, both domestically and abroad. We aremembers of UNIFE, ACRI, Association of Industry andTransport, and we participate in a number of Europeanprogrammes as well as in the discussions of the EuropeanIndustrial committees. Our research experts teachas professors at universities.This small space does not allow for a full account of whatour Company achieved last year, and I apologise to everyonewhose activities and contributions I have neglectedto mention.Dear Business partners – Suppliers, Subcontractorsand Customers I would like to take this opportunity tothank you once again for your excellent cooperation withand confidence in our Company. I can also assure youthat we shall continue to supply high quality, safe andreliable technology and equipment and that our motto“quickly, safely and reliably” as well as our vital principleslike correctness, fairness and professionalism will continue.Dear Partners and Colleagues, The year that we areevaluating, and account of which comes in the form ofthis Annual Report, was demanding, but successful, andcreates good conditions for the forthcoming years. I canassure you that I appreciate greatly every contributionthat you have made to the overall good results of theCompany, regardless of its size. Thank you all for copinghonourably with your sometimes very demanding tasks.Further details of our results and activities are providedin the relevant parts of this Annual ReportZdeněk ChrdleCompany‘s CEO & General Director11

AŽD Praha s.r.o. has been the leading Czech manufacturerand supplier of transport control, signalling,interlocking and communication systems for more than50 years. Currently the Company develops successfullyits activities at the domestic and foreign market and it isin possession of trade licence and other qualifying documentsthat allow develop the business activities in thefield of signalling, interlocking, communication, information,control and automation technology, focused mainlyon the rail and road transport domain. The Companyprovides the related commercial, research and developmentactivities, design and manufacturing of the stationaryand mobile systems, their installation, activation,testing, servicing, repairs and maintenance of both theinternally made and purchased equipment, the activitiesrelated to the cable laying, installation and cable testingand to the installation of the communication networksof all types, carrying on of the road motor transport,the geodesic and cartographic activities as well as thepurchasing and resale of the respective equipment.Thanks to complexity of provided services and economicstrength and stability, the Company can offer an effectivesolution even of entirely specific customer requirements.Besides its traditional business activities AŽD Prahafocused in 2005/2006 on development of the followingactivity areas:Road Telematics. Company headquarters comprisesthe Commercial Department of Road Telematics, carryingon commercial activities and development strategywithin its domain on the domestic and also foreign markets.Besides the above mentioned it carries on businessactivities in “Instrument manufacturing, repairs andinstallation”, the main products of which are instrumentsfor measuring of speed, physical values of tunnels andmeans of transport. The Company plays an active role inthe Association for Transport Telematics, it is involved indesign of projects and grants of the Ministries of Transportand Education and it pursues lecturing and consultancyactivities. During the last term the co-operationwith BESIP Department of the Ministry of Transport ofCzech Republic, the automobile clubs and the Municipalitiesincreased significantly, primarily in the field of supplyof the systems increasing road traffic safety and of thetraining equipment for its their future users.Special Technology. The Special Technology Department´sbroad range of activities is focused outside the Companymain activity core business. It offers primarily servicesin the security domain and it provides special equipmentfor buildings. In the fields of security, access and firesafety it offers consultancy, preparation of studies,design work, supplies of equipment, installation, inspectionand servicing. The range of activities of this departmentincludes also manufacturing of individual separateparts or completed products for the external businesspartners.Other Company activities carried on during the lastaccounting period include engineering and housingdevelopment. Within the total volume of AŽD businessactivities a major position belongs to logistic servicesand activities of the Logistic Plant Olomouc, providedto the parent company, daughter companies and also toexternal partners.13

Zdeněk CHRDLEGeneral Director and CEOFrantišek JECKELExecutive DirectorAlice DICKOVÁExecutive Officer andDeputy Director for EconomicsTechnika Plant14

The Company Organisational Structure and bodiesAŽD Praha s.r.o. Identification No. IČO): 48029483)is a solely Czech Company owned for a long time bya stabile group of owners. It is a limited liability Companyestablished pursuant to the Czech CommercialCode. It is entered in the Commercial Register administeredby the Municipal Court in Prague, Section C,Entry No. 14616.From legislative and economic point of view it constitutesa legal entity.The Company is managed by Board of Executives, consistingof CEO – General Director and other two executives.The Company Head Office has been established to providefor top management and co-ordination functions. Itmanages and coordinates activities aimed at implementationof the Company‘s subject of business.In compliance with the Labour Code the Company labourrelations for period 2005–2008 are stipulated in CollectiveAgreement signed on January 10, 2005.The Company bodies and representatives stated withinthis Annual report are effective as of September 30,2006.General AssemblyExecutivesZdeněk CHRDLEGeneral Director, CEOFrantišek JECKELExecutive DirectorAlice DICKOVÁDeputy Director for EconomicsTechnika PlantSupervisory BoardMiroslav KUČERASpecialist – Trade DepartmentMiroslav KOZÁKFinancial DirectorRichard VAVRDADeputy Director for EconomicsInstallation Plant Olomouc15

Organisational chartState as of 30. 9. 2006General assemblySupervisory boardExecutivesGeneral DirectorAdvisersForeignMarketing & TradeThe representativeof IMSSales Managerfor BulgariaDepartment of SpecialTechnologyCommercial Director Operations Director Technical Director Executive Director Personnel Manager Financial DirectorCommercial Directorfor Road TelematicsVZPrahaVZBrnoVZOlomoucZOZOlomoucMZKolínMZOlomoucZTEPrahaDSEPrahaDTIPrahaDSTBrnoDesignDepartmentR&DDepartmentAbbreviation notes:VZ – Production PlantMZ – Installation PlantZOZ – Logistic PlantZTE – Technika PlantPRJ – Design DepartmentVAV – Research and DevelopmentDSE – Division of Telecommunication and Signalling Technology ServiceDTI – Division TeleinformatikaDST – Division of Road Technology AutomationIMS – Integrated Management System Quality, Environment, …)16

Company Head Office and HeadquartersAŽD Praha s.r.o.Žirovnická 2/3146, 106 17 Praha 10Phone: +420 267 287 111Fax: +420 272 656 142E-mail: info@azd.czInternet: www.azd.czGeneral DirectorZdeněk CHRDLEPhone: +420 267 287 201Fax: +420 272 656 142Executive DirectorFrantišek JECKELPhone: +420 267 287 749Fax: +420 272 650 831Operation DirectorJiří BAŤKAPhone: +420 267 287 203Fax: +420 272 656 139Commercial DirectorMiroslav REŠLPhone: +420 267 287 749Fax: +420 272 650 831Financial DirectorMiroslav KOZÁKPhone: +420 267 287 190Fax: +420 272 650 864Technical DirectorRoman JUŘÍKPhone: +420 267 287 361Fax: +420 272 650 851Personnel ManagerMiloslav SOVÁKPhone: +420 267 287 196Fax: +420 272 650 830Commercial Director for Road TelematicsVladimír KETNERPhone: +420 267 287 234Fax: +420 272 650 86417

Organisational UnitsTechnika Plant PragueDirector of the PlantKarel VIŠNOVSKÝAŽD Praha s.r.o., závod Technika PrahaŽirovnická 2/3146, 106 17 Praha 10Phone: +420 267 287 223, fax: +420 272 650 823Deputy Director for Research and DevelopmentMichal PAVELPhone: +420 267 287 364, fax: +420 272 650 823Deputy Director for DesignJosef BOREČEKPhone: +420 267 287 259, fax: +420 272 762 543Production Plant PragueDeputy Operation Director responsiblefor Production Plant ControlMartin ČERNÝAŽD Praha s.r.o., Výrobní závod PrahaŽirovnická 2/3146, 106 17 Praha 10Phone: +420 267 287 193, fax: +420 272 656 147Production Plant BrnoDeputy Operation Director responsiblefor Production Plant ControlJolana HORSÁKOVÁAŽD Praha s.r.o., Výrobní závod BrnoKřižíkova 32, 612 00 Brno-Královo PolePhone: +420 549 122 101, fax: +420 541 211 119Production Plant OlomoucDeputy Operation Director responsiblefor Production Plant ControlStanislav SLAVÍČEKAŽD Praha s.r.o., Výrobní závod OlomoucRoháče z Dubé 6, P. O. Box č. 13, 772 11 Olomouc 2Phone: +420 585 113 700, fax: +420 585 311 42418

Installation Plant KolínDirector of the PlantPetr FALTUSAŽD Praha s.r.o., Montážní závod KolínPolepská 724, 280 02 Kolín IVPhone: +420 321 720 692, fax: +420 321 720 692Installation Plant OlomoucDirector of the PlantKarel OPRAVILAŽD Praha s.r.o., Montážní závod OlomoucJiráskova 5, 772 00 OlomoucPhone: +420 585 113 760, fax: +420 585 313 250Logistic Plant OlomoucDirector of the PlantDaniela VESELÁAŽD Praha s.r.o., Zásobovací a odbytovýzávod OlomoucŽelezniční 1, 772 10 OlomoucPhone: +420 585 113 210, fax: +420 585 311 270Division of TeleinformaticsDirector of the DivisionMiroslav HORAAŽD Praha s.r.o., divize Teleinformatika PrahaUkrajinská 4, 101 28 Praha 10-VršovicePhone: +420 274 012 612, fax: +420 274 012 611Division of Telecommunication andSignalling Technology ServiceDirector of the DivisionVáclav BARTŮNĚKAŽD Praha s.r.o., divize Servisu sdělovacía zabezpečovací techniky PrahaŽirovnická 2/3146, 106 17 Praha 10Phone: +420 272 650 818, fax: +420 272 656 162Division of RoadTechnology AutomationDirector of the DivisionLadislav MALÝAŽD Praha s.r.o., divize Automatizacesilniční techniky BrnoKřižíkova 32, 612 00 Brno-Královo PolePhone: +420 549 210 075, fax: +420 549 210 07419

Integrated Management System

The AŽD Praha s.r.o. main priority is meeting customerrequirements, needs and expectations by delivery of highquality products and services. An integral part of theCompany management is the Integrated ManagementSystem providing a framework for strategic plans inarea of Quality Management, Environment Managementand Occupational Health and Safety Management. Theseplans are declared by the document Policy of the AŽDPraha Integrated Management System. The establishedManagement System has been applied to Company activitiesand determines mutual relations between individualorganisational units and departments. It also definesthe responsibility for the processes guaranteeing qualityof the final product delivered to a customer, minimisingnegative impacts to the environment and ensuring occupationalhealth and safety.Within continuous struggle to improve the effectivenessof the Integrated Management System, AŽD Prahacreates relevant resources and implements progressivemethods in all vital spheres of its activities according toCompany strategic goals.During the 2005/2006 business year after the QualityManagement System, Environment ManagementSystem and Occupational Health & Safety ManagementSystem successive implementation the full managementsystem integration was completed so that the relationbetween these systems is closer and more transparent.From the documentation of the Integrated ManagementSystem and proving its eligibility, expediency and effectivenesspoint of view the Management System profitedby reduction of the necessary administration work.Consequently the Integrated Management System wasre-certified. During the audit at the Company Headquartersthe accredited certification body CQS declaredcompliance of the Quality Management System with ČSNEN ISO 9001, compliance of the Environmental ManagementSystem with ČSN EN ISO 14001 and complianceof Occupational Health & Safety Management Systemwith OHSAS 18001.Based on audit results, AŽD Praha was awarded by certificatesfrom the international certification body IQNetRegister. No. CZ-2345/2006, CZ-161/2006 and CZ-162/2006. Integration of all the mentioned managementsystems was acknowledged by “Golden Certificate”award.Re-certification audits were also successful in all organisationalunits which are separately certified localities.For our customers the certificates demonstrate evidenceof modern management principles within AŽD Praha,guaranteeing product and service quality, the observanceof environment protection and occupational healthand safety approach. For us the ownership of GoldenCertificate signifies an obligation to improve continuouslyall certified lines of business.21

ProductionOne of the CDP Přerov workplaces

The basic element of the AŽD Praha business policy ismaximum satisfaction of traditional and also new businesspartners. The Company objective is to offer itscustomers products and services of high standard notonly from the technical concept and performance pointof view but also from the view of costs and long termapplication. This objective cannot be reached withoutcontinuous purposeful activity focused on the developmentand perfection of the current manufacturingprogramme and also finding the new effective solutionsincluding the application of the most modern scientifictechnologicallyoriented know how. AŽD Praha ownsa wide research and development base and support ofthe technical development programme is one of the longterm priorities. Good competitive strength at both thedomestic and also foreign market is an evidence of Companysuccess in this sphere.The main volume of Company production includes theelectronic signalling and control systems for the railwaytraffic; primarily the station interlocking equipment, linesignalling and level crossing systems including superiorsystems of remote control, the ATC/ATO systemsand application of these systems in Metro and industrialtransport. Concerning the non-railway branches the productioncomprises mainly equipment for the road and airtransport. This equipment mostly forms a part of comprehensivecontrol systems allowing failsafe and smoothreal-time controlled transportation at the minimumoperational costs. Design of these systems respectsrequirements of user friendly operation and in cooperationwith the diagnostic equipment allows optimum maintenance.The basic element of control and signalling systemsfor railway transport is the electronic interlockingsystems of ESA ® 11 type in several modifications, whichcan be used for any railyard configuration of a singleor several railway stations. The design concept of AŽDPraha systems complies with operating requirementsdifferent from domestic conditions and can be used alsoin other signalling systems. This design concept makesit possible to supply the ESA ® interlocking system alsoto the world market. This system solution allows transmissionof necessary data to the superior informationsystems e.g. ISOŘ, CEVIS, MIS as well as to the unifiedEuropean Train Control System ETCS. During the periodunder review, the new generation of ESA ® 33 electronicinterlocking design with contactless control of waysideelements made a significant progress. Currently thisnew interlocking concept is tested in the railway traffic.Part of the station interlocking is safeguarding of pointsas well. For this purpose electromotive point machineEP 600 with jaw lock VZ 200 which eliminates reliablylateral forces and respects the thermal dilation of thepoint blades is supplied. The point machine system includesthe end-position checking units and other structuralelements like thrusting and lifting roller chairs. The systemoperating property was verified by trial operationtests and proved fully satisfactory for operation on linesfor speed up to 230 km/h. To make installation easyand to enable machine tamping of points, point machinesin hollow sleeper and in flange alignment are alsosupplied. As part of complex control and signalling systemthe various types of the line signalling equipment23

Pendolino train set of 680 series – at shunting track in Prague

ensuring failsafe traffic in open line section are available.For bi-directional traffic on single or multi-track lines theelectronic automatic block of ABE-1 type is manufactured.This equipment can be centralised up to 15 kmdistance between stations as a maximum. This systemis equipped by coded track circuits for continuous automatictrain protection and its design allows for properapplication with the unified European Train Control SystemETCS.For power supply of signalling and interlocking systemsthe different modifications of the unified power supplysource type UNZ which ensures an un-interruptedpower supply from 6 kV railway distribution line, catenaryoverhead line of both tractions and also from the publicdistribution network can be supplied.The upper layer of the station interlocking system andthe automatic block is the DOZ remote control systemrationalising and improving efficiency of the train controlin the real time. Currently the supplied configurationenables the remote setting the routes at individualstations and within large track sections. Through thegraphic-technology overlay DOZ enables transmission ofthe train numbers, automatic management of the trafficdocumentation, recording the train schedule fulfilmentand forecasting the traffic situation development includingproposals for solution of conflict situations causedby traffic irregularities.A significant step to make the maintenance more effectiveand less costly is completed development of Local DiagnosticSystem LDS designed for collection, archiving,classification and monitoring of station interlocking, linesignalling and level crossing system operation data.To improve traffic safety at the railway lines and roadscrossings, AŽD Praha manufactures the electronic levelcrossing system with universal application at all railwaylines. The level crossing systems can be controlled bycontinuous or by point elements and are supplied in versionswithout barriers or with barriers.For purpose to increase safety and automation of tractionvehicles control the mobile part of the automatic trainprotection system of LS 90 type is supplied. This equipmentenables evaluation and display of signal aspectstransmitted continuously from the track to the movingtrain operator‘s console, check of the driver‘s vigilanceand check of the movement train direction in the uncodedsections. The next product supplied by AŽD Prahais the automatic train operation system of CRV&AVVtype, assigned for the automatic regulation of the trainspeed according to the maximum permitted speedvalues, depending on data transmitted by the automatictrain protection system. The CRV&AVV upper layerensures the train stop at a predetermined spot and optimisesa train movement to keep the power consumptionat the lowest level.For safeguarding and automation of the train movementsat Metro lines a special continuous automatictrain protection system modified to match the conditionsof Metro traffic is used. This equipment providesautomatic train operation and stopping and can controlthe movement of trains also without human intervention.In 2006 the development of equipment for unmannedturn of Metro trains in the terminal stations and systemfor checking the possible fall of persons into the railyardwas completed. One of the important achievements25

of the period under consideration is development andsupply of compensator of dangerous currents generatedby asynchronous drive of Pendolino 680 type train setsduring its operation. This unique worldwide equipmenthas received “Certificate of competency” and has beenused with a great success.In the field of telecommunication technology the Companyprogramme includes manufacturing of a number ofspecial telecommunication devices e.g. innovated publicaddress system TORNZ for local announcement frommulti-line subscriber set or from a common telephoneset. The TORNZ system also enables remote passengerinformation in unattended railway stops. Besides theabove mentioned railway production line AŽD Prahamanufactures equipment for road traffic control especiallytraffic lights, parking and entry systems, equipmentfor identification and registration of road vehicles includingdetection and registry of traffic violations. In thesecond half of 2006 within the pilot project in Jihlava,advanced camera detection system RedCon registeringtraffic violations at light controlled intersections was putinto operation. Data received from RedCon are transmittedto the city information system and can be used torecover fines for traffic violation and also for monitoringand regulation of road traffic. Currently a considerableattention has been paid to the road telematics, telecommunicationsand radio technology comprising GSM datatransmission between monitored equipment and theservice centre.At the end of the period under consideration the Valíktunnel at D5 highway near Plzeň was put into operation.Inside this tunnel the new technologies for measuring oftraffic data including physical values and for detectionof traffic violations including measuring of vehicle masswere integrated. The complex system including tunnelillumination, road signalling, SOS signal box and highwaytraffic information system is interconnected by radio anddata network with the tunnel control centre. It is the firstsuch equipped tunnel at the Czech Republic territory.In line with the Company strategy, new products and systemsfor the traditional and also developing fields arebeing prepared with an objective to create perspectiveprogrammes in other market segments.To attract new graduates from universities and to increaseeducation in research and development of new railwaytraffic technologies a project, under Czech TechnicalUniversity and Research Railway Institute auspices,to built the Science and Technology Park in Mstětice,partially covered from European Union funds is beingprepared.26

PZZ-EA Electronic level crossing system nearby Teplice

Manufacturing ActivitiesCabinets with electronic equipment in CDP Přerov

The typical feature and also significant comparativeadvantage of AŽD Praha is its orientation to complexservices starting from analyses of customer needs overdevelopment and manufacturing of equipment up toinstallation and long term service. A significant sharein this closed cycle is represented by the Company ownproduction often of the unique key components for theequipment supplied. The Company production is providedby the Production Plants in Praha, Brno and Olomouc.Supplies for the railway investment projects are typical,primarily by the fact that they differ substantially fromcase to case. In the considered period all requirementsof Installation Plants for supply of new products withintheir own investment projects and also requirements ofDivision of Telecommunication and Signalling TechnologyService for supply of spare parts were fully met.The demand to reach a high technological level and effectivenessof the Company production results in specialisationand rationalisation of division of labour among allProduction Plants. Currently almost all the “engineering”production is concentrated into the Production PlantOlomouc, while the production of complex electronicsystems including own production and testing of PCBsis carried out by Production Plant Brno. The ProductionPlant Praha is focused primarily on the assembly, debuggingand testing of the address equipment and developmentof an integrated “cabinet program”. Within thisprogram it manufactures special cabinets where thesignalling equipment is installed.Specialisation of the Production Plants makes it possibleto gradually equip these plants by the most moderntechnology and, along with increase of product quality,to decrease production costs. The Production PlantOlomouc was equipped by unique high performance andelectronically controlled machining centres MAZAKINTEGREX 200 III ST, MAZAK Variaxis 730-SX, allowingcomplex machining even large components like cabinetsfor electromotive point machines, cabinets for barrierdrive etc. In the Production Plant Brno the productionof complicated electronic components is continuouslykept at the highest technological level. It concerns forinstance procurement of the automatic optical X -rayinspection system.In the line with the world trends, the Company focuseson gradual industrialisation of the installation activities.It means the initial debugging and verification of thesupplied equipment functionality is carried out withinProduction and Installation Plants and under their conditions.The first part of this process is carried out just inProduction Plant Praha premises, where several specialisedfully equipped workplaces were built. It is expectedthat in future all important investment projects, primarilythe foreign projects, will be implemented this way.Besides the production of the railway signalling and telecommunicationsystems which is the main activity subject,the Production Plants also execute orders fromareas beyond the transport industry. Among such mostsignificant activities it belongs extensive production ofelectronic microscopes and their components in theProduction Plant Brno for FEI Company) or the largescale cooperation production of engineering characterfor several Companies John Craine, Honeywell, Moravochemand other) in Production Plant Olomouc.29

Installation ActivitiesDispatcher workplaces at the Plzeň–Žatec line - Blatná u Jesenice station

At the beginning of the 2005/2006 financial period, theAŽD Praha installation capacities were concentrated atseveral projects within Ostrava-Svinov–Opava východ linesection and Optimisation of the Česká Třebová–Krasíkovcorridor line, modernization of Rudoltice railway stationwith the related project for Optimisation of theZábřeh–Krasíkov line section situated at Česká Třebová–Přerovconnecting branch. Installation works atsome other important railway stations and line sectionswere successively completed, e.g. projects for theOptimisation of the Bohumín railway junction, Remotecontrol of interlocking equipment on the Plzeň–Žatec lineand modernisation of the Přerov–Olomouc line sectionat Grygov and Brodek u Přerova railway stations. Theproject for Electrification of the Kadaň–Karlovy Vary linewas also completed. Additional system commissioningtook place in the Mohelnice railway station includingthe line segment in Moravičany and Lukavice directionwithin the project for Optimisation of Červenka–Zábřehna Moravě line.Beyond the scope of Corridor activities a considerablenumber of projects were activated which althoughsmaller in size, but far from being insignificant from therailway and road safety point of view. Within projectsfocused on the railyard reconstruction and safeguardingof level crossings it ranks, among the most significantprojects, Reconstruction of points and interlockingequipment in Most railway depot, reconstructionof level crossing system in the Mutějovice–Svojetín,Liberec–Tanvald, Rokycany–Nezvěstice line sections andConstruction of the level crossing system in the Vlašimrailway station.An important step within the introduction of new technologiesis activation of signalling and interlocking systemsat projects Modernisation of the Hluboká nad Vltavourailway station and Reconstruction of station interlockingat the Jeřmanice railway station on the Pardubice–Liberecline, where ESA ® 33 and KOA1 track circuitswere installed.The construction works in progress and at the newlytendered projects continues by installation of temporarysignalling equipment e.g. within the projects New Connectionof the Prague Main Station, Reconstruction ofMasaryk railway station–Libeň line, where this equipmentwas activated in the Main Station historic building.At projects Optimisation of the Plzeň–Stříbro line andOptimisation of the Stránčice–Praha-Hostivař line theworks also continue.The newly started-up projects on the České Budějovice–ČeskéVelenice, Jihlava–Havlíčkův Brod, Benešov–Stránčice, Bakov–Česká Lípa and other line sections willgradually be realized based on individual business conditions.In the field of foreign orders the activation of 11 stationinterlocking systems in India is being completed andinstallation works at the Podgorica–Nikšič line in Montenegroand in the Polock railway station in Belarus werestarted.31

Division of TeleinformaticsRailway vehicle equipped by technology for measuring of GSM-R network parameters

Within the AŽD Praha Company the Division of TeleinformaticsDTI) supplies and installs different types ofcommunication, transmission and also other telecommunicationsystems and equipment in the range fromsmall components to large complex units. Together withother organisational units and daughter companies theDivision cooperates on the design of the integrated telecommunicationand interlocking equipment for individualrailway stations and also for complete railway lines.Cooperation on rationalisation projects including remotecontrol of interlocking equipment ranks among the mostsuccessful. A significant volume of orders is executed incooperation with other Company organisational units.Beyond the railway area the Division provides own commercialpolicy.In the 2005/2006 fiscal period the project “Effectivetoll collection on the roads and highways” executed forKapsch company was among the most significant Divisionactivities. In the railway field one of the most importantactivity is the participation in project “Electrificationof the Kadaň–Karlovy Vary line”, share in the rationalisationproject “Remote control of the interlocking equipmenton the Plzeň–Žatec line” and participation in theinstallation of the remote control system at the secondrailway Corridor on Břeclav–Přerov line. Among individuallyimplemented actions was the project of extremelylarge level crossing in Vlašim, modernisation of stationinterlocking equipment in the Teplice v Čechách railwaystation and implementation of modernisation project onthe Hostivice–Středokluky track section. To support cooperationamong Installation Plants the Division suppliestelecommunication equipment for the Corridor projects,e.g. on the Plzeň–Stříbro, Stránčice–Hostivař tracksections and at the Ústí nad Labem junction, and for thenon-corridor projects e.g. on Horní Cerekev–Tábor andČeské Budějovice–České Velenice track sections.33

Division of Telecommunication and Signalling Technology ServiceMetro railyard of line C in Holešovice station

Within the Company the service of telecommunicationand signalling equipment is carried out by an independentorganisational unit – Division of Telecommunicationand Signalling Technology Service Prague DSE).The Division main objective is to provide warranty andpost warranty service and maintenance for telecommunication,signalling and information systems. In thisregard it is necessary to mention that the Division provides60 months guarantee for a substantial parts of thissystems.As a priority the Division provides servicing of the newmodernised technological installations, in particular thecomputerised station interlocking, line signalling andlevel crossing systems and systems for remote controlincluding servicing of all products related to AŽD Prahapoint and barrier manufacturing program.The Division carried out services for 162 station interlockingsystems, 462 level crossing systems, 50 tracksections with the Electronic Automatic Block System,62 other line signalling systems Automatic Line BlockSystems and reconstructed Automatic Blocks), remotecontrol equipment and related telecommunication andinformation systems. From the start of the jaw lock productiontill the end of 2006 the Division was servicing4388 installations of VZ 200 jaw locks in total.The warranty service has also been provided for MET-RO - Public Transport Operator of the City of Pragueoverhauls of 3rd grade on the IVC1 Line and service forATP/ATO system on the A Line) and for the equipmentsupplied and installed at the Slovak Railways. In India theservice supervision of equipment supplied for Indian Railwayswas secured.The service activities were carried out by the servicegroups and workplaces located in Ústí nad Labem,Karlovy Vary, Prague, České Budějovice, Kolín, Pardubice,Olomouc, Brno, Břeclav ana Ostrava. Because ofincreased number of equipment in the area the DivisionDSE) made the Ostrava service group independent. Inthe period under review the Division has also preparedconditions to take over the maintenance of signalling andinterlocking equipment.Services were provided continuously 24 hours a day and365 days a year.35

Division of Road Technology AutomationComplex control system of Valík tunnel at D5 Expressway36

The road transport field ranks among the most importantnon-railway activities of the Company. The Divisionof Road Technology Automation Brno DST) independentlyprovides development, design, production, installation,service and consulting services in this field of road technologyand develops strategy outlined by Road TelematicsCommercial Department of the Company Headquarters.In the 2005/2006 fiscal year the Division put on themarket new applications of camera technologies in areaof systems increasing road safety and prevention oftraffic violations and a crime rate. Among already realizedprojects can be stated installation of RedCon Systemin Jihlava, MUR-05 in Dubí and Bánov and installation ofconsiderable number of microprocessor controller variantsdesigned for control of signals at intersections andpedestrian crossings in Czech Republic and also abroad.Other types of equipment include systems for controlledparking, Park and Ride systems and vehicle entry andexit control systems based on automatic identificationof a vehicle registration plate. The most important projectsinclude installation of EntryCon System at Třineckéželezárny and at the NATO air base in Čáslav. The largestcompleted project of the past fiscal period is a complexsupply of control, signalling and monitoring systems inValík tunnel at D5 highway near Plzeň. Besides otheradvantages this system can monitor physical valuesrelated to the tunnel traffic and detect and registertraffic violations regarding vehicle overloading. Amongother implemented innovations belongs e.g. installationof active and passive safety elements at pedestriancrossings in Kolín and equipment for several childrentraffic playgrounds. In general it can be stated that inthe past fiscal year the Division not only strengthened itsposition and became an important supplier of technologyfor control and improvement of road traffic safety but itcontinues to develop its potential in this area.37

Housing Development and EngineeringKolín railway station vestibule

During last years the service area in Czech Republic hasbeen developing fast and brings very interesting conceptof a stable and long term business undertaking.AŽD Praha does not fall behind and uses opportunitiesresulting from the main subject of this business – participationin remarkable traffic building projects.For this reason at the Company strategy meeting a proposalfor expansion of the Company activities also inthe service area was adopted. Therefore on October1 st 2005 the new Construction and Power EngineeringDepartment ISE) was incorporated into the FinancialDepartment of the Company Headquarters. At the endof 2005 this Department completed the development ofpolyfunctional building in the centre of the city of Berounincluding a heat exchanger and air conditioning system.For the next service development an offer for cooperationwith Harmonie Group which prepares housingdevelopment projects was accepted. Therefore a jointcompany called AŽD – Harmonie incorporating activitiesof both founders has been established. AŽD Praha providesorganisation of building development including financingand Harmonie Group provides marketing, designpreparation, acquisition of land, zoning procedure, buildingpermission proceedings, advertising and sale ofa building.Currently AŽD – Harmonie works on implementationof the next joint project at Beroun-Králův Dvůr locality.It concerns one of the largest housing construction projectsoutside the city of Prague called Královský Horizontwith 225 accommodation units including garagesin 9 villa - houses.At the same time preparation works of some other interestinghousing development projects ensuring the Companyperspectives are in progress.The next part of AŽD Praha housing development activitiesis cooperation within the Czech Railways projectcalled Vital Railway Stations. In this project AŽD Praha isthe major participant trying to strengthen its position inthe area of railway traffic and housing development. CurrentlyAŽD Praha succeeded in tender for revitalisationof three railway stations included in the mentioned project.It concerns Havlíčkův Brod railway station realizationof which is going to start in the near future followed bylarge revitalisation project of Kolin railway station andalso Nymburk railway station. Additional projects of“Vital Railway stations” program are being prepared.39

The Company Logistic CentreOne of the storage halls of the Logistic Centre in Olomouc

Within AŽD Praha the logistic activities are carried outby the Logistic Plant Olomouc ZOZ) for all the organisationalunits and also for the domestic and daughtercompanies abroad. The significant Logistic Plant ZOZ)activity includes also services provided for the externalpartners.During the past business year the Logistic Plant ZOZ),in cooperation with Company Headquarters and otherorganisational units, ensured the highest volume oforders from the total extent and also the service diversificationpoint of view, at consideration of a price increasefactor of some commodities. Besides procuring theeconomically and technologically optimal material, theLogistic Plant ZOZ) has also ensured their packagingand delivery to a site on schedule though the manufacturingor the installation procedure was frequentlychanged. Also the expanding number of countries, whereCompany actively operates, brings new tasks fromthe material procurement point of view. Traditionally themaximum volume of the foreign logistic activities primarilyconcerns Slovak Republic and even other activitiese.g. in Serbia, Montenegro, Belarus and Bulgaria arealso developing successfully.In the 2005/2006 financial year the ensured suppliesamounted CZK 2,2 billions, of which the supplies ofAŽD Praha organisational units amounted CZK 1 235millions and supplies of entities other than the parentcompany amounted CZK 965 millions.A big support for successful management of the LogisticPlant ZOZ) tasks is the new Information System put intofull operation exactly with the start of the 2005/2006business year. In the logistic area the Information Systemwas successfully co-ordinated with the bookkeepingand financial programmes and even its introduction tomanufacturing sphere is being prepared.41

Socially Beneficial activitiesEnsemble of Šternberk Primary Art School, whose participation at InternationalYouth Festival in Shizuok, Japan, were supported by AŽD Praha

As a stable and financially strong company, AŽD Praha isstrongly aware of its responsibility to help those in need.That is why the company is involved in the communityin various ways and supports numerous social welfareorganisations.In view of the company main production area – the development,manufacture and installation of railway transportationsystems, AŽD Praha has focused its socialresponsibility on events supporting the environment andecological forms of transport. Every year the companysupports the European Day “Without Cars” organised bythe Children of the Earth Association, whose main goalis to point out, at least once a year, the major ecologicaland health problems – damage of our health, life and theenvironment caused by automobile transport. Amongthe events linked to the railway in the Czech Republic,AŽD Praha traditionally supports the railway museumsin Lužná u Rakovníka and Hradec Králové, as well as, forexample, the Railway Model Club in Lysá nad Labem orWinged Wheel Endowment under Technical Museum.This year the Company became the general partner ofthe Jindřichův Hradec local railway on the occasion ofthe one hundredth anniversary of the Jindřichův Hradecnarrow gauge railway.Culture. In culture, AŽD Praha supported, for example,the Concert of Stars 2006 at Žofín Palace or the folkband Spiritual Quintet. For children, AŽD Praha contributedto the organisation of the nationwide children’sfolksong festival, ZPĚVÁČEK 2006 and helped the ŠternberkArt School to take part in the International MusicFestival in Shizuoka, Japan.Education and Science. AŽD Praha considers educationsupport as one of its key activities. The signalling technology,specifically in the area of railway traffic, is not currentlyone of the most popular or modern fields of study.For this reason there is a true shortage of experts inthis field. In 2005/2006 AŽD Praha shared in supportof several important, specialised secondary schools anduniversities in the Czech Republic including the CzechTechnical University in Prague ČVUT), the TechnicalUniversity in Brno, the University of Pardubice and theTechnical College and Industrial School of Transport inPrague.Sport. Sport and active leisure are also spheres supportedby AŽD Praha. This support is not only focusedon sport events, but also on groups and clubs involvedin sporting activities. The company has supported theHC Lasselsberger Plzeň Hockey Club since 2005 andmany other smaller, local clubs such as the Sport Club inRožnov pod Radhoštěm.43

Installations achieved and other activitiesOpening ceremony of the II. Conference of Telecommunication and SignallingTechnology in České Budějovice

October – November 2005General partner at “2 nd Conference of telecommunication and signallingtechnology” in city of České BudějoviceParticipation at Prime Minister‘s business mission in SerbiaPresentation within Railway 2006 Conference in PragueEquipment of chidren‘s playground in JihlavaOstrava - Svinov–Opava východ ● DOZ CTC) remote control systemDěhylov–Háj ve Slezsku ● sectional control by ESA ® 11Háj ve Slezsku ● ESA ® 11 station interlocking systemTřebovice ● ESA ® 11 station interlocking systemDěhylov ● ESA ® 11 station interlocking systemTřebovice–Rudoltice ● ABE-1 line signalling systemRudoltice ● ESA ® 11 station interlocking systemStřelice–Hrušovany nad Jizerou ● PZZ-EA level crossing systemHoštejn ● ESA ® 11 station interlocking systemHoštejn–Krasíkov ● ABE-1 line signalling systemBohumín ● ESA ® 11 station interlocking systémLanžhot–state boarder ● AH-88A line signalling systemLanžhot ● ESA ® 11 station interlocking systemMutějovice–Svojetín ● PZZ-RE level crossing systemSvojetín ● ESA ® 11 station interlocking systemBohumín–Chalupki ● AH-88A line signalling systemÚstí nad Labem ul. Předmostí, Špitálské nám.) ▼ intersection controlledby signalling systemsLučenec SR) ▼ intersection controlled by signalling systems●▼installations achieved in the field of railway transportinstallations achieved in the field of road transportJan Zahradník, the Commissioner of the South Bohemia Region duringa talk with conference participants in Česke Budějovice

Festive takeover of Quality Certificate from the Austrian Federal Railways ÖBB)

January – March 2006Ing. Zdeněk Chrdle appointed to ACRI Executive Board as Commitee Chairmanof signalling and interlocking technologyReceiving ÖBB Quality Certificate enabling participation in tenders floated bythis companyPrticipation at Eurotraffic International Exhibition – GRAND PRIX awardČáslav, NATO Air base ▼ EntryCon entry systemApril – June 2006Participation at “Technika” Exposition in BeogradParticipation at C.S.I.L Logistic and Transport Fair, BratislavaParticipation at Conference EURNEX – ŽEL 2006, ŽilinaParticipation at Czech RailDays Fair, OstravaTřemošná u Plzně ● ESA ® 11 station interlocking systemHorní Bříza ● ESA ® 11 station interlocking systemPlasy ● ESA ® 11 station interlocking systemKaznějov ● ESA ® 11 station interlocking systemMetro A, Depo Hostivař ● ESA ® 11 M+ station interlocking systemKlášterec nad Ohří ● ESA ® 11 station interlocking systemPerštejn ● AHP-03 line signalling systemPerštejn–Stráž nad Ohří ● AHP-03 line signalling systemStráž nad Ohří ● ESA ® 11 station interlocking systemKadaň ● AHP-03 line signalling equipment connectionVladimír Ketner, Commercial Director for Road Telematics withGRAND PRIX award at Eurotraffic Fair

Closing ceremony of the CTC rationalisation project at the Plzeň–Žatec linein Podbořany station

Vroutek ● ESA ® 11 station interlocking systemPodbořany ● ESA ® 11 station interlocking systemKaštice ● ESA ® 11 station interlocking systemŽabokliky ● ESA ® 11 station interlocking systemKadaň–Karlovy Vary ● sectional control by ESA ® 11Plzeň–Žatec ● DOZ CTC) remote control systemVlašim–Benešov ● PZZ-RE level crossing systemRokycany–Nezvěstice ● PZZ-RE level crossing systemGrygov ● ESA ® 11 station interlocking systemGrygov–Olomouc TZZ ● ABE-1 line signalling systemLiberec–Tanvald, 1. stavba ● PZZ-AC level crossing systemMost ● ESA ® 11 station interlocking systemPelhřimov ● ESA ® 11 station interlocking systemDobrá Voda u Pelhřimova ● ESA ® 11 station interlocking systemDobrá Voda u Pelhřimova–Pelhřimov ● sectional control by ESA ® 11Horní Cerekev–Dobrá Voda ● AHP-03 line signalling systemOlomouc ul. Roháče z Dubé) ▼ intersection controlled by signalling systemKolín Jaselská ul.) ▼ intersection controlled by signalling systemDubí ▼ MUR-05 control systemCommercial negotiations at C.S.I.L. Fair in Bratislava

Section of AŽD Praha within exposition of Association of the Czech Railway Industry ACRI)at InnoTrans Fair in Berlin

July – September 2006Participation at International Engineering Fair in Brno– award from Electrotechnical IndustryParticipation at InnoTrans Berlin FairSupport of action “Meeting of rail draisines” at Zubrnice railroadEquipment of children‘s playground in TřeboňPresentation of Bohumin dispatcher‘s control place within“New Technology Days”General partner for Centennial Anniversary celebrationsof Jindřichův Hradec local railwayKřimice–Kozolupy ● AHP-03 line signalling systemDluhonice–Brodek ● ABE-1 line signalling systemMohelnice ● ESA ® 11 station interlocking systemKuřim nám. 1. května) ▼ intersection controlled by signalling systemÚstí nad Labem Fibichova, Panská/Revoluční, Brněnská streets)▼ intersection controlled by signalling systemsTřinec, Třinecké železárny Ironwoks) ▼ highlighting of the pedestrian crossingKolín ▼ highlighting of the pedestrian crossingBanská Bystrica SR) ▼ intersection controlled by signalling systemDálnice D5, tunel Valík ▼ complex control systemJihlava ▼ RedCon control systemBánov ▼ MUR-05 control systemPublic of InnoTrans Fair

Company Financial ResultsZdeněk Chrdle, AŽD Praha Company‘s CEO & General Director during inauguration of Technological Production orientedbase of Balkan SAST in Sophia with participation of Peter Vasilev Mutafciev, 52 the Bulgarian Ministry of Transport

The Company has completed second business yearending on the date 30. 9. of the calendar year.The Company‘s business year 2005/2006 was anothersuccessful year taking up the excellent results of previousyears.In the business year 2005/2006 the Company‘s salesturnover was higher compared to previous calendar yearby CZK 563 millions and the business results in total aretherefore more positive than in previous years.Among others Company increased its activities abroadin Slovak Republic and in Montenegro, where subsidiarieshas been set up. In addition nine domestic and fivedaughter companies abroad Slovakia, Bulgaria and Serbia)are under significant control of AŽD Praha s.r.o.Within the period considered the number of Companyemployees decreased to 1648. In this period the companypersonnel policy has been significantly focused ontoresearch and development, where CZK 217 millionswere invested.During this period the company declared exempt fiscalreserves for the new generation of electronic signallingand interlocking systems, warranted for five years ofservice life, which are being under long-term trial operation.Composition of assets is significantly influenced by receivables.Because of 120 day’s due date the major part ofthese receivables is not overdue.Company financing has proceeded in a positive way whilethe turnover growth was proportionally projected intobusiness commitments and drawing of bank loans.No Company assets have been required by means offinancial leasing and no overdue liabilities of social andhealth insurance and tax debts have been registered.In the course of this fiscal period the Company objectiveswere achieved and exceeded in some cases.The Company business development is very positive andthe presumption of other expansion creates significantbusiness prospects.53

Main Financial Indicators of AŽD Praha s.r.o.For business year 2005/2006 – from 1. 10. 2005 till 30. 9. 2006Business year “2004” was a transition period of 9 months from 1. 1. 2004 till 30. 9. 2004 caused by shifted accountingperiod as of Sep.1 of calendar year due to this fact the data of this period are not fully evidential)Indicator / period Year 2003 rok “2004” 2004 / 2005 2005 / 2006Turnover in ths CZK 3 324 128 2 212 181 3 198 921 3 762 091Profit after tax in ths CZK 151 805 129 804 152 318 190 000Profit from turnover % 4,57 5,82 4,76 5,05Value added tax in ths CZK 1 047 239 636 966 741 583 877 435Bank loans in ths CZK 215 048 102 513 136 784 560 550Employees-full time equivalent 1 822 1 677 1 671 1 64854

Turnover/full time equivalent of employeesYear 20030 500 1000 1500 2000 2500 3000 3500 4000“2004”2004/20052005/2006Turnover in mil. CZKEmployees-full time equivalentProfit from turnover0 1 % 2 % 3 % 4 % 5 % 6 %Year 2003“2004”2004/20052005/200655

Composition of Assets as atSep. 30, 2006 in thous. CZK)Composition of Liabilities as atSep. 30, 2006 in thous.CZK)Long-term intangible fixed assets 28 949Long-term tangible fixed assets 578 818Long-term financial assets 233 744Inventories 601 741Receivables 1 775 099Financial assets 84 344Accruals 7 481Assets total 3 310 176Registered capital 384 436Capital funds -993Funds from profit 65 950Retained earnings from previous years 418 664Profit of 2005/2006 190 000Reserves 834 317Liabilities 804 564Bank loans and other creditors 560 550Accruals 52 688Liabilities total 3 310 17656

Balance sheetas at 30. 9. 2006 in thous. CZK)Identif.ASSETSRowNo.Current accounting periodPreviousperiodGross Adjustment Net Neta b c 1 2 3 4TOTAL ASSETS (r. 02 + 03 + 31 + 62) 001 3 681 883 371 707 3 310 176 2 591 262A. Receivables from subscriptions 002B. Fixed assets (r. 04 + 13 + 23) 003 1 193 861 352 350 841 511 800 080B. I. Intangible fixed assets (r. 05 to 12) 004 56 968 28 019 28 949 22 593B. I. 1 Incorporation expenses 005 74 74 22 Research and development 0063 Software 007 49 683 24 490 25 193 22 1094 Valuable rights 008 3 455 3 4555 Goodwill 0096 Other intangible fixed assets 0107 Intangible fixed assets under construction 011 3 756 3 756 4828 Advance payments for intangible fixed assets 01257

Identif.ASSETSRowNo.Current accounting periodPreviousperiodGross Adjustment Net Neta b c 1 2 3 4B. II. Tangible fixed assets (r. 14 to 22) 013 878 349 299 531 578 818 521 502B. II. 1 Lands 014 58 109 58 109 57 5522 Constructions 015 455 203 122 007 333 196 337 4963 Equipment 016 552 383 347 629 204 754 158 2834 Perennial corps 0175 Breeding and draught animals 0186 Other tangible fixed assets 0197 Tangible fixed assets under construction 020 3 943 3 943 1 8608 Advance payments for tangible fixed assets 021 79 79 3329 Adjustment to acquired assets 022 -191 368 -170 105 -21 263 -34 021B. III. Long-term financial assets (r. 24 to 30) 023 258 544 24 800 233 744 255 985B. III. 1 Shares in controlled and managed oranizations 024 68 235 24 800 43 435 39 7262 Shares in accounting units with substantial influence 025 1 071 1 071 1 0733 Other securities and shares 026 110 014 110 014 110 0004Loans to controlled and managed organizations and to accountingunit with substantial influence027 79 224 79 224 105 1865 Other financial investments 0286 Financial investments acquired 0297 Advance payments for long-term financial assets 03058

Identif.ASSETSRowNo.Current accounting periodPreviousperiodGross Adjustment Net Neta b c 1 2 3 4C. Current assets (r. 32 + 39 + 47 + 57) 031 2 480 541 19 357 2 461 184 1 786 504C. I. Inventory (r. 33 to 38) 032 601 741 601 741 443 654C. I. 1 Materials 033 286 373 286 373 229 9872 Work in progress and semi-products 034 302 729 302 729 194 1743 Finished products 0354 Animals 0365 Merchandise 0376 Advance payments for inventory 038 12 639 12 639 19 493C. II. Long-term receivables (r. 40 to 46) 039 286 857 286 857 201 900C. II. 1 Trade receivables 040 66 807 66 807 18 0982 Receivables from controlled and managed organizations 0413 Receivables from accounting units with substantial influence 0424Receivables from partners, cooperative members andassociation members0435 Estimated receivable 0446 Other receivables 045 41 251 41 251 7457 Deffered tax receivable 046 178 799 178 799 183 057C. III. Short-term receivables (r. 48 to 56) 047 1 507 599 19 357 1 488 242 1 047 164C. III. 1 Trade receivables 048 1 274 899 15 857 1 259 042 912 85559

Identif.ASSETSRowNo.Current accounting periodPreviousperiodGross Adjustment Net Neta b c 1 2 3 42 Receivables from controlled and managed organizations 049 166 213 166 213 20 9893 Receivables from accounting units with substantial influence 0504Receivables from partners, cooperative members andassociation members0515 Receivables from social security and health insurance 0526 Due from state – tax receivable 053 46 515 46 515 105 9317 Other deposits given 0548 Estimated receivable 055 12 103 12 103 5679 Other receivables 056 7 869 3 500 4 369 6 822C. IV. Short-term financial assets (r. 58 to 61) 057 84 344 84 344 93 786C. IV. 1 Cash 058 16 044 16 044 2 3082 Bank accounts 059 68 300 68 300 91 4783 Short-term securities and ownership interests 0604 Short-term financial assets acquired 061D. I. Accruals (r. 63 to 65) 062 7 481 7 481 4 678D. I. 1 Deferred expenses 063 6 365 6 365 3 8612 Complex deferred costs 0643 Deferred income 065 1 116 1 116 81760

Identif.LIABILITIESRowNo.CurrentperiodPreviousperioda b c 5 6TOTAL LIABILITIES (r. 67 + 84 + 117) 066 3 310 176 2 591 262A. Equity (r. 68 + 72 + 77 + 80 + 83) 067 1 058 057 1 069 688A. I. Registered capital (r. 69 to 71) 068 384 436 384 436A. I. 1 Registered capital 069 384 436 384 4362 Company´s own shares and ownership interests –) 0703 Changes of registered capital +/–) 071A. II. Capital funds (r. 73 to 76) 072 -993 -577A. II. 1 Share premium 0732 Other capital funds 074 358 3583 Diferences from revaluation of assets and liabilities +/–) 075 -1 351 -9354 Diferences from revaluation in tranformation +/–) 076A. III.Reserve funds, statutory reserve account for cooperatives, and otherretained earnings (r. 78 + 79)077 65 950 57 949A. III. 1 Legal reserve fund / indivisible fund 078 64 232 56 6162 Statutory and other funds 079 1 718 1 333A. IV. Profit / loss – previous year (r. 81 + 82) 080 418 664 475 562A. IV. 1 Retained earnings from previous years 081 418 664 475 5622 Accumulated losses from previous years 082A. V. Profit / loss – current year (+/–) r. 01 – (+ 68 + 72 + 77 + 80 + 84 + 117) 083 190 000 152 31861

Identif.LIABILITIESRowNo.CurrentperiodPreviousperioda b c 5 6B. Other sources (r. 85 + 90 + 101 + 113) 084 2 199 431 1 481 854B. I. Reserves (r. 86 to 89) 085 834 317 865 164B. I. 1 Reserves under special statutory regulations 086 46 281 37 2102 Reserves for pension and similar payables 0873 Income tax reserves 088 43 1684 Other reserves 089 788 036 784 786B. II. Long-term payables (r. 91 to 100) 090 5 475B. II. 1 Trade payables 091 5 4752 Payables to controlled and managed organizations 0923 Payables to accounting units with substantial influence 0934 Payables from partners, cooperative members and association members 0945 Long-term advances received 0956 Issues bonds 0967 Long-term notes payables 0978 Estimated payables 0989 Other payables 09910 Deffered tax liability 10062

Identif.LIABILITIESRowNo.CurrentperiodPreviousperioda b c 5 6B. III. Short-term payables (r. 102 to 112) 101 799 089 479 906B. III. 1 Trade payables 102 553 977 312 4072 Payables to controlled and managed organizations 1033 Payables to accounting units with substantial influence 1044 Payables from partners, cooperative members and association members 105 20 205 Payroll 106 132 727 106 1906 Payables to social securities and health insurance 107 26 639 14 3387 Due from state - tax liabilities and subsidies 108 24 650 12 4628 Short-term deposits received 109 26 050 12 4719 Issues bonds 11010 Estimated payables 111 35 026 14 50311 Other payables 112 7 515B. IV. Bank loans and financial accomodations (r. 114 to 116) 113 560 550 136 784B. IV. 1 Long-term bank loans 1142 Short-term bank loans 115 560 550 136 7843 Short-term accomodations 116C. I. Accruals (r. 118 + 119) 117 52 688 39 720C. I. 1 Accrued expenses 118 52 532 39 1092 Deffered revenues 119 156 61163

Profit and loss statementas at 30. 9. 2006 in thous. CZK)Identif.TEXTRowNo.CurrentFiscal periodPreviousa b c 1 2I. Revenues from sold goods 01 673 823 621 554A. Expenses on sold goods 02 629 936 598 555+ Sale margin (r. 01 – 02) 03 43 887 22 999II. Production (r. 05 + 06 + 07) 04 3 363 812 2 818 411II. 1 Revenues from own products and services 05 2 352 695 2 161 8542 Change in inventory of own products 06 108 804 65 4463 Capitalisation 07 902 313 591 111B. Production consumption (r. 09 + 10) 08 2 530 264 2 099 827B. 1 Consumption of material and energy 09 2 203 168 1 888 590B. 2 Services 10 327 096 211 237+ Added value (r. 03 + 04 – 08) 11 877 435 741 583C. Personnel expenses 12 703 545 634 375C. 1 Wages and salaries 13 524 524 470 685C. 2 Renumeration of board members 14C. 3 Social security expenses and health insurance 15 176 961 161 629C. 4 Other social expenses 16 2 060 2 061D. Taxes and fees 17 2 332 2 295E. Depreciations of intangible and tangible assets 18 78 438 68 29064

Identif.TEXTRowNo.CurrentFiscal periodPreviousa b c 1 2III. Revenues from disposals of fixed assets and materials (r. 20 + 21) 19 538 399 251 128III. 1 Revenues from disposals of fixed assets 20 1 934 1 2062 Revenues from disposals of materials 21 536 465 249 922F. Net book value of diposed fixed assets and materials (r. 23 + 24) 22 433 317 157 567F. 1 Net book value of sold fixed assets 23 1 397 855F. 2 Net book value of sold material 24 431 920 156 712G. Change in operating reserves and adjustments and complex deferred costs +/–) 25 -5 349 -102 820IV. Other operating revenues 26 40 727 69 766H. Other operating expenses 27 27 910 25 230V. Transfer of operating revenues 28I. Transfer of operating expenses 29*Operating profit / loss(r. 11 – 12 – 17 – 18 + 19 – 22 + 25 + 26 – 27 + (–28) – (–29)30 216 368 277 540VI. Revenues from sales of securities and ownership interests 31 35 15 482J. Sold securities and ownership interests 32 78 5 79465

Identif.TEXTRowNo.CurrentFiscal periodPreviousa b c 1 2VII. Revenues from long-term financial assets (r. 34 + 35 + 36) 33 30 247 2 412VII. 1Revenues from shares in controlled and managed organizations and in accountingunits with subsantial influence34 30 247 2 412VII. 2 Revenues from others securities and ownership interests 35VII. 3 Revenues from other long-term financial assets 36VIII. Revenues from short-term financial assets 37K. Expenses associated with financial assets 38IX. Revenues from revaluation of securities and derivatives 39L. Cost of revaluation of securities and derivatives 40M. Change in financial reserves and adjustments +/–) 41 -2 200 19 000X. Interest revenues 42 10 445 6 246N. Interest expenses 43 9 713 7 139XI. Other financial revenues 44 6 916 5 033O. Other financial expenses 45 40 232 37 727XII. Transfer of financial revenues 46P. Transfer of financial expenses 47*Profit / loss from financial operations (transactions)(r. 31 – 32 + 33 + 37 – 38 + 39 – 40 + 41 + 42 – 43 + 44 – 45 – (–46) + (–47))48 -180 -40 48766

Identif.TEXTRowNo.CurrentFiscal periodPreviousa b c 1 2Q. Income tax on ordinary income (r. 50 + 51) 49 26 188 84 735Q. 1 – Due tax 50 21 930 42 717Q. 2 – Tax deferred 51 4 258 42 018** Operating profit / loss ordinary activity (r. 30 + 48 – 49) 52 190 000 152 318XIII. Extraordinery revenues 53R. Extraordinery expenses 54S. Income tax on extraordinery income (r. 56 + 57) 55S. 1 – Due tax 56S. 2 – Tax deferred 57* Operating profit / loss extraordinary activity (r. 53 – 54 – 55) 58T. Trasfer profit loss) to partners +/–) 59*** Profit / loss of current accounting period (+/–) (r. 52 + 58 – 59) 60 190 000 152 318Profit / loss before tax (+/–) (r. 30 + 48 + 53 – 54) 61 216 188 237 05367

Auditor’s ReportOn Verification of Final Accounts from Oct. 1, 2005 to Sep. 30, 2006Company identification: AŽD Praha s. r. o.Registered address: Praha 10, Žirovnická 2/3146Business ID ICO): 48 02 94 83Main scope of business:Research, production and trade in the field oftelecommunications, signaling, information,control and automation technology, mainly in transportIt is hereby confirmed the audit of final accounts of AŽD Praha Company was duly carried out. The Company Board of Executives isresponsible for preparation of final accounts in question. The Auditor’s report is destined for associates of AŽD Praha Company.The audit has been carried out in compliance with the Audit Act and International Auditor Standards with related amendments issued bythe Chamber of Auditors of the Czech Republic. Pursuant to Standards requirements the audit has been scheduled and carried out sothat the auditor acquires a reasonable certainty that the final accounts do not contain any major inaccuracies. Audit includes:– selectively performed verification of the completeness and provability of the sums and data given in the final accounts,– assessment of the correctness and eligibility of accounting methods and key estimates carried out by the Company,– evaluation of the final accounts information capability.We are convinced that the audit carried out provides a reasonable basis for expression of opinion which is contained here below in the statementto the final accounts.Statement Without objections):As per our opinion, the final accounts of AŽD Praha s. r. o. are in all significant aspects providing a faithful and clean image ofthe assets, liabilities, and financial situation as at Sep. 30, 2006, and of the expenses, incomes and business results achievedduring the period from Oct. 1, 2005 till Sep. 30, 2006 in compliance with the Accounting Act and relevant regulations of theCzech Republic.Date: Jan. 19, 2007.Ladislav Chaloupka, AuditorAuditor’s Certificate No. 1219Statutory representative of EKMA FIN, a. s.68

Supervisory Board’s Annual ReportBusiness Results of AŽD Praha s. r. o. forFiscal Period from Oct. 1, 2005 to Sep. 30, 2006In the course of whole fiscal period the Supervisory Board observed the generally binding regulations, Partnership Deed andGeneral Assembly resolutions.At its regular meetings with the executive officers the Supervisory Board dealt with the business results and how the currentproblems, immediately influencing the Company’s activities, are being solved.The Supervisory Board hereby state that the negotiations and activities of executive officers complied, in all the cases, withPartnership Deed and other binding legal regulations and no infringement was noted.The Supervisory Board made itself familiar with the contents of the Company’s annual final accounts for the period from October2005 to September 2006 and with the statement of the Ekma Fin a.s. auditor Mr. Ladislav Chaloupka dated on Jan. 19,2007 and fully endorse this statement.Pursuant to statement of auditor the Supervisory Board concluded that the final accounts were faithfully reflecting the assets,liabilities and owned capital as at Sep. 30, 2006. The business results achieved during the fiscal period were in compliance withthe widely binding and accounting laws and relevant regulations of Czech Republic.The Supervisory Board therefore advises the General Meeting to approve these final accounts including the submitted profitdivision proposal.Miroslav KučeraSupervisory Board Chairman, AŽD Praha s.r.o.In Prague Jan. 24, 200769

Annex No. 1: AŽD Praha s.r.o. 2005/2006 Statement of FinancesAnnex No. 2: Cash flow reviewAnnex No. 3: Review of equity change during 2005/2006Annex No. 4: Report regarding relations between linked persons according to § 66a of Commercial Codeduring the period from 1.10.2005 till 30. 9. 200670

71 Railyard at Praha Main Station

This Annual Report has been prepared according to Accounting Law in force and represents the state as of 30. 9. 2006.© AŽD Praha 2007

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