Economy

In 2006 Západoslovenská energetika, a.s., with its 1,431 employees on average reached in 2006 net profit of 3,383 million SKK, more than a 14% increase over the year 2005.

	Overview of 2006 Indicators
	SKK Millions	2006
	Sales revenues	26,863
	EBIT (Earnings Before Interested and Taxes)	4,150
	EBIT – Margin (%)	15.4%
	EBITDA	4,901
	EBITDA – Margin (%)	18.2%
	Profit before taxation	4,240
	Net profit	3,383
	Note: Financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union

Finance in 2006
ZSE appreciateded its available financial resources in 2006 through repo-transactions and short-term time deposits and earned interest of 91 million SKK.

Loans
ZSE has an available credit line of 500 million SKK that is available in SKK or EUR. A portion of this credit is used for bank guarantees.

Profit Distribution
The General Meeting of ZSE held on 29th May 2006 approved the proposal for profit distribution for year 2005. In June 2006 the shareholders of ZSE - National Property Fund, E.ON Energie AG and EBRD London - received dividends in the total amount of 2.715 million SKK. Dividends were paid in Slovak Crowns. The value of one dividend per share is 475 SKK.

Finance of Daughter Companies
The loan from E.ON IS Slovakia in the total value of 70 million SKK provided in 2005 was prolonged and is payable in December 2007.

	Financial Operating Expenses / Income
	SKK Millions	2006
	Interest income	97
	Interest expense	(7)
	Financial costs/income - netto	90

	Trade Receivables and Payables
	SKK Millions	2006	2005
	Trade receivables and other receivables	2,402	3,793
	of which: overdue	1,221	1,480
	Trade payables and other payables	2,765	3,249
	of which: overdue	6	167

Trade Payables and Receivables
Overdue receivables decreased by 17.5% compared to the previous year, and the overall amount of trade and other receivables decreased by 36.7%.




















Investments
In 2006 ZSE invested SKK 2,025 million. Of this amount, SKK 558 milllion was invested into the development of industrial parks.

The Company invested SKK 1,775 million into the development of its distribution system.

The Most Important Projects

	SKK Thousands	2006
	Reconstruction of VHV power line 8754 Nové Zámky – Levice	102,510
	Reconstruction of distribution building 110 kV Bošáca II.phase including own consumption	70,356
	Reconstruction of distribution building 110 kV Križovany including own consumption	54,181
	Reconstruction of 110 kV outlets in substation Bošáca	45,478
	Reconstruction of substation Sládkovičovo, including RIS and environmental upgrade	41,132

Investments into environmental upgrades required over 43 million SKK and covered mainly substations.

	Investments
	SKK Millions	2006
	Distribution	1,775
	IT, telecommunication	90
	Facility Management	70
	Transportation	7
	Other assets	90
	Total	2,025

Forecast for 2007
In the forthcoming period until 2011, the capital investment and reconstruction works are expected to amount in 1.5 to 2 billion SKK annually for a total of approximately 8.5 billion SKK. In accordance with EU Regulation No. 2003/54/ES and Act 656/2004 Coll. on energy, ZSE is required to legally separate distribution systems operations from 1st July 2007.

Risks and uncertainties
The Regulation of European Parliament and Commission 2003/54/EC on rules for the internal market for electric power, implemented into the Slovak legal system by Act 656/2004 Coll. on energy, requires ZSE to perform so called unbundling - separation of activities related to the operations of distribution systems from the Company. The deadline for this separation was set up for 1st July 2007. Within this framework, ZSE plans to separate other commercial activities into other entity with respect to the same deadline. Because of the requirements for planning and implementation of all required processes, the unbundling project represents enormous changes in the internal as well as external ZSE’ environment.

Another big challenge for the Company is liberalisation of the energy market in household consumption segment which comes into effect on 1st July 2007. This means that every household will have an option to choose from all available suppliers that exist in the market. Free choice of a supplier which established a competitive environment is expected to increase the quality of supplied services as well as decrease the price that households currently pay. We believe in our good reputation and our strong customer orientation in providing services for household and all other market segments. We are convinced that our customers will stay with us in the future and will enjoy benefits of energy market liberalisation.

Significant Events that occurred after the end of 2006
The extraordinary General Meeting of ZSE on 25th January 2007 was called upon the request of the largest of the Company’s shareholders – the National Property Fund. The General Meeting approved changes in the Company’s executive bodies. Effective 25th January 2007, Peter Vlasatý, vice chairman of the Board of Directors, and Tibor Végh, member of the Board of Directors, resigned from their positions. Ján Rusnák was appointed as a new vice chairman of the Board of Directors and Vladimír Haršányi was appointed as a new member of the Board of Directors.
The Supervisory Board also underwent several changes. Chairman Peter Baláž, together with members Ján Ďurana, Igor Glosík, Martin Ondko and József Száraz resigned. Effective 25th January 2007, Ladislav Jančo, Ľuboš Majdán, Iveta Pauhofová, Andrej Danko and Milan Chorvátik were appointed new members of the Supervisory Board. On 13th February 2007 members of the Supervisory Board elected Milan Chorvátik its chairman.

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