ECONOMIC DEVELOPMENTAND ITS INFLUENCE ON BUSINESS OF INEKON GROUP, A. S.

VSTŘÍCNOSTKOMPLEXNOST

NADNÁRODNOSTAKCELERACE

PROFESIONALITA

Josef Hušek,Managing Director and Chairman of the Board of INEKON GROUP, a.s.

22nd May 2009

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INEKON GROUP – BASIC FACTS

INEKON GROUP is a professional with international contacts and complex services, who is able to comply with wishes of its partners.

CZECH GLOBALLY ORIENTED, COMMERCIAL - PRODUCTION HOLDINGInekon Group was established as a purely private Czech company in 1990. From the beginning commercial activities - mainly export of rail vehicles and import of raw materials for chemical industry it gradually expanded into a commercial-production holding that specialises in four main lines of business:

Rail Vehicles Chemistry Software Programmes

Tram CarsLocomotives

and Carriages

Permanent WaysUrban

Transportation Systems

Cement PlantsPowert Plants

SewageTreatment Plants

Car Care Products Bussines NavigationProducts for Sports

GluesFertilizersCleaning

EquipmentCorporate Planning

Profitability Management

Strategic Projects

Capital Equipment

INEKON GROUP – GLOBAL BUSINESS ACTIVITIES

IMPACT OF THE CRISIS ON SALES OF INDIVIDUAL COMMODITIES

Reduction of consumption and demand

Limited investment

options

Cuts of prices and margins

Details and quality decide

INEKON GROUP

Urban rail transport and

linesRailway transport and

linesEnergy

Other fields of businessCement works export

Urban Rail Transport and Lines

HUNGARYTram delivery tender opened untypically in Forints instead of Euros

INEKON GROUP manufactures trams of own construction. These are operated in the CR but for instance also in South America. The company also specialises in modernisation of older types and construction of lines for mass urban transport.

Plunge of Forint Exchange RateSuppliers face the risk of loss due to unexpected exchange rate differences

UNITED STATESParticipation in tram delivery tenders restricted by the condition of manufacture in USA

ProtectionismTightening of „Buy America“ conditions should start the domestic industry, but restricts competition

RUSSIACities suffer from reduction of tax incomes, for this reason they are forced to limit their investment expenses

Investment limitationModernisation of trams and construction of lines are often postponed „indefinitely“

ALBANIADespite granted licence for operation of railways in the country we cannot commence realisation

Limited lendingThe banking syndicate, that was supposed to provide loan coverage, require additional guarantees

SERBIAA decision on realisation of railway corridor modernisation worth Euro 300 million

Financial crisisRealisation of job is prevented by lack of free funds in the interbank market

AZERBAIJANA long-term intent to modernise locomotives and facilities

Lower tax incomesPlunge of income side of the budget led to limitation of state loans

Railway Transport

INEKON GROUP is a traditional supplier of railway vehicles. Owing to Inekon, Czech locomotives are operated in Russia or Cambodia. We also ensure deliveries of spare parts to Vietnam, Turkmenistan, Uzbekistan, Syria etc.

Cement Works Export

IRAQ

Kuwait investors announced their interest to join the project of building cement works in Iraq with Euro 328 million

EGYPTA contract for construction of cement works near the capital of North Sinai, Al Arish, signed last year

State monetary policyThe commencement of realisation is subject to making a down payment in free currency, which has been prohibited by state bodies due to building of state reserves

Risk assessmentHowever, banks recommended realisation of the investment only after the global crisis ends

Cement works export belongs among the strongest lines of INEKON GROUP business. Signing of contract worth Euro 115 million in 2006 was a major breakthrough in the stagnating business connection with Vietnamese Socialistic Rep. The company, however, has also signed contracts with other countries.

VIETNAMDelay of realisation progress due to necessity to ensure sufficient financial coverage of bank loans

Slump in real estate pricesDue to economic crisis, the investor had to ensure additional guarantees for loans to banks for down payment provision

Power Plants Export

SOUTH AMERICABuilding of new power plants and modernising of existing works in connection with long-term environmental projects

INEKON GROUP realises delivery of turnkey projects in the field of energy through its subsidiary company INEKON POWER. INEKON however also offers individual parts, partial components or spare parts.

THE CZECH REPUBLICProject of biomass power plant construction in Domoradice already received the Building Permit.

CHANGE OF BANKS‘ BEHAVIOURThe banks prolong the 0.5 billion CZK down payment negotiations despite the fact, that project payback period is estimated at mere 3 to 4 years.

FALL IN OIL PRICESIn addition to economic crisis, the realisation is complicated by natural disasters and reduced incomes of budget based on oil sales

Other Fields of Business

MANAGERIAL INFORMATION SYSTEMSDue to lack of free funds in the market, companies postpone the purchase of corporate management information systems. Companies try to gain subsidies from the European Union.

CONSUMABLE CHEMICALSThe economic crisis also has its positive consequences – people focus on cheap products of medium quality. DRUCHEMA supported the customers‘ interest by innovating a number of products and by extension of the already rich portfolio.

Through subsidiary company INEKON SYSTEMS, INEKON GROUP provides its own methodical and software solutions of corporate management support. Another subsidiary company – producers cooperative DRUCHEMA – is a leading Czech producer of consumable chemicals.

WHAT TO DO IN ORDER TO HANDLE THE ECONOMIC CRISIS

1. We diversify the portfolio of banks that we collaborate with in the process of realising individual jobs

Reaction to: Behaviour of banks, limited lending, conditions of risk assessment, lack of free means in the market

2. We increase the intensity of acquisitions and respond to any enquiry in all commodities

INEKON GROUP BETS ON DIVERSITY AND SWIFT REACTION

Reaction to: Lower volume of enquiries and tenders, reduction of investments, protectionism

WHAT TO DO IN ORDER TO HANDLE THE ECONOMIC CRISIS

3. We invest in innovations and diversify the range of products and services that we tailor make for our customers

Reaction to: Change of purchasing and investing behaviour

INEKON GROUP BETS ON DIVERSITY AND SWIFT REACTION

WHAT TO DO IN ORDER TO HANDLE THE ECONOMIC CRISIS

4. To a maximum extent we use the insurances of EGAP that cover project costs up to 99% share

INEKON GROUP BETS ON DIVERSITY AND SWIFT REACTION

Reaction to: Tightening of conditions for provision of bid bonds and performance bonds by banks

5. We strengthen the long-term good relationships with our suppliers and business partners

For almost 20 years it had not happened that INEKON GROUP would lose a business due to the fact that EGAP would not provide insurance,this even holds true in such jobs as delivery of trams to the USA or delivery of nuclear power plant equipment to Ukraine.

CONCLUSION

The Crisis and Inekon Group?

•We bet on diversity of fields and spheres of business•In the event that there is a decline in one activity, we are able to be successful elsewhere•To our partners we offer mutually supplementing services at a high level of quality•We are able to ensure financing of projects even during times of crisis

We are a strong and stable partner who is able to open the

door for its customers and strengthen their position in the domestic and foreign markets.

The situation in last months has been critical. However, we believe that owing to collaboration with EGAP and ČEB we will find ways of how to overcome all obstacles and achieve success.

THANK YOU FOR YOUR ATTENTION

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