Provided Services

Commonly Managed Activities in the PROMET GROUP:

Risk Management

The  PROMET GROUP has been developing successfully the integrated risk management system aimed to minimize risks related to Company business activities for  several years already. Currently, when the crisis of US mortgages has been still more and more expanding, and its impacts jeopardize realistically also the Old Continent, the management mostly of financial and business risks is one of the top priorities in the Group.

The risk management in the Group is made centrally directly from the headquarters, and, in this way, we use the synergic effect in negotiations with insurers, application of  special software in information gathering and analyses. In order to measure the general risk exposure of the Company, and in order to create a risk catalogue or map, we  bought a specialized  software “Risiko kompass” from the German company  FutureValue Group AG in 2007. In relation to our perceiving current growing risks following from the situation in the global economy, we consider an investment in acquisition of another  software in this Company, which would enable us to carry out risk simulations for respective projects.

The risk management monitors, ensures or reduces following main risk types:

Risk of Damage to Property or Liability Title - This risk is transferred by us as much as possible to insurance institutions, where we cooperate with experienced brokers.

Commodity and Exchange Risk -  The PROMET GROUP has been using successfully   hedging  of the exchange risk for several years already, in the course of  2006 together with development of business activities to commodities traded at LME (London Metal Exchange); we have started also with commodity  hedging. This strategy proved to be much suitable especially at the second half of  2007, when a mortgage crisis occurred resulting into significant fluctuations in the rate of change of Euro and US dollar. Currently, hedging  is  vital for us since, in contrary to opinions of some leading analytics, we are afraid the credit crisis will extend out of the  USA borders and will become a global crisis, which, most probably, will cause a fall of the Euro rate of exchange to US dollar and, probably, will also result into the Czech crown slowdown.

Risk  of Credit Failure - To hedge a credit failure, we prepared a strategy in the course of years which is based on  hedging of receivables, where we closely cooperate with the insurer Atradius. Another pillar is thorough determination of delivery limits for particular customers and, especially, measurement of exposure level to the credit risk, for which we mostly use the  CaR (credit at risk) indicator.

However, the risk management is not only oriented on risk transfer and hedging but, together with a number of directives and procedures, it makes effort to decrease also other potential operation risks or their consequences.

Controlling

Controlling is perceived within the whole Group as an essential  information pillar for  strategic decision-making and thorough cost control. Controlling, however, deals also with activities out of the Company; carries out fundamental analysis of the external environment, provides backgrounds for communication with Bank institutions, evaluates development of macroeconomic and  mesoeconomic environment where early identification of potential opportunities and threats is its key objective.

In the course of 2007, a specialized database software was implemented in the  PROMET GROUP, which unambiguously improved the quality of reports and control of the  microeconomic  situation of the Company. To the future, we plan further development of the system so as to provide early warning for potential deviations from the planned progression and development of the Group. With respect to the strong development of the Group as a whole, the Controlling Department was strengthened at the beginning of the year by a new experienced member in order to keep the quality of services rendered to the Group on a top level.

Treasury Department

The Treasury Department presented itself in the final consolidated  form in the course of  2006, and it was established in form of a planned transformation in the previous period  from the former Financial Department centralized in the parent company  PROMET GROUP, which formerly only provided payment contacts of respective companies of the  PROMET  GROUP, to the Treasury Department - planning and controlling short-term and long-term cash flow of the Group, evaluating the  payment discipline  of customers as a supporting activity for the Sales Department in the Group, controlling the liquidity of the  PROMET GROUP, and procuring efficient external resources for necessary capital assurance of the Group operation. This transformation was significantly contributed to by application of the Group Cash pooling  and thorough financial planning.

The team of the Treasury Department of the PROMET GROUP respects the following values in relation to work and problem addressing:

• Reliability
• Professionalism
• Openness and activity
• Innovative and creative approaches.

The Treasury Department is an important partner for other parts of the companies within the PROMET GROUP.