Chairman’s Statement

Dear Shareholders, Ladies and Gentlemen,

The energy industry in the Czech Republic is entering its most significant stage of economic transformation. The parallel implementation of material system changes, such as the construction of Temelín Nuclear Power Station, energy market liberalization, and privatization, are injecting considerable momentum into the sector and will act as a stimulus for the swift completion of transformation in the brown coal industry. The conduct of the new owner after privatization will be of key significance. This future owner should pursue goals which entail the dynamic exploitation of the potential offered by the privatized power industry and the effective use of domestic brown coal.
Those who can understand that the market environment will continue to develop will also grasp the need for changes in the organizational structure at both our mines. New subsidiaries have been established which have the capacity to draw on the very best production and human potential in order to cut costs and expand their production capacities beyond the Company’s territory. We will be seeking to continue this trend so that we can maintain our current share in the coal market. The future brown coal market will have to cope with major reductions and fluctuations in general demand. The market orientation towards the power industry and large heat plants will also intensify. Other channels available for the use of brown coal will evidently only be supplemental in nature.
Being able to navigate our way through these market conditions, select an apt investment policy for the immediate and more distant future, and handle environmental issues sensitively while bearing in mind the Company’s prospects is an ongoing, highly demanding task for the management of Severočeské doly a.s. The results posted in 2001 follow up on the successful operations of the mining company to date and the management and other employees deserve my sincere gratitude. The results we have achieved have again enabled shareholders to manifest their positive relations with towns and cities in mining areas, the health service, education, the arts, and sport as they decide how to distribute company profits.

Ladies and gentlemen, I take this opportunity of thanking, also on your behalf as shareholders, all our business associates for their assistance in the fulfilment of our tasks. I extend my gratitude to my colleagues in the Board of Directors for applying themselves so fully to the further development of Severočeské doly a.s.

Vratislav Vajnar Chairman of the Board of Directors and CEO