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

1. VSTŘÍCNOSTKOMPLEXNOSTNADNÁRODNOSTAKCELERACEPROFESIONALITA ECONOMIC DEVELOPMENTAND ITS INFLUENCE ON BUSINESS OF INEKON GROUP, A. S. Josef Hušek, Managing Director and Chairman of the Board of INEKON GROUP, a.s. HELPFULNESSCOMPLEXITYMULTINATIONALITYACCELERATIONPROFFESSIONALISM 22ndMay 2009

2. INEKON GROUP – BASIC FACTS CZECH GLOBALLY ORIENTED, COMMERCIAL - PRODUCTION HOLDING Inekon 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 Capital Equipment Cement Plants Tram Cars Car Care Products Bussines Navigation Locomotivesand Carriages Powert Plants Products for Sports Strategic Projects Glues Profitability Management SewageTreatment Plants Permanent Ways Fertilizers UrbanTransportation Systems CleaningEquipment Corporate Planning • INEKON GROUP is a professional with international contacts and complex services, who is able to comply with wishes of its partners.

3. INEKON GROUP – GLOBAL BUSINESS ACTIVITIES

4. IMPACT OF THE CRISIS ON SALES OF INDIVIDUAL COMMODITIES Economic crisis Limited investment options Cuts of prices and margins Details and quality decide INEKON GROUP Reduction of consumption and demand Urban rail transport and lines Railway transport and lines Energy Cement works export Other fields of business

5. Urban Rail Transport and Lines 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. HUNGARY Tram delivery tender opened untypically in Forints instead of Euros Plunge of Forint Exchange Rate Suppliers face the risk of loss due to unexpected exchange rate differences Protectionism Tightening of „Buy America“ conditions should start the domestic industry, but restricts competition UNITED STATES Participation in tram delivery tenders restricted by the condition of manufacture in USA RUSSIA Cities suffer from reduction of tax incomes, for this reason they are forced to limit their investment expenses Investment limitation Modernisation of trams and construction of lines are often postponed „indefinitely“

6. 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. ALBANIA Despite granted licence for operation of railways in the country we cannot commence realisation Limited lending The banking syndicate, that was supposed to provide loan coverage, require additional guarantees Financial crisis Realisation of job is prevented by lack of free funds in the interbank market SERBIA A decision on realisation of railway corridor modernisation worth Euro 300 million AZERBAIJAN A long-term intent to modernise locomotives and facilities Lower tax incomes Plunge of income side of the budget led to limitation of state loans

7. Cement Works Export 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. IRAQKuwait investors announced their interest to join the project of building cement works in Iraq with Euro 328 million Risk assessment However, banks recommended realisation of the investment only after the global crisis ends State monetary policy The 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 EGYPT A contract for construction of cement works near the capital of North Sinai, Al Arish, signed last year VIETNAM Delay of realisation progress due to necessity to ensure sufficient financial coverage of bank loans Slump in real estate prices Due to economic crisis, the investor had to ensure additional guarantees for loans to banks for down payment provision

8. Power Plants Export 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. SOUTH AMERICA Building of new power plants and modernising of existing works in connection with long-term environmental projects FALL IN OIL PRICES In addition to economic crisis, the realisation is complicated by natural disasters and reduced incomes of budget based on oil sales CHANGE OF BANKS‘ BEHAVIOUR The 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. THE CZECH REPUBLIC Project of biomass power plant construction in Domoradice already received the Building Permit.

9. Other Fields of Business 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. MANAGERIAL INFORMATION SYSTEMS Due 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 CHEMICALS The 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.

10. WHAT TO DO IN ORDER TO HANDLE THE ECONOMIC CRISIS INEKON GROUP BETS ON DIVERSITY AND SWIFT REACTION • 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 Reaction to: Lower volume of enquiries and tenders, reduction of investments, protectionism

11. WHAT TO DO IN ORDER TO HANDLE THE ECONOMIC CRISIS INEKON GROUP BETS ON DIVERSITY AND SWIFT REACTION 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

12. WHAT TO DO IN ORDER TO HANDLE THE ECONOMIC CRISIS INEKON GROUP BETS ON DIVERSITY AND SWIFT REACTION 4. To a maximum extent we use the insurances of EGAP that cover project costs up to 99% share 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.

13. 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.

14. HELPFULNESSCOMPLEXITYMULTINATIONALITYACCELERATIONPROFFESSIONALISMHELPFULNESSCOMPLEXITYMULTINATIONALITYACCELERATIONPROFFESSIONALISM 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