The Comment of the Managing Board – 1999 year

Mostostal Gdańsk S.A. fully effected the phase of shaping the capital structure for 1999. As the end of the year Mostostal Gdańsk SA, as a dominant company (80-100% of capital)owned nine subsidiaries that were subject to the duty of full consolidation.

            The companies function within the field of activity specified in the Articles of Association of Mostostal Gdańsk Saensuring comprehension and complementarity of work and services provided by the Capital Group. At the end of 1999 Mostostal Gdańsk SA Capital Group consisted of the following companies:

  1. MG Pomorze SA – separated in December 1998 from the structure of Mostostal Gdańsk SA on the basis of construction and assembly unit located in Gdańsk.
  2. MG Żuraw SA – created as a result of internal restructure in1998. Provides transport and crane services.
  3. MG Probud SA – purchased in November 1997. The company provides general construction and elevation services. The company is located in Gdynia.
  4. MG Stal SA – purchased in December 1997. The basic scope of activity of the company is production of large size steel structures. The company is located in Białystok.
  5. MG ZUB Sp. z o.o. – created in Świecie to provide repair and modernisation services in construction industry.
  6. MG Stalton Sp. z o.o. – purchased in 1999. The company provides serviced as regards manufacture and assembly of steel structures. The company is located in Białystok.
  7. MG Melnik Sp. z.o.o. – created in Melnik – the Czech Republic, in 1999 in order to execute contracts effected by the Group in that market.
  8. MG Wisła SA – a company separated from the property of Mostostal Gdańsk SA in 1999 in order to cover market territory for which the company provides its services. The scope of activity includes manufacture and assembly of steel structures. The company located in Toruń commenced its activity in January 2000.
  9. MG Mazowsze SA – a company separated from the property of Mostostal Gdańsk SA in 1999 in order to restructure markets territory. Located in Płock, the company commendet its activity in January 2000.

Mostostal GdańskSA has not got any affiliated companies. Moreover, in 1999 Mostostal Gdańsk SA owned 8% of the share capital of Rudoport SA. That was not subject to consolidation.

      In 1999 total assets of the Capital Group increased by nearly 50% when compared with the previous year and it amounts to 196.904thousands zl. The biggest group of assets was fixed assets – 55% considering of material fixed assets and financial assets – 5,7%

      In the Capital Group achieved net profit of 9.482 thousands zl which was an increase by 44,6% when compared with the previous year. The increase is the result of the execution of contracts for main clients of the Company (Rafineria Gdańska SA, PKN SA. PERN “Przyjaźń” SA) and expansion to the German market (MG Probud SA). Apart from the expansion to the market of industrial construction – particularly large contract in petrochemical industry (hydrocracking, pipelines, tanks) – leading field of Mostostal Gdańsk SA group also provided services on the market of  residential construction (mainly MG Probud SA on domestic market in Germany). The Group executed contracts on general contracting basis (i.e. Pomorskie Hurtowe Centrum Rolno Spożywcze in Barniewice – Pomeranian Wholesale Agricultural and Food Centre, airport terminal in Gdańsk Rębiechowo).

      Major field of activity of the Capital Group is marine economy. In 1999 elements of oil rigs by Kvaerner were manufactured. The experience in marine sector may bring results of successful co-operation with Stocznia Gdynia SA which is a shareholder of Mostostal Gdańsk SA (21,86% shares and 16,32% votes at the General Meeting of Shareholders).

      The Group initiated execution of developing investments that are to be expanded by the Group in the future. In order to do that, in the second part of the year the Company purchased property in Warsaw and in Gdańsk of the total value of over 25 million zl.

      The Capital Group will develop towards the extension of market related services. In order to achieve that there have been initiated a restructuring process as regards production and management organisation that will strengthen market standing of the companies in the Group (including merger of both Białystok companies, investing in production facilities and new technology). In the next three years the Group plans to increase significantly its participation on the domestic construction market.