Czech Business and Trade 4/2010

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4 2010 MUCH-FAVOURED EMPLOYEE BENEFITS MODERN RELAXATION IN CZECH SPAS CAPITAL CITY OF PRAGUE NEW LAW ON PUBLIC CONTRACTS NO. 3 IN ELECTRIC POWER EXPORT CZECHCHEMICALAND PHARMACEUTICALINDUSTRY SupplementofCzechBusinessandTrade 4 2010

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ZVVZ GROUP IS BASED ON MANY YEARS OF TRADITION OF COMPLEX SYSTEMS FOR VENTILATION, SEPARATION, AND AIR FILTRATION AND HARMFUL POLLUTANTS LIQUIDATION. „Hand in Hand ZVVZ MACHINERY, a.s. is specialised in: axial and radial fans, medium-pressure and high-pressure fans, fans for nuclear and thermal power stations, ventilation of mines, tunnels and underground spaces, industrial use, aerodynamic tunnels, thermal combustion including recuperation, driers, square and round pipes group I including accessories, sound dampers including accessories, canals and pipes including accessories, pressure vessels and autoclaves, stationary pneumatic transport components, components for nuclear power plants, piping group II and III including accessories, ISO containers (steel 20 – 25 cu. m, aluminum 37 cu. m), reservoirs, silos (for bulk materials, lime, …) steel construction. Production according to the customer’s documentation. Production from carbonic, stainless, and aluminum materials. Company ZVVZ-Enven Engineering, a.s. is specialised in equipment for: smoke and technological gases from solid and gaseous pollutants cleaning, pneumatic transport of bulk materials, air-conditioning and ventilation of nuclear power stations, air-conditioning of buildings, ventilation of industrial buildings, mines, tunnels, and underground. Major focus area of ZVVZ-Enven Engineering, a.s. is: fabric filters, electric and mechanical separators, pneumatic transport of bulk materials, stabilisers and heat air-air exchangers, air-conditioning and ventilation equipment, also for nuclear power stations, filter ventilation equipment and closing elements, also for nuclear power stations. ZVVZ MACHINERY, a.s., Sažinova 888, 399 25 Milevsko, Czech Republic, Phone: +420 382 551 111, e-mail: zvvz@zvvz.cz, www.zvvz.cz ZVVZ-Enven Engineering, a.s., Sažinova 1339, 399 01 Milevsko, Czech Republic, Phone +420 382 551 111 e-mail: info@zvvz-enven.cz, www.zvvz-enven.cz Tradition Reliability Partnership „from design to assembly“ with the Environment“

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| 4 I N T R O D U C T I O N When he assumed office recently, the Minister of Industry and Trade, Martin Kocourek, outlined several themes he considered as his main priorities. They include the energy safety of the Czech Republic, raising the competitiveness of Czech firms, reducing bureaucracy in business, and enhancing economic diplomacy. Martin Kocourek Questions of the Month for Martin Kocourek, Minister of Industry and Trade As one of your priorities, you pointed out energy market liberalisation. Can you be more specific? Energy market liberalisation is an ongoing process.The first step, which has already been taken, is the separation of electricity transmis- sion and its production, distribution, and mar- keting. A correct separation of manufactur- ers from firms distributing energy raises the competitiveness of the environment. Here it should be noted that transmission and distri- bution are now already regulated activities. A similar process is also taking place in the area of gas and heat supply. On the other hand, there are various burdens, such as the support of renewable sources, that will pose obstacles to raising the competitiveness of the Czech power industry. Using renewable sources, however, is a commitment which the Czech Republic has taken upon itself, so that this market distortion must be reckoned with. Many of these problems are being tackled by the Energy Act Amendment, whose draft has alreadybeenprepared.OntheEuropeanlevel, competitiveness can be raised by the creation of regional energy markets and the EU energy market. Energy safety is indeed a key priority. The principal requirement is that the gov- ernment update the State Energy Concept (SEC) with a 20- to 40-year outlook. The draft update prepared by Minister Tošovský is very well conceived, nevertheless certain correc- tions will have to be made. The current and expected energy situ- ation in the Czech Republic shows that we will need a new nuclear source … As regards primary sources, the situation is more or less stable on the long-term basis. Our plan is to strengthen the role of nuclear energy, as it appears to be feasible and ef- ficient. At the moment, I cannot see much scope for any dramatic changes in the ener- gy mix. We respect our commitment, which means that we will do our best for the Czech Republic in 2020 to be generating 13% of its energy output from renewable sources. In fulfilment of this commitment, the Gov- ernment has adopted a Renewable Energy Sources National Action Plan and a pro- gramme for the promotion of renewable energy sources. At the same time, however, we must clearly state that it is not within our capabilities to raise this commitment, as the Czech economy and Czech industry simply cannot afford it. The requirement for greater competitive- ness, however, does not concern only the power industry, but also other sectors. What is your plan to eliminate the current commodity dependence of Czech exports and to raise the competitiveness of Czech exporters on foreign markets? You are right, the dependence of the Czech economy on certain branches constitutes a threat for the Czech Republic. I think our response must be the creation of suitable conditions for innovative firms. It is in the area of innovation support in particular that a number of obstacles exists, begin- ning with the complicated and costly patent protection and ending with the inadequate commercialisation of applied research results. A number of measures will have to be taken to help to raise the innovative efforts of Czech firms and to strengthen international competitiveness in general. On the part of the Ministry, this will not mean raising fiscal expenses, but the creation of a system in which commercially oriented innovative plans of firms could be financed by private re- sources and assert themselves on foreign markets. The commercialisation of applied research and its practical use is a key to the strengthening and long-term sustainabil- ity of the Czech Republic’s international competitiveness. The times are long past when Czech firms frequently based their competitiveness on low labour costs. You have mentioned the complicated and costly patent protection. How do you see the current repeated attempts of the European Union to revive the EU patent project? I welcome the idea of a single EU patent sys- tem. Currently, intensive talks are in progress on EU soil, particularly on the language as- pect of the envisaged EU patent system. It is a basic issue on which the member states have been unable to agree for several dec- ades.The current patent system is fragment- ed and is very costly for enterprises, mainly due to the fact that, when awarded, the pat- ent must be translated into the 27 national languages. In my opinion, the undeniable advantage of the EU patent system is that it willmeanconsiderablesavingsforCzechen- terprises and will mean great simplification when seeking protection for new techno- logical solutions throughout the European Photo:MinistryofIndustryandTradeoftheCzechRepublicarchives

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5 | C Z E C H B U S I N E S S A N D T R A D E How Much Will the European Union Contribute and What Projects Will It Support? By joining the European Union, the Czech Republic has gained ac- cess to the EU’s internal funds. The sum appropriated to it for 2007- 2013 amounts to EUR 29.5 billion (EUR 4.2 billion per year on aver- age). Of the neighbouring states, only Poland will be receiving more: EUR 80.5 billion. The Czech Republic - the richest country of the Visegrád Four – is entitled to draw some- thing below 3% of GDP per year on average, Slovakia and Poland approximately 3%. Members can draw money from the struc- tural and cohesion funds intended for rural development,includingagricultureandfish- eries. The Czech Republic is receiving 90% of all European transfers from those funds, four-fifths of which go for the development of the infrastructure and human resources, environmental protection, innovation, and competition support. EU MONEY PIPELINE Sofar,theCzechRepublichaslittleexperience with EU money – the drawing from European funds in the 2007-2013 budgetary period has only just begun. Nevertheless, despite the re- cession, money drawn from European struc- tural funds in 2009 (EUR 2 billion, i.e. 1.9% of nominal GDP) added about one percentage point1 to the growth of the Czech nominal GDP. This cushioned the slump of the Czech economy, which in 2009 showed a 4.0% decline in terms of real GDP, less than was the case of Germany (-4.7%), the CR’s main trading partner. Despite the massive global recession, maybe European money even helped the CR to maintain a relatively high economic standard, the highest among the Visegrád Four, which corresponds to 80% of the EU27 average (in terms of GDP per capita in PPS). It is expected that, in 2010, the Czech Republic will cut from the EU structural fund cake a portion twice as large as that which it consumed in 2009. Theoretically, in 2010 structural funds could raise nominal GDP by 2% in comparison with the scenario not including EU subsidies. In general, it can be said that 2010 is a year of the rapid beginning of the drawing of European money, so that the impact of the flow of European money intothedomesticeconomymaybemoretan- Union. Saving money on the translation of patents, however, is not the only advantage. Another benefit would be that EU patents would have to be administered centrally by the European Patent Office. This would save businessmen the costs of legal represen- tation in the Member States connected with the validation or payment of maintenance fees. Total savings for businessmen derived from the introduction of a single EU patent system are estimated at approximately EUR 250 million per year. Let’s get back to priorities. How do you want to attain greater efficiency in the work of Czech economic diplomacy? The Ministry of Industry and Trade is striving for a more dynamic support of Czech exporters, based on a new model of the country’s commercial represen- tations in foreign countries. This could be done by the merger of the current commercial departments of embas- sies and the foreign branches of the CzechTrade and CzechInvest agencies. The commercial representation would be a flexible organisation representing Czech commercial interests. By the end of this year, I would like to present to the government a new project, the Export Strategy of the Czech Republic for the years 2011-2016. Laments continue to be heard from both domestic and foreign business- men, who complain of an excessive administrative burden linked with do- ing business… Combating bureaucracy is a never-ending process. We would like to abolish, or at least simplify, a number of regulations and ordi- nances each year. Each year we will analyse their impact, especially on small and medium- sized firms. For each new legislative motion, I want to introduce an obligatory assessment of its impact on businessmen. We are aware that it is necessary to simplify the business openingandclosingproceduresbynotrequir- ing businessmen to supply data which public administrationauthoritiesalreadyhaveintheir files. This means broadening the services of centralregistrationdepartmentssoastomake itpossiblefora largepartoftheapplicationsto be handled electronically. The amount of committed money is one thing, but the ability to spend it rationally is quite another. In this sense, the Czech Republic has had to cope with two major handicaps: initial delay in drawing money from EU funds and a large proportion of investments in the transport infrastructure, whichhasa lowerpotentialtoraisethefuture production capacity of the economy in com- parison, for example, with innovation and hu- man resources development support. Unfortunately, the amount of money drawn during the first quarter of 2010 grew by more than one-half, from CZK 70.4 bil- lion (approx. EUR 2.8 billion) at the end of 2009 to CZK 116 billion (EUR 4.64 billion), with the value of all applications for support submitted, but not yet approved, exceeding the aid promised for 2007-2013 by approx. EUR 2 billion (CZK 49 billion). To prevent los- ing a part of the money promised to it, the Czech Republic must accelerate the process of drawing to comply with rule “n+2” (for 2007-2010 rule “n+3”), according to which the member state will lose the unused money which it is entitled to draw from the various funds (operational programmes) if it does not use the money earmarked for the particular year, even during the next two to three years.

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| 6 ČEPS joint stock company operates the transmission system of the Czech Republic. ČEPS manages the transmission system and develops it as part of the European electricity network. ČEPS ensures equal and transparent conditions of access to the transmission system for all participants in the electricity market. ČEPS ensures the balance between electricity generation and consumption at any given time. SAFE AND RELIABLE ENERGY TRANSMISSION 220 / 400 kV ČEPS, a.s. Elektrárenská 774/2 101 52 Praha 10 Czech Republic phone: +420 211 044 111 fax: +420 211 044 568 e-mail: ceps@ceps.cz www.ceps.cz E C O N O M I C P O L I C Y Structure of EU funds in the CR (%, 2007-2013) Infrastructure and the environment: 40.3 Innovation, competition, convergence: 25.3 Human resources: 13.8 Regional development: 19.7 Technical support: 0.9 gible than ever before or after. According to a European Commission study (2007), thanks to European money, the Czech Republic is expected to accelerate its growth (by more than 1 percentage point each year) more quickly than, for example, Poland, Hungary, or Slovakia. In addition, higher production, but not consumption, will be responsible for more than three-quarters of the CR’s expect- ed additional growth of GDP, the European Commission said. In consequence, the em- ployment rate in the CR will rise by 7 percent- age points between 2009 and 2015. EUROPEAN FUNDS – PATCH FOR WANING DIRECT FOREIGN INVESTMENTS? Money from the European Union figured strongly in the Czech Republic’s balance of payments in 2009, when some CZK 42 bil- lion (approx. EUR 1.68 billion), or slightly more than 1% of the nominal GDP, flew into the CR throughtheEUmonetarypipelines.In2007,at the beginning of the new budgetary period, it was“only“ CZK 15 billion (0.4% of GDP). Money from the EU funds began to flow into the CR just in time – however, under the weight of the global recession, the stream of direct for- eign investments flowing into the country began to dwindle. In comparison with 2008, the flow of investments into the CR dropped by CZK 58 billion to 52 billion (approx. EUR 2 billion). If the CR proves competent enough in drawing money from EU funds, it may be looking forward to an even stronger stream of money flowing in from the EU in the com- ing years, estimated at CZK 100-200 billion per year (approx. EUR 4-8 billion, i.e. 2-4% of nomi- nal GDP). In times of uncertainty, money from the EU may become a welcome substitute for any potential decline in private foreign capital investment and may support the stability of the currency, as it happened in 2009. On the other hand, however, the accumulation of the flow of subsidies within a short period of time may cause the currency to fluctuate. Long- lasting massive strengthening of the currency may prove harmful for Czech exports and may undermine economic growth. Although European funds may fill the gap in the balance of payments created by a de- cline in foreign investments, this will not re- place their ability to raise production capac- ity and boost economic growth. Therefore, the Czech Republic must be prepared to face up to declining foreign investment as a result of strong competition from even cheaper countries and build a new growth model, based on higher added value production, focused more on services, human resource development, and innovation support. Helena Horská Economic Research Raiffeisenbank a.s. e-mail: helena.horska@rb.cz 1 ) Expected multiplier of European funds is 0.6. More details later in the text.

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Contact address: Ing. Miroslav Bílý, CSc., Ing. Martin Ivan Příční 29, 602 00 Brno, Czech Republic Telephone: +420 545 215 375, Fax: +420 545 215 357 e-mail: info@eco-building.cz CLPR IMPLEMENTS AND PROVIDES: Technological tests of waste and secondary materials – determining technological appropriateness. Technological solutions of concrete methods of waste liquidation and utilisation. Conceptual technical designs and projects, deliveries of technological complexes and equipment. Construction, design, and realisation of industrial buildings and technological facilities of structures in the area of ecologically harmless processing of waste and secondary raw materials. Complete engineering services related to the construction and actual realisation of turnkey projects. Drawing up documents and experts‘ assessments concern- ing the evaluation of the influence of structures, activities, and technologies on the environment (Environmental Impact Assessment). Ecological audits. Development and construction designs of technical means in the area of solid industrial waste processing, with subsequent utilisation in the form of know-how. Trade and consulting activities in the field of building mate- rials, industrial building, and waste treatment. AREAS OF REALISATION: Mixing centres for the production of optimally moistened and pumpable stabilisate from high-temperature and fluid fly ashes and ashes. Centres for the manufacture of solidificates from the pro- ducts of the desulphurisation of energetic resources and incinerating plants of solid municipal waste. Construction of disposal areas and road bases built using the technology of concentrated fly ash suspensions aggre- gate perfused with a fly ash suspension. Line routes pouring, maintenance of subsurface structures. Furnace modules for the burning of the Cinispor light syn- thetic aggregate. KNOW - HOW: Technology for the production and use of concentrated fly ash suspensions (KOPOS). Technology for the building of road bases (KAPS). Production of the Cinispor light synthetic aggregate from fly ashes, using the endless self-burning technology. Technology for the production of a stabilisate from the products of fluid burning. Method of continual mixing and moistening of solid powder to grain materials with liquids, and equipment for the realis- ation of this method. Technological equipment for pneumatic transport of loose materials. SELECTED PROJECTS AFTER THE YEAR 2000: Mixing centre for the OTOSAN fly ash mortar at Teplárna (Heating Plant) Otrokovice, STAPO MORAVA, a. s., 2001. Expansion of a mixing terminal (TM) 1 by adding the FGD- gypsum dosage facility at Sokolov-Svatava, Sokolovská uhelná, a. s., 2001. Reconstruction of the FK8 ground limestone transport, ČEZ, a. s., Elektrárna (Power Plant) Poříčí, 2002. Ground limestone transport to the FK5 operating silo, Dalkia Morava, a. s., Teplárna (Heating Plant) Olomouc, 2003. Repairs of end product dosage, Teplárna (Heating Plant) Otrokovice, a. s., 2004 Mixing centre for the production of a pumpable stabilisate at the Starobeševo Thermal Power Plant, the Ukraine, HYD- ROSYSTEM project/SES a. s., Tlmače, 2004. Optimisation of the ELE 2 desulphurisation, ČEZ, a. s., Elek- trárna (Power Plant) Ledvice, 2005. PS 1040 Dosage of bio-fuel for the K18 boiler, Chemopetrol Litvínov, project documentation for CHETENG Brno, 2006. Repair of the FP40 horizontal mixer, ENERGY Ústí nad Labem, a. s., 2007. Reconstruction of the FP65 mixers, ČEZ, a. s., Elektrárna (Power Plant) Ledvice, 2007. Desulphurisation at Plzeňská Energetika, a. s., Preparation of limestone suspension, a turnkey project for Tenza, a. s., Brno, 2009. Moistening of fluid fly ash – construction of an additional production line in a fly ash expedition silo, Hexion Speciality Chemicals, a. s., Sokolov, 2010. NZ 660 MWe ČEZ, a. s., Elektrárna (Power Plant) Ledvi- ce – Mixing centre for the production of concentrated suspension, being realised as a turnkey project for another supplier: KLEMENT, a. s., Řehlovice. ECO-BUILDING BRNO, S. R. O., IS A PURELY CZECH PRIVATE COMPANY, FOUNDED IN OCTOBER 1992, SPECIALISING IN PROJECT ENGINEERING. DURING ITS 18 YEARS OF EXISTENCE, IT HAS BECOME ONE OF THE SMALLER, FLEXIBLE, AND DYNAMIC COMPANIES ORIENTED AT THE REALISATION OF NEW, PROGRESS- IVE TECHNOLOGIES IN THE AREA OF EFFICIENT AND ENVIRONMENTALLY FRIENDLY PROCESSING OF MAINLY ENERGETICS BY-PRODUCTS (VEP) AND SECONDARY MATERIALS INTO STABILISED COMPOS- ITE MIXTURES, BOTH DOMESTICALLY AND ABROAD. THE COMPANY HAS HAD A CLPR CERTIFIED SYSTEM OF QUALITY MANAGEMENT, ČSN EN ISO 9001 : 2001, IMPLEMENTED SINCE 2004. www.eco-building.czwww.eco-building.cz

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| 8 A N A L Y S I S The survey has shown clearly both the achievements and the challenges facing private company owners. On the one hand, their advantage is greater flexibility and wide-ranging opportunities to identify and use the gaps in the market, even in times of crisis while, on the other hand, they are more dependent on their own resources and often crucially dependent on the per- son of the owner. This manifests itself most strikingly when the enterprise has reached a certain size, or if some unexpected event has befallen the owner. CRISIS – BEST TIME FOR INNOVATION Czech firms have confirmed the experience well-known for centuries, namely that crisis is the best time for innovation and daring action. In this way, many of them have suc- ceeded in areas which they would hardly have penetrated in times of prosperity, in A survey conducted by Price- waterhouseCoopers Czech Republic (PwC), which addressed the own- ers of important Czech firms and asked them how they were coping with the current complex economic situation and what their future plans were, has revealed that 60% of the respondents last year showed lower revenues; this year, however, 70% of companies expect a growth in profits. Their message to the new government is: less bureaucracy and more flexible labour legislation. Coping with Economic Crisis Is Easier than Managing the Growth of One’s Own Firm the face of competition from global corporations. This explains the optimistic evaluation of Czech businessmen in com- parison with their rivals: on a scale from 1 to 10 (1 = the best position in relation to rival firms), most owners see themselves in positions between 1 and 4. “Paradoxically, the optimism of Czech companies is largely the result of the economic crisis. A number of those companies managed their affairs wisely, even before the crisis, and used the slump as an opportunity to cut unnecessary costs, think about the real nature of their business and become aware of long-last- ing sources of value. Now they are prepared for future growth and expansion,” says Jiří Moser, leading partner of Pricewaterhouse- Coopers Czech Republic. BUSINESSMEN PURSUE A MEDIUM-TERM STRATEGY “Limited access to financing and the uncer- tain economic development in the Czech Republic and in other countries prompted a number of domestic enterprises to review their plans and concentrate on the environ- ment they know well,”Moser adds. An expres- sion of the cautious optimism of managers of Czech firms is that more than one-quarter (28%) of them consider the development of a new product or service the best opportu- nity to ensure growth. The leading repre- sentatives of domestic firms clearly realise the risks they will have to face in the near future: 60% of the responding general man- agers mentioned low-cost competition as an important threat to attaining their aims and more than half of the respondents also fear a permanent change in consumer behaviour and preferences. “The customer, in the first place, is not a mere proclamation but, ac- cording to the majority of company heads, is an absolute necessity for maintaining the company’s long-term growth. This means ensuring high-quality customer service, hav- ing the correct information about the market and the right people to meet the customers’ expectations,”Moser points out. CASH REMAINS KING Obtaining sources of growth will continue to be a challenge for most companies. More than a half (55%) of the general managers count on the fact that, in order to finance potential growth in the next 12 months, they will have to use sources generated inside the company. Only one-fifth (20%) are planning to borrow from the bank and one in every ten (10%) will rely on the credit market. “Banks remain cautious. The debts of many enterprises have already reached a level requiring company restructuring, in order to be able to obtain additional money for their further development, or a mere continuation of their business. Today, the winners are those who have managed to keep the companies’own capital on a satis- factory level,”continues Jiří Moser. STABLE PUBLIC FINANCES AND A FAVOURABLE BUSINESS ENVIRONMENT The survey has revealed that the business sphere primarily expects from the govern- ment the stabilisation of public finances (90%), stability of the tax system (88.5%), easing the administrative burden (78%), and more flexible labour legislation (73%). If the government “frees the companies’ hands” and allows them enough elbow room for business, this will raise the competitiveness of Czech enterprises much more than export support programmes or regional projects, according to the companies’general manag- ers. A good example would be the simplifica- tion of the complicated administration of the tax system. While reducing the tax burden may be a difficult task for the government to accomplish, the reduction of the administra- tive burden connected with the payment of taxes will prove advantageous for both the state and the taxpayer. The greatest motiva- tion for Czech owners in doing business is their craving for freedom when making deci- sions and their passion for the object of their business. Ranking far behind these strongly personal motives are factors such as securing personal or family finances, or success and prestige. A number of Czech firms and their owners are relatively young, so that it is natu- ral that they are not thinking about handing over the reins of their business – only 16% are considering a change in the ownership struc- ture in the next two years. In the longer-term outlook, nearly half of the respondents are expecting a change in the ownership struc- ture. Most owners considering the handover of their enterprise prefer either the sale of the company to a strategic investor (39%) or suc- cession in the family (35%). -red-

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1 1 | C Z E C H T O P The history of ZVVZ a.s., goes back to 1948, when the Janka Radotín factory started being built in Milevsko, South Bohemia. Today, a modern machine-building holding, ZVVZ GROUP - one of the respected European producers and suppliers of a complete air-conditioning portfolio contributing to a clean environment - is being formed. The company specialises in fans for aerodynamic testing tunnels that the company manufactures, as one of only three other producers in the world. This Czech product has been chosen by the German car company, Audi, and the Canadian University of Toronto, where American car compa- nies test their cars. European Firm in South Bohemian Milevsko ZVVZ GROUP HOLDING The ZVVZ Group will now be called ZVVZ GROUP, a.s. The following companies have split from the original joint stock company, ZVVZ, to become independent entities: ZVVZ- EnvenEngineering,a.s.,ZVVZEnergos.r.o.,and ZVVZ Invest s.r.o. All three had existed before, butassubsidiaries.Atthesametime,twonew companieswereformed:ZVVZNEMOVITOSTI, s. r. o., and ZVVZ MACHINERY, a.s. These changes, long in preparation, will ensure that all activities become more trans- parent and efficient, a fact which will be ap- preciated by our customers as well. All firms in the holding will be transparent and prod- uct-oriented towards their core business. Following these changes, the original home company, ZVVZ a.s., will become a“service” company for the holding and its firms. A new company, ZVVZ MACHINERY, has taken over all of its production and business activities. The existing divisions, Production, Air-Conditioning, and Fans and Megtec, have also become parts of the new company. ZVVZ MACHINERY has thus be- come the business partner for all existing and future contracts previously handled by the listed divisions. The newly created ZVVZ GROUP, a.s., whose only stockholder is GES INVEST, a.s., a Czech company, thus directly owns 80% of ZVVZ-Enven Engineering, a.s., 100% of ZVVZ MACHINERY, a.s., 100% of ZVVZ Energo s.r.o., 100% of ZVVZ NEMOVITOSTI, s.r.o., 100% of ZVVZ Invest s.r.o., and 100% of ZVVZ a.s. ZVVZNEMOVITOSTIwillhandleallmanage- ment of real estate owned by the holding. ZVVZ-Enven Engineering carries out com- plete business and engineering activities, in particular providing all supplies in the area of the separation and dust removal of solid and gaseous pollutants from waste and techno- logical gases. It also provides key-ready de- liveries for ventilation, filter-ventilation, and air-conditioning of industrial buildings, mines, tunnels, underground railways, civilian pro- tective shelters, and nuclear power plants. Nowadays, the company supplies filter-venti- lating equipment for the 3rd and 4th blocks of MOCHOVCE Nuclear Power Plant and aims to succeed in the competition for the supply of air-conditioning and filter-ventilation systems for the completion of TEMELIN Nuclear Power Plant and other nuclear power plants abroad. ThecompanyisactiveinCentralandEastern European countries, especially in Russia, the Ukraine, the Baltic Republics, Poland, Bulgaria, Kazakhstan, Slovakia, and now also in India. HEALTHY ECONOMY Consolidated economic results for last year show that the ZVVZ Group recorded rev- enues in the amount of CZK 1 660 million. Profit before tax was CZK 105 million. ZVVZ GROUP does not rely just on the strength of its own brand, it is also continuously innovat- ing its portfolio. Products are delivered with great added value, certified according to ČSN EN ISO 9001:2008. The company‘s ambitions are to further expand its operations and to strengthen its position as a sought-after and respected supplier of products and equip- ment for green-friendly machine building. Jaromíra Rottenbergová ZVVZ a. s. e-mail: jaromira.rottenbergova@zvvz.cz www.zvvz.cz STRONG, PRESTIGIOUS BRAND The ZVVZ brand has become one of the strong,prestigioussymbolsofCzechmachine building over the years. The company also supplies and manufactures equipment for the cleaning of combustion gases intended for heating plants, power plants, and inciner- ation plants. Important products of the ZVVZ brand also include fans of artificial blasts for burners in industrial operations, fans for road and aerodynamic tunnels, and the already mentioned ventilation for underground railways and mines. The company supplies air-conditioning tubing for ventilation and air-conditioning including accessories, also for nuclear power plants, and manufactures smoke flues and components of stationary pneumatic transport, including accessories. The company has modern manufacturing equipmentatitsdisposalandprovidesitscus- tomers with excellent services.These services are built on the pillars of qualified employees and an experienced management. ZVVZ‘s largest customers include leading compa- nies on the market, such as ČEZ, Vítkovice Power Engineering, a.s., Alstom, Škoda Praha, Skanska, ČKD Export, and Chemoprojekt.

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| 1 2 E N T E R P R I S E Luncheon vouchers, education, and insurance contributions continue to be the most popular tax-preferred benefits. The most favourite tax non-preferred benefit is the mobile phone. With the improving economic situation, 95% of Czech enterprises are reintroducing employee benefits, according to a survey conducted by the ING company and the Con- federation of Industry of the Czech Republic. Generally, the most fa- voured benefit is the mobile phone, provided by 80% of companies. Luncheon vouchers and company cars are offered by three-quarters of the responding firms. A permanent highlight among company benefits for several years now have been insurance products: 60% of employ- ers offer their employees pension insurance contributions and 30% life insurance contributions. Enterprises Reintroduce Employee Benefits EDUCATION BENEFITS ARE BECOMING INCREASINGLY POPULAR While the provision of tax non-preferred benefits is stagnant, firms rather choose to invest in tax-preferred advantages. The fast- est growing are education benefits, offered by 11% of firms. An interesting growth has been shown by life insurance benefits: 5% of companies are planning to raise their life insurance contributions or to introduce this system. In the case of complementary pen- sion insurance, this option has been chosen by 4% of respondents. “With the worsening of global economic conditions, firms be- came increasingly interested in insurance products. Besides guiding their employees towards greater responsibility for their fu- ture, these firms used their insurance con- tributions as motivation at a time when sal- ary increases were not the order of the day. Consequently, employers have got used to regarding benefits as an important motiva- tion for their employees and have decided to continue providing them, as interest in them keeps growing,”explains Jiří Běťák, Di- rector of ING Employee Benefits. TAX-PREFERRED BENEFITS The most popular tax-preferred benefits include lunch vouchers – provided by 75% of companies. A high percentage of com- panies also offer their employees educa- tional opportunities and complementary pension insurance. Lunch vouchers 75% Education 70% Complementary pension insurance 60% Life Insurance 39% Flu vaccination 24% Holiday bonus 20% Commuter bonus 14% Source: ING Photo:www.sxc.hu

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1 3 | C Z E C H B U S I N E S S A N D T R A D E ing a turn for the better. The most impor- tant are individual financial rewards, loyalty rewards for years of service or an extra week of holiday.“The economy is of basic impor- tance for ascertaining the usefulness of employee benefits. A number of essential reforms are being prepared and steps are being taken to ensure the recovery of pub- lic finances; this, in relation to tax-preferred benefits, is certain to provoke heated dis- cussion,” says Zdeněk Liška, General Direc- tor of the Confederation of Industry of the Czech Republic. SALARY IS WHAT REALLY MATTERS The survey conducted by LMC also shows interesting results. It reveals that, for 47% of people, the determining factor in choosing new employment is the salary. For one-fifth of employees, the decisive consideration is job description, 8% value most the assur- ance of a long-term perspective, while 7% consider the length of working hours most important. On the other hand, the most dissuasive factors for employees are the non-observ- ance of agreements on the part of the employer, excessive authoritative man- agement and zero pay growth. Career ad- vancement and self-improvement oppor- tunities play an important role in making the decision only in the case of a mere 2% of job seekers. Other advantages or the at- mosphere in the firm are of decisive impor- tance for just 4%.“The survey only confirms the priorities of people who opt mainly for financial certitude,” says LMC’s spokes- woman, Jana Skalová. An important moti- vational factor, according to LMC, is finding a work-life-balance, i.e. conditions created by the employer that will also allow the employee time for family life, his/her hob- bies and relaxation. SIGNS OF IMPROVEMENT APPEARING, ALBEIT SLOWLY The general economic situation in the Czech Republic is improving, yet at the moment most companies are hardly feel- ing any progress. Only one-third of the companies regard their current economic situation as being better in comparison with last year, while for another third the situation has remained unchanged and for the last third it has even worsened. Despite the improving economic conditions in cer- tain sectors, the crisis persists, particularly in construction and in some branches of the transport industry. TAX NON-PREFERRED BENEFITS 95% of the responding companies provide tax non-preferred benefits to their em- ployees, with an average of five different benefits. In larger companies, employees are offered even more benefits. The most popular among these is the provision of a mobile phone, followed by a company car; education ranks fourth. Mobile phone 80% Company car 75% Beverages 71% Education 64% Physical gifts/one-off 57% Sports opportunities 33% 13th-month salary 32% Employee loans 31% Culture 29% Health care (vitamins, rehabilitation) 24% Holiday bonus 18% Flexi-vouchers 14% Source: ING INTEREST IN COMPLEMENTARY PENSION INSURANCE IS GROWING AS WELL Complementary pension insurance proves to be an important indicator of the compa- ny’s position. Firms whose economic situ- ation has improved offer this benefit more readily (in 66% of cases) than those whose situation is felt as being worse (only 53% of firms). In the absence of tax non-preferred benefits, this role is played by rewards in the form of physical gifts or one-off pre- miums and contributions towards culture and health care. In addition, some 40% of companies have prepared yet other moti- vational measures for 2010. This trend can be observed primarily in the case of com- panies with a higher number of employees and firms perceiving their situation as tak- The highest percentage of companies (38%) offer their employees financial motivation bonuses in appreciation of their perform- ance, and a large number of firms pay their employees loyalty rewards for years of service. Other frequent benefits are an extra week of holiday or paid days off. Financial reward based on the perform- ance of individuals (individually) 38% Loyalty reward for years of service 25% Extra week of holiday, paid days off 14% Open-door day for family members, company excursions, team activities 11% Above-standard health care, physician 5% Work canteen meals/refreshments 5% Holiday bonus, children’s recreation 5% Work from home 3% Possibility of purchasing a 12-month public transport ticket 3% Reward – for raising the level of qualifications 3% Bonuses based on the company performance, working groups (non-individually) 3% Other 18% Source: ING FURTHER MOTIVATION FOR EMPLOYEES

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| 1 4 S E R V I C E S Spa Holiday in the Czech Republic – What a Hit! The Czech and Moravian spa industry has witnessed a period of development started after 1989. Gradually it has stopped relying on long-term tradition only and has adapted to both technical and medicinal innovations, as well as general trends of healthy lifestyle. eral months in the Czech Republic with the whole family and they appreciate mainly a significant enhancement of their health condition thanks to the unique Czech spa treatment especially for locomotive organs or metabolism. FANCY A RELAXATION SPECIALITY? Taking a break from work duties and stress, curing health problems or restoring strength during convalescence. Today the offer is not limited to classic spa stays only, or pro- grammes for seniors and children, but it also includes popular wellness programmes.These are made to measure and you can try pro- grammes for managers, anti-stress, weight loss, detox, or wellness & beauty. Czech spas promote the so-called medical wellness – the harmonic connection of the use of natural healing sources and qualified medical care for many wellness procedures and other ad- ditional activities (golf, Nordic walking etc.). ACTIVE SPAS Movementisthealphaandomegaofa healthy lifestyle. If you like to combine spas and golf, the oldest and best-known Czech golf courses are located near Karlovy Vary (www.golfresort. cz) or Mariánské Lázně (www.golfml.cz). An unusual relaxation is fishing which you can try inthespatownofTřeboň(www.trebon-mesto. cz) or in Toušen (www.slatinnelaznetousen.cz). Youcanenjoyspasinwinter,too.Skislopesand cross-country skiing tracks are close at hand in Jeseník,JánskéLázně(www.janske-lazne.cz),or Lázně Libverda (www.laznelibverda.cz). HOW ABOUT SOME BEER... ...well, not a glass of beer, but beer in a spa tub. The effects of a real beer spa can be tested in the Western Bohemian family brewery Cho- dovar in Chodová Planá (www.pivnilazne.cz). The Czech spa industry is unique in many re- spects – nowhere else in the world can you find such a concentration of curative springs as in the West-Bohemian spa triangle, which consists of the three famous spa towns: Kar- lovy Vary, Mariánské Lázně (Marienbad), and Františkovy Lázně. This collection of unique places would not be complete without Já- chymov and Jeseník. In 1906, experts in Já- chymov continued in the scientific discoveries made by Marie Curie and they were the first in the world to start using the curative ef- fects of radon-rich waters. Jeseník is famous thanks toVincenz Priessnitz, who founded the first hydrotherapeutic institute here in 1822. And what makes the Czech spa industry so unique? It is mainly the connection of high- quality medical care, progressive curative and rehabilitation methods with the use of natu- ral elements: mineral waters, curative peloids (peat and mud), natural gases as well as the positive effect of the climate. CZECH SPAS AREVISITED MOSTLY BY GERMANTOURISTS It is pleasing for Czech spa facilities that they continue to lure foreign visitors. The aware- ness of foreigners about Czech spa industry depends on individual countries. A relatively good awareness exists on all traditional for- eign markets from which the majority of for- eign visitors arrive. These clients chose Czech spas mainly for the high-quality curative ap- proach, i.e. the use of unique natural healing sources for spa procedures as well as the care of qualified medical staff. Neighbouring coun- tries, mainly Germany, which is at the top of the list of foreign spa tourist arrivals, appreci- ate the favourable ratio between quality and price. In Russia, from where more and more clients come here, they consider it a matter of prestige to spend some time in Czech spas. Clients from Arab countries come to our spas especially for the cure, often they spend sev- The local original reconditioning spa therapy uses a combination of curative effects of warm mineral water, dark beer, raw contents used for the production of beer and products of beer brewing, plus curative wraps, massages, and drinkingtreatments.Theaimoftheprocedures is the harmonisation of the functions of the body, spiritual repose, reconditioning and re- laxation. The procedures have curative effects on skin and hair, they relax muscles, warm up joints, and support the immune system. FOREIGN VISITORS IN SPA ACCOMMODATION FACILITIES Number of guests Average length of stay in days2008 2009 Guests total 674 313 647 568 11.3 Residents 337 392 341 520 12.8 Foreign guests total 336 921 306 048 9.7 Germany 193 799 176 560 9.3 Russia 68 237 54 102 13.7 Asian countries (not mentioned here) 21 699 22 535 7.2 Ukraine 7 893 6 456 13.3 Austria 5 396 5 515 6.9 Israel 4 339 4 466 13.8 European countries (not mentioned here) 4 822 4 365 9.9 Slovakia 3 594 4 345 5.1 USA 3 315 3 304 9.8 Poland 3 301 3 012 4.6 France 1 847 1 907 4.5 Italy 1 474 1 802 5.3 UK 1 692 1 592 4.6 Netherlands 1 531 1 421 6.8 Switzerland 1 246 1 252 5.3 Belgium 741 1 124 5.1 Sweden 878 1 081 5.1 Hungary 1 252 1 081 3.8 China 1 014 1 044 2.2 Source: CzechTourism Photo:CzechTourism

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The Hospital is currently building a science and research center – the International Clinical Research Center (FNUSA–ICRC) – in cooperation with leading Europen and U. S. institutions. The ICRC is to operate on a similar principle as the European Organization for Nuclear Research (CERN) and the International Space Station. The results produced by the scientific projects implemented at FNUSA–ICRC will facilitate effective prevention, earlier diagnosis, and mini- mally invasive and more efficient methods of therapy, in particular for cardiovascular and neurological diseases. Our added value consists primarily in an individual approach to each patient,basedonthepersonalattitudeofateamofrenownedprofessionalsusingstate-of-the art equipment. Our objective is to provide advanced care, individually tailored and applied to each patient or client. We place particular emphasis on prevention as the ideal way of avoiding many diseases and alleviatingtheeffectsofadiseasealreadyinprogress.Forthosewhodohaveadisease,weoffer diagnosisandtreatmentinthefollowingkeyprogramsattheUniversityHospital: Acomprehensiverangeofcardiovascularproblems,includingvascularsurgeryandcardiacsurgery Neurosciences – in particular neurology and neurosurgery Oncosurgery – surgical treatment of solid tumors in the following areas: General surgery, including thoracic surgery urology orthopedics Otorhinolaryngology neurosurgery Plastic and aesthetic surgery In the area of general internal medicine, we specialize primarily in metabolic disorders and diseases of the endocrine system, including diabetology and obesitology, and in nephrology and hepatology We offer comprehensive services in dental medicine Last but not least, we offer special diagnostics in the area of imaging methods – 64-256 MS CT, 1.5 - 3T NMR, biplane angiography Our hospital also provides its patients with leading anasthesiological and intensive care Our Pain Management Center provides treatment for chronic pain, including the implantati- on of stimulators and continuous pumps to eliminate chronic pain. THE COMPREHENSIVE SERVICES WE PROVIDE ALSO INCLUDE BOTH PERSONAL AND ELECTRONIC CONSULTATION. WE OFFER A WIDE RANGE OF SERVICES A leading facility with a long tradition, in continuous service since 1786 We can provide an escort for patients, if required We are a state co-funded organization, established by the Ministry of Health of the Czech Republic St.Anne’sUniversityHospitalBrno,Pekařská53,65691Brno,CzechRepublic,phone:+420543182003,e-mail:healthinfo@fnusa.cz,www.fnusa.cz

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| 1 6 S E R V I C E S CHOCOLATETO PAMPER COMPLEXION Compared to beer, chocolate spa baths are better known and more common. The Regeneration Centre in Buchlovice (www. laznebuchlovice.cz) has been using them for several years. Chocolate bath and wrap clear fine lines, return minerals and amino-acids to skin, and restore the protective skin layer. The hit of recent years has been a hot choco- late massage, which is offered by several spa facilities and wellness salons. It is suitable for smoothing skin, eliminating cellulite, support- ing metabolism or the relaxation of muscles. BENEFICIAL EXTREME Relaxation centres with cryotherapy – a cur- ative method using extreme cold in a cryo- genic chamber with temperatures reaching minus 160 °C – are very popular in the spa and wellness sector. Only a few years ago this therapy was a monopoly of the Beskydy Reha- bilitation Centre in Čeladná (www.brc.cz), but at the moment there are several such facilities in the Czech Republic. The principle of cryo- genic sauna is based on the fact that extreme cold mobilises unusual processes in the hu- man body. In an extremely short time vessels in the blood and lymphatic systems expand and the increased production of enzymes and hormones starts anti-inflammatory and heal- ing processes. The Czech Republic – Haven of Medical Tourism Medicaltourismisthephenomenonofto- dayandtheCzechRepublic,thankstothe goodreputationofitsplasticsurgery,is notlaggingbehind,atleastinthenumber offoreigntourists.In2009sixthousand foreignersmadeatriptolocalhospitals orclinics;thatissixpercentmorethan in2008.AccordingtotheCzechTourism AgencytheCzechRepublicandespecially Pragueissoughtafterforitsfinancially accessibleplasticandaestheticsurgery. Eventhoughplasticsurgeryisthemain attractionformedicaltourisminthe CzechRepublicforeignvisitorsarealso interestedindentistandorthopaedic treatmentandfertilitytreatment. PLASTIC AND AESTHETIC SURGERY IN THE LEAD A study in the field of medical tourism was carried out by Hilcom. It attempted to map out the current situation of the Czech cos- metic surgery in 2008. The study took into consideration the specific nature of medi- cal tourism in the Czech Republic – i.e. that it concerns individual doctors rather than clinics. “Some 45 plastic surgeons who took part in the study said that foreign clients made up 19% of all the operations they performed,“ cited Hilcom’s executive direc- tor, Pavel Hilbert.The largest number of cos- metic surgery patients came from Germany, followed by Austria, the UK, and Slovakia. The overwhelming majority were women (87%), and travelled to the Czech Republic in most cases for breast enlargements, eye- lid operations, and liposuction. Doctors also maintain that the number of foreign clients increases considerably when they offer to help to organise the trip to the Czech Re- public. Most of them are able to assist with arrangements themselves, while 19% work with specialist travel agencies. Satisfied cus- tomers then return home and recommend good doctors to their friends. Doctors stat- ed that personal recommendations are the most frequent way how foreign clients get the surgery door. But is the risk to which patients expose themselves during treat- ment in a foreign country outweighed by the lower price? The research shows that patients from other countries are better in- formed than the Czechs, as they have to dis- cuss their issue with the doctor over a long distance by telephone or e-mail. According to Pavel Hilbert, foreign patients stay in the Czech Republic an average of 3–10 days (depending on the kind of operation they are undergoing). OPERATIONS IN DEMAND IN THE CZECH REPUBLIC Foreigners most often request for example an operation of upper eyelids (approx. CZK 7 000 - EUR 280), breasts enlargement (from CZK 47 000, approx. EUR 1880), liposuction (from CZK 20 000, approx. EUR 800), face lift- ing (from CZK 27 000 – approx. EUR 1080), nose surgery or improvement (from CZK 27 000, approx. EUR 1080), ear surgery (from CZK 7 500, approx. EUR 300). BOOM IN REPRODUCTION According to the European Society of Hu- man Reproduction and Embryology (ESHRE), women who have fertility problems make a minimum of 20 to 25 thousand journeys abroad per year. One of the sought-after des- tinations is also the Czech Republic. Accord- ing to their poll survey, for example half of British women who took part in the survey went to the Czech Republic. How many for- eign clients visit the 26 Czech centres of re- productive medicine per year is not possible to even estimate. The offer of individual clin- ics can be found on the internet and the de- cisive factor for choosing the Czech Republic can be the price of treatment, which is 50% lower that in West-European countries. Tourists come to the Czech Republic on their own or with the help of agencies that mainly organise accommodation or aftercare. It is in- terestingthatclientsfromabroadcomemore often and that it is more often a higher class of visitors. It is caused not only by the open- ing of borders, but also by the good reputa- tion of Czech surgeons and competitive pric- ing – the cost of a surgery is 70% lower than in other Western countries. According to a Forbes league table, the Czech Republic is one of the top-ten international destinations for medical tourism. CAPACITY OF CZECH SPA FACILITIES Category year 2008 number of facilites number of rooms number of beds hotels ***** 4 470 914 hotels **** 56 4 437 8 241 hotels *** 37 2 065 3 843

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CONGRESS – ENTERTAINMENT GOLF – RELAXATION – WELLNESS CENTRUMBABYLONPROVIDESTHEIDEAL ENVIRONMENT FOR COMBINING A CON- GRESS WITH ENTERTAINMENT AND SPORT. THE CONGRESS SPACE ALLOWS FOR A NUMBER OF VARIABLE USES, INDIVIDUAL HALLS HAVING CAPACITIES OF BETWEEN 10 AND 950 PERSONS. EACH HALL OF- FERS A UNIQUE ATMOSPHERE. CUSTOM- TAILORED ACTIVITIES ARE A MATTER OF COURSE, AS ARE OUR ACCOMMODATING STAFF, ABOVE-STANDARD GASTRONOMIC SERVICES, AND A HELPFUL APPROACH TO- WARDS YOUR REQUIREMENTS. WE INVITE YOU TO BRING YOUR FAMILY AND FRIENDS ALONG TO REVIEW OUR FA- CILITIES. BESIDES TOP QUALITY HOTEL SERV- ICES, CENTRUM BABYLON OFFERS A WIDE RANGE OF ENTERTAINMENT OPTIONS FOR ALL AGE GROUPS. LUNAPARK FOR THE YOUNGEST, IS STYLED LIKE AN OLD- FASHIONED CZECH FAIR. OLDER VISITORS CAN ENJOY iQPARK – AN INTERACTIVE CENTRE OF SCIENTIFIC FUN — AND THE THEMATICALLY ORIENTED AQUAPARK. THE WELLNESS CENTRUM WITH A WIDE SELECTION OF PROCEDURES ON OFFER IN AN ANCIENT SPA ENVIRONMENT, IS AN INDISPENSABLE PART OF THE COMPLEX. THE JEŠTĚD GOLF CLUB IS AN ESSEN- TIAL PART OF CENTRUM BABYLON. IT HAS AN INTERESTING TERRAIN, LOCATED BE- LOW THE JEŠTĚD RIDGE. EACH OF THE 9 HOLES OFFERS A UNIQUE PLAYING EXPE- RIENCE AND SURROUNDINGS. THE GOLF COURSE EVEN HAS AN AREA DEDICATED TO CHILDREN – MONKEY BARS, SEE- SAWS, IQPARK EXHIBITS, INDIAN CAMP GROUND, AND A SCOOTER RENTAL. YOU CAN SPEND YOUR FREE TIME IN A NUMBER OF ENJOYABLE WAYS. CEN- TRUM BABYLON IS THE IDEAL VENUE TO COMBINE A CONGRESS WITH SPORT, ENLIVENING YOUR BUSINESS ACTIVI- TIES WITH RELAXATION AND ENTER- TAINMENT. CENTRUM BABYLON, NITRANSKÁ 1, 460 12 LIBEREC, PHONE: +420 485 249 202, WWW.BABYLONLIBEREC.CZ CENTRUM BABYLON has been awarded as the “Bes t Tourism Product in the Czech Republic” by the CZECH TOURISM agency this year. CONGRESS HALL GOLF JEŠTĚD WELLNESS LABYRINTH

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| 1 8 W E S U C C E E D “Olomoucké tvarůžky”Cheese Now Only Comes from Haná “Success is ours”is what the manu- facturer of this traditional Moravian cheese with its distinct aroma, known under the name of Olo- moucké tvarůžky, could say to him- self at the beginning of August 2010. Indeed, Olomoucké tvarůžky cheese was awarded the Protected Geo- graphical Indication of the European Union. The Czechs had been fighting for its registration for six years, and finally their efforts bore fruit… Hungarian Empire and further afield to Europe. But as the actual trading took place in Olomouc, the cheese was given the name “Olomoucké tvarůžky”. OLOMOUC SPELLS CHEESE If you say “Olomouc”, the first thing that springs to the mind of every Czech is the popular Olomouc cheese. Records featur- ing its manufacture go back more than 500 years. There is a museum in Loštice, in the manufacturing compound, documenting the history of “Olomoucké tvarůžky”, the only original Czech cheese. Old machinery and the original equipment for the crushing and pressing of curd are on display, with il- lustrations of how the ancient cheese-mak- ers lived. There are some thirty different varieties of this type of cheese, which visitors to the Mu- seum can buy in the workshop next to the manufacturing plant. For those with a pas- sion for this delicacy, there is a restaurant in the square, where they can choose from an endless variety of dishes prepared with this product, as well as the world’s first Olomouc cheese-vending machine. HOW IS IT MADE? Hardly anyone knows that Olomoucké tvarůžky is a very light cheese, which con- tains less than 1% fat. It is based on acid curd and salt. The mixture is left to mature for about 14 days. After that, the mixture is crushed, shaped, and put onto shelves in the drying house. Then the cheese is placed in maturing boxes and washed. After that, it is left to mature until the characteristic yel- lowish film appears on the surface. At this stage, the cheese is nearly ready and can be packed. The longer it is left to mature, the stronger the characteristic aroma becomes. THEY OPPOSED IT, BUT FAILED The Germans and Austrians were strongly opposed to the award of the protected designation. Their manufacturers use the name “Olmützer Quargel” and were unwill- ing to give it up. In the end, their objections were overruled. The firm A.W. now expects that, owing to the designation, their sales abroad will increase. Exports now account for approximately 15% of their total sales. The cheese is exported to Poland, Hungary, Austria, and Slovakia. OTHER PROTECTED PRODUCTS Last July, Olomoucké tvarůžky cheese was added to the more than twenty other prod- ucts from the Czech Republic boasting the protected EU designation. These include, for example, Marienbad Wafers, Hořice Wafer Tubes, Pardubice Gingerbread, and Czech Beer. Recently, several Czech cheeses have obtained protected designations. About six months before Olomoucké tvarůžky, the South Bohemian Niva Blue Cheese obtained the EU Protected Geographical Indication. This means that now Olomoucké tvarůžky can only come from Haná, region around Olomouc. Should anyone disobey this regu- lation, he or she will face sanction. Currently, real Olomoucké tvarůžky cheese can only be purchased from the firm A. W., which was foundedin1876inthetownofLoštice,some 30 kilometres from the city of Olomouc. The firm was founded by Alois Wessels, ancestor of today’s owners, who, while using mod- ern technology, have retained the original recipe unchanged. “It is a recognition of the originality of this unique Czech cheese. Thanks to this desig- nation, customers have the guarantee that the cheese was made according to the original recipe and that it is not an imitation, but the genuine article,”Jaroslav Kovář, Chief Executive of the firm, says. A UNIQUE MANUFACTURER Only this one particular cheese manufactur- ing plant has remained. According to Kovář, however, this was not always the case. “In certain periods, there were several hundred such plants around,”he says. Why is the adjunct attached to this cheese related to Olomouc, when it is made in Loštice? It is a kind of cheese which used to be produced in cottages in the Haná re- gion, and what the peasants could not con- sume themselves, they took to the market in Olomouc. There, the cheese was sold and later loaded on to carts and even trains, and transported to all parts of the then Austro- “Olomoucké tvarůžky“ cheese Photo:A.W.archives,J&B–JosefBlažek'sarchives

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1 9 | F A M I L Y C O M P A N Y The T-STIX packages are to substitute the dipping tea bags or the instant coffee dosing with a spoon. They allow for the hygienic, simple and modern serving of hot beverages. Packages of this type are also very effective from the economic and ecological view (machines – cheaper than tea sachet packing machines, easy operation of the machine by one person, minimisation of mess connected with the use of tea bags and spoons). When Quality Packing Is Needed Firms which can be described as family ones are not numerous, but the company called J&B – Josef Blažek is worthy of this description. When Josef Blažek founded a firm more than a century ago, he might have anticipated that a firm of the same name would be managed early in the third millennium by a bearer of the family name, his great-grand- son, Pavel Blažek. series of ABM packing machines was on markets throughout Europe. In 2000, de- velopment required larger production space and so the plant was moved toVlašim, where it is still based. As time went on, clientele also came from Africa and America, and later from Australia. The company manufactures mainly one-portion packing machines. Its specialities are the „STICKPACK“ packing into stick sachets, and triangular-shaped packs for sugar and other items. From the beginning, the company has done its best to tailor each machine to a particular client. THE COMPANY IS EXPANDING The company is exerting great efforts to develop new machines and dosers, and to increase the quality of its packing machines. Pavel Blažek’s endeavours for the develop- ment of new types of packages has been rewarded. His patented products include the “double-stick”, a new type of wrapping which is very promising.The absolute major- ity of the manufactured packing machines are exported and the network of interna- tional agencies is expanding. In addition to other products, the exports include one- portion packing machines, and machines for the packing of cream, instant coffee, ketchup, mustard, mayonnaise, salad dress- ing, cheeses, ice creams, and many other products. Also included is the entire equip- ment for the automation of packing lines. PRESENT-DAY J&B – JOSEF BLAŽEK As a company which wants to remain suc- cessful, J&B is constantly striving to increase productivity by modern pro- duction technologies and the organisation of production. Besides the one-portion packing into sachets, it special- ises in the“Tetraeder”packing. The highlight is the T-STIX package, which gained the Worldstar Award for Packaging Excellence in 2008, and in the same year won a prize in the prestigious national Package of the Year competition, organised by SYBA, the Czech Packaging Institute, members of the World Packaging Organisation. The com- pany has direct representation in Germany, France, and Greece. Since 1991, it has man- ufactured more than 600 machines for 40 countries worldwide; 99% of its products are exported. FAIRS The end of 2010 is J&B – Josef Blažek’s time for participation in foreign fairs. At the end of September, its representatives returned from the FachPack 2010 Fair held in Nu- remberg, and are preparing for the Chicago PACK EXPO International 2010. At the former event, they introduced a new type of pack- age, the thus named double-stick with two sections – one for sugar and one for a spoon – which was included in the shortlist nomination for the Deutsche Verpackung Preis. Let us wish many commercial achieve- ments to the family firm which has adopted the slogan“The satisfaction of our customers and the quality of packing machines are crucial priori- ties for all of us.” Pavel Blažek’s great-grandfather established a firm, at that time registered as“mechanical trade”, in the town of Chlumec nad Cidlinou on 1 February 1908. The enterprise was de- veloping well until 1951, when the same fate befell it as most other companies in the then-socialist Czechoslovakia – the whole plant, including the entire furnishings and buildings, was nationalised. The firm was liquidated and thus its history was discon- tinued for forty years. MODERN HISTORY One year after the regime in Czechoslova- kia had changed, i.e. in 1990, the founder’s grandson, Josef Blažek, resumed company operations, re-opening its modern history. The nature of business was “construction of mechanically driven machines”. The com- pany began developing and manufacturing packing machines and immediately headed to foreign markets. The breakthrough came in 1993 with the commencement of co- operation with a German seller, Schwarze – Automation GmbH. This opened the doors to international markets for the small Czech firm. Success came soon, as did the estab- lishment of contacts at world fairs of pack- ing equipment. In 1997, J&B – Josef Blažek’s

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| 2 0 S E R V I C E S We Are On the Verge of Major Changes “The recession that has hit the econ- omy in 2008 is abating, according to the latest signals. From the point of view of the energy industry, which is measured in decades, it has been a very short period of time. It caused some projects to be temporarily put on hold, had a major impact on short term prices of electrical energy and gas, but the European Union‘s legis- lature and climatic policies have a far greater impact on the industry,”says Zuzana Šolcová from the Association of Energy Managers. heating and disconnect from the cen- tral heat supply, others will face further price increases, and at a certain point, either the given heat distribution system collapses be- cause of economic difficulties, or the state, regions, or municipalities will have to pro- vide subsidies. The first wave of problems is expected within the next three or four years. Following the political decision to uphold the mining limits, it is necessary to quickly finalise impact analyses for individual heat distribution systems and decide whether we wish to retain the heat distribution sys- tems and centralised supply, or not. How- ever, both cases will require a“plan” for the transformation of the heat industry to the new conditions. From the long-term point of view, the pri- ority is undoubtedly the renewal of energy sourcesandnetworksnearingtheendoftheir life cycle, and infrastructure development in the gas and energy industries to ensure safe supplies. A fundamental priority, concerning other industries as well, is the renovation of the ageing technical intelligence, i.e. increas- ingthenumberofstudentsintechnicalfields, improving quality and breadth of graduates‘ knowledge, and tighter interconnection of education programmes with the practice of industrial enterprises. Last but not least, implementation of new control systems for energy networks of the 21st century. Follow- ing the huge boom in energy industry devel- opment in the 70‘s and the beginning of the 80‘s and the subsequent thirty years of use, we must now renew the hardware, software, and human resources to maintain a strong and safe energy industry. The Czech Republic was the third larg- est exporter of energy in Europe and the fourth worldwide last year. Exports amounted to 13.5 terawatthours, which corresponds to burning about 5 million tonnes of coal. Do you think the Czech Republic will hold this position in the future, too? This is the result of several factors at work, starting with the liberalisation of the en- ergy industry and the accession to the EU, a decrease in the energy requirements of the Czech economy, and an increase in the utilisation of resources. The truth is that higher production meant faster depletion of coal reserves than expected based on original projections from around 2000. From the point of view of the industry, this was a short term issue and our export already culminated. Were it not for the economic recession, our export would be significantly lower than the 10TWH today, and would fall to zero in 2014. Thanks to the recession and other related processes it still exceeds 10 TWH, but I expect it to decrease rapidly and reach minimum amounts after 2015 or 2016. The reason will be an increase in demand related to the revival of the economy and the slowdown of the coal energy industry caused by the use of written off resources and the reserves of brown coal running low – giving us a great competitive advantage today, thanks to the low production costs. New steam-gas power plants do not repre- sent any competitive advantage over pro- ducers in Germany, and will not be a crucial factor in maintaining exports. New blocks of nuclear power plants will only become available after 2020. And even though they will cause a short term increase of surplus I do not expect our future exports to reach the levels of the recent years. What is the current layout of energy sources in the Czech Republic? A dominant role is still played by the brown coal energy industry which contributes over one-half of all electrical energy production. Nuclear power plants account for one-third and the rest is made up of renewable re- sources (almost 8%), black coal (approx. 3-4%), and natural gas (3-4%). However, we are on the verge of major changes. The contribution from renewable resources and nuclear energetics will double in the next fifteen years, natural gas will account for several times more than today, black coal energetics will practically disappear, and brown coal energetics will drop to one quarter. Our self-sufficiency in the area of primary resources will decrease. Are you aware of any strong trends influ- encing this industry? Thechangeinthestructureofresources,both in primary resources and in geographical distribution across Europe, and at the same time the growing non-uniformity of produc- tion caused by the influence of renewable resources. This necessitates overhauls of net- works and their development, development of control technologies and implementation of new generation control systems, and an Your Association collaborates on the preparations of the State Energy Policy of the CR. What do you see as priorities of this policy? From the short-term point of view, it is the transformation of the Czech heating indus- try which is facing decreasing supplies of coal. Attempts to secure replacement coal (imported, “overpaying” other consumers) or switching to other fuels, such as gas, black coal, or biomass, carry a number of construction and technological problems with it, especially higher prices of heat for thepopulationandbusinesses.Someconsu- mers may choose a different method of Photo:ZuzanaŠolcová'sarchives Zuzana Šolcová

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| 2 2 S E R V I C E S expansion of cooperation between both countries and regions. Integration of electri- cal energy and gas markets, as well as inte- gration of system operations on regional and European levels will also represent an im- portant trend in the following years. Greater participation of customers in the control of balance through new technologies and products can be expected mainly after 2015, even though the possibilities of intelligent networks in this area are being rather over- rated today. I am certain that one of the sig- nificant factors will be the renaissance of nu- clear energetics (NE) and the construction of new resources not only in nuclear countries but also in countries that have not used NE until now, such as Poland or Italy. In what way has the economic recession impacted the energy market? The recession that has hit the economy in 2008 is abating, according to the latest sig- nals. From the point of view of the energy in- dustry, which is measured in decades, it has been a very short period of time. It caused some projects to be temporarily put on hold, had a major impact on short-term prices of electrical energy and gas, but the European Union‘s legislature and climatic policies have a far greater impact on the industry. In the short term, it caused a decrease in demand for electricity which was accompa- nied by a drop in prices by almost one-half. However, the prices have already bottomed and will now grow. The recession‘s positive impact was to postpone the impending shortage of electricity, which had been pro- jected to start after 2013, by several years. It will now be partially balanced by the politi- cally supported expansion of renewable re- sources. The wholesale prices of electricity will not reflect this but the end prices will. And along with the costs of network con- structions it will bring the prices back to the trajectory they left in 2008. The topic of photovoltaic power plants is hotly debated in the CR. Do renewable re- sources (RR) have any future in the Czech Republic, and if so, which ones? RR certainly do have a future, all kinds of them. I expect the growth of production from RR not only to reach the required 13% in the CR by 2020, but to exceed it. It is, how- ever, necessary to re-evaluate the philoso- phy of support for RR and the pace of their development so that the support becomes just a temporary phenomenon enabling the development of technologies and their be- coming competitive, while monitoring the economical manageability of the support. It is a sad fact that the expansive develop- ment of photovoltaic resources during the past two years has practically drained the economical capacity of support for many years to come. The huge support for the economically least efficient production from RR caused by mistakes in legislation will, to a certainlevel,hamperfurtherdevelopment. However, in the long term I expect mainly biomass use in the heating industry, biogas stations for the production of electricity and heat, new generations of photovoltaic sys- tems with higher efficiency as supplemental resources in intelligent networks, develop- ment of solar thermal systems to supple- ment local heating, and also development of geothermal resources in the long term. It is a matter of course that wind energetics, which is one of today‘s most competitive RR, will see a great growth in production. Only hydro energetics is expected to expe- rience a very limited growth as the major- ity of the energy potential of water in the Czech Republic is already being used, and even the new pumped storage hydro plants will have a difficult position faced with new technologies for electricity storage. The Czech Republic must invest in the development of its transmission system. What are the strategies and priorities in this area? Thedevelopmentofthetransmissionsystem is absolutely vital to the Czech Republic‘s energetics safety. The priority is to renovate the ageing system, reinforce the transmis- sion capacity in the north-south direction, and connect new resources (nuclear power plants, new steam-gas resources, and wind parks). One of the most important issues is the acceleration of the approval process for new line constructions and ensuring access to properties which constitutes the great- est risk of construction delays. As it largely concerns a part of the European transmis- sion infrastructure, an effort will be made to secure financial resources from EU funds. A new generation of control systems as well as the strengthening of international cooperation are indispensable parts of this endeavour. With what foreign industry associations do you cooperate? Our Association mainly cooperates with IFIEC Europe (International Federation of Industrial Energy Consumers) which represents the interests of industrial energy users in Europe for whom energy is a significant component of production costs and a key factor of com- petitiveness in their activities in both Europe and throughout the world. We also cooper- ate with our sister Association of Energy Man- agers (ASENEM) in Slovakia and the German Verband der Industriellen und Kraftwirtschaft (VIK) – Federation of Industrial Energy Con- sumers and Energy Industry. Jana Pike Photo:www.sxc.hu

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DESIGN, PRODUCTION AND DELIVERIES OF PUMPS AND PUMPING EQUIPMENT FOR POWER ENGINEERING, PETROCHEMICAL INDUSTRY, WATER MANAGEMENT AND OTHER BRANCHES EXECUTION OFTURNKEY PROJECTS SIGMA GROUP a.s. – MAIN ADVANTAGES Long-term tradition – company established in 1868 Great experiences High-end products Relevant quality Own R&D More than 30 years of continuous deliveries for nuclear power engineering REFERENCES: Alstom, ArcelorMittal, Atomstrojexport, Belenergo, ČEZ, Enel, Mosenergo, Siemens, Slovnaft, Škoda Power, U.S. Steel; The long-standing and rich history and tradition of the company resulted in many references not only in Europe, but also in Asia, Africa, and South America. EN ISO 9001:2008 SIGMA GROUP a.s., Jana Sigmunda 79, 783 50 Lutín, Czech Republic phone: 00420 585 651 111, fax: 00420 585 944 258, e-mail: export@sigmagroup.cz www.sigma.cz SIGMA GROUP A.S. PERFORMS FOLLOWING ACTIVITIES AND SERVICES: consulting elaboration of offers and projects deliveries of pumps including accessories project and deliveries of pumping stations erection, supervision commissioning, testing maintenance, overhauling training of operating staff conventional and nuclear power engineering water management systems water treatment plants chemical and petrochemical industries mining and metallurgy agriculture, irrigation and drainage systems mechanical engineering and civil industry special categories for ecological, rescue and fire applications in the field of

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| 2 4 S E R V I C E S Piping Systems for State-of-the-art Power Stations In 2009, construction of a new 660 MWe super-critical power station in Ledvice, North Bohemia, started. Its trial operation is planned for 2012. It will be one of the most advanced power stations in Central Europe with gross efficiency of ap- proximately 47%. This, in compari- son with old coal-firing power sta- tions, whose gross efficiency is about 35%, means a significant reduction of CO2 and other emissions. One of the principal suppliers for the new power source is Prague’s Modřanská potrubní, a.s., the most significant Czech manufacturer of high-pressure connecting piping for the power industry. For the Led- vice power station it supplies“critical piping”, the technologically most demanding part of the plant, which connects the boiler to the turbine. To attain higher efficiency, the most advanced coal-fired power stations use hot-reheated steam systems with super above-critical steam parameters (tempera- ture 600 °C and pressure 28.0 MPa), requir- ing high-strength steel piping, which resists high pressures and high temperatures. For their production, the manufacturer uses X10CrWMoVNb9-2 high-temperature steel (ASME code SA 335 P92), made available on the European market only a few years ago. The pipes from this high-quality steel with external diameter 510 mm and wall thickness 80 mm must be bent and welded, and the seams must be heat-treated both in the shop and during site assembly. This naturally requires completely new process- ing technologies. MODERN BENDING MACHINES For the bending of large diameter pipes Modřanská potrubní uses two CNC ma- chines supplied to it by the Dutch firm Co- jafex B.V., suitable for bending pipes in di- ameters of up to 1 020 mm: a PB 1 000 and a completely new machine, PB 850 Special with high forming strength specifically designed for bending large steel sections with great deformation resistance. Both ma- chines use the induction heating principle for pipe bending. Due to the size of the sec- tions the bending process is slow and takes more than 23 hours. After bending, the bend is heat treated at a temperature of 1 050 °C, which is followed by accelerated cooling in a water bath and tempering at 770 °C. SHORTENING OF WELDING TIME Another important process in the manufac- ture of steam piping is welding of the com- ponents. Before the actual welding could start, trial welding of the pipes was carried out both by the manual electric arc welding method and mechanised orbital welding. Welding of this size of sections is very de- manding. It requires great skill and only very experienced welders are able to make fault- less welds. Just for illustration: manual mak- ing of one weld sized 528 x 80 mm takes more than 46 hours. Mechanised orbital welding means that the automatic weld- ing machine rotates around the joint and is ideal especially for field joints. The AUTOTIG 600 PC automatic orbital welding machine, which Modřanská potrubní uses for pipe welding, employs the method of butt weld- ing into the narrow gap. Its advantages are the possibility of using a single welding method to make the entire weld, including the root layer, significant reduction of acces- sory material, and mainly the shortening of welding time down to one-fifth of the time needed in manual arc welding. These inno- vated production processes at Modřanské potrubní were consummated by successful bending and welding tests in the presence of an independent notified person. The mastering of new technologies in process- ing new materials for super above-critical power station units is confirmation that Modřanská potrubní ranks among leading piping system manufacturers. The company has been in the piping systems branch since 1947 and during its existence has made deliveries of connect- ing piping for more than 300 power station units with an aggregate output of more than 50 000 MW to more than 20 coun- tries on four continents, including all Czech and Slovak power stations and most power plants in Eastern Europe. Photo:Modřanskápotrubníarchives Automatic orbital welding machine

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Tradition and professionalism • The most important Czech supplier of piping systems for power engineering • Inductive bends, HP fittings, special piping components, orbital welding etc. • Supplies for primary circuits of nuclear power plants and power plants with supercritical parameters • More than 60 years of experience in supplies for power engineering • Up to now supplied complete connecting piping for more than 330 power plant units with the performance of over 50 GW to 30 countries all over the world • Supplies according to ČSN, EN, DIN, ASME, GOST and API standards Modřanská potrubní, a.s., Komořanská 326/63, Praha 4, obchod@modrany.cz www.modrany.cz

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| 2 6 S E R V I C E S Renewable Sources of Energy: Biomass in the Lead Although the share of electric- ity generated from alternative resources in the Czech Republic is increasing every year, we are still lagging behind the European Union average. While, in 2009, the share of renewable sources in the produc- tion of electricity was roughly 7% in the CR, in the EU this share was one-fifth. The obligation of the Czech Republic to generate electricity from alternative re- sources ensues from the Accession Treaty signed in Athens in March 2003, which clearly states: “In 2010, the total share should be 8% and in 2020 the Czech Re- public should produce a further 5% of al- ternative energy.” The Czech alternative energy platoon is still headed by energy produced from bio- mass (approx. 31%), closely followed by hydroelectric power plants with almost 29%. The proportion of solar energy has risen sharply, although it is still insignifi- cant on the overall scale. Figures suggest that, in comparison with 2008, the increase is almost sevenfold. A similar boom to that of solar energy has been recorded by ener- gy produced from biogas. An 18% increase has also been recorded in the output of wind-power plants. As a matter of inter- est: in the European Union, hydroelectric power plants are clearly top of the list with almost 60% of renewable energy produc- tion, whereas biomass (17.6%) ranks third after wind energy (21.1%). CZECH SOLAR BOOM In the Czech Republic, the last few years have been characterised by an enormous increase in the number of photovoltaic power plants. The number of solar energy sources has multiplied every year and in- vestment in photovoltaic facilities is ranked among the most profitable. This develop- Elektroporcelán Louny PorcelainmanufacturinginBohemiahas averylongtradition.Elektroporcelán Lounya.s.isbasedinNorth-westBohemia, where,owingtotheregion’sgoodraw materialsupplies,porcelainmakinghistori- callyunderwentaturbulentdevelopment, withalargenumberofporcelainfactories comingintobeing.Thedevelopmentof industryandelectrificationcalledforan everlargersupplyoftechnicalandelectri- calporcelainandceramics.Thehistoryof Elektroporcelángoesbacktothe1880s.To findoutaboutthecurrenthistoryofthis traditionalceramicinsulatorandtechni- calceramicsmarket-player,weaddressed MiroslavJetleb,Directorofthecompany’s SalesandMarketingDepartment What is your current range of prod- ucts supplied to the market? Ourcompanyisengagedintheproductionof porcelain and composite insulators for mid- dle voltage (MV) and high/ultra high voltage (UHV). The insulators are produced in com- pliance with IEC, DIN, ANSI, EN standards and the customer’s requirements and drawings. We supply both bare and reinforced types made from materials C110 and C130. Com- posite insulators are made from HTV silicon and cores from ECR glass. We are holders of the ISO 9001, 14001 and 18001 Certificates. The range of MV up to 35/36 kV includes line suspension and line post insulators for overhead transmission lines, insulators for railway and other trolley lines, insulators for both in- and outdoor application in switch- ing stations, switch boards and other AC electrical equipment. It further includes both bare indoor and outdoor wall and transformer bushings for conductor insula- tion and deliveries of complete sets of trans- former bushings or cable bushings. The HV/ UHV range includes protective housings for circuit breakers, surge arresters, cable seal- ing heads, instrument transformers etc. for use in switching stations for voltages of over 110 kV up to 750 kV. Maximum height of glued insulators is 5.15 m and max. height of one piece is 205 mm. We use exclusively C130 material. What are your export markets? We export up to 90% of our output, and our main outlets are Germany, Switzerland, Italy, Russia, and France. Our EPL products can be found in Japan, Australia, the USA, andTurkey. How is your firm faring in the face of Euro- pean competition? Our EPL output capacity is about 6 000 t a year, and we are among leading Europe- an manufacturers in the smaller producer category as regards quality and important customers. ment was brought about mainly by the purchase price of solar electricity being guaranteed by the state for 20 years in ad- vance. Over time, however, this has grown into a problem with expected enormous energy price increases caused by excessive state support, and subsequently it has neg- atively affected Czech companies as well as households. The first reaction was the ap- proval of an Amendment to the Renewable Sources Act, which provides for a reduction in the purchase price of electricity from solar sources by more than 5% than that previously allowed. Additionally, the sub- stantial electricity price increases in 2011 are being corrected by the Government, which has levied a 26% tax on solar power plants put into operation in 2009 and 2010. The Government expects this withholding tax to generate about CZK 4.2 billion for the state next year. From the viewpoint of the other side, the terms are being changed “at half-time” and many operators of solar power stations speak about defence in the form of arbitration against the State.

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| 2 8 inz S E R V I C E S Company Tradition with Great Expectations Could you mention some export successes in the area of supplies for the energy industry that you have achieved in recent years? In what way were you better than your competition? Thanks to our long tradition, we export to many different destinations. We have an es- pecially strong position in European countries, but our products are used in all parts of the world.To name some of the more exotic places, I can list Bangladesh, Thailand, India, Vietnam and Peru. We have succeeded in ac- quiring many important orders in recent years. I consider as most significant the ones related to reconstruction and repair, where we have been able to replace equipment from other manufacturers with our products. I am con- vinced that this proves the quality and price competitiveness of our products. The fact that we are headed in the right direction is also evidenced by our expand- ing co-operation with important customers, such as hospitals and Tesco Stores, etc. Since2009,youhavebeenapartofLloyd ElectricandEngineering,theIndiancorpor- ationthatisoneoftheleadingplayers,par- ticularlyintheareaofthemanufactureofair conditioningunitsfortrackvehiclesandheat exchangersforairconditioningmanufactur- ers.Howhasyourstrategychangedfollow- ingtheentryofsuchanimportantinvestor? The product portfolio has not changed follow- TherootsoftheJANKACompanygoall thewaybackto1872,whenJanJanka registeredatinsmithworkshopinPrague. Today,JANKAENGINEERINGisworkingon agreatnumberofveryimportantprojects thatconfirmitsleadingroleintheareaof complexdeliveriesofindustrialaircondi- tioningandcooling.MsLenkaChmáta- lová,BusinessManageroftheCompany, confirmsthisinourinterview. ing the acquisition, but understandably, there have been some strategic changes. We now have the opportunity to focus our business, manufacturing, and development strengths on a segmentthathasnotbeena preferredoneup until now – industrial cooling, ventilators, and specialised air conditioning, especially for track vehicles.This allows us to apply our many years of experience and the power of an important investor,andI hopethiswillbeoneofthethings that helps us to get over the financial crisis. What other significant projects abroad lie ahead of you? We have acquired several very important or- ders, and I consider the most significant to be the orders related to the completion of the Slovak Mochovce nuclear power plant. These orders have forced us to expand our manufacturing facilities which is good, and we consider this a great success. We also manufacture for our Czech partners, who then export to Russia, Belarus, and the Ukraine, among other countries.

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THE CORE OF OUR BUSINESS: Reconstructions and maintenance of transformers on site or in the assembly hall Independent testing and analysis of the transformers and transformer oil Complete services and maintenance of on load tap changers Delivery and installation of new on load tap changers Regeneration of the transformer oil Application of low-frequency power sources for the dessication of insulation in oil transformers THE REVOS COMPANY WAS ESTABLISHED IN 1993 WITH A GOAL TO SUPPLY TO OUR CUSTOMERS HIGH QUALITY SERVICE AND SUPPORT IN ELECTRO TECHNICAL PROJECTS, SALE, INSTALLATIONS AND MAINTENANCE OF HIGH VOLTAGE ELECTRICAL DEVICES AND EQUIPMENT. THE ORIGINAL MAR- KET WAS THE CZECH REPUBLIC AND SLOVAKIA. TODAY WE SUCCESSFULLY OFFER OUR SERVICES ALL AROUND EUROPE. WE PAY THE UTMOST ATTENTION TO ENVIRONMENTAL REQUIREMENTS AND LAWS. REVOS,s.r.o., Hudcova 76, 612 00 Brno, Czech Republic, phone: +420 537 020 911,email: revos@revos.cz, www.revos.cz

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3 1 | K A L E I D O S C O P E Czech Republic Still Interesting for German Firms For the fifth time, German companies placed the Czech Republic at the top of the list of the most attractive countries in the region of Central and Eastern Europe. It is the result of a survey among almost 1000 German investors in 15 countries of Central and Eastern Europe, which was car- ried out by German foreign chambers of commerce. The Czech-German Chamber of Commerce and Industry carried out the survey in the Czech Republic. The Czech Republic is still interesting for German companies; despite the economically and politically difficult period, not much has changed in the Central and East-European region. Only Poland, thanks to the resist- ance of its economy at the times of the economic crisis, secured a good position and moved up from the fourth place to the second. Slovakia, which only last year placed second after Czech Republic, fell to the fourth place. The top 5 also includes Slovenia and Croatia. Central and Eastern Europe is in total an important growth Managers Blame Piracy on Employees In the Czech Republic, 37% of software is used illegally; as a result, software pro- ducers lose CZK 3.6 billion (approx. EUR 144 million). The average penalty which a guilty company had to pay to the dam- aged software producers rose to CZK 240 thousand (approx. EUR 10 000) last year. “Compensations reaching several hun- dreds of thousands are not an exception,” says Jan Hlaváč from the Business Software Alliance. The main cause of the existence of piracy in companies is the manage- ment’s unwillingness to watch over soft- ware as a full-fledged part of a company’s property. It is quite common that a signif- icant part of a company’s software is not at all filed and the management of the company has no idea where it came from. Software pirates face high penalties, for- feiture, or up to five years imprisonment. “The accused culprit is usually made to pay hundreds of thousands of crowns in the form of damages suffered by the soft- ware company consisting of up to double the value of discovered illegal software. The above-stated amounts do not include the cost of legal representation of the ac- cused and other costs related to the crimi- nal or civil court proceedings. Czech Financial Sector is Healthy and Resistant to Risks sufficient profitability, but also by good funding liquidity, a high deposit-to-loan ratio, a low proportion of foreign curren- cy loans, independence from external fi- nancing and in particular sufficient capital adequacy. However, the risks for financial stability remain high and strong. The main risk scenario for the Czech economy and thus its financial sector in the following two years is the return of recession for its largest business partners and the result- ing decrease of local economic activity. Economic regeneration which started in mid-2009 is fragile, because it ensues not only from a restored trust of the private sector, but also from strong support steps of economic policies. The second key risk is the worsening fiscal development in many countries including the Czech Re- public. What is considered to be a current danger in this respect is the spreading of fear related to the ability to finance the state debt in critically indebted countries to other countries whose public finances also demonstrate partial signs of poten- tial unsustainability. The Czech banking sector is healthy and according to the results of stress tests, it remains resistant to market, credit, and other risks. In neither of the stress scenar- ios does any sector as a whole fall under critical values of relevant capital solvency requirements. Nevertheless, as the Report on Financial Stability 2009/2010 issued in June 2010 indicates, the possible impact of a worse than expected development of the economy must not be underesti- mated. “The stability of the Czech finan- cial system is good and it is pleasing to see how financial institutions are coping with the crisis. The tough and compre- hensive tests reveal that even strongly adverse conditions should not threaten the stability of the financial sector,” said Zdeněk Tůma, the former Governor of the Czech National Bank. The high resilience of the Czech financial system is based on the fact that financial institutions entered the recession in good condition and were able to create a capital buffer during the recession. The Czech banking sector’s strong position is supported not only by market. By the end of 2008 German com- panies invested in ten East-European EU member states a total of EUR 77 billion, which represents 8% of the total German foreign investment. The largest volume of investment – over EUR 20 billion – went to the Czech Republic. German companies in the Czech Republic invest more than on the growth markets in Brazil, Russia, China, and India. Photo:sxc.hu

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| 3 2 R E G I O N ADMINISTRATION OF THE CITY Prague is the capital as well as the largest city of the Czech Republic in terms of area and population. At present it has more than 1 250 000 inhabitants. Prague is situated within the Central Bohemi Region, is the centre of its administration, but having regional status itself, is not a part of it. On its territory, there a large number of state insti- tutions and many other organisations and companies. It is the seat of the country’s president, government, central state bod- ies and the Supreme Court. Besides that, Prague is the seat of many other authorities, both of national level and self-governing territorial units. In terms of self-government, the city is divided into 57 districts, where delegated competences are exercised by 22 offices in their administrative areas. These offices can issue e.g. building permits, identity cards, passports, trade licences, or pay social benefits. Magistráthl.m.Prahy(PragueCityHall) Mariánské náměstí 2, 110 01 Praha 1 Phone: +420 236 001 111 E-mail: posta@cityofprague.cz www.magistrat.praha-mesto.cz Much has already been said and written about Prague, which is not surprising - Prague is one of the most beautiful and most admired cities in the world. It is a metro- polis which is constantly expand- ing and developing, a prosperous city and the fifth richest region in the EU. Prague accounts for one- quarter of the economic perform- ance of the Czech Republic, it is the destination of a half of all foreign direct investment in the Czech Republic. Capital City of Prague Liberec Praha České Budějovice Jihlava Brno Zlín Ostrava Olomouc Pardubice Hradec Králové Ústí n/L Karlovy Vary Plzeň SLOVAKIA POLAND AUSTRIA GERMANY Prague is the seventh most visited city in Europe, it ranks fourth in the quality to price ratio of hotel services, is the fifth most favoured Christmas destination. It has unique architecture, and countless theatres, concert and exhibition halls, mu- seums and galleries, and cinemas. Since 1992 the historic centre of Prague, with an area of 866 hectares, has been entered on the UNESCO World Heritage List of cultural and natural sites. The complex of historical buildings is dominated by Prague Castle towering high above the city, and its his- toric core extending along both banks of the Vltava River. ADMIRATION FOR PRAGUE A look back at the city’s eventful history shows that, ever since the Middle Ages, Prague has enjoyed the reputation of one of the most beautiful cities in the world, often dubbed “the Golden City”, “the City of a Hundred Spires”, “the Crown of the World” and a“Stone Dream”. For centuries, famous people have been paying tribute to Prague. Enchantment with Prague was expressed by W. A. Mozart, L. van Beethoven, G. Apol- linaire, P. I. Tchaikovsky, F. M. Dostoyevsky, A. Rodin, O. Kokoschka, as well as Elizabeth II, Queen of the United Kingdom, Pope John Paul II, and others. In more recent times, its beauties have been admired, for instance, by Barack Obama, Pope Benedict XVI, and Charles, Prince of Wales. IMPORTANT DISTRICTS: City Centre: The Old Town, The New Town, Josefov, The Lesser Quarter, Hradčany, Vyšehrad Large districts flanking the Centre: Smí- chov, Vinohrady, Nusle, Vršovice, Žižkov, Kar- lín, Libeň, Vysočany, Holešovice, Bubeneč, Dejvice, Braník INDUSTRIAL CENTRE Besides the very significant tourist industry, there are many manufacturing enterprises, andtheimportantfilmindustryisonceagain returning. Industrial plants are concentrated mainly in the south-east and south-west of Year 2002 Year 2009 Number of visitors to the city 2 534 421 4 346 079 Number of foreign visitors 2 232 000 3 803 518 Visitor overnight stays 7 025 955 11 243 453 Number of congresses at Prague Congress Centre 217 341 Number of visitors to the Zoo 527 061 1 296 579 Number of immovable cultural monuments 1 930 2 080 Number of immovable national cultural monuments 34 37 Indicator Period Indicator value Increase * (decrease) in % Population on 30th June 2010 1 251 072 +0.7 Regional GDP (mil CZK) 1) 2008 934 095 +2.4 Average salary (CZK) 1st half 2010 29 029 +0.4 General unemployment rate (%) 2) 2nd quarter 2010 3.5 +0.9 Number of economic entities 3) on 30th June 2010 497 003 +3.4 Source: Czech Statistical Office; *As against the same period of the previous year; 1) Increase/decrease in current prices of the previous year (real growth) 2) Increase/decrease in percentage points; 3) Increase/decrease influenced by the discontinued statistics of self-em- ployed farmers in the Economic Entities Register (approx. 65 000 in the CR) Source: www.prahavcase.cz Photo:CzechTourism

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3 3 | C Z E C H B U S I N E S S A N D T R A D E Wholesale and retail trade; repair of motor vehicles and motorcycles - 33% Transportation and storage - 3% Accommodation and food service activities - 4% Information and communication - 5% Financial and insurance activities - 2% Real estate activities - 13% Professional scientific and technical activities - 22% Administrative and support service activities - 4% Public administration and defense; compulsory social security - 0% Education - 2% Health care and social work activities - 2% Arts, entertainment, and recreation - 3% Other service activities - 7% Activities of households as employers + Activities of extraterritorial organisations and bodies - 0% ECONOMIC ENTITIES BASED IN PRAGUE WITH PREVALENT ACTIVITIES IN THE TERTIARY SECTOR, BY CZ-NACE SECTIONS, 2009 the city. Two categories are clearly gaining the dominant position in terms of produc- tion volume: they are food production and the manufacture of electrical and optical instruments. In addition, Prague is also home to other large enterprises in the traditional industrial sectors and branches, which enhance the great importance of the capital city as an industrial centre: the printing industry the manufacture of metal products the manufacture of machinery and equipment the chemical and pharmaceutical industry the industries of glass, ceramic and porce- lain products, building materials the manufacture of transport equipment (except car production), here especially rail vehicles, motorcycles, light aircraft, and others ECONOMIC POSITION The most frequent macro-economic indi- cator used to determine the overall econ- omic performance of a region - GDP per inhabitant - in Prague twice exceeds the CR value in current prices, and more than 2.3 times the value of the second best region, Central Bohemia. Prague’s high economic performance is influenced by companies based here which operate in progressive branches with a high added value. This also impacts on salaries in the city. The concen- tration of economic activities in Prague gives it a big lead over the other regions. SECTOR STRUCTURE IN PRAGUE The following graph shows the sector struc- ture of economic entities based in Prague. They are listed in the different sectors on the basis of the Classification of Economic Activities (CZ-NACE). Most of the overall number of incorporated economic entities based in Prague are active largely in the ter- tiary sphere, the figure exceeds 80%. This is typical of economies in cities. Prague is the main transport junction in the Czech Republic and an important crossroads in Central Europe. It has an extensive trans- port infrastructure. The Prague railway junc- tion is the node of long-distance and sub- urban passenger traffic. Prague’s big goods stations are in recession, but the district of Uhříněves is today the base of the largest container transloading facility in Central Eu- rope. Prague-Ruzyně Airport is the city’s chief airport. Water transport in Prague is mostly used for recreation and tourism. Radotín port serves for the transport of goods on the Vlta- va River to the Labe waterway, but it is used sporadically, in particular to carry loose build- ing materials and large-sized loads. The roads are gradually being upgraded and modernised, along with the city’s de- velopment. The main motorways are the D1 (Brno, Ostrava), D5 (Plzeň), D8 (Ústí nad Labem), D11 (Hradec Králové). Two high-speed ring roads are being gradually built around Prague and are to be completed in about 2015. Traffic in the centre is regulated in particular by a system of paid parking zones. Around the year 2000, the city began to adopt the concept of a network of cycle routes, with bike paths being built in many places. Public transport subsidised by the Mu- nicipality is part of the Prague Integrated Transport System. PRAGUE SUPERLATIVES The longest square: Wenceslas Square, length 750 m The largest square in Prague (and the CR): Charles Square (area 80 500 sq. m) The oldest bridge: Charles Bridge (1357) The oldest brewery: U Fleků (founded 1499) The oldest café: still open - Slavia (opened 1881 in the Lažanský Palace) The tallest building: City Tower at Pankrác (height 109 m, 30 stories) The tallest structure: Žižkov TV Tower (216 m) Source: www.praguewelcome.cz Charles Bridge Source: Czech Statistical Office

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| 3 4 R E G I O N Prague - the Second Best Place to Do Business In the Central and East- European area, Prague is the hot spot to do business among the post-com- munist countries. The rankings of capital cities in the area are topped by Vienna with 89.9 points out of the possible 100, followed by Prague with 70.8 points. This finding has been presented in a study by the Roland Berger Strategy Consultants. to be bad. Prague is considered abroad as a city with quite a polluted environment, mostly as a result of the heavy traffic in the centre. EDUCATED PRAGUE In terms of education, the ranking is the same, which means Vienna (77.5 points), Prague (64.5), and Budapest (62.2). This as- pect is evidenced by the number of pupils and students per teacher, the proportion of the population with a completed edu- cation, and the number of universities in the country out of the list of the 500 best universities in the world. Prague is ahead of Bratislava and Vienna in the number of sec- ondary school graduates. PRAGUE INNOVATION Ljubljana leads in innovation, with 71.4 points, followed by Budapest (69.1) and Prague (53.4). The survey counted the number of newly founded companies, the number of people working in the creative industries, the number of registered nation- al patents, and the cities‘ expenditure on research and development. The number of people working in the creative industries in Prague ranks among the lowest in the area. NUMBER TWO IN LIVING STANDARDS In terms of living standards, Vienna comes out ahead with 90.8 points, followed by Prague with 78.4 points and Ljubljana with 63.6. This is based on UBS‘s Big Mac Index, which compares the amount of working time needed to buy a hamburger at McDon- ald‘s, on the comparison of the average rent per apartment, and the proportion of green spaces and recreational areas in a city. INTERNATIONAL PRAGUE Vienna has the top score in terms of inter- nationalism, obtaining the maximum of 100 points, followed by Prague in the second place with 36.2 points, and Ljubljana and Bratislava jointly holding third position with 23.8 points each. The survey looked at how many international headquarters the capi- tals had, and surveyed the numbers of for- eigners and mixed-nationality marriages. STAR IN CULTURE Prague won on culture. The Czech capital gained 88.8 points, Vienna in the second place received 70.7 points, followed by Mos- cow in the third place with 48.5 points. The survey looked at the number of concerts by international rock bands, the number of theatres and museums in the cities, and the number of visiting tourists. Culture, the choice of leisure activities, the public transport system, and education are Prague’s forte, while, on the other hand, the quality of the environment and health serv- ices are its weakest spots. Prague is ahead compared with capitals in Eastern Europe, but it still lags behind Vienna and cities in Western Europe. INFRASTRUCTURE IN 2ND PLACE In terms of infrastructure, Vienna is clearly in theleadwith82.1points,followedbyPrague (61.2) and Budapest (45.7). This ranking is based on how many direct flights a city has, how extensive the public transport system is, how many Magnetic Resonance Imaging facilities it has per capita, and how many households are connected to the Internet. POLLUTION IN PRAGUE According to the study, Prague has a dense public transport network, but a problem is access for handicapped people. The reputa- tion of Prague taxi drivers is said to continue BEST CITIESTO DO BUSINESS INTHE CENTRAL AND EAST- EUROPEAN AREA: Vienna Prague Budapest Ljubljana Moscow Warsaw Bratislava Bucharest Kiev Zagreb Source: Roland Berger Strategy Consultants Wenceslas Square – Prague’s shopping centre Photo:CzechTourism

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| 3 6 R E G I O N 1. Airport Logistics Park (51 038 sq. m) 2. Panattoni Park Prague Airport (49 558 sq. m) 3. Tulipan Park Prague (80 071 sq. m) 4. Karlovarská Business Park (13 088 sq. m) 5. Zličín Business Centre (23 771 sq. m) 6. Prague Chrášťany Business Park (11 457 sq. m) 7. Rudná Business Park (130 336 sq. m) 8. Prologis Park Úžice (97 326 sq. m) 9. D8 European Park (20 125 sq. m) 10. PointPark D8 (64 356 sq. m) 11. VGP Green Park Letňany (16 833 sq. m) 12. VGP Park Horní Počernice (288 177 sq. m) 13. Prologis Park Prague Jirny (192 627 sq. m) 14. Průmyslová Business Park (15 877 sq. m) 15. IOG Industrial Park Čestlice (9 061 sq. m) 16. D1 Zone Nupaky (7 500 sq. m) 17. Prologis Park Prague D1 East/West (190 451 sq. m) 18. Jažlovice Logistics Platform (20 808 sq. m) 19. PointPark Prague D1 (134 195 sq. m) 20. Modletice Logistics Park (16 772 sq. m) 21. U Továren Business Park (28 423 sq. m) 22. Tuchoměřice Warehouse (5 400 sq. m) 23. Big Box Horní Počernice (8 000 sq. m) Prague A-class Industrial Parks Attract Investors Prague and its surroundings offer an unusual density of real estate for business, tailored to domestic and foreign investors. This includes industrial zones, developer indus- trial parks, production complexes for various purposes, office space, brownfields, and other commercial real estate. Generally, support is given to the construction of indus- trial zones, other commercial space, and brownfield regeneration, since quality commercial real estate is a key to success in attracting foreign investment. Let us pay more attention to the warehousing and logistics market in Prague and its surroundings. 1st Quarter 2010 Indicators Total Greater Prague Rest of Czech Republic Warehousing stock (sq. m)* 3 356 000 1 486 000 Existing vacant space (sq. m) 567 000 237 000 Vacancy rate 16.9% 17.9% 16.1% Total leasing activity (sq. m) 158 000 75 000 83 200 Net absorption (sq. m) 108 600 33 400 75 200 New completions (sq. m) 0 0 0 Space under construction (sq. m) 67 500 11 900 55 600 Average net effective rents ** (EUR/sq. m/ month) 3.00 – 4.00 3.25 3.00 – 4.00 “Prime industrial yield” 8.75% Source:CBRichardEllis,2010;*Inthe1stquarter,parkswererequalifiedandtheamountofspacechanged;**Forunitsof2000–5000sq.m The Czech Republic and its capital city are also affected by the lingering economic cri- sis. A favourable outlook for the future can be based to some extent on the industrial market’s revival, which has been evident since the 2nd half of 2009, as shown by research of the CB Richard Ellis company. The revival continued in the 1st quarter of 2010. This means that demand for modern industrial space is growing and, as no new projects have been completed in the last year, due to low construction activity, the vacancy rate has decreased. GREATER PRAGUE AREA In the 1st quarter of 2010, total leasing activ- ity increased by 25% quarter-on-quarter, to 75 000 sq. m. Net take-up activity accounted for only 44% of the total, which means that, in this quarter, the market was driven mainly by renegotiation. A total of 9 lease agreements were concluded, with an average size of 3 700 sq. m each. However, it should be noted that there were three renegotiations for space with an average size of 13 800 sq. m each. In the 1st quarter of 2010, the vacancy rate was 17.9%, differentiated by the areas of Prague. At the moment, there are 270 000 sq. m of vacant space, which is a little less than in the rest of the Czech Republic as a whole. At the end of the1stquarterof2010,threewarehousesheds of 11 900 sq. m area were under construction. STABLE NET EFFECTIVE RENTS During the last year, the net effective rents in most industrial areas decreased, but at Photo:VGParchives,T.StaříkPhoto:VGParchives,T.Stařík

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3 7 | C Z E C H B U S I N E S S A N D T R A D E the moment they seem to be stabilised. Average net effective rents for units of 2 000−5 000 sq. m are in the region of 3.25 EUR/sq. m/month in the Greater Prague Area. PointPark D8 Industrial zone offers mod- ern A-class warehouse and light produc- tion space in the north of Prague-Zdiby. This location offers an excellent connec- tion to the centre of Prague and other main traffic arteries. The Park will eventually offer 150 000 sq. m, situated just off the D8 high- way on Exit 1. D8 European Park is situated at Exit 9 of the D8 motorway, linking Prague and Dres- den and approx. 14 km from Prague. Towns in the direct vicinity provide the Park with a large labour pool. There is a total of ap- prox. 20 000 sq. m of existent ultra-modern warehouse space, with another 70 000 sq. m planned to be developed, with units of various sizes from 1 900 sq. m upwards. PointPark D1 is situated approximately 16 km from the centre of Prague on Exit 15 off the D1 highway connecting Prague with Brno and Bratislava. Ground was broken on this project in October 2005 and the total amount of eventual distribution space will be 170 000 sq. m of modern warehouse and logistics space. Rudná Business Park – consisting of 130 000 sq. m of completed and highly successful warehousing facilities in Prague West - for rent. It is possible to adjust spaces specifically to client needs. VGP Park Horní Počernice is a complex of industrial buildings of A-class quality, totalling 290 000 sq. m in size, located in a uniquely competitive area - Prague Horní Počernice. This excellent location offers space for both light production as well as logistics companies. Tulipán Park Prague is a modern indus- trial park situated in Prague-Hostivice, to- talling 80 000 sq. m. Excellent connection to the new R7 highway and close proxim- ity to Prague’s Ruzyně Airport. ProLogis Park Úžice is located in a stra- tegic region on the D8 highway (Exit 9), a mere 9 km from the Prague outskirts. Excellent location near Prague on the D8 highway connecting the CR and Ger- many. Warehouse space zoned for light production and logistics, specifications according to client requests. Airport Logistics Park is a modern lo- gistics centre in Prague, offering over 51 000 sq. m of quality warehouse stor- age space, plus administrative and sani- tary areas. It offers high quality in an excellent location right next to Prague‘s Ruzyně Airport. Panattoni Park Prague Airport offers approx. 50 000 sq. m, with possible ex- pansion of up to 149 000 sq. m. Advan- tage of the park is its close proximity to Prague's Ruzyně Airport, with warehouse and office layout according to client wishes. ProLogis Park Jirny Modern distribu- tion park situated in Jirny, on the outskirts of Prague, 20 km East of Prague in the di- rection of Pardubice and Hradec Králové - Ostrava, eventually Poland/Slovakia. ProLogis Park Prague D1 East & West is a prime, modern industrial zone split on either side of the D1 highway into two parts, totalling approximately 190 000 sq. m. Due to its excellent location, it is pos- sible to commute to the centre of Prague by public transportation. Tulipán Park Prague VGP Park Horní Počernice

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| 3 8 R E G I O N Prague’s Et netera Is Collecting Awards For several years, the Et netera com- pany has been in the limelight for win- ning top positions in competitions, as well as awards and prizes as Company of theYear, and among those compa- nies who care about its employees. As the firm states on its website, it is still a group of young experts who have experience with large projects. For more than 13 years, this leading Czech Internet company has been design- ing, creating, and administering the web- sites of major Czech firms, such as Annon- ce, Ahold, Datart, DVC (i-legalne.cz), EMG (knizniweb.cz), Fortuna, Telefónica O2, Sie- mens, Staropramen, Volksbank and others, and winning important awards for its work and business approach.Therefore, we posed several questions to Martin Černohorský, Member of the Board and Managing Direc- tor of Et netera. Which of the awards do you value the most? Of greatest value to us are the awards in the Company of the Year competitions –1st place in 2009 in the Capital City of Prague, 2nd place in Prague in 2010, and also the award of Prague’s Responsible Company of the Year in 2010. I may also add the prize in the Top Employers competition, in which we were placed 3rd in 2010. What is your explanation for so many awards won by your firm? In the first competition, the jury appreciated our attitude to business in comparison with other companies, regardless of turnover or specialisation. In the Top Employers com- petition, this approach is confirmed by our employees and the result shows that the interests of our firm and the interests of our employees are well balanced. Is there a way to gauge whether the prizes that you have been collecting in the last few years have helped your business? We do not have any precise measurable in- dicators, but I am convinced that they help us to gain people’s trust. If you say some- thing, but have nothing to prove it by, it is harder to bring new ideas home to people. The awards are of great importance to our employees, partners and other entities who co-operate with us. They confirm that we are doing our work well. People are the key asset in services, and when they are con- tented and proud of being associated with Et netera, they also bring the expected busi- ness to us in various ways. You are also offering your services abroad, what is the proportion? Yes, we are. It oscillates between 10 and 25% of total services, and has started to rise signifi- cantly in recent months. For example, we are providing services connected with consul- tations, measurements, and analytics of the functioning of electronic banking and web- sites for the headquarters of a bank in Austria. As a result of our partnership with Google and Omniture in online analytics tools, we are being approached by customers from all over Europe. We are also implementing e-commerce projects for the branches of several customers all over the world. Has your company been hit by the crisis? What are you doing to resist it? We are feeling it. In recent times, there has been an increasing number of tenders that could not have been predicted and that often ended in a result in which the decisive factor was only the price. This is rather un- pleasant for us. Over the long term, we have sought to maintain the high quality and re- liability of our solutions, which of course is not the cheapest way, and I personally be- lieve that, due to the crisis, price is increas- ingly becoming the decisive aspect. We are trying to face it with the better selection of tenders in which we participate, and mainly with the diversification of our services. For- merly, Et netera focused more on the devel- opment and management of applications, while at present we are trying to pay the same amount of attention to consultations, analytical services, new media, and services rather more typical of marketing agencies (strategy, campaigns, etc.) Photo:Etneteraarchives,www.sxc.hu Martin Černohorský

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EdovaEdova Aromaterapie Edova Pomeranč a hřebíček EdovaEdova Aromaterapie Edova Máta EdovaEdova Aromaterapie Edova Eukalyptus EdovaEdova Aromaterapie Edova Zelený čaj Moth and Mosquito Repellents Odour and Smoke Absorbers Advertising, Presentation and Commercial Aroma Labels A souvenir aroma label is also an excellent advertising object and information carrier 691 52 / Kostice 719 Phone: +420 519 338 139 Fax: +420 519 338 298 E-mail: info@montgroup.cz www.montgroup.cz Trenčín Mont Group s.r.o. is a protected workshop which employs handi- capped people on a long-term basis.This has been made possible by the nature of the produc- tion of our air fresheners.Thanks to official accreditation, we are offering close co-operation to all those interested, under the legislation of the particular EU state, in the area of “Spare Filling”. In addition, anyone buying our well-functioning and easily affordable products will help many handi- capped people to find employment. Practical Use Fragrance Health Practical Use Fragrance Healthfor and for and Commercial fresheners and aromatherapy are excellent trade articles, which are selling well in chain stores, as well as at filling stations and on news stands. They also find good use in households, hospitals, toilets, cars and offices. There are two types of products impregnated with special fragrant essences to repel moths and mosquitoes. They will protect your clothing in the wardrobe for a long period of time and will add a pleasant scent to it. The mosquito repellent will drive troublesome insects away, not only in the home and car, but also in semi-closed outdoor areas, such as summer houses. If correctly used, the active substance is absolutely safe to your health. There is a variety of products with aromatherapy effects. The composition used in Eda’s aromatherapy labels is manufactured from natural aromas and plant extracts, which have a beneficial effect on the human organism and psyche. Suitable for the home, office or shop, where they will enhance the feeling of comfort and well-being. From our wide-ranging selection, we have chosen four scents for you and hope you’ll choose the one to evoke the perfect feeling of comfort in you. Aromatherapy About usAbout us Moth and Mosquito Repellents Odour and Smoke Absorbers Advertising, Presentation and Commercial Aroma Labels Aromatherapy These are air fresheners impregnated with special fragrant essences, which absorbs unpleasant odours and cigarette smoke smell. The essences penetrate deep into the fabric (e.g. car seat upholstery, lounge suites, curtains). They are also suitable for restaurants and offices. Unique collection of air fresheners with therapeutic and protective effects

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| 4 0 R E G I O N Prague – Mother of Schools The Czechs sometimes refer to their capital with pride as the Mother of Cities. Similarly, it might be called the Mother of Schools. The territory of the Capital City of Prague is home to almost every type and grade of school and educational establish- ment, from pre-school facilities to primary, secondary, higher vocational schools and, naturally, universities as well. If the list is to be complete, it should further include establishments for leisure activities, extra-mural education, etc. Each year Prague uses the policy of grants to further the development of the educational system. Prague has a unique position, particularly in the area of tertiary education. Quite nat- urally for a city with an important and very long tradition in this respect, the capital city of Prague has a large concentration of universities. Thirty-two institutions of higher education, which is more than a half of all Czech universities, are based in Prague.Their students account for more than 40% of all university students in the country. Students in Prague, and primarily universi- ty students, are a very significant social cate- gory, forming an integral part of the city’s so- cial life. In 2008, there was a total of 213 342 students in secondary or higher schools and universities in Prague, about 60% of whom were students enrolled at Prague universi- ties. The number of foreigners among uni- versity students is steadily increasing. PUBLIC UNIVERSITIES IN PRAGUE Academy of Performing Arts in Prague (AMU) – www.amu.cz This includes the Theatre Faculty (DAMU), the Film and TV School (FAMU), and the Mu- sic Faculty (HAMU). Academy of Fine Arts in Prague (AVU) – www.avu.cz This organises Master’s and Doctoral pro- grammes in the areas of Fine Arts, New Media, Restoration of Works of Art, and Architecture, with related scientific and ar- tistic activities. Czech University of Life Sciences in Prague (CZU) – www.czu.cz Founded in 1952, it consists of five faculties and two institutes. CAPITAL CITY OF PRAGUE SELECTED DATA – HIGHER VOCATIONAL SCHOOLS AND UNIVERSITIES 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 Higher vocational schools 35 34 34 34 36 36 37 38 Students 7 046 6 755 6 867 7 290 6 996 6 677 6 580 6 961 Universities 13 19 26 26 29 30 30 32 Students 1) 68 599 70 148 74 321 78 387 81 760 107 671 116 033 128 731 1) Untilthe2004/2005schoolyear,onlyCzechnationalsinfull-timestudies;fromthe2005/2006schoolyear,studentsineverylevelofstudiesatpublicandprivateuniversities. Source:InstituteforInformationonEducation Photo:UniversityofEconomicsarchives(J.Koudelka),www.sxc.hu

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4 1 | C Z E C H B U S I N E S S A N D T R A D E Czech Technical University in Prague (ČVUT) – www.cvut.cz One of the oldest technical universities in the world. In 2009, the institution’s 7 fac- ulties offered 85 study programmes (323 specialisations), with a total enrolment of 23 363 students. Charles University in Prague (CUNI) - www.cuni.cz Universitas Carolina Pragensis is the most important Czech university, one of the old- est universities in Europe, and the oldest in Central Europe. The University is formed by 17 faculties, based mostly in Prague. In 2009, almost 53 000 students were enrolled, which was almost one-fifth of all univer- sity students in the Czech Republic. In 2009, Charles University was listed as the top uni- versity in the Czech Republic in the Ranking of World Universities scheme. University of Economics, Prague (VŠE) – www.vse.cz A public university focused on education in the field of economics. In 2009, this was the first Czech institution in the history of Czech university education to be awarded the ECTS designation by the European Union, which certifiesthatVŠE’sstudyprogrammesarecom- parable with advanced international levels. Institute of Chemical Technology, Prague (VŠCHT) – www.vscht.cz The largest institution of its kind in the Cen- tral European area, with an almost 200-year tradition in chemical technology studies. It can be described as a research university, characterised by a high proportion of stu- dent involvement in research work during their studies. Academy of Arts, Architecture, and Design in Prague (VŠUP) – www.vsup.cz A public institution of higher education, with programmes of study in Painting, Il- lustration and Graphics, Fashion Art, Design, Graphic Design, Ceramics and Porcelain, Photography, and Architecture. It also offers courses in Animated Film. NOT ONLY UNIVERSITIES To present a comprehensive survey, it should be added that, during the past school year, there were more than 1 700 schools and educational establishments in the Prague area. A few more figures complete the picture. Attendance at schools in the capital city area, regardless of the founders, was as follows: 31 308 children at nursery schools, 74 470 pupils at primary schools, 74 799 students at secondary and voca- tional schools (of whom 24 962 students at secondary schools), 1 421 students at the Conservatoire, 6 708 students at higher vocational schools. From 25 to 27 November 2010, Prague secondary and higher vocational schools will organise Schola Pragensis 2010, the 15th year of the presentation and selec- tion of their curricula. Schools founded by the Capital City of Prague and other entities will present their institutions, as well as the results of their work. EVALUATION BY OECD EXPERTS Last spring, Prague was the venue for the OECD final conference of the Czech VET Review: Learning for Jobs. Just as in the other thirteen reviewed countries, the Czech Republic was presented with the conclusions of OECD experts concern- ing the level of vocational education and training in the country and the co-oper- ation of schools with employers. Accord- ing to the OECD team, the Czech Repub- lic has improved the system of vocational training in many respects in the last few years. This is due, for example, to the in- troduction of a new system of qualifica- tions and a single final examination in the vocational training branches. It is also assisted by the remarkable database of schools, vocational specialisations, and jobs available to graduates in the labour market (www.infoabsolvent.cz). LIST OF SELECTED PRIVATE UNIVERSITIES AND COLLEGES IN PRAGUE Banking Institute/College of Banking - Prague University of Finance and Administration - Prague Josef Škvorecký Literary Academy - Prague College of Tourism, Hotel and Spa Management - Prague Private College of Economic Studies - Prague Metropolitan University Prague Jan Amos Komensky University Prague Anglo-American University - Prague College of Economics and Management - Prague University of New York in Prague College of Information Management and Business Administration - Prague University College of International and Public Relations Prague College of Regional Development - Prague Unicorn College - Prague University of Economics, Prague

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| 4 2 R E G I O N State-of-the-art Technology and 90-year Tradition In 2009, the number of enterprises with more than 100 employees aver- aged 236 in the territory of the Capital City of Prague, according to the Czech Statistical Office.This was the great- est number of large industrial firms registered by any Czech region. If one company is to be selected from this number of well-functioning firms, and its activities and products are to be presented, let us choose one that has a long history of continuous work, as well as a promising future ahead. PRAKAB Pražská kabelovna, a.s., based in the Hostivař quarter of Prague, is a producer and supplier of cables. It offers a wide range of products, from energy and telecommuni- cation cables to e.g. communication cables. ThesearedeliverednotonlytotheCzechmar- ket, but also to European and world markets. In 2011, the company will celebrate its 90th birthday. The history of the Company began in 1921, when Emil Kolben founded Pražská kabelovna s.r.o., with the trademark of PRAKAB. Over time, this Prague enterprise, as well as the range of products on offer, were expanded. After World War II, PRAKAB continued the production of cables, but the company was incorporated into the KABLO Kladno group. In 1991, it was transferred to the original owners, who continued the manufacture of conductors and cables. NEW TRENDS At the beginning of the millennium, PRAKAB focused on new trends in cable production and, in 2003, made an investment in a Test Centre for specialised cables of low fire haz- ard.The Centre, the only one of its kind in the Czech Republic, is an accredited workplace of the Electrotechnical Testing Institute. Due to this, PRAKAB is the first cable manufacturer in the country to manufacture fire-resistant cables. An important moment was the clas- sification of cables in relation to reactions to fire (The Construction Products Directive), which outlined the legal requirements of the European Union and to which PRAKAB flex- ibly responded with its own developments. OWN RESEARCH The above-mentioned Centre, actually the company’s own laboratory for fire-resistant cables, consists of eight workplaces. The ca- bles are tested in a fire simulation environ- ment. Heat and smoke emissions are meas- ured in tests of flame spread, while other tests are focused on resistance to vertical spread of flame on single-insulation conductors and cables, and a vertical flame test on vertically installed bundles of cabling. The Centre also conducts measurements of smoke density in cable burning, and resistance to fire of un- protected cables in emergency circuits. Last but not least, the laboratory has equipment to determine flammability by means of the oxygen index method and to measure gas emissions from cable material burning. DEVELOPMENT OF NEW MATERIALS Another step in the development of a new type of cable is the project implemented with financial support from the Ministry of Industry andTrade.This programme, FR-TI1/429, is des- ignated “The Development of New Materials and Construction Solutions for Cables Applied for the Safe Transmission of Energy and Infor- mation in Spaces with Fire Hazards and High Concentration of Persons, Complying with Decree No. 23/2008 Coll.“ This project aims at the design and testing of new materials for a new product – cabling which will comply with the requirements of Decree No. 23/2008 Coll. on the technical conditions for the fire protection of buildings.The objective is to de- velop a new cable with the required class of reactions to fire and, at the same time, capable of transmitting electrical energy and informa- tion in case of fire. It should also preserve the qualities which reduce hazards to the health or life of persons and the environment in case of fire.The cable, developed from new materi- als, must comply with the requirements of De- cree No.23/2008 Coll., like existing cables, but will be manufactured from materials of much lower cost, which will reduce its selling price and thus increase its competitiveness within the European area. www.prakab.cz Photo:Prakabarchives

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CZECHCHEMICALAND PHARMACEUTICALINDUSTRY SupplementofCzechBusinessandTrade 4 2010

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WWW.ENASPOL.CZ ENASPOL a.s., Velvěty 79, 415 01 Teplice, Czech Republic Phone: +420 417 813 111, +420 728 422 421 Fax: +420 417 532 560, E-mail: enaspol@enaspol.cz Surfactants • anionic – alkyl sulfates (SLS), alkyl ether sulfates (eg. SLES), alkyl benzene sulfonates (eg. LABSA) etc. • hydrotropic – cumene sulfonates, toluene sulfonates Concrete and mortar admixtures • plasticizers and superplasticizers • setting retarders and accelerators • fluidizers • demoulding oils • air-entraining agents • curing agents • antifreeze admixtures • deaerating agents • water reducers Gypsum admixtures • fluidizers • water reducers Textile auxiliaries • for pretreatment – ie. washing, boiling and bleaching agents • for dyeing and printing – ie. wetting, engraining, anticreasing, levelling, dispersing, soaping, fixing and oxidizing agents • for finishing – ie. milling, softening and caulking agents • greasing agents • larding agents • flocculants Dye, pigments, paints and colour industry • dispersing agents • colour deepening agents • antisettling agents • peptizers • homogenizers • adhesion promoters • coagulants Rubber industry • emulsifying agents • dispersing agents for latex dispersions Leather industry • tanning and retanning agents • dispersing agents Enaspol a. s. is a chemical company with longtime tradition in research and production of surfactants, construction chemicals and textile auxiliaries. It is located in the vicinity of Teplice in Northern Bohemia, on the halfway between Prague and the Saxon metropolis of Dresden. Wide range of company´s product portfolio includes:

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3 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y Czech Chemical and Pharmaceutical Industry Supplement of Czech Business and Trade 4/2010 CONTENTS Editorial 4 ANALYSIS Stimulation of the Chemical Industry in the Czech Republic 4 The Future of the Pharmaceutical Industry in the Czech Republic 6 INVESTMENT Chemical and Pharmaceutical Industry in the Czech Republic 8 INFORMATION Brno Scientists Can Remove Cellulitis 11 EDUCATION When Science Does Well 12 CZECH TOP Walmark Commemorates 20th Anniversary 13 Bauer Bandage – Healing Miracle among Bandages 16 ENTERPRISE Way out of the Crisis? Investment into Publicity, New Export Destinations 18 Pro-export Cluster: Czech NBC Team 19 CzechBio Export Alliance – a Gate for the Czech Biotechnology Sector 20 What about a Custom-made Hospital? 21 LEGISLATION Health Business Faced with Advertising Rules 22 Interview: Helping to Establish Clear Market Rules 24 WE INTRODUCE Nanomedic Cluster – Together to the Goal 25 SURVEY Poll of Successful Companies Operating in the Chemical and Pharmaceutical Industry 26 PRESENTATION OF FIRMS: CHEMOTEX Děčín a.s.; Enaspol a.s.; KPS Metal a.s.; Interpharma Praha, a.s.; OMEGA ALTERMED a.s.; BETTAC PLUS s.r.o.; WALMARK, a.s. MK ČR E 6379 This magazine is published as a supplement of the Czech Business and Trade economic quarterly. Managing Editor: Šárka Kratochvílová Graphic Design: Art Director: Nina Nováková Graphic Designer: Jiří Hetfleisch Production: Anežka Zvěřinová Address: PP Agency s.r.o., Myslíkova 25, 110 00 Praha 1 Czech Republic, Phone: +420 221 406 622 Fax: +420 224 930 016, e-mail: journal@ppagency.cz www.ppagency.cz Deadline: 30/8/2010 Attitudes expressed by the authors of articles in this magazine are not necessarily consistent with the viewpoint of the Publisher. © PP Agency, Company with the ISO 9001 certified quality management system for publishing services Coverphoto:www.sxc.hu;page3photo:PhotoCombo IN THE NEXT SUPPLEMENT TO CZECH BUSINESS AND TRADE It seems that things are looking up for Czech industry. Importantly, the number of orders is rising and their value has recorded a year-on-year increase of 27.2%, of which more than one-quarter came from abroad. The growth in new orders was mainly due to the manufacture of computers, electronic and optical apparatus, motor vehicles, semi-trailers and trailers, and basic metals, metal processing, and foundries.The latter sector will be the theme of the next supplement.

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A N A LYS I S Dear Readers, The chemical and pharmaceutical in- dustries are together the third largest sector in terms of share in the GDP of the Czech Republic, and account for approximately 13% of the country’s industrial production. Although the chemical industry markedly predomi- nates over the pharmaceutical industry, both branches have high value added to their production based on qualified technologies with high demands on research and development, and profes- sional labour. Your will also find in this issue a detailed analysis of the Czech chemical and pharmaceutical indus- tries, information about investment opportunity, and examples of state sup- port to these branches. A good example of the co-operation of science and research in practice is the activity of Palacký University in Olomouc in the article entitled When Science Does Well. Of many interest- ing matters in this issue, we mention, for example, information that Czech scientists have invented an apparatus for cellulitis treatment, and the exist- ence of a new Czech patent which is innovative in the treatment and heal- ing of wounds. We also introduce Czech legislation relating to the placing of food supple- ments on the market, and drawing at- tention to possible problems with ad- vertising these products. Šárka Kratochvílová Stimulation of the Chemical Industry in the Czech Republic The year 2009 was not favourable for the Czech chemical industry; its results were influenced by the economic recession as was production in the connected automo- bile and building industries and manufac- turing sectors. The decline in revenues in the different groups of products mostly ranged between 6 and 20%, and was about one-third in oil refineries. A slight year-on-year increase was recorded only in the pharmaceutical industry. A much more favourable development came in 2010 with the revival of the world economy. This was confirmed by results in the January- May 2010 period, in which revenues and exports were up by 15 to 20% against the same period of 2009. Czech chemical industry. One of the prob- lems which could affect the compatibility of the European chemical industry in general is adaptation to the new European chemi- cal legislation, especially the Registration, Evaluation, Authorisation, and Restriction of Chemicals(REACH–ECOrderNo.1907/2006). This influences the finance of chemical enter- prises, the small and medium-sized ones in particular; up to one-third of them according to the latest estimates. A positive aspect is its validity throughout the EU, and in view of the compulsory data sharing there should be no repeated tests on animals and consequently the number of laboratory animals used for testing the properties of substances would be reduced. The objective of the new chemi- cal legislation is to ensure a high standard of the protection of human health and the environment, and increase compatibility and innovation. The REACH-connected orders will affect many enterprises. Approximately 106 000 people are now working in chemical plants with 20 and more employees and re- dundancies are likely in the chemical industry and in the connected manufacturing sectors. Companies could avoid losses by spreading additional costs of REACH implementation over a longer period of time. Ways of dealing with the situation in the Czech Republic in- clude a model method of procedure. Czech NECHELA System An important practice introduced in the chemical industry last year is the informa- Photo:www.sxc.hu,PhotoCombo Based on information from www.mpo.cz Moreover, the results were derived from a lower base as the economic recession was fully apparent in the first months of 2009. Revival and better development in the chemical industry can be expected in 2010 compared with 2009, but the sector cannot be expected to reach the level of 2008. Chemical Logistics Project A major subject at present is the chemical lo- gistics ChemLog project, which is to increase the reliability, effectiveness, and safety of the transportation of chemical substances. The three-year project was launched in Novem- ber 2008 and is due to end in 2011. It originat- ed at the initiative of the European Chemical Regions Network (ECRN), which associates 21 regions. Its budget totals EUR 2.2 million including EUR 1.7 million in subsidies from the European Regional Development Fund. The project has seven participating countries – Germany, Poland, the Czech Republic, Aus- tria, Slovakia, Italy, and Hungary. In the Czech Republic, two entities are involved in the ChemLog project – the Ústí Region which has a high concentration of the chemical industry, and the Association of Chemical In- dustry of the Czech Republic. The outcomes of the project will serve as recommendation for the solution of the unfavourable logistic situation in Central Europe. Chemical Legislation REACH Great attention is being devoted to the im- pacts of the chemical legislation on the

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5 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y tion and trading system NECHELA (Czech acronym for unused chemical substances) created by the Ministry of Industry and Trade. It is a unique system which is not op- erated in any neighbouring country as yet. The system is to help mainly small and me- dium-sized enterprises to get rid of unused chemical substances left over after produc- tion is changed or terminated, and to buy advantageously chemicals and chemical preparations in small amounts (on the mar- ket available only in large packages). In the last few years, the state spent doz- ens of millions on the liquidation of illegal storage of chemicals, and the number of such cases increased markedly, especially in 2006-2008 period. Large amounts were also spent by regions and municipalities. The information part of the system has the form of a public database of offered chemical substances and preparations. The possibilities of the electronic system are: 1. look into the public database of unused chemical substances and prepara- tions; 2. place an offer of unused chemical substances and preparations; 3. register for an announced electronic auction as a potential buyer of the offered chemical substances and preparations. The chemi- cals which can be offered on the on-line NECHELA exchange are many and include paints and varnishes, solvents, degreasing agents, chemicals for the food industry, lu- bricants, fuel additives, sealing agents, and grinding and polishing means. On the con- trary, excluded are drugs, medical means, feeds, cosmetics, nuclear materials, narcot- ic and psychotropic substances, explosives and fuels. The trading part of the NECHELA system works with the registration of users, which is essential to guarantee the concluded deals. Registration into the system is electronic and requires an extract from the Commercial Reg- ister or a similar document.There are no regis- tration and trading fees, and help from brokers is also free of charge. The NECHELA system is open to everybody at: www.nechela.eu.

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| 6 A N A LYS I S The Future of the Pharmaceutical Industry in the Czech Republic Lenka Mrázová, Tax and Legal Services, PricewaterhouseCoopers Czech Republic, www.pwc.com/cz/en Expenditures on pharmaceuticals in the Czech Republic have been increasing in re- cent years. Such a trend could be triggered by several factors. One of the most obvious is aging of the population. Another expla- nation for the higher spending on pharma- ceuticals could be chronic diseases such as obesity, asthma, diabetes, heart disease etc. Another trend which can be observed is the increase in contributions of the private sector to the total health expenditures in the Czech Republic. Such a development reflects the worldwide tendency to encour- age people to take more responsibility for managing their health. Key Industry Specifics Prices of pharmaceuticals distributed in the Czech Republic are subject to price regu- lation. Price regulation is in general ap- plicable for those pharmaceuticals which are reimbursed from public health insur- ance. Price regulation prevailingly refers to maximum price regulation and regulated maximum margin. Another factor influenc- ing prices of pharmaceuticals is reimburse- ments from the Czech public health insur- ance system. Beside price regulation, pharmaceutical companies also have to follow other rules in respect of applying for a distribution/pro- duction licence, advertising, provision of samples, cooperation with physicians, etc. In general, revenues of pharmaceuti- cal companies are subject to standard taxation. However, in order to stimulate research and development (R&D) activities in the Czech Republic, companies which perform R&D are entitled to a double de- duction of eligible costs incurred in respect of R&D from the tax base (for corporate in- come tax purposes). If the company meets certain requirements (e.g., the R&D activity must have valuable elements of novelty or the company must use specific inno- vative procedures), it may deduct from its tax base 100% of eligible expenses that are incurred in connection with the realisation of R&D projects. It means in practice that it can claim certain costs twice as a tax-de- ductible expense and as an item decreas- ing the tax base. From the indirect taxes point of view, on the sale of human pharmaceuticals, a re- duced VAT rate (10%) is levied. Future Outlook In the near future, it is expected that many of the pharmaceutical companies will suf- fer from massive patent expirations of original products. In combination with the intended implementation of generic pre- scriptions, an increase in sales of generics is anticipated. In this respect, the pharmaceutical com- panies will probably enforce their marketing and selling activities towards pharmacists and patients (both groups will have a bigger Photo:www.sxc.hu

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7 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y influence on the selection of specific phar- maceuticals in future). Also, changes in marketing strategies are expected, resulting in cost savings. The pharmaceutical companies will restruc- ture their sales force and will start using so called e-detailing (or e-promotion) as an important marketing channel. Big sales teams will be replaced by smaller ones with more focus on the training of sales representatives. The PricewaterhouseCoopers Health Re- search Institute recently conducted research which identified an emerging phenomenon amongbothdevelopedandemergingmarket countries: In response to the global recession and pressure to reduce rising national health costs associated with chronic diseases, gov- ernment and health leaders recognise that in- dividuals must play a bigger role in managing their health and overall health spending. To engage consumers and compete for them in the global health care mar- ketplace, health systems are trying to un- derstand consumer needs and individual preferences and tailor care to fit them, not unlike other industries that have been transformed by consumerism. A PricewaterhouseCoopers survey of nearly 600 global government and health industry leaders gathered the following conclusions. As most of the Czech pharma- ceutical companies are part of international holdings or groups, most of results are highly relevant for the Czech and other CEE countries and their health care systems and pharmaceutical industries: Seventy-six per cent agreed that lack of knowledge and access to health infor- mation keeps individuals from managing their health. Seventy-four per cent be- lieve that patients do not understand the health information and choices available to them. Growth of the Internet, social media, mobile communication and merg- ing of information technology with health care are expected to give consumers un- precedented new access and knowledge. Recently planned reforms of health care system in the Czech Republic and some other more developed post-communist countries will have to take into consider- ation a new role of patients who are bet- ter informed and are clearly willing to be treated as customers. To create incentives for health providers to encourage behavioural changes in their patients, 84 per cent of health leaders agreed that compensation to hospitals, physicians, and other providers should be based on quality health outcomes. Tight both public finance and private budgets in many countries, incl. those in CEE region, will make governments and businesses in health care industry pursue efficiency and clear gains of spent resources. Nearly three-fourths of health leaders ex- pect that health funding and financing in their countries will be redistributed from treating sickness in acute care settings to keeping people well and outside of hospi- tals, nursing homes, and doctors’offices. Forty-five per cent of health leaders ex- pect personalised medicine to be a factor. New diagnostics and pharmacogenomics are making it possible to customise diag- nosis and treatment to fit individual dif- ferences. We expect that also preparing Czech health care system reform will de- fine standard and above-standard services enabling more individualised health care. Nearly one-half of global health leaders expect medical tourism to increase by 2015, as health systems compete for con- sumers by offering personalised care, ac- cess to medical innovation, and the great- est value for consumers. Government‘s Programme – Health is One of Its Priorities The current pharmaceutical market trends are also reflected in the Programme An- nouncementofthenewlyestablishedCzech Government. As health should be one of its priorities, the Government plans to adopt a set of reforms in order to modernise the health sector and increase its effectiveness. According to the announcement, health insurance companies should have more re- sponsibilities during the process of determi- nation of pharmaceuticals reimbursements. Further, with regard to demographic trends (e.g., aging of the population) the Govern- ment will support development of palliative and hospice treatment. Implementation of so-called generic prescriptions and substitutions should be finished. In practice, it means that, in each group of pharmaceuticals, there will be one product which does not require additional payment by the patient. The Government also declares that it will support reinforcement of patients’ rights. Further, there will be an emphasis on pre- vention via positive motivation of patients by health insurance companies. In respect of R&D, the Government made a commitment to simplify the cooperation of public educational and research insti- tutions with commercial entities. What is more, such cooperation should be newly encouraged by a tax incentive (costs in- curred by the company in this respect will be eligible for an R&D allowance). Also, the current R&D allowance (as an item decreas- ing the tax base) should be preserved even though the Government intends to abolish most of the existing corporate income tax exemptions. Last but not least, the payment terms of public hospitals should improve significant- ly, while standard payment terms of public institutions should not exceed 30 days. Total Health Expenditures inCZKbillion 0 50 100 150 200 250 300 2004 2005 2006 2007 2008 Governmental health expenditures Private health expenditures 17.3% 14.6% 13.1%12.5%11.7%

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| 8 I N V E S T M E N T Chemical and Pharmaceutical Industry in the Czech Republic Jiří Sochor, e-mail: Jiri.Sochor@czechinvest.org, www.czechinvest.org The Czech chemical industry accounts ap- proximately for 1% of the whole chemical industry in Europe. This is noteworthy in a country with ten million inhabitants and a chemical and pharmaceutical industry with more than 100 000 employees. Thechemicalandpharmaceuticalindustry is the third most important industrial sector in the Czech Republic in terms of share in the GDP. The sector accounts for some 13% of the whole Czech industrial production. The chemical industry is predominant as the pharmaceutical industry forms less than one-tenth of the sector. European Chemical Industry The Czech and European chemical industries are naturally closely connected. The Euro- pean chemical industry is the third most im- portant sector in the EU and from the global point of view, it is a world leader with a share of 29% in the total revenues in production. In the EU, the chemical industry employs di- rectly more than 1.5 million people. However, the European chemical indus- try is very slowly losing its dominant posi- tion, which is also apparent in the Czech Republic. The European chemical industry is under strong pressure from rivals, mainly in Asia led by China and India, the USA, whose share is rising, and also Brazil and the Middle East. Pharmaceutical Industry on the Rise Somewhat different is the situation in the pharmaceutical industry, which has been on the rise in the last few years in the Czech Republic. This country has no final manu- facturer of generic drugs, but became very popular among foreign producers, such as Sanofi-Aventis and the Israeli TEVA. Sanofi-Aventis came to the Czech Re- public last year when it purchased the Czech Zentiva. The French invested USD 2 billion into the purchase of the Czech acquisition. Due to this, the Czech Re- public was included in the largest merg- ers and acquisitions. The UN Conference on Trade and Development ranked the French-Czech transaction as the 50th larg- est merger and acquisition in 2009. Besides TEVA and Sanofi-Aventis, about one-hundred small and medium-sized en- terprises are operating in the Czech Repub- lic mainly in research and development in the lower phases of pharmaceutical produc- tion, or as suppliers of the basic materials for further processing. One of these companies is the UK-based Yorkshire Bioscience, which specialises in the production of substances for research in immunology and molecular biology. The company chose the Czech Republic for its advantageous situation in the centre of Europe, which allows perishable sub- stances to be despatched rapidly through- out the continent. The company also found the area suitable for marketing. Opening the Czech branch named A22Z Bio, the com- pany owner Slava Pavlovets said that when clients found that the company was based in the UK, they feared unnecessarily high prices and called rivals to enquire about theirs.They are naturally looking for cheaper solutions and clients in Central and East Eu- rope in particular have the feeling that the UK is an invisible but strong barrier. Prague will open access to a much broader range of clients, he added. It is noteworthy in this connection that chemicals consumption of the new mem- ber countries of the European Union with 150 million inhabitants amounts to 25% of the amount consumed in the old mem- bers. Many investors into the chemical and pharmaceutical industry as well as other sectors regard the Czech Republic Photo:www.sxc.hu

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9 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y as an ideal bridge between the traditional EU countries and those which acceded to the Union in 2004. History of Chemical Production Chemical production in the territory of the present Czech Republic commenced in the late 18th century, when a chemical factory was built atVelká Lukavice in North- east Bohemia and in 1778 launched the manufacture of sulphuric acid by thermal decomposition of pyrite slates. The boom of the chemical industry began almost a century later with the construction of several soda factories in the Czech Lands. Let us skip several decades to the present day. In addition to a number of small and large chemical plants, the Czech Republic has several oil refineries. Since this coun- try has crude oil in a very experimental amount, it is imported. Fuel is manufac- tured by Česká rafinérská plants in Litvínov and Kralupy nad Vltavou. Other important enterprises of the Czech chemical industry include Spolana in Neratovice, Synthesia in Pardubice, Synthos in Kralupy nad Vltavou, Spolchemie in Ústí nad Labem, DEZA in Valašské Meziříčí, Hexion Specialty Chemi- cals in Sokolov, BorsdoChem MCHZ in Ostrava, Lovochemie in Lovosice, Lučební závody Draslovka in Kolín, Fosfa in Břeclav, and Precheza in Přerov. Inorganic production is concentrated in Lovosice, where fertilisers and artificial silk are manufactured. Explosives come from Semtín near Pardubice. The local plant makes the undeservedly ill-famed explo- sive sold under the Semtex trade name. The centres of pharmaceutical production are Prague with its surroundings, Ústí nad Labem, and Opava. Chemical Production in Czech Hands Many of the most important chemical companies have Czech owners, and this leaves promising scope for foreign invest- ment into this sector in the Czech Repub- lic. Chemical production has a very long tradition in several areas of the country. The attitude of the local inhabitants and authorities is favourable especially in lo- calities where restructuring has been completed, and this is a welcome advan- tage for large investment into the chemi- cal industry. Research and Development In the last few years, investment into bio- technologies has been rising rapidly in the Czech Republic, which has always been, to- gether with Hungary, the leader in Central and East European chemical and pharma- ceutical research and biotechnologies. This lead has been increasing intensively in the recent period. At present, four clusters of biotechno- logical firms are operating in the Czech Re- public. They are dispersed throughout the country, and although their history as an as- sociation is short, they represent enterprises with a very long tradition in research, devel- opment, and production. Czech universities have a total of 57 000 students of life-science branches at this time and so the Czech labour market can of- fer every year more than 7 400 fresh gradu- ates ready to work in biotechnologies.

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| 1 0 I N V E S T M E N T University Projects An International Centre of Clinical Research will be opened soon in the southeast of the Czech Republic, in Brno, which is the second largest town in the country. The main partner of the project in the Czech Republic is the renowned Mayo Clinic of the USA, which is one of the three fore- most centres focused on medical research. An ambitious objective of the Czech Cen- tre is to shorten to the absolute minimum the period between the discovery of a new treatment and its application in medicine. The future Central European Technology Institute in Brno is to combine life science and physics and create a scientific facility that would attract researchers of the whole world. Besides people, it also plans to ad- dress enterprises throughout the world, as the main funding of the Centre will come from contracted research for private enti- ties. The situation is similar in the central Bohemian Centre of Biotechnology and Biomedicine, which will concentrate on re- search in biotechnologies - functional ge- nomics, cell biology and virology, structural biology and protein engineering, and also biomaterials and tissue engineering. These projects originate at universities directly or in co-operation with the Acad- emy of Sciences of the Czech Republic, so that they follow up real research and will be using experienced scientists as well as talented beginners. The new laboratories could be established since the Czech Re- public has acceded to the EU and gained access to the Structural Funds, which will subsidise the construction and initial invest- ment into the operation of these facilities. Afterwards, these huge projects will have to take care of themselves. This will open large scope for new investment. Scope for Investment Investment will be possible directly into contracted research, and into spin-off firms which are bound to originate due to the Centres. Czech science takes credit for the discovery of the laws of heredity, the birth of polarography, and the patent for the manufacture of the presently most effective substance against HIV/AIDS. The rich history promises an excellent future. Investment into biotechnologies goes to a sector on which programmes of public sup- port are focused in the Czech Republic. This is the European Potential programme, which provides a subsidy to the establishment of re- search and development centres although it can study other sectors than biotechnologies, and the Innovation programme, which can be used in the Czech Republic for the pur- chase of new equipment for the manufacture of an innovated product – this does not need to result from the firm’s own research and de- velopment, and can rest on the right to pro- duce the innovative product. In both cases, the subsidy ranges between 40 and 60% according to the size of the par- ent enterprise. The only limitation ensuing from European regulations is that the labo- ratory or new line must be outside Prague, possibly off a motorway near the boundary of the city. Investment Incentives The Czech Republic has investment incen- tives for large projects, such as reduced corporate income tax. Direct subsidies to the creation of new jobs are available in Czech regions with a high rate of unem- ployment. The total amount of the invest- ment incentive again depends on the size of the enterprise – from 40% for a large enterprise up to 60% for a small one. The subsidy is calculated from the amount of the initial investment the company into its Czech business. All subsidies for entrepreneurs are man- aged by the CzechInvest Agency, which also offers consultations to entrepreneurs who intend to expand their business to the Czech Republic. The Agency can find an ideal place for business, give advice about possible subsidies, and identify suppliers precisely according the new investor’s request. Photo:www.sxc.hu

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1 1 | I N F O R M AT I O N Brno scientists have found a new method of cellulitis treatment by the joint effect of pulsed magnetic field and heat. Brno has thus confirmed again its position of an in- novation centre of the Czech Republic. Unique Treatment The team, headed by senior lecturer Ivan Ramplof theENJOYcompany,founda unique method of cellulitis treatment by polar pulsed magnetic field and heat. The combination of these two influences sets off accelerated re- moval of surplus adipose cells concentrated in the affected areas and the small bumps and wrinkles in the originally ugly“orange skin”are smoothed out.The potency of the new meth- od has been proved by clinical tests in the der- matological laboratory at the teaching hospi- tal in Plzeň. The apparatus has a certificate of the State Testing Institute. The scientific team of the ENJOY company works at the South Moravian Innovation Centre. Without Harmful Effects Theapplicatoroftheapparatusdoesnotcome into direct contact with the affected skin and so the patient can wear light clothing during the treatment. The cure is painless and has no harmful effects for the body, as the heat and themagneticfieldspenetrateonlyintothehy- podermis. The other non-invasive procedures based on vacuum, electric field and the like require direct contact of the applicator with the body, are technically intensive and are not absolutely free of health risks. Treatment at Home The Claire apparatus is designed for use at home and the users do not need to visit a cosmetic salon or a clinic. Clinical tests have shown visible results after a mere two weeks of application of the apparatus. “We devoted more than five years to the devel- opment of the method and the Claire appa- ratus for cellulitis treatment,”Senior Lecturer Ivan Rampl said. ”In the normal population, 80-90% of women suffer from cellulitis. At this time, cellulitis is known to have four degrees. The method we have developed provably treats cellulitis up to the second and third degrees, and the fourth degree of damage to the skin requires treatment by a specialist physician.” Incubator Helps “We are glad that our incubator programme can help firms such as ENJOY. Scientists who work on significant innovative solutions that help ordinary people with everyday prob- lems are doubtlessly very important. We ar- rangeforthesefirmsfunding,space,consult- ancy, contacts, publicity, and help with the transfer of technologies. In the last six years, we have thus helped the establishment of more than fifty enterprises of which 21 have completed the incubation programme with success,” says Jiří Hudeček, Director of the South Moravian Innovation Centre. Enterprisesinthisincubatorareprovidedwith funding, space, consultancy, contacts, public- ity, and help with the transfer of technologies. “In the last six years, we have thus helped the establishment of more than fifty enterprises, of which 21 have completed the incubation programme with success,” the Director of the South Moravian Innovation Centre says. ENJOY spol. s r.o. ENJOY develops innovative apparatus for the treatment of cosmetic, dermatological, and venereological problems. These electronic devices originated on the basis of the results of a joint project of medical and technical re- search establishments of two universities and experts of the ENJOY company. The newly developed method of treatment is based on the use of the revitalisation effect of a combi- nation of polar pulsed magnetic and light field on the skin and mucous membranes.The uni- versal character of this method allows appli- cation in a broad range of curative apparatus for cosmetics, dermatology, gynaecology, cor- rective surgery etc. This project was realised with financial support from the state budget through the Ministry of Industry andTrade. South Moravian Innovation Centre The South Moravian Innovation Centre helps innovating enterprises, students with original ideas, researchers, and inventors. The Centre supports co-operation between the industry, research facilities, and public administration. It creates an environment for easier innovation in South Moravia. The Centre strives for intensive links of business and science in the South Moravia Region. The South Moravian Innovation Centre creates a platform for the partner- ship of all important South Moravian univer- sity facilities, by which it helps to increase the contribution of science and research at regional and state-wide levels. The Centre was established in 2003 as an interest as- sociation of legal entities. The members are: the South Moravia Region, Mendel Univer- sity in Brno, and the University of Veterinary and Pharmaceutical Sciences Brno. Brno Scientists Can Remove Cellulitis Lucie Kanioková, The South Moravian Innovation Centre, e-mail: kaniokova@jic.cz, www.jic.cz

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| 1 2 E D U C AT I O N When Science Does Well www.upol.cz The participation of scientists in an inter- national space project, the construction of a new top-quality background for scientists, connection of science and practice in the development of a new type of water treat- ment... these are only a few examples of the work of scientists of Palacký University in Olomouc, which was founded in the 16th century and is the second oldest university in the Czech Republic. Let us look in detail at some of their achievements. Searching for the Building Blocks of Matter Olomouc scientists are participating in a unique space experiment. Maybe that this research programme focused on parti- cle physics will soon reveal the hidden se- crets of nature. Scientists of the European Organisation for Nuclear Research (CERN) have simulated the conditions of the origin of the universe and the Big Bang. Two pro- ton rays were directed against each other in an underground accelerator of the Swiss section of CERN. In a team of experts from the whole world, scientists from Olomouc with colleagues from Prague, Germany, and France are responsible for the adjustment of one of the detectors which record the results of experiments, which will continue for another two years. Answers to questions about the origin and composition of the universe are to be provided by new parti- cles which will originate in the collision of the proton rays. All this is taking place at a speed near the velocity of light in a 27- kilometre circle of the accelerator installed in a depth of 100 metres under the borders of Switzerland and France. The bigger the energy with which the particles collide, the more hidden properties and expressions of the matter can be exposed. More than two thousand post-graduate students around the globe will be partici- pating in the analysis of the data yielded by the experiments. The largest ever equip- ment of its kind weighs 7 000 tonnes. Among those awaiting the results are three scientists of Palacký University who say that the accelerator and its detectors themselves give a picture of the excellent scientific-technological standard of man- kind in the 21st century. Unique Medical Project Palacký University has launched a unique project to provide background for experts who are seeking new drugs for the treat- ment of tumours and infectious diseases. The project, called Biomedreg, links scien- tific research and clinical practice. It will cost some CZK 900 million (approx. EUR 35 mil- lion), of which about CZK 750 million (ap- prox. EUR 30 million) will be provided by the European Union from the Operational Programme“Research and Development for Innovation”. This funding will allow a new scientific centre – Institute of Molecular and Translation Medicine – to begin operations within two years. The centre will bring to- gether more than a hundred Czech and foreign scientists, and have unique techno- logies of chemical biology and molecular and translation medicine. “The diagnosing and treatment proce- dures are ever more tailored for patients individually, as they must be given specific preparations which help them. It happens that a substance to which one patient re- sponds very well has minimum effect on another patient. The period between the development of new drugs to their appli- cation in general medicine is long, and we are trying to get them to patients as soon as possible. We also intend to concentrate on the treatment of less frequent tumours,”says Marián Hajduch, head of the project team, and head physician of the Experimental Medicine Laboratory of Palacký University. He added that the introduction of knowl- edge in general medical practice will de- pend on the interest of the pharmaceutical or biotechnological industry. Exceptional Method of Water Treatment A waste water treatment plant based on the use of nanotechnology, which is unique in the world, is being tested by research teams of the Nanomaterial Research Centre of Pa- Photo:PalackýUniversityarchives Doctoral graduation ceremony at the university Matriculation at Palacký University in Olomouc

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1 3 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y Walmark Commemorates 20th Anniversary Walmark is ending its second decade of in- volvement on the market. During this period, the company has become the largest pro- ducer of vitamins and food supplements in Central and Eastern Europe. The company was established in 1990 and within one year began to concentrate on trading in soft drinks, and one year later expanded its operations to pharmaceutical and paraphar- maceutical preparations, mainly food sup- plements and cosmetics. During the twenty years of the company’s existence, food sup- plements became the main and most impor- tant item in its offer. Walmark also did well in the manufacture of over-the-counter drugs, which have been in its portfolio since 2004. Thankstoincreasedandtargetedinvestment intonewtechnologies,controlsystems,know- how, and human resources, Walmark has built up one of the most modern pharmaceutical plants in the Czech Republic, which meets all of the strict criteria for drugs manufacture set by the State Institute for Drug Control, and was awarded the Good Manufacturing Prac- tice (GMP) certificate several years ago. Inthelastfewyears,Walmarkhasalsobeen focused on strategic investment to boost its leading role on the food supplements mar- ket. The first acquisition, in 2004, was Proen- zi, a significant brand for joint nutrition. One year later, the company acquired Profitness, which runs a retail network of shops selling food supplements under the name Vitaland. The so far last acquisition, made in 2006, was Aminostar, which manufactures nutrition and food supplements for sportsmen. We spoke about the past and present of Walmark to the company’s Export Director, Mr. Dimitris Anestis. Could you give a brief characteristic of the 20-year existence of Walmark? Walmark was established as a family enter- prise and in the last 20 years worked its way up to become a very prominent pharmaceu- tical company in the Czech Republic and the wholeCentralandEasternEurope.Butthissuc- cess did not come by itself; it was due to hard work and endeavour of the management and all employees. All of them have a share in this achievement. Probably the most important factor of Walmark success in the pharmaceuti- cal industry are our consumers. Without them and without their satisfaction and loyalty to Walmark products we could not do so well.We must not forget the many important and stra- tegic decisions, which were based on global market trends and had to be made for the sake of the future development of the company. Walmark shows that a company estab- lished without foreign capital and foreign know-how can succeed in such a challeng- ing branch as pharmaceutical production. Knowledge of the possibility of coming with an idea, realising it and succeeding is our in- spiration for future work. Walmark is now the most important producer of food supplements in Central lacký University and H+A Eco CZ. Modern equipment “driven” by nanoparticles of iron has been completed by the teams in the Science and Technology Park of Palacký University. The equipment can rid water of toxic substances which cannot be removed by traditional methods. The development of the newly patented technology took about five years. The equip- ment is small and highly effective and so its use is universal at any stage of the treatment in dependence on the type and concentra- tion of the contaminating substances. It does not need such large sedimentation tanks, as the classical waste water treatment plants – several square metres are sufficient. Will Scientists Retard Ageing? Another team of scientists from Olomouc, this time from the Laboratory of Growth Regula- tors, takes credit for a discovery in the area of plant hormones. In a group of so-called cyto- kinins they have found an effective substance which retards the ageing of skin and treats some skin diseases. It is no elixir of youth, but it does prevent ageing. It is not as it might seem a mere dermatological preparation against the roughness of skin, wrinkles, and pigmen- tation disorders, but an effective means of treating facial erysipelas and acne. The long- known effects of cytokinins against the age- ing of plant tissues and organs inspired new research and testing of their derivates which finally resulted in the discovery of substances which show a high level of properties that re- tard ageing – the so-called anti-senescence effect – also when tested on the ageing of human ligamentary cells. Cell testing showed that the substances really work and retard the ageing of skin. However, the human and ani- mal organism is composed of a multitude of cells and this substance has an effect only on one of their types. And so it does not neces- sarily have an effect on other cells in the body. Scientists want to continue research, aware that ageing cannot be prevented absolutely, but the human life can be prolonged. Šárka Kratochvílová, e-mail: kratochvilova@ppagency.cz, www.ppagency.cz Science and research at Palacký University in Olomouc

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| 1 4 C Z E C H TO P and Eastern Europe. How has this leading position been achieved? Walmark has been building its position on the Czech market with focus on food sup- plements from the beginning, and has been holding the leading position in this area for several years. Nevertheless, the main factor and a decision very strategic for successful development of the company was expan- sion to foreign markets, which is essential for sustainable growth of the company in the global economy. And so it was very im- portant to build a strong and leading posi- tion on both the Czech and foreign markets. Since Walmark regards Central and Eastern Europe as the most strategic region, the ma- jor part of endeavour was devoted to it. This was why branches were gradually opened in the 1993-2007 period in seven countries of this region – Slovakia, Poland, Romania, Hungary, Bulgaria, Lithuania, and Latvia. In all of these countries, Walmark has been achieving excellent results comparable to its results on the Czech market. The eighth branch, the first one in Western Europe, was opened in France in 2008. Besides the mentioned branches, Wal- mark has been doing well in other coun- tries, too. The export department has been establishing and systematically developing trade in more than twenty other countries. The department regards as strategic the countries of the former Soviet Union (Es- tonia, Russia, Belarus, Kazakhstan, Arme- nia, and Azerbaijan), and countries of the former Yugoslavia and the Balkans (Slov- enia, Croatia, Serbia, Bosnia and Herzegovi- na, Monte Negro, Macedonia, and Albania). Development also came in other areas – the Mediterranean (Greece, Cyprus, Por- tugal, and Turkey), the Middle East (Kuwait, Jordan, the United Arab Emirates, Qatar, and Iran), and the Far East (Vietnam, Hong Kong, and Mongolia). This trend of expansion to other world markets will continue to underline the inter- national character of Walmark. After all, two- thirds of last year’s company turnover was generated on foreign markets. Which Walmark products are the most strategic? The Walmark portfolio includes more than 100 products. Its size reflects maximum ef- fort to meet the requirements of our clients, which is most important. Clients are our priority and we take care that they are satis- fied and always find the product they need. And so the portfolio must be constantly en- larged with new products and the old ones must be innovated. In the last few years, long and concep- tual marketing gave rise to brands such as Martians® - multivitamins for children, ArthroStop® - joint nutrition, Spektrum – multivitamins for adults, Urinal –prepa- ration for the inflammation of the urinary tract, Prostenal® - for problems with the prostate, and Dialevel – preparation which regulates blood sugar. The portfolio also in- cludes a broad range of vitamins, minerals, and natural products. How is the quality of Walmark products ensured? The highest quality of Walmark products is extremely important since it affects hu- man health. It is important not only from the view of competitiveness, but especially from the view of our clients whom we want to offer the best. Walmark has been a GMP certificate holder since 2003 and so it meets all legal terms con- cerning the manufacture and distribution in the pharmaceutical industry.The GMP certifi- cate is a part of the Quality Assurance System which controls all stages of manufacture from raw materials up to the final product. What is the Walmark vision for the coming years? Walmark’s future objective and vision is the creation of a strong Central European company with ambitions to expand to the worldwide market of food supplements.The future will certainly bring many new chal- lenges which will be pushing the company further. The challenges will be our drive to follow up the two successful decades and continue developing the company. One of the company objectives is to become Europe’s most important and renowned manufacturer of food supplements whose products are popular and has many satisfied and loyal clients, and who does not neglect continual promotion of a healthy lifestyle. I thank you for the interview and wish Walmark muchsuccessinthenexttwentyandmoreyears. One of the most modern factories in the Czech Republic -Walmark Photo:Walmarkarchives

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P r o d u c t s f o r y o u r h e a l t h Health for the whole family Domestic Market Subsidiary Markets Export Markets Estonia Latvia Lithuania Belarus Poland Czech Republic France Slovakia Hungary Romania Bulgaria Ukraine Portugal Slovenia Croatia Bosnia and Herzegovina Serbia Montenegro Macedonia Albania Greece Turkey Cyprus Jordan Armenia Azerbaijan Kazakhstan Russia Vietnam > Kuvait >UAE > Iran Qatar >

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| 1 6 C Z E C H TO P Bauer Bandage – Healing Miracle among Bandages The Bauer Bandage is an example of the unique application of the work of Czech sci- ence which has the chance to reap laurels around the globe. This statement seems to be inflated opinion, but it has a reason. The exceptional carbon dressing, Bauer Band- age, can be mentioned only in superlatives. When the owner of the industrial sample, Mr Václav Bauer, established BETTAC PLUS s.r.o. six years ago, he had to go through years of research, development, and manu- facture of medical means based on woven and non-woven textiles of pure activated carbon. They are designed mainly for the treatment of old wounds that are difficult to heal, but they have many other uses. When Mr Bauer tells the story of his road to renown, the exceptional product deserves only good fortune. An assembly of applauding Chinese physi- cians, scientific appreciation from the NASA centre in Houston, wives of wealthy Egyp- tians hugging him in gratitude for their re- covery – such are the parts of his story. What are we talking about? Miraculous Bandage In the professional language, the Bauer Band- age is a sterile bandage with activated car- bon in the microfilament form with increased absorption induced by an osmotic gradient. Comprehensibly, it is a bandage based on carbon which due to its sorption properties extraordinarily effectively stops bleeding, cleans varicose ulcers, closes wounds, and thus prevents secondary infection of the damaged tissue. It prevents inflammation and alleviates pain. It is also a low-cost cure. Václav Bauer says: “It is not a medicament in the true sense of the word – my bandage works due to its strong cleaning potential. In essence, it is only a bandage – but its po- tency astonishes physicians. Everything heals five to eight times more quickly.” Pain Absorbent Explanationofthefunctioningofthebandage to the layman is that it can absorb toxin from the human body, close it in itself, and liqui- date it. This is due to its density – the capacity of one human hair is 1 600 carbon fibres. To put it another way – the surface of the fibres in 1 sq. cm of the carbon layer of the band- age would spread over an area the size of one and a half football fields. Such is the strength of the mechanical cleaning of a wound. Ac- cording to the holder of the industrial sample, ADVANTAGES AND USES: effective for absorption of unpleasant odours rapid cleaning of wounds treatment of wounds which are difficult to cure (varicose ulcers, bedsores, infected wounds etc.) treatment after surgery rapid stoppage of bleeding OPINION OF A PHYSICIAN The use of the Bauer Bandage is most revolutionary in the treatment of the so-called diabetic leg and varicose ulcers. Problemscausedbydiabetesmostlyendwithamputation. Treatment with the bandage has very satisfactory results, thelimbcanberescuedandamputationavoided. Another very serious problem is the varicose ulcer which requires very long treatment. The Bauer Bandage allows a much shorter period of treatment. The wound is closed andhealed.Allbacteriaare“wipedout”,andthewoundis closed by new tissue. there is nothing in the world that would clean a wound like this carbon textile. Activated carbon serves in three areas of modern therapy: the treatment of acute bleeding wounds in which the application of the dry carbon layer is dominant, the treatment of wounds that are difficult to cure and defects in which the principle of “wet healing” is used, first aid in case of in- toxicated wounds, and as part of a complex treatment of a sting or bite by an insect. Road to Success Following registration, the active carbon bandage has been introduced in practice and co-operation has been established with the Association of General Practitioners. The bandage is now certified and patented, and ready for export to some 20 countries world- wide.The use of carbon in medicine has been known for a long time, but the BETTAC PLUS s.r.o. products belong to the few which can be applied to wounds directly and thus acceler- ate the effects of carbon to the maximum. Vá- clav Bauer says:“Years ago when I heard about a firm which “materialised smoke”, I had the impression of some mediaeval endeavour of alchemists. But it fascinated me so much that I purchased the firm and was determined to finish the development of the then semi-fin- ished product so that it would help people. Success came in ten years.” Most applications are very easy and even a layman can cope with them.The effects come very quickly. Examples of suitable branches of use: Surgery Dermatology Stomatology Gynaecology Some areas of internal medicine Surface oncology Protection against some poisons and gases More at www.bauerbandage.cz Václav Bauer – from the business mission which accompanied PresidentVáclav Klaus to Egypt in 2008 Photo:BauerBandagearchives Šárka Kratochvílová, e-mail: kratochvilova@ppagency.cz, www.ppagency.cz

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ACTIVE CARBON COVERINGBETTAC PLUS OPERATES IN THE RESEARCH, DEVELOPMENT, AND MANUFACTURE OF MEDICAL MEANS CLASS II B OF PURE ACTIVE CARBON. THEY ARE USEDTO CLEAN OLD NON-HEALINGWOUNDS AND IMMEDIATE STOPPAGE OF BLEEDING. THEY ARE USED IN HUMAN ASWELL ASVETERINARY MEDICINE. SUITABLE FOR CIVILIAN AND MILITARY USES. CERTIFIED IN 20 COUNTRIES AROUNDTHEWORLD. www.bettacplus.cz Bettac Plus s.r.o., Radlická 608/2, Praha 5, Czech Republic Phone: +420 777 794 049, +420 737 555 009, E-mail: bauerbandage@seznam.cz

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| 1 8 E N T E R P R I S E Way out of the Crisis? Investment into Publicity, New Export Destinations Michal Filipi, Czech Health & Safety Alliance, e-mail: michal.filipi@avec.cz Czech Health & Safety Alliance is focused on health care, defence and safety. It is an ex- port group of Czech enterprises and institu- tions involved in the research, development, and manufacture of special means designed for lifesaving and health protection in natu- ral disasters, industrial accidents, epidemics and the like. In 2009, the revenues of all companies associated in the Alliance declined in con- nection with the world economic crisis. It was soon evident that increased attention must be devoted to publicity abroad, to strengthen positions on existent markets and find new export destinations. And so, the Alliance included in its plan participa- tion in international fairs to present systems for the protection of the civilian population, and several new defence and safety techno- logies. These included innovated torches of the LEMAX Company and the latest series of AVEC respiratory filters. Alliance at World Fairs The 2010 plan included participation in six of the most important fairs of defence and safety technologies - DEFEXPO - New Delhi, DSA - Kuala Lumpur, SOFEX Jordan - Amman, EUROSATORY - Paris, Milipol 2010 – Doha, and INDODEFENCE - Jakarta. The planned participation in the fairs benefited from the subsidy system of the Ministry of Industry and Trade and help from the Czech Chamber of Commerce. Thanks to this sup- port, the Alliance could present itself in the Czech pavilion and the participating compa- nies had an excellent opportunity to attract attention. At these fairs, the Alliance estab- lished relevant contacts with trade partners from fifteen new destinations and compa- nies met and promoted co-operation with old trace partners. Following participation in international exhibitions, the Alliance mem- bers have so far this year exported goods for more than USD 780 000, and contracts on other deals are ready for signing. Interest in Safety Technologies The exhibitions did more than help in the increase of exports and establishment on new markets. Participation in them showed an increase in worldwide interest in safety products and technologies. This gave com- panies new ideas for innovations and the introduction of several new products which can also go to the markets of the most ad- vanced countries. Items worth mentioning include a new system of escape from fires in high-rise buildings, innovated safety hel- mets, and a new model of the LEMAX police torch. Very helpful for exports of Alliance companies was their co-operation with the Defence Industry Association of the Czech Republic and the Ministry of Defence due to which a representative of the Alliance could join a business mission to Pakistan. Presentation, Innovation, Subsidies This year’s domestic events attended by Al- liance companies included the FUTURE SOLDIER 2010 exhibition and conference in Prague. Since its members want to establish new and promote existing trade opportuni- ties and relations, the Alliance has decided to put additional money into fairs and exhi- bitions in 2011, and to arrange “incoming events”to acquaint foreign trade partners and the final users with top quality defence and safety technologies. Great attention is devot- ed to research and development connected with the ideas mentioned above. Currently, development is focused mainly on the inno- vation of materials which can serve defence and safety. The new materials will be used for a new generation of products and in the fu- ture increase the utility value of products in an effort to maintain leading positions on world markets. Effective use of subsidies and sup- port programmes of the Ministry of Industry and Trade, the Ministry of the Interior and the Ministry of Defence, and co-operation with the Defence Industry Association and the Chamber of Commerce are a great help for Czech manufacturers in gaining new export opportunities and expansion of production, whichhavea goodinfluenceontheeconomy of the whole Czech Republic. Co-operation with the CzechTrade Agency has also proved to be worthwhile, as its offices in Germany and France helped the Alliance to find trade partners in West European countries. Personal protective equipment Member of integrated rescue service, intervention for pandemic influenza Photo:Firm’sarchives

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1 9 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y Pro-export Cluster: Czech NBC Team Czech NBC Team is a free alliance of eleven entities established in 2004 with a single clear objective – mutual support in this ex- port-promoting cluster in the export of their specialcommoditiesforwhichtheCzechand the entire Central European market is small. The seventh year is in existence the alliance of the manufacturers of protective aids and clothing, decontamination equipment, and other products which are essential in cases of chemical threat and accidents, and natural ca- tastrophes. They are equipment and services for protection against chemical and biological danger and radiation.The users of the products are the different sections of the integrated res- cue system and especially the armed forces. Support to Operations Support to operations of the alliance has two kinds – the first and usually most important is financial support of different forms. The second and no less important is state sup- port abroad either through embassies, refer- ences of the Ministry of Defence as the main Czech user, or through regional offices of CzechTrade. Interest Is Increasing Professionals are aware of the alliance as indi- cated by the rising number of direct contacts of potential clients abroad. From its very be- ginning, the alliance has been placing great emphasis on joint presentation abroad, both in the media and presentation at special- ALLIANCE MEMBERS: B.O.I.S.-FILTRY, spol. s r.o. www.bois-filtry.cz ECOPROTECT, spol. s r.o. www.ecoprotect.cz EGO Zlín, spol. s r.o. www.egozlin.cz EST+ a.s. www.estplus.cz Gumárny Zubří, a.s. www.guzu.cz ORITEST spol. s r.o. www.oritest-group.cz POHORELEC s.r.o. www.pohorelec.cz SIGMA GROUP a.s. www.sigmagroup.cz SVITAP J.H.J. Ltd. www.svitap.cz VOP 025 Nový Jičín, s.p. www.vop025.cz VOP-026 Šternberk, s.p. www.vtuo.cz MILIPOL fair in Qatar Soldier in NBC ventilated protective suit with a detection apparatus Josef Orel, ORITEST spol. s r.o., e-mail: orel@oritest.cz, www.nbcteam.cz ised exhibitions or its own presentations to potential clients. It has attended more than twenty prestigious exhibitions in Europe and other continents except for Australia, and ar- ranged about ten specialised presentations in countries with the largest market potential (Turkey, Egypt, Pakistan, etc.). Main Advantages, Achievements, and Objectives The high quality of products, reliability of the alliance members, and flexibility of the group have proved to be the correct approach to acquisition. There are two simple examples: Most members of the alliance have gained new clients in regions where products had been presented, especially in the Middle East, the Persian Gulf, and newly in the Far East. Joint statistics of the alliance do not exist; orders worth several million EUR have thus been gained according to information from members. An extraordinarily important success is the fact that the main Czech client, the Army of the Czech Republic, takes the alliance as the representative of Czech producers in the sec- tor. This is an extraordinary result, which was not among the targets of the alliance when it was first established. It is difficult to gain a position and even more difficult to retain it. Competition is strong, and so operations are being prepared to boost positions and gain new ones.We can mention, for instance, the forthcoming exhibitions MILIPOL Qatar, IDET Brno, DSEi London, SITDEF Lima, DEF- SEC Bangkok, and an extremely important presentation in New Delhi. This presentation ranks among the most important strategic operations, and the reason is evident....

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2 1 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y What about a Custom- made Hospital? Jan Hudeček, First Czech Health Alliance, e-mail: hudecek@biophys.cz, www.fcha.eu The First Czech Health Alliance is an as- sociation of manufacturers and suppliers of medical equipment and facilities who have formed a special export alliance under the aegis of CzechTrade export promotion agency. The main offer form the Alliance are spe- cial modular systems of the construction of hospitals, policlinics, PET centres, laborato- ries, and other medical and pharmaceutical facilities which require sophisticated and clean areas. The Alliance also offers the cus- tomary construction of these facilities and an efficient combination of classical and modular construction and furnishing. The First Czech Health Alliance offer is complete including development, design, manufacture, consultations and advise, construction, assembly, validation, support, and warranty and post-warranty service. All processes are certified in accordance with ISO 9001:2008 and 14001:2004, and all prod- ucts have the CE mark for the EU market and GOST for Russia and other countries. Medical Facilities Made to Order These modular systems are very suitable for the construction and innovation of operat- ing theatres, intensive care units, PET onco- logic centres, laboratories, mobile hospitals for use in natural and industrial disasters, pharmaceutical production, the manufac- ture of IT products, and all other facilities which require so-called clean areas. The advantages of the modular systems include quick construction, a great variabil- ity of components, the possibility of gradual effective extension of facilities according to increasing requirements for area and quality of equipment, and solutions“tailored”for cli- ents with respect for individual demands. Research Laboratories TheFirstCzechHealthAllianceoffersa unique laboratory for the study of climatic influences (temperature, humidity, and air circula- tion) on persons, their clothing and equip- ment (apparatus, instruments, etc.). A broad range of temperatures and humidity can be simulated to find out the real possibilities of persons and materials in extreme climatic conditions. It is suitable, for example, for the training of rescuers, firemen, aircraft crews, special military and police units, etc. The Alliance is seeking foreign partners, building and investment firms experienced in the construction of medical and phar- maceutical facilities in their countries. The Alliance would be their sub-supplier of the special clean areas mentioned above. FIRST CZECH HEALTH ALLIANCE OFFER: medical apparatus for diagnosing and therapy complete medical and pharmaceutical facilities consumer materials for health care interior furnishing of medical facilities designs and projects for medicine and pharmacy field hospitals mobile rescue systems and products medical communication systems service and support for the supplied products training of health care staff Design of operating theatre Dental surgery Design of modular hospital

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| 2 2 L E G I S L AT I O N Health Business Faced with Advertising Rules Jana Pike, PP Agency, e-mail: pike@ppagency.cz, www.ppagency.cz Do you have an original idea to manufac- ture a miraculous medicine from herbs or do you want to import vitamins and dis- tribute them in the Czech market? Then be careful not to break laws or prepare an improper advertising campaign that would cause you to be fined. The so-called food supplements, where these products belong, are foods that con- tain large amounts of compounds benefi- cial to the body and that serve mainly to supplement a normal diet which is often insufficiently varied. Under this name we can thus imagine vitamins, minerals, amino acids, specific fatty acids, extracts and other substances with a favourable effect on our organism. Dietary supple- ments thus help to alleviate negative influ- ences and continuously keep our bodies fit. However, despite the proven beneficial effects of food supplements on the hu- man organism this group cannot be re- garded as drugs. Supplements strengthen the organism and prevent the occurrence of troubles, but they cannot cure, for in- stance, tonsillitis or appendicitis, and thus these products must not be mistaken for drugs. At the Beginning There Is Notification Duty If you want to produce a preparation which contains only vitamins and min- eral substances, your production is not liable to undergo any complex approval procedure. Before introduction to the market it is necessary to notify the Min- istry of Health. This institution offers on its web site a notification form for down- loading, where you fill in the composi- tion of the product, description of the package, effects of the product, or refer- ence to a study documenting the prod- uct’s effects. If you import a supplement, it is necessary to submit the distributor’s statement about the fact that the food supplement has been legally introduced to the market in the producer’s country. Before putting it into distribution, you must send the Czech text of the name, as it will be given on the product’s package, to the Ministry of Health, and in a copy to the Ministry of Agriculture. In case all the legal requirements have been met, you can introduce the product to the market on the day of dispatching the notification. It is more complicated to start selling a product which contains for example plant extracts or substances not listed in Regulation No. 225/2008 Coll. This requires the approval of the chief public health of- ficer with the introduction of such a food supplement to the market, and you must also submit data on the composition of the food product, including the chemi- cal forms of the components and the na- ture of its source, the results of laboratory analyses concerning the presence of con- taminants in foods and the set microbio- logical criteria for foods, and an opinion of the National Institute of Public Health on health safety of the food (according to the Food Products Act). If everything is in order, the Health Ministry sends the Photo:www.sxc.hu

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2 3 | C Z E C H C H E M I C A L A N D P H A R M AC E U T I C A L I N D U S T R Y notification to the National Institute of Public Health, which incorporates it into the RoHy Information System (Register of Rulings of the Chief Public Health Officer - http://snzr.ksrzis.cz/). Since the informa- tion system is open to public access, the Ministry does not automatically issue a certificate confirming that the notifi- cation duty has been fulfilled, a written certificate must thus be requested in the submitted notification. Advertising Must not Be Deceptive Have you successfully coped with the process? Then you can launch the prod- uct on the market. However, in this case you may hit a major problem - current Czech standards for the regulation of advertising are much stricter than the European laws being proposed. In addi- tion, some experts do not consider them to be sufficiently clear. According to the existing wording of the law on advertis- ing for food supplements, the producer must not deceive customers especially by “attributing to a food the properties of prevention, treatment, mitigation or cure of human diseases, or to suggest such properties“. If an advertisement says that a preparation has a favourable effect against any disease, such as vitamin C against the flu, a penalty can be expect- ed. However, it can be said that the prod- uct has anti-aging effect, because it is a natural process. Paradoxically, compa- nies making food supplements are thus disadvantaged at present compared, for example, to toothpaste producers, who can assert without any problem that their paste prevents paradontosis. More exact rules are to be set by new European laws that will permit much more for food sup- plements than the present legislation. There will be so-called health assertions. When, for example, a preparation will in- clude a sufficient quantity of vitamin C, the producer will be able to write that it acts against the flu. What Labelling is Your Product Required to Have? according to legal rules, it must be la- belled as a “food supplement“ on the package. the package of the product must not be labelled with a medical indication (nor may cure or prevention of diseases be indicated), as this is reserved only for drugs. However, it is possible to men- tion beneficial effects on user’s health - the so-called health assertion. it is forbidden to say or suggest that a balanced and varied diet cannot pro- vide sufficient quantities of nutrients. there must be a notice for the products to be kept outside the reach of children, and a warning against exceeding the recommended daily dose. the package and insert of a drug that has been granted registration within registration proceedings is required by the legal regulations to contain the so- called registration number. It is assigned by the State Institute for Drug Control, in the following structure: AA/BBB/XX-C (e.g. 15/062/98-C), where AA represents the so-called indication group where the drug is listed (the indication group includes all the drugs related to the treatment of a given type of diseases, e.g. antibiotics, antidepressants, anaes- thetics, laxatives, hormones), BBB is the number of the registration decision in the calendar year, XX represents the last two figures of the registration year, and C is geographical denomination (coun- try where the medicinal preparation has been registered). What Are the Fines? The body authorised to supervise observ- ance of the act on advertising regulation is the Council for Radio and TV Broadcast- ing for advertising distributed in radio and TV broadcasting. The Council can impose fines of up to CZK 2 million for violation of the act (approx. EUR 0 08 million), or up to CZK 10 million (approx. EUR 0.4 million), depending on the gravity, and can do so repeatedly.

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| 2 4 L E G I S L AT I O N Photo:www.sxc.hu;NanomedicClusterarchives The Czech Association of Special Foods (CASF) was set up in the year 2000 to par- ticipate in the establishment of a balanced legislative framework for products sup- porting health. The CASF now represents 18 companies which account for about 50% of the Czech food supplements mar- ket. We asked Bohumil Hlavatý, the CASF Chief Executive, about problems faced by this branch of business. WhywastheCzechAssociationofSpecial Foodsfoundedandwhatareitsobjectives? The Czech Association of Special Foods was set up in order to defend the interests of food supplement producers and distrib- utors who operate on the Czech market. We also want to establish an ethical and open market in food supplements. In order to achieve this goal, the CASF has an eth- ics commission composed of lawyers and other experts which helps the member firms in creating legal advertising. Intensive Interview: Helping to Establish Clear Market Rules communication with the state administra- tion is necessary to build an open market. It is our advantage that we represent a half of the Czech market, it is easier for the deci- sion-makers to negotiate with a represent- ative of a whole segment rather than with separate firms. Regarding food supplements, it is often said that the country’s advertising legislation is strict or that the rules for food supplement advertising are not clear. If I do business in the sector, how do I learn whether “my advertising“ is permissible? The greatest stumbling block in our legal environment is that the certainty whether an advertisement is legal or not can be obtained only through a court verdict. There is no way of finding in advance whether an advertisement is legal or not. Companies usually solve this problem by addressing lawyers or our Ethics Commis- sion. However, these institutions are un- able to provide guarantees that an adver- tisement will not be fined. Where should I be particularly careful? Can you give examples of a “correct“ advertisement, and the false, deceptive advertising in this area? Most often fines are imposed on adver- tisements because they do not show suf- ficiently in a visible way the obligatory information that the product is a food sup- plement. Unfortunately, no-one is able to state obligatorily what parameters this information is to have. Manufacturers are also frequently fined for their products try- ing to make the impression of a medicinal preparation. This can be an interpretation for information that a product is available in pharmacies. But they account for the sale of 80% of all food supplements. I cer- tainly recommend to avoid formulations such as cures, helps to prevent specific dis- eases, and the like. If someone uses these words, they can be certain to be fined. On the other hand, such words as strengthens, revitalises, protects are tolerated. If I, as an entrepreneur, want to introduce a new food supplement to the market, what should I do? If you are not a manufacturer and want to start importing a food supplement, then the first thing to do is to check whether the manufacturer’s product is certified at least according to the HACCP system. However, quality manufactur- ers of food supplements increasingly work at present already within the GMP standards which meet the requirements of pharmaceuticals production. If you are in doubt, I recommend you to consult the content of your preparation with the National Institute of Public Health, and in case of a controversial composition, with the State Institute for Drug Control. When this is done, you can request notification from the Ministry of Health, where you must submit, in addition to an opinion from the NIPH, and SIDC where required, also analyses from an accredited labora- tory for chemical and microbial safety, and texts on packaging which comply with the laws currently in force.

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2 5 | W E I N T R O D U C E Nanomedic Cluster - Together to the Goal Vladimír Velebný, e-mail: nanomedic@nanomedic.cz, www.nanomedic.cz The word cluster is heard ever more often in the Czech Republic. It is a modern way of linking entities which do not compete, but complement each other.This gives the members and the association as a whole better opportunity to manoeuvre and pre- requisites for direct and indirect economic support from the state and social support in general. An example of a lucrative sym- biosis of the entrepreneurial and scientific sectors is the Nanomedic Cluster. The cluster is a grouping of compa- nies, universities, and research institutes, which was established in the autumn of 2006 and at present its members are 18 small and medium-sized enterprises and six scientific sections of universities and academic institutes. The Pardubice Re- gion acceded to the cluster in January 2010. From the beginning, the cluster has been presenting itself as a grouping of co-operating and non-competing en- tities which intend to develop and then manufacture and sell products of medical nanobiotechnologies. This scientific term stands for prepara- tions which are manufactured with the which occurs in our body and so is a sub- stance inherent in it. Since we produced this acid with the use of bacteria (it was actually produced by bacteria directly), we worked with typical instruments of biotechnologies. From this substance we make nanofibres to be used as carriers CLEAR OBJECTIVES As soon as the cluster had been established, it defined five objectives on which their activities would be concentrated: Firstly, it is nano and microfibers of biopolymers, which will serve as covers of wounds and burns, or as supportive structures in different scaffolds. The second area are bandages (wound covers) with a biologically active component to cover wounds which are difficult to cure (bedsores, diabetic defects, and varicose ulcers). The third area are preparations for tissue engineering, a sort of artificial tissue to replace in the body natural tissues damaged by accident or illness. The fourth intention of the cluster is the develop- ment of drug carriers for targeted distribution or guided release. The basis of these systems should be substances which are fully accepted by the human or- ganism and after a certain time completely disappear in it. Such carriers can be left inside the organism, for example after surgery, where they are gradually de- graded while releasing the drug they carry until they disappear completely. This can be used in surgery in general, and especially in oncology, traumatology, orthopaedics etc. The last area of development are certain forms of therapy using various possibilities of manipulation of gene expres- sion in the treatment of wounds and tissue engineering. In essence, this would mean that with use of the developed substances we could switch on or off certain genes which manage the creation of substances. For example, genes with positive influence on the healing of wounds would be switched on, and those with adverse influence would be switched off. 500 times enlarged random oriented nanofibre use of biological systems; in this case the use of bacteria and yeasts, and their size and manner of formation rank them among nanotechnologies suitable for ap- plication in medicine. We can show this clearly by the following example: With the use of bacteria, we make hyaluronic acid, for targeted drug delivery. In view of their size, nanofibres belong to the nanoworld and we produce them by nanotechnolog- ic techniques. Rapid Success Nanomedic Cluster has been operat- ing for less than four years. This is a rel- tively short time in the branch of phar- macy, in which the development of new preparations is normally long. However, the cluster can boast of a number of achievements, which have so far reached the stage of application for patents and presentations at various congresses and symposiums, but will be applied in prac-

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| 2 6 S U R V E Y Enaspol a. s. Velvěty 79 415 01, Teplice 1 e-mail: kasikd@enaspol.cz www.enaspol.cz Turnover: EUR 12 million Number of employees: 68 Export: 70% of the total turnover – mainly to Germany, Poland, Hungary, Slovakia, and Austria Enaspol a.s. is a chemical company with a long tradition in research and production of surfactants, which are the basic materials for the manufacture of detergents and washing powders. Another production segment are construction chemicals (especially concrete plasticisers and superplasticisers), dispersing agents for dyes and pigments, and textile auxiliaries. Enaspol is located near the town of Teplice in North Bohemia. Where do you see the biggest interest of your clients at this time? We are a small producer of chemical sub- stances, but clients can always rely on the quality of our products, timely and reliable supplies, possibility of finding complicated technical solutions with our experts, and help in the development of new products. Flexibility, reliability, and inventiveness are our biggest advantages. A good signal was the fact that the crisis did not weaken us but forced us to rationalise production. Our attention is now focused on research and development where we invest increasing amounts of money. This enables us to place our chemical products in new branches with a promising future: the manufacture of plas- terboard, self-levelling floors, and latex. Be- sides finding new uses of our old products, we are introducing new products which are sought for in the market. This was the main reason why we developed washing prepara- tions for professional dishwashers, a number ofparaffinemulsions,hydrotropicsurfactants, and linen softeners. How specifically is your company tackling the crisis impacts? From the short-term point of view, we strive for strict and consistent checking of all cost items and ensuing reduction of the purpose- less and superfluous ones, services in parti- cular. In the case of raw materials, we seek the most advantageous purchase and payment terms. From the long-term view, care is paid to innovations and new acquisitions. Photo:Firm’sarchives Poll of Successful Companies Operating in the Chemical and Pharmaceutical Industry tice soon. In the first place, there are very thin fibres made from hyaluronic acid, a substance which occurs normally in the organism and is not regarded as alien to its nature. These fibres can serve as the carriers of drugs that speed up healing, provided they are given the form of tex- tile used to cover wounds. No equipment for the manufacture of these fibres exists and so it has to be developed. The same substance was used to make nanofibres thinner than human hair and impercep- tible to the naked eye. These will be used to form an artificial cartilage, which is also being developed in the cluster. In this case, too, the manufacturing equip- ment had to be developed, as that avail- able on the market cannot make target- ed fibres needed for the given purpose. Development has also been completed of a bandage with a biologically effective active layer, which accelerates the heal- ing of varicose ulcers and problematic wounds of diabetic patients. Co-operation in Practice In order to meet its resolution to develop as well as manufacture new preparations, the cluster had to invite to its ranks en- terprises which develop and produce machinery and equipment for the man- ufacture of new medical and curative preparations. And so a place in the cluster belongs to engineering companies cap- able of designing and manufacturing new equipment and bringing it to excellence in co-operation with companies operat- ing in measuring and regulation. It was clear from the beginning that a problem in the realisation of the cluster strategy would not be lack of research and manufacturing technology or premises. The “bottleneck” could be expected in staffing, especially in research, develop- ment, and designing, and middle and sen- ior management. Specialised education in the neoteric and fringe branch of medical nanobiotechnologies does not exist for the time being in the Czech Republic as it probably does not elsewhere. This was why the cluster set as one of its strategic intentions support for the establishment of a new multidiscipline study branch to educate experts in medical nanobiotech- nology. The new study branch is planned at the Brno University of Technology with Bachelor‘s, and later also Master‘s and Doctoral programmes. 500 times enlarged oriented nanofibre

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