William Malcolm

Profits Rebound At Vitkovice A.S.

Vítkovice, a.s. reported earnings of CZK 162.8 million in 2019, a turnaround from its CZK 3.2 billion loss in 2018. The company, which provides services for subsidiaries of the Vítkovice Group (formerly Vítkovice Machinery Group), generated revenues of CZK 164.7 million last year.

“The financial results reflected the accounting operations when the company was able to ‘dissolve’ part of the provisions, which it created due to guarantees for companies in the group,” said Kijonková.

In recent years, the company has struggled with the insolvency of some of its subsidiaries. The former engineering holding underwent a significant transformation, and only a few non-manufacturing companies remained in the group. Vítkovice, a.s., still has several subsidiaries, such as Vítkovice IT Solutions, which are mainly engaged in development projects or property management. Together with its subsidiaries, they have almost 500 employees.

The financial results were approved by the General Meeting, which, however, did not decide on the intention of the Board of Directors to get rid of part of the old liabilities from the liability for loans to subsidiaries in the form of capitalization. The shareholders discussed the proposed operation in detail until late Monday evening and asked dozens of questions. The majority shareholder representative abstained from voting due to the time of the meeting, the large volume of questions, and, according to the spokesman, the apparent misunderstanding of the proposed steps by minority shareholders, so the capital increase was not approved in the end.

The Board of Directors proposed that the General Meeting agree to increase the share capital and subscribe for new shares worth approximately CZK 241.4 million. This corresponds to a claim of Duohamer, which would thus acquire Vítkovice shares in the corresponding value by capitalizing the claim. The company’s share capital would thus increase from approximately CZK 132.8 million to CZK 374.2 million.

“We want our company to reduce its workload from the past and stabilize,” said Chairman Rodan Broskevic. According to him, it was challenging to reach an agreement on the receivable settlement, which was initially a receivable of Komerční banka.

“We attribute the shareholders’ nervousness concerning capitalization to the misunderstanding that our company does not currently have sufficient funds to meet this obligation. Capitalization is a benefit for shareholders, not a loss. This was not understood even after many hours,” Broskevic said.

He stated that after reducing the company’s debts, the value of shares would increase and that maintaining the Vítkovice brand and strengthening the company for new projects is still essential for him. In particular, it is a new development use of reclaimed areas, such as Agglomeration and Heap Hrabůvka.

Dana Dvořáková, a spokeswoman for KKCG, which is a minority shareholder in Vítkovice, described the non-voting on the capital increase as a victory for KKCG and other minority shareholders. “We consider the General Meeting of Vítkovice, a.s. to be a turning point. For the first time in history, minority shareholders came together and clearly showed Mr. Světlík that times have changed, and things were not what he was used to for many years. That his personal interests were not the same as interests of Vítkovice, a.s.,” Dvořáková said.

She described the proposal for the subscription of new shares as purposeful. “During the General Meeting, it became clear that Vítkovice, a.s., has extensive assets and does not need any new capital. This resulted directly from the statement of the company’s Board of Directors,” said Dvořáková.